Lessons from around the globe: best practices in financial advisory

JOHANNESBURG, May 19, 2015

The second annual Discovery Financial Planning Summit held on Tuesday in Sandton, which brought over 1,000 financial advisers together, was aimed at providing insight into global best practices to help ensure the delivery of quality advice in a changing regulatory environment. Joining other local and international thought leaders in the financial services industry, a panel of delegates from three continents gave their views on global practices.

The dialogue focussed on pertinent aspects of financial advice and planning, and panellists representing Australia, USA and the UK, discussed factors conducive to success in the financial services industry in the context of changing regulations and customers’ needs. The panellists included Justin Gilmour, Managing Director of Integro Private Financial Consulting (Australia); Howard Sharfman, President, NFP Insurance Solutions (USA); and Andrew Da Silva, Managing Director, Direct Financial Finance Solutions (UK).

Delegates got information on commissions, fees, administration and compliance. Panellists also discussed the average age of financial advisers, the importance of qualifications, referrals, speed of service and turnaround, number of clients per adviser and other issues experienced over three continents.

Through international partnerships, Vitality, Discovery’s scientifically-based wellness programme is available to clients on these continents as well. Commenting on the Vitality Wellness Programme, all three panellists believed that it would become a game-changer in their countries, although relatively new in some. Their view was that this would happen as awareness grows and healthy behavioural change takes hold, and as intermediaries and customers realise the benefits of healthy living and delayed mortality.

Each of the panellists acknowledged that technology has made a massive difference in administration, enabling quicker turnaround times. While the Australian panellist, Justin Gilmour, said up to 70% of his company’s admin is outsourced to India, Howard Sharfman from the US said his company prefers to keep administration in-house, due to concerns about security.

The panellists agreed that administration work must be separated from brokers and producers of business, freeing them up to concentrate on what they do best.

While Andre Da Silva, the UK panellist, estimated the average age of financial advisers in the UK at around 41, Gilmour said it was in the early 50s in Australia, and Sharfman said it was in the mid 50s in the US “because we don’t have people retiring early in this space.”

All three of the panellists agreed that formal and professional qualifications are important in the financial planning industry, but not everyone needs to be qualified. They agreed that it is vital for financial advisory teams to have easy access to qualified specialists. According to Sharfman, having access to qualified and professional people “are your table stakes to be in the business.”

On the subject of relationships between financial planners and clients, the panel was unanimous that there has to be mutual respect and a “connection” for a long-term relationship to endure.

“We don’t want to work with people who don’t want to work with us – we’d rather a client leave us earlier than later,” said Sharfman.

While Gilmour said his company likes “complexity” which enables it to structure solutions for clients, Da Silva said the unintended consequences of compliance is that a lot of people in the middle of the income and investment bracket “are missing out on advice.”

Although each of the panellists said their companies all participated in some form of referrals – and paying commissions for referrals – none of them said they were using social media as a tool to promote their companies or win clients.

Da Silva said his company still uses classic referrals process, while Sharfman said his company uses “stalkers” to research people to whom it would like to be referred. “We do our research first so we can understand the person, and then we try to get a referral so that we can meet up with them,” said Sharfman.

Gilmour said that his company adopted an approach whereby it made referrals and received referrals via its professional service network involving accountants, lawyers and other service providers in its environment.

On the subject of fees, Gilmour said his company’s model is to provide clients with a free initial scoping session. A plan is then devised for a client at a fee ranging from $AUD 4,400-12,000. Once the plan has been signed off by the client and payment has been made, the plan is put into practice and managed on an ongoing basis.

ENDS

Attached from left to right: Justin Gilmour, Managing Director of Integro Private Financial Consulting (Australia); Howard Sharfman, President, NFP Insurance Solutions (USA); and Andrew Da Silva, Managing Director, Direct Financial Finance Solutions (UK).

For media queries please contact Khensani Mthombeni on 071 886 9188 or khensanimth@discovery.co.za.