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A ‘middle of the road’ financial security score

10 August 2011 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

Throw the words “Oh behave!” at an audience and you might conjure up images of the 1960s hippy-spy, Austin Powers. He was the lead character in a series of silly action-comedy films that poked fun at the traditional spy-movie genre. Mike Myers plays a Bri

The latest comment on South Africans’ attitude to retirement can be found in the Financial Security Barometer 2011, a study conducted by acsis. The group set out to explore perceptions and understanding of key concepts like “financial security” and “financial wellbeing”; to determine the need for financial planning among ordinary savers; and to better understand the impact of financial literacy on planning activities. And unlike other industry surveys that focus on low and middle income groupings, acsis decided to talk to those individuals who definitely had the means to save! Their survey collates information sourced from 411 detailed interviews with households earning at least R30 000 per month. “This sector has the potential to be financially secure,” said acsis chief executive, Andrew Bradley. “The results are not skewed by those who are not in a position to save.

Using a financial planner

The survey’s 411 participants were ‘sliced and diced’ into a number of distinct groups, but the key focus – and the delineation we will comment on in this newsletter – was on those who were using a financial planner (53% or 219 respondents) and those who were not (47% or 192 respondents). This came as quite a shock and acsis wanted to know why, particularly in the R50k-plus income segment, people wanted to ‘go it alone’. Of those not using a financial planner 52% said they had no need of this assistance as they were capable of handling their own affairs. And 21% bought into the fallacy that they didn’t have enough money to see a planner. “People believe they can do their own thing, but there is a huge disconnect between what they believe they can do and what they are actually capable of,” said Bradley. This knowledge gap plays out in many of the survey findings. For example, of the 67% of respondents who indicated that their financial planner had a formal degree or qualification, a whopping 43% had no idea what the qualification was.

The survey confirms that South Africa’s high income savers are fiercely independent. Of the respondents who used financial planners 11% indicated that they relied heavily on their financial planner throughout the financial decision-making process, while 81% would typically follow the financial planner’s advice only after consulting their partner and conducting additional research. Bradley said this situation was encouraging as it showed that savers were taking responsibility for their financial affairs and making informed decisions with the assistance from (rather than instruction by) a professional planner.

The value of a financial plan and planner

Ask an audience how many are ‘above average’ drivers and most will put their hands up. Survey respondents acted in much the same way to the question: “How would you describe your financial knowledge?” An impressive 92% of total survey respondents indicated they were well or reasonably informed with good to above average knowledge! These financial industry ‘experts’ sourced their information from financial planners (52%), the Internet (30%), friends and family (26%) and financial newspapers or magazines (25%). But there were glaring differences between the survey respondents making use of financial planners and those ‘going it alone’! Those with financial planners obtained their information from financial planners (80%) and friends and family (20%) versus 19% and 33% respectively for their ‘no planner’ peers.

The answer to life the universe and everything...

One of my favourite High School reads was Douglas Adams’ Hitchhikers Guide to the Galaxy. Novels in this series were so popular that the final book was marketed as “the fifth book in the increasingly inaccurately named Hitchhiker’s Trilogy.” Although the books are chock full of comic nonsense I can recall Adams’ attempt at answering the “meaning of life” in his first novel. The novel reports it took a super computer called Deep Thought 7.5 million years to compute and check the answer to the Ultimate Question of Life, The Universe, and Everything – which turns out to be 42.

Acsis set out to find a single number to express South Africa’s financial security. To do this they selected certain survey questions, filtered the responses to these questions into specific factors and then applied regression analysis to score and weight factors according to their likely influence on financial security. After the requisite number-crunching acsis determined the Financial Security Barometer 2011, for all savers in the income category, as 6.5. Those pre-retirement were slightly less confident (6.5) versus those in retirement (7.3) – and those with a financial planner (6.9) were definitely happier than those without (6.1). “The financial planner plays a crucial role in empowering South Africans to make the right decision about their financial affairs,” concludes Bradley. “They must continue to do so by assisting, educating and informing their clients.”

Editor’s thoughts: We’ve covered the proverbial ‘tip of the iceberg’ in today’s comment on the acsis Financial Security Barometer 200… We’ll unpack some of these findings at a future date. But for now we’d like to know your views on financial security. If a score of one is terrible and 10 perfect, how would you rate your financial security? Please add your comment below, or send it to

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