Without a doubt it’s been hard for many IFAs to keep focus over the last couple of years with a highly changing environment. With the FOFA reforms now behind us, now is a good time for IFAs to think about the target markets best suited to their business.
A target market is a group of clients you can put together based on the similarity of their characteristics. This helps advisory businesses build advice and service offerings that meets the needs, wants and desires of these groups, rather than creating a different offer for every client that walks through the door. So defining target markets and the advice and service packages you offer to them creates business efficiency. This is really called Target Marketing.
So why is now a good time for IFAs to clearly define their target markets?
I believe things are about to get even more competitive. FOFA caused the larger players including banks to put their houses in order. In many cases, these changes might have been long over due. The consequence of this however made them focus on their own advice and service offerings. From a strategic perspective, they want and need to be compliant. They also want to deliver more growth and contribution to their bottom lines. Let’s face it, banks in Australia today are addicted to ever increasing profits and financial advice done well, provides them with another revenue stream.
We have already seen the big four banks offer robust offerings to high net-worth clients through their private bank offerings. I think we should expect to see a greater push by the banks into middle and mainstream Australia, facilitated by their branch networks and new online offerings.
Of course there is no way an IFA can financially compete with a large institution that’s housed full of salaried advisers. There are however other ways to compete and here’s some ideas on how you might position your business for success:
- Build genuine personal relationships. Relationships are something that transaction based businesses like banks struggle to do well. In fact some of them actively discourage advisers from doing it, working under the flawed assumption that people are happy to have a relationship with a bank logo.
- Create strong advice and service packages. Bank advisers only have access to a limited range of products – their own. You have the ability to create best of breed offers for your clients and deliver them in way that actually makes sense to your target market.
- Don’t keep your advice and service packages a secret. If you do something really well for your defined target market, make yourself a leader in the space. Spending some time and effort on building awareness about who you are and what you do. Make this an ongoing part of your business.