Financial planners and advisors failing consumers

29 Jul 2015 16:00pm
WINDHOEK, 29 JUL (NAMPA) – Namibia is experiencing a high number of complaints from consumers that relate mainly to dissatisfaction with the financial products they acquire through advice from financial planners and advisors.
The Namibia Financial Institutions Supervisory Authority (Namfisa)'s General Manager of Insurance, Grace Mohamed said on Wednesday that if there was appropriate and effective financial planning and advice, the understanding of the products and terms would not result in the high number of complaints Namfisa receives on a daily basis.
Mohamed made the remarks during a financial planning conference taking place in Windhoek under the theme ‘Holistic Financial Planning in Namibia’.
The aim of the conference is to increase and enhance the quality and quantity of advice given to clients within the financial service industry.
Mohamed said Namfisa received 83 complaints in the fourth quarter of 2013. This number increased to 93 complaints in the first quarter of 2014; while in the following quarter, 106 complaints were recorded.
In the third quarter of 2014, there were a total of 152 complaints, while in the fourth quarter, a total of 196 complaints were received by Namfisa.
“It is not difficult to notice that the complaints have been increasing steadily quarter on quarter until the end of 2014. This could be attributed to the quality of financial advice that consumers receive, or the wrong financial advice being given to consumers,” she said.
Mohamed called on the financial service industry to address these anomalies by introducing regulations for the registration and conduct of intermediaries such as financial planners and advisors.
“The number of investment alternatives is greater than ever before and still growing. In fact, the vast array of available choices may generate as much confusion as it does opportunity,” she said.
Mohamed indicated that this is where financial planners must play a critical role and ensure that hard earned money is invested wisely.
“We have witnessed a proliferation of financial planners in recent years. It is my impression that this expansion is being fuelled by the increasing complexity of the financial services industry and the consequent demand by consumers for assistance in dealing with this complexity,” she stated, adding that the increase is partly also due to some financial planners looking at the financial industry as an opportunity to make a quick buck.
Mohamed however said there is an opportunity for financial planners and advisors to play a more meaningful and developmental role.
Financial planning should be considered as a career path that requires education levels that are appropriate to the complex nature of the products and services being sold, as well as of the consumers, she said.
Mohamed further explained that the agenda at Namfisa over the past few years was driven by the need for reform in the financial sector in order to ensure inclusivity and deepening of the sector for the financial prosperity of every Namibian.
These reforms encompass ideals enshrined in the fourth National Development Plan and Vision 2030.
Other significant change the authority wants to see include proposals on conditions for greater localisation of ownership and management of insurance companies. It also wants to see the authority’s relationship with insurance intermediaries change.
These reforms, through appropriate regulations, will affect the manner in which intermediaries conduct their business.
Once promulgated, Mohamed said, the new regulations will require financial intermediaries to be registered and to have a minimum amount of qualifications which would help improve the quality of the services offered to clients by financial intermediaries, she explained.
The conference, which is being hosted by Namfisa, ends Thursday.