New financial morality emerges in SA
Knowledgeable control over money has replaced responsible abdication, writes LUCIENNE FILD
These are some findings of a research report that examines the values and beliefs of South African consumers in relation to saving, spending, borrowing and investing money.
Resonance - The Money Report has been compiled by Illuminology, an independent research consultancy. The extensive research involved a cross-section of South Africans.
The report highlighted the emergence of a new financial morality. "The core value of consumer financial management has shifted from responsible abdication to knowledgeable control."
Investors are no longer prepared to unquestioningly accept advice of financial experts - they want to take control of their financial destiny. But the problem is the apparent unwillingness of financial institutions to accommodate them.
The following trends summarise how consumers view financial responsibilities and financial institutions.
The rich are different
Consumers recognise that secure employment will not make them rich. While aware it isn't easy, South Africans believe entrepreneurial activity is the most reliable means of generating wealth.
In several cultures, adult children care for parents. This explains the lack of interest in longer-term investment in certain groups. But this custom is eroding as parents are increasingly left to fend for themselves.
Making ends meet
While consumers regard budgeting as important, they struggle to stick to their plan. The most common budgeting methods are:
Saving is difficult, but. . .
South Africans know they must save, but find it extremely difficult to do so on a regular basis. Enforced saving - for instance, a monthly debit order on a bank account - seems to be the preferred savings method.
Unit trusts are viewed as an effective way to save. Resonance found, however, that this is because investors prefer the easy monthly payment mechanism and the discipline it imposes, rather than the benefits of the unit trust product itself.
Channelling spare cash into a home loan is also an increasingly popular means of saving.
Borrowing and the credit trap
Resonance found a revitalised morality associated with credit. Being in debt has lost much of its social stigma but consumers continue to feel very embarrassed about the consequences of non-payment of bills.
Great anxiety is also experienced when applying for a loan because people cannot anticipate what the financier's decision might be. Being turned down severely traumatises some consumers.
The report suggests that a better understanding of the "rules" by which loans are granted would avert nasty surprises.
Banks - six of one. . .
Many consumers feel they are being treated like criminals by banks. They also feel they are being "ripped off" by the banking system since bank charges are poorly understood and generally resented. When dealing with banks, consumers are required to negotiate a maze of invisible, misunderstood and arbitrary rules and regulations, states the report.
What customer service?
For many consumers, a bank is unfriendly and intimidating - and they feel enormously resentful about the rudeness and indifference shown to them by abrupt and busy staff.
Lengthy queues are associated with banking, and seen as unnecessary. While making a fuss about poor service is not a South African characteristic, the normally accepting consumer will increasingly select a bank on the basis of the quality of customer service, states the report.
Life assurers are honest, but brokers. . .
Long-term assurers enjoy a far more positive position in the hearts and minds of average South Africans than is true for the banking industry.
The financial intermediary, however, has a very poor image in the marketplace - even while the company he or she represents enjoys a positive profile.
The fine print in an insurance contract also represents a perplexing problem for clients who feel they are faced with a complex set of regulations that seem to make no sense at all.
Short-term sharks and their crooked customers
According to consumers, short-term insurers are not to be trusted - and are to blame for the fraud committed against them. The predominant feeling is that "they cheat us, so they deserve to be cheated".
Lies, damn lies and advertising
Financial services advertising is generally regarded with great scepticism by SA consumers as they feel promises made are not credible. Consumers think financial institutions deliberately set out to confuse them and say they would prefer "straight talking".