by Staff reporter

Secure lifelong financial wellness

There is a secret formula to secure lifelong financial wellness...

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Research indicates that approximately 500 000 South Africans, earning more than R30 000 per month, have defaulted at least once on payments in the past year. Even more distressing is the fact that less than 20% of people have some form of a financial plan in place and people that are regarded as financially secure, struggle to implement their financial plans because they do not have a financial adviser.

This could explain why the vast majority of South Africans simply do not have enough money to support their lifelong financial journeys. As research highlights, this is not necessarily because of a shortfall in capital but rather a case of inadequate financial planning that results in individuals not managing their capital optimally. Also, people tend to base their retirement income stream on a monthly income ‘number’, often founded on their monthly income before retirement, when this number might be influenced by their pre-retirement needs, without taking into account how these needs will change over time.

As a result, the average person does not have a clear understanding of their financial situation and how to plan effectively for today, not to mention the future and retirement.

The good news

Momentum has partnered with the University of South Africa (Unisa) to produce the annual Momentum Unisa Household Financial Wellness Index, which details the state of the nation’s financial wellness.

Over time, this index provided us with unique insight regarding people’s perceptions and behaviours when it comes to managing their financial worlds. This insight enabled Momentum to develop an exceptional framework that helps clients to have enough money to support their lifelong financial journeys which we refer to as financial wellness.

For clients to be financially well does not only consist of being able to pay monthly bills; it is about so much more. For them it is about having enough money to provide for planned and unplanned expenses for today and in the future and to support their retirement dreams.

However, the key to unlock optimal financial wellness for clients consists of a detailed financial plan, supported by a monthly budget that is reviewed on a regular basis. But this can only be put in place when clients have access to good financial advice.

Specialists in the financial services industry are tasked with making recommendations and should clients choose to implement these recommendations, and stick to them, they are more likely to be in a position where they can protect themselves and their loved ones against unforeseen events because they now have control over their financial situation.

This empowers families to ensure that they will have enough money to support their lifelong financial journeys.

A needs-based master plan

Knowing that people’s needs can be a strong driver to establish or change behaviour, our extensive research regarding people’s perceptions and interaction with money, led us to discover very specific financial needs that are associated with life-changing events. Also, we identified four primary financial needs as people progress through certain stages of their lives.

Based on this insight we developed a financial wellness wheel where all primary financial needs are depicted. These four needs include protection for clients themselves, their families, their belongings and the need to plan and prepare for their future. Taking this one step further, we identified additional financial needs that could emerge from these primary needs and transformed this into practical, secondary financial requirements that are linked to specific stages of people’s lives.

This financial wellness wheel enables us to get a ‘snapshot’ of clients’ financial wellness at specific stages of their lives. More importantly, because these primary and secondary financial needs are interlaced, the wheel provides clients with a holistic, yet unique view of their state of financial wellbeing and the existing ‘gaps’ that might prevent them from enjoying optimal financial wellness, now and in the future.

However, good financial advice plays a vital role in this process where the focus is less about the sale of financial products and more about ‘big picture thinking’ to ensure that clients have enough money to achieve their lifelong goals. This forms the basis of a detailed and practical financial plan.

On a practical level

As a result of this unique framework, where the four primary financial needs link with each other in a seamless manner over a client’s lifetime, Momentum can create alternative avenues from where we can leverage additional capital for clients without any extra cost to them. For this, we developed practical tools that can assist clients to unlock unrivalled financial value which will add to their goal of achieving their desired level of financial wellness.

A lot of the engineering of these practical tools is based on our research telling us that there are a number of similar financial aspects which people battle with and the top three include budgeting, managing debt and the perceived complexity of taxes.

Since a budget is the natural outcome of a solid financial plan, it enables clients to manage their money more effectively, thus empowering them to unlock more capital that can be utilised to provide for future needs. When it comes to managing debt, very few people are equipped to do this. However, being able to manage debt effectively, leads to consolidation and an increase in capital in the long run. When it comes to tax and how to structure this effectively, people tend to ask the experts instead of trying to understand how tax impacts their lives. But, if people had an understanding of how to structure tax well, in the context of their financial situation, it could result in more savings and access to increased retirement savings. This is where expert financial advice can make a substantial difference in clients’ lives.

This, once again, illustrates why it is so important to have the right discussions with clients because a tailored financial wheel forms the basis from where a practical master plan emerges. From our side, this wheel also enables us to reallocate clients’ capital in order to address all existing financial needs without extra cost to them.

