We all have acquaintances or know people that, for various reasons, drifted into the financial services sector and acquired the label “financial adviser” or “financial planner”.
I say drifted because some may have started out as accountants, worked selling insurance or slogged it out at a brokerage firm, joined a bank and went from clerk to manager, or simply took early retirement and, being reasonably successful in managing their own money, thought they could do the same for others.
Regulatory changes
This scenario no longer prevails. At the time that the South African Financial Services Board (FSB) evolved into the Financial Sector Conduct Authority (FSCA) earlier this year, it administered 15 separate acts related to the financial sector — and this was just within the non-banking category alone.
The FSCA is now the market conduct regulator for the entire financial services industry.
And if you want to enter this arena, you have to ensure that you understand and abide by the new Market Conduct regulatory framework, not only for your own well-being and business survival, but to provide your clients with professional advice and peace of mind.
This will require extensive and more thorough development and training programmes for those entering the sector (and, invariably, for many already employed).
Regulating the financial sector is not new. Six years ago, the FSB introduced the Treating Customers Fairly (TCF) programme, which set out to make the industry more customer-centric across the value chain.
The new Market Conduct policy is TCF on steroids: financial services providers will be required to display transparent governance structures, clear risk controls, and detailed, reliable, and effective management information systems.
The entire culture of the sector is changing. Some may feel this is fostering bureaucratic inefficiencies and placing additional — and uncalled for — cost burdens on the sector.
This is clearly not the case. The industry is undergoing radical change, and in order to remain and compete in the market, institutions will need to re-align their corporate culture to achieve a more sustainable — and inevitably more profitable — business model.
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