According to Old Mutual, the percentage of working people in South Africa who are actually okay to retire is only about 10%, which is an alarmingly low figure of course. Then within that 10% only 2% of people can actually retire and maintain their existing lifestyle. There is clearly a severe lack of committing to proper personal financial planning.
So how do we change this behaviour?
While, most behaviour change comes from a need or the environments in which people are raised, BDO Wealth Advisers believe it could change through education around Financial Planning and wealth creation.
One approach to this education starts with building the actual profession that is Financial Planning by supporting the development of Certified Financial Planning® professionals. Much like how people see lawyers and doctors as prestigious and take their advice because their infamy through TV shows, court cases and more, if the Financial Planning profession is not viewed as enticing why would you want to engage with a Financial Planner. Also the less Financial Planners we have the more chance for people to be taken advantage of through pyramid schemes and the like, just further exasperating the initial numbers mentioned above. Trust is the key to successful Financial Planning.
That is why BDO Wealth Advisers has started sponsoring the BDO UJ Trusted Adviser Project. The focus of the project is for third year BCom Financial Planning students to participate in a real life simulation of advising a client on their financial plan. The students get into groups, are given a case study ‘client’ scenario (reflective of the SA market) and together need to present their financial plan and proposed actions and solutions to help the client make better decisions so that their wealth can outlive them while seeing positive contributions in their life – much like what BDO Wealth Advisor’s mandate is.
The aim is not just to see the plan that they come up with for the client but rather to highlight that it is about the trust that needs to be developed between the team as well as with a panel of judges who represent the client.
Throughout the project we saw relationships being strengthened and opinions being formed to come to the best result for the client. This is what makes a trusted adviser – someone who takes the time to build relationships with clients and provide advise that is reliable and credible.
The winning team members each walks away with a R5,000 investment in a unit trust per person. The key element of the prize being that they each would receive a financial planning consultation with a BDO financial planner as part of their prize. This not only ensures that they receive independent advise as where to invest their prize money, by more importantly that they experience independent financial planning as a client – showcasing the career of a Certified Financial Planning® professional.
If more students can see the effort and approach that goes into Financial Planning, we hope that they will start spreading the word to their friends, educating them in the process about a career as a Certified Financial Planner®, growing the prestige of the profession and ultimately leading to more trust for Financial Planning, which in turn (we hope) will encourage a generation of savers.