The general consensus among industry players is that 2010 can only bring about positive change and that the future holds great opportunities for those brokers who have survived the turmoil of the last few years. We look at some of the trends driving these opportunities.
Professionalism
“Financial services could not be a better industry to be in right now,” says Phillip Matlakala, CEO of Metropolitan Retail. “For the first time in history, it is becoming a profession rather than a job that people just happen to fall into. The fact that brokers have to be qualified or accredited to sell certain products assures customers of the capabilities of that broker to give solid advice. Ultimately, the industry as a whole is viewed in a much better light as a professional, credible and valuable industry.”
JonJon Smit, Sales Director at CIB agrees. “Strict regulations ensure brokers are armed with a new culture of professionalism and are better equipped to offer invaluable advice in all the intricate areas that exist in the many types of cover a business requires.”
“The introduction and amendments of key pieces of legislation, such as the NCA, FAIS and the new commission regulations, has helped in professionalising our industry and providing much needed transparency and appropriate business practices that ensures we serve our clients better,” adds Bertus Visser, CEO of Momentum Distribution Services.
Broker value widely recognised
“In an environment where clients have more policy options than ever before, insurance intermediaries are increasingly playing a crucial advisory role based on their close understanding of the business community and the types of business risks companies need to insure,” says Guy Scott, CEO of Aon South Africa. “Intermediaries have a key role to play as market educators and advisors at a time of increasing consumer frustration.”
Jaco Coetzee, General Manager, Sanlam Financial Advisers notes one can equate financial planning to good health and well-being: one can take multivitamins to maintain general well-being, but only a medical practitioner can treat a specific condition. “In the same way, consumers may have saving accounts, but this in no way makes provision for planning needs such as short-term insurance, children’s education, medical cover, life and risk cover and planning for retirement.”
“Many investors took a severe beating of late, losing confidence in the equity markets. 2010 will offer opportunities to educate clients on how best to position their portfolios for the next three to five years,’ says Cathy van der Merwe, Chief Operating Officer of EFS Investment Solutions. “Most investors require the assistance of a financial advisor to help guide them through the maze and jargon of different investment options. This has never been more true than now.”
CIB’s Smit concurs, “Broker expertise, advice and constant client contact - coupled with an understanding of their changing marketplace - will be more crucial than ever before. The professional broker today runs his or her business as a practice and has evolved as an entrepreneur who is highly sought after by clients.”
Flight to quality
“Other than an increasing demand for reliable, independent advice, some of the key consumer needs that create opportunities for insurers and, by extension, for financial advisers are an increased desire for greater simplicity, transparency, stability and guarantees, as well as what’s been termed a flight to perceived quality,” comments Hylton Kallner, Chief Marketing Officer, Discovery. “The upshot is that there are a great many consumers in the market actively seeking greater certainty, reliable information and a trustworthy guide – in other words, actively seeking your expert advice.”
New and existing markets
“Our research shows that customers absolutely trust their brokers,” says Ian Middleton of Masthead. “This is a great positive that brokers can build on. Trusting customers, with the right support, will become loyal and profitable long term customers. Further research shows that, in contrast to popular belief, one in two customers are willing to pay fees. It creates a great opportunity for brokers to develop or adapt their values propositions and changes their business models. In addition, most consumers prefer choice and independent brokers – of which there are only about 8 000 - are ideally positioned to offer this choice to consumers.”
“The need for our products has not gone away,” says Kenny Meiring of Metropolitan EB. “Indeed, the need has grown significantly as many who changed jobs did not preserve their pensions last year, thus creating an even bigger gap in their cover.”
Brad Toerien, CEO of FMI notes that the South African market is largely under insured which presents a huge opportunity for growth. Johan Coetzer, Executive: Retail Channel Liberty adds that there is also a growing and largely untapped middle income market which offers enormous potential for new business.
“Ironically, tough economic times are exactly the times when individuals re-look at their situations and take the opportunity to ensure they have their financial affairs, including insurance, in order,” comments Chris de Klerk, Corporate Actuary at PPS Insurance.
Pieter Erasmus, Head Marketing at Momentum Short-term Insurance says the important indicators for the short-term insurance industry are typically vehicle and property sales. “In both these industries, it seems as if the bottom of the cycle has been reached and that improvement can be expected in 2010. This could result in growth opportunities for the industry in general. From an investment income point of view, equity markets are also expected to stabilise and improved investment returns can be expected in the next year.”
New approaches
AON’s Scott says the role of the insurance broker will continue to shift from a transactional broker to a professional risk consultant.
“This trend is already evident amongst the top-end, larger global players whose service offerings are highly diverse ranging from captive consulting encompassing analytics to personal lines scheme arrangements in a typical affinity model.
“Brokerages are realising they have to offer value-added services to differentiate and remain relevant. The strength of the consultants’ network, the ability to deal with the regulatory minefield of outward globalising SA business and access to international markets are all value propositions of a global risk consultant.”
“Going forward, we can expect more focus on risk management and the role of insurers, intermediaries and clients. Economic conditions likely to lead to higher levels of innovation, cost management and collaboration. Climate change risk is severe, but that it also presents opportunities for us to offer new solutions and risk management advice to help our clients pro-actively manage their risks,” says Edward Gibbins, Executive Head of Broker Distribution at Santam.
Pierre Geyer, a member of Hollard’s Group Exco and MD of Hollard Select Brokers says Hollard has witnessed more entrepreneurial thinking among brokers and a willingness to diversify beyond traditional offerings. “Many intermediaries responded positively to the challenges of 2009 by finding new ways to engage and remain relevant to their clients - developing new methods of communication, increasing frequency of engagement and diversifying and expanding their product range. Nobody knows a client’s needs better than a broker who is fully engaged. But some don’t know, or leverage, the competitive power and personal relationship they hold in their hands.”
Job satisfaction
“For someone who is entrepreneurially minded, a career in this industry will offer not only personal and financial growth, but the ability to create jobs and contribute positively to our economic growth, particularly if you enjoy the support and backing of a large corporate with a trustworthy name,” says Liberty’s Coetzer.
Ronald King, Director: Financial Planning at PSG Konsult agrees. “Just pay one death claim to a widow and you understand just how valuable the intermediary’s role is. In addition to the job satisfaction that comes from knowing you can truly make a difference, it also offers unmatched flexibility. How many other careers provide you with the opportunity to watch your son’s rugby match on a Tuesday afternoon? And, of course, there are a number of brokers who didn’t read this article and have left the industry, so there is less competition!”
Mark Cronje, Advice Manager, Old Mutual Personal Financial Advice & Private Wealth Management, sums it up: “2010 is alive with possibility and opportunity. The financial services industry remains the place where dreams can be realised and financial planning goals can be achieved.”
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