MyNews24 is a user-generated section of The stories here come from users.

Awie de Swardt
Comments: 0
Article views: 263
Latest Badges:

View all Awie de Swardt's badges.

Is access to financial advice still reserved for only a select few in 2016?

05 October 2016, 08:31




It is that time of the year where industry associations are giving awards to the best product providers, best advisors, etc.  As we look through the lists of prize winners, you will see impressive CV’s with long track records.  To be the best in the industry, you have to provide advice or products to the best in the market.  Top advisors with years’ experience in the affluent, high net worth individual market.

When you consider the dire financial position of 90% of South Africans, you have to ask the question: What advice is the normal South African citizen with too much debt and too little salary getting?

As an example, a middle-class retirement fund member enquired about the benefits of adding additional contributions to his retirement fund.  In light of the new tax breaks of up to 27.5% of taxable income, his employer-sponsored retirement fund will be the cheapest form of saving.  The first piece of advice he got from one of the largest Insurer’s agents was to rather invest his extra money into a retirement annuity.  The quote included once-off advice fees and trail fees.  Which would not have applied if the extra money was invested in his existing retirement fund.  This advice was given with no needs analysis done of this member’s actual pressing needs?  Apart from the costs and benefit aspects, does this member have an emergency slash fund which contains a few months’ salary in the event of the car breaking down or that school project that came up?  Or does this family even have a budget?  A simple budget which contains even the smallest amount of savings?  Why are products still being considered before advice?

Perhaps it is because the majority of advisors are not paid for advice.  Most advisors are paid to sell products by product companies.  Such a system is flawed for the average South African citizen who is looking for proper advice and tools to get ahead in life or just maybe, survive.

Even the advisors that have shifted to charging advice fees can really only look after the wealthy that can afford to pay professional fees for advice on similar scales to Lawyers’ fees.

Robo advice, the next best thing in the product pushing genre, will also ultimately be aimed at affluent, educated intellectuals who actually know what they are looking for and don’t want to speak to an advisor.

So what is the solution?  The financial services industry eagerly awaits the next white paper on a holistic social security system for South Africa.  My plea is that access to financial advice must be included in this plan.  The retail distribution review legislation should also include advice as part of social responsibility to individuals who cannot afford high fees.  Perhaps financial companies’ Affirmative Action plans should focus more on advice to previously disadvantaged groups and the poor. 

Insurance industry bodies, professional advice bodies, the Financial Services Board and the industry itself should consider ways to give the average South African access to affordable advice.  The reality is that most South Africans’ financial positions are so dire, corporates should be able to package their advice and tools to be able to roll it out in bulk to the masses as part of social responsibility but, also just because it is good business.  Financial education at school level and at the workplace should be compulsory for every South African.  

Before a retirement annuity is sold or another life insurance policy, the client should receive a needs analysis which includes a budget and which covers the basic necessities, for example a savings plan, a Will, funeral cover, etc.  There must be a holistic look at short term as well as longs term needs.

There is a total misunderstanding of the value of proper advice in this country and the financial services industry is largely to blame for it.  It is up to the South African Financial Services Industry, which includes the regulators and National Treasury, to make proper financial advice available to all South Africans.    

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.


Read more from our Users

Submitted by
MyElectionManifesto: Have your sa...

Do you believe in BEE? How do you think the government should address land reform? Do you think the NHI is financially viable? And how do we solve the unemployment crisis? Read more...

0 comments 3717 views
Submitted by
Jacques van Zyl
MyElectionManifesto: PSALM to foc...

We, the people of PSALM, believe in respect for each other as: human beings, firstly and utmostly as South Africans, respect for life and each other's possessions. Read more...

0 comments 607 views
Submitted by
Matthew Field
Beware the Ides of March

To the youth reading this: forget power. It will not help you. It is a cheap trick that takes you down the road of death. Do not chase power. Chase love. Read more...

0 comments 811 views
Submitted by
Malcolm Baillie
Days of our New Dawn

Well, here we are: From the makers of the one hit wonder 'Firepool' and the cult series 'Broken PowerStation' comes the latest production: 'New Dawn'. Read more...

0 comments 349 views
Submitted by
Mkhonto Scarborough
Why we must take pride in our lan...

The way we feel about our language has everything to do with the way we feel about our culture – which is above all, the place we were born, and the people we grew up with. Read more...

0 comments 279 views
Submitted by
Hettienne Marx
Another Home Affairs hero found

In desperation I started dialling all the Pretoria and Johannesburg numbers, and ESTHER MOKWENA was the only person who not only answered my call. Read more...

0 comments 809 views


Press Code We subscribe to the Press Code.

E-mail Newsletters You choose what you want

News24 on Android Get the latest from News24 on your Android device.

Terms and Conditions Terms and Conditions - Updated April 2012

Interactive Advertising Bureau
© 2019 All rights reserved.
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.