Can Social Media help IFAs battle new competitors and the effects of the upcoming Retail Distribution Review? In January 2013, the Retail Distribution Review (RDR) will take effect, banning independent financial advisers (IFAs) from receiving commissions from financial services companies, opening up a radical change to the industry. For the first time, IFAs will need to collect fees directly from their clients. The rules could not come at a more competitive time in the industry. It is likely that IFA’s will prefer to deal with wealthier clients to achieve higher consultancy fees, leaving the general public with and increasing knowledge gap and no obvious place to turn for independent financial advice. So what can financial services companies do to engage directly with their customers? Social Media can help, and here's how.

1. It is time for the financial services market to take social media seriously

2. Exhibit One# Changing legislation

3. The Retail Distribution Review (Jan 2013) will forbid IFAs receiving commission from financial services companies

4. IFAs will need to demand fees when the commission dries up

5. Less than 15% of households currently seek professional financial advice, so charging won’t help

6. Consumers are turning to friends and family for free financial advice

7. Judgement One# A large advice gap is forming

8. Exhibit Two# The social consumer is maturing

9. 68%of the Facebook audience are between 18-44, compared to 45% of the general population UK Population Facebook Population Source UK: Office National Statistics Source Facebook : Social Bakers

10. And social users are actively using the social conversation to influence their purchase choices Has social influenced your buying decision? Source: econsultancy.com

11. And which buying decisions are most influenced? 43% Bought financial services as a result of a recommendation via social networking friends 26% Bought clothingas a result of a recommendation via social networking friends 25% Bought flights/car hire/ hotels as a result of a recommendation via social networking friends Source: Moneyfacts.co.uk “Social media used to choose financial services” March 2010

12. Judgement 2# Social audiences should be ready to receive credible advice

13. Exhibit Three# The current players are not ready

14. Social is where PR, marketing, product and customer service all collide, in public

15. Don’t treat social media like a marketing channel but a businesscommitment to conversation with customers

16. Real or not?This un-moderated activity is damaging the NatWest brand #FAIL

17. Lloyds TSB broadcast some advice well on YouTube but offer a game on Facebook rather than conversation #FAIL

18. Morgan Stanley invested hugely in an integrated online and social platform But forgot their customers were time poor and really wanted a mobile application #FAIL

19. SUCCESS IS A CONSISTENT USER EXPERIENCE WITH CHANNEL AGNOSTIC STORYTELLING

20. You need buy-in right from the top to bring together the experts from across the business

21. first direct use social transparency to prove their business model works

22. Judgement three#Significant business change is required to take advantage

23. Exhibit Four# The innovators are circling

24. Wonga used social to assess lending risk.They measured desire and ability to repay. Then made it transparent and fast...

25. ....and achieved a 5% default rate compared to the 25% market average

26. Wonga.com is a very simple offering, yet to be tested measuring long term risk.But...

27. “Think, where else do speed, convenience and transparency interest the consumer banking customer? So our vision is bigger than short-term loans.“ Errol Damelin, founder Wonga.com

28. Aggregators are using branding to forge strong customer relationships 3.2m Video Views 50k Twitter Followers 785k Facebook Likes Price comparison sites earn over £650m a year in commission Source: YouGov 2011

29. Judgement Four# It is time for the traditional providers to reclaim their market

31. Social consumers have the appetite

32. Significant business change will provide a return

33. It is time to actISEARCHM.COM