The local insurance industry faces a lot of complexities and changes from many sources including regulation, the rapid pace of technology and the connected customer.
FAnews approached a few advisers, to get their take on their concerns for 2018 and beyond because the adviser’s voice, after all, is what matters to us.
Times have changed
“We work in a very dynamic environment and many intermediaries are grappling with changing technologies, increasing regulatory pressure, a greater need to provide holistic financial coaching to clients, and the simultaneous requirement to efficiently run a sustainable and profitable practice,” says Johann Steyn, CFP® at Rainmaker BlueStar Financial Advisory Services, authorized by Sanlam.
“When I think about the real concerns we face as financial professionals going forward over the next couple of years, then it’s clear that we need to be very aware of the bigger picture and trends facing us,” says Kobus Kleyn, Certified Financial Planner and Director at Kainos Financial Services.
“Given the current intermediary age demographics, intermediaries are at risk from becoming disconnected from potential new younger clients, making it difficult to grow their books. As Millennials invest, and ruthlessly bypass anyone who is not adding value, intermediaries must adapt or fade away. The increasing pace of change has created a gap representing an ideal opportunity for a younger generation of connected advisers to engage with younger and aspirational clients,” emphasises Richard Rattue, Managing Director at Compli-Serve SA.
“For existing intermediaries, becoming customer centric organisations will be key through meaningful connection and data analytics. In times past, this meant spending as much time with clients as possible, but in reality, there is of course only so much time in a day, so embracing technology to make clients feel closer to you will be the challenge,” says Rattue.
The real issues we face
“We and our clients face a host of regulations that are applicable to the broad financial services industry. The major concern is the impact on efficiency, profitability, compliance and the intended micro-management by the Financial Sector Conduct Authority (FSCA). The Retail Distribution Review (RDR), Treating Customers Fairly (TCF), Twin Peaks and the Protection of Personal Information (POPI) Act are major examples of such regulations, and the challenges in this space include increasing commoditisation of investment products and the need to have low cost digital distribution and advanced digital profiling to respond more effectively to customer needs. It is up to us as professionals to proactively minimise the upheaval by finding reliable and cost-efficient models to grow and sustain our practices. During the RDR implementation over the next five years we would have to mitigate the adviser and advice gap which will come about,” says Kleyn.
“Social Media, on the other hand, is undeniable and more so through the various generation gaps. How we use our smartphones, Fintech and social media for branding, differentiation and to enhance our value proposition is paramount to have sustainability within our practices,” continues Kleyn.
“Regulatory changes, from a practical perspective, do often translate to a greater administrative load for intermediaries. This tends to impact the time we should be spending on empowering our existing clients, and on building new relationships,” says Steyn.
“We are also facing increasing cost pressures and running a profitable practice has become more challenging. Advice and proper compliance processes are costly areas of service, and there is also mounting pressure on investment fees in a low-return environment. As intermediaries, our requirements and roles are changing, and thus the support we need is changing too – both in terms of having the relevant technologies at hand and having the right third-party relationships. As a business and an industry, it is imperative that we continue to stay ahead of the curve,” continued Steyn.
In all honesty
“If you take an honest look at RDR and what it aims to achieve, you honestly cannot fault its purpose. Its objective is to guide a historically sloppy industry toward professionalising itself,” says Jason Bernic, CFP® Financial Planning Coach at Old Mutual Wealth.
“Advisers can either embrace technology and ask themselves how they can include it in their advice process, or they can reject it and compete against it,” continues Bernic.
“If commissions fall away altogether you will be left with your advice, but no invoicing solution (my purist approach). We, as a profession, have a long way to go in this space, but the sooner you start thinking about what your business looks like a few years from now, the better off you will be when the time comes to make adjustments,” says Bernic.
Adapt or fade away
“Many advisers are concerned about the imminent changes in the financial services landscape, however, most of these changes are for the benefit of the industry, in pursuit of professionalising it. Those advisers that embrace these changes, instead of fearing them, will be better positioned to flourish. Some of the changes are better considered now, then reacted to later. If you future fit your business, rather than retrospectively correcting it, the transition will be smoother and less disruptive,” continues Bernic.
“Staying abreast would be crucial to ensure we remain sustainable and create wealth on the up while protecting wealth on the downside,” concludes Kleyn.
“Intermediaries will need to know their customers to achieve this – through interpreting data to pre-empt and create a desired service offering that can be billed to accepting clients. Intermediaries who do not adapt, risk becoming irrelevant,” concludes Rattue.
