Hi, my name is Jeffrey, and I will be your Financial Adviser
If this is your first meeting with Jeffrey, he will want to go through your existing policies. Jeffrey is a thorough man, as he should be! ‘Oh my, he does know his stuff…’ you may think, as he points out possible changes that could save you money.
He deftly points out dangers to the security of your Golden Years you never saw before. Oh, but what if you fall ill with a dreadful disease? Alternatively, fall, unable to get up again? What will happen to you then? In these uncertain times, do you REALLY have job security? How will you make sure that your income is secure so that you can keep paying for your son’s braces?
Now that you are hungry for securing a better future, he offers you new products on a platter garnished with easy to swallow payment plans…and you thank him profusely. You tell him that he is a good man for showing you the error of your ways.
The truth is…
Jeffrey might have been right.
Or he might have been hungry for commission.
Old School Jeffrey
The recipe used by the majority of insurance companies is one which enables the agent (called a seller) to earn a commission for each policy sold. This is how they make their money so that they can eat. This commission is paid in differing amounts – the first helping is the biggest, followed by regular, smaller ones for the duration of the lifetime of your policy. Fortunately for you, as Jeffrey, no doubt would have reassured you, this does not affect your payments. It has been evenly mixed into your monthly fee. You will not even taste it!
Should Jeffrey leave (research shows that he will, in all likelihood, find greener pastures after three years) the insurance company keeps scooping off the commission as per the agreement in the contract?
Only, they do not dish it out to the replacement agent. Siyanda, his bright-eyed replacement, will have to tempt you with another spicy course if she wants to be paid.
This is what gives NFS heartburn
NFS believes that there are two problems with commission-based selling.
- The bigger the premium, the bigger the commission. How do you know that you are not being oversold?
- When Jeffrey or Siyanda throws up their hands and says ‘we need to change this!’ how can you be sure that this assertion is made, based on your needs, rather than their appetite for commission?
The diet NFS prescribes
For many years, the regulatory authorities have also been concerned about this state of affairs. They have suggested that a fee-based model could serve as a healthier alternative. NFS, concerned for the health of your heart and pocket, serves it up as follows:
- Policies need to be well done, but commission should be rare. When we sell a policy, we only accept one-tenth of the commission due to us. 10% covers our admin costs. The other 90% is returned to you in the form of a lifelong premium discount for the life of the policy. This is worth thousands of rand to you.
- We serve financial advising as our main course. For this, we charge a fee. Clean, clear and upfront. You are issued with an invoice and it is free of preservatives, and portion sizes are not limited to possible insurance sales.
Our ingredients list
Over a period of a year, we will meet with you four times. We do so, following the Financial Regulator’s approved six-step plan. By the end of this year, we would have reviewed:
- Your marriage contract. Are you sure which agreement you entered into when you got married? You would be surprised at the number of persons who approach us, who don’t know!
- Your Will. We will check it for errors so that there are no surprises or extra burdens on your loved ones. The Gauteng Master of the High Court has stated that 73% of Wills presented after death has had to be rejected, because of errors.
- Your investments. These will be analysed, and you will know what the expected return on those investments are. We include a risk assessment. For an additional fee – which you will know about upfront – we will manage your portfolio proactively, so that you can receive the best returns.
- Your income streams. We examine these and help you diversify your income. Diversity reduces risk, should the unfortunate happen and one of these streams run out of steam. We never put all your eggs into one basket. We advocate for a balanced diet, consisting of passive and active income, spread over four courses. These could include investment income, rental income, dividend income, and capital gains.
- Your property. Passive income is a good thing! Investing in property is excellent, but can be challenging. We will walk you through the process, one step at a time. We do not add an extra charge for this service.
- Your financial plan. The economic climate, both internationally and nationally, affects which course is best to take. We will evaluate your plan accordingly and adjust it to suit the seasons.
The need for sustained energy
Your wealth has to last for your entire life. You may have significant others in your life, for whom you would like to leave a legacy. You may want to share your love with a cause you feel passionate about. Waiting until you are halfway or more through your meal, can leave you with a bitter taste by the end of it. Start now, do your shopping wisely and speak to your financial dietician, our financial advisor, about establishing healthy habits that will lead to financial well-being for life.
A taste test of a different flavour
Anyone who wants to consider using our services is entitled to one free meeting. This can take place either face-to-face or via Skype. We serve customers from eleven countries around the world and would gladly make room for you at our table!