In SA, the average retirement age stands at 60 years, and should people live to reach the age of 100, which is very possible in our day and age, it means that retirement savings will have to last for at least 40 years. This is savings that were produced over a period of only 35 years if one assumes that a person entered the workforce at age 25. Clearly, this sum does not add up.

Should this same 25-year-old individual choose to partner with Momentum, because of our unique financial wellness framework and innovative product offerings, we can generate additional capital for clients that can last another 30 years into retirement, over and above the existing value attached to benefits at retirement age. This means that we can contribute a great deal of capital to clients’ retirement. Knowing that only an estimated 6% of South Africans can retire comfortably, our unique framework can thus add another 30 years’ worth of retirement savings at no cost to clients.

This commitment to clients’ financial wellbeing is articulated in our purpose which is to enhance the financial wellness of every individual, family, community and business. From a practical point of view, this involves the continuous process of assisting clients with planning and managing their money so that they can afford their expenses, planned and unplanned, and achieve their goals over their lifetime.

However, in order to implement a detailed master plan requires a change in behaviour. We understand how difficult it is to change existing behaviour because it requires a lot of discipline.

This is why there needs to be definite commitment from clients to change the way they think and interact with their money, and this can be achieved through constant support from financial advisers.

Financial wellness multiplied

As stated in our purpose, we are committed to assisting clients in changing their financial behaviour and this served as inspiration when we created Multiply, Momentum’s revolutionary engagement tool.

Multiply acts as the catalyst that unlocks more value from Momentum products. By doing the right things, such as being active and going for health and fitness assessments, clients gain access to discounts, cash back and significant savings. This can all be channelled into more benefits that ultimately increase their financial wellness. Clients are thus motivated and rewarded in a fun way, both over the short and long term, when they reach milestones linked to wellness.

Therefore, by engaging with Multiply, as part of clients’ ‘basket’ of Momentum benefits, leads to great savings and cash back that could be channelled to life cover, disability, critical illness and income protection. This, together with longevity protection, will not only address the needs of not being able to absorb shocks, but also provide additional retirement income. Together, this is how we ensure that clients have enough money to support their lifelong financial journeys and be financially well. We walk our talk and have a proven track record; thus, we can confidently state that if clients have a better life, life automatically multiplies.

Momentum is then the obvious choice.
 

 Research indicates that approximately 500 000 South Africans, earning more than R30 000 per month, have defaulted at least once on payments in the past year. Even more distressing is the fact that less than 20% of people have some form of a financial plan in place and people that are regarded as financially secure, struggle to implement their financial plans because they do not have a financial adviser.

This could explain why the vast majority of South Africans simply do not have enough money to support their lifelong financial journeys. As research highlights, this is not necessarily because of a shortfall in capital but rather a case of inadequate financial planning that results in individuals not managing their capital optimally. Also, people tend to base their retirement income stream on a monthly income ‘number’, often founded on their monthly income before retirement, when this number might be influenced by their pre-retirement needs, without taking into account how these needs will change over time.

As a result, the average person does not have a clear understanding of their financial situation and how to plan effectively for today, not to mention the future and retirement.

The good news

Momentum has partnered with the University of South Africa (Unisa) to produce the annual Momentum Unisa Household Financial Wellness Index, which details the state of the nation’s financial wellness.

Over time, this index provided us with unique insight regarding people’s perceptions and behaviours when it comes to managing their financial worlds. This insight enabled Momentum to develop an exceptional framework that helps clients to have enough money to support their lifelong financial journeys which we refer to as financial wellness.

For clients to be financially well does not only consist of being able to pay monthly bills; it is about so much more. For them it is about having enough money to provide for planned and unplanned expenses for today and in the future and to support their retirement dreams.

However, the key to unlock optimal financial wellness for clients consists of a detailed financial plan, supported by a monthly budget that is reviewed on a regular basis. But this can only be put in place when clients have access to good financial advice.

Specialists in the financial services industry are tasked with making recommendations and should clients choose to implement these recommendations, and stick to them, they are more likely to be in a position where they can protect themselves and their loved ones against unforeseen events because they now have control over their financial situation.

This empowers families to ensure that they will have enough money to support their lifelong financial journeys.

A needs-based master plan

Knowing that people’s needs can be a strong driver to establish or change behaviour, our extensive research regarding people’s perceptions and interaction with money, led us to discover very specific financial needs that are associated with life-changing events. Also, we identified four primary financial needs as people progress through certain stages of their lives.

