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2014: The year of social media

Financial advisers will make more use of social media marketing and mobile technology to grow their businesses this year, commentators predict.

Wednesday, January 15th 2014, 6:00AM 15 Comments

by Niko Kloeten

Strictly Business owner Tony Vidler says social media is likely to be one of three major trends in technology for advisers.

He expects the other two for 2014 to be an increased use of electronic underwriting and what he calls “mastering mobile”.

Social media such as blogs and social networks offer a great opportunity to prospect for new clients without taking up great time and expense, he says.

The principle is the same as traditional prospecting, Vidler says, but with bigger numbers. 

A person who traditionally would have referred an adviser to one or two people could now refer them to 100-200 via their social networks.

“Research from America shows that 90% of people don’t trust what they read in advertising.  However, more than 90% trust peer-to-peer recommendations.”

However, Advisers have been “very slow” to take up social media as tools for their businesses, Vidler says.

“The Johnny-Come-Latelys will be grappling with how to do that this year; their clients are already there.  Clients want to be talked to on the channels they are using.”

Vidler says the slow uptake by advisers is not due to demographics. The fastest-growing group on Facebook is women over 65.

“They key attribute for successful use of social media as a business medium is speed of thought.  Traditionally as a whole the industry has not been very innovative and speed of thought is the missing ingredient I think."

Industry commentator Clayton Coplestone expects to see advisers increasingly making use of technology to automate certain parts of their businesses.

Coplestone, director of Heathcote Investment Partners, says advisers need to focus on where they have a comparative advantage.

“Advisers need to figure out pretty quickly what they do well and what bits can be outsourced or automated,” he says. “It’s part of the journey I talk about for sole practitioners into being a business.  It’s a three to five-year process at best.”

Coplestone also sees changes on the way in administration, particularly in terms of platforms, where he expects to see competition coming from overseas players.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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Comments from our readers

On 15 January 2014 at 10:24 am darryl said:
Automating the business makes commercial sense, social media... well, that's a bit like saying using a pen or a car will become a trend... state the obvious. Mastering, tease that out as much "social media" blasted out by self acclaimed experts is just noise with very little value with the intention of folk with very little time taking notice. If you want to position yourself as someone who makes a lot of noise and appears like you have too much time on your hands, its not a bad medium... we all like to receive our news or information in different ways and perhaps the trend should be asking clients what they may find valuable and how would they like to receive that?
On 16 January 2014 at 3:30 pm brent sheather said:
Well said Darryl !! From my limited experience of the subject financial advisers propensity to use social media is inversely proportional to their skill as an adviser.
On 16 January 2014 at 4:34 pm MJS said:
Too, true Darryl. Still, it does have a worthwhile and growing place in the prospecting process. It can provide an avenue towards meeting prospective clients you might choose to target (Oechsli style!)
On 17 January 2014 at 11:55 am Kevin said:
It's easy for these business coaches to say use social media, get an awesome website, advertise on google etc but the reality is that old school techniques is what actually works when selling insurance...unless you a spare million or two and can afford to throw money and time down a black hole...what works is activity and seeing the people...don't lose focus on that would be my advice...
On 17 January 2014 at 12:18 pm Tony Vidler said:
Naturally I respect any advisers decision to take their message to market, and generate new business opportunities in whatever method works best for them.

The real point of stating "the obvious" is that it is does not appear to be all that obvious to the majority of people in financial services that there has been a fundamental shift in how consumers engage with businesses, or how consumers collect and absorb information. There also appears to be a lack of understanding throughout professional services of the need for a patient engagement process for acquiring many new customers today, and that digital methods - including social media as ONE digital method - is an excellent way of leveraging an advisers time and resources.

As for Brent's comment...well, that is just another ridiculous "play the man and not the ball" jibe that is customary. It added nothing to the topic or the discussion, it is merely another slag off at anyone who doesn't happen share his view.

Social media is without doubt the number one method of consumer communication on the planet today. with 90% of consumers trusting peer-to-per recommendations, and only about 14% trusting advertising or traditional marketing messages, there is a clear and present danger for those advisers who wish to work on a referral basis if they choose to ignore social media.

Frankly, it is where most consumers are recommending good business experiences to their friends. That is an opportunity, or a threat, for professional services.

On 17 January 2014 at 3:34 pm Andy said:
Well said to both of you. Most of my clients are more interested on how they are going to spend the money that I save them, rather than ways to save money (or spend less). My job is to work in the background for them, not tell them everything I know or do every second of the day.

