New advice models to meet demographic and digital trends
The ability to dream and envision the future are differentiators that help human brokers and advisers stand out in an increasingly digital world. Khanyi Nzukuma, CEO at Glacier by Sanlam, used his platform at the in-person Glacier Ideas Lab 2025 event to share his thoughts on leading in a changing world. He framed his comments around six trends driving wealth management, each of which will be explored in today’s newsletter.
AI and automation take centre stage
Number one, technological innovation. “Many industries are integrating technology into their day-to-day operations,” said Nzukuma, commenting on the fast-track adoption of artificial intelligence (AI) and automation across sectors. He warned that financial services businesses that resisted this change risked being left behind. In a later presentation, the audience was polled on the various applications they used daily, with almost all saying they had integrated some or other large language model, like Chat GPT, into their personal and work lives.
The second theme keeping advice practices and their product suppliers awake at night is demographics. “We are seeing younger people entering the workplace, and they think completely differently to you and me,” the CEO said. Financial advisers and planners need to pay close attention to ensure they remain relevant, and are able to maintain relationships with individuals across generations, from Baby Boomers to Generation Z, and soon Generation Alpha. Advisers were cautioned against over-reliance on older clients. “If, for instance, 80% of your client base is in their mid-50s, then you are running a risk,” Nzukuma said. “
Shifts in regulation and the resulting compliance burden featured as the third trend. According to Nzukuma, the Financial Sector Conduct Authority (FSCA) was unrelenting in its crusade for the fair treatment of consumers, demanding unprecedented levels of transparency in adviser-client engagements. In this context, you can expect little mercy if you drop the ball in areas like communication, fees discussions, financial needs analysis (FNA) or product recommendations. Advisers, financial planners and wealth managers face the additional challenge of navigating increasingly complex cross-border advice, estate and taxation regulations.
The growth, inflation and interest rate overhang
Forecast economic growth, inflation and interest rates are always top of mind when advising clients on saving towards retirement or investing through it. The presenter unpacked the fourth (macroeconomic) trend in the context of today’s low interest rate environment.
He commented on the recent decision by the South Africa Reserve Bank (SARB) to target 3% inflation rather than the previous 3% to 6% range, warning that clients may not get the expected yield from guaranteed products. To illustrate, the pension your client receives from a life annuity could take a 40% hit just based on where in the interest rate cycle he or she transacts.
Fourth, advisers and planners must consider overarching social and behavioural trends when interacting with clients. “We are seeing pressure to invest in or encourage businesses that invest in preserving the climate and the environment,” Nzukuma said, bringing some of the social aspects to the fore. FAnews has frequently reported on the integration of environmental, social and governance (ESG) factors into investment decision making, and the consensus is that clients prefer their capital to be invested in a socially responsible firms.
Weighing up behavioural finance and wellbeing
Sanlam, like most of its diversified financial services peers, is also painfully aware of the impact of behavioural finance and consumer wellbeing on insurance and investment outcomes. Clients know what they should be doing in areas like diet, exercise and financial discipline, but often need firm guidance to keep them on track. Nzukuma explained: “As advisers, you deal with emotion, irrationality, greed and fear … our responsibility as an industry is to sit with clients, be patient, teach and coach.”
Finally, trend six, centres on the evolution of business models. This exhibits in various ways, including the outsourcing of non-core functions. “The most important thing for a financial adviser is to sit in front of a client,” the CEO said, and your business model should make this possible. Tech adoption is enabling advice and risk practices to do just that, introducing efficiencies in areas like administration and compliance, and freeing up advisers for face-to-face advising.
With the six trends locked in, the audience was treated to a brief overview of the domestic market. The presenter tried to put a positive spin on what most of his audience (and FAnews readers for that matter) are experiencing as tough trading conditions. Nzukuma hinted that South Africa could soon benefit from a ratings upgrade, and even tried to solicit a round of applause for the 0.8% second quarter year-on-year GDP growth reported by Statistics SA recently. Your writer has heard louder applause from smaller crowds. At least some sectors of the JSE have done well, including financial services and mining.
Combining data and tech in client comms
Overall, the shifts that will have the biggest impact on the South African financial services sector fall neatly into the first two trends already discussed: digital innovation (technology) and demographics. Under technology, the presenter shared an example of modern day client communication ex the retail sector, with a recent WhatsApp campaign by Shoprite Checkers featuring a video of Jamie Oliver reaching out directly to clients by name. Advisors were challenged to combine their client data with technology to take communications to the next level.
Under demographics, your focus should be on the looming intergenerational wealth transfer from the so-called Baby Boomers to their dependants. “The biggest creators of wealth in the world ... will be transferring wealth to the next generations,” Nzukuma said. “And that has major implications for advice practices.” Large asset managers in the United States have estimated that around USD100 trillion will transfer hands from one generation to the next, starting around 2045. A financial advice practice cannot remain sustainable without positioning for this eventuality.
The premium advice for advisers is that you need to understand your clients’ children if you hope for that wealth to remain in your practice over time. Reframed slightly: If you cannot relate to individuals in the Millennial and subsequent demographics, you risk missing out on the inter-generational wealth transfer dividend. They will take their wealth and invest elsewhere.
Gen Z clients have different focuses
You will need to know, for example, that persons in Gen Z (today aged 13 to 28) tend to be entrepreneurial. They live for the moment and value real world experience over the nine-to-five slog. And they demand that real-time, 24-7 customer experience that emerging digital platforms and other emerging technologies make possible.
Need an illustration, just ask your local GP about their Gen Z patients. Nzukuma shared a recent discussion with one of his friends, who also happened to be a doctor. By the time clients visit the practice they have already researched their ailment, weighed up the various available treatments and just want the GP to write a script so they can purchase the medicine.
A future-fit financial advice practice will have to understand client journeys, and appreciate that these clients journeys will vary based on age or life stage. It must be diverse in terms of age, gender and race or risk missing out on demographic trend opportunities. And it must adopt and implement systems that enable a digital first approach to attract a younger clientele.
Adding personalisation to holistic planning
Your long-term success hinges on connecting with your clients at an individual level (personalisation) and adding to your holistic financial planning capabilities to include lifestyle coaching and other human elements like empathy.
Writer’s thoughts:
Advisers who rely too heavily on older clients may find their books shrinking as wealth transfers to younger generations, leaving them to navigate uncomfortable succession conversations. How are you accommodating generational shifts in your advice practice? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
