BLUECHIPFINANCIAL
BLUECHIPFINANCIAL PLANNING | Financial literacyThe future of group risk:why a consultative approach is key to financial security in SASouth Africa faces a significant financial literacy crisis.According to the Organisation for Economic Co-operationand Development (OECD), only 42% of the adultpopulation are financially literate.Research from National Treasury indicates that over60% of households struggle with budgeting and managing debt,leaving many unprepared for financial emergencies or retirement.Income inequality exacerbates this issue, with the top 10% ofearners taking home more than half of the country’s income,according to Stats SA.The shift toward consultative sellingGiven the country’s economic challenges, changing familystructures and the growing complexity of financial products, aconsultative approach is more critical than ever in South Africa’sgroup risk and employee benefits market. Instead of merelypromoting products, there’s a need for advisors to focus onunderstanding each employer’s unique requirements through athorough needs analysis.The rise of AI tools and call centres, coupled with reducedhuman interaction, has left many advisors frustrated. Navigatingthe growing number of product providers, complex termsand conditions and stringent regulatory requirements, suchas Know Your Client (KYC) and Policyholder Protection Rules(PPR), has become overwhelming. Independent advisors facean added challenge: regulations now require communication ofpolicy changes to employers and individual members, makingcommunication and education even more critical, especiallygiven South Africa’s low financial literacy levels. As a result, manyadvisors tend to gravitate towards a limited selection of providersthey trust, which can ultimately restrict client choice and limitbusiness growth.The independent advisor’s challengeEconomic disparities among corporate clients and the diversesocioeconomic workforce mean a one-size-fits-all approachis inadequate. As a business development manager at JigsawFinancial Services and a CFP® with over 30 years’ experience inthe industry, I have seen how financial protection plays a vital rolein employees’ lives.In lower-income sectors, financial protection often takesprecedence over retirement savings. Many employees coveredunder group policies are sole breadwinners, meaning theirfamilies depend entirely on their income. The right benefit structureensures families are protected in times of need. Furthermore,employees who are uninsurable as individuals rely on their employerprovidedgroup cover, which may be their only form of financialprotection. Conducting a detailed analysis of the employee data32www.bluechipdigital.co.zais essential to ensure the correct cover is in place and that pricingremains sustainable.Addressing the complexity of group riskAt Jigsaw Financial Services, we support advisors in navigatingthe complexities of group risk, ensuring the benefits offered alignwith the needs of both employers and employees. We utilise dataanalytics to strengthen advisors’ recommendations. A detailedanalysis of employee demographics provides critical insightsinto group composition. For example, an advisor may initiallyrequest standard cover up to normal retirement age. However,data analysis might reveal that several key employees are alreadynearing retirement age, and the company may intend to retainthem beyond retirement.While insurers may simply quote as requested, we highlightthese insights to advisors, adding value to their recommendationsand ensuring better alignment with employer needs. Risk coveris often overlooked in favour of investment-focused retirementplanning. However, escalating risk costs can erode investmentallocations, ultimately affecting long-term financial security.Sustainable risk pricing requires industry-specific accuracy. Areengineers desk-bound or field-based? Are IT employees remoteor on-site? These distinctions impact pricing and affordabilityallocations, ultimately affecting long-term financial security.A call for a consultative approachSouth Africa’s financial literacy crisis presents both a challenge andan opportunity. Advisors play a crucial role in guiding employersand employees through their options, ensuring risk benefitsare structured effectively andmembers understand theircover. By adopting a consultativeapproach, advisors can have ameaningful impact on financialsecurity across the country.Jigsaw empowers advisorsutilising data-driven insights,technical expertise and strategicsupport needed to navigate thisevolving landscape. We helpadvisors craft sustainable, clientcentricsolutions that provide realfinancial protection. Together,we can drive meaningful changein the group risk space, ensuringSouth Africans have the securitythey need for the future. Corinne da Silva, CFP®,Business DevelopmentManager, JigsawFinancial Services
Financial ServicesPartnering with Financial Advisors, Employee BenefitConsultants and Retirement Fund Administrators tonavigate Group Risk with expertise, insights, andsolutions that matter.010 447 2234info@jigsawsa.co.zawww.jigsawsa.co.zaJigsaw Financial Services (Pty) Ltd (Reg No: 2003/015468/07)(FSP No.: 21406) is an Authorised Financial Services Provider.
