New technology has the ability to disrupt the status quo and create new opportunities.

With new opportunities we however also are confronted with new challenges. In the field of financial planning, this is no different.

In the early days, a ‘retirement plan’ was simple and concurred with family planning. More children meant more sustainable wealth as adult children typically took care of elderly parents who were not able to work or look after themselves financially. In the late 1800s the revolutionary idea of retirement was created where employers started to provide retirement benefits to workers after their years of service. The calculation of these benefits was usually based on two major factors namely years of service and seniority within the organisation. With this system, the employer took both initiative and responsibility for the financial wellbeing of employees while employed as well as in retirement. These benefits promoted loyalty towards employers and incentives to work for promotion. Employees typically started working at a young age and were focused on advancing their careers to gain maximum promotion and only retire after more than 40 years of service.

Although this system provided good financial care for employees, especially those who placed a high priority on future financial security, it also dictated retirement savings and subsequently take-home-pay. Increasingly, later generations wanted more freedom and greater control of salaries. More freedom however requires more responsibility and insurance providers soon filled the gap. Insurance companies designed policies and products with the objective to assist customers to invest and save for retirement, independently from employers. The demand grew rapidly and insurance soon became a lucrative business, also offering employment opportunities to many.

Insurance policies and products however came with their own set of issues. Ensuring feasibility and profitability, the majority of product offerings came with long-term policies. Contracts were well written and customers were often left in the dark about the intricate details, especially with regards to the contract duration of policies. After years of investment, policy holders were often left with less than what were promised or expected, without the opportunity to get out of the deal with no penalties. This situation necessitated greater disclosure of information and improved financial product regulation.

Today, the financial industry is well regulated and financial service providers are required to be authorised.

Financial planning services or financial advice cannot be provided to any customer without adhering to specific qualification standards and procedures. This includes analysis of clients’ financial situation before recommending suitable solutions.

With the internet a whole new world of information, tools and technology are freely available. Artificial intelligence (AI) has the ability to gather personal data we may not even be aware of. These intelligent systems may know what we need (and want) even before we realise it ourselves. Having access to this information, marketers and opportunists are enabled to identify opportunities and apply direct marketing in unforeseen ways. Privacy protection has become increasingly important, hence the introduction of the Protection of Personal Information (POPI) Act. Financial service providers also have a great responsibility to protect and continue to safeguard personal information.

Your money and your future wealth is your responsibility. The first step is to make the right choice in the appointment of your financial service provider. Make sure you have a trusted financial partner that can provide adequate financial guidance and the professional expertise that you require.