Looking for tailor made solutions
Over the past few years, financial advisers have faced their fair share of challenging times.
Whether this is because of the economic situation that the country currently finds itself in, the fact that clients are wanting to see more value in the investments that they make, or the combination of the two.
Clients want ultimate value when it comes to their investments, and it is the financial adviser’s role to make sure that it happens. However, this is not always easy. This was the subject of a panel discussion at the recently held 2017 SRP Africa Structured Products and Alternative Investments Conference.
Biggest hurdles
One of the first issues discussed during the panel discussion was a conversation around the biggest hurdles that financial advisers currently face.
“I think one of the biggest issues is finding products that are understandable to both the financial adviser and the client,” said Stephen Katzenellenbogen, Executive Director of NFB Private Wealth Management, “at times, products are sold to clients on face value where there is very little understanding on the intricacies of how the product works.”
He added that there are also times where products are sold to clients where they are unsuited to their needs. Hopefully this will change when regulation (the Retail Distribution Review) has been put into place in its entirety. It also says a lot about every financial adviser in the industry embracing the principles set out by Treating Customers Fairly (TCF).
Black box approaches
For many years, the insurance and investment industries have been governed by the approach that the industry is run by a set of carefully designed products that will cater for the greatest amount of concerns for the greatest sector of the population.
This black box approach has proven to be very effective. However, in a world where more clients are asking how does this work and why does this work, can we say that this approach is appropriate?
“Some advisers are still selling products based on the mantra of: if it looks good and sounds good, then it must be good. Are we treating customers fairly by taking this approach?” asked Robert Foster, MD of Seed Investment Partners.
He added that there is a lot of competition in the industry at the moment, particularly when it comes to the investment space. But as the industry becomes more competitive, the products within the industry are becoming more complex.
“At the end of the day, the risk sits with us. We need to be sure that the client’s investments will eventually achieve the goals that they discussed with us at the initial meeting,” said Sydow.
Editor’s Thoughts:
Perhaps this round table discussion provided the early signs that the days of black box type products are coming to an end? Clients are looking for tailor made solutions. This may well be the next big industry differentiator; if an investment house or an insurer can construct tailor made products for clients while maintaining a hold on the overall cost of doing business, the challenging waters shall part like the Red Sea and clients will flock to the promised land. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
