Weekly Thoughts 28 June 2013

My personal assistant and I spent most of the last two days completing my financial statements for the Financial Services Board (FSB). Every Financial Services Provider (FSP) has to submit their financials to the FSB each year. Mine are due at the end of June. I have to show my income and my expenses for the 2013 tax year as well as my assets and liabilities.

Being a sole proprietor, the figures are what applies to me personally, but a large FSP like Standard Bank has to do it too, as one single, large entity. What the FSB are looking for and wanting to check, is that the Service Provider is solvent and that its assets outweigh its liabilities. We may not continue to operate as a licenced FSP if either of these are not on the positive side. So I have to show that my income is greater than my operating expenses and that my personal assets are greater than my personal liabilities. I get the merits of it: to supposedly avoid or prevent miss-selling for immediate or desperate financial gain. But it also suggests that the FSP has to ensure it operates a profitable and sustainable business. This is very important for clients as it ensures that a client’s service provider is able to survive and be there for them. Makes it difficult for independents to enter the market though. My income definitely did not exceed my expenses in my first year.