Future-proof your practice

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Change in the last 18 months has been rapid, with business and advice moving online in a matter of weeks. Zoom alone grew from around 10 million users in 2019 to 300 million users in April 2020, according to their 2020 Annual Report. And while advisers and brokerages have adapted to the new environment, many would have liked a little more time to prepare.

So, to aid you in getting ready for whatever the next big change might be, we’ve identified five future trends and looked at how these may affect you. That way, you and your brokerage can prepare in good time for future success.

The trend: A virtual, paperless office

After the pandemic, some clients will stay online, some will not, and some will want to meet in person and transact online.

Some of the preference for virtual advice is age dependent. According to the 2021 EY Global Wealth Research Report, millennials are more than two times likely to want virtual advice than baby boomers. But it’s about convenience – and working according to your clients’ preferences, whatever they are.

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Where does this leave the bricks and mortar offices? You will have seen one of the big five banks announcing that they are moving to a hybrid model, with some employees working from home permanently, which means a lot less office space and lower costs. It’s worth considering what office model you’d like to use in future.

Prepare your practice
If you decide to go the virtual office route, it will require some planning.

Make sure you have the required technology and connections to run a virtual, paperless office – it’s worth working with an IT expert who can help you set up your systems and ensure they are secure.

Choose partners to work with such as 1Life, who offer virtual services and platforms, such as Vantage. Vantage is 1Life’s financial adviser digital solution and allows you to service both your existing and new clients digitally from FNA to acceptance. It’s quick and easy, with security features such as one-time-pin transactions which allows you to work with your clients without having to be in the same room.

As far as the physical office goes, keep an eye on expenses and do a cost benefit analysis to see if the space is worth it. You can also consider an alternative of shared office space with another business or brokerage and set up a suitable schedule for office use.  Consider whether you truly need a physical office – it’s a large capital investment that could easily be avoided.

The trend: Cybercrime

Virtual offices and online data attract cybercriminals. Data breaches exposed 36 billion records in 2020, according to the Varonis 2021 trends report, and 85% of those were due to either hacking, malware or phishing. A reported 95% of breaches are caused by human error, and only 5% of folders are protected, which indicates there is a lot you can do to protect your brokerage and client information.

Prepare your practice
Criminals always look for the easy route – so make it difficult for them to find vulnerabilities in your system, and your chances of being attacked reduce. Simple protection measures can make a big difference, and it’s worth investigating cyberinsurance.

You also need to ensure you and your staff are trained on how to protect data and personal information, and follow safety and protection measures rigidly. This includes everything from password protection to file encryption and anti-virus checks.

If necessary, hire an expert who can assess your systems and ensure they are protected, and also educate you and your staff on how to be cyber savvy.

The trend: Diversification

Wise investment advice always includes diversification. This advice applies to income as well, and many successful advisers (and clients) know that depending on one income stream or one market segment is high risk. Add different income streams and income becomes more stable.

Prepare your practice
Analyse your current income to determine which products, providers and groups of clients it comes from. For example, are your clients all in one age group, and is your main product life cover? Then, identify areas where you can diversify.

Is there a business opportunity in prepaid insurance, for example, or could you upskill and become an investment adviser or tax consultant? Other options to consider include partnering with complementary brokerages, such as a tax consultancy or fiduciary expert, which may also be a good way to access new clients.

The trend: Fees and costs will be questioned

According to the 2021 EY Global Wealth report, 42% of clients are concerned about hidden costs when working with their wealth managers. Transparency in South Africa is mandatory, but many clients still find costs and fees for financial products and advice difficult to understand. The good news is that clients are willing to pay for good service and advice.

Prepare your practice
Always be transparent about costs and don’t rely on the bare minimum requirement of disclosure. Make sure clients understand your fees. Your brokerage should also have a service value proposition, which shows how you service clients, where and when you add value, and how this can benefit your clients. This makes it easy to answer the question: what do I get for the fee I pay?

The trend: People want to learn how to manage money and create wealth

The EY report identified financial and investment education as something people feel they need, and it peaks around key life events. For example, when a client has a new baby, they want to learn how to invest for their child. When they get married, they might want to start joint investments with their spouse. But they don’t always know how to sift through the money management and investment advice available, judge whether it is trustworthy, or apply it to their own situations with confidence.

Prepare your practice
Use your social media interactions, newsletters and meetings with clients to offer some financial education. You could also investigate offering webinars to help your clients understand financial terms and products or draw up some quick easy guides explaining important financial terms and concepts and offer these to your clients as a value add. Alternatively, have you ever considered writing an eBook on the subject, that you can self-publish and promote online?

A quick word on client attraction and retention

Client retention and attraction are top of mind for most advisers. Competition is fierce, money is scarce, and attracting new clients is not easy, especially if the trend of the shrinking middle class continues and unemployment remains high.

Many of the above trends – in fact, all of them – provide ways to not only retain clients through offering good service, but also find new clients through increasing your reach with initiatives such as financial education and partnering with complementary businesses.

Future-proof for future success

There is a lot to deal with in the here and now, but it is worth taking a moment to reflect on what your brokerage should look like in three years and thinking about how you can cost-effectively adapt and change to get there. Focus on what clients want and look for innovative and supportive partners who you can work with to grow your business and serve your clients.

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