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Six ways intermediaries can thrive in 2024’s financial landscape

06 March 2024 Sanlam

Intermediaries today face the challenge to thrive amid a complex economic landscape and the reality of constant change, but therein lies the opportunity, says Heinrich Punt, General Manager of Intermediaries at Sanlam.

He examines their prospects as critical contributors to the financial stability and success of individuals and families.

“Intermediaries must continue to progress their positioning as trusted guides. The most recent nuance is personalisation, underscored by integrating financial coaching into the planning process. By delivering on personalisation, intermediaries can positively influence client behaviour and leverage relationship equity."

Realities we’re dealing with in 2024:
The 2024 economic landscape continues to be marked by uncertainty, with potential volatility stemming from geopolitical conflicts, fast-tracked deglobalisation strategies, rising inflation, and sanctions.

These factors necessitate intermediaries to remain vigilant and adapt their strategies to safeguard client portfolios and investment decisions. Punt adds, “Intermediaries must also navigate the increasingly complex regulatory environment, ensuring compliance with new regulations. This year it comes in the significant shape of the two-pot retirement system implementation.”

The big opportunities of 2024:
Punt says intermediaries can play a significant role in helping clients double down on their plans by focusing on these critical components to reach their financial goals with confidence.

The two-pot system: The proposed two-pot system, which allows clients to access their retirement fund for emergencies, presents an opportunity for intermediaries to emphasise the importance of the retirement plan, encouraging clients to stay on track and understand the consequences of withdrawal decisions.

He says, "The more clients access their retirement funds, the more they need to replenish, potentially derailing their retirement plans. Therefore, intermediaries should view the two-pot system as an opportunity to keep clients focused on their retirement planning, ensuring the best possible outcomes. This doesn't negate the reality that some clients may have genuine needs to access their retirement funds. However, the goal should always be to maintain the integrity of the retirement plan as much as possible. There’s a real opportunity to reach out to and grow closer to clients through this process."

Connect with new generations: The rise of Millennials and Gen Z presents a significant opportunity for intermediaries to connect with new generations of clients seeking financial guidance in 2024, expanding their reach. Punt says there’s a clear need in the market, with Forbes finding that 79% of polled Gen Z and Millennials cited seek financial advice from social media.

“These younger demographics are more receptive to digital communication channels, making it crucial for intermediaries to establish a strong social media presence, create engaging video content, and utilise non-traditional communication techniques to cultivate connections.”

Tap into underserved segments: Sub-segmenting presents immense opportunities for intermediaries. He adds, “Breaking down a significantly larger market into smaller, more specific groups based on certain characteristics or behaviours allows intermediaries to focus on underserved segments. An example of this is tapping into younger graduate demographics that are not currently accessing financial planning services but starting to earn.”

Personalised AI-driven digital experiences: Punt highlights the crucial skill of personalising digital experiences and how it distinguishes successful intermediaries in this digital age. He says artificial Intelligence (AI) has the potential to enhance marketing approaches, campaign emails, and operational processes, leading to substantial improvements in productivity and efficiency. “Implementing this technology as incremental enhancements over time and integrating it in various roles among support staff can add value to intermediaries' practices."

Financial coaching and client relationships: Financial coaching also emerges as a valuable approach to connecting with clients and fostering enduring relationships. By integrating financial coaching into the planning process, intermediaries can provide personalised – but non-emotional – guidance that addresses their client's specific needs and behaviours. “This approach can help clients make informed decisions and achieve their financial goals. For intermediaries, it can result in more rewarding client relationships, better client retention and optimised commercial outcomes.”

Guide clients towards smarter financial decisions: Intermediaries have even more opportunities to guide clients towards making smarter financial decisions this year. For example, with Gen Z's inclination towards high job mobility and 'soft saving'—prioritising immediate gratification and lifestyle over long-term financial security—and their notable job mobility, intermediaries can provide strategic guidance.

Punt adds, “They can help these clients understand the importance of maintaining financial discipline and the consequences of their saving choices. “Offering tailored advice and creating a clear financial roadmap is crucial for intermediaries to assist clients in preserving their savings and investments as they navigate between jobs, ensuring personal and professional choices don't compromise their financial stability."

Create moments to work on your business, not just in it
In the dynamic landscape of financial intermediation, Punt emphasises the importance of intermediaries creating moments to work on their business, not just in it. He says this involves stepping back from the immediacy of daily tasks to engage in real planning and soliciting stakeholder input. By doing so, intermediaries can better discern between challenges and opportunities, ensuring more adaptive decisions.

Punt also advocates for a deliberate focus on development. He says this strategic reflection is essential for intermediaries to remain competitive and to capitalise on the evolving opportunities within the financial landscape.

He concludes, “The 2024 landscape presents a complex mix of challenges and opportunities for intermediaries. By staying informed, being proactive, and fostering resilience, intermediaries can navigate these challenges and seize the opportunities that lies between them. Sanlam is committed to empowering our intermediary partners at every step in the journey.”

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