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Travel agent or pilot – What is your role as financial adviser?

“Advisers are acting like travel agents, selling clients a ticket to a seat on the aeroplane, when in fact, we should be thinking of ourselves as pilots, being with our clients throughout their journey, and safely leading them to their goal, or destination,” Jon Mackintosh from EncoreSA explained at a Allan Gray Global Advice Landscape webinar held at the end of 2020.

Shifts in the advice landscape across the world have been catapulted into the fore by the Coronavirus pandemic. Ongoing regulatory developments, volatile market conditions, technology advancements, fee scrutiny and questions around the benefit of advice mean that today’s advisers need to continue to work hard to futureproof their businesses. This was one of the key take-outs at the webinar that featured speakers from markets in Australia, the UK and South Africa. The event gave advisers a global take on what is changing and what is staying the same, and how this may impact their long-term sustainability.

All speakers agreed that regulatory changes across the various markets have changed and continue to change the landscape for advisers. However, while the changes in the UK and Australia happened at pace, in South Africa the pace has been more evolutionary than revolutionary.

Tamryn Lamb, head of retail distribution at Allan Gray, noted that there have been a number of key regulatory changes or updates in South Africa since 2014. Another trend is that the value proposition of advice continues to evolve. “Advisers have gradually evolved from simply offering product solutions and investment returns to putting the client’s life at the centre of the conversation. Today advisers are akin to a financial coach, or life manager.”

In the UK there has been a reduction in the number of financial advisers. A trend that is also seen in Australia, with regulatory changes forcing a mass exodus of both investors and advisers. Down under, a Royal Commission enquiry led to the uncovering of serious malpractices, forcing many product providers, particularly banks, to close their entire investment advice divisions.

JD de Lange, Chief Operating Officer of Allan Gray Australia mentioned that there are about 10% fewer advice clients than five years ago, which has created fee pressure for advisers. The other side of the coin is that advice has become extremely expensive even by Australian terms. David Haintz from Global Adviser Alpha based in Australia added that advisers need to change their perspective.  “Advisers are giving away what they should be charging for and charging for things they should be giving away. Advisers should be seeing themselves as selling a 30-year relationship, and then have a scalable fee model that reflects this.”

“We need to deliver what clients are looking for, not what is in our kit bag,” concluded Haintz.

Click here to download the Allan Gray media release.

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