What's Happening?

Should you specialise or generalise?



Generalists and specialists are essential to any operation. Given the disruptions in the past two years, intermediaries may find themselves questioning which camp they find themselves in, and if this is worth changing. Or one might also ask: can you be a specialist and a generalist at the same time?


Naturally, doing business in South Africa brings its own set of variables to factor in when deciding to go broader or deeper, so we consulted the country’s experts to find out where to focus.


“Generalists usually have a wider market audience and specialists have had a narrow market audience,” Shahed Adam, Head of Intermediary Distribution at Hollard Life Solutions, explains.


So, market size is an important determinant for the attractiveness of a specialist approach.”


“Insurers who define their market position in terms of a narrow product feature like income protection or a particular market, as professionals, tend to attract specialists in the intermediary space,” says Adam.


“Insurers that attract more generalists to their distribution typically define their market positions in terms of advice,” he adds.


Peter Olyott, CEO of Indwe Risk Services, also points to our unique situation in this country.


“In South Africa, unlike some other markets, most advisors become general advisors across all sectors before specialising in either a specific sector and or specific insurance types in a particular sector,” he says.


“Ideally, from an organisation point of view, having an advisor able to move between two or three sectors and a broad range of specialised and general insurance covers is ideal.”


The benefits of specialising


Specific experience is priceless though, Olyott mentions.


“Importantly one must not underestimate the importance of advisors who have hands-on involvement and successful (and sometimes unsuccessful) experience with large and complex claims,” Olyott says. “These experiences are extremely useful when moulding the advice and product solutions for particular clients.


Shahed Adam points out that there’s a financial incentive too.


“A specialist on aggregate tends to earn a significantly higher income,” he says.


“Professionals specialise for a variety of reasons,” says Guy Holwill is the Chief Executive of Fairbairn Consult.


“These include our ongoing quest for personal growth, focusing on things that we enjoy, moving to more attractive remuneration models (think trail fees on investments), or simply because the complexity of our jobs requires us to focus on fewer aspects.”


The advantages of generalisation


Being a generalist allows you to sell more than one product line due to the natural links between different insurance products. “This can unlock numerous opportunities for advisers,” says Wimpie van der Merwe, CEO of Global Choices.


A generalist’s success hinges on strong relationships with people.


“Clients often show a preference to contact a single person to take care of their financial needs across multiple areas,” Van der Merwe points out. “This frequent client engagement creates opportunities for the adviser to build enduring relationships with clients, which creates further opportunities and referrals.”


“Industry insights show that 48% of financial advisors’ sales consist of cross-selling to current clients, and 29% of sales originate from referrals from the advisor’s existing client base,” he says.


“This insight demonstrates the importance of creating and maintaining a strong relationship with clients.”


Another perk is that generalist advisers avoid limiting themselves, Van der Merwe says. “Generalist advisers are able to diversify their businesses and build on their annuity income through different streams of product.”


“Experience finds that generalists tend to do better in difficult economic times,” says Shahed Adam.


How ecosystems facilitate your field


Depending on the ecosystem created by the insurer, it could accommodate both specialists and generalists in its distribution strategy, says Shahed Adam.


For example, Hollard Life Solutions’ ecosystem and value proposition accommodate both generalists and specialists.


“Its flexible business models allow it to remain resilient and are well-positioned to bounce back and create more market opportunities for intermediaries,” explains Adam.


“It remains committed to financial advisors as its preferred intermediary channel by working hard on creating ease of doing business and simplified solutions for its clients.”


A post-covid landscape


With the removal of restrictions, in-person interactions are on the rise. “Interpersonal skills remain critical for success in either specialist or generalist intermediary practices,” Adam points out.


“However, experience finds that specialists find it more difficult to create and sustain deep personal relationships as they tend to rely more on tech and analytical tools to generate their advice. Generalists, on the other hand, tend to rely more on their social skills to deliver their advice.”


Although there’s a return to in-person interactions, a precedent has been set with the use of pandemic-enforced technology.


The use of communication technology enables an adviser to have multiple avenues where they are able to check in with their clients, mentions Wimpie van der Merwe, CEO of Global Choices.


“It enables far more client interactions, removes geographical barriers and leverages up your business. Of course, face-to-face interactions will always be significant, and form a large part of establishing a relationship.”


You should base your medium of interaction on whoever you are dealing with, not on whether you’re a generalist or specialist.


