Recent announcements from online-only brokers adjusting their business models or even closing consumer-facing advisory businesses show the difficulties of this sector.
Have these changes demonstrated the adage that it costs five times more to acquire a new customer than to retain an existing one?
Although in this instance five times might be rather stingy as internet acquisition costs can be significantly greater.
This outcome would not have been through the poor performance but rather the difficulty an internet-only intermediary has engaging a wider market through the internet alone.
Google, Twitter, Facebook and other social media platforms provide the opportunity to engage the UK consumer market, outside of traditional media channels, at a perceived low cost to their curated and engaged consumer bases.
Unfortunately, pay per click or view models can be tricky beasts to configure and effectively utilise, unless money and time are not restrictive factors to testing, checking and testing again.
Financially related keywords come at a premium: first from the auction style of bidding and everyone gunning for the prized number one slot; second that specific groups of keywords are inflated to discourage fraud.
This isn’t to say that pay per click cannot be an effective route to market, but one must acknowledge it can be troublesome and expensive for specific industries who, cost-wise, start with one hand tied behind their back.
There is also an assumption that social networks are the correct locations for engaging customers with financial products.
However, on occasion where the various algorithms had decided I was thinking of moving house, the adverts of online brokers and robo-advisers provoked some brutal, unforgiving and often unfounded comments from others about these companies and financial services in general.
Stay classy internet.
So are Facebook or Twitter necessarily the platforms people use to start looking for a mortgage?
Is the online mortgage broker or robo-advisor presenting themselves to the client at the appropriate point of the decision-making process?
Is it possible to position the advice process closer to the client in an online form beyond simply searching for a mortgage?
Pure online brokers and robo-advisers are pioneering the mortgage advice space and pay per click will generate huge revenues, albeit probably not for the intermediary and any activity in this space needs very close monitoring.
Of course, retention will remain the cheapest and most fruitful way of servicing clients.
Here technology continues to deliver great client outcomes at a fraction of the cost with configurable automated reviews tied into an integrated diary and visibility to ensure that opportunities are actioned.
This ensures advisers are re-engaging with their client three or six months before any deal end dates and that the client is contacted by the adviser at the start of their decision making, leveraging that already existing and trusting relationship.
The funny thing is, client retention, not acquisition, is a far better candidate for online interaction and doesn’t involve those excessive costs.