Swift action to jump-start consumer education

03 September 2015 Myra Rego
Myra Rego, FAnews Journalist

Myra Rego, FAnews Journalist

It is important that people take into consideration their financial situations by becoming money smart. Good financial habits are key to a financially savvy future.

The 2015 FPI Financial Planning Week which will be held from 7-11 September across the country is aimed at educating consumers about dealing with a professional financial planner and the importance of financial planning. 

In today’s increasingly complex world, people face serious challenges in their financial lives: high levels of debt, low levels of financial literacy, and inadequate retirement savings, to name just a few. 

Needless to say many people face the harsh reality of a declining economy, poverty, inequality, job losses and energy crises. People’s incomes have reduced and costs have increased, retirements have disappeared, bills are sky high and loans are completely out of control. 

While this is of serious concern, people still tend to move away from financial planning due to higher pressures and stricter budgets in households. Let us look at an example. 

The generational gap

It is often noted that Millennials – people born between 1981 and 2000 - do not trust the financial services industry. Yet when you take this into to consideration, the need for financial education in this market is that much more prevalent here too. 

The Millennial generation has had their views of the financial industry shaped by the 2008 financial crisis, with mistrust coming from the fact that they have watched their parents lose their homes to foreclosure, witnessed loved ones get taken down by high-interest rates and discovered hidden fees along the journey. 

However, when we look at spending patterns of Millennials, it seems to be a much more dire situation than that of previous generations. If you think about it in terms of the lives of average South Africans, they are meeting the needs of paying mortgages, saving for studies, buying houses, buying cars, getting married and having kids. 

Added to this is the fact that some may have to take care of their parents, they have to pay taxes, save for holidays and extravagant activities that go along with life if there is any money left at the end of the month. Some barely make ends meet. 

While at it, the use of ‘plastic cards’ should be noted as another concern as more money goes out than in. A Clinical Psychologist once said, “When paying with plastic, we do not really feel our spending. What you cannot see, you do not feel. The system is sneakily designed that way”. 

At the end of it all, when all has been paid there is barely anything left. The perception often is that once all bills are paid and money has been allocated to the necessary, whatever is left over will be saved, which is not how it should be. Some believe that retirement saving is not of importance at their age because they have their whole life to save for retirement which does not take into consideration what may happen tomorrow or next week. This highlights the notion that, ‘poor financial habits spell a recipe for disaster’. 

Pondering the future

With the pot brewing, it is important that  people take into consideration their financial situations by becoming money smart. Good financial habits are key to a financially savvy future.

Clients need to be informed to make sound financial decisions. This is where financial advisers play important roles to ensure clients are fully educated and are aware of what products are available to them to achieve lifelong financial well-being. Evidently they see financial advisers as sales people. The key to working with them is to show how you can help educate them and find solutions to their immediate problems. Transparency and clear communication is better for the client as well as the adviser, in that it tends to build a stronger, longer-lasting relationship. 

And as part of Financial Planning Week the FPI, will be hosting a national initiative helping set South Africans on the right financial path. 

These workshops will offer valuable financial guidance and advice to middle and lower income consumers and this will allow customers the opportunity to discuss their specific financial and insurance related needswith Certified Financial Planner (CFP) professionals.

This annual consumer initiative is an ideal way to raise awareness about CFP professionals and professional financial planning.

To become a part of this initiative visit the Financial Planning Week website for more information on how you, as a financial expert, can get involved.Join the crusade and help paint the industry in a positive light. Show consumers that you truly care for their needs. 

Editor’s Thoughts:
In line with the core mission to promote good financial planning amongst all South Africans, the FPI and industry representatives are on path to bringing light to the industry and what it is all about, by helping people see the value in financial advice and financial planners. As an adviser, you have the power to lead people in the right direction financially. Will you participate in the initiative?Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts


Added by Kenny, 03 Sep 2015
I don't think the average South African is anywhere meeting these needs anymore.
The debt crisis is bigger than we care to acknowledge. All the good habits in the world don't change anything for someone who's lost their job, getting called re bills, losing their house, etc. I think the time has come for drastic intervention, to my mind this needs to start with relooking at retirement legislation (what is the point of having money on an RA, if you can't keep your house). Then credit providers need to be seriously addressed (as well as bank the same time consumer education re debt. a big stick approach. only when someone is "rationally-mentally" in a state to do some planning will they be able to. South Africa needs INSPIRATION... let any education come from that inspiration. look at this article...same issues espoused since the 80s.
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