| Kippreport.com

EYEING OPPORTUNITIES IN THE LIFE SECTOR

August 20, 2012 11:00 by kippreport

A study conducted by Merrill Lynch, entitled: “Understanding the needs of affluent investors” matched the time spent by advisers on the components of the financial planning process, against the components most valued by clients. They found a clear mismatch – advisers spend too much time on preparation, and not enough time in front of the client – the element the client values most. The institutional side of the financial services industry is well placed to support advisers via the provision of tools to enable them to spend less time of preparation, and more valuable time with their clients.

Some examples of the tools we have seen used to great effect in the region have been based upon well-known industry practices from other more developed markets. These examples still hold true, with tools that explain and provide guidance on financial concepts in terms that are clear for the non-expert.
Risk profiling tools
These may be paper based or online, and in each case offer a disciplined, transparent approach to demonstrating a client’s personal attitude to risk, by asking them a series of simple questions in regard to their emotions and feelings in different investment return and purchasing scenarios. The output is a description of the level of risk with which the client is most comfortable, which in turn filters the most suitable type of portfolio.
Fund analysis tools
As an industry, we have access to an abundance of data, and the online analysis tools now readily available to advisers enable themto produce client-facing reports, which offer insight into chosen or suggested portfolios, and break¬down fund sectors, holdings, performance and volatility – all designed to give the client a clear and informed picture.
Principles of investment
Client-facing guides are available, which explain the concepts such as investment diversification and asset allocation. Other guides contain illustrations of “dollar cost averaging” to help manage concerns during periods of vola¬tility, as well as the importance of “time in the market ” not “timing the market ”, which provides a compelling story during periods of investment recovery.
Insurance calculators
These offer both clients and advisers a transparent framework to calculate the most appropriate levels of life and/or disability cover, based upon the client’s personal circumstance.
Summary
Life insurers and client advisers have a basis for optimism, as residents of the GCC have the highest propensity to save of any geographical group in the world. The independent relationship between market conditions and the need for financial planning enhances this prospect. Accessing this oppor-tunity in a sustainable way requires co-operation between advisers and the institutions with which they work, and translating vast knowledge into practical client education.

 

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