Professional Practice Management Presented by Anton Swanepoel Integrating regulatory reform into your FSP

Key regulatory challenges for the IFA 1. Financial Advisory and Intermediary Services Act (FAIS) 2. The General Code of Conduct (FAIS) 3. Financial Intelligence Centre Act (FICA) 4. Treating Customers Fairly (TCF) 5. Protection of Personal Information Act (POPI) 6. Retail Distribution Review (RDR)

Positive vs negative outcomes 1. FAIS – Raising the bar 2. The General Code of Conduct – professionalising the financial services industry 3. FICA – Prevention of Organised Crime, Money Laundering etc. 4. TCF – A basic business requirement 5. POPI – Preventing soliciting and identity theft 6. RDR – Calculate fair remuneration for professional services rendered

Client Experience FSP Business Business Professional introductionPeople Gather client informationPlanning Agree on service to be renderedProcess and procedures Systems Present proposal Operations Agree on solution Marketing Implementation Risk Management & Compliance Ongoing advice and services Financial Management RemunerationProfit/Loss Shareholder Value = RDR is about re-designing your practice into a first-class sustainable business Conduct analysis & prepare report Professional Practice Management

REP Introduction Gathering Information Service Agreement Conducting Analysis Prepare Client Report Present Your Proposal Accept / Reject Proposal Implementation Ongoing Advice & Service Trust Quality Advice Service Excellence Value Proposition Client interaction and service delivery

Copyright Dissatisfied Neutral Satisfied Impressed Raving Fans Emotional Level Time Your clients’ experience?

Turning clients into Raving Fans ➜ Integrity ➜ Competence ➜ Sound advice ➜ Service model ➜ Value proposition ➜ Delivering consistently

Client Value Proposition FSP Business Business Professional introductionPeople Gather client informationPlanning Agree on service to be renderedProcess and procedures Systems Present proposal Operations Agree on solution Marketing Implementation Risk Management & Compliance Ongoing advice and services Financial Management Remuneration ModelProfit/Loss Shareholder Value = How to re-design your practice and take your business to the next level Conduct analysis & prepare report Business management

Key challenges 1. Value proposition 2. Service model and consistent delivery 3. Pricing of your services 4. Your people 5. Strategic planning 6. Process and Procedures 7. Systems and Operations (hardware, software and workflows) 8. Marketing and generation of new prospects 9. Risk Management and Compliance 10. Financial Management

Non-profitable Clients Break-even Clients Profitable Clients Profitability Number of Clients Key challenges: Service model and pricing

Re-imagine delivery and remuneration ➜ Re-imagine the strategic positioning of your business ➜ Re-imagine your customer value proposition and service model ➜ Re-imagine your business efficiencies ➜ Then re-imagine your remuneration model

Strategic positioning of your business ➜ Identify key challenges ➜ Do you need help? ➜ What is your value proposition? ➜ How do I price my products and services? ➜ How does one optimise your business efficiencies? ➜ Can you outsource your non-core business?

If you are outnumbered or feel intimidated … partner!! Strategic positioning of your FSP FSP Client FICA FSLGAA TWIN PEAK TCF RDR ILAA POPI Binders FAIS

Potential partnerships 1. Consider agency or join a bigger FSP 2. Partnership through association 3. Staying independent and outsource non-core business activities 4. Fund management – Model Portfolios 5. Business management programme and/or business consulting 6. Support with service model design and implementation 7. Individually branded client reporting 8. Compliance 9. Legal support 10. A fully integrated CPD training programme

Client interaction and client experience Client Experience FSP Business Business Professional introductionPeople Gather client informationPlanning Agree on service to be renderedProcess and procedures Systems Present proposal Operations Agree on solution Marketing Implementation Risk Management & Compliance Ongoing advice and services Financial Management RemunerationProfit/Loss Shareholder Value = Integration of all the regulation requirements in the client interaction process Conduct analysis & prepare report

Your professional introduction 1. Letter of introduction 2. Compliance document vs Marketing document 3. Content 4. Branding 5. Look and feel 6. Electronic version 7. Optimisation 8. FAIS / FICA / POPI / TCF / RDR?

Gathering your client’s information 1. Personal information 2. FICA information and confirmation 3. Needs analysis questionnaire 4. Risk profiling discussion 5. FAIS / FICA / POPI / TCF / RDR?

Your client service agreement 1. Client service request 2. Client service instruction 3. Service level agreement 4. Confidentiality agreement and POPI declaration 5. FAIS / FICA / POPI / TCF / RDR?

