20th September 2011

Aegon: Community can grow your business and help your RDR transition

Community can grow your business and help your RDR transition

I want to look at affinity relationships. I thought I would be clever and adopt an old journalistic trick of starting our chat with a dictionary definition of affinity relationships. I googled the term, and to be frank most of the definitions were so boring and long-winded I abandoned that idea. However, what struck me were some 'power words' that jumped out at me. Words such as 'companionship', 'intimacy' and 'community'.

It was community that resonated with me most. I thought back to what Steve Balmer once said. As the CEO of Microsoft he's often asked for his sage advice, and when asked at the start of the century 'how do you make money in the noughties?' his reply was 'community'.

From connections to community

Community is something that some advisers are striving to achieve but not many have got it right in the UK advisory sector.

When we talk about affinity relationships in the advisory market place, a large percentage of financial advisers automatically think of professional connections. It is of course correct that good long-term relationships with solicitors and accountants can be highly profitable and beneficial for all parties, not least the client. However, affinity relationships are more than solicitors and accountants. It's about building up a wider community - one that will make you money.

Where do I start?

Affinity relationships flow from a solid and active business vision and segmentation process. First, you need to identify the clients you want to work with as part of your RDR business transition action plan. Then it's time for what I see as two very logical questions:

• Are these clients profitable?
• Do I have enough of them?

If the answer is yes, then it's very much a nurturing and retention strategy for the business. If not, then an acquisition strategy is required. Both benefit from having segmented your clients.

Any robust segmentation process helps you build an 'identikit' of your clients. It helps you identify socio-economic factors, behaviours, prejudices, hobbies and use of technology. If you want to retain certain segments, then yes, it may be that you need a good relationship with their solicitor or accountant – but I would say that you need to look beyond these.

Get closer to your clients

I would say that once we know a profile of our clients, we can use this to establish affinity relationships with other professionals or partners in their life. We can explore golf clubs, sports clubs, charities they're interested in and even social clubs they're members of. We can use this to be part of their community and either retain or attract them to our business.

If we retain our best clients we can make money. If we attract more of our best segments we can make money. Affinity relationships can help you do this. It is also a wonderful way to prepare for RDR. As we get closer to our clients we can understand what makes them tick, what excites them and even what bores them and include this as part of our RDR client proposition but that’s for another day. If you can’t wait check out www.aegonse.co.uk/businessbrain for all your RDR support needs.

John Joe McGinley Business Consultancy Manager Aegon June 2011

RDR