Alexander Forbes Financial Services, the legion of fund administration in the country, is adding a Financial Planning Consultants division to its fold to tap into the virgin financial education market. The FPC, aimed at making people have a second look at how to manage their money, are established in economies like South Africa.
General Manager of the outfit, Batlhalefi Phale, is bullish about the market accepting the services, but admitted Batswana like being closer to their money.
“These are products that are tried and tested in South Africa. They have had such a division in a long time,” Phale told Sunday Standard.
The FPC division targets different groups, including pensioners, existing employees and people who are on contracts, particularly executives. Currently, there are 330, 000 people in the formal employment sector with 170, 000 covered by the retirement funds.
The balance is on gratuity and severance or packages and these are the interesting people that Alexander Forbes will follow because they have been buying retirement annuity from insurance companies without pension.
“We are now into the retail market,” added Phale. The retail investors are normally the people who would like to invest in unit trusts, which is why Alexander Forbes has partnered with asset management companies like Investec, Allan Gray, Stanbic Investment Management Services (SIMS) and Coronation.
Retail investors will approach Alexander Forbes and discuss products and services offered by the asset managers, which will also mean broking for asset managers.
The FPC is able to offer a client an array of investment options and to structure a retirement annuity to best suit an individual’s retirement savings needs through retirement products like Afri53 Provident Fund, Alexander Forbes Individual Retirement fund.
It also offers Retirement Annuities from Insurance companies which are ideal for members of pension and provident funds who would like to supplement existing retirement provisions with maximum tax efficiency.
FPC offer lessons in wealth creation and preservation that target people on gratuity, severance and 1/3 benefits.
Alexander Forbes said wealth creation enables people to retire earlier than expected as the ‘money will work for you’ instead of you continuing to work for your money. The other product pre-withdrawal planning is targeting those who are deffering their benefits.
It is said prudent financial planning with one’s withdrawal benefit can help people acquire assets like cash, shares, unit trusts and bonds to help boost retirement savings.
The division also offers retirement planning in a bid to give clients set defined retirement goals helping them to achieve financial independence at retirement.
Another financial service provided by the division is investment planning, which allows people to have a balance between current consumption and saving for the future the company’s investment portfolios and product solutions.
Upon retirement a consultant will advise the client on a comprehensive view of the different retirement annuities investment options available in the market today.
These retirement packages are best suited for investors aiming to minimise the likelihood of a shortage of required income at retirement.
According to Alexander Forbes, actuarial professionals in the retirement industry agree that a person’s final retirement benefit should provide him/her with, at least, a minimum pension income of 75 percent of your final annual fund salary.
“Our consultants have the resources and knowledge to help you track your retirement savings to make sure you retire with enough money to keep the standard of living you are accustomed to when you retire,” said Alexander Forbes. “When one changes jobs instead of cashing in on their retirement benefits; it usually happens when you change jobs, are retrenched or dismissed. Wealth creation and wealth preservation to give you the opportunity to preserve those savings and at the same time secure your retirement savings needs”.
Alexander Forbes added that prudent financial planning with ones withdrawal benefit can help people acquire assets like cash, shares, unit trusts and bonds to help boost retirement savings.
FPC comes at a time when the retirement and investment planning education is minimal with large number of people not taking up pensions. Phale is bullish the market will welcome the products that will help clients grow their money.
“We expect the uptake to be positive on our products,” Phale said. “We now understand the Botswana market and we want to leverage on the people that retire. We want to move people into products that can match their liabilities,”
The local culture is that when one retires, its either they invest in a cattle post or buy a ploughing field, which comes with risks as many inexperienced people lost their retirement savings, but with education they will be exposed to other investment instruments.
The new division which falls under the financial services at Alexander Forbes previously had a skeleton staff of two people who serviced people as they retired. Now it has a staff compliment of seven who have received their training from South Africa where FPC is established. Alexander Forbes will formally launch the division in the future, but already services like pre-retirement counselling are being offered.