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Jaco Coetzee, general manager of Sanlam Financial Advisers says the launch of the new model – known internationally as financial advice dealerships – was perfectly timed. “Changes in the financial services industry, including regulatory requirements and ever more complex products, have meant financial advisers are increasingly becoming experts in a specific area.

“Of course clients don’t want to deal with multiple financial advisers – one for life insurance, one for short-term, and one for investments – so the BlueStar businesses are one-stop-shops where a client can deal with multiple experts. This is a very professional approach to financial planning, similar to the structure of a law or accounting practice.”

He says the goal of empowering talented financial advisers to own their own business, and thus stay in the industry, has also been successfully fulfilled. “A distinctive feature of the BlueStar model is that all financial advice provided is backed by Sanlam, which ensures peace of mind for both clients and advisers. We also provide support for business processes, such as making sure each business complies with all relevant legislation and regulations. This has helped BlueStar owners build successful businesses which are also stable employers.”

Coetzee says the response from clients has been extremely positive and this has helped spur the rapid growth of this division of the Sanlam group’s distribution business. “Clients now have a relationship with a business, not with one individual only. If you consider the high turnover rate of intermediaries across the industry, this allows clients a lot more peace of mind.”

André Blignaut, principal of Blignaut BlueStar in Centurion, has a team of nine financial advisers – including specialists in investments and fund analysis. His flourishing business offers the full range of advisory services to a client base of 4 600.

“Since the elevation of the practice to a BlueStar business in 2009, we have had a steady stream of new clients, mostly through word of mouth. When chatting to our clients, they say the fact that they only need to phone one number to get all their financial planning needs met is a huge bonus. They also mention the security of not being ‘orphaned’ if their adviser leaves the industry.”

What is next for BlueStar? Coetzee says alternative interaction models made possible by technology are also likely to be introduced. These include sections of a financial needs analysis being done electronically, and interactions with clients taking place via social media in addition to face-to-face meetings. “We are introducing web-based technology that will lead to huge time and cost savings for financial advisers. It combines financial planning advice tools, investment portfolio construction tools and back-office tools, in an integrated package. The new technology will offer tangible benefits to our clients, who will now be able to get the same quality advice, but much quicker.”

Coetzee says going forward, the drive towards specialisation is set to continue, with these types of businesses likely to increase as more advisers specialise in smaller areas of focus.

Financial advice ‘dealerships’ around the world:

  • Australia has a relatively mature ‘dealership’ industry, with a trend towards consolidation and the domination of large firms of financial advisers currently playing out.
  • In Australia only about 5% of financial intermediaries remain independent sole practitioners, with 95% being part of a financial advice business.
  • In the UK, the retail distribution review has seen adviser numbers drop by 20%, with a clear trend developing where financial advisers prefer to be part of a group providing restricted advice instead of being an independent whole-of-market adviser.
Sanlam Life Insurance is a licensed financial service provider.
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