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Sanlam’s BlueStar model going from strength to strength

13 December 2013 Jaco Coetzee, Sanlam
Jaco Coetzee, general manager of Sanlam Financial Advisers.

Jaco Coetzee, general manager of Sanlam Financial Advisers.

The growing global trend towards specialisation in the financial services industry has led to Sanlam’s BlueStar business model going from strength to strength, with 40% of the group’s financial intermediaries now operating from this supported business platform. Over the past year, the group’s BlueStar businesses have grown more than 20%, representing almost 50% of the total revenue generated by Sanlam’s financial advisers.

"Specialisation has meant more and more financial advisers are choosing to go into business together to offer clients a one-stop shop for all their financial planning needs. Our BlueStar model is one very successful way of accommodating specialist financial advisers to the benefit of both advisers and clients,” says Jaco Coetzee, general manager of Sanlam Financial Advisers.

The BlueStar financial advice "boutique” model was launched in early 2009 in response to specific challenges facing the financial advisory industry, including an aging adviser force, the need to diversify client offerings, and a lack of cross-selling to clients. The key elements of the platform are a small business with one back office, but with three or four advisers who each specialise in certain elements of financial advice, sharing clients.

"Regulatory requirements and a proliferation of complex products over the past few years have led to financial advisers choosing specific areas to specialise in, for example short-term insurance, retirement, life assurance, risk, estate planning and investment planning. It is simply not possible for advisers to be experts on all the solutions in the market. Financial needs also vary between professionals, business people, retirees, affluent clients and labour market entrants, so advisers are opting to specialise in order to identify the most appropriate solutions to meet their clients’ needs,” says Coetzee.

With the BlueStar concept, the relationship is now between the client and the business, instead of between the client and an individual. "Clients still receive personalised service, but it is not dependent on only one individual, which ensures the continuity and longevity of the relationship. Clients can obtain advice for all their financial needs in one location. And a strong back office ensures regular client contact, and the financial advice given is backed by Sanlam which provides security to both the clients and the adviser. Products sold are also not restricted to Sanlam only,” says Coetzee.

Advisers operating from a BlueStar business are thoroughly trained on a 24-month programme called the "BlueTrain”. It equips them with the needed business skills to run their own financial advice business. Legal, administrative and financial support are also offered to make sure the venture succeeds.

About 760 of Sanlam’s 1 900 advisers now work in a BlueStar business or professional practice. The latter is a business that is currently not using the BlueStar brand but which is already functioning as a business. "There are currently 157 BlueStar businesses, and our aim is for 70% to 80% of Sanlam advisers to eventually be operating from these businesses. Within a year or two, we believe that all new advisers will be brought in as associates to advisers within existing BlueStar businesses and learn the trade under the guidance of experienced mentors.”

Coetzee believes the principles underpinning the BlueStar financial adviser business model are "the way of the future. Building personalised client relationships from a small entity enabling specialisation and expert advice covering the whole spectrum of clients’ financial needs, are not only what clients want, but also ensure the future of our financial advisers by allowing them to build equity in their own practices,” he concludes.

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