Have you switched to fees yet?

Axa Winterthur have published an interesting survey this week on how IFA's are adapting their service models to help them cope with the current economic downturn. Despite the apparent desire and push to move to a fee based model for many IFA firms over recent years, the survey reveals that 6 out of 10 IFA's are currently running a commission based business but they expect to increase the fee-based portion over the next 12 months.

So yet again we see a drive towards and a desire for fee-based business models but it seems that progress is slow. So why the delay? Experience tells me that many firms want to get there but practically they just don't know how. Help and guidance is needed if firms are to get their businesses ready for a post RDR world. So how do you get there?

The important focus must be on being able to demonstrate the value of your proposition to your clients. There is a huge misconception by consumers that advice is free and if this is to change then IFA's need to really show their clients what they are paying for. This means that firms need to take steps to firstly understand the demographics of their client base, conducting an unbiased segmentation of their clients, and secondly to ask their clients what they think about the existing services they offer. Only then can a firm understand how to change their business model and proposition to justify a shift to fee-based advice.

In my opinion there will still be a place for transactional businesses post RDR, but there is much uncertainty and speculation over the business and distribution model for such firms. Those businesses who decide to move to a fee based, truly independent proposition have huge opportunities in front of them, but only if they can get their service proposition right for each segment of their client base.

A strong service proposition, together with effective marketing based on an understanding of the needs and financial behaviour of a particular client segment means that firms can truly maximise those opportunities and build a strong business fit to weather any economic storm.

From Cyberspace to CRM: Technology Delivers Results

Effective client management and service has always been a key driver for business success but in today’s climate it really is absolutely vital. Customers expect far more than just a competitive price, when times are tough they demand excellent service and it is this that will set you apart from your competitors. Technology eases the way, providing slick solutions to help you deliver customer service more quickly and effectively. The continuing expansion of the internet, social networking and email communication makes getting your message to your clients even easier. So which technologies should you consider to maximise the opportunities within your client bank?

A website gives your business presence
If a client is looking for a particular service today they will more than likely ‘Google’ it. The World Wide Web is the largest shop window in the world and the internet savvy consumer has millions of company profiles and brochures at their fingertips so make sure your website stands out. An interesting website is a great way to clearly state what you do and why customers should choose you.

Feedback technology ensures you can really make client opinions work for you
The only way to really understand what your customers want is to ask them for their views. Doing this enables you to benchmark your service proposition and set a solid foundation on which to build your client proposition and marketing strategy. Good client Feedback technology makes the process of gathering feedback simple so that you can focus on the results; and it’s a much more cost effective way to understand what your clients think than manual, paper-based methods. A timely email received by your client with a simple click through to your personalised, branded client questionnaire ensures rapid, relevant feedback. Feedback that you can measure, analyse and act upon.

Social Networking drives referrals
Social networking sites like Twitter provide a free, easy way to get your message across. If you have a really great meeting with a client, ask them to tweet about it. Soon their friends and family will hear about you, along with their work colleagues, and their followers too. This is viral marketing at its most powerful, passing on your message and building awareness of your brand.

Email communication delivers your message efficiency
Email is fast, it’s cheap and it’s an effective way to communicate with clients. If you profile your customers you can send targeted promotional messages to different groups quickly and easily. If you don’t hold many email addresses as yet, start gathering your client’s email addresses as part of your factfind or client review process. It may take a few months but before too long you’ll have an email marketing list that you can use to communicate with clients quickly and easily, perhaps to update them on events you are running or to send out a regular client newsletter.

A CRM or Back Office solution keeps you on top of your client relationships
A solid back office system keeps your client records in one place, manages leads, sales and business activity, and gives you an audit trail of all communication. There are lots of solutions out there to suit all types of organisation so shop around; and when doing so make sure you focus on your business requirements not the functions offered by a particular solution. A good back office solution will integrate with other tools or provide the ability to export your client data so you can use it elsewhere. So make sure your data is accessible so that you can also exploit the power of other essential business tools such as Microsoft Office, Google Docs, Business Intelligence or Customer Insight solutions.
So if you are not making best use of the internet and technology to enhance your service proposition and build an effective marketing and communication strategy, ask yourself a few questions….
Do potential customers know who you are?
Do you know who your customers are?
Do you know what your customers really want?
How well are you servicing your customers right now?

