• Barend le Grange, Head: Individual Member Support

Deciphering the individual – One size does not fit all

One of the challenges in a world of big data, is that the tiniest details often contains some of the most valuable information upon which important decisions need to be based. But if this kind of detail gets swallowed up in some kind of industry average, an important opportunity may be lost. And in our industry that could mean an important decision that directly impacts on the outcome of an individual member’s retirement journey.

One size does not fit all.

In the 2017 Sanlam Benchmark, we introduced the Sanlam Financial Resilience Index (SFRI). The intention of this index was to offer a diagnostic tool that could be used to determine what obstacles exist that prevent retirement fund members from improving financial resilience. Since 2017, we’ve engaged with numerous fund members and have received over 5,000 responses.

The SFRI assigns a financial resilience score that can be used as a benchmark to measure the financial resilience of any given fund against the industry in general, across the following six categories:

  • Income and Package Composition

  • Financial Wellness

  • Level of Indebtedness

  • Budgeting

  • Provision for Retirement

  • Advice and Financial Planning

The SFRI shifts the focus from issues should ‘generally’ be addressed, to what the members’ specific needs are for any given fund. The analysis of the data means a fund could see where they stack up against the industry and get meaningful insights into the areas that should be addressed by the fund.

This is merely one example of how we can start adopting a one-size-does-not-fit-all approach and start paying attention to members’ individual needs.

At Sanlam, we believe that a vital key to improving each member’s retirement outcome is engagement. This includes the frequency, timing, method and simplification of complex topics. To do so, you have to understand who the member is, what they want, how they want you to engage with them, as well as when to engage them. Retirement Benefits Counselling can be one of the tools that facilitate such meaningful engagement.

A quick recap of what Retirement Benefits Counselling is: It is the disclosure and explanation, in clear and understandable language, including risks, costs and charges of:

  • The fund’s available investment portfolios;

  • The terms of the fund’s annuity strategy;

  • The terms and process by which a fund, handles preserved benefits in terms of regulation 38; and

  • Any other options made available to members.

An important question trustees have to ask themselves, is can the effectiveness of Retirement Benefits Counselling be measured and if so, how will this be done. Essentially, there are two elements to this question:

Firstly, trustees will need a view of member’s engagement in terms of Retirement Benefits Counselling. For example, in the case where counsellors are being used, this would mean knowing how many members called the Retirement Benefits Counselling service and what the nature of their counselling needs were. In the case of proactive counselling, knowing how many members were reached and whether they were successfully counselled is important.

Secondly, trustees will need the means to measure what impact Retirement Benefits Counselling has on actual member behaviour, irrespective of the method of counselling. This means measuring for example, if fewer members opted to take cash when withdrawing from the fund, and the number of members that opted to retire in-fund (should this option be part of a fund’s annuity strategy).

All of this highlights the importance of partnering with a provider that has the systems, infrastructure and capabilities required to assist trustees in making the most of any interventions put in place and thus enabling financial resilience for their members.