By: Steven Amey, head of Intermediated distribution at Ashburton Investments

It’s the ideal time for retail investors to tap into the rise of highly skilled independent financial advisors (IFAs)

In July each year South Africans celebrate National Savings Month - an initiative of the Savings Institute of South Africa (SISA). The objective is simple but profound: promote healthier financial habits and encourage households to save for the future. 

“In essence, the intention is to foster a culture where South Africans can become more financially disciplined, leading to greater financial independence. To foster this culture, South Africans need to learn that small actions in savings and investments can make a big difference to their lives. And there are positive changes in the financial advice industry that consumers can capitalise on to do this,” says Steven Amey, head of Intermediated distribution at Ashburton Investments.

Why the need to promote healthier savings and investment habits? 

According to Eighty20 XDS Credit Stress Report 2025 Q1, South Africa has much to be concerned about it in terms of its over-reliance on debt. Household debt in the first quarter of 2025 reached an outstanding R2,56 trillion, up 2.1% from the previous quarter. “Most concerning is the quantum of loans overdue - a staggering 34.8% of all loans are in arrears, the first time in two years this number has gone up,” Amey cautions. 

“We know consumers are battling to pay for rent, food and the basic necessities of life, yet we continue to spend on items that fall outside these categories, evidenced in the ‘Mass Credit Market’, representing the majority of the South African populus.  

“Interestingly, approximately 325,000 people started utilising credit for the first time, in the form of retail loans. Credit card overdue payments, in the mass credit market, increased and 53% are in default, unable to pay an installment. On average, South Africans spend close to 30% of their income on loans. Also, according to TransUnion’s Q1 2025 South Africa Industry Insights Report, the growth in originations of new credit cards, at 30.7% year-over-year (YoY), far outstripped growth for other consumer credit products during the first quarter of the year. This is cause for concern,” says Amey.  

So how do we change to build better savings habits?  

Amey says there are a number of good habits South Africans can embrace to improve their financial well-being. This includes reviewing their household budget to find where they can save, becoming financially self-disciplined because small changes in spending can make a big difference, and starting to save immediately without hesitation to reap the benefits of compound interest over time. 

“Separate your needs from wants and rather use your hard-earned salary to pay for the essentials and the remainder to save and spoil yourself. We tend to overreach and spend more than we can afford. The statistics demonstrate this. So why extend yourself for short-term happiness when the inevitable of having to return your item or have it repossessed a few months later will cause greater embarrassment?”   

How savings and investment options are evolving in SA: the case for DFMs and IFAs

Amey advises that while learning to save is critical, turning savings into long-term investments is where real wealth is built. To do this, South Africans need to be aware of changes in the financial industry that can be leveraged for their benefit.  

“The investment value chain has dramatically improved for the regular retail investor over the last two decades. We have moved from having an investment industry that largely sold financial solutions on the back of attractive commissions, to one that has become well-regulated, respected and led by financial professionals that truly care about their clients’ financial well-being,” he says.  

Amey says it is interesting to note that the financial services industry has splintered into various advisory cohorts, each with their own unique value proposition. Many advisors have elected to join networks of advisors, ordinarily supported by large established industry providers which assist advisors with regulatory compliance and enable them to offer sound financial advice and a host of additional ancillary services to enhance their value proposition to their clients.

In addition, there are large life and banking advisory divisions which offer advisors many of the benefits of a network, with access to additional systems and services these large life and banking channels have developed over decades.

And then there are the larger, more established independent financial advisory practices that have retained their total independence, leveraging the resources they have accumulated over years of entrepreneurial practice.  

“Qualified Independent Financial Advisors (IFAs) of today, who are able to render sound holistic financial advice, are being regarded as the modern day ‘sherpa’. Their role is to prepare and help you navigate the financial complexities of life. Holistic financial planning is the epitome, where there is no longer a focus on a single need but a comprehensive analysis incorporating all aspects of financial planning, from budgeting to cash-flow analysis, tax planning, investment planning, estate planning and the like. Once all of this and more has been compiled into an understandable and executable financial strategy, financial products, platforms and solutions can be recommended to enable your unique plan”. 

Amey further cautions that while robo-advisor platforms have become prevalent, and tempting, they should be used only by more informed and astute investors. “The need for financial advice from a qualified financial advisor remains as strong as ever despite these latest developments.”

According to the Association for Savings and Investment South Africa (ASISA) March 2025 report, there are a plethora of investment options available to investors. For instance, there are 1884-unit trusts (100+ being passive or ‘Smart Beta Funds’), commodity funds, hedge funds, structured products, private equity, venture capital funds, fine art, actively managed certificates (AMCs) and more to select from, all adding to the financial complexity investors are facing. “This is why it is critical to get advice from a qualified financial advisor.   

One very important development Amey points out is the steep recent growth in Discretionary Fund Managers (DFMs) in South Africa.  

“DFMs have removed the burden of the advisor having to perform in-depth investment management due diligences and the complexity of having to compile detailed economic and asset management reports. Most DFMs have experienced teams, with sound investment processes and philosophies, mastered over several years, to the benefit of the advisors they serve. In addition, many DFMs manage significant assets, which can enable them to negotiate reduced asset management fees on behalf of advisors. The investment portfolios they compile may be bespoke for the needs of certain financial planning practices or more general to serve broader financial advisor needs. These portfolios usually comprise large and boutique active asset managers, as well as passive and smart beta investment strategies to reduce overall investment portfolio costs. Advisors then invest their clients’ assets into these portfolios to achieve desired investment outcomes.”  

Amey says it has become clear that many DFMs “add significant value, segregating roles and responsibilities to ensure the advisors they partner with can focus on what they do best”.  

“The savings and investment industry has evolved significantly over the last two decades. South Africans who want to change their financial fate need to tap into this opportunity. And the way to do this is to partner with the highly skilled new generation of accredited financial advisors who lead from the front, acting as much-needed financial sherpas for South Africans who want to build a better future,” Amey concludes.