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Financial advisor and the future version i

  1. 1. The Financial Advisor in a Turbulent Future VDS Brink © 2010 Third Circle Asset Management This article supports a presentation at the Financial Planning Institute of Southern Africa’s conference on 22 April 2010 and provides views on an expected future and the impact thereof on the financial advisor. It suggests an increasing turbulence yet a time of innovation giving many opportunities. Sound scenario processes will aid to a competitive edge. The client of the future asks for an empathic approach where financial management principles to be combined of an in depth understanding of the personality and needs of the clients are key to success. simply will not work in the future. INTRODUCTION This article discusses it and provides guidelines for We live in turbulent times with a world slowly coping and using it to create wealth while serving our emerging from the worst economic decline in 80 years. clients to cope in an uncertain and difficult future. It will take years to recover the damage. It is also a time when a new generation is emerging with a new outlook Sunter (2001) proposed a simple yet effective method to on life. These clients with a new mindset pose a look at the future naming it the Foxy Matrix. Simply by challenge to the financial advisor. understanding the facts of the day well, Build possible futures from it, get more information, develop several The shadows of 1994 and the impact of the internet options, choose, plan and do. changed all and that current ways of doing things THE CONTEXT OF WISDOM Never before more data and information are on our finger tips. We all have access to about everything and our minds are swamped by noise and images. Each person hears and sees about 5000 advertisements every day. This does not give a competitive edge as we are all equal in this. It scatters our minds and we lose our thinking power. Modern day fund managers try to convince us of their offerings by giving and more graphs, numbers and the same proposals clad in a different clothing. 1|Page
  2. 2. The great Warren Buffet lives far from the madding  the ever widening gap between rich and poor crowd, reads selectively what really counts and found with South Africa the worst in the world. that real wisdom beyond it all. Data – Information - Knowledge – Insight – Wisdom: it SPECIFIC TRENDS is beyond knowledge where the real competitive edge lies and our challenge is to pursue insight and wisdom. Major technological advances shape the world. The Wisdom is found by reading whole books with a logical energy challenges will bring forth innovation as seen golden thread that build the path ways of the mind. It is last in 1994 when the world ran dry of oil. found by surrounding us with great people different from ourselves and by spending time doing things that Despite the politically correct hype on alternative spur creativity. energy, it is difficult to see any major contribution from Creativity and solutions are almost never found on the solar or wind sources. The electric car will remain a playing field, but by sitting on the pavilion and having a myth as battery technology never caught up. Despite faraway look at what happens. general belief, an electric car is environmentally more The financial advisor of the future standing out from the unfriendly than a petrol or diesel car with a larger crowd will be the one that practises wisdom building in carbon footprint. every aspect of her/his life. The focus on hydrogen as an alternative fuel and hydrogen fusion as a radical new way of generating EXPECTED FUTURE electricity can be the focus. We live in the shadows of several revolutions. Traditional media is and will be under increasing threat Revolutions are over and done with quickly, yet the with the onslaught of digital media. shadows linger for a long time. In this period we Food production will be aided increasingly by painfully adapt to the new, while leaving behind the genetically engineered plants and new commodity wars past with difficulty. will be fought over the access to abundant and clean The new South Africa in 1994, the coming of the water. Internet and collapse of the world’s financial systems Bio technology and Nanno technology will continue to provide a turbulent future with uncertainty, yet for those and can be major focal points for investment. ready for it, great wealth and opportunities. Locally the current trend in white male Some of the current major changes are from Peters entrepreneurship will continue to surprise. (2005), Aburdene (2007) and Naisbitt (2006):  The Peak Oil period and the demise of almost FUTURE WINNERS all traditional energy sources  creeping socialism worldwide, The most important trend is the dehumanization of  the painful rectifying of the worst financial people. As herd animals we love to be loved and hate to crisis in 80 years, be hated. We grasp at technology to solve this need  global movement of people that will have to go with Facebook to cure loneliness use and Twitter for back home forced by the host countries, modern day koöperasie stoep stories.  