More than half of IFAs do not market their business, relying still on recommendations, research has found.
The study by London-based IFA consultancy firm Harrison Spence found 50.3 per cent of advisers rely on word of mouth and recommendation and don’t feel the need to market their business.
Speaking exclusively to Financial Adviser, Brian Spence, a managing partner of Harrison Spence, said: “A truly business-minded IFA would usually want to build profit and value in their business by generating further enquiries, developing a business plan to grow the business and recruit around that.
“The figure also indicates that nearly half of IFAs are not seeking to segment and attract the right type of enquiries from the right type of prospective client. It’s a reactive, rather than a proactive approach.”
Mr Spence suggested the fact many IFAs have enough business without marketing themselves could be a symptom of the RDR reforms which have lead to many advisers leaving the industry.
The RDR, which came into effect in January 2013, was aimed at increasing the professionalism and knowledge of the financial advice sector.
According to the research, 25 per cent of IFAs are marketing and carrying out PR locally to generate the right type of enquiries from higher value clients.
Almost one fifth - or 19.5 per cent - are using tools such as search engine optimisation and email marketing to attract clients.
Mr Spence recommended that IFAs hire professional marketers to help them sell their business, saying now was a good time for IFAs to market themselves with strong demand for advice, particularly among clients “orphaned” as a result of RDR.
Modelling work published last month by Towers Watson on behalf of the FCA into the size of the “advice gap” caused by RDR found the sector has a surplus of around 5,000 individuals.
The report, published alongside the two-year post-implementation review of the RDR, cites the latest regulatory data which shows there are more than 31,000 individuals with a statement of professional standing confirming they are qualified to deliver advice.
Adviser view
Donna Robertson, an IFA with Chesterfield-based Jones & Co Independent Financial Advice, said: “Word of mouth is good because it means there is a littly bit of trust there and someone has had a good experience with you but we do do a little bit of advertising so it is a bit of both.
“Every adviser is a littly bit different and some only want clients with a certain amount of wealth but we are happy to speak to anyone so it works for us.”
