Ad­vice in a di­choto­mous mar­ket

Ad­dress­ing del­e­gates at the 2014 As­so­ci­a­tion for Sav­ings and In­vest­ment South Africa ( ASISA) Assem­bly in Cape Town, Robert Kerzner, pres­i­dent and CEO of US- based re­search or­gan­i­sa­tion LIMRA, re­it­er­ated that glob­ally, the ad­vice model is un­der scru­tiny l

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He also in­sisted d that face- to- face ad­vice ac­tu­ally does mat­ter and does make a dif­fer­ence. er­ence. Some 78 per cent of con­sumers umers will wil con­trib­ute to a re­tire­ment fund if they the op­er­ate through an ad­viser, while only 43 per cent of con­sumers will con­trib­ute to a re­tire­ment fund with­out an ad­viser. Kerzner also noted that while re­search shows that about 60 per cent of con­sumers are more likely to in­ves­ti­gate and study life in­sur­ance prod­ucts on­line, the sales of risk prod­ucts on the In­ter­net have not in­creased sub­stan­tially. Seven out of ten Cana­di­ans pre­ferred to buy life in­sur­ance face to face, while the fig­ures in the US showed 57 per cent of con­sumers pre­ferred face to face in­ter­ac­tions. Pur­chas­ing risk prod­ucts through an ad­viser was said to in­spire an el­e­ment of con­fi­dence among con­sumers, mak­ing them feel more pre­pared for re­tire­ment. Kerzner also touched on the di­chotomy of the South African pop­u­la­tion and mar­ket, and the in­equal­i­ties that ex­ist. In a panel dis­cus­sion, speak­ers agreed that there was a great need for con­sumer aware­ness and ed­u­ca­tion when it came to fi­nan­cial ser­vices, and sav­ing in South Africa.

Stop blam­ing the mar­ket

Isaac Ram­puta, as­sis­tant sec­re­tary gen­eral at fi­nance union Sasbo, also high­lighted that there is a need for in­no­va­tive schemes to cap­ture the in­creas­ing num­ber of South Africans work­ing in the in­for­mal sec­tor, who do, in fact, wish to save. Reit­er­at­ing the re­al­i­ties of the South African con­text, Berne­ice Hieck­mann, mar­ket­ing and prod­uct devel­op­ment ex­ec­u­tive at MMI Metropoli­tan Re­tail, said that the South African ma mar­ket needs to be ap­proached with hu­mil­ity and cred­i­bil­ity. She af­firmed that sav­ings and life prod­uct providers could in fact learn from their cus­tomers who man­age to feed and clothe and ed­u­cate a fam­ily of four on R1 400 a month. Hieck­mann added that in the South African mar­ket ‘ ad­vice’ is a very big word. For some peo­ple, it means ‘ en­able me’, while for some it means ‘ just tell me what to do’, and for some it means ‘ ed­u­cate and em­power me, while for oth­ers it means ‘ just give me in­for­ma­tion, and I can make my own choices’. She urged prod­uct providers to stop blam­ing the com­plex­i­ties of the mar­ket for the lack of sav­ings in South Africa, high­light­ing that it is, in fact, so much eas­ier to get a loan prod­uct in South Africa, than it is to take out a sav­ings prod­uct. Na­tional Trea­sury fi­nan­cial in­clu­sion direc­tor Roelof Goosen, said that im­prove­ments in fi­nan­cial in­clu­sion in South Africa would be un­der­pinned by a re­duc­tion in costs ( on the pro­vi­sion and con­sump­tion side), and be­havioural changes, and said that there were a num­ber of de­vel­op­ments tak­ing place in that re­gard from the pub­lic and pri­vate sec­tors. Hieck­mann added that the role of prod­uct providers and fi­nan­cial ad­vis­ers is to fa­cil­i­tate, and not to an­nex, and re­minded the au­di­ence at the ASISA Assem­bly not to sit so far away from the peo­ple they are try­ing to serve. Con­sumer ed­u­ca­tion some­times works both ways, and the fi­nan­cial ser­vices in­dus­try can learn a lot from con­sumers in South Africa, con­cluded Hieck­mann.

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