Tag Archives: FSB

The great South African funeral-cover rip-off!

Can someone explain to me why funeral insurance is so expensive? It has got to be one of the biggest rip-offs and forms of institutionalised abuse of South Africans. I did some shopping around online Continue reading The great South African funeral-cover rip-off!

Financial planning profession in SA – not yet, not even close!

For far too long now we have been talking about financial planning becoming a profession in SA…sadly, we are not even close yet because it still remains an industry dominated by the need to sell products and by the suppliers of those products.
Continue reading Financial planning profession in SA – not yet, not even close!

Suck-session Planning

I recently tried to make an appointment to see my doctor for my annual check-up only to be informed that he has left to “take a sabbatical”. Bottom line is that he is tired and has had enough and is going to do something else.
Continue reading Suck-session Planning

At Liberty to do what they like?

It seems that Liberty Life have decided that they can do what they like and ignore written instructions from their clients. They appear to have adopted a policy of sending policy information requested by a non-servicing advisor, on behalf of a client and with the client’s written consent, to the client and not to the advisor who requests it.

This is NOT what the client has requested? How can they get away with this?

It also makes the work of the financial planner so much more difficult to do (and adds to the cost of servicing the client). I’m prepared to venture that this is not in the spirit of TCF!
If Liberty are worried about advisors obtaining information fraudulently then perhaps they need to look at the quality of the average advisor with whom they are doing business and not upset their existing client base either.
Rather than retaining the business, this kind of attitude goes a long way in encouraging clients and advisors to move business away from Liberty Life.

 

 

 

You should be ashamed of yourselves, Liberty Life

I just came across a client who has been sold a decreasing life annuity by someone representing Liberty Life. Yes, I know that there is no such thing (officially) as a decreasing life annuity (no one would buy it if there was) but this is effectively what a non-escalating life annuity is. You have condemned the client to future poverty!

While the initial income may look more attractive, in 20 years time (the guarantee period on the annuity for a 65 year old with stage 3 cancer and no financial dependents?) she will be getting an income which will be less than 1/2 of what she should be getting if there was an inflation linked escalation.

This is the kind of product and advice that gives our industry a bad name. If the insurance companies and ASISA wont act then perhaps it is time that the regulators banned this kind of product.

Imagine this…

Imagine that the body that regulates medical doctors (or any other profession) went to the doctors and said something like this to them: “We are terribly sorry but (due to a whole lot of reasons) we have let a whole lot of people who have not been suitably qualified as doctors, practice as doctors. And now as a result of this we need all of you to write (more) exams so that we can try to ensure at least some minimum kind of compliance.”

Unthinkable in just about any professional arena – the regulating body would be hung out to dry!

Not so in the Financial Services profession…exactly because of the above we now all need to write exams before the end of the year. So if your financial planner is grumpy (and I know I am) you now know why!

Leaky taps!

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)!