Financial institutions have long recognised the importance of establishing strong ties with local customers and the mutual benefits of forging such relationships. You only have to look at the loyalty that building societies inspire throughout their regional heartlands to realise borrowers want to have empathy with their financial providers and are grateful for personal and localised touches in a world that can seem dominated by faceless transactions conducted via computers.
Banks are not ignorant to the importance of identity either. This month sees the 10th anniversary of HSBC’s advertising campaign modelling itself as “The world’s local bank.”
But while huge national lenders/providers and financial institutions retain a keen sense of parochial peculiarities, local advisory practices sometimes overlook the very thing that should be at the core of their identity and inform everything they do – the fact they are based in, and knowledgeable of, the same area that their customers inhabit.
Being a local service that understands the needs of local people should be the raison d’etre for all such practices and this partiality can form intermediaries’ unique selling point. Establishing personal relationships is at the heart of what financial advisers do and if part of the bridge-building is borne out of informal discussions about local weather, football results or politics, then all the better.
We have all endured insincere attempts from non-local telesales callers or charity fundraisers to establish common ground by making sweeping generalisations based on geographical assumptions, so it is all the more appreciated when someone strikes up a conversation about something local, topical and, most important, personal.
Being local does not just make casual chatting easier either – it can inform the advice provided and the plan of action an adviser decides upon.
Take, for example, communities where the economy and employment situation is strongly linked to a specific industry or company, such as Vauxhall in Ellesmere Port or Nissan in Sunderland. Local advisers are more likely to have an understanding of the atmosphere and prospects of the area and are able to advise accordingly.
Imagine if a big manufacturer, which is integral to the local economy by virtue of direct employment and links with local suppliers, is facing financial difficulties or is on the verge of making redundancies. A local adviser is likely to have picked this up from regional press or anecdotal conversations and is well placed to suggest a protection review to any clients employed by the manufacturer.
Customers appreciate a solution specific to their needs and not just a one- size-fits-all approach.
Advisers may have their ears to the ground regarding the possibility of new employers coming to the area and the likely impact on house prices.
The BBC’s decision to move much of its resources to Manchester had a marked impact on property values in fashionable areas such as Didsbury – something an adviser outside the area would have been unlikely to pick up on.
When borrowers make financial commitments as significant as retirement planning or taking out a mortgage through an adviser, they are not just taking out a pension or acquiring a homeloan – they are buying into the relationship with their adviser and placing their trust in their hands. People buy people and this is why local advisers are able to inspire such appreciation, dedication and commitment.
Even if some IFAs’ businesses are part of networks or ownership structures that mean the end-owner is not local, it is important for many firms to retain a local brand.
This set-up essentially gives principals the best of both worlds. They are able to benefit from a centralised back-office, and the support and structure this affords them, there is a financial incentive and they get the significant backing of a national operation, all while maintaining the local identity that made them successful in the first place.
The world has become a global village and it means there will always be a core audience of people who appreciate the personal touch of buying local when faced with an homogenised, somewhat faceless choice.
We have seen many technological moves in financial services over the past few years that have removed the need for face-to-face interaction but the majority of people prefer to discuss such problems/issues with someone in person.
If that someone is an adviser who understands their problems and needs and can empathise with their frustrations about the local road works, then it is not hard to see why customers will stay loyal to them rather than going elsewhere.
Local practices for local people may sound rather like the mantra of the fiercely partisan residents of The League of Gentlemen’s Royston Vasey but focusing on local brand and investment philosophy will benefit clients, it will also help firms retain advisers and ensure they remain profitable and relevant for years to come.
Financial services advice will remain a sector where local knowledge is invaluable.