Re-thinking financial planning : the changing role of the financial planner.
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Date
2006
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Abstract
This study which is located in Durban, South Africa examines the life insurance Industry
in South Africa, the trends, local and international, and strategic issues and the thinking
of the industry leaders that will impact upon current distribution business models. The
impact of these on the role of the Financial Planner is highlighted, providing evidence of
the international success of alternative models for the distribution of professional
financial advice.
The literature review in this study suggests that, from international experience, the
weakest link in the present distribution chain of life insurance is the Financial Planner
because their means of remuneration is currently being subjected to extensive reduction
by regulators. As the South African industry transforms as a result of price cutting and
regulatory pressures on downscaling of existing commission structures, the Financial
Planner will bear the brunt of this resizing to the form of substantial reductions in their
earnings, resulting either Financial Planners exiting the industry, or seeking an alternative
business model than that of commission remuneration from the sale of life insurance
products
It is against this backdrop that this submission examines three critical questions: How
will the transformation of the South African life insurance industry, changing needs and
demands of consumer's impact upon the role of the Financial Planner in the financial
planning industry? What are the consumer's experiences, expectations and perceptions of
Financial Planners? What must Financial Planners and their representative bodies do in
order to ensure the continuity and independence of the role of the Financial Planner in the
distribution of professional financial planning advice? These critical questions are
investigated using a quantitative research instrument, i.e. a structured questionnaire, the
results of which are statistically analysed using the SPSS system.
The main findings provide substantial evidence that trends and experiences from the UK and USA will have a similar impact on the South African Financial Planner's future in the present life insurance business model. The predictions, teachings and motivations of
relevant authors is for Financial Planners to adopt a holistic expanded business model
offering Life Planning to consumers which provides the Financial Planner with an
alternative to remaining in the present business model. The study further reveals that
consumers attach a high value to the intellectual abilities and to the role the Financial Planner plays in providing them with professional financial advice. It further confirms that without the Financial Planner, life insurance companies have no real link to the
consumers of life insurance products because the consumer is dependent upon the
Financial Planner for professional financial advice.
Description
Thesis (MBA)-University of KwaZulu-Natal, Westville, 2006.
Keywords
Financial planning industry--Management., Life insurance--Law and legislation., Theses--Business administration.