When was the last time you made a significant purchase on the high street? A while ago, I’d imagine. If you’re anything like me, you probably did some research online, then went down to the high street to have a look at whatever it was in the flesh, and then bought it online. Many retailers are aware of this, and its effect is that they’re closing high street shops. They’re just not economically viable any more.
It’s a phenomenon that has parallels with the way that many perceive that aggregators are encroaching on financial advisers’ businesses, and it’s an easy parallel to draw. The truth is somewhat different though, after all, getting a mortgage isn’t the same as buying a new TV.
Rather than aggregators cannibalising advisers’ businesses, they may well be helping them
We supply most of the UK’s aggregators with data and we’re seeing an interesting pattern emerge. While many consumers are indeed doing their research on aggregator sites, for those who don’t complete the journey themselves, they still need a broker. Anecdotally, we’ve found that consumers want to educate themselves on what’s available, and what might be suitable, but need the advice of an expert to check their working.
It’s clear from this that rather than aggregators cannibalising advisers’ businesses, they may well be helping them. The time previously spent on talking through products and explaining or working out the benefits is drastically reduced, and customers are - through the actual act of research - far clearer in what they actually need.
What this means is that, far from being competition, aggregators may well end up being beneficial for advisers. However, for this relationship to succeed it does need to be symbiotic. If the scales tip too far in either direction the delicate balance is lost, and we may see a reduction in the number of brokers or in the prevalence of aggregators. Neither of which would be good for the consumer as can be evidenced by the decline in high street shopping, and the high street itself.
This path created by consumers - who have essentially created a desire path to the hybrid model that has been talked about for many years - shows us exactly how people look for financial products, and it would make sense for the industry to make that journey easier. If some consumers want to do their research before buying, then we should create better mechanisms for them to do so. If some want to buy online then let’s help them do that. And if some will only buy if they can talk to a real live person, then let’s help them speak to someone. It’s up to the industry to ensure that people looking for financial products are not just well served, but actually helped along the journey. And that can only happen when the industry works together.
While a shift in the balance between brokers and aggregators may not be as visceral as the sight of a high street of boarded up shops and betting outlets, it is no less important for the financial health of consumers. Perhaps it’s time to bury the hatchet?
