The majority of South Africans who used the services of an independent financial adviser (IFA) have told a survey that they were either “satisfied” or “very satisfied” with the advice they received.
This was one of the findings of the FSCA-commissioned 2020 Baseline Survey on Financial Literacy in South Africa. The 235-page report was published last week.
The sample size for the 2020 survey was 2 693 (respondents were 16 years and older) with national representation using the census enumeration areas. The face-to-face data-collection interviews started in February 2020 but had to be halted because of the lockdown. The fieldwork resumed in November 2020 and was completed in February 2021.
The FSCA commissioned the research to examine the financial knowledge, attitudes and behaviours of South Africans as part of ongoing efforts to understand, monitor and promote financial literacy. The first survey was reported on in 2012, with subsequent rounds in 2013, 2015, 2017 and 2020.
Only 38% of respondents said they had asked a professional for financial advice on important issues in the past 12 months. The survey’s four categories of professional advice were IFAs, banks/building societies, insurance companies and accountants.
Of these four categories of financial professional, IFAs received the highest level of customer satisfaction: 21% of respondents said they were “very satisfied” and 54% said they were “satisfied” with the advice they received.
IFAs were followed by accountants, with 71% of consumers either “very satisfied” or “satisfied” with their advice, and banks/building societies (70% “very satisfied” or “satisfied”).
Satisfaction was lowest for insurance companies, although more than half of respondents (53%) were “very satisfied” (16%) or “satisfied” (37%) with the advice.
Overall, 69% of consumers were very satisfied with the advice they received from all four categories of professional.
Educated people were more likely to rate the support they received from a professional as satisfactory, with 71% of the tertiary-educated satisfied with the advice they received. This outcome was almost 20 percentage points above the national average.
Labour market status was also a crucial determinant of satisfaction with the information provided. Less than two-fifths (37%) of unemployed people who received expert advice were satisfied with the information they received. This outcome was 15 percentage points below the national average.
A person who effectively worked towards achieving financial goals was more likely to purchase professional advice.
Of those who had obtained the opinion of a financial expert in the preceding 12 months, 44% said the cost of the advice was too high, compared to 36% of those who had not recently sought professional guidance. The report said this suggests that the experience of having received expert advice increases the likelihood that a consumer will have a negative view of how this kind of help is priced.
Finding ‘good and relevant’ advice
Survey participants were asked whether they had trouble obtaining “good and relevant” financial advice. More than half (55%) said had they not, whereas about 13% said they had. The reminder either had never tried to get financial advice (27%) or said they were uncertain how to answer.
People who had asked a financial professional for financial information in the 12 months prior to the interview were more prone to say they had trouble obtaining “good and relevant” financial advice. Of those who had purchased this type of professional help in the year before the interview, 21% said that they had trouble, compared to 8% among those who had not sought professional help recently.
The table below shows a breakdown of responses to whether respondents had experienced difficulties obtaining “good and relevant” advice by financial product.
Those who recently obtained professional advice on insurance were most liable to report having trouble finding beneficial and reliable information, whereas people looking for expert opinion on tax planning had the least trouble.