Financial Journalist Maya Fisher-French speaks during the Mail & Guardian Critical Thinking Froum about saving.
Yet, a variety of factors saw the stock lose more than a quarter of its value in less than a month. And while it has started to regain some of these losses, many view it as yet another example of investing gone bad and wonder if hiding cash under the mattress is better value for money.
However, this does not have to be the case. For every example of investments gone wrong there is another of people turning into millionaires virtually overnight. And while there are talented individuals who can spot a good investment, the majority of us do not have the time or the skills to do so. This is where working with a professional financial planner becomes important to help secure a financial future that could mean planning for retirement, paying for your children's education, or just buying a new home.
According to the Financial Planning Institute of Southern Africa (FPI), an independent professional body for financial planners in South Africa, a professional financial planner is a trusted adviser who works with individuals to review all their options so that they can make informed decisions about their financial situation at every stage in life.
Focusing within
The people who might need a financial planner are not necessarily the ones who are struggling financially.
Esther Venter, the senior director of faculties at the Milpark Business School, says that it is often the case that those who are involved in the daily management of the money matters of others are the same people who neglect their own financial affairs.
"Very few people realise the importance of consulting an expert financial planner in the management of their financial affairs. This is partly because many people think that they have the situation under control by belonging to a pension fund or owning a life policy," she says.
Speaking at a Mail & Guardian Critical Thinking Forum held in Sandton this week, Rian le Roux, head of economic research at the Old Mutual Investment Group South Africa, says that South Africans are putting away way too little when it comes to their financial futures.
"People who are used to indulgent lifestyles are in for a rude awakening when they retire and discover that they have not saved enough to continue living at those standards. People assume that the money they pay into a pension fund will be enough but it is not the case anymore. Savings are driven by the ability to save and the willingness to save," he says.
This is where effective financial planning becomes important to empower people to reach their goals whatever they might be. According to Venter, a qualified financial planner will conduct a proper needs analysis for a person based on that individual's goals. This needs analysis is central to the Financial Advisory and Intermediary Services (FAIS) Act that regulates the industry.
Looking for investments
According to the recent Old Mutual Savings & Investment Monitor, South African consumers appear to be taking a "wait and see" attitude when it comes to their financial matters. While they continue to make plans to reduce spending and cut back on non-essentials, they are still under significant financial pressure. However, consumers are looking to find out more about saving, paving the way for qualified financial advisers to educate them on their options.
Financial journalist and Mail & Guardian Critical Thinking Forum panellist Maya Fisher-French feels that while education is important, it needs to become easier for people to save.
"As it stands, if I want to start investing in a unit trust, I need to complete a 16-page document, show my proof of residence, and fulfil a whole list of other legal requirements. Yet, there are companies online that can approve your application for a loan in a matter of minutes without requiring any of those documents. If we make it as easy for people to save and invest as it is to get into debt, then we will see a significant change in people's behaviour," she says.
And with the economic landscape requiring a cautious approach, saving and investing for the long term should be a priority for people irrespective of income.
It needs to become part of the culture of the country to be able to save for the long-term and not be reliant on government to take care of people when they retire.
Questions you should ask your financial planner
The Financial Planning Institute of Southern Africa (FPI) is an independent professional body for financial planners in South Africa and has developed 10 questions to assist individuals in interviewing and evaluating financial planners to find one that is suited for their needs:
1. What are your qualifications?
2. Do you belong to a professional body? If so, which one?
3. Are you a Certified Financial Planner (CFP)?
4. How many years experience do you have giving advice?
5. Please could you explain your methods of remuneration (fees or commission)?
6. Do you have any references?
7. Are you a licensed financial services provider and what is your number?
8. What "after sales back-up" do you provide?
9. What can I do if I am dissatisfied with your services?
10. Which product providers do you support?
What is a certified financial planner?
Certified financial planners are financial advisers who meet all four the following requirements:
Education. Passed the Post Graduate Diploma in Financial Planning.
Exam. Passed the Financial Planning Institute (FPI) Board Examination, where the provision of advice is assessed
in detail.
Ethics. Subscribes to the FPI Code of Ethics, aimed at protecting clients and professionalising the industry.
Experience. Has at least three years' experience in financial planning.
How to lodge a complaint with the office of the Ombud
The Financial Advisory and Intermediary Services (FAIS) Ombud deals with complaints submitted to the Office by a specific client against a financial services provider. The complaint will be considered if it is alleged that the provider or representative:
Has contravened or failed to comply with a provision of the FAIS Act and as a result the complainant has suffered or is likely to suffer financial prejudice or damage;
Has wilfully or negligently rendered a financial service to the complainant and has caused prejudice or damage to the complainant or which is likely to result in such prejudice or damage; or
Has treated the complainant unfairly.
To lodge a complaint with the office, an individual needs to complete a complaints registration form that can be downloaded from the Ombud web site (faisombud.co.za) or request a form to be faxed, emailed or posted to them.
Once the form is completed, signed, and all the supporting documentation for the complaint is attached, it needs to be returned to the office of the Ombud, that will review the complaint and will take the necessary steps, if any.