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The positive impact of financial advice

Posted on 14 Sep 2022

“You never know when a helping hand will change another person’s entire life.” So said US author, salesman and motivational speaker Zig Ziglar, whose interest in self-help shaped his career to focus on raising the image of salespeople in America. In this way, Ziglar’s purpose met his passion.

As a financial advisor, your purpose similarly meets your passion as you help clients reach their financial goals and enjoy peace of mind. You are responsible for your clients’ financial well-being, and take their financial and emotional needs into account in your recommendations. This reflects a desire to make a difference in other people’s lives and a commitment to your profession.

But how do you deliver outcomes that quantitatively demonstrate value to clients? How does your FSP assess the value of the advice provided to clients?

To help answer these questions, consider how clients have benefitted from your advice and services. Are you aware of the extent of your reach and the positive impact you and your FSP have on clients, their families, and friends, as well as business owners and employees? Do you realise the immense positive influence of your advice on your family, friends and community over the years?

This newsletter focuses on how you, with your passion, education, efficient business models and well-trained administrative employees, make a positive impact on clients’ lives and benefit wider society.

A beneficial profession

‘Financial advisor’ might not be one of the first professions that come to mind when considering the careers that beneficially impact society. However, it should be when one considers the roles you fulfil and the impact of financial services on your clients.

As a financial advisor, the roles you play in your day-to-day life include Key Individual, business owner, employer, coach and mentor, psychologist and good listener. You are also a trusted individual with whom clients can share their deepest wishes and fears. The influence you have is massive, and it ripples through society.

Furthermore, you provide an essential service, as the desire for financial freedom and relief from financial stress are among consumers’ top priorities.

To better understand the positive impact advisors make in clients’ lives, consider the claim pay-outs made in South Africa following three major events in the past few years. These are the COVID-19 pandemic that became a reality in March 2020 when the first patient tested positive, the July 2021 riots and the April 2022 floods in KwaZulu-Natal.

COVID-19 claims

ASISA reported that death claims between 1 April 2021 and 20 September 2021 increased by 53% compared to the same six-month period in pre-COVID 2019. The Rand value of these claims increased by 127%. In total, R92 billion was paid out in death benefits during the first 18 months of the COVID-19 pandemic to 30 September 2021. The claims were based on individual life, group life, credit life, and funeral cover policies.

Death claims due to COVID-19 and benefits paid over 18 months:

In July 2021, South Africa was hit by a wave of devastating violence. Following the riots, Sasria (the South African Special Risk Insurance Association) paid out more than R5.8 billion in claims. A report by Mary Papayya in Business Day estimates that claims linked to the violence could amount to R27 billion. Claims of about R20 billion have already been paid out in the last few months.

In April this year, heavy rainfall in KwaZulu-Natal caused severe flooding and landslides. By 14 April 2022, insurers had received flood-related claims of R245 million. Of this, R45 million was attributed to homeowner, motor, and commercial policies. The remainder was for specialty cover, such as plants, factories, specialised equipment, and shipping and maritime cover.

The claims and pay-outs from the above events highlight the significant role FSPs, Key Individuals, and financial advisors play in the lives of individuals, businesses, and communities. While pay-outs of death benefits cannot relieve the pain of loved ones passing away, your good influence on your clients ensured there was financial comfort and security for those who lost loved ones. Likewise, pay-outs empowered short-term policyholders to replace their assets, and businesses were able to recover quicker with financial assistance.

How you make your impact

At the heart of an FSP is the Key Individual who runs the business with long-term sustainability in mind. The Key Individual ensures advisors are educated and trained accordingly, and that clients get suitable advice. The Key Individual also ensures administrative personnel interacts with insurance companies, in order to ensure claims are paid to families who rely on the benefits.

As you enhance your clients’ lives with financial security, the claim statistics reflect how people are protected. Spreading wealth and comfort positively impacts clients, and millions of individuals overall.

In short, how you operate speaks to your profession, and Masthead salutes you on a job well done. We remain committed to assisting you, not only to comply with regulatory requirements but to run a sustainable business.

To ensure your business continues to operate efficiently, Masthead has developed the FSP ECO System. This strategic guideline can be used to re-look at your business and identify what is in place and what works in your business. It also reveals if anything is missing and the areas that need improvement. To find out more about the FSP ECO System, or if you have any questions, contact your Compliance Officer.


MASTHEAD IS

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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