the demise of Europe, the rise of the BRIC (Russia, India, China and Brazil) countries, Friedman (2006) proposes that if we can understand all  the dehumanization of people due to this and go back to the fundamental needs of humanity, technology, we can be winners. Those able to do the following will  A new war for technical talent, be the leaders of the future:  Social implosions as poor people are rightfully  work to together with others. To know that I angry, know so little and surround myself with diverse  the Diaspora of people and the demise of people thinking and doing things differently, traditional boundaries,  put existing things together,  aging boomers,  show others how to do things, to help, support  the advent of female power, and pass on knowledge and wisdom,  the rapid swinging of the pendulum in almost  do things differently from the norm, all aspects of society and 2|Page
  3. 3.  apply things differently from others, personal growth to be ahead of the pack when  care for the earth in all we do, the tide turns. Many of us are now in this  be a wise giant and focus locally, situation.  an most importantly to put themselves in the 3. A positive environment, yet your abilities are shoes of others weak. This is the “Fools paradise” case where many were during the period 2005 – 2008. Get on your knees, become humble and start afresh. The rapid advent of female power and the more 4. A positive environment and superb abilities. emphasis on emphatic thinking is crucial for success as This is the 7th Heaven case where we should a service provider. The product alone is simply not reap and sow wisely. good enough anymore. The way it is presented will count more than anything else. Then map the detail in these four situations Schwartz Key to success is to understand our clients even better (2005 ) proposes that we: and to spend time understanding human behaviour and  Identify a focal issue to understand and build their fears and needs. wisdom. What decisions do we have to take to have a long term positive influence on our future? Avoid the noise of the day; it is just the THE NEW GENERATION swinging of the pendulum. Rather focus on the Generations think and act differently according to longer term trends in society and get ourselves Codrington & Grant-Marshall (2004) ready for it.  Some of these were mentioned earlier, yet in a The Boomers born after the 2nd World War still are the local community, there might be others more financial, political and economic power of the world, specific. yet within the next decade that will fade due to aging.  List the driving forces that influence your They are bossy, talkative, stylish and competitive. business directly or indirectly. The Generation X (1960 – 1980) likes sharing,  Rank these key factors by importance and individualistic and hates bossiness and corporate uncertainty. Flag the easy ones as they might be culture. the quick wins.  Post this knowledge into one or more of the Millennials (1980 – 2000) loves friendship, technology four possibilities above and start working on and a honest balanced lifestyle. plans. The market will move away from the Boomers to eventually the Millennials and increased female power Never stop reading, great answers are often found off with a softer more caring approach. the playing field. Poetry, art, philosophy, history Service providers able to shift towards this approach inspired almost all great people. To stick to journals, will be the winners in the future. internet snippets retailing to our business is not giving a competitive edge. Looking at it through the eyes of other disciplines and sitting at the feet of wise people are a great step to wisdom. BUILDING YOUR OWN FUTURE Winning means to understand the future before acting. Nobody has a crystal ball and tomorrow can bring any CREATING OPTIONS surprise. Disasters happen, things break, bad people are Only now can options for decisions wisely mapped out. out to get us, yet great things can and will happen and Snap decisions is little different from gambling. those prepared for it will be the ultimate winners. Detailed facts and wisdom discussed with others is the A sound method is to prepare for 4 futures and be ready correct step to prosperity. for each one. Sunter (2005) Options need to be within the constraints of the law and 1. A negative environment and your offering must be morally sound. lagging. Look into the mirror with humility and Morals, values and ethics differ. Our culture, ask what went wrong and what should be done. personality and shaping by society created a different 2. A negative environment, yet your skills are rule book from other people and a minefield of what is superb. In this case it is critical to grind away right and wrong. and keep up your belief in yourself and 3|Page
