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What are the key drivers in client acquisition?

Reputation and word of mouth still trump digital marketing for clients choosing which financial adviser they want to work with. That’s according to new research conducted by Lancaster University Management School on behalf of Financial Management Bureau, an advisory firm based in Kendal, Cumbria.

Financial advisory firm Financial Management Bureau (FMB) has tasked students at Lancaster University Management School with a six-month project to find out how people choose a financial adviser.

Modus operandi

The six BA Marketing students who are based in the UK, South Korea, China, Spain and Romania, studied academic papers and third party research, as well as creating their own survey of around 150 people and conducting phone interviews.

They found that the vast majority of people heard about their current financial adviser via either word of mouth (34 per cent) or referrals (24 per cent), with a further 33 per cent learning about them from people including family members, employers or professionals such as accountants.

Only around five per cent of the survey respondents said they would rely on an online search.

Most people’s research into financial advisers (40 per cent) consisted of looking for referrals or recommendations, or via reviews (20 per cent) or news articles (15 per cent).

Respondents to the survey listed reliability and reputation as by far the most important factors they considered when choosing a financial adviser. Price was the third most important consideration, closely followed by breadth of service.

As FMB managing director Liz Beavis explains, “There are so many factors to take into consideration in marketing these days that it can be easy to begin missing the wood for the trees.

“These results are very helpful in reminding us that often the most effective marketers are satisfied clients themselves, who will share their experiences with others. And, of course, the basis of these positive experiences comes from the one-on[1]one service they receive and staff and advisers making the effort to give them extra help and add value.”

Liz, who is also a financial planner within the business added: “People also said they appreciated honest, clear, jargon-free advice that was personalised to them. This is perhaps no great surprise, but it does go to show the value of being down to earth and taking the time to treat people patiently and ‘like human beings’.”

Online factors

The research also found that having a high quality website was only moderately important to many respondents (41 per cent) when choosing a financial adviser, with the important target market of the over-55s placing the least value on this.

At the same time, 91 per cent said that social media had no influence on their choice, with 32 per cent getting their information from newspapers and 28 per cent from email newsletters.

Ruth Power is Director of Business Development at FMB and says that this was a reminder that it was important for advisers to connect with people using a range of media.

“Of course, the research doesn’t cover how much of a negative effect a poor website may have or how much of a part social media may play in subconsciously nudging people,” said Ruth, who is also an entrepreneur in residence at LUMS.

“However, I think the transition to digital is a slow one when it comes to financial management, because we have a lifetime client journey and different clients access media in different ways.

“It’s about managing that transfer to digital; you can’t just flip everything. You have to take into account that still the most important way for people to hear about the business is a recommendation from someone they know and trust.”

FMB has been working with Lancaster University for a number of years, collaborating on projects to both enhance learning for the students and give insights to the business.

Ruth said: “We don’t have the resources or time to undertake this kind of market research, so student projects give our business something extra. They are looking at things as a blank canvas and often see things from a different perspective.”

Liz added: “It’s so refreshing to have new sets of eyes on the business. They have really come up with some interesting findings as to what prompts people to seek advice and how they go about choosing an adviser. This is really important for us to understand, as we go about growing our business and finding new clients.

“I would recommend that other local businesses take a look at how they can work together. It’s great for the students and really injects energy into your business as well.”

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