Who owns the client?

01 August 2008 Liberty Group

This is a question as old as the industry itself. However, it is up to financial advisers and product providers alike to ensure that the client suffers no collateral damage in seeking the answer.

Many financial advisers will argue that the correct relationship is linear in nature, with the provider and the client at opposite ends of the spectrum with the adviser in the middle, implying exclusive access to the client through the adviser.

The often aired rationale for this argument lies in the fact that the advisor "sourced " the client and that the client bought the ongoing advisory capabilities of the advisor rather than the product and service features provided by the product provider or organisation.

Inalienable right to the client?

Accordingly, a view held particularly strongly by independent financial advisors is that an intermediated sale confers an inalienable right of access to the customer.

To a large extent this position has been observed and preserved by the long-term assurance industry in South Africa who has historically "outsourced " the client relationship management, both sales and service, to the intermediary. However, product providers are beginning to question the wisdom of this approach as consumerism emerges as a dominant theme both locally and globally.

New playing field

At the same time product providers are being confronted by their own specific challenges, such as regulation which in itself has far reaching risk and commercial ramifications. Even at a basic regulatory level, if one merely considers KYC and money laundering legislation alone, not to mention advisory risk and compliance requirements regulation (FAIS), product providers
today are required by virtue of the licenses under which they operate to get a far better understanding of the client.

Aside from the regulatory compulsion, perhaps the strongest motivations are emerging from commercial arguments where organisations are questioning the sustainability of operating models where customer perspectives and insights cannot inform commercial decision making due to organisational sales and service constructs. In short, product providers are starting to
question whether they will survive unless they evolve from sales-led to customer-led.

Finding the equilibrium

The obvious question that emerges is how these evolving and conflicting perspectives will find equilibrium in the industry as operating models evolve in the consumer environment.
One approach is to rely on technology to serve as the catalyst to balancing the customer ownership issues between intermediary and provider.

Perhaps a more sustainable approach is to find the right balance between the intermediary, the customer and the product provider. The point of equilibrium is where all parties can find the value in the tripartite contract.

Through deepening their commitment to intermediation, product providers can position themselves as intermediary partners, whose interests at servicing customers are to entrench the intermediary customer relationship not to circumvent it. The question then is not "who owns the client " but "how do product providers help intermediaries to entrench their relationship with the client " through service, marketing and sales initiatives.

Quick Polls


How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?


Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now