Dedication, hard work and planning key for advice, adviser success

One of the major challenges facing South Africa’s financial services sector midway through 2024 is its continuing inability to reflect the national demographic. You need only spend a few minutes tallying up the age, gender and race stats at an assembly of financial advice professionals, or insurance and investment experts, to expose significant shortcomings under each heading.

Government seems to have the transformation side of the equation sewn up, through significant amendments to the country’s Employment Equity Act. The President signed the Employment Equity Amendment Bill into law on 6 April2023, and it became effective from 1 September 2023. These amendments pave the way for the minister of employment and labour to set employment equity numerical targets for different sectors of the economy, including financial services, and to regulate compliance with same. Such interventions will work at an institutional level; but it is less clear how effective they will be in the independent financial advice (IFA) segment. 

Refocusing on an age-based transformation

This writer reckons addressing the age, gender and race issues in financial planning could be as simple as attracting more young advisers to the profession. However, by shifting your focus from transformation to growth, you will soon unearth a more fundamental problem that constrains the profession. Too few people even consider financial advice as a potential career, and in the unexpected event that they do, there are too many obstacles that make it difficult for young entrants to succeed in it. FAnews spoke to Lelané Bezuidenhout, CEO of the Financial Planning Institute of Southern Africa (FPI), to learn more about the struggle that new entrants to the profession face, and how to address same. 

The first part of our discussion dealt with some of the challenges that young advisers face. “One of the primary challenges for young financial advisers is their age; it often takes time for older clients to trust younger advisers due to the perception that they lack a proven track record,” Bezuidenhout said. There is some irony in this observation, being that by reducing the average age across the profession one risks diluting the very advice it peddles. The best way to overcome this is for young advisers to thoroughly prepare for client meetings, always be punctual and maintain professionalism throughout. 

Another challenge emanates from the misconception that advisers make big money, from day one. New entrants to the industry are often discouraged when they cotton on that they are not going to earn millions in commissions. “If young advisers recognise from the beginning that their role is a calling, like being a doctor or an actuary, they will view their career as a journey and not a get-rich-quick solution,” Bezuidenhout said. Young advisers need to realise that building a successful and profitable financial advice practice takes time, and does not happen overnight. As the investment professionals say: it is time in the market that pays off. 

Product provider versus advice practice

FAnews asked whether young advisers were better off learning the ropes as tied agents at established financial product providers or by joining an independent practice? “It really depends on the young adviser’s preferences,” Bezuidenhout said. “Starting at a large corporate means that the young adviser will learn extensively about product advice and how the products of large corporations can meet clients’ financial needs; at large corporates, the young adviser may have access to resources not available at smaller independent firms, such as structured training and induction programmes”. 

Smaller independent practices offer benefits too. According to Bezuidenhout, young advisers at smaller practices may receive more personal mentoring opportunities, which are often not possible in large corporations. Ultimately, the decision of where to enter the market should align with the young adviser’s long-term career aspirations, their preferred learning style and the type of financial advising experience they aim to acquire. “The reality is that most financial advisers start out at big corporates due to few alternatives being available during or immediately following a young adviser’s studies,” she said. It takes between two and seven years for that adviser to learn the ropes and consider a move into an IFA practice, or starting a practice of their own. 

Given this background, we asked what advice the FPI would give someone who was considering starting out on the financial planner journey. “You should meet with a seasoned Certified Financial Planner ® to understand their journey,” Bezuidenhout said, suggesting someone who has succeeded on that career path rather than someone who has tried but failed. You should use this interaction to understand the learning pathway and the requirements you must meet to become a CFP professional. It also helps to become part of a networking group such as the FPI Young Financial Planners Organisation (YFPO) which is dedicated to young financial planners. 

Money remains a major influencer

Money is always a consideration when choosing a career, so it should come as no surprise that remuneration becomes a major part of the ‘stay in the advice profession or not’ debate. “It is crucial for any young adviser to understand the remuneration structure of the financial services provider the intend joining,” Bezuidenhout said. You should explore how your total remuneration package is made up. Does it include a base salary and benefits, for example. It also helps to know how IFA remuneration aligns to client charging in areas like commission, fees and assets under management, to name a few. 

“It is not just about remuneration, it is also about other benefits such as a great company culture, structured learning programs, availability of mentorship opportunities and a future-focused business,” Bezuidenhout said. She noted that factors like work-life balance and professional autonomy are also important. A fair point; but do current fee and remuneration practices encourage younger people to enter and remain in the industry. And more specifically, can youngsters make a reasonable living when starting out? It helps if you compare new financial advisers to new hires in other sectors. 

“It is the same with any profession or career; you must find an employer that matches your remuneration needs and value system,” Bezuidenhout said, before explaining that an employee-employer relationship had to be beneficial to both parties, and that young advisers had to consider their employer’s needs too. “Young financial planners need to understand what they are agreeing to when they accept an employment offer; a professional is a professional, regardless of age,” she said. “Know your worth, recognise your potential and negotiate on that basis. And remember, you will not start out on the highest remuneration package, it takes time to move up the ranks”. 

Some words of encouragement

All that remained was to find some words of encouragement for someone considering a career in financial advice, or someone who had been working in the profession for a couple of years and was on the verge of giving up. The following self-help should resonate across sectors. “Do you have a personal development plan in place, and are you following it?” Bezuidenhout asked. “Giving up might seem like the easy option, but moving forward, though challenging, is more rewarding”. She added that those who persevere in this tough industry often became successful mentors in their own right. 

 “You rarely hear from those who give up because they do not have stories of perseverance and / or the ‘can do’ attitude that saw them through; before giving up, ask yourself why,” she said. Of course, there is always a chance that you are in the wrong career or on the wrong journey. In such cases, it might be worth completing a personality assessment to better understand yourself. Also, consider spending some time with a career counsellor to assess your options. The closing advice: “Success in financial planning does not come from luck but from hard work and dedication; have a plan, and follow through”. 

Writer’s thoughts:

Starting out in a new profession can be difficult; you need to learn the ropes and move through the ranks to make it to the top. If you knew then what you know today, would you still have embarked on a career in financial advising? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].

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