First for the professional personal financial adviser
31 OCTOBER 2024 R69.95 INCL VAT
www.moneymarketing.co.za
TWO-POT RETIREMENT SYSTEM There’s been a larger than expected rush of people withdrawing from their retirement savings. We look at how the industry has coped. Pg 4-6
TECHNOLOGY Technology is revolutionising financial advising by automating tasks, enabling personalised strategies, and using advanced analytics to enhance client engagement. Pg 16-18
MEDICAL AIDS What’s the best way forward for the medical insurance industry, with all the threats on the horizon? We investigate some of the latest developments and how they impact financial advisers. Pg 19-21
PRIVATE EQUITY Do private equity funds still offer better returns and resilience due to scale and stability? We take a deep dive into this asset class and its current performance.
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Pg 22-24
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Better financial education for all By Unati Kamlaina
Commissioner of the FSCA
S
peaking at the FSCA Financial Education inaugural Summit, Unati Kamlaina, Commissioner of the FSCA, spoke of the dire need for financial education in South Africa. The Summit was aimed at elevating the strategic discussion around financial education and motivating heads of financial institutions and other relevant stakeholders to pledge their commitment towards certain financial education goals. Financial education in South Africa has come a long way from simply being understood as offering basic tips on budgeting and saving. Today it’s about much more than that. It’s about empowering individuals with requisite skills and knowledge necessary to make informed financial decisions, protect oneself from financial missteps, and build the confidence to engage with sometimes complex financial products and services. It is also about building resilience against economic challenges and, ultimately, enhancing the overall wellbeing and even economic stability of the country. We recognise that the challenges facing financial customers today – whether it is economic pressures, increasing vulnerability, or the rapid evolution of technology – demands a unified approach to financial education. Alliances essential It is only by working together, pooling our resources, and strategically aligning our efforts that we can ensure that financial education is not merely accessible, but also impactful. We all know that the rise in cost of living is hitting South Africans hard, with high indebtedness - all of these creating financial strain on household balance sheets. In 2021, the Human Sciences Research Council reported that 71% of the population didn’t have emergency savings, leaving them particularly exposed to financial shocks. Additionally, millions of creditactive consumers are behind on their debt repayments by more than three months. The Covid-19 pandemic also further exposed how vulnerable many of our households are to financial shocks. So financial education is important, particularly in this economic reality, as it assists people to go through tough times and empowers them to make informed decisions in safeguarding their financial wellbeing.
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Without this proper educational foundation, many end up making choices that worsen their financial situation rather than improve it. Take, for example, the new two-pot retirement system. The undoubted outcome is that without a proper understanding of the impact of early withdrawals, members of retirement funds might end up jeopardising their long-term financial security. The temptation to dip into retirement funds early, especially when one is under pressure, could leave many South Africans with insufficient savings for their retirement years. This highlights why financial education is so crucial. People need to fully understand the impact of their choices. Financial education is at the centre of shaping customer outcomes in the financial sector. In this context, we urge all stakeholders – retirement funds, employers, unions, and others – to intensify their efforts to ensure that their members and employees have the knowledge they need to make smart decisions. Addressing technological innovation Another key issue that calls for a unified approach to financial education is the subject of the rapid innovation and technological advancements in the financial sector. Whether this is through new products such as crypto, the digitisation of channels to which financial services are distributed, or the rapid use of artificial intelligence in the provision of financial services. Sure, these new products and services offer convenience and broader access, but they also present risks, especially for consumers who might not fully understand how these innovations work. The increase in digital fraud and online scams underscore this point. Continued on next page