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How to beat Google

The news that the organisation whose name has become the verb to describe an internet search is entering the mortgage-sourcing market, even if, at the moment, it is only in the US, probably sent a shiver down the spine of every IFA and mortgage broker. And if it didn’t, it should have done.

The initial mortgage service will be in America but there are four other territories – Canada, China, Hong Kong and the UK – where Google Finance is currently in beta. If the US service works, given Google’s current issues in China, one might conclude that a service in this country is not too far away. Even if Google choose not to bring their sourcing service to these shores, the prospect alone should be a wake-up call to every adviser business that does not have a clear under – standing of how they will build an online relationship with their customers.

It is difficult to understate the impact that Google could have on the UK financial advice market should they choose. A recent article in the New York Times identified that the internet giant has a 70 per cent share of the US search market and in the UK, this increases to 90 per cent.

How many consumers looking for a mortgage would not carry out some initial research online? Google is the natural place to start.

Advisers need to start planning now to protect their client relationships so that clients think of their IFA as the first place to go for financial information both face to face and online, with Google and anyone else coming second.

Google is by no means the only organisation that might target traditional adviser customers, it must only be a matter of time before many of the consumer-facing insurance comparison websites look at a wide range of financial products.

These so-called infomediaries who make large amounts of previously difficult to obtain information readily available and provide tools to analyse it are a core part of the internet economy. Many of these will have far bigger budgets than most adviser organisations could even dream of.

So if you can’t outspend the competition, how else can you protect your customer relationships?

In my view, the answer is to do what advisers usually do so well, personalise the relationship, although I believe that must now be
achieved in additional ways.

What advisers do have is the benefit of an established relationship with their client. Multinational organisations can build powerful consumer tools but it is less easy for them to provide detailed personalised content.

Hundreds of thousands of investors maintain details of their online portfolios via a range of financial websites and links to third-party price feeds mean that asset values can be updated but the initial information always needs to be populated by the customer.

If a customer, who already has an established trusted personal relationship with the adviser, can be sure they will be able to source the information they want from their IFA’s site, why would they look anywhere else?

Where contracts involve regular contributions, then underlying unit values also need to be updated manually.

By comparison, advisers using a number of established client management systems can give their clients access to this information based on
the adviser’s own records. This means the client portfolio can be available online with far less initial work by the customer. It can also be maintained without regular client intervention and the results will be more accurate.

In addition to accessing their portfolio online, clients can also be given the opportunity to amend and update fact-finds and notify changes in circumstances.

Some of the best implementations of IFA client-facing websites even give the customer the opportunity to drill down into their asset allocation. Some advisers may feel this is activity they would only want the client to carry out with them but it can be a valuable opportunity to
gain insight into what the client is thinking.

It is important to make sure you have the ability to review all a client’s activity on your website. Terms and conditions must reflect this and this can give valuable insight into client concerns. Effectively, you are making use of management information to better understand the customer.

Google has built much of its business on exactly this sort of analysis. For example, the Google Mail service identifies information from clients’ emails and serves the user adverts relative to the words used.

I see it as essential that adviser firms not only build information-rich services for their clients but also actively promote them to make sure that the customer is aware of all the adviser services they can reach online.

Even if some consumers may seem reluctant to use the internet, their children will be keen to show them the power of the services they can access. If the client’s response is “yes, but I can get all the information from my IFA’s site”, it also raises the opportunity of advising the next generation.

There is no doubt in my mind that the first place that any adviser should go to discuss their web development requirements is their own client management system as it makes sense to reuse as much as possible of the information the adviser will already have created.

In addition, there are three websites that I would urge any IFA or mortgage broker wanting to develop such service to look at. They are: www.ifa-Systems.co.uk, www.ifanetsite.co.uk, and www.ifaportals.co.uk. Each of these has an established track record in helping advisers deliver content-rich websites with powerful customer-specific content.

It is inevitable that infomediaries will challenge traditional adviser businesses models but the firms that will be best able to resist such disintermediation will be those who have made their own online services an integral part of their proposition.

If a customer, who already has an established trusted personal relationship with the adviser, can be sure they will be able to source the information they want from their IFA’s site, why would they look anywhere else?

Solutions are readily available to advisers, doing nothing should not be an option. We live in the information age, leveraging the better quality information that advisers have about their clients is the best way to defend relationships with those clients.

Ian McKenna is director of the Finance & Technology Research Centre

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. I would be surprised if this will spur advisers into action because for the vast majority, the benefits of the internet and the positive impact it will make upon their business has passed them by.

    It appears to me as though a lot of advisers will just never embrace the internet and understand the benefits it can bring to their business.

  2. Johnstone Hooton - Price 19th February 2010 at 2:27 pm

    has anyone ever noticed that Ian McKenna look a lot like comedian Dave Spikey?

  3. A timely warning.

    I think most are aware that for many consumers the internet is the first step in their research for any product or service. Even if they don’t purchase via the net many take great satisfaction from having the ability to do the research online. The consumer feels empowered – they use the net because they can.

    At the moment as Ian states, advisers have the solutions available to ensure they continue to demonstrate the critical part they play and the invaluable added value they provide.

    Currently,only advisers have access to the more sophisticated research tools and systems.

    What else will be made available to consumers post RDR to cater for clients who are not seen as suitable candidates for the new business models or propositions being considered?

    Be aware of the power of the internet and embrace as much as you can to benefit your business.

  4. Ian is right on the button.

    It amuses me greatly that week after week, month after month, year after year we are still telling IFAs that they must start to embrace the Internet.

    Don’t they get it yet? RDR is a sideshow compared with the impact that the Internet is going to have on this profession.

    Phil

    Philip Calvert
    http://www.ifalife.com

  5. Googles biggest customers are people looking for porn, why does that fit with mortgages? it would be like AVIVA branching out into sex toys

  6. doesnt mr Mckenna look earily like Dave Spikey from phoenix nights

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