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How prepared is the Financial Planning profession for the inevitability of Internet advice?

The high street’s inability or unwillingness to compete with Internet retailers is a worrying problem.  It’s a problem for high street retailers predominantly, not to mention the inevitable social issues which will result.

It’s pretty clear to anyone that the Internet is fast becoming a major outlet (if not the preferred outlet) for products and services of every description, though whilst this is not (yet) the death of the high street; it is the unstoppable growth of a powerful distribution route for anyone from book sellers, gadget and clothes sellers - through to providers of professional services.  Indeed, you might ask why some traditional services are still completed ‘manually’ when they can be done entirely electronically at a fraction of the cost and at twice the speed.  Conveyancing is a great example.

When I look at the financial advice profession, I see an industry working hard to build reputation, enhance credibility and aspiring to the highest possible professional standards.  In fact, anyone involved in the world of money is under the spotlight right now, so the current rehabilitation and rebranding of Financial Services is not just desirable – it’s a matter of survival.

So whilst financial advisers focus on good stuff such as professionalism, RDR, treating customers fairly, image and reputation – what are they doing to acknowledge and respond to the inevitable impact of the Internet on their lives and income?

Well, many financial advisers now have a website – though a startlingly high percentage still refuses to accept that the Web has any part to play in their clients’ lives.  Some IFAs also have a Blog; some send out email newsletters; a growing number use social networking websites and increasingly many use video and communication tools like Twitter.  All good stuff again, except for the fact that just about every other industry is much further down the line in their use of these tools, and busily identifying ways to integrate them into their sales, marketing and communication initiatives.  Indeed, many industries are already reengineering and redefining their service propositions around these technologies to make themselves more attractive to increasing numbers of Internet-savvy consumers of all ages and demographics.

Whilst interest in technology and the Internet is increasing rapidly amongst IFAs and financial planners, there is still a huge reticence to accept its inevitability as a means for consumers to obtain financial information, financial advice and to implement advice by themselves.  Whilst there will always be demand for face-to-face financial advice (providing the suppliers of that advice are perceived as trustworthy and credible), much of the reputation those suppliers have will be determined not by the number of qualifications after their name or the number of referrals from existing clients, but online - as increasingly consumers ‘rate’ and review financial advisers on websites and in social networking website forums.  For example, what is the first thing you look at after the price when you buy something on eBay or Amazon?  Yes, the reviews and reputation of the seller – and I for one have decided not to make certain purchases simply based on the reviews the product and/or the seller have received.

And this is important; because latest figures suggest that 78% of us take and trust the advice of peer recommendations on review websites and social networking sites, whilst only 14% of us trust advertisements.  There’s also growing evidence to show that many companies consider the quality of their online reviews and recommendations as more important than their positioning in search engine results.

“But my target clients don’t use social networking websites” many financial advisers will say. 

That’s true to some extent, but it’s changing - changing right now and right under your noses.  And it’s happening faster than you can possibly imagine.

For example, currently the fastest growing demographic on Facebook is women aged between 55 and 65, with males aged 45 to 54 the second fastest growing demographic.  22% of Facebook users are now aged between 35 and 65.  Considering that once upon a time, 90% of all college students in the US had a Facebook account, this represents astounding growth in use of the site by this older demographic. 

But if you want to remain convinced that your clients don’t or won’t use the Internet or Facebook, then that’s fine.  At least do yourself and them a favour by finding out the degree to which they do use the Internet.  Simply add an extra question to your fact find:  What are your three favourite websites?

The chances are they won’t yet say it’s Facebook, but if they do use the Internet at all, they’ll be able to give you an answer.  It may be the BBC’s website, the National Trust, Saga or something else.  The important thing is to find out if they are using the Internet to any degree – and this will help you to determine to what extent they would be predisposed to receiving communications from you online – or indeed learning about financial matters via your own website.

Change is happening, and not everyone wants to meet a financial adviser to help them with their savings, investments, mortgages and pensions.  All the information they could ever need is out there on the Web.  Certainly, they may not have the skills needed to interpret and apply that information to their own circumstances, but you can’t stop them trying.  And as websites get better at helping people to understand financial concepts and financial planning techniques, more and more people of all ages will obtain financial advice in this way.

Of course – YOUR website should be one of those that is dispensing financial information – and this in turn gives you a great many opportunities to put your expertise to good use by creating ‘financial information products’ which people can purchase and use as they see fit.  Because while your financial advice website continues to be little more than a brochure promoting your services, consumers are searching for and finding the information they need and want without having to actually go and see a financial adviser.  And even if they do want to see a fina

Author: Philip Calvert
Posted: Sunday, September 06, 2009 | 4:58:31 PM