  4. 4. Sound guidelines for the ethical limits of options is IN SUMMARY given by Ollinger (2004): The financial advisor fulfils a critical role in our  Is it legal? economy to be between an ignorant public and sound  Do we have a code of ethics in our business? investment principles. As such the profession played a  Do we have a policy to guide us? major role in the growth of our economy.  Do we infringe on somebody’s rights? This role will be even more important in the turbulent  Do we avoid responsibility? times ahead. Sound understanding of wealth creation,  Is it good for our company? risk and reward and linking it to the needs and fears of  What will they say if everybody knows about the clients will be key to success. it? For more on asset management and the psychological  and most importantly; what will my mother say profiling of clients go to if she is to know about this? For more on the general topic, contact A quick win serving selfish personal objectives will not of visit work and should never be an option. THE NEEDS OF OUR CLIENTS ACKNOWLEDGEMENTS Our generations differ, our cultures differ, The Financial Planning Institute of Southern Africa and circumstances and society shaped us to what we are specifically Adéle Victor for trust and support. today. Our personalities differ and so our fears and Hugo Snyman (CEO), Dewald Scholtz (Industrial needs. To understand your client is the most important psychologist), Thilo Otterpohl (Graphics artist) and step to be able to stand in her shoes. Christo Luus (Economist) of Third Circle Asset McCathy (1999) summarized it that we will have our Management for their support, guidance and wisdom so clients worshipping us if we understand that they apart liberally shared. from our product also need: Great people sharing and guiding me in the complex  Do not want to be hurt, world of wealth management notably Laurette Pretorius of Sasfin Securities (Pty) Ltd, François du Plessis of  Be part of the group, Vega Capital and Vollie Volshenk of Aristaat.  worth something,  do worthwhile things,  want to learn,  want beauty & order,  want to share,  want you to care for me,  believe in a higher power,  want to do great things,  angry yet want to forgive,  better than others,  bored and love to laugh and have fun,  afraid of and need to be protected and reassured. Focusing on these aspects while proving a service to the best of our ability are key to success. Giving our clients a comprehensive solution according to Demathini (2005) is more important than ever before. Helping them to be a full happy person is about having sound relationships, a happy family, a healthy body, doing sensible work, believing in a higher power and create wealth. 4|Page
  5. 5. REFERENCES AND FURTHER READING Sunter C, (2000) Games foxes Play, Human & Rousseau. Sunter C, (2005) Socrates and the Fox, Human & Aburdene, P. (2007) Megatrends 2010, Hampton Roads Rousseau. Branson, R. (2006) Screw it let’s do it, Virgin Books. Tushmann, M.L., (1997) Winning through Innovation, Codrington, G and Grant-Marshall, S.(2004) Mind the HBS Press. Gap!, Penguin. De Bono, E. (1970) Lateral Thinking, Penguin. De Bono, E. (1999) New thinking for the new Millenium, Penguin. De , E. (1985) Tactics: The art and science of Success, Fontana. Demartini, J. (2004) How to make a hell of a profit and still go to Heaven. Hay House. Gladwell, M. (2000) The Tipping Point, Abacus. Gladwell, M (2005) Blink, Little Brown. Greene, R. (2001) The Art of Seduction, Viking. Grove, S (1994) The Dance of the Brain, Human and Rousseau. Hamel, G and Prahalad, CK. (1994) Competing for the Future, Harvard Business School Friedman, T.L. (2006) The World is Flat, Penguin. Hung, R. Y. (2006) Business Process Management as Competitive Advantage: a Review and Empirical Study, Total Quality Management, 17, 1. Kung, P. And Claus, H. (2007) The fruits of Business Process Management, Business Process Management Journal, 13, 4. Lee, R.G. and Dale, B.G. (1998) Business Process Management: a review and evaluation, Business Process Management Journal, 4, 3. Mccarty, H (1999) Motivating your audience, Allyn and bacon. McLeod, F and Thompson, R (2002) Non-stop creativity and Innovation, McGraw Hill. Naisbitt, J. (2006) Mindset, Collins. Ollinger, H (2004) Master’s thesis University of Pretoria, unpublished Peters, T. (2003) Re-imagine!, DK. Peters, T. (2005) Trends, DK. Schwartz, P. (2005) The art of the Long View, Wiley. Sunter C, (2001) What it takes to be World Class, Human & Rousseau. 5|Page