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Interview of the week


Peter KRISTOFOVIC, President, SALVE Group

In the more developed markets like the Czech Republic, Slovakia, Hungary and Poland, the German and Austrian companies have advantage of being first comers and they benefit from that. But today we are strong both financially and in know-how.

XPRIMM: How would you describe your activity in Romania and the CEE?
Peter KRISTOFOVIC: In the more developed markets like the Czech Republic, Slovakia, Hungary and Poland, the German and Austrian companies have advantage of being first comers and they benefit from that. But today we are strong both financially and in know-how.
And combining it with our local knowledge and unique advisory model we have an ambition to be a leading company on the emerging markets of Romania, Serbia, Ukraine and Russia.
In Romania we have formed a new company - SALVE FINANCE, that was created by merging of existing two - SALVE Club and FINCOP. We want to work only under one brand, as the leader of professional financial advisory.

XPRIMM: One year ago, after the pensions' reform, your company management has resigned. How did you manage to make the transition to another management?
P.K.: First of all, our business philosophy is not to take the situation like a crisis but rather as a challenge. Our success was so big in the reform that some of the people in management were not objective and assumed this success as if it was only their own.
However, we are on the market for more than 12 years and we have experience from 3 reforms from the past. We know exactly what we want to do and how we want to do it. A brokerage company is not a substitute for the sales force of an insurance company. Since our ex-management had a totally different view on where to go with the company, our roads had to split. They are trying to find their own way today.
We managed to expand our advisory network to 42 branches, compared to 30 half of year ago. The sales people are our partners and the spirit is entrepreneurial.

XPRIMM: Do your future plans include local management?
P.K.: They already do. We believe in local management and people in Romania are proved to be able to perform very well. They combine their experience from international companies with local knowledge and deliver outstanding results. We currently have Mr. Septimiu MAIER as Executive Director who is an outstanding manager. On the other hand we do not have someone as head of the sales force - they are all our partners. The head office must provide all the technical and training support for the independent business owners.

XPRIMM: Did the brand contribute to your success?
P.K.: Our brand helped, but what also was very important, were the long term investments that we made in Romania and we want to continue even more, especially in international education of our top leaders. Their knowledge is our only way for future growth.

XPRIMM: What is the advantage of your sales structure?
P.K.: Selling life insurance is not a dream job for anyone. The classic distribution system does not provide enough motivation for a person to advance in their career. In USA the number of tied agents decreased by 50 % over the last 30 years. However number of independent financial advisors is growing yearly.
We are offering life changing career through a totally different model, where people stop being employees obeying orders but they are becoming independent business owners. The power that you unleash is extreme and creates huge growth potential. And this is exactly what happened.
We do not sell products; we give an independent advice to our clients on which financial solutions best fit their goals. Product is secondary.
For that mission we have experienced leaders in our team and they are putting their ideas into creating their successful strategies every day. The team we have is amazing. Today we are much stronger than six months ago, with a healthy company and growing number of satisfied clients every month.

XPRIMM: What is the ratio between pensions and insurance in your portfolio?
P.K.: That is difficult to determine on the long run. In Romania, last year we had 95 percent pensions and 5% insurance, but the results were heavily influenced by the pension reform, which was only temporary. Our core business is not directed towards pension reforms but towards financial advising, where we focus on life and non-life insurance, mortgages, investment funds and third pillar pensions. When we analyze the CEE markets, we believe the ratio will be half insurance and half pensions. For example, in Ukraine we have 90 percent insurance because that is specific for that market. When you enter a market you have to determine the clients' needs and then mix the right products for financial planning.
What we understood about Romania is that 10 million people need pension planning. That is a combination of second pillar, third pillar, life insurance and investment funds.
Here, every company says it is the best. So today we have dozens of product producers in each category, where everyone is the best?
Definitely not - and this is where our job starts. We need to give independent advice to millions of people. People began to realize that the state pension system is not enough. The system we are trying to implement is helping us get more advisors in order to be prepared for that large volume of clients.

XPRIMM: What are your expectations regarding the development of the third pillar?
P.K.: The difference between the second and third pillar is quite large. It is not easy to set a figure for 2009 but we expect to intermediate a couple of thousands policies each month. It is not a typical retail business, but in second half of 2009 we would like to introduce a special system that we are successfully using in Slovakia for advisory in this pillar. However exact details are our know-how I cannot share publicly now.

XPRIMM: Which are the companies you prefer to work with in Romania as well as in Russia and the Ukraine?
P.K.: In general we work only with the world leading companies with huge financial power and stability. For many years we've been working with GENERALI, ALLIANZ, AEGON, RAIFFEISEN and ING, which all have a very good position on the Romanian market. Also, we prefer to work with them on other markets because their standards are the highest both for us, as well as for our customers. In general, the leaders of the market can provide the best services, pricing and quality. Nevertheless, when a company is appreciated on a local market, we usually have a successful collaboration. This year we will enlarge our portfolio with products of Aviva, which has a great management team in Romania and bank products of BCR BPL, credit cards and mortgages.
That way the client will be served with a full portfolio range. He/She will see a huge added value of the independent advice.

XPRIMM: Do you plan on expanding on other markets?
P.K.: The next market we are entering is Serbia, because the insurance companies are present, but the independent advisory is missing. As mentioned, very soon we would like to start building our business also in Russia.
My dream is to enter the U.S. market. It might come as a surprise to some but they still do not have the 2nd Pillar. And they need a pension reform as much as a health insurance reform. There already is a movement to change their social security system. In 2009 we will open a small office there just for research and to be prepared for the moment after the presidential elections.

XPRIMM: Do you see any potential on the Moldavian market?
P.K.: Moldova will be interesting due to the pension reform. We joined the President of Slovakia on his official visit to Moldova. He helped us to open many doors. We have met with officials from the National Bank and people from the Ministry of Finance and we discussed the perspectives regarding local development. It is important that we already have advisors in Romania and we see this as a natural growth.

XPRIMM: How did/does the financial crisis influence the business of the SALVE Group?
P.K.: The good thing is that people stopped believing blindly in the commercials of companies who have a lot of money. Today they are asking for advice and do not believe what they tell them in the first financial institution where they walk in. This creates a huge space for our business - people need expertise and independency more than ever!

Editor: Oleg DORONCEANU | Published on 16.01.2009

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