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Humanity counts… Top lessons for advisers and brokers through pandemic

19 October 2020 Gareth Stokes

The future of financial planning and human advice hinges on your mastery of human relationships, partnerships, purpose and trust. These truths emerged during a panel debate held on the first day of the 2020 Financial Planning Summit 2020. The event is an annual initiative offered by The Collaborative Exchange.

The debate, professionally hosted by René Grobler, Head of Investec for Intermediaries and Cash Investments, considered the impact of pandemic on financial services clients. The session kicked off with some worrying statistics, namely that South African families saw their collective net wealth plummet by some R828 billion in the first quarter, and that 2.2 million jobs were lost in the second quarter of this year. 

The value of long term relationships

The Momentum/Unisa South African Wealth Index survey further estimates that 85% of consumers are in some form of financial distress. Jeanette Marais, Deputy CEO at Momentum Metropolitan Holdings (MMH) observed that the pandemic crisis brought with it a new appreciation of the important role that financial advisers play in assisting clients with their insurance and investment needs. “A rational voice, a voice of someone who knows your circumstances and with whom you have had a long term relationship is invaluable during times of panic,” she said. 

The pandemic also revealed the value that ordinary consumers place on health and life insurance products, with the product providers participating in the debate admitting sharp upticks in enquiries for such covers during lockdown. “We have seen huge demand for life insurance and medical schemes, both products which meet a fundamental need,” said Hylton Kallner, CEO at Discovery SA. He added that the group’s debit order experience throughout the pandemic suggested that clients were prioritising their financial protection, despite financial constraints. 

The pandemic and subsequent lockdown nudged industry, spearheaded by financial services providers, to take a massive leap into digital engagement. “We have witnessed a fundamental rearrangement of the factors that define society … anyone who things that our business models are going to be face-to-face and cuddly [as we emerge from pandemic] will be disappointed, we are now in the digital world,” said Dave Munro, CEO at Executive at Liberty Holdings. This statement prompted Grobler to ask: Is the ‘face’ of our future financial adviser still human? 

Is the face of financial advice still human?

The application of technology in introducing health services directly to customers’ homes should give financial planners hope because the typical adviser-client interactions are easily dealt with digitally. Kallner commented on the incredible uptake of virtual consultations by medical scheme members who chose to engage with doctors online; but admitted that virtual interactions would never replace the craving that clients have for human contact. A human advice layer, whether delivered digitally or face-to-face, is also indispensable given the complex product universe. “The products we offer, if we set aside the way they are delivered, are inherently complex and they do need a layer of translation in many instances,” said Kallner. His observations were supported by Marais, who said that even the most sophisticated client preferred a level of human interaction. “Clients will want to reach out, especially in the world of investment, which is complex and typically long-term focused,” she said. 

South Africa’s Financial Sector Conduct Authority (FSCA) would have loved the next inputs to the debate. Marais said that the pandemic would force product providers to rethink their business models and offer simpler products. This would require a shift from an environment where complexity rules to one that features products, that are needs driven, with less packaging and fewer layers of complexity. It is a change that will have to occur in a face-to-face and adviser-led setting. “The majority of the clients we deal with feel the need to converse,” agreed Mike Galloway, COO at Adviceworx. “Face-to- face is here to stay, but [we cannot ignore that] digital channels make it easier to do business”. He pointed out that digital technology introduced efficiencies that would threaten advisers; but that face-to-face businesses that acknowledge and adapted technology would prosper. 

Sustainable businesses empower advisers

There were some positives for financial advice practices through pandemic. Galloway said that small, medium and micro-enterprises had to be nimble when allocating capital, human resource and time. “It was [satisfying to look at our adviser partners through crisis] and realise they were not panicking about next month’s income, because they had built up a solid annuity stream,” he said. These sustainable financial advice practices were able to focus on meeting client needs through pandemic rather than obsessing over generating new income. 

Another ‘good news’ story is that all of the advice-led businesses under the MMH banner have posted record ‘new business’ months in September 2020. “The client need that has been created [through pandemic] is like something you have never seen before,” said Marais. The ability to give research-backed advice using tried-and-tested advice processes were singled out as differentiators in achieving improved financial outcomes for clients. “Independent financial advisers who have built up diversified practices built around long-term clients have been fairly strong through this period, and were delivering a fundamental service to their clients,” agreed Kallner. He added that the financial planning environment was professionalising, rapidly. What lessons has the pandemic dished up? 

A new generation of advisers

Kallner said that social media and other technology channels will enable a new generation of advisers to build practices and client bases in ways we never thought possible, thereby delivering meaningful financial advice. “Our biggest learning from the pandemic is relevance; our greatest success comes from implementing client solutions that are relevant to them,” concluded Galloway. 

According to Munro: “Advisers are not involved in high speed transactional businesses; but in long term relationships that are deeply human”. He noted that the crisis has taught us that the humanity of our industry is what really counts. Jeanette Marais, meanwhile, said pandemic brought a new appreciation for financial advice and insurance: “We see a renewed appreciation for the importance of financial advice … and for good medical aid and life cover”. Financial advisers must not let fear and uncertainty distract them. Stay the course, keep perspective and never lose sight of future possibilities in the world of holistic financial planning. 

Writer’s thoughts:
It is difficult to remain positive given the massive economic fallout caused by pandemic and the ensuing lockdown; but one cannot ignore the opportunities for client engagement that have since emerged. Has demand for health and life insurance increased recently? And would you agree that your clients are more committed to their investment and risk portfolios since the pandemic struck? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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