Clients research online, buy in person

Advisors will have little success selling investments and life insurance online, but they can use the web as a turnkey solution to drive more business their way, says a study conducted by Forrester Research.

According to Forrester’s study, entitled Canadian Trends in Researching and Applying for Financial Products Online, 21% of U.S. financial service consumers have applied for a financial product online. When Forrester surveyed 6,000 Canadian adults, it found only 12% had applied for a financial product online. The majority of those applications were for banking products, such as credit cards and savings accounts, and auto insurance.

Brad Strothkamp, senior analyst with Forrester who authored the study, points out the vast majority of consumers for investment products and life insurance want to do their business face to face, but an increasing number are doing their research online.

“Canadians will educate themselves online because these are complex products. They’re not at this point going to be willing to apply online. I don’t expect that to change in the near future for sure,” he says. “When they get ready to buy, they want to talk to somebody, especially for things like life insurance, RRSPs, RESPs, etc.”

For example, only 5% of respondents said they have applied for life insurance online, compared to the 23% who said they’ve researched these products online.

Strothkamp says these stats highlight an opportunity for service providers to turn researchers into prospects by offering product information online. Strothkamp says websites that excel in driving business are those that offer detailed information tailored specifically to each product and then offer easy access to an advisor or sales representative. Unlike cold calls, these are prospects that you know are interested in financial services.

“One thing that is important [to note] is that just because Canadians aren’t applying online doesn’t mean they’re not researching online, so you have to serve them well. You have to understand how they make choices on these products,” he says. “This is where I see huge opportunities for functionalities like online chat and ‘click to call’ to reach out to people who research online but don’t necessarily want to apply online.”

Strothkamp emphasizes that successful websites also clearly provide product information that matches their marketing goals.

“You have to make sure your website matches those goals, whether its rates or fees or the level of customer service or whatever,” he says. “You have to make sure that information is available and then make it very easy to get in contact with you. This is where we see a lot of firms using interactive help as a way to bridge the gap between the website and making talking to somebody as easy as possible.”

Right now it’s those companies that have a large scale, like the big banks, that are ahead in the online space since they create their own products and have a large network of advisors and sales representatives for researchers to talk to.

Forrester, which does an annual ranking of the bank websites, singles out TD Canada Trust and CIBC as two companies that have excelled at providing easy-to-navigate, informative websites that also provide ready access to customer service for those interested in purchasing or learning more about their products.

Providing strong online sales solutions is imperative for future growth, the Forrester study says, because the youngest age group polled, Generation Y respondents (those between the ages of 18 and 27), have a much greater comfort level with applying and researching online. Almost 40% of Generation Y respondents said they research financial products online, and 19% of Generation Y respondents who have been using the web for 10 or more years said they have applied for financial products online.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com