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
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.