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The future of financial planning and advice

12 January 2022 Myra Knoesen

During the past year, financial advisers learned critical lessons. FAnews spoke to Jacques Coetzer, GM of Strategy and Transformation at SanlamConnect, and Janine Horn, a Certified Financial Adviser at Momentum, about pivoting post-pandemic for the future of financial planning and advice.

Critical lessons from the pandemic

“The past year and a bit have, in many respects, been a challenge for all of us. But it has also brought to the fore things that we have long taken for granted and, during this difficult time, shown their true value. Like long and deep relationships and the importance of trust placed in an adviser relationship to explain things and to support client decision making,” said Coetzer. 

“During a time of uncertainty, and in many cases, financial pressure, the value of advice and planning by financial advisers to support clients in achieving their financial goals has never been more evident or critical. The important role of people being able to talk to a person they trust to make sense of the deluge of information, and to help them make decisions that support their long-term financial wellbeing and confidence was the key point during the pandemic. And it is likely to remain so into the future,” added Coetzer. 

Some realisations

“For many advisers, the pandemic has emphasised the changing needs of our clients and what they value from adviser services. If anything, it has significantly accelerated several things that we, as an industry, and as financial advisers, knew were already shifting, specifically in the realms of digitalisation,” emphasised Coetzer. 

Some of these, Coetzer said, include: 

  • The importance of understanding our clients as people. This is the basis for long-term trusted relationships on which to build a business relationship;
  • Understanding the client’s financial position holistically as part of a long-term client specific plan to achieve their goals, as a context within which to interpret information, provide advice, guide their financial decision making and put in place (and then manage) product solutions that achieve those goals;
  • The importance and benefits of being able to engage with clients digitally. And knowing when to use which engagement approach. Many advisers indicated the efficiency gains made from using these platforms more in their practices, but this needs to be balanced with personal interaction when necessary (and possible); and
  • The ability to express all of this in a value proposition to clients and be able to deliver that proposition consistently over time. 

“Arguably, these factors may be easier for vested advisers that have longstanding relationships with their clients. However, as we all know, a relationship is something that requires consistent work. For new advisers, potentially building their practice around these principles will stand them in good stead for the future,” added Coetzer. 

Ensure ongoing success

“The shift in emphasis to a greater balance between being able to do product- and service transactions in the traditional sense, and a personal understanding of clients as a basis for holistic financial plans to achieve client goals is important. This needs to be supported by appropriate advice, wrapped in a strong business relationship. In an industry where most adviser revenue is still based on product-linked commission and fees, the importance of getting a commercial model to work in an adviser practice to generate revenue from his or her knowledge, experience, and professional services (and not derived from a product) is critical for ongoing success. Digitisation is shifting products and product-related services closer to the client (because they demand it, and it makes sense), requiring advisers to build their business around the professional services that they render to clients. By its very nature, these professional services are already embedded in adviser practices, but must be brought to the fore through an appropriate value proposition as a basis of commercial success into the future. ‘Unwrapping’ them from product sales and services will be the key,” continued Coetzer. 

“Customers demand value for money, and as financial advisers (us and our industry), we simply have to place emphasis on this when we interact with customers. The value proposition requires introspection from both sides of this equation. This introspection will highlight the gaps in our processes, and these gaps need to be filled with haste. The gaps speak of effective review of client portfolios, solidifying relationships, accelerating digital engagements, speed to conclude services, etc.,” said Horn.

“Customer preferences these days leans towards self-service, almost self-insurance, and is definitely bordering on self-advice. This, of course, is risky to say the least. Our value is realised when we connect and make our customers’ truest desires, hopeful and possible. To be present in the post-pandemic world, the financial planning industry needs to understand the value chain this buyer will consider doing business within, and that our value chain is the whole chain, not just the adviser, so the industry needs to get on board holistic support internally, as that has presented a disconnect in the past,” added Horn.

Expectations and deliverables

“The magnitude of work for financial advisers cannot easily be expressed, and the income earning options may rest upon doing more of what we do best; cross-selling, focusing on customer relationships, holding space for the person to create a sense of intimacy and instilling confidence, so that we place quality before quantity in front of clients,” continued Horn.

“Smooth effective consultations, coupled with ease of completing the necessary paperwork, accelerated timelines, seamless transactions and products that present benefits offering value for money, coupled with the after sales support in a post-pandemic environment, is crucial. It is evident that understanding and verbalising expectations and deliverables between parties is a conversation that needs to be had between an adviser and a client,” said Horn.

“It's critical to reset the strategy of planning that ensures customers are buying and that financial advisers aren't selling. This narrative has already been edited to some extent. The refining of this is in our reaction. Customers need to feel safe and confident. Advisers need to feel that they are offered a fair enough share for services. South Africa needs to shift the mindset… just like a doctor’s consultation has to be paid, sometimes upfront before you leave the doctor’s room, so too does the fee-for-service model in the industry requires similar respect. Yes, there may be repeat visits until ‘the problem’ has been resolved, and this is no different. We simply have to promote awareness and customer education,” added Horn.

People, price and product

“There can be little doubt that the impact of the pandemic on the financial situations of many clients, and their financial goals, could and would have been significantly worse if not for the great work done by so many advisers during this time. Helping clients understand. Removing uncertainty in the minds of clients. Guiding them to the best financial decisions given their situations and plans. Managing the products that must deliver the sought outcomes. And giving them confidence that today may be tough, but tomorrow will be better and, over time, things will be even better,” concluded Coetzer. 

“Financial planning is a plan that requires strategic inputs for successful outcomes. The measurement of the success of this plan has evidently changed – it’s no longer about commission in our pockets and the number of policies sold or the targets met, but highlights the fact that this plan requires reviews, servicing, and fees. Emphasis should be placed on intermediary services when we praise and report on performance and figures. This is an unsung, often unpaid job. Advisers need to get their business cycle, client mix and service offering right,” said Horn.

“Rethink innovation and change making and realign with disruption. In a fatigued, stamina-void society, we need to look after and look out for our people. This emotional touch point and connected compassion is also a state of the future. Navigating an altered landscape that we all are still present in demands to find the beauty in the disruption, where people, price, product and promotion all happily abide,” concluded Horn.

Writer’s Thoughts:
As Coetzer said, for many advisers, the pandemic has emphasised the changing needs of clients and what they value from adviser services. It could and would have been significantly worse if not for the great work done by so many advisers during this time. Do you agree? If you have any questions please comment below, interact with us on Twitter at @fanews_online or email me - [email protected]

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