Social media are transforming the ways people communicate. It is hard to understate the impact they will have on the ways that 21st Century consumers take a wide range of decisions, including which financial products to buy. That said, the impact of social media on adviser businesses must be seen in the context of wider change.
Only when firms have prepared to meet the challenges of these changes should maximising the opportunity offered by social media become a priority. RDR means that many adviser firms will be forced to adopt business models that are vastly different to their current operations. To do so effectively, advisers need to have a clear
understanding of the proposition they will offer different types of customer. As adviser charging considerably reduces the scope to allow different customers to cross subsidise each other, it is essential for advisers to understand the profitability of each client.
The natural way for advisers to measure client profitability and carry out customer segmentation is by embedding a suitable client management
system at the heart of their business. Correctly implemented, this should enable advisers to automate many processes which if maintained
manually would incur significant costs. Under the new regime, these costs should be passed to the client.
The natural way for advisers to measure client profitability is by embedding a client management system at the heart of their business
Other forms of new media also mean that one of the traditional roles of the adviser, as gatekeeper to information, has become obsolete. Infomediaries such as Money Supermarket and others are now making an increasingly wide range of financial information and ever more planning tools available online, either free or at minimal cost. Adviser firms who can fully leverage their position of having access to the most accurate information about their clients should be able to continue to maintain an advantage over the infomediaries. This will mean deploying
powerful, dedicated client-facing online propositions to provide customer-specific information. While social media may be an excellent way of attracting and maintaining a dialogue with clients it will be the information-rich services that enable firms to show their true value. Social media alone cannot deliver this.
In summary, while it is important for adviser firms to develop a strategy for maximising the benefit of social media there are several other key decisions around technology that will be even more imperative for long-term prosperity of their businesses. If firms cannot adapt their commercial model to meet the challenges of RDR, they will soon cease to exist. Consequently, in the immediate future it may be appropriate to address the other points outlined above before addressing social media.
The main impetus behind us embracing social media was an ability to reach a wider autdience. We have always tried to keep up with new innovation and be early adoptors, which has meant trying as many things as we can. We started out just blogging on our website and then moved into podcasting in September 2007. It was still very new then and we were one of the first advisers to do it.
Initially, there was no great science behind the subjects that we chose for blogging or podcasting. We tended to look at other sectors and would see what had worked well for them. From there, it was a case of adapting it for retail financial services. Now we’ve been doing it for a while, we can tell what goes down well.
For us, social media served three main areas: Part of it was about attracting clients. We have seen a great number of new clients come
to us through social media over the years. It also served to provide a better service to existing clients. We email our newsletter every Monday
morning to all our clients, keeping them updated about the main news stories that affect them. Finally, it is part of raising our profile generally. It is another way of reaching a wider audience, including the media.
For some advisers it will still be a step too far. Some don’t have websites or email, so there is a huge catchup process
Now we have expanded our social media presence to include Twitter. I’m an avid tweeter. I now have 1,500 people following us on Twitter and they tend to use it to get a view on what is going on.
We rebuilt our website – www.ifc-ifa.co.uk – last autumn and it now integrates with all the other social media sites. There are about 225 links. That said, we are selective about the ones we use and are not active on all of them. The website is vitally important – it provides the core of the experience, so that really needs to be working before exploring other areas.
When we started doing social media, the main audience was younger. Groups such as MySpace were really only looking for the younger demographic. Now, the bulk of the users are 40-plus. This is very much our target market. They don’t trust traditional advertising or marketing, but they trust the opinions of their close network. Unless advisers embrace social media to some extent, they may miss out on that group.
Is is for everyone? We do it as one part of our marketing plan and it remains only one cog in the system. For some advisers it will still be a step too far. Some don’t have websites or email, so there is a huge catch-up process to go through before they embrace the opportunities afforded by social media. It is a question of not running before they can walk.