Financial advisors face challenging environment


“There’s a lot of hurdles that financial advisors have to face, and among other things, there are other aspects such as choice in the market. There’s over 1,000 unit trusts in the industry right now,” Sanlam Multi Manager International portfolio manager Rafiq Taylor told CNBC Africa on Wednesday.

“Markets over the last 10 years have been quite generous to financial advisors and their clients. We think that over the next five to 10 years, it’s going to be a bit more challenging.”

Increased regulation within the financial services sector will however pose a number of challenges to the industry.


“That’s probably one of the biggest impacts that financial advisors are going to have, and the biggest challenge. As more regulation comes into play, in a year’s time, sets of legislation are going to have a material impact not only on the disclosure that is given but also the transparency, as well as the actual benefits that go to the client,” Taylor explained.

“It’s going to be crucial that advisors position themselves strategically as professional businesses that can best dispense advice to their clients.”

The client will also have to have a significant understanding of the service offered in the industry, as well as understanding the related service fees, before making a commitment.  

However, there are administrative burdens for fund managers and financial advisors, such as the change in a client’s risk profile.

“If a client today goes into a specific risk profile, and three months later new information comes to light, be it financial, economic or fund manager in nature, in three months’ time a client with a similar or the same risk profile will actually end up possibly getting a slightly different portfolio. How does that financial adviser deal with that?” Taylor explained.

“It’s how you actually navigate that type of environment both regulatory and financial, that is going to really determine what you can do for your clients and in doing the best for your client.”