Short-termism is an accusation that has long been levelled at the British
way of doing business. But things move on. Supermarket loyalty cards have
been introduced and brands have been formulated that insinuate themselves
into the very fabric of the consumer's life.
In short, initiatives for holding on to customers and developing long-term
relationships have become the norm and this applies to IFAs as much as any
Alongside this, what needs to be taken into account is the recent changes
to the environment in which IFAs are operating. With the increasing
regulatory and media scrutiny on up-front commission comes its gradual
erosion in favour of trail commission or fees. Correspondingly, the focus
of the interaction between IFA and client moves away from the initial
moment of selling and on to the long-term relationship.
If IFAs agree on the importance of ensuring business over the longer term,
the app-roaches they take to achieve this differ.
Berkeley Independent head of marketing Sally Reeves says one of the things
IFAs will have to do is sell advice actively and to convince clients of the
added value that an independent adviser can bring.
Reeves says many network members have service agreements with clients,
usually paid for on a quarterly basis. As part of these agreements, they
get, for example, monthly updates, newsletters and invites to corporate
Reeves says: “Dozens of people are marketing the same products, so we need
to see if there is some extra benefit we can offer to build the
relationship with the client and pass any benefit on down the line.”
She says the networks are best placed to do this with their bargaining
power to secure the best rates from providers. These are often deals that
the customer would not get by going direct.
Reeves says many advisers recognise that clients might want to go direct
for some products and some advisers will try to acknowledge and accommodate this by allowing this to take place through their own websites. But where there
is a need for face-toface advice, she thinks this should be holistic.
An important element in maintaining customers is having good admin. Reeves
says: “When I hear IFAs say that they have 2,000 clients on their books, I
laugh. How can you possible service them properly?”
Other than tailoring the amount of clients you have to the admin support
that you can offer, Reeves also suggests that clients should be introduced
to paraplanners and other admin staff so that they have a familiar face to
go to with routine enquiries that might not require the attention of IFAs.
Applewoods Associates head of marketing Claire Rob-erts says maintaining
existing customers is more important than attracting new clients.
She feels that the two are interlinked in any case as most new clients
come as a result of recommendations from satisfied existing customers.
Applewood Associates has a two-pronged approach to maintaining customer
loyalty. On the one hand, it offers “jollies” in the traditional sense such
as investment seminars to which existing clients are invited. These are
then combined with a day of golf or meals arranged by the firm.
On the other hand, clients receive a bimonthly in-house magazine and
mailshots. Every three months or so, clients are also contacted to see if
they are happy with things and feedback is invited.
Newsletters are a popular way of keeping in contact with clients. The
Financial Planning Service principal Julian Crooks also sends out regular
newsletters, partly because he believes his clients are likely to get them
from other IFAs. “If you do not keep on reminding your clients who you are,
you risk losing them,” he says.
Crooks buys a pre-printed package but sends this out with a covering
letter on the issues which he feels are topical. He sees himself as acting
as a filter, dealing with the news stories, and often scare stories, that
clients may have read and weeding out the wheat from the chaff.
But above all, Crooks thinks the traditional qualities of giving a good
service and making sure you do your job well are the primary ways of
ensuring long-term business.
At present, the consumer debate is primarily focused at the level of
comparing channels and, given the debate over the polarisation review, this
is perhaps inevitable.
But once the dust has settled, some think the consumer debate might become
more finely tuned.
Rather than arguing over the merits of going to see an IFA over buying
direct, perhaps the performance of individual IFAs could be compared.
Imagine an FSA performance table for IFAs.
Crooks, who is one of the few advisers who are Certified Financial
Planners and whose business is predominantly fee-based, says: “I always
introduce the subject of commission and make it clear what people are
getting for their money. IFAs who are not transparent with consumers will
risk a consumer backlash.”