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Martin Bamford: Comparing estate agents with IFAs

Presentation is all when it comes to winning new business

Martin-Bamford-MM-Peach-700.jpg

I am currently in the process of selling my house. After seven years and lots of work, it is time for a change and we have identified a suitable ‘project’ in the village.

It has been a while since I last spoke to an estate agent, so it was interesting to see how this ‘profession’ has progressed in recent years. Inviting these often unpopular people into my home also gave me the chance to consider elements of our own proposition.

As I would do with any service, I started by asking for some referrals from friends who had recently moved home. Facebook made this easy, with plenty of suggestions coming in as soon as I mentioned I was thinking about selling up. If you are thinking about how your own clients find you, chances are they have asked around on Facebook, Twitter or LinkedIn before picking up the phone.

Before contacting recommended agents, I checked them out online. The quality of their websites helped me to narrow down the field from the five that had been recommended to the two with whom I wanted to spend time considering further.

I wanted to see a professional looking website that had been recently and regularly updated. A few dropped out of contention because of outdated content or sloppy design. When the service being offered is marketing one of the most valuable assets you own, you want to ensure the firm you choose is capable of marketing their own business.

Meeting with the estate agents gave me a chance to compare different propositions. Whilst essentially offering the same service, both approached it slightly differently.

The first had some innovative ideas around marketing with a range of asking prices, offering a professional photography package and holding an ‘open house’ to build competitive pressure. The second was slightly more traditional, offering a more hands on approach to selling property.

There was also a difference between the individuals. Warning signs kept appearing during the first meeting. He was a nice enough chap, but had clearly spent a lot of time at the old school of selling. He engaged in lots of talking and little real engagement. I got the impression that he was determined to use up every hour of the allotted appointment time we had agreed, whether he needed to or not.

And then we moved onto pricing.

Given the recent changes introduced by the RDR, I was looking for any ideas about how estate agents are approaching pricing their services in the current market. The first proposed a flat fee for their services.

What flat fee actually meant was a percentage of the sale price converted into a monetary amount. I guess that approach fools some customers into thinking that they are getting better value. Converting it back to a (very uncompetitive) percentage was easy enough.

The second estate agent had the more traditional percentage based approach to pricing. They suggested one price and quickly offered a discount when I stayed quiet and made a slightly concerned looking face.

As much as we might not like to admit it, there is little difference between IFAs and estate agents.

Yes, we are both selling different things, but both are offering a service and both are becoming increasingly professionalised, with estate agents now subscribing to a reasonable sounding code of conduct and ombudsman service.

It makes sense to think about how we present our own propositions when considering how other business types present their own. Why and how we choose service providers tells us lots of about why and how our clients choose us.

Martin Bamford is managing director of Informed Choice Ltd

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Comments

There are 52 comments at the moment, we would love to hear your opinion too.

  1. Owning both an IFA and and estate agents I thought i would read this article…….aaaaaaaaaaarrrrrrrrrrrrrrhhhhhhhhhhh…….whos publish’s such an utter waste of time and rubbish??!!

    Martin you seriously need a life!

  2. Interesting thoughts. Couple of others:

    People know to contact an estate agent when selling their house. How do we educate people as to when they need financial advice?

    People go to estate agents because they perceive a tangible benefit – a higher sale price, which outweighs the fee. Again, IFAs need to communicate the value of their service clearly.

  3. “As much as we might not like to admit it, there is little difference between IFAs and estate agents.”

    Really? So how many years does an estate agent have to study to become Certified or Chartered?

  4. Roman Duzinkewycz 17th January 2013 at 11:50 am

    I read this article in amazement. There is a world of difference between financial advisers and estate agents and if you don’t know what they are, perhaps you should be an estate agent yourself – never jeard such rubbish.
    By the way, ‘sloppy websites’? – only in your opinion sunshine.

  5. I see that as I dictate this, there are no comments at present.

    Gosh Martin I don’t think this piece will win you any compliments! I know you are a keen user of social media. As I will have nothing to do with it I wondered if I was just being an old fart and canvassed my clients (of all age groups). Naturally those over 50 – 100% don’t use it at all. What surprised me however that those between 35 and 50 – very few used it at all (and I mean less than a handful!) This age group is mainly made up of well above average earners with good qualifications. So perhaps that tells you something?