Based on this insight we developed a financial wellness wheel where all primary financial needs are depicted. These four needs include protection for clients themselves, their families, their belongings and the need to plan and prepare for their future. Taking this one step further, we identified additional financial needs that could emerge from these primary needs and transformed this into practical, secondary financial requirements that are linked to specific stages of people’s lives.

This financial wellness wheel enables us to get a ‘snapshot’ of clients’ financial wellness at specific stages of their lives. More importantly, because these primary and secondary financial needs are interlaced, the wheel provides clients with a holistic, yet unique view of their state of financial wellbeing and the existing ‘gaps’ that might prevent them from enjoying optimal financial wellness, now and in the future.

However, good financial advice plays a vital role in this process where the focus is less about the sale of financial products and more about ‘big picture thinking’ to ensure that clients have enough money to achieve their lifelong goals. This forms the basis of a detailed and practical financial plan.

On a practical level

As a result of this unique framework, where the four primary financial needs link with each other in a seamless manner over a client’s lifetime, Momentum can create alternative avenues from where we can leverage additional capital for clients without any extra cost to them. For this, we developed practical tools that can assist clients to unlock unrivalled financial value which will add to their goal of achieving their desired level of financial wellness.

A lot of the engineering of these practical tools is based on our research telling us that there are a number of similar financial aspects which people battle with and the top three include budgeting, managing debt and the perceived complexity of taxes.

Since a budget is the natural outcome of a solid financial plan, it enables clients to manage their money more effectively, thus empowering them to unlock more capital that can be utilised to provide for future needs. When it comes to managing debt, very few people are equipped to do this. However, being able to manage debt effectively, leads to consolidation and an increase in capital in the long run. When it comes to tax and how to structure this effectively, people tend to ask the experts instead of trying to understand how tax impacts their lives. But, if people had an understanding of how to structure tax well, in the context of their financial situation, it could result in more savings and access to increased retirement savings. This is where expert financial advice can make a substantial difference in clients’ lives.

This, once again, illustrates why it is so important to have the right discussions with clients because a tailored financial wheel forms the basis from where a practical master plan emerges. From our side, this wheel also enables us to reallocate clients’ capital in order to address all existing financial needs without extra cost to them.

In SA, the average retirement age stands at 60 years, and should people live to reach the age of 100, which is very possible in our day and age, it means that retirement savings will have to last for at least 40 years. This is savings that were produced over a period of only 35 years if one assumes that a person entered the workforce at age 25. Clearly, this sum does not add up.

Should this same 25-year-old individual choose to partner with Momentum, because of our unique financial wellness framework and innovative product offerings, we can generate additional capital for clients that can last another 30 years into retirement, over and above the existing value attached to benefits at retirement age. This means that we can contribute a great deal of capital to clients’ retirement. Knowing that only an estimated 6% of South Africans can retire comfortably, our unique framework can thus add another 30 years’ worth of retirement savings at no cost to clients.

This commitment to clients’ financial wellbeing is articulated in our purpose which is to enhance the financial wellness of every individual, family, community and business. From a practical point of view, this involves the continuous process of assisting clients with planning and managing their money so that they can afford their expenses, planned and unplanned, and achieve their goals over their lifetime.

However, in order to implement a detailed master plan requires a change in behaviour. We understand how difficult it is to change existing behaviour because it requires a lot of discipline.

This is why there needs to be definite commitment from clients to change the way they think and interact with their money, and this can be achieved through constant support from financial advisers.

Financial wellness multiplied

As stated in our purpose, we are committed to assisting clients in changing their financial behaviour and this served as inspiration when we created Multiply, Momentum’s revolutionary engagement tool.

Multiply acts as the catalyst that unlocks more value from Momentum products. By doing the right things, such as being active and going for health and fitness assessments, clients gain access to discounts, cash back and significant savings. This can all be channelled into more benefits that ultimately increase their financial wellness. Clients are thus motivated and rewarded in a fun way, both over the short and long term, when they reach milestones linked to wellness.

Therefore, by engaging with Multiply, as part of clients’ ‘basket’ of Momentum benefits, leads to great savings and cash back that could be channelled to life cover, disability, critical illness and income protection. This, together with longevity protection, will not only address the needs of not being able to absorb shocks, but also provide additional retirement income. Together, this is how we ensure that clients have enough money to support their lifelong financial journeys and be financially well. We walk our talk and have a proven track record; thus, we can confidently state that if clients have a better life, life automatically multiplies.

Momentum is then the obvious choice.
 

 

 
 
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