Financial advice is an experience, not an event. In the past, brokers made it an event by being fly-by-night salesmen who sold you a financial product and never returned to service you, Gerald Mwandiambira, a financial planner at Sugar Creek Wealth and the acting chief executive office of the South African Savings Institute (Sasi), says.

Mwandiambira, who holds the Certified Financial Planner accreditation, says a funeral policy is the only financial product many black people have. As a result, they have experienced bad advice because, while the policy provides cover for a funeral, it fails to meet their broader financial needs.

Many people do not know how life policies work; they can provide disability cover, income protection, income replacement during a severe illness or even a lump-sum payment on death to cover a child’s entire education.

The funeral policy experience, with shortfalls in cover, insufficient cash to meet needs and no follow-ups after the initial sale, often reinforces their perception that financial advisers are not worth the effort, Mwandiambira says.

He told a Liberty media event that the Financial Services Board’s review of the way in which we pay for advice and the ways in which products are distributed, the Retail Distribution Review (RDR), will provide greater transparency about costs and enable you to choose advisers who sell financial advice, not financial products. Products are solutions that should enable you to implement the advice you have been given, he says.

Mwandiambira says Sasi will embrace RDR, as it will ultimately expose more people to the power of life assurance products and real advice, which can enable people to create wealth across generations.

He says he hopes that this will lead to products suited to the growing black middle class, who typically face issues like single parenting, providing for members of the extended family, and inadequate retirement planning.

Part of the popularity of the funeral policy is that the product has evolved to meet the needs of the extended family. Mwandiambira says he hopes there will be similar such innovation in investment and savings products and life policies.

Insurance is a savings product, as it replaces a saving you have not made, he says.