As a side thought - I am concerned about internet security, especially after recent hacking of several major media centres. Is this a risk we want to expose our clients and their information to? Bear in mind many people still don't even have decent virus protection on their computers... And the trawling for information by media centres is far more prolific than many people realise. People seem very concerned about the NSA powers and GCSB, but are quite happy to put every bit of information about them and their family on Facebook, Linked-In, Twitter, Myspace, and every other bit of social media. These links also come back to you...

Just saying.
On 17 January 2014 at 5:33 pm w k said:
Agree with Kevin. I'm still using old school technique - referrals and people I meet face to face. One thing that has not been brought up (I stand corrected) is qualifying your prospects, and this is very difficult using modern technology to sell insurance unless you are talking about consumables. I must admit that I'm not a prolific producer, but I do qualify my prospects first. And my gut feel says there could be trouble ahead, I give this chap a miss.

You may or may not agree with me, but we as professionals must learn to reject clients, I mean the troublesome ones. To me, that is part of our business risk management.
On 20 January 2014 at 3:01 pm graeme tee said:
Too true w k, a few people cause most of the problems. Sure people use social media to communicate their good ( or bad experiences) to their "friends on facebook" or whatever. Surely if an advisor does a good job and people tell their friends, that is a good old fashioned referral, is it not? If an advisor thinks they can advertise their services by participating in social networking than is simple self promotion, is it not? I think consumers ( to use VT's term ) would see through that and appears the majority of comments here also support that notion.
On 20 January 2014 at 3:26 pm brent sheather said:
Absolutely wk. We need to be very careful taking on new clients and those clients you get via social media are more likely to be trolls. In fact a strategy of no new clients is my resolution for 2014.
On 20 January 2014 at 4:31 pm Tony Vidler said:
I think that the last two correspondents both make excellent points. Well said gents.

Security and privacy are legitimate concerns when using digital, as is the perpetual legacy of anything said online staying online forever, one way or another.

For what it is worth, I am wont to repeat that "word of mouth marketing is where it is at". This is especially true in New Zealand I believe, perhaps moreso than many other western nations. Digital can enhance the word of mouth opportunities, which is why I give it the credence I do.

Having said that, I agree that not all clients are good clients and that good qualification of prospective clients (including rejecting some potential customers) is a very smart business move.
On 21 January 2014 at 12:53 pm billy the broker said:
Today I got via social media contacted regarding buying life insurance. TradeMe/LifeDirect....offering me 20% rebate if I take out an income protection policy.

I really wonder the platform and formula they use how long does their business stays on the books and is it really profitable?

When using social media selling risk covers its always with the tag that they offer discounted premium or some kind of rebate to entice the prospect.

Is that really how insurance should be flogged off to the public just like a can of baked beans on $5 Friday at PaknSave!!

The skill is not getting the client in the first place but retaining them on your base for years to come. And I think it's not old school technique but using your experience with things that work and work well.

From what I'm reading on this thread it seems the majority are going one way. I wonder why...:{)>
On 21 January 2014 at 9:36 pm Kevin said:
No disrespect to Tony intended, I just feel there's a lot of distraction and 'noise' around how to market ones services via online and social media. Our competitive advantage over the likes of trade me/life direct is the personalised service and advice we offer at the coal face...if we hide behind a computer we don't get the sales...well I don't anyway!
On 22 January 2014 at 9:39 am w k said:
If I may, side track from this topic and get some feedback from advisers. What if we get clients to answer these questions on our appointment letter:
1. Names of advisers you have dealt with. (new adviser can then cross reference with previous advisers and decide to take the client or not)
2. Has any adviser/s declined or terminated their service/s to you, if yes, please elaborate.
Then, perhaps, put a warning after the questions that if these questions are not answered truthfully, it may affect the outcome of any complaints against their adviser/s in the future.

If the client did not answer these questions truthfully and eventually file a complaint against the adviser, can this be some form of defense for the adviser?

Personally, I think these questions are important to ask, as mentioned earlier, this is part of our business risk management, and I do not think we need to spend unnecessary money on legal advice to implement this. The associations or professional bodies you guys belonged to should be helping you on such topic. I used to belong to one briefly, but nothing of this nature was ever discussed. For a while now, I do not belong to any as it was of no benefit to me.

Will be good to hear from some of you.

I hope this is of some help to you guys and I want to contribute something even though I'm working my way out of the industry.
On 22 January 2014 at 11:57 am Russell Hutchinson said:
Reminder: this site is social media :-)
On 24 January 2014 at 11:13 am Johnny said:
billy the broker- there's online sales, online marketing & advertising, and social media marketing.

I think you have some of those confused.

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