Financial health – How to get it back on track

Gross Domestic Product (GDP) results are the worst we have seen in over a century, and a decline of 51% for the second quarter of 2020 underlines just how tough times are. The latest Momentum Unisa Consumer Financial Vulnerability Index (CFVI) also shows that South Africans are indeed in a very vulnerable state and unable to cope financially.

The Momentum CFVI recorded the largest quarterly decline of 13.1 points (from 47.7 points to 34.6 points) in the income category. According to Dumo Mbethe, CEO of Momentum Corporate, this underlines just how many households are facing reduced financial inflow, which makes household budgeting more important than ever so any income goes as far as possible and households are still able to honour debt payments.

“South Africa is blessed with an abundance of talented sportspersons. However, for them to get on top of their game and deliver world-class performances, they need good coaches. In a similar way, retirement fund members should reach out and use the experts and resources they have access to by virtue of their fund membership, like benefit counsellors and financial advisers, to get back on top of their financial game,” Mbethe advised at one of their member webinars recently, reinforcing the important role of the financial adviser during financial turmoil.

According to Mbethe, a financial plan is the bedrock of anyone’s financial health and vitally important in current times, highlighting the key elements of a financial plan, i.e. a household budget, the retirement and group insurance benefits, provision for personal savings and insurance as well as establishing a will.

Mbethe also emphasised the requirements of the default retirement regulations that necessitates all retirement funds to offer benefit counselling. Especially during times of severe financial stress, it is important for the financial adviser and client to connect. These interactions will assist to remove the emotion and will help your client to see the situation more clearly.

Many clients are experiencing these vulnerable financial situations. Now is the ideal time to guide and coach them to adjust their financial planning in view of the changed circumstances, as well as to ensure that all their goals, whether short- or long-term, will be met. Failure to keep close to your client could result in an in-house, salaried benefit counsellor advising the client, and you losing out on an investment opportunity which you helped create, over many years.

Click here to read more about the critical role of a financial adviser in the current volatile market – a role to give a clear perspective on clients’ finances.

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