Conducting your analysis and preparing the report 1. Executive summary of the client’s needs and objectives 2. Cash flow analysis 3. Targeted return and relationship between risk and return 4. Highlight the required risk 5. Explain risk capacity 6. Address risk tolerance 7. Written recommendations 8. FAIS / FICA / POPI / TCF / RDR?

Presenting your client proposal 1. Confirming the client’s needs and objectives 2. Cash flow analysis 3. Using cash as the point of reference 4. Using inflation as a benchmark 5. Explain risk vs return again 6. Focus on the investment strategy 7. He who owns the plan owns the client 8. Position the plan first, product last 9. Position the investment strategy and the importance of the ongoing monitoring and service model 10. FAIS / FICA / POPI / TCF / RDR?

Agreeing on your proposal 1. Advice agreement 2. Service agreement 3. Value proposition and service model 4. Transactions must be accurately accounted for 5. Optimisation 6. FAIS / FICA / POPI / TCF / RDR?

Implementation 1. Fully completed application form 2. Scanning of documentation 3. Submission of application 4. Follow up 5. Finalisation of application 6. Confirmation letter to client 7. FAIS / FICA / POPI / TCF / RDR?

Ongoing advice and service value proposition 1. Ongoing value proposition per client segmentation 2. Quarterly investment reports (own branding) 3. Six-monthly feedback 4. Annual reviews 5. Minutes of meetings 6. FAIS / FICA / POPI / TCF? 7. Retail Distribution Review (Re-imagine delivery and reward)

RDR: Re-imagine delivery and remuneration 1. Standard cost for every FSP License fees Fit and proper requirements Operational ability Financial soundness requirements 2. First meeting Travel Professional time Paperwork 3. Financial planning Obtaining additional client information from third parties Needs analysis Risk profile 4. Conducting an analysis and prepare a client report Professional time Suitability

RDR: Re-imagine delivery and remuneration 5. Presenting the report Professional time 6. Agreement Advice risk Transactions must be accurately accounted for 7. Implementation and confirmation of transactions Professional time Resources Compliance 8. Ongoing advice and service model Professional time and resources Advice risk

Client Experience FSP Business Business Professional introductionPeople Gather client informationPlanning Agree on service to be renderedProcess and procedures Systems Present proposal Operations Agree on solution Marketing Implementation Risk Management & Compliance Ongoing advice and services Financial Management RemunerationProfit/Loss Shareholder Value = Integration of all the regulation requirements in the management of the business Conduct analysis & prepare report Business management

People 1. Your personal fit and proper requirements 2. The brand called You 3. What is your own, unique value proposition? 4. Developing your people 5. Fit and proper requirements 6. Develop the next generation of super- assistants 7. Introducing a super-assistant development programme 8. Employment contract 9. Performance appraisals aligned with your value proposition to clients 10. FAIS / FICA / POPI / TCF / RDR?

Planning 1. Articulate your vision for the business 2. Determine your current position in the industry 3. Do a SWOT analysis 4. Do a gap analysis 5. Identify your main strategic goals 6. Do your strategic planning 7. Draft your business plan 8. Identify your outsourcing opportunities and partnerships 9. Draft your marketing plan 10. Implement!

Process and procedures 1. Client interaction 2. Record-keeping 3. Client correspondence 4. Submission of new business 5. Confirmation of transactions 6. Service model 7. Compliance audits and reports 8. Management and overseeing of activities 9. FAIS / FICA / POPI / TCF / RDR? Process: SMaC (Specific, Methodical and Consistent)

Systems and operations 1. Operational ability 2. Offices 3. Infrastructure 4. Technological systems 5. Hardware 6. Software 7. Work flows 8. FAIS / FICA / POPI / TCF / RDR?

Marketing 1. Website 2. Branding 3. Documentation 4. Value proposition 5. Turning existing clients into fans 6. FAIS / FICA / POPI / TCF / RDR?

Risk management and compliance 1. Advice risk 2. Business plan 3. Disaster recovery 4. Business continuity 5. FAIS / FICA / POPI / TCF / RDR 6. External compliance and business consultant 7. FAIS / FICA / POPI / TCF / RDR?

Financial management 1. Pastel / VIP 2. Business information 3. Financial management 4. Annual financial statements 5. Business planning and ongoing cash flow management 6. FAIS / FICA / POPI / TCF / RDR?

General 1. Gap analysis 2. Client value proposition and client experience 3. Critical evaluation of your client interaction process 4. Critical evaluation of your pricing model 5. Critical evaluation of your business efficiencies 6. Critical evaluation of your management style and effectiveness 7. Identify your priorities 8. Prioritise, plan and implement accordingly 9. survey

Questions?