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GOAL SETTING AND FINANCIAL PLAN. INTRODUCTION 1 With the introduction of the TCF (Treat Customers Fairly) principle based legislation, Old Mutual positioned.

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Presentation on theme: "GOAL SETTING AND FINANCIAL PLAN. INTRODUCTION 1 With the introduction of the TCF (Treat Customers Fairly) principle based legislation, Old Mutual positioned."— Presentation transcript:


2 INTRODUCTION 1 With the introduction of the TCF (Treat Customers Fairly) principle based legislation, Old Mutual positioned advice as core component of the sales process within the Insurance industry. Without proper advice, no salesman will survive when the TCF legislation is implemented. As a result our focus has moved from selling products to rather ensure advisers partner with their customers throughout their life to meet their goals and dreams. To do this we need to understand and respond to : the customers’ goals and dreams the importance of these goals to a customer’s life at a particular period in time how to create wealth and provide financial freedom

3 THE ADVICE-LED CONVERSATION Advice is a verbal activity which is evident throughout the conversation. All aspects of the customers life has an impact on the final outcome of the conversation and therefore the adviser has to know more about the customer’s life than just the obvious. ̶ Life Stages; Spent behaviour; Goal setting; Financial needs without a product push ̶ A richer conversation adds value to the advice process. Affordability discussion shifts to introduce the focus on spent behaviour and not only on the R-value available after deductions. The spent behaviour is a critical factor in the drive to sell products the customer can afford. Advice is driven and recognized through financial education input and guidance. The advice-led conversation does not have to conclude in a sale at point of conversation. The Financial Plan is completed and represents the basis of evidence of the advice-led conversation. Financial Plan is the foundation of all future customer engagements & sales. 2

4 HOW DO WE SUPPORT THE ADVICE-LED CONVERSATION The following changes are evident to support the new advice world that we creating in RMM FNA is replaced with Goal Setting & Financial Plan Financial Plan supports a long term engagement – not once off discussions Affordability section includes more detailed expenses Financial needs related questions reviewed – questions shorter and more needs focused vs. current product driven questions FAIS compliance checklist (questions) reviewed and updated – due for distribution by 10 April 2014 Life stages sales aid designed – as diary insert Electronic sales aid (smooth bonus slides with voice option) included on om- konect Future scripting capability Advice-led conversations & Financial Plan management supports persistency indicators 3


6 AFFORDABILITY 5 Is not… Recording income and expenses to determine disposable income available for more products. Is … Assessing what a customer spends their money and not only how much. Identify areas in creating more disposable income e.g. multiple cellphone contacts, multiple loans Identify opportunities for lending and short-term referrals Remember … Even though affordability is the first section on the application, you would need to understand the customers goals and priorities and this would will be established throughout your conversation. at first, note the income and expenses, you may only have a detailed discussion around the spend behavior later once goals and priorities are established.

7 GOAL SETTING 6 Currently … Advisers would determine a customers goals through the conversation, however, we have not recorded them in detail. Going forward … Advisers will capture the customers financial goals in detail. The summary of goals provides a guide of categories a financial goals could be. It is important to capture the detail of the goals in the customers own words, this is more personalized and customers can identify with them on an real and tangible way. Once you have the detail of the goal, ensure that you indicate which of the goal summaries is affected e.g. I want to save enough money for my child’s education in 15 years, as well as make sure that my house is covered if anything should happen. The summary associated with the goal is “Education” and “Household & Car”

8 GOAL SETTING 7 Customer Dependants Customers dependants refer to any individuals where financial dependency is relevant. This not only refers a spouse and children but any parents/in-law, extended family or even domestic workers in the employ of the customer. In order to provide appropriate advice, the adviser needs to understand who the financial dependants are, the adviser, through the conversation with the customer must determine this. Once this has been determined, the adviser must record not only that there are financial dependants but how many. √√ 2 1 2 1 110 Important note: recording the children in their different age groups is significant to understand the needs per age group. e.g. Advisers will identify a different need from a child at the age of 6 versus a child that is 16 or 17.

