Advancing professionalism in the financial advisory space

In 1963 Bernard Barber wrote that an occupation must have four characteristics to be thought of as a profession. These include: “general and systematic knowledge, an orientation to community interests, self monitoring through internalized codes of ethics,

South Africa’s financial services industry is on track to achieve each of these characteristics. Professionalism was among the priority topics at the 2009 IISA conference. In the two years since stakeholders across the industry have worked to instil professionalism in every facet of their businesses. Financial advisers and services providers are fully committed to the continuous professional development goals set out in the Financial Advisory & Intermediary Services (FAIS) Act.

The industry has also met every regulatory challenge head on, including Regulatory Exams, the Consumer Protection Act, Conflict of Interest and Treating Customers Fairly to name a few. FAnews asked some of the country’s most respected practice management companies and insurers what they are doing to assist with the Financial Services Board’s call to greater professionalism in the industry.

Celestis

Putting practice management at the heart of your business

Celestis believes the delivery of practice management services will increase your profitability in the short term and add sustainable value to your business in the longer term.

“We asked 155 of our financial adviser clients whether practice management contributed to building a sustainable business,” says Esmé Davies, Head of Celestis Practice Management. “65% of respondents said that practice management had added significant value, while almost half stated that their incomes had increased as a result.” In the same survey 60% of respondents admitted that the implementation of practice management principles left them with more time to concentrate on their core responsibilities such as conducting client reviews.

The role of the financial adviser is multi-faceted. Most advisers are good at giving advice to their clients, but find themselves bogged down with the day to day managing of their business. Effective practice management can lighten this load by offering solutions, introducing efficiencies and sharing the experiences of successful advisers from around the world.

Celestis receives feedback from satisfied customers nationwide. One of the best comes from KwaZulu-Natal, where an adviser client observed: “I’ve now done so much new business that it’s created a bottleneck. It is a welcome problem.”

Esmé Davies
Head
Celestis Practice Management

Hollard

Training the insurance sales force

Training the insurance industry sales force is critical to professionalism in the financial services industry. As a result of changing regulation the client-facing adviser has to be properly versed in financial services law as well as trained on products and general industry information.

In terms of the conflict of interest provisions in the FAIS Code of Good Practice, insurers may no longer offer financial incentives to independent financial service providers… But they can provide training on a non selective basis to brokers to ensure that the broker industry is well informed on its products! That’s why Hollard operates a training academy which has assisted its brokers in learning the material for the FAIS RE I and Key Individual examinations.

Our procurement division plays an important role in the appointing and monitoring of service providers such as loss adjusters, panel beaters, risk asset inventory specialists, vehicle tracking companies and attorneys – all put in place to ensure that the consumer and the broker are being treated in the most professional manner possible. The more professional these providers, the more professional the consumer experience will be.

Hollard further contributes to professionalism in the industry in the way it employs and trains its staff. We aim to attract and retain the best staff by means of career advancement, training and suitable incentives.

Danny Joffe
Legal Director
Hollard Select Brokers

Liberty

Placing the financial adviser in good hands

At Liberty our development and training is structured and focused to ensure that our financial advisers are equipped, skilled and motivated to play an active role in the lives of our customers. The adviser has to protect the client’s assets, wealth and health benefits against uncertain events which might occur.

To ensure that our financial advisers are equipped to fulfil this important role we have designed a 36-month development path which involves the entire business value chain. During this period the financial adviser undergoes a rigorous selection and recruitment process followed by formal training and “Just in Time” coaching.

At Liberty we focus on sustainability. The Path to Success is a structured development path designed to assist the financial adviser to become professional, effective, skilful and compliant. The development path is a shared responsibility between the financial adviser and his/her manager, who acts as a coach to the adviser throughout his/her career development. The positive results of this process can already be seen in the high retention rate of our 2011 intake which is above 90%.

We continuously analyse the changes in the financial environment to align the training and development of our people to ensure that they play a significant role in the life of customers and their families.

Juan Lewis
Head of Wealth Learning
Liberty

Masthead

Professionalism through unprecedented intermediary support

Masthead plays an important role in professionalising the industry by supporting independent financial advisers (IFAs). Since Masthead’s launch in 2004, our vision has been to assist IFAs to retain their independence and thrive.

We have consistently helped IFAs to meet the demanding requirements of the FAIS legislation through our compliance services. This was just the first step in helping IFAs on a path to professionalism. Over the last seven years we have steadily grown our offering, often working with IFAs as business owners.

We encourage IFAs to see themselves as employed professionals who competently deliver a valuable service to consumers. We also encourage them to create capital value by growing their practice over time.

To this end Masthead provides the support services, guidance, information and tools IFAs need to develop themselves and their businesses, as well as comply with legislation. Being in touch with the advice community, we are aware of IFA needs and therefore able to offer relevant solutions. Masthead also hosts Professional Development Days annually, where industry speakers are invited to share information and news with IFAs.

