Advisers face hard truths on compliance, remuneration and trust

There is no shortage of bad actors operating on the fringes of South Africa’s financial services industry. Each year, the mainstream media runs dozens of stories about get-rich-quick scams and Ponzi schemes, each article detailing how thousands of victims lose their life savings after being reeled in out of greed or desperation.

Blaming advisers for criminality

The second day of the FPI Convention 2025 offered a rare opportunity for your writer to listen to and reflect on how his fellow financial journalists view trust within the financial planning profession. Author and journalist Mandy Weiner took to the stage to moderate a panel discussion under the title ‘rebuilding trust in financial planning and advice’. It was a somewhat skewed conversation based on the premise that mostly upright advisers were somehow to blame for outright criminality. 

In her introduction, Weiner said financial planning professionals would have to focus on authentic client relationships, meticulous governance and ethical practices to address the trust deficit. Ryk van Niekerk, an award-winning journalist and Editor at Moneyweb, admitted there had been plenty of scandals over the years but argued that a small minority of advisers was giving the entire industry a bad name. “Most qualified financial advisers are really good, providing excellent advice,” he said. “The industry is trusted more often than not.” 

On the negative side, there is a perception that financial planners belong to an “elitist industry for rich people” and that remuneration models are out of touch. Journalist and author of Maya on Money, Maya Fisher-French, took a similar position, saying there was something wrong with a world where consumers sought advice from journalists and finfluencers rather than going to an adviser. “There is this implicit feeling that when someone goes to an adviser they will be sold a product they do not need, or that the product will be sold simply to allow the adviser to meet a target,” she said. 

Saving clients from costly mistakes

There are countless examples of financial advisers or planners saving their clients from making costly mistakes; on the minus side. But the way remuneration is structured and the prevalence of targets among tied agents can weigh on financial outcomes. 

Author, columnist, and political commentator Justice Malala was the last panellist to deliver opening remarks. He said that trust was easily eroded by the actions of the few, and that financial advice stakeholders had to think long and hard about why people were turning to journalists for advice. 

“South Africa faces a pandemic of distrust of authority and authority figures and of professionals and professions,” Malala said. “It is time to think seriously about [how society views] your profession and industry because this could become a crisis before you know it.” Weiner asked the journalists to comment on some of the recent stories that had left a taint on the financial services sector. 

Van Niekerk offered a ‘different shades of grey’ assessment. The first shade involved outright fraudulent operators who used lies and misrepresentation to steal people’s money; the second with legitimate businesses that lost their way and started doing illegal things; and the third centred on legitimate businesses that used questionable marketing and remuneration tactics that led to a misalignment of financial products and consumers’ risk profiles. 

The excessive remuneration conundrum

Commenting on the BHI Trust and other scandals, Fisher-French said that excessive remuneration structures often contributed to poor advice outcomes. “If there are big commissions on the line, and little due diligence done, then you end up with these problems,” she said. And then she stumbled onto something your writer has commented on before, being that the biggest trust issues seen in the adviser-consumer world stem from unaddressed aspects of the then Financial Services Board’s Retail Distribution Review (RDR) 2014. 

The News24 journalist singled out remuneration as a major challenge before suggesting that product providers move away from product sales targets towards outcomes-based, consumer-centric measurements. Consumers should not be sold a retirement annuity (RA) when something like a tax-free savings account is more suitable. Van Niekerk singled out another unaddressed RDR matter that is contributing to structural problems in the financial advice space, namely adviser categorisation. Consumers have no way to differentiate between a Certified Financial Planner (CFP), a  tied agent, or a broker who just happens to do investments on the side. 

The CFP® accreditation was held up as an emblem of trust in the financial planning industry. “If you have a CFP qualification, you know what you are doing; it is a tough qualification to get and the standards are high,” Van Niekerk said. “It is fair for consumers to assume that ethical behaviour accompanies the academic qualification.” Malala weighed in on this point in the context of the CA(SA) designation for professional accountants. He suggested elevating the CFP as the measure of ethics and professionalism. 

Some spontaneous applause moments

There were a few moments that elicited spontaneous applause from the assembled financial planners, including the back-and-forth on the complexity of today’s financial sector regulation and resulting compliance burden. “We have good regulations that just need to be enforced,” said Van Niekerk when asked about the pending Conduct of Financial Institutions (COFI) Bill. He advocated for “sharp sword” enforcement rather than the “butter knife” approach of today. 

Fisher-French concurred, saying that the volume of regulation did little to protect consumers. She then took a swipe at the many consumers who fall victim to scams despite being warned against them by their financial advisers, again drawing applause from the audience. There is plenty of anecdotal evidence of advisers or planners telling their clients not to put money into a questionable opportunity only for the client to ignore them, lured by the prospect of an irrational return. Case in point, some 34000 South Africans allegedly fell for the promise of large monthly returns, of up to R500000, from a small initial investment of as little as R3500. 

Malala briefly returned to the enforcement issue, lambasting the National Prosecuting Authority (NPA) for its poor performance. His point was that there was adequate financial regulation but inadequate enforcement. By inference, he noted that the Financial Sector Conduct Authority (FSCA) was not the correct institution to tackle rampant criminality. Weiner took this as a signal to begin wrapping up the discussion, asking the panellists what concrete actions the industry might launch to rebuild and sustain trust in financial advice. 

Actions earn trust

“The industry consists of individuals as opposed to a collective, meaning that ethical values are not consistent across the board,” mused Van Niekerk. He encouraged advisers to provide their clients with a good, solid service focused on meeting their financial needs. “Your actions will earn you that trust,” he said, commending the many highly regarded financial planners plying their trade domestically. His closing remark was that client outcomes need to improve, perhaps on the back of new approaches to advising, supported by technology. 

Fisher-French closed with some comments on how rising compliance costs were placing advisers under undue pressure. Her point is that compliance costs are weighing on advisers who do the right thing, while the real harm is being caused by those who operate outside the regulatory net. Aside from the compliance burden, the Fin24 journalist wished for a remuneration solution that would allow the financial advice community to extend its expertise to low-income households. 

Writer’s thoughts:

The fact that so many consumers turn to finfluencers or journalists for financial guidance is an indictment of the advice profession. What can advisers and their institutions do to rebuild trust between clients and qualified professionals? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].

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