Blue Chip Issue 85

BLUE CHIP FPI THE VALUE

BLUE CHIP FPI THE VALUE OF A FINANCIAL PLANNER Lelané Bezuidenhout, CFP®, has been the chief executive officer of Financial Planning Institute of Southern Africa for three-and-a-half years. Blue Chip, the official publication of the Institute, speaks to her about the financial planning profession. Lelané Bezuidenhout, CFP®, CEO of FPI.

FPI BLUE CHIP Lelané Bezuidenhout has a passion for developing people, processes and systems. She is a strong believer in turning stumbling blocks into stepping stones and finds a silver lining in every situation. Lelané has a positive mindset and is focused on reaching her goals through careful planning and aligning with strategic goals and commitments. She values the standards and principles implemented by bodies like Financial Planning Institute of Southern Africa (FPI) as well as the FPI Code of Ethics and Practice Standards as they guide her in treating customers fairly. She is a proud CERTIFIED FINANCIAL PLANNER® (CFP®) professional member of FPI. Lelané, please talk to us about the importance of consumer education in South Africa. Consumer education is extremely important as it enables consumers to make informed decisions around their finances. Consumer education focuses on financial management (like budgeting), investing and borrowing, risk management (insurance and medical aid) as well as addressing South Africa’s poor savings culture. There is a massive need for financial literacy training in South Africa. Reflecting on the findings of the Financial Sector Conduct Authority’s (FSCA) Financial Literacy Baseline Survey, especially the financial literacy index, the overall current state of financial literacy in South Africa is lower than what was found in 2015 – young people seem to have been negatively affected. We need to introduce more financial literacy programmes for the youth of South Africa. As a community of financial institutions, non-profit and business process outsourcing companies as well as associations, we need to do more in a collective manner to increase the overall financial literacy levels in South Africa via robust consumer education programmes. We already have a few good programmes like: • FSCA’s Money Smart Week South Africa • FSCA’s consumer education website • FPIMyMoney123 (www.fpimymoney123.co.za) • Financial Planning Standards Board (FPSB) World Financial Planning Day • FPI’s Financial Planning Week • Association for Savings and Investments South Africa (ASISA) Consumer Financial Education Practitioner Sprints There are quite a few financial institutions that, in terms of their Prudential Authority and Financial Sector Code compliance requirements, are running consumer education programmes too. Please speak to us about the value of and need to use the services of a financial planner. We need to understand the services of a financial planner first. A CFP® professional financial planner works in the areas of: • Financial management (like budgeting, ratio analysis, etc) • Investment planning • Retirement planning • Tax planning • Risk planning (short-term, long-term, medical and business risk planning, etc) • Estate planning The value and need of a financial planner are crystallised by how a CFP® professional assists clients in developing strategies to help them manage their finances and to meet their life goals. CFP® professionals do all the above within the framework and ambit of a professional Code of Ethics and Financial Planning Practice Standards. A financial planner is a professional that guides you over a period of years to realise your financial goals and is there when life happens (birth, death, marriage, divorce). The financial services industry must focus on the value of professional financial advice and not on selling policies. One of the big issues facing financial advisors is clients focusing on their fees and advisors having to justify their value to clients. What is FPI doing to support advisors to transition to a fee-based model for advice? This is a real issue and comes from the stigma that financial advisors are policy peddlers that just chase commission. To change this perception, the financial services industry must focus on the value of professional financial advice and not on selling policies. We have seen quite a few Retail Distribution Review (RDR) proposals implemented via the General Code of Conduct, specifically the June 2020 amendments. These amendments, focusing just on fees, changed Section 3A (financial interest and conflict of interest management policy) quite significantly. It clarifies that either commission or fees can be charged, and that the provider/representative cannot be remunerated more than once for performing a similar service. Some professionals have moved to a fee-based-only model for professional advice (ie they do not take any commissions but only charge fees). FPI has designed a tool that assists members in charging a fee and taking into consideration the nature of the service and the resources, skills and competencies reasonably required to perform the service/s1. This tool is available in the membership community under member resources (practice management). Non-members cannot access this tool. FPI hosts peer collaboration sessions where professional members of FPI can participate in best practice sharing sessions. Transformation of the profession is an imperative of FPI. What does FPI mean when it refers to “transformation” and what is FPI doing to support its mission of “facilitating transformation within the profession”? One of FPI’s business objectives is to participate in the creation and revision of programmes in support of transformation in the industry. If the industry lacks diversity and inclusion, so will 1. 3A (d) (i) BN 80 of 2003 as amended in June 2020 www.bluechipdigital.co.za 21