September 3, 2019 smacms_admin

Lessons from Abroad

I have just come back from 2 weeks of seminars in Europe. The first of these was with Investec in London, and the second the Fund Forum – the largest gathering of investment managers, fin-tech, asset managers, and thought leaders in the world – held in Copenhagen.

Apart from enjoying the European summer in two wonderful locations, I came back filled with reflections and information. Over the next few newsletters I’ll unpack all that I learnt over those 2 weeks, as well as my thoughts and reflections on the matters. For this newsletter, I am going to turn my attention to the place my sister affectionately calls her home, “the little mud island”, or more commonly known as the UK!

Political Perspective

Earlier this year I attended a conference held at the London Stock Market. This was at a time when the general sentiment surrounding Brexit was anything but positive. Concerns were raised about travel and visa-free entries, border control and the influx of refugees. Politicians were out of favour, and large companies (such as Land Rover, Jaguar and Ford) were relocating their manufacturing plants out the country.

People were disgruntled.

Fast-forward to 4 months later and things have not improved. Property prices are down in various parts of London by a staggering 25 – 30% (ringing any bells, Cape Town?).

People are angry with their politicians who hog the daily headlines with their own inner party warfare – they’re not as lucky to have anything as meaty and meaningful as The Daily Maverick!

Economically, people are concerned about what the unravelling of Brexit will mean.

So often we get caught up in our own political and economic headlines that we don’t consider that other countries are facing similar afflictions. Taking a moment to reflect on these can be sometimes be a source of both perspective and comfort. So perhaps the grass isn’t always as green as it appears?

Retirement Shocks

A big take away from the London conference was the concern that the UK have about their ageing population and their lack of retirement provisions.

Many UK-based companies that do offer retirement funds are doing away with defined benefit funds and moving towards funds defined by contribution only – a notion that South Africa executed over 25 years ago. The responsibility for their staffs’ retirement outcomes now sits with their staff, not the company.

The concern in the UK is that the average person’s pension pot holds the same value as their annual leaving salary.

Add this to the fact that most people in the UK either have not thought of the importance of financial advice or cannot afford to see a financial advisor, and therefore they’re left with a dire future. You see, financial advisors in the UK typically only see high net worth clients or persons with a certain prescribed investment fund size, or they charge a high consultation fee, rendering professional advice for the benefit of the few.

This leaves many of the greater public in the UK completely unaware of what their retirement future will look like.

Up until now the average UK citizen has relied on their social system and their private insurance defined benefit retirement funds, but this is under pressure. Companies are no longer offering defined benefit retirement funds means that there is no longer a guaranteed income for life.

Additionally, some politicians want to do away with the NHS, the government pension fund age is increasing and, for some, their pension fund payouts are reducing.

So, there is an enormous knowledge gap as a result of this limited access to sound financial advice.

Furthermore, in 2040 (18 years from now) a disconcerting 1.4 million households in the UK will be headed by someone over the age of 85, an increase of 161% over a period of 25 years.

I want you to absorb this figure and the percentage increase – in 18 years time 1.4 million homes will be headed by a breadwinner who has been retired for close to 20 years, subjected to Brexit and changing financial situations, leaving them with little hope to manage their finances sustainably. I’m no Nostradamus, but this isn’t looking good. Whilst that may seem far from home, unfortunately, we’re experiencing the same situation here in South Africa.

It’s time we do something about it.

So, what does this mean for you? Your family? Your kids?

If you’re currently looking after your ageing parents, you may well be paying for them when you reach your retirement age and for many years after. This is a massive concern. People will run out of money before they run out of time.

Key Takeaways

In a strange way we are luckier than those in the UK.

We live in an environment where we know that we cannot rely on our social system. We know that our country is under huge economic strain, that our social system is unsustainable and doesn’t care for the aged, and that relying on a state hospital isn’t feasible. What gives us the edge on our friends and family members from “the little mud island” is that we have access to financial advisors (though you need to sift through and make sure you’re not with a sales agent but an actual financial planner).

We know that we need to fend for ourselves and that we do live for today. Enjoy the balance but always have one eye on the future.

Get real with your retirement plan – it’s become more important than you realize.

The key differentiator between the UK and SA right now is access to a reliable financial advisor. Don’t be caught out by moving markets, changing regulations, or macro-economic uncertainty, when all you need to do is pick up the phone. 

Own your future. A recent article from Oxford University called The Future of Ageing also covers a few of these matters. If this is a topic that interests you, and you’d like to read more, just send and email to with the Subject COPY and I’ll gladly send a copy of the article through to you.

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