Masthead supports initiatives to professionalise the advice industry, as this promotes quality advice, creates a favourable perception of the industry and contributes to the sustainability of independent advice.

Ian Middleton
Managing Director
Masthead

Mutual & Federal

Enhancing professionalism in the insurance industry

The short-term insurance landscape has undergone significant regulatory and legislative changes in the last year. “A key benefit of these changes is enhanced professionalism in the industry,” says Peter Todd, Managing Director of Mutual & Federal. “New regulation, such as the Regulatory Examination (RE) for brokers, sends a strong message to the industry that we need to up our game.”

Mutual & Federal has responded to that call. We organised a series of countrywide workshops to help brokers get to grips with the requirements for their RE assessment. “The purpose of these exams is to ensure that as an industry we meet a minimum standard, which our customers can rely on,” explains Todd.

Mutual & Federal has adopted a client-centric and broker-centric model in its drive to increase professionalism throughout the organisation. Todd elaborates, “We believe that, only through strong partnerships with our brokers and clients, will we be able to anticipate their needs and do our jobs even better.”

Peter Todd
Managing Director
Mutual & Federal

Old Mutual

Assisting and supporting financial advisers

“In a legislative and regulatory environment that is continually changing, Old Mutual assists and supports financial advisers and brokers to adapt to the changes and to succeed,” says Iain Williamson, Managing Director for Retail Affluent at Old Mutual.

Most regulatory changes aim to strike the right balance between consumer protection, the provision of excellent financial solutions and encouraging a professional financial advice industry. Old Mutual will continue to support advisers as we have done since the introduction of the new FAIS regulations in 2002, whether through commission regulations, conflicts of interest legislation or the newly introduced Regulatory Examinations (RE).

We’ve assisted advisers with practice management to increase efficiencies, business analysis to help them get a better understanding of their client base and introduced innovative product solutions and ongoing training.

Old Mutual supports the ongoing drive for education as a cornerstone of professionalism in the industry. We believe a solid understanding of the laws and regulations on advice and intermediary services will lead to a more professional industry and ensure customer satisfaction. As such, we are assisting intermediaries by offering training sessions to help them prepare for the exams.

Iain Williamson
Managing Director for Retail Affluent
Old Mutual

Sanlam

Contributing to a professional industry

Sanlam Financial Advisers (SFA) has established an enviable record of professionalism in the industry by developing and vesting a vision to be the most professional financial advice organisation in South Africa. Jaco Coetzee, General Manager of SFA, says this vision was established as far back as 2003, before the FAIS Act was promulgated.

The idea was to establish a culture through which Sanlam advisers would take their cue on professionalism from the Group’s vision in addition to legislative requirements. Part of the execution of SFA’s vision focused on a formal internal professionalism measurement, which enabled Sanlam to move away from pure product selling which was how the industry historically wrote business.

A further element in support of its vision involved the appointment of quality and risk consultants four years ago to monitor the advice given to clients. There are now seven full-time consultants who provide regular structured feedback to SFA management and are actively involved in training advisers to become more professional, skilled and knowledgeable. Sound advice means that clients know they can afford the products they were purchasing and that their choice “fits” their specific financial goals. SFA’s success of placing the client first is evident from its client retention index which remained constant even over the recession.

The rigid assessment and evaluation of new appointments within Sanlam’s adviser corps and the focused enforcement of this process is another factor worth noting. Individuals interested in working for SFA have to pass a thorough formal evaluation process, which only one in five achieve.

The appointment process is yielding results. “We have the lowest turnover of advisers in the industry, and internationally the lowest for an organisation of our size… International organisations are knocking at our door to learn from us,” says Coetzee.

Jaco Coetzee
General Manager
SFA

Santam

Helping short-term brokers clear regulatory obstacles

Initiatives such as the FAIS Act and Regulatory Examinations (RE) are aimed at professionalising the financial services industry and are implemented in line with global trends.

“The FAIS Act and the regulatory exams are valuable to the South African consumer, because they are aimed at preparing financial professionals to better render expert advice and service,” says Edward Gibbens, executive head of Broker Distribution at Santam. Santam has created a portal that facilitates RE registration and provides information, study aids and tools to help brokers pass their test.

“Brokers are placed in a position of complete trust, where they are relied upon to help protect the profitability and sustainability of their customers’ livelihoods by advising them appropriately,” says Gibbens. “It is important, within this framework, for brokers to keep up to date with the changing regulatory environment, because it will become increasingly important to customers.”

Santam believes that brokers add value by helping companies to navigate the wide spectrum of insurance products available. Thanks to RE the financial services industry is served by a group of committed and professional financial advisers who command a new found respect from customers and peers.

Edward Gibbens
Executive Head of Broker Distribution
Santam