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Get in the local loop

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&#39s 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&#39s

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&#39s 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

trusting relationship.

There are structural ways of developing this positioning, notably,

fee-paying or flat-rate commission, none of which I am going to

rehearse here.

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&#39t. 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

market advocacy.

Look at the places where people go to talk about money. You will not

find them on allied, they are far to busy on, and, to be honest, who can blame them?

When I click Zurich Advice Network on allieddunbar., 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&#39t 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&#39t 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&#39s 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

need it.

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.

Jason Ross


Citigate Lloyd Northover


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