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13 November 2023
Now, the looming two-pot system adds even more complexity to the nation’s retirement landscape. Financial advisers can play a pivotal part in guiding clients to optimal and personalised outcomes as they approach their wind down years. Gert Bezuidenhout, Regional Executive at Sanlam, who is preparing for his own retirement, shares how he believes advisers can add maximal value to clients in this critical chapter.
“Despite having the benefit of time to invest in my pension fund over my career, I've found that retirement sneaks up on you. This is a common concern shared by many South Africans, the biggest concern is whether what they’ve saved will be sufficient, given rising inflation and increased life expectancy. As financial advisers, our role is to equip clients with the necessary tools and knowledge to alleviate their financial stress and empower them to retire with confidence.”
Bezuidenhout says inadequate planning can leave clients under immense financial stress rather than provide a leisurely retirement. “As a financial adviser, you must encourage your clients to save towards their retirement as early as possible. Preparing for retirement isn't a sprint they can start later in life. It’s a marathon requiring long-term financial saving stamina.”
He adds that engaging with clients regularly and gaining their trust help financial advisers craft a tailored retirement plan and adjust these strategies to align with changing life circumstances.
“I’ve reduced my stress levels and fortified my retirement plan through my long-term contributions to a pension fund guided by sound advice and regular check-ins with my own financial adviser. This approach helps clients avoid high-risk, detrimental financial decisions many people fall prey to when playing catch-up, such as investing in high-yield, high-risk investments, or Ponzi schemes.”
Bezuidenhout says, much like retirement planning, building a trustworthy client relationship takes time. “The goal for financial advisers is to ensure that, while your clients are busy in their respective fields, they feel secure knowing that they have a professional adviser in their corner who facilitated their retirement planning early and will review their finances regularly as their life changes.”
Bezuidenhout says the newly proposed two-pot retirement system presents opportunities and challenges in clients' retirement planning. "On one hand, having access to a separate savings pot offers a financial lifeline for those under financial stress, potentially preventing a deep descent into the debt trap. However, the same system could tempt individuals to make ill-advised withdrawals for non-essential expenses, such as a new car, thereby diminishing their retirement nest egg."
He adds that this becomes especially significant as clients near retirement age when that savings pot can provide a crucial lump sum to kickstart a well-planned retirement venture. He says financial advisers must help clients understand the long-term impact that tapping into these savings will have on their retirement provisions.
“Every rand withdrawn today could translate into fewer months of financial security later. Sometimes, alternative solutions, such as taking a loan, might be more practical than compromising a client’s retirement savings.”
Bezuidenhout says financial advisers must also consider how retirement impacts clients' lives emotionally and socially. He says individuals can experience a sense of being sidelined when approaching retirement, which can have profound psychological implications.
It's easy for people to feel irrelevant. However, you can use these transitions to encourage introspection.”
Bezuidenhout says financial advisers can encourage clients to shift their perspective from ending their careers to starting a new chapter, whether this is a traditional retirement or a second, gentler career. “The emotional retirement journey is complex, but it doesn't have to signify an end. This change in perspective enables clients to realise that they still have a purpose and can continue to make valuable contributions. It's not always about retiring from something; it can be about moving towards a new phase that continues to stimulate a client’s body and mind.”
Bezuidenhout says today’s complex financial landscape makes it more challenging for clients to make informed decisions, with the extensive variety of products and services overwhelming even the savviest individual.
“Your role as a financial adviser is to simplify these offerings, empowering clients to make well-informed decisions. Sanlam equips you with the tools, information, and solutions needed to tailor plans that align with your client's unique financial objectives.
He adds that clients nearing retirement present an opportunity for financial advisers to steer them toward a rewarding second cat in their lives, reminding them that they are never too old to unlearn, relearn, and venture into new career opportunities.
Bezuidenhout concludes, “You can make your client’s transition into their next life stage seamless by packaging tools, information and advice into a tailored strategy that suits their unique needs and aspirations. That way, you can empower their financial confidence by offering affordable solutions that reflect their dream retirement.”