The modern bank and insurance broker can to a large extent fill the gap left by the major banks. He can do this by giving personal advice to his clients and fully mapping out their financial situation. Digitalisation also plays an important role in this.
This emerged from an interview with Marc Dhondt (photo), the Belgian representative of the Luxembourg life insurance company OneLife, as part of the BZB congress that was held on 21 October.
Dhondt has more than 30 years of experience in the sector and ensures that the company is represented by independent brokers. He has a team of six and has seen much change in his career. “The advantage is that we are self-employed and can therefore organise ourselves optimally,” said Dhondt. “It is an ideal way of providing optimal service.”
Dhondt mentioned that many brokers and financial intermediaries have been involved in mergers and takeovers in recent years and have therefore become larger and larger. “There is clearly a problem with succession. Moreover, the banks have an increasingly tenuous relationship with their clients because of the rotation you often see in those offices. In the past, a bank director would stay in his post for decades, but now there is more turnover and you see people rotating every three or four years.”
Close to the client
“If he does his job well, the independent bank and insurance broker has to be close to his client and be able to map out his or her entire movable and immovable assets. This is a distinguishing feature from the (major) banks. There are not many parties anymore who can propose investment funds to their clients in a totally independent way. And open architecture in Belgium remains limited to a number of players, and often not even in a completely open way,” Dhondt said.
(Luxembourg) life insurance is, in his opinion, an indispensable tool in this context. “Thirty years ago, any broker could place an investment alongside some insurance. Financial products were sold “in-between”, so to speak. There were also financial products offered by bankers alongside their banking products. This changed in the early 2000s. And certainly since 2010-2012, after the big financial crisis, this has become more and more a product for specialists. Brokers now specialise in financial products without the bank.”
Experience
According to Dhondt, the broker is also quite an experienced and mature person. They are seldom beginners in the sector, and often they have already had a career as a clerk at a bank. They are people who want to be enterprising and offer top service to their clients. This requires some maturity. They are also people who insist on their independence.
Dhondt is critical of the restructuring that the banks carried out in 2008-2011. Many independent brokers were then side-lined, and those who wanted to continue working had to commit themselves exclusively to the bank. Many preferred to continue working independently.’
Information
Dhondt stressed that it is of the utmost importance that brokers have sufficient information about the markets and products, and are also able to bring this to the client in the right way. “At OneLife, for example, we have XRay, a tool that allows us to give extensive info on the funds that are in the portfolios today. We also have an agreement with a specialised lawyer who can draw up conclusive policies, and we organise master classes that allow brokers to earn FSMA training points. After all, OneLife is accredited to provide such training.”
YouInvestYou
Dhondt mentioned in this context that he has set up YouInvestYou.com, a social network like Linkedin and Facebook especially for brokers. “It is a content platform that appeals to a broader target audience than just estate agents, such as notaries, accountants, wealth lawyers and real estate firms. There is also an app for iOS and Android. Currently 600 people have signed up,” Dhondt said. The intention is to develop the platform further in the future.
Challenges
Dhondt mentioned that independent brokers today are facing different challenges. He mentioned the constantly evolving legislation and regulations, such as the IDD, which was transposed into Belgian law at European level. A circular letter from the FSMA is still pending. This is an issue, because brokers do need to be able to give an overall picture of what their clients own.
“It is not easy for brokers to draw up correct and complete reports,” Dhondt stated. “Everyone now has his own interpretation, and that is a difficult thing.”
Earnings model
Until now, brokers have got commissions from insurance companies if they can show that they can advise in a completely independent way. Their earnings model is therefore not based on product sales. “It is tempting to offer products that yield more than others. The interpretation by society is fairly free. At OneLife, we have clearly chosen that every type of product yields the same commission.”
“After all, the broker has to take into account the profile of his client and compile a portfolio accordingly.”
Future
Dhondt said he feels positively about the future of the independent brokerage business. “They must use the right information sources and distribute them well. Many young clients are internationally mobile and are looking for products that are portable and fiscally neutral. Luxembourg life insurance is the tool for that. After all, bank accounts and Belgian life insurance are geographically limited.”
“Digitalisation can also ensure that the client is served even better. The broker is a real expert who is close to his clients and needs to understand their financial and family situation perfectly. Those who succeed in this have a bright future,” concluded Dhondt.