Showing true value to clients
The Financial Planning Institute of Southern Africa (FPI) is hosting its annual conference on 14 and 15 June; and in the run up to the conference, we need to ask why we are still debating the value that financial planners can offer clients.
I recently read three interesting, yet eye opening, articles on the internet. The first article discussed the debt that South Africans find themselves in and the dire situation facing certain people. According to the report, 52 000 civil judgments were made for debt worth over R362 million in the first quarter of 2016.
The second and third articles discussed the related topic of the petrol price increase on 1 June and how South Africans are getting into debt for everyday items such as groceries and fuel.
If we want to move from the endless struggle to make ends meet, we have to manage our debt; and this is where the value of the financial adviser comes in because you can offer an array of services to your client.
What problems do financial advisers solve?
According to a release by Liberty Retail, Financial advisers don’t solve problems, they are more like guides who are able to assist you to assess what your most important needs are and make expert recommendations.
Financial planning consists of two very important parts:
- Firstly, there is wealth cover; this is protection that individuals need in the event of their death, disability, injury, diagnosis of a dread disease or any other health care related event.
- Secondly, there is wealth creation, which is when an individual accumulates money over a short, medium and long-term time period to cater for various needs such as education, retirement, and everything inbetween. People also require advice on the various tax implications of the various products in the market, and how Capital Gains Tax can affect them.
Making use of the services of a financial adviser to gain advise on these aspects is important. The creation of a legacy is important.
While it is understandable that during times of economic pressure, clients may not have money to spare for death or dread disease cover, it must be pointed out that the financial hardships that will fall on them if they don’t have this cover in place should something bad happen to them will be far worse than if they had cover in place.
Target early interventions
In theory, this makes perfect sense. The time that clients are most likely to accumulate debt is when they start working because they want to fund a lifestyle that they had been dreaming about for a number of years.
Speaking from personal experience, it would have been great to sit down with an adviser before I got a credit card to get lessons on how to manage my debt. But this does not come without a cost, and advisers need to make a living. So we need to ask if it makes financial sense for a worker who has just entered into their corporate career to consult with an adviser. Do we need to sit and reinvent the wheel when it comes to entry level products and pricing when it comes to entry level advise?
The Retail Distribution Review should have an impact on this, but will that be enough?
The role of education
The debate on displaying the value of a financial adviser is a bit like the debate about the chicken and the egg.
When is the best time for advisers to be marketing themselves to potential clients? Is it when they have established their corporate careers and are now starting to think about having a family? Is it when they are just starting their corporate careers so that their protection will be proactive rather than reactive? Is it at school so that we create a nation of financial savvy individuals who know that the door they need to knock on when they start working is the door of a financial adviser?
One would suggest that the best time to market the value of financial advice is at school level so that clients hunt you down rather than you hunting clients down. There are some initiatives in the industry at the moment which are aimed at students, but again, are advisers doing enough in their own capacity to offer their services to schools? Yes it may be on a pro bono basis, but short-term sacrifices lead to long-term gains.
Students remember the impact people make on their lives and they may build a lasting relationship with you that may become profitable. Will a student trust someone they have never dealt with before, or will they deal with someone they know and trust?
Editor’s Thoughts:
I always wish someone had sat down with me when I was younger and taught me how to manage my income. Only loss teaches us the true value of things. If you ask yourself that question, be the change and make a difference. How you value yourself is how others will value you. If you care enough to give them some of your time at a young age, they will reciprocate when they are older. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
