Jeanetta Hendricks, GM: Care at Fedgroup

 

 

It may seem odd to suggest that putting people first could be a novel concept for retirement funds.  Especially since their core function is to manage pensions for the people who contribute to them.  Yet, the emphasis has always been squarely on the numbers, with little thought for the people behind them.

 

That’s not a naked criticism. Managing retirement savings is a hefty responsibility and fund managers need to be clear-eyed about their purpose and have a laser-focus on the money if they are to deliver maximum growth and financial security.  Particularly since their members rely on them to make sure they are prepared for the future once their working years are over.

 

Yet, it’s not enough.

 

Retirement is a vulnerable time. And aside from needing confidence that their own financial needs can be met, members also need to know that, if the worst happens, and they’re not around to take care of their minor children and other dependents, they’ll be looked after too.

 

Not just by having their financial needs taken care of but also with a support network to provide the empathy and guidance they’ll need to navigate their way.

 

South Africa badly needs a more people-centred approach and although Fedgroup is innovating right across the retirement fund solutions landscape, our pioneering work in the area of beneficiary funds highlights it best.

 

 

Care for the most vulnerable

 

Beneficiary funds were mandated by government in 2008 to disburse death benefit payments to minors who have lost their breadwinner, to cover schooling and living expenses.

 

It was a welcome initiative and retirement funds created add-on beneficiary funds to distribute the benefits left by their members.

 

Yet it was instantly clear to us that simply making a monthly pay-out was no substitute for the gaping hole left by an absent parent. And beneficiary funds were not structured to provide any meaningful support beyond that.

 

Guardians needed to know: how much money they’d be sent every month, when it would arrive, what to do when it didn’t and how to deal with the curve balls life threw at the children in their care, like replacing a broken laptop required for school or other unexpected expenses.

 

Without emotional or educational input, or the means to manage their money effectively, these most vulnerable youngsters were being set up to fail. So we developed a unique beneficiary funds solution that has become an emotional anchor for them and for our business.

 

Designed with people in mind, it uses our own Azurite IT platform. First, to perform the essential task of administering monthly pay-outs but also to offer the personal service and flexibility they need and that empathetic retirement fund trustees wish them to have access to.

 

 

The disruption starts with technology

 

The beneficiary funds system is undeniably complex but, for us, it’s all about serving the best interests of beneficiaries and making sure they don’t get left behind.  So we’ve found ways to innovate in the areas that concern us most.

 

Technology, of course, is key and rather than retrofitting a solution to a clunky legacy system, we built and continue to develop Azurite from scratch to manage everything seamlessly: from transactions to client communication, across all our product lines.

 

This gives us a single view of every client, with every interaction on record, meaning that in our Beneficiary Care business unit, children have the comfort of their issues being handled without delay and critical payments being made on time.  And  institutional clients (who white-label our solution) experience real-time access to data which gives them immediate oversight and the ability to respond at pace.

 

On top of these industry-leading performance levels, Azurite slashes turnaround times, improves productivity and saves costs. All radical cost-efficiencies that allow us to provide premium customer service at a competitive price.

 

 

Leading with the human touch

 

Best of all, Azurite lets beneficiaries interact with us directly through a dedicated Care Centre and for us to reach out to them via SMS or email, when necessary.

 

Since their financial knowledge is often limited, it can take time to resolve their concerns and empathy is vital.  To that end, the experts in our Beneficiary Care department are either parents, former beneficiaries of our fund or they come from a child-headed household, and therefore have the necessary situational awareness.

 

So, whether they’re checking the date of their next payout, or need help with a finance, education, medical or wellness matter, they’re assured of a sympathetic ear and solid guidance.

 

They can also be assured of quick action from the trustees who manage their retirement funds and, to avoid the usual lengthy approvals, we always have a trustee on call  to make decisions on ad-hoc payments and special requests.

 

 

Gearing for maximum growth

 

The core function of a retirement fund is to preserve and grow the money it receives from its members.  In contrast, the function of a beneficiary fund is not just sound investment preservation, but to disperse it in a sustainable way.

 

Yet, because they are both subject to the same regulations, they’re often managed the same way, meaning they experience the same liquidity problem and struggle to free up enough cash to execute payments.

 

The classic response is to keep a significant portion of assets (up to 50%) in cash, which means the money isn’t being invested as it should. Because Azurite automatically processes disinvestments from the beneficiary fund, to make monthly payouts, and then rebalances fund allocations every week, we only need to keep 2% available in cash.

 

Not only does this ensure beneficiaries get the maximum benefit from their invested funds but our investment in technology and innovation also yields major improvements in cost-to-income ratios.  One institutional client reported it had halved its cost-to-income ratio, even after we had recovered our administration fees.

 

We’ve applied innovation to fees too.  Instead of the usual layered structure, with fees charged per transaction, which can be confusing when a retirement fund is managing multiple functions itself, we prefer to keep things easy and transparent with a single fee. Aside from the obvious logic of separating beneficiary funds from retirement funds, to meet their very different management needs, it also avoids any risk of double dipping or unplanned extra costs.

 

 

Innovation for positive change

 

These are just some of the moves we’ve made to put people at the centre of our  beneficiary care offering and we apply the same awareness to all our Retirement Fund Solutions.

 

Yet our responsibility to the children doesn’t end there. Upon completion of matric, we offer internships and study opportunities exclusively to our beneficiaries through our Iteke Learnership Programme and a number have become permanent employees.

 

Does it make a difference to put people first?  Fedgroup beneficiary, Johan Schultz says  it does:

 

“You have helped us unlock the doors to a bright future. May you be the big difference in the lives of the other children that you assist. You were in ours.”

 

 

ENDS