• Myra Knoesen - FAnews Journalist

Advisers voice their concerns

The local insurance industry faces a lot of complexities and changes from many sources including regulation, the rapid pace of technology and the connected customer.

FAnews approached a few advisers, to get their take on their concerns for 2018 and beyond because the adviser’s voice, after all, is what matters to us.

Times have changed

“We work in a very dynamic environment and many intermediaries are grappling with changing technologies, increasing regulatory pressure, a greater need to provide holistic financial coaching to clients, and the simultaneous requirement to efficiently run a sustainable and profitable practice,” says Johann Steyn, CFP® at Rainmaker BlueStar Financial Advisory Services, authorized by Sanlam.

“When I think about the real concerns we face as financial professionals going forward over the next couple of years, then it’s clear that we need to be very aware of the bigger picture and trends facing us,” says Kobus Kleyn, Certified Financial Planner and Director at Kainos Financial Services.

“Given the current intermediary age demographics, intermediaries are at risk from becoming disconnected from potential new younger clients, making it difficult to grow their books. As Millennials invest, and ruthlessly bypass anyone who is not adding value, intermediaries must adapt or fade away. The increasing pace of change has created a gap representing an ideal opportunity for a younger generation of connected advisers to engage with younger and aspirational clients,” emphasises Richard Rattue, Managing Director at Compli-Serve SA.

“For existing intermediaries, becoming customer centric organisations will be key through meaningful connection and data analytics. In times past, this meant spending as much time with clients as possible, but in reality, there is of course only so much time in a day, so embracing technology to make clients feel closer to you will be the challenge,” says Rattue.

The real issues we face

“We and our clients face a host of regulations that are applicable to the broad financial services industry. The major concern is the impact on efficiency, profitability, compliance and the intended micro-management by the Financial Sector Conduct Authority (FSCA).

The Retail Distribution Review (RDR), Treating Customers Fairly (TCF), Twin Peaks and the Protection of Personal Information (POPI) Act are major examples of such regulations, and the challenges in this space include increasing commoditisation of investment products and the need to have low cost digital distribution and advanced digital profiling to respond more effectively to customer needs. It is up to us as professionals to proactively minimise the upheaval by finding reliable and cost-efficient models to grow and sustain our practices. During the RDR implementation over the next five years we would have to mitigate the adviser and advice gap which will come about,” says Kleyn.

“Social Media, on the other hand, is undeniable and more so through the various generation gaps. How we use our smartphones, Fintech and social media for branding, differentiation and to enhance our value proposition is paramount to have sustainability within our practices,” continues Kleyn.

“Regulatory changes, from a practical perspective, do often translate to a greater administrative load for intermediaries. This tends to impact the time we should be spending on empowering our existing clients, and on building new relationships,” says Steyn.

“We are also facing increasing cost pressures and running a profitable practice has become more challenging. Advice and proper compliance processes are costly areas of service, and there is also mounting pressure on investment fees in a low-return environment. As intermediaries, our requirements and roles are changing, and thus the support we need is changing too – both in terms of having the relevant technologies at hand and having the right third-party relationships. As a business and an industry, it is imperative that we continue to stay ahead of the curve,” continued Steyn.

In all honesty

“If you take an honest look at RDR and what it aims to achieve, you honestly cannot fault its purpose. Its objective is to guide a historically sloppy industry toward professionalising itself,” says Jason Bernic, CFP® Financial Planning Coach at Old Mutual Wealth.

“Advisers can either embrace technology and ask themselves how they can include it in their advice process, or they can reject it and compete against it,” continues Bernic.

“If commissions fall away altogether you will be left with your advice, but no invoicing solution (my purist approach). We, as a profession, have a long way to go in this space, but the sooner you start thinking about what your business looks like a few years from now, the better off you will be when the time comes to make adjustments,” says Bernic.

Adapt or fade away

“Many advisers are concerned about the imminent changes in the financial services landscape, however, most of these changes are for the benefit of the industry, in pursuit of professionalising it. Those advisers that embrace these changes, instead of fearing them, will be better positioned to flourish. Some of the changes are better considered now, then reacted to later. If you future fit your business, rather than retrospectively correcting it, the transition will be smoother and less disruptive,” continues Bernic.

“Staying abreast would be crucial to ensure we remain sustainable and create wealth on the up while protecting wealth on the downside,” concludes Kleyn.

“Intermediaries will need to know their customers to achieve this – through interpreting data to pre-empt and create a desired service offering that can be billed to accepting clients. Intermediaries who do not adapt, risk becoming irrelevant,” concludes Rattue.

“Financial advisers have to keep abreast of the digital age which enhances the advice process. We bank on our phones, call cars to collect us, and insure via phones. Digital applications enable considerable efficiency and narrows the gap between the client and financial adviser. Informative digital platforms are imperative as our future clients run lives from a smartphone,” says Claire Van Wyk, Certified Financial Adviser at Discovery.

“If you can continually demonstrate that you do the best for your clients, you have nothing to fear. You will not only survive – you will thrive,” concludes Bernic.

Editor’s Thoughts: While others see regulation and technology in a positive light, others believe it is complex and will be costly. But, as Bernic stated, some of the changes are better considered now, then reacted to later. Will brokers, advisers and financial planners find it easy to weather the storm and adapt to a new way of doing business? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.

This article is published courtesy of FANews


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