First for the professional personal financial adviser
31 JANUARY 2026 R69.95 INCL VAT
www.moneymarketing.co.za
THE POWER OF TAX-FREE SAVINGS ACCOUNTS One of the simplest and most tax-efficient ways for clients to build wealth over time remains underutilised in many portfolios. Cover story and Pg15-17
WHAT FINANCIAL ADVISERS CAN EXPECT IN 2026 It’s going to be a year shaped by renewed business confidence, shifting client expectations and a fast-moving regulatory and technological landscape. Pg6-11
HOW TO SET FINANCIAL GOALS Effective financial goal-setting begins with understanding a client’s life ambitions and translating them into clear, measurable and achievable long-term targets. Pg12-14
GETTING RETIREMENT PLANNING BUY-IN Despite retirement planning being essential for South Africans, many are still woefully underprepared. But how can FAs help to remedy this worrying situation? Pg18-23
TACKLING TECHNOLOGY We look at the latest news in the world of technology. Keeping informed can enhance the advisory process by streamlining administration, improving personalisation and freeing advisers.
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Pg24-27
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Are South Africans maximising the TFSA opportunity 10 years on? By Andrea Malyon
MoneyMarketing Contributor
A
decade after their launch, Tax-Free Savings Accounts (TFSAs) have become a familiar part of South Africa’s investment landscape. Created to foster a culture of disciplined long-term saving, they remain one of the simplest and most powerful ways for individuals to grow wealth without the drag of tax. Yet, despite their accessibility and advantages, many South Africans still misunderstand how TFSAs work, resulting in missed opportunities, premature withdrawals and sub-optimal investment choices. Conversations with industry leaders reveal a TFSA market that has matured considerably, but one that still relies heavily on advisers to help clients capture its full value. A market of missed opportunities When TFSAs were introduced in 2015, investors approached them cautiously. Today, nearly every bank, Linked Investment Service Provider (LISP), and asset manager offers TFSA solutions, and balances have increased significantly as early adopters approach a full decade of contributions. According to Daniel van Andel, Head of IFA Proposition at Allan Gray, strong recent market returns have helped long-term TFSA investors build substantial balances, with some now exceeding R500 000 and a few even approaching R1m. “We are starting to see the positive impact of tax-free growth over longer periods,” he says. Investors who contributed consistently and stayed invested through multiple market cycles are now benefiting from compounding that has been completely shielded from tax. Murray Anderson, Head of Retail at Prescient Investment Management, echoes this sentiment. He points to a clear behavioural shift in the market: more investors are moving away from cash-based TFSAs toward balanced funds and other growthoriented investments. “The most notable behavioural change is the shift into growth assets to maximise tax-free compounding,” he observes. Monthly debit orders (often around R3 000) have also become more common, signalling increasing commitment to longterm behaviour. Despite these improvements, both experts agree that TFSAs remain widely misunderstood – and often misused. Short-termism, early withdrawals, and overly conservative investment allocations continue to hold investors back.
Persistent misconceptions The single most damaging misconception is around the contribution rules. Withdrawals from a TFSA cannot be replaced. Once funds are taken out, the contribution room is permanently lost. Attempting to ‘replace’ a withdrawal later in the year can also result in accidental excess contributions and a punitive 40% penalty from SARS. “Many investors treat TFSAs like transactional accounts or short-term savings pockets,” says Anderson. “But the real value only emerges after 10 or more years, when the compounding effect accelerates.” Another misconception is the belief that cash is a safe default inside a TFSA. While cash lowers volatility, it also severely limits long-term returns. Over a multidecade horizon, the opportunity cost is immense when compared with a diversified balanced fund or equity exposure. A third misunderstanding relates to tax treatment. Unlike retirement funds, TFSA contributions do not reduce taxable income. “The real advantage is not the contribution – it’s the tax-free growth and tax-free withdrawals later on,” Anderson stresses. Van Andel notes that some investors still use TFSAs for short-term goals, which tends to push them into conservative investment choices and results in premature withdrawals. This behaviour erodes the taxfree compounding runway and wastes a portion of the lifetime allowance. A structural advantage that still goes unused Diane Behr, Head of Operations at Foord, underscores just how advantageous TFSAs are, especially when viewed correctly. “The way to think about a TFSA is like a private pension fund,” she explains. “The structure gives you major tax advantages and encourages disciplined saving. Inside the fund you get tax-free reinvestment, and over time that makes a huge difference.” For Behr, the biggest missed opportunity is simply that many South Africans are not using their TFSAs at all, despite their clear benefits. “One of the most important things advisers should be doing is making sure that clients use their full annual allocation every year,” she says. This extends beyond adults. Parents and grandparents can open TFSAs for children or grandchildren, giving younger generations a powerful compounding advantage from day one. Continued on next page
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