Building a successful, sustainable and profitable financial services practice
“How many years, how many clients and how many interactions does it take to build a successful, sustainable and profitable financial services practice?” This was the question posed by FAIS expert Anton Swanepoel at the recently held Financial Intermediari
“One client can ruin both the financial success of your business and more importantly your reputation,” said Swanepoel. Thus the main challenge facing financial advisers is to protect their existing business and grow their practices against the backdrop of an increasing regulatory and compliance burden. “Growing your business without taking unnecessary risk is the most important thing for financial practices to consider,” he said. The Holy Grail of financial advice is a client interaction process that achieves this objective. And the FIA Code of Conduct does exactly that. It is a step-by-step process – built around tried and tested financial advice practices – that instils trust in clients and protects your business.
The A, B, C of financial advice
Financial advisers follow an intuitive “beginning to end” process when writing new business. It begins with a professional introduction and culminates in the implementation of a product provider solution plus ongoing advice. Following the professional introduction (and typically during the first interaction with a prospective client) an adviser gathers information by determining the client’s specific needs and objectives. The steps that follow play out over the next few days or weeks and include agreeing on the solutions required, letters of authority (from the client), conducting an analysis, presenting the proposed solution, obtaining quotes etc. “A contract comes into place when you make an offer that you client accepts,” said Swanepoel. Although this contract can come about verbally it makes no sense in today’s highly regulated environment not to have everything in writing.
Once a contract is in place the financial adviser must perform by setting in place the various solutions agreed to. The implementation stage involves interaction between broker and product provider, with feedback from both parties to the client. The financial advice process can no longer end at implementation. The Financial Services Board (FSB) is looking into practices where ongoing commissions are paid without ongoing service, so it makes sense that an annual review is included as a matter of course. “Ongoing advisory and intermediary service to your clients create the opportunity to engage with them at least once per year – and that make it more difficult for the opposition to sneak your clients away,” said Swanepoel.
Client retention is common business sense! We all know how much it costs to sign on a new client versus retain an existing one… Product providers go to great lengths to prevent early terminations, lapses and surrenders. And financial advisers should do everything in their power to make sure their clients stay on board too. A step-by-step process goes a long way towards establishing a trust relationship with your clients. And it ensures a professional service through honest, fair, efficient and consistent client interactions.
New code, same old process!
“The FIA Code of Conduct is a formalisation of what financial advisers revealed during the various Regulatory Exam sessions that took place pre-RE,” said Swanepoel. It merely sets in stone the processes that ‘best practice’ intermediaries have developed and perfected over decades. “If it was not for these processes you would not have had a business,” he said.
The process does not guarantee that your clients will not complain, but it protects you in the event they do. You can service your clients by the book and still run into difficulties… An adviser who has been in business for 30 years without a single complaint can see his business and reputation go up in flames because of one disgruntled client. “The trick is to understand that while building a business is difficult, protecting that business is infinitely more so,” concludes Swanepoel. He believes that the FIA Code of Conduct is a simple an easy to follow guide to grow and protect a financial advisory practice.
Editor’s thoughts: The Financial Intermediaries Association (FIA) should be commended for driving professionalism in the financial advice space. Advisers who are concerned with yet another “code” can rest easy, because the FIA Code of Conduct, FAIS Act and its accompanying codes, and industry best practice all advocate the same basic set of ‘rules’ for client interactions… If you follow any of these in your practice you should not run into any difficulties! Have you read the FIA Code of Conduct and are you confident your business incorporates its processes? Add your comment below, or send it to gareth@fanews.co.za
Comments