    The quality of web sites. Well again ‘all that glitters is not gold’. I deal with some very well respected accountants and other professionals (Surveyors, solicitors, medical practitioners etc.) – who believe it or not don’t have a web site at all. They don’t need one as they are well renowned and established.

    As to comparing us with Estate Agents – well you are a brave man – and I’ll leave it at that!

  6. I can never understand the venom that is directed towards Mr Bamford whenever he writes a perfectly reasonable article. It is often helpful to compare our offering with those of other professions such as medical consultants, if for no other reason than to put yourself in the customer’s shoes.

  7. Of course you missed out the option of doing it yourself, sticking an A4 sign in your window or on your front lawn and hoping for the best. Then there’s the online systems that have sprung up where you upload your own description and photos and hope someone who used the internet to buy everything these days contacts you. Both of these methods are a pretty cheap option and there’s only you to blame if your property remains unsold, but this is the brave new world we’re in these days and you’ve got to embrace everything and discount nothing. Basing your judgement on how much someone might pay or how often they update their website is an utter folly of course as the guy with no website at all might have a long list of potential buyers just waiting to move into your area. “The old school of selling”? Is that now the derogatory term for the new post RDR highly qualified adviser who thinks they know it all? And, “there was also a difference between the individuals.” Good god we’re now into the area of psychology and rocket science. Who would have thought? Good luck with selling your property i’m sure with all your research it won’t take you long….

  8. I’ve just wasted 5 minutes of my life…………….. What was that all about

  9. @derek pearce

    Thanks for your opinion, Derek.

    As an owner of both an estate agent and IFA firm, what parallels do you draw between the two professions?

  10. Don’t think I need to point out the differences between Financial Advisers and Esate Agents… and I would be here all day if I did.

    Website wise, very different between the two occupations – Financial Adviser doesn’t need a website, but is never a bad thing to have a good one from a marketing point of view. Estate Agents needs a website, its a totally different business, infact it is vital – I would never use an Estate Agent who cannot market a property on their website and Ricghmove & Zoopla – my investment client does not need me to market their ISA that I have arranged for them….

    Yes the way you present yourself is important in both jobs, but the only point useful to an IFA is that one size doesn’t fit all, some people still prefer to old school approach others are more modern (I doubt any of us would have survived in business so far if we hadn’t worked that one out for ourselves already…) and that it is good to be upfront about your fees rather than hiding a % as a ‘flat fee’ which it is not as if you don’t your client will not be impressed with you, again something that I am sure we had worked out for ourselves.

  11. @Paul

    That’s a good question. It’s also interesting to note there are at least seven estate agents in our large village, and only two IFA firms. This is despite the potential market for property sales being much smaller (I assume) than that for financial advice.

  12. @Blair Cann

    Apologies if the point I was trying to make in this article was unclear. What I was trying to get across was that there is little difference between how people find estate agents and IFAs, and when it comes to deciding on which service provider to select.

  13. Are you taking the mick MM? How can you consider such drivel as this to be of any benefit to anyone?

  14. Some of the comments below this article only bring to the fore the question many are asking (unfairly in my view): “What is the point of estate agents?”. I just bought a flat and the estate agents, frankly, added friction to what would have otherwise been a simple transaction. That said, I accept some estate agents provide a valuable service, particularly those who know how to turn on a computer. Harry Katz’s comment is particularly bone-headed. So well off people don’t really use social media, Harry? Yeah right. *dials the men in white coats*

  15. I would had thought if you were a smart IFA, you would have marketed and sold it yourself?
    People use estate agents as a last resort, likewise the same for IFA’s.
    Costs for both do not represent value for money and likewise you both win if either the house is sold at a loss or if the value of the portfolio goes down into a loss.
    Personally, you are both tarred by the same brush, just that some are better then others but never anyone’s best friend.

  16. Alistair Cunningham 17th January 2013 at 12:22 pm

    Martin,

    How many times have you negotiated fees with an IFA? I wonder how you can base the statement “As much as we might not like to admit it, there is little difference between IFAs and estate agents.”

    You might get fewer “trolls” if your post was grounded with some basis in fact?

  17. Given there’s only one “Derek Pearce” on the FSA Register, were I him I might have considered the reputational impact on my own businesses before posting like that…

  18. Alistair Cunningham | 17 Jan 2013 12:22 pm

    Define “trolls”?

