Keep it simple, and profit from doing so!

21 June 2007 IFAnet Independent Distribution Services

Ongoing changes in regulations governing the financial services industry, and especially the advice process, have brought about a significant additional workload with regards to understanding the clients' needs, sourcing an appropriate solution, implementing the solution and subsequent record keeping; an additional workload that takes time out of what would in the past have been "selling time" or "fun time". Many intermediaries seem to have allowed themselves to become distracted by some of the schlep these changes have resulted in; for example, technical product evaluation, compliance monitoring and record keeping.

Whilst not all intermediaries are typical sales people, I would venture an opinion that many are. For fear of being shot down for generalising, by typical sales people, I mean people who are good prospectors/networkers, good sellers of products and good relationship builders, but not necessarily good analysts, administrators or known for paying attention to detail. Yet, it appears that us "sales people" spend a whole bunch of time in those areas that we are not good at not only does this cost money, because less selling time means fewer sales, but probably means that we are not doing as good a job of it as our practices should be. Why not simply focus our own efforts on those areas that a) match our skills and b) generate revenue, and "outsource" or "buy" those skills that either don't generate revenue or are not playing to our strengths.

The debate I guess has to be "can I pay someone less to do the schlep than it costs me in lost sales?". In addition to this consideration, can somebody else with the appropriate skills do the schlep better than I can, at a price that I am prepared to pay? If the answer to either or both of these questions is yes then it makes sense to do so, both from a financial point of view as well as for ensuring the effective use of your time.

So, how do I determine what to do myself and what to either delegate to another competent individual in my business or outsource to an external service provider? Simple calculate your "hourly income rate" by dividing your average monthly new business income by the hours you spend actually preparing for a consultation with a client. Then, using this "hourly income rate", determine what it costs you by getting involved in activities that are not directly contributing to earning the income. If you can delegate or outsource these activities for less than you are costing yourself, delegate or outsource.

For example, how many hours a month do you spend trying to analyse the various products in the market to ensure that your client is getting an appropriate product to satisfy their needs, including listening to the various companies you do business with pitching that their product is the best for whatever reason? Have you calculated the cost of your time in relation to the "schlep time"? If you're not taking time to do a technical analysis of the various products, how do you know whether the products you are using are appropriate to your clients' circumstances?

Complexity often involves spending more time doing something an expert would take to achieve the same, if not a better, result. By outsourcing non-income-generating activities we can effectively reduce the amount of time spent on activities such as compliance monitoring, product evaluation and new business processing. There are various solutions in the market that can facilitate the simplification of your day to day activities but, as we all know, these solutions usually cost money.

Let's put some estimated costs into context:

Assistant/s                R8 000 per month (you probably have at least one already)
Domestic servant        R1 000 to R3 000 per month
Compliance services    R1 000 per month
Garden service           R   500 per month
Product analysis tool   R   370 per month (Plantech)
Astute         variable cost depending on activity

Most of us will gladly employ the services of a domestic servant, a gardener or garden service and various other domestic service providers. Why? Because we can. Perhaps, but it's more likely because we acknowledge that we are either not stimulated by the activities, do not have the time or are not able to perform these tasks as well as the person whose service we employ. Yet, when it comes to our business some of us decide to be our own compliance officers, spend hours and hours trying to understand what the technical differences are between company A, B, C, D and E's products, and spend chunks of time doing tasks our assistants could be doing for us.

So, given the shrinking of our selling time, the only way the intermediary can continue to enjoy the same level of income as before is to ensure that the sales that are done are move rewarding per transaction (more commission).  Alternatively you can ensure more face time with clients, focus on those daily activities that you are good at and allow others to focus on what they are good at!

Most salespeople are not very good at technically dissecting products down to their component parts (again, a gross generalisation). Neither should we need to be; not when there are simpler solutions available in the market such as Plantech and Spotlight's Risk Researcher.

A good compliance service will not only ensure you are kept up to speed with what needs to be done to remain compliant with the very onerous F.A.I.S. requirements, but it will free you up to concentrate on your income-generating activities.

Using Astute to get information at reasonable rates from the major life companies, rather than your assistant requesting the information from them or, heaven forbid, having to use a call centre, will certainly reduce his or her time spent on information-gathering. Time that can be better spent assisting the intermediary in other areas of the business.

For heaven's sake, and yours of course, keep it simple do what you do best and outsource the rest. It will save you time, and we all know that time used effectively can be worth money.

Quick Polls


The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?


Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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