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Challenges can become opportunities

19 September 2017Jonathan Faurie

Since the beginning of the year, South Africa has been through a proverbial roller coaster when it comes to the economic environment that the country finds itself in.

We have had to live with increased petrol prices and rising interest rates, poor political decisions which has affected investor confidence, and credit downgrades which is very much a fall out of the aforementioned challenge.

In the middle of all of this is the client, a person wanting to save towards their retirement while trying to navigate the storms and mixed messages which surround them. During this time, they need the advice of an experienced guide in the financial adviser. Yet, these guides are also trying to navigate their own way through a new world.

Take control

Clients are not worried whether their financial adviser has their own problems to deal with. It seems that the shoulders of these advisers, men and women alike, need to be proverbially broad as they are expected to make clients the centre of their universe.

Speaking at the Sanlam Glacier i3 Summit in May, Avishal Seeth – Branch Head of Simeka Consultants and Actuaries in Gauteng – said that in order to achieve this, advisers need to put themselves in the pilot seat. He added that like Captain Chesley Sullenberger – the retired US Airways pilot who landed flight 1549 in the middle of the Hudson River – advisers need to make decision based on the information on screens which are in front of them, and years of experience even when conventional wisdom advises otherwise.

“The thing with hindsight is that it is not an exact science. Work colleges and other people within the industry will look at the decisions you make and question them. However, they do not know what your client is going through. You are making decisions based on their needs and their emotions once the decision is made. As long as clients trust you, trust your instincts,” said Seeth.

The changing landscape

It seems like we write, and talk about this a lot in the industry. Technology – like regulation before it – is the single most talked about topic in the industry.

The Fourth Industrial Revolution has had a major impact on the industry and has introduced a pace of change that is so quick that some are finding it hard to keep up.

This may be the challenge facing some advisers. But instead of insisting that advisers need to fear this, Seeth suggests that advisers embrace it.

“The important question we need to ask ourselves every day is: how do we evolve advice? How do we use the tools at our disposal to take advice to the next level? In order to do this, advisers need to go back to where they fist started in the industry. Although the landscape was vastly different then, retirement savings was still sold on the principle of trust. Clients trusted you then and will trust you now. You just need to find a way to use technology to your advantage when building trust,” said Seeth.

The new age client

Added to the above challenges is the fact the client of today is vastly different from the ones advisers are used to dealing with. Millennials now form the largest portion of the working population and are in no way similar to their predecessors.

“Millennials have a different approach to decision making. In the past, clients were happy to let advisers make decisions for them. Now while there is no indication that Millennials trust their advisers less, they want to be co-pilots and make decisions regarding their future with advisers,” said Seeth.

Another distinguishing factor about Millennials is that they are inclined to make the majority of their decisions using online platforms, so an adviser needs to ask if they are playing in this space or not.

The dichotomy

An added challenge that is being presented is that while clients are getting younger, the average age of advisers is getting older. There are precious few young skills coming into the industry.

Skills development – and succession planning – is an industry issue that needs serious attention. Perhaps we need to look at mentorship programmes where we guide our youth towards the financial services industry. While it is good that the youth are ambitious and want to all become doctors, lawyers, accountants and judges, there is simply no space for every young member of society to fill these rolls.

The Financial Services Board often talks about the need for financial education. Perhaps mentoring the youth to choose the financial services industry is the first step in this.

Editor’s Thoughts:
There is no set blueprint to overcome the challenges presented above. But if advisers are not aware of the enemy they face, they can plan for success. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

Comments

Added by Kenny, 19 Sep 2017
Mmm, I don't know any youth that want to become one of those professions. All the youth I speak to, want to be viral on their social media. Or, they want to be managers. The trend seems to actually be away from a speciality that requires professional membership and towards generalism or tech or social "hit it big". oh, and good advisors are actually a bit of all those professions.
And actually the regulators need to embrace the technological changes . Regulation holds back the advisors accepting the technology changes, not the other way around.
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Added by Cynical Simon, 19 Sep 2017
I am bewildered at the Editors Thoughts , however the advice to embrace change has become a cliche and to me a sure sign that the person dishing out this advice is as confused as I am and I am not convinced that the millennials are as unique as they are made out to be,WHAT i DO KNOW IS THAT THEIR PARENTS WERE BABY BOOMERS.
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