First for the professional personal financial adviser
28 FEBRUARY 2025 R69.95 INCL VAT
www.moneymarketing.co.za
WHAT’S INSIDE YOUR FEBRUARY ISSUE: BUILDING A SUCCESSFUL FINANCIAL ADVISORY FIRM It’s essential to not only understand your clients’ unique financial goals and challenges but also to offer tailored strategies that align with their needs and aspirations. Pg 12
BECOMING A FINANCIAL ADVISER With a lack of Financial Advisers in South Africa, it’s essential to promote the profession and encourage others to join. Pg 13-15
EMPLOYEE BENEFITS Thoughtfully crafted benefit packages help employees feel valued. We investigate what employers need to take cognisance of in the year ahead. Pg 16-21
BOUTIQUE ASSET MANAGERS Smaller asset management firms play a key role in the investment ecosystem and the economy. Find out the plans this section of the industry has for 2025.
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Pg 22-25
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Employee benefits: Trends,
flexibility and legislative challenges By Sandy Welch
T
Editor, MoneyMarketing
he employee benefits landscape is evolving rapidly, with technology playing a central role in streamlining processes and improving accessibility. From faster claim settlements to AI-driven solutions and digital communication strategies, these advancements are reshaping how employees engage with their benefits. Employers and employees alike are closely watching trends that have shaped the past year and what lies ahead. MoneyMarketing spoke to Natasha HuggettHenchie, Consulting Actuary and Director, and Trevor Kingsley-Wilkins, Principal Consultant, both from NMG Employee Benefits, to find out what they expect from the year ahead. Two-pot’s impact continues “The two-pot retirement system was monstrous last year, significantly impacting the industry and NMG,” says Kingsley-Wilkins. “We believe the industry has handled the transition well. At NMG we paid out R650m and processed approximately 48 000 claims. This underscores the significant demand and engagement with the new system,” he says. Looking forward to 2025, a continuation of the trend is expected, particularly in January and February, due to school fees. It’s also anticipated that individuals who have not yet claimed will do so in the new year. “As the tax year finished and a new one starts, members will regain access to their funds, potentially leading to another surge in claims. We are not expecting claims to be as overwhelming as the previous year.” Members who delay their withdrawals may wait until the funds accumulate to a reasonable level, which could lead to increased activity around May, June or July. However, it is anticipated that many will claim their funds as soon as they become available. Legislative changes and challenges The legislative landscape is expected to undergo adjustments, with refinements to the two-pot legislation addressing unresolved technical details. The anticipated introduction of the Conduct of Financial Institutions (COFI) Bill remains a work in progress, with no confirmed implementation date. “While March was initially suggested, it remains uncertain if this timeline will be met,” says Huggett-Henchie. Additionally, member benefit projections and other regulatory frameworks,
such as conduct standards, are expected to gain renewed attention in the coming months. Specific areas of focus include clarifications regarding late payment interest calculations for employer contributions. Addressing the barriers Despite advancements in financial products, such as modern retirement annuities, legislative restrictions persist. Employees are still unable to transfer funds freely between employer-sponsored plans and personal accounts, creating barriers to financial mobility, says Huggett-Henchie. Many in the industry are hoping for future regulatory reforms to introduce a system similar to Australia’s, where employees contribute to a chosen fund regardless of employer changes, ensuring continuity and flexibility. It’s a space to watch. The role of medical aid Another pressing issue is the introduction of the National Health Insurance (NHI) system, which has prompted medical aid providers to develop low-cost, accessible healthcare solutions. The viability of the NHI in its current format remains uncertain, with industry experts questioning its feasibility and timeline. “Employers and benefit consultants are increasingly exploring packaged solutions that combine healthcare and financial wellness offerings, such as affordable medical aid plans coupled with funeral cover,” says Huggett-Henchie. Another issue is that many employees remain unaware of all the benefits available to them, such as critical illness cover, which provides financial support in times of health crises without requiring drastic lifestyle changes. Proper education from consultants can lead to a growth in awareness and engagement. “Gap cover, which addresses the shortfalls in medical aid plans, is gaining traction,” says Kingsley-Wilkins. “While it often requires proactive promotion, once adopted by employers, it sees significant uptake.” Gradual contribution strategies Setting up a new fund can be daunting, especially for businesses with a large workforce due to the immediate impact on payroll expenses. It is essential to understand that benefit implementation does not have to be an all-or-nothing process. “Employers are encouraged to adopt a phased approach, starting with smaller contributions and gradually increasing them over time. This strategy helps prevent sudden reductions Continued on next page