Around Easter I have my annual meeting with a mythical creature. I’m not referring to the Easter bunny but to marketing actuary Viresh Maharaj.
The title is so contradictory. Marketing is all about making products fun for customers. I know that recently CMO or chief marketing officer has been adopted as a title by marketers who want to be taken seriously, but I think it should be MOF, or minister of fun. On the other hand, an actuary does cheerful tasks like working out how long people have to live. "I see dead people" could be their catch phrase.
Well, Maharaj has officially become CEO: Client Solutions at Sanlam Employee Benefits. A bit of title "inflation" there. I am not sure you can be a CEO of a division of a division.
Brokers and tied agents have largely deserted the middle market in favour of the top end
Maharaj was giving a preview of the forthcoming Sanlam Benchmark Survey, and he brought along Trurman Zuma, who seems to have been at all the Sanlam presentations. His day job is CE (with no "O") of Sanlam Personal Finance: Savings. But I am not sure when he has time to sell any of those high-margin recurring-premium endowments. He also had a starring role in the recent Glacier platform roadshow that went around the country.
Of course, saving for retirement is not just a pension fund issue; it is also a personal savings issue. Zuma says the level of understanding of financial stress is at a record high but it is still too low. I am a little sceptical, though, when the answer given is more advisers.
The Benchmark Survey focused on the R200,000-R1.5m/year income market. Brokers and tied agents have largely deserted this market in favour of the top end, which provides large lump sums. Businesses such as Sanlam Sky, Metropolitan and Old Mutual group schemes have been successful at the bottom of the market, but most businesses are bleeding in the middle market. I must admit that reducing upfront commissions has had the unintended consequence that it is no longer profitable to serve this market.
Zuma hints that part of the solution is financial wellness programmes, but surely for salaried staff to give advice on a group basis is a more sensible way forward than having commission-driven salesmen do it.
Like a true actuary Maharaj delivered the bad news well. No fewer than 73% of the middle class panellists said they always or sometimes experience financial stress. More than half considered the effect of stress to be somewhat or extremely negative. And 56% experienced a personal budget deficit, with spending ahead of earning at least a few times a year.
Cultural concerns
The largest source of stress was short-term debt obligations such as car payments and credit cards at 55%, followed by not having enough for unexpected emergencies (40%), often because they have decided to save money by cutting out short-term insurance. In a reflection of some specifically SA cultural issues, the third-largest source of stress was extended family financial obligations or ad hoc requests for financial support (33%). Paying for university or school was not far behind (30%). What concerned Maharaj, who after all focuses on retirement products, is that all these were rated as more worrying than "not being on track to be able to retire" (29%).
In another questionnaire in the survey 43% said they were worried about saving for the future, yet for most who are already working retirement will be at least half of their future.
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