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The Rise of the Virtual Financial Advisor: Delivering Personalised Advice in the Digital Age

26 October 2021 Commspace

This pandemic has upended our lives, impacting the way we live and interact with each other, on a personal and professional level. The Financial Advisory profession is no exception. Since the global adoption of lockdowns and social distancing, an interesting development has emerged in the sphere of financial advice: the rise of the virtual financial advisor.

In an industry built on establishing and nurturing trust and relationships with clients, it’s always been a given that client meetings are conducted in person, over a business lunch or a cup of coffee. Covid-19 has rapidly overturned this long-held belief and shown IFAs that it is more than possible to successfully run an IFA practice in an entirely virtual space.

But is it viable in the long term? And can virtual advising really capture the rapport of face-to-face client meetings?

At Commspace, we’ve set out to answer these questions - and more - in this post.

Financial Advising Pivots to the Online Sphere

When COVID-19 hit, it spread at a rate faster than anyone could have predicted. IFAs who, up until then, conducted most meetings in person, were woefully unprepared (as were the rest of us) to deal with the disruptions that resulted from it. Advisors who had built their businesses from the ground up were forced to pivot to the online sphere in a kind of “sink or swim” reaction.

To the surprise of many IFAs, the transition to virtual consulting was easier than anticipated and offered an array of benefits. A more flexible work schedule, no rush hour traffic and an overall increase in productivity were the direct result of the transition to online practising.

Many advisors who initially saw virtual advising as a temporary means of working around lockdowns and social distancing, began to examine it as a viable means of achieving a better work-life balance while future-proofing their businesses for the long term.

Virtual Financial Advising: How Is It Different?

At face value, running a virtual advisory practice is no different from running a location-based one. As an IFA, you’re still working to build clients’ trust in you, and nurture and maintain client relationships, while providing an excellent service. How it’s done is where the key difference lies.

There are four key areas where the difference is most apparent:

1. Communication - Once you’ve made the decision to go virtual, all of your communications with both clients and employees will be conducted digitally, whether it’s meetings on Zoom or Google, emails or voice notes.

2. Management - The way you manage your team will change as well. Since you’ll no longer be working with an in-house, location-based team, all team management will take place online. The process of completing tasks and getting the answers you need might take longer and require more reminders and follow ups.

3. Operations - In a virtual practice, digital tools and systems will be essential to your practice’s success. All of your daily business operations will be run via tools and software that will help you keep track of client appointments, meetings, projects in progress, filing and a workflow overview.

4. Client acquisition and management - Finally, your client acquisition and management strategies will have to change. In-person networking and marketing are not applicable for securing new clients for a virtual practice. Digital marketing and maintaining a robust online presence through a website and on social media will become how new clients find and contact you. Management of current clients will also take place online through virtual engagements.

The upside of virtual prospecting is that you - as well as your clients - are location independent, meaning you have a wider client reach compared to traditional advising.

Are Virtual Financial Advisors Here to Stay?

Through virtual advising, IFAs have been able to build a business more suited to their lifestyle.

It also allowed advisors to be more selective about the clients they choose to take on, as their location is no longer a definitive factor. This allows them to derive a better sense of value from their work and build better client relationships.

For many IFAs who have made the switch, the work and lifestyle benefits of owning a virtual practice mean that there’s no going back, even after the pandemic eventually ends.

Does This Mean All IFAs Should Be Embracing The Virtual Route?

There’s a misconception that going virtual is an easier option compared to running an in-person FA practice. While there are benefits, it’s important to understand that launching a virtual practice comes with challenges, and takes consistent work and dedication. It is possible to find success as a virtual financial advisor, but the results won’t appear overnight.

Additionally, going virtual is not the best decision for every IFA. Running a virtual practice does mean you spend a lot of time by yourself, with no reprieve from physically meeting with clients. If you’re the type of IFA who draws energy and inspiration from meeting up with and chatting to clients, then a fully virtual practice is likely not for you.

At the end of the day, it’s about understanding there’s no one right way to practice financial advising and identifying which avenue suits your personality and lifestyle best.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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