It’s a good job I don’t earn a living from writing…it would have been a very bad month and a number of people have reminded me that I have not updated the blog for a while. I guess it is nice to be “missed” but as I have explained to many of them, I usually write when I feel passionately about something…
So does that mean that I’m not passionate at the moment? Not at all, on the contrary…I just don’t know that the things that are “consuming” me would really be of interest to most other people…if you think you might be interested then read on, else come back next week again.
Fact is that right now, most Financial Planners/advisors/brokers are coming to terms with the fact that we all have to right exams this year. And not just any exams, a closed book multiple choice exam with a pass mark of 65% that is based on the letter of the law (stuff that any normal professional in any other occupation would look-up as and when he/she needed the information). Imagine telling a doctor/lawyer that he/she has to write a whole lot of exams because their regulators have allowed a whole lot of under-qualified people to pass themselves off as doctors/lawyers?
The exams are not really the issue though; it is the real intention behind them that appears to be “questionable”. The nature of many the questions is such that it appears that the intention is to “trick” and not assess knowledge. Some of the answers revolve around making a distinction between the use of words. For example:
- “The registrar must…” or
- “The registrar may…” or
- “The registrar might…”
Come on! What is it that is the regulators are actually trying to achieve? Estimates are that as many as 2/3 of financial advisors/brokers (maybe more) will be forced to leave the industry by the end of the year. The future will most certainly contain far fewer independent financial planners and financial planning practices with bigger (corporate) offerings (just look at how many of the corporates are currently buying up books). These are not usually the kind of places associated with personal advice, attention to detail or a focus on relationship. I could harp on about the process and the intentions as well as the likely unintended consequences for the industry and also the consumer but it won’t get us anywhere…
My biggest issue with FAIS, all the legislation and these upcoming exams is that as well intentioned as the legislation may be, it is analogous to putting a bucket under a leaky tap…you need to fix the tap!
We need effective regulators and we need to regulate the financial services companies far more pro-actively. There have been far too many financial scandals on the FSB’s watch and far too many of the companies have been offering inappropriate products for far too long. Yet the responsibility and blame is usually passed on to the financial advisors. Just one example of this is the new conflicts of interest legislation which prevents financial institutions from spending more than R1000 per year on an individual advisor. Clearly the intention is to try to stop companies enticing brokers to sell their products by wining and dining them (this does not apply to their internal salespeople).
However, one of the biggest conflicts (in my opinion) has not been addressed. This is the area around retirement annuities – to my mind there is a massive conflict of interest where companies offer life insurance (contractual) RA’s as well as unit trust RA’s. There is a complete conflict with respect to the quantum of commission that can be earned on these 2 RA’s – for the target chasing sales person, the contractual RA wins every time and the consumer ends up with an out-dated and inappropriate product. Did the legislation even consider this as a conflict?
So right now, despite the fact that we run a great business and have an awesome client base and are able to impact a significant number of lives for the better, the future of our industry is highly uncertain…and I’m grumpy about that!
I hear that land is cheap in Zim and I am considering the appeal of farming (not really, but there are times when it does look attractive compared to this)!
