Compelling value propositions will aid brokers in post-RDR world
Jacques Coetzer, General Manager of Sanlam Broker Services.
Independent brokers are likely to benefit from a compelling value proposition in the context of the implementation of the Financial Services Board’s Retail Distribution Review (RDR).
Jacques Coetzer, General Manager of Sanlam Broker Services, says South Africans have a dire need for independent financial advice and believes independent brokers play a crucial role to educate clients face to face and assist them to make the right life insurance and investment choices.
In contrast to tied agents, independent brokers can also offer impartial, comparative advice and suggest a range of appropriate solutions for a client’s needs across a spectrum of products and product providers. This, says Coetzer, requires professional experience and knowledge that cannot be obtained from a website or call centre.
He quotes a study in the UK by Standard Life and unbiased.co.uk which found that clients who receive appropriate financial advice typically save nearly double the amount for their retirement than those who don’t seek advice. “Good, qualified and accredited independent brokers offer a significant service to empower South Africans to take charge of their financial destiny.”
How brokers position their value in the context of independent advice will, however, be critical. Coetzer says a value proposition will initially require brokers to take stock of the business and the service that they currently offer clients. Current income and the potential impact of changes should be analysed, as should the activities offered – the type of advice, support services and expertise the practice can provide – and what can be charged for.
He believes a good value proposition should communicate the following:
• Who you are and what you do
• What problems you can solve
• Who your ideal client is
• Why your approach is more valuable than other approaches
• Why you can help people reach their goals
• Why your clients should be prepared to pay for your services.
The broker value proposition should be specific but also simple, outcome-based and believable, compelling and interesting, and easy to communicate. “Crucially, it should be genuine – if you aren’t sure what value you bring to your clients, ask them,” he says.
A well-defined proposition will decrease time with unqualified or uninterested prospects, and will increase the speed with which new clients come on board, Coetzer argues. It will also allow brokers to tailor products and services to their ideal clients, and will show clients and prospective clients that they have their best interests at heart.
“It is important that everyone in a practice is able to communicate a value proposition to anyone at any time. In addition, even though value propositions are normally client facing, they can also be used internally to make sure that the messages you communicate are consistent.”
Coetzer says Sanlam has been engaged in assisting independent brokers adapt to a post-RDR world and ensure the economic viability of their businesses, including providing assistance with drawing up broker value propositions to clients.
“Given the risks faced by broker practices in a changing environment, we want to ensure that they remain meaningful and relevant. Especially in tough economic times, we need to ensure their independent advice remains accessible to South Africans across the economic spectrum in the long term.”
