I would like you to take a look at your website. Go on, a hard look. I have. It looks quite good actually, your branding is demonstrated throughout the pages and it gives a good indication of what your business stands for. There is even a map to show prospective clients how to find you.
And therein lies the problem. It is prospective clients that your website will appeal to, your existing clients already know where you are based, what you look like and what services you provide. So what value are you adding to the people you currently service? An existing client is far more profitable than a prospective one so how can you cater for their need?
The online brochure
Used effectively, the web can be a cost-effective way of attracting new clients. According to the Forrester research, by the end of 2000 there will be 18.8 million users of the internet in the UK.
Seventy-two per cent of internet users are ABC1s. Twenty-one per cent are in the 25-34 age range and almost a further 50 per cent are 35-plus, a perfect audience for personal finance. The only issue is to ensure it is you that this target audience contacts.
Search engines are not much use here. Just search financial advice on Yahoo and see what you get. There are online personal finance directories. These sites will help maximise your opportunity to display your wares at little or no cost. Only though, if the directory is publicly and actively promoted.
So link with a few directories and wait for the clients to pour in. But how are you going to service those extra clients and are you really maximising your opportunity for profit?
Can you service more clients without taking on additional resource? How much of your time is spent on answering client queries on products they already hold? How much more of your time could you spend being profitable if you concentrated your efforts on acquiring new business rather than administration?
As an IFA, you are the only complete aggregator of client information. In securely broadcasting summary financial information to your clients about their financial situation, they have access to their records at their fingertips.
One of the most successful pieces of marketing literature at IFA Promotion was the financial log book where clients could keep a record of all their financial information in one place and then update it when necessary. The only problem with this is that it does not notify you, the IFA, of any changes. An online fact-find would change that. As the online fact-find is updated, you would be notified of the changes. Your files would always be up to date.
An online diary would remind the client and your office when renewals are due for all products owned.
A regular newsletter, online news, guides and articles on topical issues would keep your clients regularly informed on what you feel is important to them.
Online calculators could allow clients to self-assess needs.
Put all this together on your website and it becomes your 24-hour a day, seven-day a week assistant.
The point is, you have the opportunity to offer so much more added value via the web to your existing and potential clients than other “faceless” financial portals can proffer. But why would you want to?
Forrester says at least six of the seven services which are offered by IFAs are threatened by the internet. Product information, choice, discounts, commoditised or simplified products, advice and long-term planning are all available online through various financial portals.
The only thing that the portals cannot provide is what Forrester calls the “intimacy” that an IFA has with their client. Look at portals such as Interactive Investor and Moneyextra. They provide, to a certain degree, the six areas listed above and, in an attempt to add the “intimacy” part, they list you, the IFA, as a service they offer.
But their attempts are futile. They are not the IFA. They do not have the 87 per cent loyalty that you have. They do not have the 3.7 million clients that collectively you service. So only you can, with the right website, service the needs of your existing clients as well as enjoy profitable relationships with a whole host more. Financial services portals would kill for a slice of this action. Personal finance is big business. Interactive Investor hasaround two million unique users every month, Moneyextra boasts just under 700,000. Thatis big browsership.
The estimated revenue via e-commerce is expected to reach £1.7bn by 2002, accordingto Datamonitor. Axa Sun Life, whose onlinee-commerce website went live in January has sold more than £8m of single-premium term insurance over the net in the last 10 months.
As products become more simplified and as access to information becomes more readily available (and legible) so then more products will be bought online.
I still hold with the theory that financial products are sold, not bought, but this really only applies to a limited number of products that you will still need face-to-face advice for. Pensions are a good example, as is advice on niche services such as tax issues and company schemes and benefits. But for products that people know they have to have, such as life insurance for a mortgage policy, and products that are becoming sexy, such as shares and latterly unit trusts, or for products that you would not normally deal in, such as general insurance, then the internet becomes an easy and enticing way of obtaining such products.
You may not want to offer every type of product around, you may consider yourself a financial planner where you will only ever offer face-to-face, fee-paying advice. But, in doing so, you do your clients and yourself a great disservice and give them opportunities to go elsewhere.
As the obvious person to offer the best of breed from all products, even those that you normally do not offer, it means that via the web you are in a unique and enviable position.
The problem is that design, hosting and negotiations with content providers all cost money and all take time. At My Money Adviser, we have been in negotiations with many content providers. Most charge huge sums for their technology. Those that offer the technology free leave it to you to worry about embedding the technology and the design and hosting.
What this industry needs is a company that can offer IFAs a low-cost, high-quality designed, e-commerce and client-servicing-enabled website that gives clients a chance of locating and using on the web. Now I wonder who offers this kind of service?
Benjamin Ensor of Forrester says : “Open finance will be fronted by a new type of player which aggregates customer account information and offers a comprehensive range of best of breed products.
These emerging open finance compan-ies pose a threat to IFAs because, as wellas offering advice and best of breed product choice, they know their customers, link recommendations to transactions and package dynamic solutions.”
According to Ensor, IFAs are to be sidelined to a life of niche service offerings.
But we have a creative and dynamic industry. Those of you who do embrace the technology that is on offer today can become the very profitable emerging open finance company that Mr Ensor so animatedly speaks of.