Digging deep to generate wealth

The South African insurance industry has experienced a challenging two years. This year, many companies will be looking into their crystal ball to see whether they are in for much of the same difficulties.

FAnews caught up with Mandy Turi, Managing Director from Genesis Risk and Investment, to discuss the company’s focus, the challenges that lie ahead and where she believes the industry is going.

Turi is of the opinion that there needs to be a certain measure of pragmatism when offering products and services in order to overcome industry challenges.

A novel preservation method

While there are many investment models that exist in the world, simple approaches that focus on the bare basics of investing are often the best.

James Twidale, Junior Portfolio Asset Management of 1st Fusion Asset Management which is a member of the Genesis Advisory Services Group, mentions that the group firmly believes that wealth creation is in the hands of its clients.

“The clients’ daily employment or business interests are what will make them wealthy or wealthier. They should not be coming to an investment or financial advisers to create wealth but rather to preserve it,” says Twidale.

Trying to be competitive

The South African insurance industry is going through some major changes and challenges. This is proving challenging for companies who want to remain competitive, particularly in terms of global competitiveness. Genesis Advisory Services operates in both the UK and in South Africa, and when it comes to competitiveness, there is not much to differentiate the two markets.

“Each market has different challenges. The UK market is further down the line in terms of its Retail Distribution Review (RDR) principles than the South African Market. The UK market is experiencing it, while the South African Market is still anticipating it. The UK market appears to have a clearer distinction between life and investment advice than the South African Market. On life insurance products, the UK guidelines are very clear, but less so in the South African market,” says Turi.

She adds that Genesis Risk and Investment is achieving success in both markets, although RDR and the changes in the South African market, are forcing the company to adopt a more flexible and innovative approach to how things are done in the South African context.

Specialist divisions

Genesis Advisory Services offers a range of products which include life, disability, dread disease, medical, employee benefit as well as short-term solutions.

“We have experienced quite a few challenges in the short-term space, but we have consistently proved that having advisers even in this space is valuable. We consistently conduct broker appointments for clients who take the direct insurer route and after bad experiences choose to move back into the adviser space,” she says.

Maintaining optimism

“In 2014, the insurance industry had an interesting year as most life insurers announced increases in total premiums. Despite the fact that consumers’ pockets have been pinched by lower economic growth, there are still many underserviced or unpenetrated segments of the market,” says Twidale.

While 2015 may prove to be challenging, there will definitely be some opportunities for growth. “In our view 2015 will be a difficult year from a price perspective. Consumers are under pressure and will be more price sensitive,” says Turi.

She adds that additional capital reserves will be required in order to facilitate the proposed changes to remuneration structures for advisers, as well as additional infrastructure and resources to meet the demands of more regulation. Smaller businesses will come under pressure for failure to plan and, by default, the quality of their advice. ”This presents an opportunity for us as Genesis Advisory Services,” concludes Turi.