What should I do with my money? Perhaps, because the question is so simple, the answer appears easy. So easy that almost anyone can answer it: make it grow. But as Carrick Development and Brand Director Kieron McRae says, like most things we value in life, it’s complicated.
We all have acquaintances or know people that, for various reasons, drifted into the financial services sector and acquired the label “financial advisor” or “financial planner”. I say drifted because some may have started out as accountants, worked selling insurance or slogged it out at a brokerage firm, joined a bank and went from clerk to manager, or simply took early retirement and, being reasonably successful in managing their own money, thought they could do the same for others.
This scenario no longer prevails. At the time that the South African Financial Services Board (FSB) evolved into the Financial Sector Conduct Authority (FSCA) earlier this year, it administered 15 separate acts related to the financial sector — and this was just within the non-banking category alone. The FSCA is now the market conduct regulator for the entire financial services industry.
And if you want to enter this arena, you have to ensure that you understand and abide by the new Market Conduct regulatory framework, not only for your own well-being and business survival, but to provide your clients with professional advice and peace of mind. This will require extensive and more thorough development and training programmes for those entering the sector (and, invariably, for many already employed).
Regulating the financial sector is not new. Six years ago, the FSB introduced the Treating Customers Fairly (TCF) programme, which set out to make the industry more customer-centric across the value chain. The new Market Conduct policy is TCF on steroids: financial services providers will be required to display transparent governance structures, clear risk controls, and detailed, reliable, and effective management information systems.
The entire culture of the sector is changing. Some may feel this is fostering bureaucratic inefficiencies and placing additional — and uncalled for — cost burdens on the sector. This is clearly not the case. The industry is undergoing radical change, and in order to remain and compete in the market, institutions will need to re-align their corporate culture to achieve a more sustainable — and inevitably more profitable — business model.
Of course, this must be driven through a top-down strategy and applied across the company. But there is also a bottom-up approach requiring a longer-term view but one that will ultimately ensure that the culture changes, the sector is sustainable, and will continue to flourish and provide our clients with the satisfaction and security they expect.
We need to win the hearts and minds of those entering the sector for the first time. This may sound like a war strategy but unless we can develop a core of financial advisors who are professional and knowledgeable, and who grasp the principles and the culture of sustainable business models, we shall fail our clients and inevitably fall foul of the regulators.
This cuts to the heart of training and developing the people entering our sector. Many of the big players already are extending the training programmes for new recruits. In some cases, training programmes have gone overnight from a mere four-week offering to a two-year full-on financial development programme. They can afford to be, is the usual response to this.
Remember, even if you are a small company, unless you are developing, training, and organising for your staff to become professional financial advisors, you will soon not be in business. Our clients have moved on from having a coffee with that “friend” who has a sure-fire way for them to grow their money.
There is the danger that companies will use training programmes to simply prepare recruits by providing the requisite knowledge to tick the boxes in terms of passing the regulatory requirements. It’s tempting, it’s less time-consuming and hence less costly, and it’s a lot easier for all concerned.
But it is not sustainable. It doesn’t change the culture. The essayist Michel Montaigne once said that, “we ought to find out not who understands most but who understands best”. As has been pointed out, having the knowledge without understanding is like having principles without the integrity to apply them. Those who have the knowledge, those that can tick the boxes are, to paraphrase Montaigne, simply repeating another person’s learning; to be wise in the ways of wealth requires a wisdom of your own.
We need to cultivate a new breed of financial advisors and planners. This is not simply a matter of philosophy; it does not mean you should not set specific, measurable, and tangible goals, that you don’t continue manage expectations, or provide opportunities and mentorship. Training courses must be rigorous, demanding, and quantifiable — and there will always be dropouts. But financial institutions offering such programmes need also to create a culture that develops its employees, that nurtures their quest for wisdom, and that rewards them for their ability to create deep, sustainable, and beneficial relationships with clients.
After all, if you develop those recruits coming through your door today, they will be the ones who keep it open in the future.
Director – Development and Brand
About Carrick: Carrick Wealth is a regulated, independent ﬁnancial consultancy with a dedicated advisory team specialising in wealth and capital management for high net worth clients, including offshore investment structures and portfolio management.
The Carrick Development Academy (CDA) attracts top graduates annually who aspire to lead wealth and capital management into a new realm of professionalism and success. The 18-month development program offers structured on-the-job learning, technical industry training as well as professional development and insight into the day to day role of a Carrick Associate.