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Financial Professionals Can Learn From Travel Agents

No one uses travel agents anymore, right?

Wrong.

The business of travel planning is alive and kicking, but it has drastically changed within the last thirty years. Case in point? We’re calling it travel planning as opposed to travel booking. The travel agencies that thrive today have learned how to adapt to rather than circumvent the technological advancements of today, and financial advisers should follow suit.

Let’s travel back in time.

What Was & What Will Be

What made a travel agent successful in 1980? One major factor was commission. Agents worked in tandem with airlines to book tickets for clients. Airlines then paid travel agents a slice of the profits. Simple enough.

But in the 1990s, airlines began to reduce commission paid out to travel agents. This, coupled with the rise of the internet and DIY travel planning, meant travel agents were going to have to work smarter than ever to keep their businesses thriving.

Working smarter translated into bringing more value to the table than simply arranging flights. And that meant more than playing a middleman who sells products. After all, clients could simply showroom: see which travel products were out there and then buy them for themselves cheaper than the agents would sell them.

First, enter the big guys, travel agencies you may not even realize are travel agencies: Expedia, Trivago, Kayak. Upon first glance, these websites seem like the travel agency killers. After all, they’re automated and promote DIY planning. So why are we calling them travel agencies?

When some aspect of planning goes awry, or a traveler has a question, a customer can’t always DIY it away. If they could, there would be no need for the many live humans working at the big travel sites. Often, customers need to talk to someone. And that someone is in fact a travel agent.

In other words, when things are going fine, people are pleased with automation. When they’re not, they’re not. 

So are big travel sites the only “travel agents” who have survived? What about boutique companies? The sit down, let’s-discuss-your-plans places?

It’s true: technology has killed off many of these small shops. But, those that thrive offer a unique value proposition: specialty. Travel agents continue to be relevant – particularly where luxury is concerned. While boutique travel agents may not be right for everyone, they fit the bill for those who want a customized experience and are willing to pay for it.

The Rise of Experiential

Virtuoso isn’t exactly boutique. The company is a large travel “network” with more than 16,000 agents. But the company is still a departure from Expedia and the like. One of the beliefs they push is that clients’ money will go farther with a travel agent because they’ll be privy to more perks. Smaller surviving companies are following the same route, perhaps to an even greater degree.

Take, for example, Milk + Honey Travels. Proprietor Brianna Glenn seems to be less concerned with finding the cheapest flights for her clients and more focused on whipping up memorable travel experiences for them. One client raves of a rooftop aperitif in Rome and a boat tour through the Amalfi Coast.

The seamlessness of travel planning: timesaving, ticket buying, etc., is necessary but not sufficient for boutique travel planners. They must deliver exceptional experiences to their clients. And these one-of-a-kind, “in the know” activities are what will keep travel agents in business, especially through younger, more tech savvy generations. Although you may think the opposite, younger generations are becoming more open to the idea that having a travel agent is worth it. This hints toward an upward value on experiential planning.

The trend of wanting experiences versus simple purchases extends far beyond travel agencies. As Kristy Stromberg of Forbes writes, “…as online commerce continues to grow exponentially, the role of the retail store is shifting from purely pragmatic to more experiential. Moving forward, the key to survival for retail stores may rely on their ability to act as a living showcase for products and brands.”

So, what can we as financial service professionals glean from these findings? 

Applying Findings to Financial Services

Firstly, we can learn that automation isn’t everything. Big travel sites embrace a DIY, automated approach with live employees behind the curtain. Second, when it comes to luxury or boutique buyers, there is still a demand for customization and hand-holding.

Taken out of context, these takeaways could be just as applicable to those working in financial services.

We’ve spoken about this before. In ye olden days, financial advisers could and would make a living through product flogging. They were not usually selling their services, they were selling products. Then pricing became (and continues to become) more transparent. Clients began to understand just what they were paying for. Advisers had to justify their fees. And so wholistic and technologically sophisticated planning went on the rise.

Advisers can no longer get away with showroom selling, the same way travel agents can no longer get away with simply booking tickets. Sure, there will be the occasional client satisfied with simply making a couple of product purchases, just as there will be an occasional traveler satisfied with an agent only booking a ticket. But these types of clients have reason to be on the decline.

Lesson One: Big firms need to follow Expedia and not shy away from technology. Most of the time for most clients, advisers should allow robust technology to carry a lot of the load, just as the big travel sites do. They may even want to let clients collaborate or entertain a DIY aspect with the planning process. Of course, human advisers need to be ready when (actually, before) markets drop and when clients have questions. 

Lesson Two: As for “independent” or “boutique” advisers, they’ll have to offer the complete package. In addition to up-to-date technology, they need to give their clients worthwhile experiences. No, we’re not talking about creating a VR simulation in the office or giving away a swag-bag. Rather, successful independent advisers will have to run the gamut of financial planning.

They’ll have to truly prove their value-add. Not by selecting the best products to sell their clients, but by demonstrating innovative tax strategy, showing them how to create and protect a legacy for their children, and weighing more complex decisions like whether they should upgrade their home.

An independent financial adviser must be a planner, an investor, and a life coach at once.

Sources:

http://www.milkandhoneytravels.com/

https://motherboard.vice.com/en_us/article/8q8q4p/why-are-travel-agents-still-a-thing-internet-airlines-agencies

https://www.nytimes.com/2018/01/30/travel/networks-agents-virtuoso.html

http://www.travelweekly.com/Travel-News/Travel-Agent-Issues/Delta-international-commission-cut-could-be-first-many 

http://www.travelandleisure.com/travel-tips/travel-agents/millennials-travel-agents

https://www.virtuoso.com/

https://www.forbes.com/sites/forbescommunicationscouncil/2017/09/19/retail-as-marketing-redefining-the-retail-experience/#3ad06eb6b563