The world of the IFA is changing rapidly. Since depolarisation, there has been a notable change in the make-up of the IFA community and consumer demand is having a real effect on how IFAs and the organisations they work in conduct their business.
Competition has certainly increased and IFAs realise that differentiating themselves from other firms has become essential. Whether it is the increased use of technology, improved marketing techniques, the fact that consumers are being offered more types of advice or the way in which clients are given greater choice in how to pay for this advice, it is clear that we are entering a brave new world, where IFAs are waking up to consumer demand and adapting accordingly.
Over the last five years, the internet has significantly changed the behaviour of consumers researching information, with the majority no longer looking in the press or in their local directory for details of IFAs.
According to a recent study, there are 29.8 million people using the internet, with the average person spending 23 hours a week online, which equates to 21 per cent of their media consumption. Statistics such as these show that IFAs cannot afford to ignore this media channel.
Given the effectiveness of this media, it is no surprise that online advertising spend in the first half of 2006 added up to £917m, accounting for 10.5 per cent of the UK advertising industry.
This was up from 5.8 per cent the previous year, is more than either outdoor ads or radio ads and is a trend which is almost certain to continue.
Broadband penetration is also a key indicator as to the availability of internet information to users. Almost 10 million households in the UK have a broadband connection, accounting for 80 per cent of all internet users, which is up by 61 per cent from the year before.
Many IFAs recognise that the web is the research tool of choice among consumers seeking financial advice and are fully embracing their online presence. Sixty-three per cent of IFAs have a website compared with 54 per cent 12 months ago.
The number of IFAs with an email address has also increased by 16 per cent in the last year, meaning that 96 per cent of member firms are contactable online.
This is very significant as the number of enquiries being received electronically has increased dramatically. Our figures show that 92 per cent of the 600,000 requests we received over the last 12 months were dealt with online compared with 32 per cent in 2000.
The number of online directories, where details of IFAs can be found, has also increased exponentially in recent years. If you type “find an IFA” into google, the search engine returns over one million results and while many will be inappropriate, there are hundreds of others which are offering what consumers and potential clients are looking for.
IFAP has grown from just one website to being able to offer a search facility through 56 different websites and this is before you have considered the other local and national directories available.
These facts might indicate that IFAs who are yet to establish a web presence or who are not promoting their businesses online risk losing out or are losing out already. If you are not in the virtual high street when consumers’ initial online financial research takes place, there is a risk that consumers and businesses will remain oblivious to the services your firm offers.
There is little point in having a website if people cannot find it. Consumers researching on the internet invariably use search engines to match sites to the keywords they enter or visit their favourite sites and use links from content they find there. In the UK, Google is one of the main search engines, with 78 per cent market share.
Simply listing in a directory or search website should also be just the start. It also follows that if a consumer is researching online and finds your details, they will want to continue the research process by visiting your website and finding out a bit more about your business and how you can help them.
When a listing with a directory or search facility is done properly, once consumers have found company details, they can benefit from a number of features such as enabled links through to your website and email and a section whereby consumers can request that you call them back. This ensures that customers are connected with your business as soon and as comprehensively as possible and that you do not miss potential custom.
Despite some IFAs adapting and enhancing their businesses, the fact that there is still a disparity between what IFAs are offering and what clients want shows that many IFAs still need to wake up and face this brave new online world head-on.