Independent financial advisors have a positive future and, together with Masthead, can deal with the challenges facing our industry and the IFA, said Ian Middleton, managing director of Masthead.
Addressing IFAs and their support staff at the organisation’s popular annual event for members, the Professional Development Days, Middleton sought to extinguish IFA doubt about the future, focusing on the theme, ‘stronger together’.
“We all go through moments when we question whether there is a future for independent financial advice or whether we should be looking for alternative career options,” said Middleton. “Masthead believes unequivocally that the future for independent financial advice is positive.”
According to Middleton, two such challenges that IFAs face are reduced profitability and increasing regulation. “IFAs work longer hours, yet don’t earn as much as before. Advisory models are under review and are likely to be aligned with international policy. This will impact commission.”
Despite the challenges, he noted there are ample opportunities for IFAs, considering that the majority of South African consumers are under-saved, under-insured and go without financial advice. “It is important to protect customers’ lifestyles,” he noted.
“With some 78 million Google links to ‘personal financial advice’, a multitude of products, many of which are complex, and advertising from direct financial services operators, consumers are confused and the information overload has paralysed them,” said Middleton. “Many of these consumers need a catalyst, such as an unfortunate event, before they understand the value of and seek financial advice.”
The value of good advice should be a meaningful, positive difference, even after taking costs into account. Yet, Middleton believes the value of financial advice is under-emphasised in many instances, while cost is over-emphasised.
“Consumers are happy to pay for financial advice, provided that they perceive value,” he said. Given what IFAs are required to do, Middleton believes current IFA remuneration is regarded as being in line with market forces.
“IFAs need to market and position their value proposition more effectively in future with their potential and actual clients so these clients know what they are paying for and are happy to do so,” he said.
According to research findings, consumers who follow their advisor’s advice have a higher level of satisfaction with their overall financial position, explained Middleton. The positive influence of advice shows in that consumers with advisors start saving from a younger age and are more satisfied with their retirement provision than non-advised consumers.
They are also more likely to have an updated will, emergency fund, diversified products and high financial security.
“Masthead’s role is to assist advisors to build independent, sustainable and profitable businesses,” said Middleton. Representing the interests of IFAs at industry level, Masthead continues to engage with the National Treasury, Financial Services Board and FAIS Ombud. Some of the more recent discussions include the future of commission, industry exams, FAIS levies and matters of compliance.
To continue meeting IFAs’ changing business needs, Middleton announced the launch of additional Masthead support, namely a dealer group to support IFAs under a master licence. “This new arrangement will appeal to IFAs who would prefer to follow a set programme and still retain many of the benefits of independence,” Middleton explained.
Other speakers at the Professional Development Day were drawn from some of Masthead’s 26 product partners and preferred suppliers, including Sanlam, Old Mutual, Liberty, Snyman van der Vyver, FMI, Southern Cross, iTransact and 1Com. Masthead’s Andre le Roux again fulfilled the role of master of ceremonies.
The event was well attended in the nine venues across the country, with some venues drawing record attendance of both members and non-members.
“IFAs value the opportunity to network with Masthead, our product partners and suppliers, as well as each other,” said Middleton. “Our interaction reinforced the theme that we are ‘stronger together’ and provided encouragement, education… and prizes for several lucky IFAs.”
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