“Advisers should always undertake to understand what type of interaction their client prefers, and consequently be able to adapt to those preferences,” he says.


Weighing up your interests and clients’ needs


“Advisers tend to specialise around a specific product rather than around clients – for example we specialise in areas like short-term, investments, risk, employee benefits and medical schemes,” says Guy Holwill of Fairbairn Consult.


“The problem with this is that if you specialise in short-term because it interests you, but you are mainly working with clients with simple needs; you will be less convenient than a generalist who is able to advise the clients on all their needs.”


“This would be equally true for people specialising in risk and investments, but less so for those specialising in employee benefits and medical schemes.”


“Therefore, whether you look at it from either the clients’ or advisers’ perspectives, your choice of target market will determine whether it is better to be a generalist or specialist,” he says.


The hybrid approach


A final point to consider is whether there is a hybrid between generalists and specialist that provides the convenience of a one stop shop, with the expertise of specialist advice, emphasises Holwill.


He uses a legal analogy to explain his point.


“Let’s assume that you have used your local lawyer (a generalist) to advise you on all your legal matters. Now assume that a legal firm opens across the road, where there are partners specialising in different aspects of the law. For relatively simple legal matters, you’d probably be OK with your local lawyer. But it is likely that you’d be in safer hands if you had a complex commercial matter and went to the firm of specialists. And if those law partners work together, you can get the benefit of a one-stop shop.”


The point he makes is that a group of connected specialists may well outperform individual generalists.


“For this to be successful, it requires the specialists to think of the clients as ‘our clients’ and not ‘my clients’,” he says.


Looking to the future


Peter Olyott says that with the benefit of hindsight and the recent spate of natural and other catastrophes which have befallen us in South Africa and globally, one would venture that sector and product specialisation will become the norm.


This is for two reasons. Firstly, there has been an exponential degree of changes in general and across specific sectors.


“This means it will become virtually impossible to possess up to date knowledge and expertise across all industry sectors and across all insurance products”


Secondly, catastrophes have forced a reevaluation of both the products produced and the advice rendered.


“Again, beyond a certain level, it will be difficult and in some cases impossible for a single individual no matter how competent to possess all of the requisite technical skills and details to render sufficient depth of knowledge and understanding to provide suitable risk and insurance solutions,” he says.


“In most cases an overall account director with good experience, understanding of a client’s business backed by either industry specialists and/or product specialists will be required to look at risk and insurance solutions across the spectrum.”


How much does it matter?


So, should intermediaries be generalists or specialists?


“I don’t think it matters, as long as the intermediary knows what they are,” replies Steve von Roretz, Chairman of Leppard Underwriting.


“This can only be achieved by defining the strategic ambition of the intermediary, being clear about the services and product offered and an investment in people and systems, aligned to strategy, to culture and fit.


This is about having the right people in the right position.


“If the intermediary wants to specialise around certain types of insurance products, then the appropriate skills need to be in place,” Von Roretz says. “If the intermediary wants to be a generalist, then in our modern world technology is the investment of choice, with high processing capacity and connectivity.”


But what about advice?


“Yes, this is incredibly important,” he says. “An intermediary is expected to provide advice and if this advice is inadequate through negligence or omission the intermediary can be exposed. And I don’t think this dynamic alters for the specialist or the generalist.”


“Correct support and input from product specialists will contribute to the intermediary/customer relationship and bond, enhance the reputation of the intermediary, and build trust within the ecosystem,” he says.


“This is what is offered by members of SAUMA who have the ability and product skills and who will work with advisory intermediaries. This can bridge some of the gap where the generalist stretches and reaches out into the specialist, and I add niche areas. The FIA member, working with SAUMA members is akin to partnering, for the benefit of the consumer.”


Still, an intermediary does need to take care.


“The standards set out by a specialist will be the legal test against which the generalist is measured, in the event something goes awry and by which legal exposure is measured,” Von Roretz says. “This warning is equally the case for the specialist reaching out to provide generalist advisory services as they do not do this work on a regular daily basis and can be caught out.”


“What the generalist or the specialist should never do is take on work they know they can’t do. And you know where this line is drawn if honesty is the rule of thumb,” he emphasises.


Generalists and specialists both have a place in the sun.


“Both can be really successful. They can do this because they can build relationships but mainly because their customers will feel and experience real support which they can trust.”