LISPs need to provide solutions, not products

A successful linked investment service provider (LISP) will be one that differentiates its service and client relationships, and works closely with financial advisers to deliver an excellent service to clients. Only a select few LISPs will take major market share in the future, and these LISPs will offer investors and advisers financial solutions and the tools and applications to make the best financial decision.

Currently, LISPs in South Africa manage assets of R696 billion. The landscape for investors, advisers and LISPs has changed enormously over the last few years, and the next few years will see many more changes.

Operating in the new environment

In the new environment, advisers and investors will need an investment partner; a service provider that will offer products, service and processes that make their lives easier, and allow for better and faster decisions. The LISP that offers these financial solutions will be the one that succeeds.

Regulation is continuing to increase, and clients have become more demanding. Advisers are facing the challenges of running a successful business, ensuring that their clients meet their financial goals, and complying with required legislation, good business practice and new regulations that will continue to be implemented. This increase in regulation has made the process of finding investment solutions more rigorous, and while this is in the interest of the client and adviser, it has increased the complexity of the decision of where and when to invest. It has also added to costs and it has increased the time taken to make financial decisions.

While regulation offers investors more protection and a more sustainable financial services sector, it has dramatically changed the way investors, advisers and LISPs do business. As the landscape changes, LISPs need to offer advisers tools and products that make investing an ongoing success.

The advantage of value added relationships

Key will be relationships, and how the LISP adds value to the relationship and makes the investment decision and management an easier process to manage.

Advisers have upped their game in the last few years. LISPs must now offer services and products that match this higher level of skill. Clients are looking for a financial solution, not just a product, and our products must be capable of fulfilling these solutions.

Relationships are built on real value. Investors and advisers are looking for reputable LISPs to do business with. They are also looking for LISPs that offer them the right opportunity to make the right investment decisions with the minimum of fuss.

Keeping ahead in the LISP market in the future, lies in innovative and flexible service. I don’t think the innovations lie in products, they lie in simplification. We need to make it easier for the financial adviser, and partner them in their business.

Offering tools that assist the adviser

The most recent tool STANLIB Linked Investments introduced, is the Portfolio Construction Tool. The tool allows a financial adviser to construct, analyse, monitor and review their client’s portfolio. Another addition is an Income Drawdown Tool. Critical in the issue of living annuities is managing drawdowns to ensure that the annuity income does last for life. With the STANLIB Linked Investments drawdown tool, advisers and retirees can see how long their income will last in different funds and at different drawdown levels.

LISPS – Linked Investment Service Providers

A LISP is a company that enables investments in a wide range of collective investment schemes, such as unit trust funds, via one source.
Effectively an investment administration and product packaging business, a LISP also offers access to traditional life insurance products such as endowments, retirement annuities, preservation funds and living annuities to cater for the full range of your investment needs.
All Lisps must be licensed with the Financial Services Board (FSB) as Administrative Financial Services Providers. Lisps are regulated by the Financial Advisory and Intermediary Services (FAIS) Act.

Source: Association for Savings & Investment South Africa