UCT to prepare SA financial planners for landmark legislation

31 May 2007 UCT Graduate School of Business

The UCT Graduate School of Business (GSB) will run a course this June to address the challenges raised by new financial sector legislation expected to come into effect later this year.

The legislation will require financial intermediaries to choose between selling products for a commission, and giving financial advice for a fee.

The course, called "Advice-Based Financial Planning From selling products to meeting client needs", has been designed to directly address the changes tabled with the release of the National Treasury's Discussion Document on Contractual Savings in South Africa.

According to Robert Macdonald, Director of the UCT GSB course and Head of Xchange Solutions, the indications are that by the end of 2007 every intermediary in South Africa must have made a decision about whether they want to be a fee-only adviser or a sales agent.

"This is the stark reality facing 'brokers' and 'agents'. Essentially, financial advisers will have to make the choice between an advice model and the product distribution model," said Macdonald.

He explained that only those who choose the advice model could be called "independent financial advisers", while those who choose the product distribution model will be known as "sales agents".

Macdonald said there were many uncertainties facing the financial planning community around how to make the transition to a fee-based independent advisor.

"Life for financial planners is going to be very difficult going forward. If the choice is made to become an independent financial adviser, what consequences will this have for the adviser making this decision? Will he or she be able to carry on as usual, simply changing the name of the remuneration they receive from commission to fee?"

These are but some of the issues that will need attention in the financial adviser's business. "In effect, choosing the advice model is likely to require not only a significant re-engineering of an adviser's business, but also the way that they approach and interact with their clients," said Macdonald.

The UCT GSB course is designed to help financial planners understand the transition to advice-based planning and make the right choices in terms of their business, and the way that they deal with their clients. It is a two-day course that earns the intermediaries continuing education credits.

The course harnesses together some of the leading expertise available in South Africa and abroad.

This includes: Jonathan Dixon, the Director General for Financial Sector Policy in the Treasury and chief architect of the National Treasurys Discussion Document on Contractual Savings; Nigel Scott, Director of h4 Financial Planning who will present on the differences between the advice-based approach and the product distribution model; and Kevin Bailey, founder and Executive Chairman of The Money Managers Ltd in Australia who will cover how businesses internationally have taken up the challenge of transitioning to the advice-based model.

The course will not only be dealing with regulatory and business issues, but will also focus on the issues of changing the mindset of both financial planners and clients. To this end there will be a presentation on research conducted by Xchange Solutions and Markinor into what clients are looking for from financial advisers; as well as a session dealing with relationships between clients and advisers, and clients relationship with money.

One of the key roles of an advice-based financial planner is to mentor their clients on a range of issues. There will be a practical session run by the Centre of Coaching at the UCT GSB looking at implementing a mentoring relationship with clients.

Macdonald added that in addition to financial planners, it would be very useful for broader industry players to attend, such as the Life Offices, Asset Managers, Banks, Private Banks, and Unit Trust companies.

"Anybody who is involved in selling financial or investment products, or advising clients on investment or financial matters will benefit from this course." 

"The changes that are coming about will impact on all businesses that interface with financial advisors. The course will also include a panel discussion in which key issues can be raised with the regulator and other key industry players," he said.

The course runs from 18 - 19 June 2007 and is run by the UCT GSB Executive Education unit which has been rated in the global top ten by the Economist Intelligence Unit in 2005 and 2006. Contact (021) 406 1323 for details or email

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