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An Evolving Financial System
by Madeleine Coetzee - Monday, 24 June 2013, 02:25 PM
 

By: C. Leppan, FPI Centre for Professional Development

In the latest edition of The Financial Planner magazine, author Murray Anderson addresses the increasing concern around inadequate investment and the reality of the old adage: “If you fail to plan, you plan to fail.”

Based on the results of the first national survey of financial literacy commissioned by the Financial Services Board (FSB) carried out in July 2012, Anderson quotes that the overall financial literacy score is 54%.  According to Anderson, although this does not seem very low, there remain inadequacies in financial literacy in South Africa.  The survey clearly shows that people who have better income levels and access to some form of financial education have a much better chance at saving.

Anderson claims that education is the key to an improved savings culture in South Africa and it is clear that there is an important role for financial planners to play.  Having a financial plan is vital but the role of the advisor is more relevant when dealing with retirement as many important decisions are often overlooked.  On average investors are not equipped on their own to deal with the complexity of being able to generate an income or to preserve capital in order to provide for a comfortable retirement. 

Decisions whether to utilise a fixed or flexible annuity vehicle and the use of fixed income funds when dealing with fixed assets, need to be guided by a professional advisor who is able to address all the pros and cons.

In his closing remarks Anderson states that only 6% of South Africans can afford to retire comfortably.  “The many discussions that are going on in the industry and at government level at the moment are all aimed at dramatically improving this.  But an evolving financial system will bring financial innovation and hence there will always be the need for professional financial advice to guide the not-so-informed through the myriad important and often life-changing financial decisions that need to be taken by investors.”

 Anderson believes that the role of the advisor is even more relevant at retirement since the importance of the decisions at this time in a person’s life is often most important, yet frequently overlooked.

 You can read the full article by author Murray Anderson, MD Atlantic Asset Management, on page 24 of The Financial Planner magazine, Issue 29 (2 of 2013).

 


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