    It would be a pretty useless forum or article inviting reader comments that didn’t get any replies from…..err, trolls?

  19. Martin has a valid point, if we are to be considered a “profession” the way we present our services to clients will actually become as important as how much we charge, but in consideration of the above, we also need to demonstrate to clients that we can meet their expectations and ensure they understand the difference between searching on the web for the so called “best deal/best price” and buying products themselves and how the “advice” route gives them better consumer rights and protection in the event things go pear shaped due to either bad advice or poor service.

    As for how we are viewed by the public, IFAs still have a good reputation for honesty and integrity, bar the few bad apples one inevitably gets when money is involved, that reputation and perception needs to be enhanced and built on for the future. The press are not our friends and every little perceived “rip off” perpetrated by an adviser is siezed upon to our overall detriment.

    The FSA has imposed these changes despite massive opposition in the industry and especially our sector, it is now incumbent upon them not to just observe the effects of these changes but to assist us to engage with the public so that THEY understand the changes and how THEY can benefit from our services.

    I hope and pray that the commission ban, thus making most transaction based IFA businesses virtually worthless as a saleable item, the loss of thousands of advisers from the industry does not render the IFA sector so castrated that the public will no longer be able to use us at an economical price.

  20. If I want an estate agent to sell my house I expect to pay the estate agent for marketing and selling it for me. If a product provider wants an IFA to sell a product for the product provider, after RDR this is a free service. IFAs get bugger all from product providers for selling their products for them…

  21. “Trolls” arose in newsgroups many years ago. It would be someone who posted deliberately inflammatory comments, simply to annoy “regulars” in the group.

    Some “trolls” would become a fixture of a particular group and be involved in long “flame wars” – where users usually descended into ad-hominem arguments.

    It wasn’t long before trolls began to organise competitions between themselves – involving cross posting to a “scoring” group so that responses to their “bait” could be counted.

    Trolls are part of the “tradition” of forums and newsgroups and predate even the world wide web by some years.

    Unfortunately, the idiots in the media got hold of the word and now seem to apply it to any person who posts an opposing view.

    Perhaps that is part and parcel of the development of the English language, although it is a shame that such a pithy definition has been now so commonly misused by ill informed media types that it might soon lose its true meaning.

    Oh, and I thought the article wasn’t very good as there are few real similarities between IFAs and estate agents.

  22. ive kissed many an IFA in my time and seen the prince but NEVER ever would i put them in the same boat as the smiling assassin Estate Agents…

  23. @Adam Smith. What in particular reputational impact might my “post” have?? I await your response…..

  24. What boring, self absorbed nonsence. There is no similarity to Estate agency (which is still basically unregulated and staffed by a buncn of liars) I dont object to them having selling skills because that’s how sales occur. they wont ever be regulated to FS levels because theres not the same capacity for the City to steal.

  25. Like Martin, I am a fellow IFA who finds himself dealing with estate agents as I look to sell my property. I have dealt with many estate agents who have acted as introducers to me..but this has been the first time they have provided me with a service.

    Martin’s point that there are not too many differences has some validity. Both professions have been tarred with bad press in the past due to the actions of the unscrupulous. However both professions are making strides in raising the standards provided to customers.

    Admittedly, estate agents are behind IFAs in the evolution to a fee based model as well as becoming advisors, not salesmen. However, we IFAs are behind the professional standards that those in the accountancy and legal professions abide by.

    I don’t understand the elitist nature some of us take. IFAs can learn from the legal & accountancy framework in terms of professionalism…they in turn can take the ‘get to know your customer’ actions we IFAs take..and i think we all could learn a thing or two from the marketing methods Estate Agents use.

    About time, we all acted as advisors in the best interests of the client..rather than look down our noses at differing professions.

  26. Brave Man Martin comparing the estate agents and IFAs. I do understand the rather hurt feeling on here.

    However I do agree with the website and social media aspect. We surveyed our new clients last year and the results surprised me. The vast bulk had seen our website before the meeting and some of those did comment it helped make their mind up on us as a company. The other point is facebook and twitter. We do have a growing number of clients who say they found us via facebook. The most common was ‘you went to school with my son/daughter and you are friends of facebook’. It prompted me to create a facebook company profile and link it with my own account. That way a least people know what I do or can check easily.

