Change can only be better
We are living in a world of change. Not only is technology affecting the industry, customers are changing and their expectations of the industry are evolving. FAnews attended the 2015 Discovery Financial Planning Summit where a number of the speakers focused on the changes in the industry.
While there has been some resistance to this change, a key theme on the day is that one simply cannot sit back and wait for change to pass you by. You need to be on the boat changing with the rest of the industry in order to remain relevant with your clients.
The evolving customer
Customers are putting significantly more weight on the experiences they receive when they interact with a company. A recent study has shown that 78% of people would pay more for a product if they were certain that they were getting a better product and a better service from the company supplying the product.
Sizwe Nxasana, Outgoing CEO of FirstRand, said that we need to change the way we interact with our customers. This includes improving the quality of advice given to customers by leveraging technology to better serve the needs of clients.
Some of the changes affecting the industry has been voluntary. However, some of this change has been forced. Nxasana pointed out that in the six years following the global financial crisis, the credibility of banks and insurance companies have been called into question. This has led to some new players in the space.
How you position your offering in this changing market is a differentiating factor. Nxasana added that smartphones has democratised access to financial services and social media platforms are now a major force in the financial services space. He added that it will be a challenge for big companies in the industry who are sitting on legacy systems to adapt to new ways of doing business.
Give credit to the industry
Intermediaries have been very critical of the financial services industry over the past few months, and a lot of this criticism has not been without basis. However, do we give the industry credit when it is due?
Most of the criticism of the sector has been about the level of regulatory change that is being implemented in the industry. However Finance Minister Nhlanhla Nene issued a stern warning saying that evolving regulation in the sector is here to stay.
“South Africa fared better than most countries in the aftermath of the global financial crisis. But there is no room for complacency,” said Nene, pointing to the role that the financial services industry played in protecting the industry from the fallout following the financial crisis.
With these changes come increased cost pressures. This is having a significant impact on all players in the industry, not matter how big or small they are. “I am cognisant of the additional cost burden that the regulations in the aftermath of the financial crisis has had on financial service providers. However, this is outweighed by the benefits for the sector,” said Nene.
Lessons from abroad
One of the aims of the Summit was to provide insight into global best practices to help ensure the delivery of quality advice in a changing regulatory environment.
One of the best ways to achieve this is to hear about the experiences of companies and brokers who have already gone through the regulatory change that we are currently going through. There was a high level discussion panel at the Summit which featured Justin Gilmour, Managing Director of Integra Private Financial Consulting from Australia, Howard Sharfman, President of NFP Insurance Solutions from the USA and Andrew Da Silva, Managing Director, Direct Financial Finance Solutions from the UK.
Each of the panellists acknowledged that technology has made a massive difference in administration, enabling quicker turnaround times. While the Australian panellist, Justin Gilmour, said up to 70% of his company’s admin is outsourced to India.
The panellists agreed that administration work must be separated from brokers and producers of business, freeing them up to concentrate on what they do best.
While Andre Da Silva, the UK panellist, estimated the average age of financial advisers in the UK at around 41, Gilmour said it was in the early 50s in Australia, and Sharfman said it was in the mid 50s in the US because they don’t have people retiring early in this space.
All three of the panellists agreed that formal and professional qualifications are important in the financial planning industry, but not everyone needs to be qualified. They agreed that it is vital for financial advisory teams to have easy access to qualified specialists.
Editors Thoughts:
Positive change is good for any industry. If the needs of clients are evolving and becoming more particular, regulatory change and changing the way you do business will benefit your company. We have seen the effects of this in the UK and the US which have high levels of insurance penetration. Perhaps we should focus more on Nene’s message of playing a role in making a positive impact on the lives of our clients and stop complaining about change that is inevitable. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
