Driving change in the retirement industry - Alexander Forbes
“It is still early days, but this is powerful stuff,” he said.
“It shows that the default retirement solution that all retirement and employee benefit funds had to comply with since March, is driving change in the industry,” he said.
A default investment portfolio is a portfolio for members of occupational funds who do not specifically choose how their retirement savings should be invested.
The default regulations require a board of a defined contribution pension and provident fund to provide one or more default investment portfolios to its members.
De Villiers said the default solutions had altered the environment for retirement funds. In the past, the industry was focused on getting as much cash into the hands of the retirement fund member, as fast as possible.
But people today were doing a range of other things after their retirement, or after a retrenchment, that required a range of different financial solutions and decisions on the part of the retirement fund member.
He said in an interview in Cape Town that the financial services world was fragmented in terms of the multitude of products, solutions and advice on offer and a challenge was making all this information accessible to the retirement fund member.
Now the default mechanism could allow the fund to cater to an individual's personal funding requirements and make counselling and advice available, through a digital process and “retailisation”, so that the members could “feel special” about their retirement savings as opposed to viewing it as a grudge purchase, as had often been the case in the past, said De Villiers.
He said Alexander Forbes was looking for a “top digital solution” or to partner with a digital platform - which was something the company could not develop itself, as digital technology was not its business - to drive the new savings and financial wellness agenda to a broad range of people of different income levels.
It meant providing more than just an app to members, said De Villiers, adding that in this country, the few apps available from retirement or employee benefits companies tend to provide relatively basic information to the member, such as their fund value.
The digital solution should allow the company to connect with the member so that it can help the member find the right solution or decision for his own wellbeing.
“We need to collaborate with all the stakeholders, so we get it right,” he said.