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Holistic financial advice essential to tackle SA’s financial vulnerability

07 December 2021 Sanlam

A solid understanding of client needs matched with holistic financial advice and financial education is critical to address the financial vulnerabilities of South African consumers. Add the benefit of close client and intermediary relationships, and a solid foundation for improved savings, investment outcomes and wealth accumulation become evident.

Panellists at the November 2021 Sanlam Financial Confidence webinar made a convincing case for the requirement of holistic financial advice across all client segments, noting the need to advise high net worth clients on tax-efficient intergenerational wealth transfers, often across multiple jurisdictions to supporting middle segment clients who may just be starting out on their wealth accumulation journeys. Khanyi Nzukuma, Chief Executive Officer: Glacier by Sanlam, said whatever the client segment, there were universal demands around affordability, ease of access, 24/7 service and personalisation.

Jurie Strydom, Chief Executive Officer: Sanlam Life and Savings, said the acquisition of financial knowledge presented the first step towards building financial resilience. “Clients are desperate for good, trusted advice, but unfortunately, many people either may not have access to advice or cannot afford it,” said Strydom. The Sanlam Group is expanding its financial advice reach through business ventures such as the recent acquisition of Absa’s investment management business, currently still subject to regulatory approvals. Nzukuma pointed out that both businesses had intermediary-focussed strategies that offered an aspirational value proposition. “This is a massive opportunity for Sanlam,” he said, noting that the Group would be able to leverage scale in an environment of increasing pressure on costs and margins. Moreover, he added that the opportunity would give Sanlam access to clients outside the Group’s dominant profile, especially among younger age groups.

Another mechanism applied by the Group to achieve broader financial advice reach is through the leveraging of digital platforms and other technology innovations to lower advice and transaction costs and to meet customers wherever they wish to be serviced. Addressing the issue of the potential negative impact of technology on adviser practices, Nzukuma said here was no such thing as the perfect human-to-technology ratio. “There are activities which one can automate, and there are those that demand human engagement. Each practice has to determine an optimal balance.” Nzukuma said the only caveat was that technological engagement cannot replace human trust, nor recreate the value in the tangible face-to-face assurances that a financial adviser can offer clients that the financial solution being recommended is appropriate.

Strydom agreed, saying that each intermediary business had to adopt technology at a level that worked for its advice methodology and client base. More importantly, the financial institutions with which they choose to partner should be adequately resourced to develop and integrate the technology solutions needed to ensure a competitive advantage.

“Intermediaries should partner with companies that make the necessary investments in technology. Our job is to ensure that our technology stack is sustainable, because if that fails it creates major obstacles for the intermediaries,” Strydom reiterated. Sanlam is making ongoing investments to ensure that its digital platforms deliver an exemplary customer experience, whether for a potential client who arrives ‘cold’ on the company website or the high-net-worth client, who enjoys access to the same investment information available to the intermediary, online. In either case, the digital platform should be designed to promote high-quality conversations with intermediaries.

Excellent advice and sound client relationships stood out as key differentiators in an increasingly competitive product environment. “People are desperate for advice and are desperate for help with their finances,” concluded Strydom. “The best client relationships are built on great intermediary advice, which is why intermediary businesses sit at the heart of the value offered in the Sanlam Group.”

Quick Polls

QUESTION

There are countless articles written about South Africa’s poor retirement outcomes. Which of the following would you single out as the biggest contributor to local savers not accumulating enough to buy an adequate and sustainable pension?

ANSWER

Lack of personal accountability
Poor participation in formal retirement funds
Reluctance to seek financial advice early on
SA’s high unemployment rate
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