Build your FAIS-compliant practise on trust

10 November 2009Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

It’s hard to spot the financial adviser in today’s financial services environment. The casual observer probably notices the Financial Services Board (FSB), the FAIS Ombud, the South African Revenue Services (SARS) and other stakeholders before stumbling upon the hard-pressed intermediary! This is part a result of greater regulatory intervention in the domestic financial services environment and part due to advisers shifting essential practice functions to outsourced professionals. Would the same situation hold if financial advisers took a more serious interest in compliance issues?

It’s time for the financial services professional to take a closer look at his understanding and application of the rules of the game. The issue of accountability featured prominently in Anton Swanepoel’s FAIS for Leaders presentation, attended by FAnews Online in Pretoria, 6 November 2009. Anton – the author of numerous books on adapting businesses practices with the FAIS Act in mind – shared some of the insights he gained while researching his latest book:FAIS 2010: the Paradigm Shift!

It’s time to change your mindset

The message we took from Anton’s presentation was that the right attitude is essential in tackling industry challenges. Anton used the upcoming Regulatory I and II FAIS examinations to illustrate the point. Instead of viewing the exam as another time-consuming regulatory burden he urged the audience to think about what the exam meant to their practices. A positive approach allows you to convert your exam preparation into profit! Consider the following statements:

· The FAIS Regulatory I exam requires that you gain an understanding of 95% of the regulatory requirements for financial services providers; and

· You can gain the knowledge required to pass the FAIS Regulatory I exam by covering 20% of the FAIS Act, and 40% of the General Code of Conduct.

If you view your exam preparation as a chore then you’ve already lost the battle. It’s better to tackle the exam as an opportunity to brush up on your knowledge of the rules and regulations applicable to your chosen profession. After all, knowledge of the rules is one way to get the jump on your competitors!

Think of the regulations as a ‘trust’ blue-print

What does a business need to prosper? Anton spent hours trawling through the top management publications of recent years to find a blue-print for success. The successful business package is a dynamic mix of 11 components. The first is people. To succeed you must surround yourself with the ‘right’ people for ‘your’ business! Notice the emphasis on the second word! The ‘right’ person must have honesty and integrity, be competent and possess leadership qualities.

The second element is trust… The FAIS Act is a friendly reminder that trust leads to profitability. That’s why the following quote is often referred to as the golden rule of marketing: “All things being equal, people will do business with – and refer business to – those people they know, like and trust!” This concept is espoused in another management book by Stephen Covey, titled The Speed of Trust. This book defines the dynamic relationship between trust, the speed of completing a transaction and transaction cost. The faster you gain a client’s trust the quicker you conclude the transaction and the less your costs!

What else contributes to a competitive financial services practice? Anton lists component three to 11 as follows: client-centred business practices, a focus on quality, bullet-proof business systems, technology, service excellence, product innovation, marketing, financial management and risk management. When all is said and done, concludes Anton, “FAIS is simply an executive summary of all the business books published in recent times!”

Make regulation your passion

Financial professionals have made mistakes in implementing the provisions of the FAIS Act. One of these errors was the piecemeal handover of regulatory issues to a compliance officer. It’s akin to ignoring the rules of your own game. Anton uses a great example to illustrate this. Although professional golfers like Tiger Woods often wait for course officials to rule on tricky situations, you can be sure they know the rule book backwards and forwards. As the leader in your practice you should know the rules of your industry backwards and forwards too. Use the compliance professional to guide you through the rough spots!

In conclusion, FAIS should not be a chore; but a passion. Anton urges all financial services practitioners to view the FAIS Act and General Code of Conduct as “the cornerstone of the financial services practice!” If you had to describe these lengthy documents in two simple words you will probably go with regulated commonsense!

Editor’s thoughts: All too often we view regulatory requirements as a burden. Financial services professional would do well to change their attitude when it comes to the FAIS Act and General Code of Conduct. These documents actually serve as a blue-print for a bullet-proof financial services practice. Do you agree with Anton Swanepoel’s take on the upcoming FAIS Regulatory exams? And have you worked out a strategy for tackling the FAIS Regulatory I and II exams? Add your comments below, or send them to

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