Even the digitally savvy need financial advice
27 Jun, 2022

I love the digital world. In fact, part of my career has been built on it and in my current role, it is always part of my strategic thinking.

In my present company, I was responsible for digital client experience in a previous role. We tried to create awesome client experiences and digital interactions for clients. And still earlier, in a previous company, I headed up strategy, innovation and digital distributions for the personal finance department. This is fancy speak for selling everything from retirement annuities to tax-free investment products online.

I like staying on top of what is fast and happening in the broadest possible sense. How to buy equities online or how data and technology are used to link lenders and borrowers in the business-to-business space – all of this fascinates me. So does gamification and its intent to get people to engage with their financial products or learn more about complicated topics.

Men and women could empower themselves so much by engaging with online money tools and knowledge – I have.

Clicking or tapping away to do my banking, do online shopping, or book theatre tickets – I feel in control and love the convenience. I check my investment balances and submit insurance claims online. I even communicate digitally with my financial adviser.

What? you will ask. Someone with it and savvy enough for robo-advice and you have a financial adviser? Yes. Yes, I’m decent with money but I still need guidance. Yes, I’ve even been part of the design-thinking of robo-advice, but I believe there is a balance between what you can do for yourself and where you need independent advice.

In my twenties, for instance, I was probably overinsured. If you have dependants or a business, you need more insurance but looking back I was too cautious at the time. I could rather have invested some of the insurance money.

As much as I love digital tools, there is advice that machines simply cannot give you. For instance, the best financial advice I ever got was to set aside money for the things I want before I want them. That is why I have always had a travel fund – and had a mortgage fund before.

More brilliant advice was to get the savings and insurance money out of the way as soon as you start the month. It goes off my account via debit orders and I never think about it again. In a way, it almost means that I don’t have to budget for my expenses to death because the important commitments are out of the way immediately.

This goes for my medical insurance too – apart from my medical aid at work, I have taken out gap cover for what the medical aid can’t reach. Gap cover must be one of the best-kept secrets. I was especially thankful for it when I had a small operation earlier this year and the gap cover paid for more than half of the costs. I would have battled to pay for that out of my pocket or even my emergency fund.

The retirement annuity, tax-free investment, life insurance and critical illness and related cover, and even funeral cover for my mom, sisters, and their offspring, are all taken care of. My family brought me up and helped to educate me, and I will be expected to step in should something happen. That’s why I also see myself as building generational wealth for my nephews and nieces in case I never have my own family.

I love the fact that I can now have positive discussions with my financial adviser. This has not always been the case – like when I lost my own business and with it all my life savings. People make the mistake of being ashamed of financial hardship or debt. It happens in the best of families – and when you are in trouble is exactly when you should be talking about your money affairs.

My colleagues at Momentum Investo say that robo-advice is for experienced, knowledgeable people who can navigate the pitfalls of assessing their appetite for risk, tax-efficient ways around money, and other aspects where financial advisers usually step in. The same goes for young clients just starting who are extremely cost-sensitive and comfortable that they can navigate money complexities and risks. It will also work for you if you are highly independent and prefer a hands-off approach.

From experience, however, I know that robo-advice often recommends standard products. If you are one for bells and whistles and features you can add as your financial needs evolve, you may want to look at wider offerings.

The best is that financial advisers also have access to digital tools to help you make better financial decisions. Such tools tell you whether your retirement products adhere to Regulation 28, which means their risk is kept in check. The tools can help determine the cost of a solution, project growth, and compare funds.

Don’t you, too, just love the creativity and innovations of the digital world?



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