Jacques Coetzer, general manager of Sanlam Broker Distribution.
A compelling value proposition will undoubtedly benefit independent brokers in an RDR world, and the better the match between a value proposition and client selection or segmentation, the more competitive a broker is likely to be. Jacques Coetzer, general manager of Sanlam Broker Distribution, offers tips on how to go about delivering such a value proposition and linking it to your business model.
• A well-defined client base will highlight the need to re-direct certain categories of clients for optimal service. As you engage in client segmentation, you may decide there are certain clients you cannot continue to realistically service within the framework of your value proposition. If you have decided to focus on wealth management for clients who are approaching or are already in retirement, for example, clients in the accumulation phase may no longer fit your value proposition. It is important that these clients are not left out in the cold.
Coetzer says you can assist them in a number of ways:
o You could create distinctive value propositions for different areas of your business. “You could then channel separate resources to each, with the aim of servicing more than one client segment. It is important, however, that your business has the ability to deliver the required services to each of these segments.”
o You could refer clients who are not aligned with your value proposition, to another brokerage where they may be better assisted.
o Another option is self-service – there are many options for clients to ‘go it alone’ and do their financial planning and product selection using various online programmes and tools.
“It is crucial, however, that the transition is handled with the utmost sensitivity, to ensure that no client is left feeling let down. The old adage still rings true: it takes 10 clients to get one good message into the market, but it takes one client to get 10 bad messages into the market,” says Coetzer.
• Communicate your value proposition effectively to your client base. “It makes no sense to have a clear value proposition, but your clients don’t know about it. You can personally communicate with your clients, via correspondence or through marketing, as long as you get the appropriate message and the correct positioning of your business out there,” he says.
Coetzer adds that branding is another important consideration – it should be aligned to the value proposition of your business. “The branding and general ‘look and feel’ of a brokerage focusing on wealth management will be quite different to that of a business focusing primarily on life insurance, for example.”
• Make a clear distinction between the ‘to play’ factors and the differentiators of your business. The ‘to play’ factors will enable you to participate in your market segment, but not to achieve success, which is determined by that which differentiates you from your competitors. Depending on your value proposition, your ‘to play’ factors may include a certain level of expertise, a professional approach and the ability to access information on behalf of a client.
“Factors that differentiate you are the ones that will give you the leading edge, however – they can include the way you deliver your service or use technology, or a distinctive process you use to advise clients,” says Coetzer.
• Depending on your value proposition, decide on the form of your business model. Your business model needs to ensure you can deliver on your ‘to play’ factors and will include details such as your business objectives, targets and processes. It will deal with the ‘enablers’ and resources you need to execute these.
“An effective business model will also help you deliver on your defined competitive differentiators. The key is to channel just the right amount of resources to enable you to participate in your chosen market, but the major emphasis should be on what differentiates your business from the rest. If you want to stand out from your competitors, this is where most of your efforts and resources should go.”
Coetzer says Sanlam has been actively engaged in assisting independent brokers adapt to a post-RDR world and ensure the economic viability of their businesses, including providing assistance with drawing up and delivering broker value propositions to clients. “Especially in tough economic times, we need to ensure their independent advice remains accessible to South Africans across the economic spectrum in the long term,” he concludes.
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