“Financial advisers have to keep abreast of the digital age which enhances the advice process. We bank on our phones, call cars to collect us, and insure via phones. Digital applications enable considerable efficiency and narrows the gap between the client and financial adviser. Informative digital platforms are imperative as our future clients run lives from a smartphone,” says Claire Van Wyk, Certified Financial Adviser at Discovery.
“If you can continually demonstrate that you do the best for your clients, you have nothing to fear. You will not only survive – you will thrive,” concludes Bernic.
Editor’s Thoughts:
While others see regulation and technology in a positive light, others believe it is complex and will be costly. But, as Bernic stated, some of the changes are better considered now, then reacted to later. Will brokers, advisers and financial planners find it easy to weather the storm and adapt to a new way of doing business? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.
Comments
Added by Derek Smorenburg, 06 Dec 2018SIMPLE SOLUTIONS - SAIFAA has created a ‘unique’ SA First Formal set of Solutions that will assist the whole Financial Services Community with our first steps taken in September 2018 as per the Martin Hesse of Personal Finance Editorial and the SAIFAA Wheel & Agenda (both available on request).
The SAIFAA Post Retirement Planning Certification (PRPC) Program that incorporated the ‘Psychology of the Journey towards and into Retirement’ unique concept (The Psychology of Retirement – Dr Hannetjie van Zyl-Edeling, Proactively Preparing Clients and Spouses for Retirement – Paul Britton of The Bridge Fulfilling Retirement Program, Trends in the Retirement & Frail Care Accommodation Industry – Arthur Case CEO of Evergreen Group and Lize de la Harpe Powers of Attorney, Curatorship’s & Legal Costs) opened the opportunity to all to change and enhance the role of our IFA Members when they engage with Clients, Spouses and Families who need to be totally incorporated within this Journey towards and into Retirement!
All the rest of the points you have correctly raised will be so much easier to implement once the whole Financial Services Community embraces the PRPC program!
SAIFAA will be running 2019 PRPC Programs open to the entire Financial Services Community and our IFA membership.
Derek Smorenburg
CEO & Founder of South African Independent Financial Advisors Association
+27 (0) 82 441 5000
+27 21 712 3284 (Home Office)
derek44@mweb.co.za
https://saifaa.co.za/
SOUTH AFRICAN INDEPENDENT FINANCIAL ADVISORS ASSOCIATION
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My concern is that even with thousands out of the industry, those who stayed behind in the industry, cannot service the customers due to the numbers that has to be served and the cost involved. It has always been a case that only those who can afford assurance, get serviced, and preferably the high income group. This will become the norm , if it is not already, to no benefit of the customer.
We are most probably in the most regulated industry and the rules are made by people, very young, with no insight , working for a salary.....it will be a declining industry as we know it since very few new entrants are prepared to work under so many legislation.
The cost involved is horrendous end escalating whilst the assurance companies just make bigger profits and the intermediary's income shrink by default.
My point is simply that I am not against a better deal for customers at all, I have embraced almost everything that has occurred thus far, but do not know for how long it will be sustainable, the crooks will also alway be there..... Just my 2 cents opinion
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If commissions fall away altogether there won't be a future for the industry.Even as things are the old guard with established client bases are retiring and dying with few young advisers to take their place.
Everyone seems to be reluctant to admit that the hard implementation of RDR will be catastrophic for the industry and people like Bernic will find themselves unemployed. Report Abuse
I disagree completely ,by far most of them(us) agree with the fact that the industry needed a clean up.Everybody would love to be deemed a professional and everyone would love simple ,fast efficient technology.
Unfortunately the vast amount of interference this tsumami of legislation has caused has probably resulted a knee jerk reaction from the industry in general.To a lesser degree technology.
While government robs,plunders and steals,while criminals are all around us with very little policing,while our legal system is overburdened,clogged and not at all a hundred percent functional ,how can you expect the intermediary/ broker to feel about spending 50-60% of his time trying to obey onerous and often nit picking legislative changes.
So yes I as an adviser for the past 30 years would love to see positive legislative change and I embrace this wholeheartedly, but frankly this I believe could have been done in a far simpler way by perhaps developing FAIS legislation from a different simpler and more efficient perspective not 30,000 pages of ever growing bumph per individual in a one size fits all approach.
The article is correct though, we are concerned,how much longer can we cope and why should we pay for it(legislation) as well?
By the way the same applies to technology,much of it inefficient and cumbersome ,slowing the intermediary/broker down more and more.
Just my penny's worth guys.
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