    As a final point we mainly deal with over 50’s for the pre/post retirement market. 90% is pension and investment work. That age group are definately on social media – on a daily basis from what I see. Our oldest client is proud she is on social media and chats to her grandchildren regularly wherever they travel. At 85 years that not bad going

    I understand why people dont like these forms of communication but they are another string to our marketing bow and I would strongly receommend IFAs dont ignore this option.

  27. @Martin Bamford. They give advice, they offer services, they charge for thier services, there are many types of both, they sink or swim.

  28. and martin…which is your prefered photo, the one used with this artcle or the one you use on your website?

  29. @Charlie

    I looked into this option, but decided to use an estate agent for a couple of different reasons. Most people buying a property tend to either browse Rightmove (and others), which don’t currently allow direct sellers to upload their property for sale. There is also something useful about putting an agent between the buyer and seller when it comes to negotiating. It’s early days still (one week) but I’m pleased with my decision to appoint an agent for this, based on early results.

  30. Next week………IFA’s vs Zombies!

    Compare charging structures and err charging Zombies, contrast conversational techniques and question the lack of take up on further qualifications for the Living Dead………

  31. @Greg Heath

    Thanks, Greg. I could have made comparisons with my doctor, accountant, plumber, mechanic or any other trade/profession, but this seemed like a good example with things we could learn.

    We have a similar experience when it comes to client use of the Internet and Social Media. Almost 100% of our new clients last year first checked out our website. Most of our clients, who are typically in their 50s or 60s, use either Facebook or Twitter.

    I understand that the fastest growth in the use of Facebook comes from the over 50s.

    Social Media is definitely something to supplement other marketing channels, rather than something to replace them.

  32. @derek pearce

    Thanks for the question, Derek. I prefer the new photo I need to get taken within the next few months. After losing five stone in the past twelve months, I’m hoping looking slightly better in front of the camera than I have done in recent years 🙂

  33. How many of you bill your clients for the time you spend spouting vitriol on these websites? Maybe if you went and helped some clients you would be in a much friendlier frame of mind.

    I thought the article raised some worthy points, as does much of the information from the Bamford camp.

  34. Martin you obviously understand nothing about financial services in the modern world, estate agency is a contractual service where you are engaging a professional to sell your house on your behalf and therefore is acting as an agent

    IFA services provide ongoing service well beyond the initial setting up of a product and includes setup of products and reviews and indeed other services that don’t include products. These relationships can last for many years whereas an estate agency service will last only the time of the sale. You can therefore not compare the two trades and if you do your quite foolish in my opinion.

    Maybe those who write for money marketing should have greater respect for the IFA community rather than coming up with such overinflated opinions of themselves. I often read articles in this magazine and feel that the people that write them have an axe to grind with the IFA community could it be they are failed IFA’s.

  35. Too much time on your hands, since you ceased giving advice Martin.

  36. @Peter Herd

    That’s a rather harsh assessment, don’t you think? If you read my article again (carefully, slowly, maybe ask someone to read it to you?) you might see that I wasn’t saying that IFAs are estate agents are the same. I was merely drawing some similarities between the way in which both acquire clients and put forward a value proposition. Sorry if you failed to understand that.

    I have nothing but respect for the IFA community. Well, most of it anyway.

  37. “Too much time on your hands, since you ceased giving advice Martin.”

    If only that were true!

  38. Hey Martin…..did you pay for your advice obtained from the estate agents. No i didnt think so – there’s your difference. If these guys started charging for their advice I wonder how you would assess them in that scenario. I can assure you that you would be looking at the individual, their knowledge and their integrity; not how good their website is!!

  39. I have read an awful lot of your articles over a period of time and they often come across as if you having an axe to grind. As most people make jokes about estate agents I’m sorry if I get upset when someone compares us to them and thinks that we provide a similar service.

    There is plenty of rational discussions about remuneration systems and indeed getting this message across to a client but I do think that your article was designed to have a dig at the IFA community which you have chosen to leave to become a journalist.

    It’s hard enough been an IFA at present without this type of article trying to demean our profession. After all how long does it take to become an IFA and indeed how many hours training a year to stay an IFA compared to an estate agent. If you don’t mind me saying it’s b***dy hard work been an IFA at the moment and maybe that’s the reasons why you left.

    I don’t need somebody to read the article to me and the reasons why my comment was so strong is because I think your original article was insulting. Maybe you should reread your own article and some of the comments here again before writing another article (that is my attempt to give you some constructive feedback).

