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What can product providers do to add value to your advice practice?

25 March 2021 Gareth Stokes

I get invited to hundreds of financial services provider (FSP) conferences and webinars each year, ranging from the benign annual results presentation; to the forward-looking quarterly outlook statements; to the solemn update on business interruption or other sector-specific crisis; to suggestions on how to optimise a financial or risk advice practice. The common thread running through these interactions is the provider’s desire to add value to stakeholders, often times the intermediaries, financial advisers or insurance brokers who represent their products to the consuming public. This morning, as I reflected on Old Mutual Investment Group’s Q1 2021 Media Briefing I started thinking about what advice professionals really need from these interactions.

Context always matters

A word on context is indicated here. An assessment of any stakeholder interaction must be informed by the intended audience as well as the reason given by the provider for holding the event. So, for example, we would not attempt to compare a broker roadshow with a media update. These events are designed for different audiences and outcomes. Over the next few paragraphs I seek to share a writer’s perspective on what advice professionals might desire from a product provider interaction, based on the aforementioned media briefing. I do so in full appreciation that my view will differ from that of many of our readers. It is my hope to start a wider discussion on how leading financial services brands can better service the advice professionals who play a role in their distribution channels. 

Let us start at the beginning. I have always written on the assumption that a macroeconomic update is useful to professionals in both the financial and risk advice discipline, because these updates inform you about the environment you are selling your advice into. My usual approach is to quote expert opinion from a presentation to inform FAnews’ readers of the macroeconomic conditions under which their advice practices operate. I would, for example, have introduced an article covering the Old Mutual event with the chief economist’s view. “For 2021, we expect a strong GDP growth comeback and a strong and stable economy,” said Johan Els, before predicting continued low inflation and low interest rates globally. 

I would then discuss various developments that inform the product provider’s future outlook. Els went to lengths to explain how expansionary fiscal policies, such as the US$1.9 trillion rescue package approved by incoming US President Joe Biden, would combine with ongoing monetary policy interference to cause a weaker dollar. The final tweak is to offer a local interpretation of global themes. “A weak dollar coupled with expansionary fiscal and monetary policies will result in the ‘risk on’ trade picking up steam, making for a very favourable environment for South Africa,” said Els. I have always assumed that this type of information is useful to financial and risk advisers in informing a basic view of the domestic economy; but wonder whether you, my readers, agree. 

Stock picking; do we really need to know?

Most asset manager presentations follow a tried-and-tested recipe. They begin with an economic overview and then shimmy into a discussion about in-house fund strategies and share picking methodologies in light of the economic environment. In our media briefing example, portfolio manager at Old Mutual Investment Group, Siboniso Nxumalo, was on hand to unpack the topic ‘Investing in South Africa, famine or feast?’. I believe that a house view on investment themes and stock picks is great for financial advisers; but less useful to risk professionals; but I could be wrong. Perhaps advice professionals desire more from their engagements with asset managers than a restatement of run-of-the-mill key information disclosure documents (KIDs). Likewise, risk advisers might enjoy an informative discussion that is outside their main skill set. 

A common practice among asset managers is to remind their audiences of long term market trends. Nxumalo drew attention to the myriad crises that had affected domestic financial markets over the decades, including the global oil crisis and Soweto uprising in the 1970s; the Black Monday collapse in the late 1980s; interest rate shocks in the 1990s; and the rand crash and Dotcom bust of the late 1990s / early 2000s. I find great value in discussions of historic market movements and will usually share these with my readers; but I now wonder whether advice and risk professionals receive this information in the same light. 

Perhaps the value in these discussion lines in the asset manager’s prediction of financial market responses to emerging local and offshore trends. This would help to determine where to direct a client’s discretionary funds, though it is more likely that financial advisers defer to asset managers insofar asset allocation and stock picking. “Globally, interest rates are low; a low rate environment is supportive for global growth and recovery and South Africa is a beneficiary of this,” said Nxumalo. He observed that the quintuple-whammy of low interest rates, expansionary fiscal policy, higher commodity prices, high household savings and widespread vaccination against Covid-19 would be good for consumers. 

Perhaps FSP’s should focus be end-consumers, your clients…

“The high savings rate has created pent up demand; but inflation is low because people are still not going out to spend this money,” continued Nxumalo. “When things go back to the way they were, there will be plenty of consumption happening”. This simple statement contains information that financial and risk advisers can take to the bank. Your clients and  potential clients have most likely adopted a conservative approach to their personal finances through pandemic. This means they could be invested in short term savings instruments and need advice on more appropriate investment products. Finally, some mention of the all-important consumer. Could this be the Holy Grail for future product provider conferences and webinars? we wondered. Surely, anything that leads to a better understanding of consumer behaviour is good for an advice practice? 

Old Mutual concluded that South Africa’s financial markets were among the cheapest worldwide before informing the audience of some of the local stocks in its equity portfolios. The group was positive on the likes of Absa, FirstRand, Foschini, Italtile, MTN and Super Group, to name a few. I have always wondered whether my readers care what companies an asset manager has the hots for on a given day and would love to hear your opinion on that. How does this kind of information help, if at all? 

Els concluded the asset managers’ economic outlook with some positive sentiment around South Africa Inc. “We see a rebound in 2021 growth, a better medium-term outlook and fiscal issues being gradually solved,” he concluded. “Happy days are here again for SA economy; a South African comeback is imminent”. And this opens up my final question for this slightly unusual newsletter. I have always struggled with cheerleader antics at what should be a hands-length, impartial assessment of the economy and markets; but perhaps this is something that South Africa’s upbeat financial and risk advisers like! 

Writer’s thoughts:
The purpose of today’s newsletter was to start a debate about what financial and risk advisers really want from the myriad conferences and webinars they attend. I welcome your thoughts to guide future reporting on such events. Please take a moment to let me know what you value when it comes to online or real world interactions with your product provider partners. Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].


Added by Gareth Stokes, 29 Mar 2021
Thank you for sharing the ‘million dollar’ question, Bertie. Once the dust settles, those providers who fail to appreciate the individuals in their distribution machinery will suffer!
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Added by Gareth Stokes, 29 Mar 2021
Good comment, thank you Koos. The resources at the disposal of product providers give them an edge in presenting on emerging themes and prevailing / forecast macroeconomic indicators. These overviews are great in keeping IFAs and clients ‘up to speed’ with the latest developments.

The social interactions and networking at these events are missed. Only time will tell if the time we save through virtual functions will make up for the personal connections we lose.
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Added by Bertie le Roux, 25 Mar 2021
Very touchy subject and you referenced it well. I have 2 comments - often I attend these "sessions" for one reason only = CPD points as asset managers has to "punt their funds" so true view we hardly ever get. Secondly, my pet hate and it was emphasized by Covid-19 that the FSP do not care much about the IFP. No-one reached out to me as IFP asking me how I am coping and how they can be of assistance no they kept their sales drives and in the interim they allowed contribution holidays etc. which impacted my cashflow even more (still needed to service those clients irrespective) .... Do i really matter or does only my production matter!?
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Added by Koos, 25 Mar 2021
I attend the events not for the managers to inform me about which stocks that they have in their portfolios, that's their viewpoint. I want to know more on their viewpoint of the current local and world economies and what is driving it as well as how does their fund compositions are structured to for current and future fund compositions within the fund mandates. The change due to the pandemic from roadshows to webinars saves us a lot of time from travelling to and from the venues and I believe that it saves them a lot of entertainment, venue, travel and accommodation expenses. Don't get me wrong, it is nice to interact with them socially and picking their brains.
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