“For too long financial needs analyses (FNAs) have calculated an amount that clients need to allocate to insurance and invest without taking affordability into account. If we want to make financial advice more accessible and achievable, FNAs must include affordability considerations."
1Life CEO, Laurence Hillman, is passionate about making financial advice accessible to more South Africans. This starts with an FNA that is quick and easy to complete and takes affordability into consideration as well as a client’s life stage.
Technology has made FNAs a lot easier to complete because no manual calculations are required, but they still have a few drawbacks. They tend to either focus on only one aspect of personal finance – insurance or investments, and the recommendation of how much to spend on insurance or to invest ignores how much a client can afford.
This means that financial advisers have to spend time manually adjusting the FNAs output to find an affordable amount and to make sure clients have adequate insurance and investment savings for their life stage.
There’s another drawback in many FNAs – they ask a lot of questions. For advisers this means spending time with a client completing an FNA and following this up with a discussion on the outcome of the FNA. In addition, the client needed to sign, in person, the Record of Advice, acknowledging they understood the outcome of the FNA and accompanying financial advice. A time-consuming exercise we believe can be shortened.
1Plan, a revolutionary FNA, supports the financial adviser through the advice-giving process. There are only five questions a client needs to complete. 1Plan then uses these answers and big data to come up with an affordable monthly number. No tweaking or adjusting required. Based on the client’s life stage, 1Plan will calculate how much of that affordable monthly number should be spent on risk products and how much on investing.
“Other FNAs tell you how much you need. Ours tells you what you can you do with what you have,” says Laurence.
1Plan is quick and easy and uncomplicated. It calculates a number that is realistic, so clients can be confident their goals are achievable.
Spend your time providing good advice - not filling in forms
Yes. Well-designed FNAs aren’t lengthy, and they don’t ask too many personal questions. “We looked at what we learnt on our digital journey in our direct distribution channel and used the innovations achieved there as well as insights from economic research and big data to design an FNA for financial advisers that is simple yet sophisticated, comprehensive and compliant,” says Laurence.
1Plan is available to financial advisers on 1Life Vantage, 1Life’s financial adviser digital solution. Advisers log in, capture client details such as name and ID number, and complete the FNA with the client in real time.
1Plan then calculates an appropriate, affordable monthly amount that is allocated towards insurance and investments.
This allocation takes a clients’ life stage into account. For example, a client with two toddler children will have a higher allocation towards life and disability insurance than an older client with children in matric.
“Although the number is an affordable recommendation, it isn’t cast in stone,” says Kobus Wentzel, 1Life’s head of distribution. “Financial advisers know their clients personally and can adjust the number if they need to. “
1Plan also makes annual reviews a lot less complicated and repetitive as clients can quickly review the five questions to see if their circumstances and life stage have changed and their financial products still meet their needs.
“During lockdown it took us only 3 days to build a remote acceptance functionality into 1Life Vantage, says Kobus. “This enables financial advisers and clients to conduct business safely using smart devices, electronic signatures (records of advice and applications are date, time and location stamped using geo location), and two-factor verification through a one-time pin functionality. 1Life Vantage ensures secure transactions and a permanent record of when and where the FNA and an application were completed.”
Top tip: Find out more about how you can do business digitally with 1Life and Vantage here.
Technology can and should improve financial advisers’ businesses and add value to them and their clients, personally. 1Life has shown that you can do things differently and more effectively in the digital world through innovations like 1Plan and remote acceptance.
We’ve been innovating for over 15 years in our direct distribution channel. Now, we are able to bring this history of innovation to our advisers, and really give them the tools they need to empower their business. We are a true multi-distribution insurer and are currently registering many likeminded innovative independent financial advisers to distribute our life and investment products.
“We want to help financial advisers use digital tools like 1Life Vantage and the 1Plan FNA to build better relationships with their clients and give good financial advice,” concludes Laurence.
To find out more about 1Plan and how it can help you and your clients email us on [email protected]
|Explain to your client what an FNA is and how it will help them manage their finances
||Say an FNA is only for compliance. It is required but an FNA’s purpose is to make sure you can give the most appropriate advice
|Encourage your clients to be objective
||Ask your clients questions you wouldn’t want to answer
|Read through the FNA and complete it yourself so you can guide your clients
||Rush through an FNA – it can be quick, but some clients may need a bit of time to think about the questions
|Explain why an FNA should be completed at least once a year
||Forget to schedule an update with your client