According to the Organisation for Economic Co-operation and Development (OECD), only 42% of the adult population are financially literate. Research from the National Treasury indicates that over 60% of households struggle with budgeting and managing debt, leaving many unprepared for financial emergencies or retirement. Income inequality exacerbates this issue, with the top 10% of earners taking home more than half of the country’s income, according to Stats SA.
The shift toward consultative selling
Given the country’s economic challenges, changing family structures and the growing complexity of financial products, a consultative approach is more critical than ever in South Africa’s group risk and employee benefits market. Instead of merely promoting products, there’s a need for advisors to focus on understanding each employer’s unique requirements through a thorough needs analysis.
The rise of AI tools and call centres, coupled with reduced human interaction, has left many advisors frustrated. Navigating the growing number of product providers, complex terms and conditions and stringent regulatory requirements, such as Know Your Client (KYC) and Policyholder Protection Rules (PPR), has become overwhelming. Independent advisors face an added challenge: regulations now require communication of policy changes to employers and individual members, making communication and education even more critical, especially given South Africa’s low financial literacy levels. As a result, many advisors tend to gravitate towards a limited selection of providers they trust, which can ultimately restrict client choice and limit business growth.
The independent advisor’s challenge
Economic disparities among corporate clients and the diverse socioeconomic workforce mean a one-size-fits-all approach is inadequate. As a business development manager at Jigsaw Financial Services and a CFP® with over 30 years’ experience in the industry, I have seen how financial protection plays a vital role in employees’ lives.
In lower-income sectors, financial protection often takes precedence over retirement savings. Many employees covered under group policies are sole breadwinners, meaning their families depend entirely on their income. The right benefit structure ensures families are protected in times of need. Furthermore, employees who are uninsurable as individuals rely on their employer-provided group cover, which may be their only form of financial protection. Conducting a detailed analysis of the employee data is essential to ensure the correct cover is in place and that pricing remains sustainable.
Addressing the complexity of group risk
At Jigsaw Financial Services, we support advisors in navigating the complexities of group risk, ensuring the benefits offered align with the needs of both employers and employees. We utilise data analytics to strengthen advisors’ recommendations. A detailed analysis of employee demographics provides critical insights into group composition. For example, an advisor may initially request standard cover up to normal retirement age. However, data analysis might reveal that several key employees are already nearing retirement age, and the company may intend to retain them beyond retirement.
Business Development Manager, Jigsaw
Financial Services
While insurers may simply quote as requested, we highlight these insights to advisors, adding value to their recommendations and ensuring better alignment with employer needs. Risk cover is often overlooked in favour of investment-focused retirement planning. However, escalating risk costs can erode investment allocations, ultimately affecting long-term financial security. Sustainable risk pricing requires industry-specific accuracy. Are engineers desk-bound or field-based? Are IT employees remote or on-site? These distinctions impact pricing and affordability allocations, ultimately affecting long-term financial security.
A call for a consultative approach
South Africa’s financial literacy crisis presents both a challenge and an opportunity. Advisors play a crucial role in guiding employers and employees through their options, ensuring risk benefits are structured effectively and members understand their cover. By adopting a consultative approach, advisors can have a meaningful impact on financial security across the country.
Jigsaw empowers advisors utilising data-driven insights, technical expertise and strategic support needed to navigate this evolving landscape. We help advisors craft sustainable, client-centric solutions that provide real financial protection. Together, we can drive meaningful change in the group risk space, ensuring South Africans have the security they need for the future.
