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Advice for a better South Africa

01 April 2013 Rudolf Britz, Momentum STI

The value of good financial advice goes a long way … perhaps even further than one realises, says Rudolf Britz, chief actuary Momemtum Short-term Insurance.

It is widely argued that South Africa could be missing the opportunity it has to be the gateway into Africa. I don’t think it would be wise to venture an opinion, but it’s safe to say that such an opportunity would mean serious economic growth – something that could only be good for our country, as it is currently struggling to produce something close to decent annual growth.
 
Just think of the amount of good it would do to our income gap if we could ensure that these mooted growth opportunities are grabbed with both hands by new small and medium enterprises in particular. The abundance of entrepreneurship available in South Africa need only be coupled with a few well designed opportunities for this to be a real miracle. Could it really be that simple?

Reputable financial services stabilise the economy

As financial service providers, we should never forget our role in the economy. For a start, real economic growth comes from excavating commodities or making something out of raw materials. This means the organisation of labour and material into a streamlined process that adds value and ultimately creates wealth.
 
In this context, offering financial products is a peripheral service. However, without proper consideration of the things that could go wrong, the fundamental drivers of an economy built on mining and manufacturing alone cannot be sustainable.
 
The existence of reputable financial services is therefore critical to the stability of the broader economy, which is something not many people realise. It also follows that the role of advice in our economy is a very necessary one, and we would have to ensure that the perception about advice remains pure in order for it to complement the efforts of the fundamental economic drivers.

Giving financial advice to entrepreneurs

In the very process of constructing the fundamental economy – such as having to streamline labour and material – lie many pitfalls and risks. It’s not difficult to read a number of articles about this in the media every day. It is fair to say it is extremely challenging to construct this process successfully in our country. The things that could go wrong are often out of the control or ability of the entrepreneurial spirit that is busy creating value, and this discourages many potential entrepreneurs to attempt new ventures.
 
It is right here where the insight and skill of advice can assist immensely as part of the broader risk management of these small and medium-sized enterprises. It is the natural skill that advice brings that can identify risks and match these with appropriate mitigation tactics – whether these are management practice or financial products.
 
One should not forget that it is insurance that can rebuild communities after significant disasters. The value of the right advice becomes clear when one looks at how insurers have managed risk in a number of instances.

Opportunity for growth

If approached in the spirit of risk mitigation and business assistance, we can say that the future of advice is alive and well. However, if advice is still seen as an attempt to sell insurance products, the world will unfortunately remain relatively small. There is much opportunity for growth in developing countries, including South Africa, and growing middle classes are likely to drive this demand, particularly if they are also entrepreneurs.
 
Momentum Short-term Insurance upholds the opinion that sound advice is at the core of a successful business and that our clients always receive the best in short-term insurance advice through our intermediaries.

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