By: Zandile Makhoba, Liberty Lead Specialist: Insights Development and Brandon Naidoo, Liberty Lead Specialist: Investment Proposition
South Africa has a growing number of dollar millionaires, with assets that exceed 1 million US dollars. The 2023 Africa Wealth Report puts the number at 36 500, assuming an exchange rate of around R15 to the Dollar, so the number might be less given currency fluctuations, but the point is that there are a great deal of high net worth individuals in the country.
SARS figures tell us that there are 282 618 taxpayers that earn an income of more than R1million a year, making this group a much bigger cohort if we expand the definition.
Research from the UCT Liberty Institute shows that high-net-worth individuals are focused on building wealth and take a long-term view of all things connected to this. This includes always having a plan B, creating security for their families and taking advantage of every available opportunity life has to offer. Most high-net individuals live in or close to the major three urban centers, in places like Umhlanga Rocks or Stellenbosch, and many occupy senior management positions. They enjoy things like fine wine, art and travel; they value the environment and contribute to causes of their choice.
Our research also found that this group; even though wealthy, still required some guidance on how to grow their wealth. Those who had a financial adviser agreed that they felt comfortable navigating their way with the assistance of an experienced partner like this, and they were always keen to know about the benefits of new opportunities that lead to wealth creation.
The value of Insurance
It should come as no surprise then that they are quick to appreciate the value of life insurance. According to Brandmapp, some 64% are covered, and our latest figures show that since the pandemic, many of them have increased the value to which their premiums cover their families, should the worst happen. Family security ranks high for this group who often have very extensive business interests and investments, and advisers would do well to consider a very broad-based solution, which would include things like professional indemnity and cover for their children’s schooling, which might include sending them overseas to further their studies or to pursue their passions.
Financial advice remains key to this growing group of people. We should recognize that clients like this have very personal needs around which advisory services have to be tailored.
Letting their money lead the way
Beyond understanding the value of life insurance, wealthy people value diversifying their portfolios. They are always looking for opportunities for their money, both locally and beyond our borders, which means they seek access to overseas investment opportunities, or just the ability to move money overseas smoothly for travel, retiring overseas or for their children’s education abroad. It’s really about being goal based with tailored solutions, including partnering with the right asset managers who can offer exposure to emerging opportunities.
Liberty has created a one stop shop within the Standard Bank group that covers all regulatory and legal hurdles for moving money overseas for these purposes. Our investment teams have engaged in various partnerships to access research and provide a level of due diligence for advisers and clients. Stanlib, the asset manager within the group, has recently partnered with JP Morgan Asset Management which has an experienced team that spans the world and is able to cover a broad range of sectors and industries. All of this enables us to offer the fullest range of services and opportunities for client’s money in one well integrated package that keeps things simple and therefore time efficient.
Wealth is usually always earned, and this means having an eye on the future. An adviser wanting to offer their services to high-net-worth individuals would no doubt want to be able to produce a range of future proofing lifestyle options, along with proven global money management abilities, so that clients like these can get the best support available for their ambitions to prosper.
This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. The material has been created for information purpose only and does not contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Please consult your financial adviser should you require advice of a financial nature and/or intermediary services.
Liberty Group Limited is a Licensed Life Insurer and an Authorised Financial Services Provider (no 2409).