Guiding consumers since 2009

New course aims to boost quality of financial advice

By Staff Writer

By Natasha Arendorf, ITNews.co.za

Dramatic events in the global marketplace in recent times such as the current US sub-prime crisis and the crashing of one of the America's biggest banks Bear Stearns, has rattled investors globally.

With investors increasingly looking for guidance and sound advice on protecting and growing their hard-earned savings, the UCT Graduate School of Business is offering a programme for financial advisors called Advice-Based Financial Planning, which is geared to giving advisors the critical tools to best take care of their clients.

According to Robert Macdonald, Director of the UCT GSB course and Head of Xchange Solutions, South Africa has not been immune and there have been some dramatic fluctuations in the South African share market over the past six months which would have undoubtedly unsettled many investors.

Macdonald said that when markets turn turbulent the need for sound financial advice becomes all the more critical if not essential to chart a safe course.

Many investors who try to go it alone, according to studies in Behavioural Finance, run the risk of falling foul of pitfalls such as peer pressure, cognitive mistakes or errors of judgment, and allowing emotions to influence investment decisions.

As a result investors often make the wrong decision at the wrong time.

Government has recognised the need that South Africans have for sound advice from financial advisors and major changes are afoot in the financial advisory sector where advisors will need to clearly state whether they are sales agents who represent a certain investment product or company, or are completely independent.

The South African industry to date has seen many people not get the best financial advice because of the commission and incentives paid to advisors to peddle selected products.

The new system will mean that many advisors who make the shift from being salespeople to independent advice-based financial planners will need a new set of skills that fosters a long term relationship with clients.

"Advice-based financial planners who want to present a value proposition of providing consultative, holistic advice geared towards achieving long-term goals have to change the way they approach and interact with clients and thus need new skills for this.

"It is here that financial planners need to harness global best practice and most importantly focus on the importance of people skills.

"They need to ask themselves: How do I give good advice? How do I manage a client and their emotions and keep them focussed on their investment objectives amidst constant market noise and hype? How do I elicit trust and mentor a client?"

The UCT GSB course, run by the UCT GSB Executive Education unit, is designed to help financial planners understand the transition to independent, advice-based planning and make the right choices in terms of their business, and the way that they deal with their clients.

It is a two-day course that earns the attendees continuing education credits.

The course harnesses together some of the leading expertise available in South Africa and abroad.

This includes: Nigel Scott, Director of h4 Financial Planning who will present on the differences between the advice-based approach and the product distribution model; Johann Maree, Director of the Institute for Practice Management, who willl  present on the current state of financial planning businesses in South Africa, and Kevin Bailey, founder and Executive Chairman of The Money Managers Ltd in Australia who will cover how businesses internationally have taken up the challenge of transitioning to the advice-based model

The course will not only be dealing with industry and business issues, but will also focus on the issues of changing the mindset of both financial planners and clients.

To this end there will be a session on the importance of developing trust with clients; which will pick up on research conducted by Xchange Solutions and Markinor into what clients are looking for from financial advisers; as well as a session dealing with money relationships, those between clients and advisers, as well as a client's relationship with money.

One of the key roles of an advice-based financial planner is to mentor and coach their clients on a range of issues.

There will be a practical session run by the Centre of Coaching at the UCT GSB looking at implementing a mentoring and coaching relationship with clients.

"Many people find they need advice when they are at vulnerable stages of their life - such as when they reach retirement. Many fear making mistakes and ruining 40 years of hard work and so need guidance and reassurance.

"They need to feel they are being taken through a process that engages them fully, and ensures their goals and needs are properly and realistically identified and responded to," said Macdonald.

Macdonald added that the course will not only be useful for independent financial planners and brokers, but it would be very useful for broader industry players to attend, such as the Life Offices, Asset Managers, Banks, Private Banks, and Unit Trust companies.

"Anybody who is involved in selling financial or investment products, or advising clients on investment or financial matters will benefit from this course." 

The course runs from 8 - 9 May. Contact (021) 406 1323 for details or email abrahams@gsb.uct.ac.za

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