The demise of Thomas Cook is likely to be well debated and dissected. Brexit uncertainty might have encouraged a decline in bookings in recent years, but the root cause of the failure is more likely a change in consumer behaviour.
Put simply, we don’t visit travel agents to book holidays any more. We log on to our devices and compare a wide range of deals before buying the most competitive. Thomas Cook simply failed to move with the times.
It’s a shame, because Thomas Cook had real brand equity. Many of us still get nostalgic over brands such as Blockbuster and Woolworths.
These businesses didn’t fail because we fell out of love with them, but because they weren’t prepared to accept the world was changing.
There’s a lesson here for financial planners. Our world is changing too. One of my biggest bugbears as a financial services marketer is spotting the signs of this failure to adapt to change. It’s the financial adviser who still believes their value lies in the products they recommend. Or the adviser who relies on referrals from existing clients and, therefore, thinks they have no need for a modern website.
A changing market environment won’t kill your business overnight. It’s more like death by a thousand cuts. You might not notice your client enquiries gradually drying up, as they turn to new ways to find their professional advisers. The loss of a client here and there can be easily justified as natural wastage.
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Then you realise the business isn’t looking quite as healthy as it once did. Perhaps you blame the ever-growing burden of regulation or that inflated professional indemnity insurance premium you paid this year. You point the finger at a change in the algorithms used by the adviser directories, which no longer serve up as many of the right client enquiries. Perhaps you blame Brexit.
But in truth, that slow failure was down to you refusing to accept that change is a constant and something we must look squarely in the face on a daily basis. While your competitors were learning the art of storytelling, behavioural coaching and remote delivery of services, you stuck to your knitting and hoped your clients would remain loyal forever.
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I’m pretty sure Thomas Cook will serve as a wake-up call for some financial planners. They will want to rethink how they do things today and what their business might look like in a decade.
One of my favourite quotes about change comes from Microsoft founder Bill Gates, who once said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”
Martin Bamford is a chartered financial planner at Informed Choice
Follow him on Twitter @martinbamford
Very good points Martin. I was interested in the use of technology algorithms which keep prices artificially high for consumers not just in Insurance but in hotel rooms and many other areas of life. Paul Lewis ably demonstrated this with Car insurance on Money box BBC 4. Technology can do some very heavy lifting with process. The key on how we tell our story is important and interestingly ” Fake News ” and misrepresentation of information and accuracy on socia media and the internet can be lost in the algorithms by error or intent.
Valid points, but there is still room at the higher end. Using your example of travel. There are still plenty of people who continue to use travel agents (Me included). This gives us access to some niche travel companies such as Azure, Prestige and Beachcomber, who generally have rather better venues and hotels and a superior service. (EG.Private transfers from and to airports).
Furthermore when on occasion there is a problem (and I have encountered to fairly major ones – not the fault of the agent or tour company), one call to the agent got it sorted. Booking online means you are on your own with any problems.
So in the same way, there are still people who have a life and would rather go to an adviser/planner to sort things out than fiddle around themselves. I used to tell my clients that I was their financial travel agent.
The DIY brigade are in the main at the lower end and I never found that to be a particularly worthwhile sector but as they say À Chacun Son Goût.