I sometimes wonder if financial advisors realise the important role, they play in wealth protection and wealth creation for their clients, whether in South Africa and across the world. It is interesting to note that there are still many advisors who regard their occupation as sales driven. We acknowledge that selling skills are important, but there are many more aspects that make this, not only an occupation, but a profession.
Putting Financial Advice into Perspective
Financial advice is a service that is needed by every individual, irrespective of the amount they earn. Let’s compare it to medical needs, where every individual, rich or poor, needs medical advice from time to time. Not everyone can afford or requires specialised medical advice. Many of us resort to seeking advice from a pharmacist assistant or from floor support staff.
They are often very helpful, but we need to be aware that that these people whom we put our trust in, are still undergoing training, studying or don’t have sufficient knowledge to assist. Despite this, we hope to receive appropriate advice on whatever our medical needs are and/or to offer suggestions on the correct medicine or product, irrespective of whether the person assisting us, has completed a relevant qualification or not.
Why can’t we expect the same from a financial advisor? The financial services industry allows people to work under supervision while they gain experience and complete a qualification. If such a person was asked for financial assistance, is the expectation not the same as in a pharmacy? One would expect the financial advisor, under supervision, to direct you “to the correct shelf”.
Where does Class of Business (COB) fit in?
Once the deficiency in service was identified and class of business identified as the training to close that gap. Class of business training focuses on general financial product knowledge, in relation to a specific line or class of business category. It includes training on the general and special characteristics of the range of financial products within the class. The fee structures, charges, and other general risks relevant to the products in that class, are considered. The training also includes the appropriateness of various products, as well as the features that will address the needs for different types of clients. Economic factors that may impact these products and the applicable legislation, such as tax, is also covered.
The Nine Classes of Business
The product categories that a Financial Services Provider (FSP) can be licensed for, have been divided into nine classes:
- COB 1 – Short-term Insurance (Personal Lines)
- COB 2 – Short-term Insurance (Commercial Lines)
- COB 3 – Long-term Insurance
- COB 4 – Pension Fund Benefits
- COB 5 – Short-term and Long-term Deposits
- COB 6 – Structured Deposits
- COB 7 – Investments
- COB 8 – Forex Investments
- COB 9 – Health Services Benefits
How Class of Business can Help you?
Without class of business training, an advisor will only have limited product knowledge and sales skills to rely on when trying to address a client’s financial needs. If this was all one had to rely on, one could easily point the client to the wrong “shelf”, or the wrong product.
With the knowledge gained through class of business training, a financial advisor will be better equipped to assist a client with basic financial needs. This allows for you to identify a client’s financial needs and be able to match those needs with the most appropriate financial solutions available. Is this not what any client would expect from any individual practicing a profession?
The introduction of class of business training in Board Notice 194 of 2017, changed this environment for ever.
Growth in Motion offers all nine classes of business courses. For more information visit https://gimacademy.africa/coursesnl?c=6.
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