Technology is there to help you build and maintain strong relationships, generate repeat business and grow your business. Thanks to technology business can now be conducted more efficiently, online; it connects us with our clients and allows us to communicate in a more immediate way than ever before. So take a small step into cyberspace and watch your business take a giant leap into a better way to do business.

Get Busy Living or Get Busy Dying

In the Shawshank Redemption, it is Andy Dufresne, a man wrongly convicted, a victim of circumstances out of his control and played so poignantly by Tim Robbins, who first utters the line “Get busy living or get busy dying”. And he’s right; it really does come down to a simple choice.

Today’s world brings us constant challenges. For those of us in business, never has it been more challenging to grow our businesses, in a climate where consumer trust has all but disappeared and every day the media perpetuates and propagates the doom and gloom. For many business owners the answer is to wait, to ride things out until those ‘green shoots’ really do appear. But in truth now is the time to get busy living. Now is the time to take action, to market your proposition, to build confidence in your clients. Now is the time to get your business ready for the recovery.

Holding back on your marketing and business growth plans may seem like the sensible option right now, playing it safe and cutting your costs to ride out the recession, quietly. But while you are busily biding your time, those who are prepared to take advantage of the economic climate right now will ultimately prosper. Those who nurture their clients, those who proactively build and develop their client marketing strategy, those who focus on client relationships and service will come out way ahead of those who sit back and wait.

There are companies out there who are thriving during this recession, and why? Because their focus is on growth, expansion, new ventures; they are taking advantage of the current economic climate. Take Tesco as an example; although their sales may have slowed, they continue to thrive. Tesco is set to expand its personal finance arm, seeing an opportunity to compete with the big banks whose reputations have taken such a hit in the last few years. Tesco are actively expanding into what some would consider one of the most difficult markets to be in, they are seizing the opportunity to build on their brand and take new ventures to market. While the banks are busy dying, Tesco is very much living…and thriving.

The recovery will bring investment and consumers will look for financial advice more than ever before. The economic downturn has shown us that simply saving in a bank deposit account isn’t enough; the constant media stories about how the economy has effected every part of society has educated consumers, has given them a better understanding of the financial framework of the UK. The post-recession consumer will be much more financially savvy. They will need and will demand advice. They will turn to those firms who serviced them proactively during difficult times, those firms who they trust, those firms who focused on building their brand and shaping their proposition.

The recovery is on its way, and whenever it comes you need to be ready. Don’t delay, take hold of your entrepreneurial spirit and get busy living.

Segmentation: The Key to Success

To build a strong service proposition, it has become evident that most IFA’s not only need to ensure the advice process works properly but that the client is getting the appropriate service. As advisory firms start to change their business model in light of the impending Retail Distribution Review, they need to consider a robust approach to managing client relationships and this approach should be built around their Contact Strategy and Marketing Plan.

1st – The Exchange have published their white paper research on the “Future of Distribution” in the financial services marketplace. This research highlights over 30% of the FSA regulated firms surveyed were of the opinion that Client Segmentation was the business area which required most change. It also highlights 51% of the firms claimed by 2012 the focus would be on face to face advice for High Net Worth Clients.

Developing the right approach to client relationship management will help demonstrate to the client the value of the relationship with the IFA and assist in building long term relationships. This is what lies at the heart of relationship marketing and is why Client Segmentation is so important.

Initially it will be necessary to consider the structure of your client base. Once the groupings have been decided you then need to start the communication process with the clients. As the relationship develops with the client and their circumstances change it will be necessary to review the client segments.

The challenge for the IFA today is to accurately segment their client base. Subjective segments based around the last time they saw a client or what they bought is not enough. It is also important to distinguish between segmenting a client base to understand the financial behaviour of a client and using basic client information to flag a birthday or policy anniversary.

Identifying High Net Worth clients will become more business critical as will identifying other types of clients who will become high net worth in the future. Technology has an important part to play in this process to ensure the segmentation exercise can be done as time efficiently as possible.

The ideal position is an approach which allows the IFA to produce an un-biased segmentation of their client bank and then measures ongoing customer satisfaction to not only demonstrate a client is being treated fairly but also as a means of continually shaping service proposition, generating new business and obtaining introductions to new clients.