Factors impacting the sustainability of independent financial planners in KwaZulu-Natal.
Multiple channels are used for the marketing, distribution and sale of insurance products. These include independent financial planners, tied and franchise planners, bank financial planners, call centres, telemarketing, mobile and online facilities. The predominant channel is the independent financial planner. However, a significant number of independent financial planners are leaving the industry permanently or joining alternative models. The aim of this study is to ascertain the factors affecting independent financial planners and the impact of these factors on the sustainability of independent financial planners. The study focussed on independent financial planners practising in the long-term insurance industry in KwaZulu-Natal (KZN). One hundred and fifteen (115) planners of the population of 525 completed electronic questionnaire, which was sufficient to draw inferences to the population. A quantitative method was used allowing the researcher to make generalisations from the respondents that completed the electronic questionnaire to the target population. Descriptive and inferential statistics were used to analyse the data. Legislation has been identified as a key factor affecting independent financial planners. Over 25% of respondents indicated that they had considered exiting the industry within the last five years with 73% (of this 25%) citing compliance legislation as the major reason. One third of respondents experienced a decrease in income over the last five years with 60% confirming that commission regulations negatively impacted on their income. Over 50% of all respondents agree that clients are using alternative channels for the purchase of insurance products. There must be a concerted effort from all stakeholders to professionalise the industry. Minimum qualifications required to practise as a financial planner will result in confidence and trust on the part of consumers in the profession and the planners practising in the profession. Independent financial planners need to incorporate social media and other forms of technology in their practices for the marketing, distribution and sale of products and services to retain and attract new clients. They need to differentiate themselves from the alternative channels by marketing themselves as selling advice and not products.
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