I suggested in Money Marketing last October that IFAs were ideally
placed to take advantage of customer confusion and apathy in the UK
financial services market. Since raising the issue, MM's editor has
thrown down the gauntlet for me of explaining how.
This is a brash attempt to do just that and one that ignores all the
usual consultant caveats – “need specifics of each individual case”
and so on. If you do not want to be assaulted with generalisations
and opinion, stop reading now.
Let me start by summari-sing the current climate. Big financial
services providers are worried because the business models they have
been practising for decades are losing their relevance, based as they
are on providing mass-produced products and targeting these at a mass
market with broadcast media.
The response to the pressure of increasing competition is to use the
same tools but turn up the intensity, a process that sows the seeds
of eventual failure. The tools are well known – product development
and marketing, which largely consist of making slightly better stuff
and telling more people about it.
Or, to put it another way: “Banks, brokers, insurers and other
financial services firms are steadily encroaching on one another's
territory, forcing customers to sift through a mounting collection of
product choices.” (Jupiter Media Metrix 2001: Integrated Finance).
Too many choices, too much confusion.
From a business perspective, the diminishing customer returns are
matched with mounting marketing costs. Or, in today's world,
increasing technology spend, IT being a convenient budget for
marketing to plunder, especially with the board running scared about
“this whole CRM/ e-commerce thing”.
The IFA position is equally confused. Faced with too much choice,
customers want to turn to a trusted source. They are becoming
increasingly sceptical of the intensifying marketing hype and yearn
for the kind of human conversation where they will get real advice
that has direct relevance to them.
At this point, they should turn to their advisers but the ambiguous
position of the IFAs, halfway between trusted professional and used
car salesman, severely limits the numbers who will do this.
One way out of this conundrum is to shift the emphasis of IFA
positioning from independence to advice in the context of a long-term
There are structural ways of developing this positioning, notably,
fee-paying or flat-rate commission, none of which I am going to
What we are now addressing is the place people go to get information,
not flannel, where they go to get opinion, not hype, and where they
go to find out what other people like them are saying about this or
that company or product. We are talking about the internet.
The last three years have been a cycle of overhype to overpessimism
but we are at last starting to get an idea of what the web is all
As an anthropologist, I was brought up to believe that most research
methodologies only substantiate what you already know. To find out
what people are really up to, you have to get into the trenches with
them and today that can be an enlightening experience.
Point number one is that the internet was not invented as a marketing
channel. In direct contrast to TV, with its advertiser-funded
business model, the net started as a forum for conversation, not
e-commerce, streaming content or broadband-multimedia.
The killer application of the internet is email and email is the net
talking. As you may have noticed, the language of email is very
different from the language of TV straplines or pension brochures.
The internet resonates with the voices of real people.
You may also have noticed that when people get to control their
media, what they do is communicate with each other. Take the 1.2
billion text messages sent in October and the 2.5 hours a month users
spend talking over internet relay chat (ICQ).
OK, sermon over. So, how do we mobilise this insight in marketing
IFAs to customers? The simple answer is that we don't. As Fast
Company put it in August 2000: “Consumers have built up antibodies
that resist traditional marketing. We need to stop marketing at
people and start creating an environment where consumers can market
to one another.”
In this scenario, marketing plays second fiddle to the creation of
Look at the places where people go to talk about money. You will not
find them on allied dunbar.co.uk, they are far to busy on
motleyfool.co.uk, and, to be honest, who can blame them?
When I click Zurich Advice Network on allieddunbar. co.uk, I get a
sterile statement explaining: “Zurich has a track record of success”.
In stark contrast, Motley Fool tells me that an Isa is “a bit like a
fortress that even the Chancellor of the Exchequer can't invade”.
Corporate track records of success do not interest your customers
unless they translate directly as a benefit.
The questions that clients want answering are of basic self-interest.
Ask yourself,how many times do your clients open their conversation
by asking what the track record of success of Allied Dunbar is? Zero.
They want to know: “How I get a mortgage in Kingston when the starter
homes are four times my salary?” and “What is really the best Isa to
have when everyone claims to have the top-performing funds?”
If your customers want corporate rhetoric, they can get it perfectly
well without an IFA.
But don't take my word for it, ask Accenture. Its August 2001 report
on e-business in financial services says customers want “a proven
brand and/or local presence” and “the option to engage in live
two-way communication”. Better still, check it out online.
The question then bec-omes, how can IFAs facilitate conversations
about matters that engage their clients and turn a profit (given that
the idea is to create value in the IFA proposition, not erode it
further)? Well, starting with the right question is always the
foundation of a good strategy but here are some tactical pointers.
First of all, create a network of regional sites as local loops where
customers can share relevant stories and comment, why not
Then have content provided by registered users and moderated by
authoritative IFAs, perhaps holding weekly clinics. Content would be
linked nationally and collaboratively filtered so that the most
popular topics are dynamically updated.
Make sure that product companies invest in this to support their IFA
networks but they should do this at arm's length to preserve the
critical quality – authority.
Marketing support could be directed at alerting people to the
presence of these communities. IFAs then become experts who host
discussions as the true authorities on local money matters. They help
knowledge-sharing and this would support the revenue model shifting
to a fee-based or hourly rate model.
Cold-calling and email spamming get relegated to the dump as
customers ask for advice, pulling the content when and where they
Yes, this is a radical app-roach and, yes, it goes hand in hand with
a repositioning of the IFA proposition and the IFA revenue model.
But who can honestly say this is not happening already? As I started
out saying, the balance of power in financial services is shifting.
A gap in the market is opening up between institutions and customers
and the trick is to position IFAs to open this new conversation.
Citigate Lloyd Northover
I suggested in Money Marketing last October that IFAs were ideally