Financial Planning
July 9, 2024

Good financial advice can help us move the needle on South Africans retiring comfortably

By Robyn Laubscher, Advice and Product Specialist at PSG Wealth

Having recently celebrated 30 years of democracy in South Africa, I am prompted to think about what the next 30 years will look like for South Africans. For example, will the percentage of people retiring comfortably increase from the current 6%, or will it decrease?

Several factors could influence these numbers. The state of the economy will obviously be a significant factor, but another important variable that many overlook when plotting out their financial journey is the role of a financial adviser.

Recognising that financial advice is not only for the rich

There is a common misconception that financial advisers are only for the elite, for the wealthy, or for complex financial structures like offshore trusts. This is not the case, however, and establishing a relationship with a trusted, accredited financial adviser from a young age can make a significant difference in your life.

When we offer financial advice to Gen Z investors, they often tell us that they will start planning when they start making more money. However, experience has taught me that you may never feel that you’ve reached that point. I would encourage the older generation to introduce their young adult children to their financial adviser to expose them to financial planning from an early age and help them understand the value of receiving professional financial advice.

Your financial adviser should understand your world

A financial adviser’s responsibility is to help you to achieve your financial goals. To do so, they will engage with you to understand your world, your objectives, your tolerance for volatility, and what is really important to you. Based on this, they will be able to assist you in creating a realistic financial plan that is tailored to your specific needs. Good financial planning decisions include many aspects – much more than just where and how you invest.

Your relationship with your financial adviser should be lifelong, and you should engage with them regularly. As your life changes, your financial goals and objectives change, and your financial adviser will be there to guide you on your financial journey.

Not only is a certified financial adviser qualified to give advice, but they also possess extensive experience in- and knowledge of the financial world, and they understand the emotional aspects of investing and how to stick to a plan to achieve a goal – much like a trainer at the gym. They are there to support you, remind you of what you need to do to achieve your goals, and ensure you understand any potential consequences of deviating from the plan you have created together.

The costs of seeking advice versus the costs of not doing so

Another common misconception is that financial advisers are expensive and unaffordable, and that clients should rather manage their finances without the assistance of a financial adviser due to these costs. There is, of course, a cost associated with financial advice – as is the case with any professional service. Whilst it is important to understand these costs, it is equally important to consider the value of professional financial advice over the long term.

In the same way as I wouldn’t try to treat my family medically given that I am not a trained medical professional, seeking professional advice and guidance is worth the fee you pay compared to the costs of making poor financial decisions.

Finally, the sooner you make a start, the better. In the words of Mahatma Gandhi, “The future depends on what you do today”.

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