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Masthead Masterclass helps advisors prepare for the future

Author: Media Release   Original Publication: FAnews

Posted on 23 Aug 2018

Independent financial advisors (IFAs) need to be fully committed to their businesses and not just involved, if they want to succeed in the increasingly regulated environment of the future, Ian Middleton, MD of Masthead, told more than 1 000 IFAs at the recent Masthead Masterclass held in 11 venues across South Africa.

Full commitment requires ongoing investment in one’s business, which will build and ultimately provide an income for life, said Middleton. Looking at industry statistics for life-wrapped investment business, advisors operating independently enjoy the benefits of doing “bigger business” (ie. larger investment amounts) and doing business with more affluent clients than tied agents. Masthead research shows that IFAs within its network currently manage an average of R156 million per advisor. They have an average of 552 clients, although this is skewed by the sample containing some direct operators, and write an average of 7.5 investments, 9 long term and 12 short term policies in new business quarterly.

Middleton acknowledged that IFAs worldwide face many challenges. They operate in a volatile marketplace with new and strong competition. They need to maintain cash flow, find and retain the right staff and achieve a work-life balance, often while working in isolation. In addition, their businesses increasingly fall under the scrutiny of the public and demanding regulators.

“What got IFAs to where they are today is unlikely to get them to where they want or need to be in the future,” said Middleton. To stay in business, they need to maintain a positive mindset and remain focused. He encouraged IFAs to put on the “business owner hat” and consider some of the key issues.

One such issue is “a wave of regulatory developments, which makes the local financial services industry one of the most regulated in the world.” Recent regulatory developments and/or consultations include the Financial Sector Regulation Act, Fit and Proper regulations, Personal Indemnity (PI) requirements, Equivalence of Reward, FAIS General Code of Conduct amendments, Policyholder Protection Rules for long-term and short-term insurance, insurance regulations, FIC Amendment Act and the Retail Distribution Review (RDR). Charene Nortier, FAIS Supervision at the Financial Sector Conduct Authority (FSCA), discussed these in detail.

“It is critical not to ignore regulation, but to understand it,” said Middleton. The changes are substantial, as the new “Fit and Proper regulations have recently overtaken RDR (which is still being fully implemented) as the biggest change since FAIS.” He said Masthead focuses on understanding the changes and submits regular commentary to the FSCA.

Another issue is to safeguard one’s business reputation, which takes years to build, yet five minutes to ruin. He encouraged advisors to engage more with clients to build trust. “The more engaged clients are in retirement planning consultations, the more those clients trust their advisors and the advice.” Research shows that some 60% of clients with whom advisors have “considerable engagement” said their advisor provides value beyond what they could achieve on their own.

Furthermore, satisfied clients are more loyal. Research from the USA indicates that three quarters of clients are satisfied with their advisor in terms of accessibility, transparency and clear communication. Half of these clients want a lifelong relationship with their advisor.

Several aspects also predict how loyal clients will be to a business. These include accessibility, percentage of the client’s assets under management, length of the client relationship and if the advisor is engaged with clients in their retirement planning.

Engaging with clients is vital to increase profit. “Work done by Business Health in Australia shows that advisors who contact their top or ‘A-clients’ more than 10 times a year enjoy 31% more profit than those who do not. Seeking feedback from clients also improves profitability,” said Middleton.

He added that great advisors offer more than financial guidance and education. They consistently demonstrate good listening skills and integrity. They are perceived as trustworthy and show that human relationships matter. Those who establish a deeper emotional connection with their clients have more satisfied and confident clients.

Another important consideration is to stay relevant to your target market in an environment of stronger competition and the emergence of “disruptors” that change how things are done. He warned against applying a one-size-fits-all approach to customers, especially across different age bands.

To remain sustainable, Middleton recommended that advisors review the way they deal with various categories of clients. They should look at their onboarding processes for new clients, request feedback from new clients, and set and manage client expectations. In addition, advisors should introduce clients to their key staff and delegate client facing tasks to staff as much as possible to reduce client dependency on the advisor only. It is important “not to operate alone if you want to stay in the industry,” he said.

He mentioned some of the steps advisors have taken to be more client focused. These include allowing clients guest WiFi access while they wait in the reception of the practice, adding a CRM alert for A-clients who have not been contacted in 90 days, providing financial advice tips in emails, preparing staff for equity in the business and publishing relevant articles in a client newsletter.

Masthead continues to help advisors run sustainable businesses, said Middleton. “Advisors can gain further understanding of regulation through Masthead’s Online Learning portal, where we unpack in simple terms new regulation on the horizon, its impact on your business and how to deal with it. We also provide the tools, templates and customisable implementation plans and packages that are needed to deal with regulatory and business change.”

“Advisors have dealt with change before and can remain sustainable by doing the right things,” said Middleton. “With Masthead’s help, you can prepare your business for the future.”

This article was originally published on on 13 August 2018. To access the original article, click here.


A national supplier of risk management services to independent financial advisors and other licensed financial service providers (FSPs). Established in 2004, we help our clients overcome their risk management challenges so they can grow and thrive in an increasingly regulated industry. Providing professional guidance and practical support, our team of specialists is passionately committed to delivering tangible solutions.

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