Page 79 - MC14326 all pages
P. 79
Michelle DuBois The South African Insurance Industry Survey 2016 | 75
Senior Manager, The changing face
Financial Risk Management
Tel: +27 60 997 4512 of financial advice (RDR)
Email: michelle.dubois@kpmg.co.za
The changing face of financial advice The future face of the financial adviser
The rumblings of the new era started in 2002 with the It’s a whole new world out there for the financial adviser who is
publication of the FAIS Act, followed quickly by the Statement willing to evolve his practice. Many advisers will tell how they
of Intent in 2005. Fast forward to 2016 and there is no have spent years perfecting their sales skills. No longer content
doubt that the Retail Distribution Review (RDR) is going to with a compelling sales technique, the adviser of the future
fundamentally change the face of the industry. Far from a tick needs to create and, more importantly, constantly validate a
box exercise, the RDR will have a profound impact on product value proposition that is beyond fault.
development, innovation and systems, which will provide
business with an opportunity to reassess their distribution Rumour has it that the far reaching changes proposed by the
models, product design, IT systems and general business RDR will see financial adviser numbers drop significantly, that
capability. Ultimately building a business that is well positioned clients will be reluctant to embrace the concept of advice fees,
to move forward into the new era. and will thus go direct for their insurance needs, contributing
to the increasing advice gap. With every risk, however, is an
The RDR discussion paper, released in November 2014, opportunity and for the financial adviser who is willing to evolve
outlines a total of 55 proposals which it suggests will be his business, the future has never been brighter. Perhaps in the
implemented in a three phase approach. The first phase, words of Socrates, “The secret to change is to focus all of your
implementing 14 of the 55 proposals, will address aspects energy, not on fighting the old, but on building the new.”
such as product supplier influence, commission anomalies and
equivalence of reward, whilst also addressing the key concept The advisory relationship is complex and demanding. Based
of adviser categorisation. This, in turn, will require structural heavily on trust and reputation, the decision to engage the
changes to distribution models, placing greater responsibility on adviser’s services are reliant on emotive factors as well
product suppliers to ensure delivery of fair customer outcomes. as historical performance, recommendations from other
Innovation designed to effectively address conflict of interest, professionals and qualifications.
maintain a competitive edge and enabling a self-directed,
advice driven sales force will secure a successful paradigm Clients will question whether a financial adviser really
shift and an “out with the old and in with the new” approach to understands their needs, as well as demanding a differentiated
business. service that cannot simply be obtained online or via a call
centre.