9 GOAL SETTING 8 Customer Life Stage Another critical element in providing appropriate advice is in understanding where a customer is at that particular time, in relation of their life. This we refer to as the Life Stage. Remember though that everyone is unique and the life stages referred to a merely guideline of the average customer. The life stages in our Financial Plan is relevant to our market. Important note: Single parent is recorded as a life stage on its own and should be selected together with the appropriate age group. its important to highlight Single Parent as a life stage on its own as it is very relevant in our market and the need and conversation will be different and therefore advisers need to understand this. √ √

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11 FINANCIAL PLAN 10 Life/Disability/Severe Ilness This section is to understand: 1.What the customer currently has for Life/Disability/Severe illness (total cover) 2.What the customer would like for Life/Disability/Severe illness (total cover) Record the shortfall, if any. Important note: Even though the priority and Benefit recommended follows directly, do not immediately identify priorities and recommendation. This should only be done after all needs questions have been answered. This encourages a more objective view for the customer as well as a quality advice conversation on a whole. The customers then see the “bigger picture”

12 FINANCIAL PLAN 11 Funeral This section is to understand: 1.What the customer currently has in Funeral benefits (total cover) 2.What the customer would like to have in Funeral benefits (total cover) Record the shortfall, if any. The question relating to cover continuing after death or disability is to not only understand the customers need but also to assist the adviser in understanding which product would be best suited when recommendations are made later.

13 FINANCIAL PLAN 12 Investment Investment questions are based on all investments. i.e. education, savings and single premium investments Record the customers needs based on the questions in this section. Once again the question related to savings continuing in the event of death or disability, is not only to capture the customers need but also to give the adviser insight into the product that could be recommended later. The amount needed and already provided for should be total premium/contribution not value of investments, except for Single Premium.

14 FINANCIAL PLAN 13 Retirement This section is to understand: 1.What the customer currently contributes for Retirement (total premium) 2.What the customer would like to contribute for Retirement (total premium) Due to the constraints in projections of investments, we do not project investment values required at maturity. The amount already provided for should exclude pension/provident funds.

15 FINANCIAL PLAN 14 Valuables and Debt Short term and lending products are part of the RMM value proposition and this section facilitates the referral process. An adviser would identify through conversation with the customer if lending or short term product is relevant. If so, complete the section below to initiate the referral to OMF and/or iWYZE.

16 FINANCIAL PLAN 15 Priorities and Recommendations Priorities and recommendations should happen after all other sections have been understood and captured by the adviser. Priorities: for every shortfall there must be a priority. priority is a number which show importance of the shortfall identified. the priority is determined by the customer based on the goals identified. The adviser provides advice to a customer but the decision remains with the customer. Recommendations: once priorities are set by the customer, the adviser would provide the customer with recommendations on which product is appropriate for the need. at this stage the adviser must provide the customer with certain risks. product risks: e.g. if you take the standard funeral versus taking the comprehensive+ your family will not be covered should something happen to you. In the financial plan it was indicated that the customer would like the premium/benefit to continue in the event of your death/disability. Continue to next page…

17 FINANCIAL PLAN 16 Priorities and Recommendations, conti. Recommendations: prioritization risks: the adviser may also now point out the risks of the customers priority of one need over another e.g. customer identified a higher priority for investment over life cover. This may not be in the customers best interest if there is no life cover and there is a family unit that would need financial support in the event of the death or disability of the main provider. Keep in mind that as a result of this conversation priorities could change.

18 FINANCIAL PLAN 17 Intermediary Comments The intermediary comments section is without doubt one of the most important sections on the Financial Plan. Advisers must make use of this section to provide an overview of the conversation with the customer. This will assist the supervisor, when assessing the quality of advice, in what actually took place in the conversation between the customer and adviser. This section should also highlight the risks that was explained to a customer, should the customer not agree with the advisers recommendations. The comment must be meaningful and create context that is not necessarily evident in the completion the Financial Plan. Important note: Be clear in summarizing your conversation. Your exact comments will be captured and stored should a dispute ever arise, the application will be used.

19 FINANCIAL PLAN 18 Conclusion It is important to understand that the Goal Setting and Financial Plan is not a once off event. It is a continuous journey with a client through every stage of their lives. The financial plan should be used referenced with follow up visits and interactions with customers to make them realize their goals and dreams over time.


21 THE FOLLOWING UPDATES ON THE APPLICATION FORM Unclaimed Assets – more details re beneficiaries are required when a beneficiary is selected – an additional page has been designed to accommodate this enhancement. Main reason for this change – beneficiaries cannot be traced at claim stage. Tax reference number – in preparation for legislative ruling on tax numbers being captured for products with tax benefits, we have made provision for a field to capture the tax number with relevant validations but it is not a compulsory field yet. Max cover increase – ASISA increased the cap on Zimele products to R50,000. Updating of personal information at Life Plan Call Centre – during conversation with customer as part of the Life Plan underwriting process, the Call Centre agents will now have access to customer personal details in order to update customer information – in the past the Call Centre rejected these cases. Salary band has been removed – capture actual income. General logo updates & new branding look & feel. 20

22 THANK YOU Old Mutual is a Licensed Financial Service Provider

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