As South Africans begin the new year, many households are grappling with the financial strain of “Januworry”. Despite the ongoing cost-of-living crisis, financial planning often remains a low priority for clients. This creates a vital opportunity for financial advisers to step in and guide their clients toward greater financial stability and resilience.
“There is no better time than the start of a new year to engage with a financial adviser and do it right,” says Bertie Nel, Momentum’s Head of Financial Planning and Advice.
While many people set New Year’s resolutions to stick to a budget, a lack of financial literacy often prevents them from reaping the full benefits of financial planning. According to the Momentum/Unisa Household Financial Wellness Index, only 15% of South African households are genuinely financially literate, even though 45.7% believe they are.
“This shows how easy it is to lie to ourselves about our handle on wealth creation and household financial management,” says Nel. “That is where financial advisers fit in.”
Advisers are uniquely positioned to bridge this knowledge gap and guide clients through the complexities of budgeting, saving, and investing. Without proper advice, households risk making costly mistakes that can undermine their financial stability. Advisers play a critical role in steering them toward better decisions and long-term wealth creation.
To ensure clients are well-prepared for the year ahead, Nel encourages advisers to focus on structured and proactive engagements. He suggests seven key areas to address during financial planning reviews:
- Conduct a financial health check
Encourage clients to treat the start of the year as a financial check-up. Assess their savings, debt levels, and cash flow to ensure they are on track. This review sets the foundation for growth and stability.
- Optimise tax planning
Highlight potential tax-saving opportunities, especially as tax season approaches. Keeping clients informed about recent tax law changes can help them maximise deductions and retain more of their income.
- Align investments with goals
Review clients’ investment portfolios to ensure they align with their financial objectives and risk tolerance. Regular rebalancing and diversification are key to navigating economic uncertainties.
- Evaluate insurance coverage
Life changes can affect clients’ insurance needs. Regularly review their life, disability, and critical illness cover to ensure it remains relevant and adequate.
- Develop a debt reduction strategy
Educate clients about debt management strategies that can alleviate financial strain. Options such as consolidation loans or reprioritising repayments can free up cash flow and improve financial health.
- Strengthen emergency savings
Reinforce the importance of maintaining an emergency fund that covers three to six months of expenses. Help clients build or replenish their reserves to prepare for unexpected challenges.
- Review and refine financial goals
Financial goals should evolve with life changes. Encourage clients to revisit their objectives regularly to ensure they remain realistic and aligned with their current circumstances.
By addressing these areas, advisers can help clients approach financial planning with greater clarity and accountability. Nel compares the adviser’s role to that of a coach who provides expertise and guidance to navigate life’s financial complexities.
“Think of a financial adviser as your coach, guiding you through the big game of life. They help you avoid pitfalls and seize opportunities that align directly with your financial goals,” he says.
While the new year often inspires fresh resolutions, achieving financial stability requires ongoing commitment. Nel urges South African households to approach 2025 with a renewed focus on their financial futures and professional support to build resilient budgets, reduce debt, and achieve long-term security.
“With the right financial plan in place, 2025 can be your year of growth and stability. Don’t wait—start now and take charge of your financial journey with the right advice,” concludes Nel.
