Financial advisers can’t bridge wealth gap

Hair and lipstick should not say ‘saver’ for some

During savings month, which drew to a close this week, we frequently heard commentators lamenting the poor culture of saving.

Some commentators, often those linked to financial institutions, decried how the so-called black tax is often a stumbling block to individuals who aim to save.

A round-table discussion on the relationship between financial advisers and consumers, organised by insurance house Liberty Group, was a breath of fresh air.

Research findings from a study by Amone Redelinghuys were presented. The study, which focused on banked individuals earning more than R20 000 a month, found that those with tertiary qualifications aged from 35 to 44 and earning a gross income between R20 000 and R40 000 a month, were more likely to have financial advisers.

It found that most of those in the low-income brackets who are less educated do not have financial advisers as they think the service is unaffordable and don’t think they will derive value from it.

The study also revealed that those with financial advisers tended to rate their financial position much higher than those who did not and one in three consumers want advice on how to grow their wealth.

Redelinghuys said more than 70% of those with advisers have seen an improvement in their finances, while only a quarter of those without advisers have.

Samke Mhlongo, an independent financial consultant who also attended the discussion, said many of her clients wanted to save while they accumulate wealth.

“I find that sometimes we tend to be too hard on South Africans by saying they aren’t saving. A lot of people that I see, who are between 24 to 34 and 66% are female, they understand the need to be financially secure. They want to act rich while they become rich. So they don’t want to look like they’re saving; their hair and lipstick shouldn’t say they are savers,” she said.

Mhlongo said it was also important for consumers to find advisers who are going to enhance their lifestyles.

“I find that a lot of people are actually paralysed by fear… they don’t trust anyone.”

Mhlongo said she spoke to a women who was very conservative – she saved by taking a packed lunch to work, not spending on her hair or make-up. But her savings were only earning her 4% a year – below the inflation rate – resulting in her effectively losing money every year.

Jay Naidoo, the divisional director for distribution transformation at Liberty, said you can start by saving small, but you should not abdicate your responsibility to an adviser.

You must realise that you have a responsibility as well to achieve your end objective, Naidoo said.

“It’s not that I’ve got a financial adviser and they must do everything and then I’m sorted. There’s got to be a partnership towards achieving goals.”