Market jitters create risk opportunity - Liberty
Market feedback from Liberty Life’s annual financial planning campaign should alert industry professionals to growing interest in risk cover by upwardly progressive families.
Liberty’s educational drive is designed to get more South Africans to plan their finances and begin structured saving. The Magic of a financial plan’ campaign ‘sells’ the idea of proper financial planning rather than products or services, but interaction with so many families in a relatively short period always delivers important marketing insights.
Early feedback from advisers is that worries are surfacing in many families that recent lifestyle gains will prove unsustainable if boom conditions are followed by a downturn.
Howard Fox (pictured), Liberty Life’s Divisional Director: Marketing, notes: “Our campaign drives awareness of the benefit of needs-driven financial planning, but in-depth planning conducted in thousands of homes also produces significant feedback on the state of the market.
“Advisers will be interested to note growing concern – especially among recently promoted executives and supervisors – that their transition to a new suburb, new schools for the kids and new cars for the parents is often based almost entirely on a single income stream.
“Often, the bread-winner’s income has been topped up with incentives that became a matter of course within an economy on a 5% growth trajectory. With growth falling to 3% in 2009 according to official projections, the penny has dropped that sizeable risks are being run. Families could be extremely vulnerable should the bread-winner fall seriously ill or if there is any interruption in earnings.”
This suggests pent-up demand for professionally structured dread disease and continuation-of-earnings covers.
The campaign has again confirmed that the concept of financial planning is novel for many families. Some are engaging in a real review of needs and goals for the first time in their lives.
The latest Liberty promotion proclaims ‘The Magic of a Financial Plan’.
The ‘magic’ refers to the multi-tasking wonders that a good plan can perform; guarding against health and financial risks while building up investments and savings that enable long-term goals to be realised.
The campaign is linked to a competition offering the holiday of a lifetime to the winner.
However, only properly structured plans based on principles endorsed by the Financial Planning Institute (FPI) can be entered for ‘The Magic of a Financial Plan’ contest.
The consumer with the winning plan will go on a magical two-week holiday for four, including a week at Disney World Orlando and a weeklong Caribbean cruise. The prize is worth R250 000.
Plans must follow the rigorous six-step FPI process. The planner must:
- Establish and define a client-planner relationship;
- Assemble relevant client data and define client goals;
- Analyse and evaluate the client’s financial status;
- Develop and present financial planning recommendations and alternatives while drawing up a Record of Advice and suggestions;
- Discuss plan implementation;
- Ensure ongoing monitoring of agreed recommendations.
Fox adds: “The turmoil on world markets is a wake-up call for some upwardly progressive South Africans. Advisers conducting the planning sessions are able to point out that you don’t have to leave yourself at the mercy of sudden changes in the business environment.
“Prudent financial provision, a long-term saving strategy and appropriate risk cover provides peace of mind in uncertain times.
“We communicate this message year after year. This time around the message has added impact – headlines from the business pages see to that.”