  40. @Michael Taggart

    One of us must be bone headed. I didn’t say all well off people don’t use social media, I just said that my client’s (in the vast majority) don’t. Nor do I follow your comment about men in white coats.

    My post was slightly edited. Insofar as I said that I hadn’t seen any comments as I dictated the post. That is precisely one of the points; you and others may well sit there typing away on e-mails and social media sites. I have other things I need to do.

    Without wishing to be overly contentious, from what I have seen I really do find these sites the epitome of banality. I also confess that I don’t read Hello or OK magazines, nor do I watch’ I’m a Celebrity Get Me Out of Here’ – all of the same genre as far as I’m concerned. I am certainly no Luddite. Indeed I am still proud of the fact that I won the one and only Money Marketing competition for the uses of IT in Financial Services when many of you were still at school.

  41. The difference between estate agents andIFAs is,,,,

    Massive regulation for IFAs

    Huge fees for IFAs

    No legal long stop for IFAs

    If your house falls in value you don’t go to an ombudsman or a solicitor to say you have been mis-sold a house.

  42. Martin, I’m sure you’re both bright and a consummate professional but you don’t half come out with some drivel in these little vanity project articles.

  43. @Peter Herd

    It seems like your interpretation of the article is the issue here, rather than what I have actually written? The best I can tell, you are somehow offended by me drawing a parallell between aspects of an estate agent (because massive generalisations are often made about their ethics and behaviour) and how IFAs operate. I find that bizarre.

    I’ve certainly not chosen to leave the IFA sector to become a journalist. I continue to own and manage a firm of Chartered Financial Planners which delivers independent financial advice. Whilst I write for the trade and national press, I’m not a journalist.

    Extending your own logic, I might get upset by you suggesting I’m a journalist, given the recent issues to consume that profession, but of course I don’t because I understand the behaviour of some doesn’t reflect upon the standards of all. If that were the case, the IFA sector would be royally screwed.

  44. Nic Cicutti watch out!

    Martin wants your role as MM’s IFA chief antagonist!

  45. Alistair Cunningham 18th January 2013 at 9:31 am

    I checked the definition:
    “Troll” – one who expresses a difference in opinion with Mr M Bamford.

  46. Okay, I’ve read the article and I’ve read the responses, have I missed something? Seems like too many IFAs with too much time on their hands reacting to an article without reading and understanding it first.

  47. Martin, I am a great admirer of your work, would you perhaps like to collaborate on some slightly controversial articles I’m preparing for the Saturday edition. Love, Liz.

  48. I’m going to be simple!

    Estate Agents sell houses.

    Advisers help customers make sense of their financial affairs and help them live the lifestyle they want whilst ideally not running out of money.

    There isn’t even a comparison to be made – other than they both deal with customers.

    As a side point, I really do love Harry Katz’s comments. They genuinely make me smile and I’m honestly not being facetious.

    This man has “better things to do” so dictates (I wonder if a secretary then types this up?) his comments for the many blogs he gets involved in.

    Just because this website isn’t called Facebook, Twitter, Linkedin or is not any of the other ‘social network’ sites out there, doesn’t mean it’s not a social website.

    What is a blog with the ability for ‘strangers’ to comment if it’s not a social network…?

    I’m now off to do a comparison with my GP and my lawyer and then dictate a new blog.

  49. Roman Duzinkewycz 19th January 2013 at 9:34 am

    In answer to Mr Bamfords response?!? My advice (for which there is a fee and I will be forwarding you my invoice very, very shortly) is that you just stop writing – if you are running a practice, take a good look at yourself before going back to it – if this is the quality level, I’m glad I don’t work with you.

  50. Perhaps it’s the age of the clients I generally deal with, but I think the use of social media is overstated. Doubtlessly it will increase.

  51. I think the point that Mr Bamford’s trying to make here is that intermediaries still charging for the majority of their services on a transactional percentage basis, as do most Estate Agents, probably aren’t quite as advice-orientated as they may like to portray themselves.

    In terms of charging a percentage that bears very little relationship to the amount of work undertaken, (most) recruitment agents, as far as I’m concerned, are considerably worse than estate agents and equally ungoverned by either regulation or any requirement to hold a minimum level of relevant qualifications. Flog, forget and move on.

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