Surfing the waves of change
FAnews recently received an interesting opinion piece from Hylton Kallner, Chief Marketing Officer at Discovery where he provided key insight into regulatory updates and changes in consumer behaviour to geopolitical factors that influence society. He also focused on the different dynamics at play in the industry today which makes the environment more competitive and volatile.
Talking about global and local trends in financial services, Kallner says, “In this changing environment, understanding and interpreting the trends is key to developing strategies that will benefit our clients.”
Kallner also believes the role of the financial adviser is increasingly more critical in helping clients to navigate options and identify solutions that best meet their individual needs.
Knowledge
The financial planning arena is vast and offers countless products and solutions. To give the appropriate advice, financial advisers need a keen understanding of the industry and what influences it.
“Clients want the assurance that they are obtaining financial advice from qualified professionals,” says Kallner. The way the industry is moving, having the required professional credentials, specialisation and an avid knowledge are essential to operate successfully.
Technology
Technology has effected major change in the way consumers and companies do business. In South Africa, in particular, we are still experiencing a digital divide. This means many consumers don’t yet have access to all the available technology.
But for those who do have access, it has made services faster and direct. It’s also made consumers more demanding. The myriad of available digital platforms through which consumers engage have made them hungry for information and willing to share their knowledge.
These trends are positive and hold advisers and product suppliers accountable for the products and services they provide. In the sphere of financial advice, it has, says Kallner, brought on a potential threat to the role of traditional face-to-face financial advice because consumers now have the ability to bypass advice and use direct-selling channels.
But developments in technology have also benefited financial advice. “Online and other tools enable smarter financial advice, relationship building, and running your business on the go. It’s about tapping into this technology and making it work to advance your level of performance and best meet your clients’ financial planning requirements,” says Kallner.
Regulation
There are several regulatory changes currently under review in South Africa. Finance Minister Nene recently made the point that it is justified for the financial services industry to be held to higher standards and ongoing regulation because of its crucial role in the country and economy. He emphasised regulation has the purpose to protect consumers and to provide stability in the industry.
The need for and purpose of regulation is clear. The Financial Services Board (FSB) has been pro-active in the introduction of the Treat Customers Fairly (TCF) framework, which also ties into the implementation of the Twin Peaks model. Consultation and analysis is also ongoing with the FSB’s Retail Distribution Review (RDR) on distribution and compensation practices of retail financial services.
On implementation of these regulations, the industry and stakeholders can expect a natural period of adjustment. The intension behind these regulations and reviews is positive and will ensure best outcomes for not only consumers and their protection, but also the industry.
Kallner’s advice to financial advisers is to be in touch with what’s happening and get involved in discussions on decisions that affect you. “It is a dynamic industry and career, and by embracing these changes and knowing what they are about, it will be easier to adapt and work within the compliance parameters for continued success.”
Risk
Besides the fact that the financial services industry faces increased volatility due to macro factors, the industry - both here and globally - has seen the nature of client risk changing.
The world over there is a sharp rise in the incidence of non-communicable diseases, specifically those that can be prevented or managed through lifestyle behaviour. People are also living longer due to advances in medical science.
Considering dynamic client risk profiles and longer lifespans, Kallner says it is essential for financial advisers to remain active in reviewing clients’ financial needs. “Life is not static and neither should financial advice be. Every stage of life will require a different financial planning structure. We are also learning that it is possible to positively impact lifestyle risk factors and advisers are uniquely positioned to assist their clients along this journey.”
Products
Although there is a general trend and appeal to the industry for simpler products, Kallner says, that more than offering products that are simple, products offered to clients firstly have to be relevant and add value to the client and society more broadly. “Shared Value Insurance aims to do exactly this by rewarding clients for getting healthier through lower premiums and impacting the broader society through improved productivity and a lower healthcare cost burden,” says Kallner.
The concept is gaining traction globally, and insurers in the UK, Australia and the USA are applying the principles of behaviour change and dynamic pricing. “It is exciting to see where the industry is headed and the positive effect financial services organisations can have not only on people’s financial planning needs but also on their overall health and wellness,” says Kallner.
Financial advisers are critical to the success of the financial services industry and they play an equally important part in bringing these financial solutions to consumers who need them.
Editor’s Thoughts:
Financial advisers have always been the cornerstone of the financial services industry and they play a major role in the growth of their clients. Adaptability is key to expand their influence in the industry to make sure that the adviser will be there as the industry changes into the world class vision that the FSB aims to achieve. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
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