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Hey, Gen Y and Gen Z do you think you can retire comfortably?

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By Penelope Gregoriou, technical investment specialist at Alexforbes

 

Millions of South Africans rely on the money saved in their employers’ retirement fund to earn an income in retirement. For many people, this is their only formal savings for retirement. Unfortunately, too often, this money is still not enough to sustain them in retirement.

Being a young professional has its fair share of demands and complexities, with real day-to-day demands such as housing, transportation and health needs all perpetually competing for a share of

your wallet. Retirement savings, quite frankly, is a low priority for many. But research shows that it is critically important for young professionals to take responsibility in reaching a reasonable income in retirement – the sooner the better.

According to the 2021 Alexforbes Member Insights publication 65% of members aged between 20 and 30 are expected to replace and live on less than 60% of their final salary when they retire because they have not saved enough during their working lives. Consider this: if you had retired today, could you live comfortably on less than 60% of your monthly take-home salary? This is expected to drop even further below 60% due to low contributions and not keeping retirement savings invested when changing jobs throughout the remainder of working careers.

Research by the publication found that a retirement fund member who has actively increased retirement fund contributions by 0.25% each year since 2012 would have achieved a 2% increase in salary contribution rate by 2020. A small incremental increase such as this can lead to an almost 10% improvement in expected retirement benefits for younger members.

The need for better solutions

Penelope Gregoriou

The key underlying issues compromising pension outcomes are largely due to younger members:

  • choosing lower contribution rates to increase their take-home pay
  • having little or no access to relevant information
  • not clearly understanding what their options are at critical points in their financial journey
  • not knowing the long-term consequences of the financial decisions they make today
  • not having access to financial advice or financial counselling

There is mounting evidence that more people are realising how important the right information at the right time is and the long way it can go in supporting their financial journey and setting them in the right direction.

Digital member engagement solutions, financial wellness programmes and seamless in-fund and out-of-fund savings solutions all serve a valuable purpose in helping young members improve decision-making and the prospects of a more comfortable retirement.

Supporting this notion is the finding that 78% of retirement fund members want short-term and long-term financial planning (2021 Alexforbes Member Insights). It is clear that retirement funds cannot only be solving for retirement savings and income. Providing expert, holistic advice on retirement, group risk, health management, healthcare, investments, employee wellbeing

solutions and skills development can help members make the most of their long-term financial futures. More members are realising the advantages of having access to holistic solutions that provide them with personalised information, engagement and advice to make better, informed decisions today while still helping them plan for tomorrow.

Enabling the good and mitigating the bad

Retirement might seem like a far-off reality – especially when you’ve just started working – but it is still a reality. Your money competes for a lot of immediate priorities, but a long-term priority can only be met in the present. While you might often feel like you are on a seesaw of financial instability and discomfort, finding financial services that can provide you with a balance of pertinent products and solutions during critical times in your career – such as joining or leaving a company – can assist to preserve savings intended for long-term priorities, such as retirement.

Though there are challenges that come with being a younger professional, it does come with the significant benefit of time. As a younger investor in a retirement fund, you have a long-term investment horizon. Saving from an early age means that your money has more time to work for

you. Thanks to the impact of compound interest the amounts contributed in the early years of retirement saving add the most to your probability of a comfortable income at retirement. That is why it is imperative to maximise this opportunity as best and as early as you can.

You don’t have to do it alone

Employee benefits, and what they can offer employees, have evolved into solutions that are relevant and effective enough to guide members, especially during the critical moments earlier in their career and lives. Previously isolated benefits are now more integrated in employer-sponsored retirement funds to mirror the reality of members’ lives and accommodate their immediate and long-term needs, simultaneously.

An employee benefit provider can support employer-sponsored retirement funds with information and insights when reviewing the benefit design and engagement plans of their funds. The additional support that an employee benefit provider with an integrated and holistic offering can present can help members get over day-to-day hurdles – emergency savings, health needs, education – that could derail them in meeting their long-term retirement objectives. This could be something as simple as misunderstanding retirement benefits and the options at a member’s disposal. Helping members understand the total picture of what’s on offer, and what’s at stake, throughout their individual life journeys can go a long way in guiding better decisions at the right times to ultimately improve outcomes.

Starting a new job is a big change. You may need some help to make good decisions as you start your new job. Even small financial decisions you make now can affect your ability to reach your goals. You are planning for a critical time in the future. Ensure that you are getting the right foundations in place today, holistically.

This is the most opportune time as any to rethink how you have approached your employee benefits. Financial toolkits, like the newly launched My Money Matters portal from Alexforbes, offer members guided access to content that can help them better understand their retirement fund benefits and make better financial decisions based on their personal circumstances.

Business

How can businesses boost employee experience for finance professionals?

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By Martin Schirmer, President, Enterprise Service Management, IFS

Over the course of the last year, The Great Resignation has seriously impacted organisations across the globe. Staff are quitting in huge numbers, leaving companies unprepared and struggling to fulfil their workloads. In fact, mass departures are happening at all levels of the labour market, as employees attempt to adapt to the hybrid working model and growing socio-economic uncertainty.

In light of this, optimising the employee experience (EX) to attract and retain talent has become a top priority for employers. Organisations have come to understand the necessity of taking immediate steps to drive employee engagement and reshape workplace culture.

The financial services (FS) industry is no exception to this trend. From increasing employee burnout to growing career dissatisfaction, the pandemic has exacerbated the need for transformation across finance teams. This is exemplified by recent data from Spendesk, which found that approximately 40% of finance professionals are willing to leave their roles or already have concrete plans to do so.

Organisations looking to get ahead of the competition must put in extra efforts to retain their existing workforce. The fact is that employee expectations and requirements have irreversibly changed, with more workforces becoming increasingly distributed. Today’s hyper-connected workforce values flexibility and simplicity, and it is organisations which offer these experiences that will succeed in the long term.

As part of this process, finance companies must look towards the power of technology to create seamless user experiences across devices. From automating workflows to improving overall efficiencies, Enterprise Service Management (ESM) can help organisations to boost user satisfaction and go that extra mile for their employees.

How poor EXs are driving finance teams to quit

With over 40% of employees spending a significant proportion of their time carrying out mundane, manual tasks, it is not surprising that poor EXs are having a detrimental impact on job satisfaction. Finance teams in particular have been slower to digitise core processes, leading to a heavy reliance on manual tasks. This not only increases the amount of time spent on each task, but also impacts the engagement levels of finance professionals who cannot focus on more strategic aspects of their roles.

As a result of the pandemic, flexibility has also moved to the forefront of finance teams’ desires. Given the fast-paced nature of this industry, the conversation surrounding work-life balance has increased rapidly. Failure to offer flexible working policies, coupled with a lack of technology to facilitate this flexibility, has led to poor EXs across the board.

Most notably, the overarching move to omnichannel, digital-first approaches has dramatically reset both customer and employee needs. Finance is the third-slowest running corporate function behind legal and IT. Operating in a competitive environment, 73% of finance operations are facing pressures to speed up, improve efficiency, and prioritise automation.

Mitigating the problem using technology

ESM, an offshoot of IT Service management (ITSM), is the cornerstone of smart digital transformation for organisations. It can help finance teams to streamline and automate routine processes, such as monitoring the status of service requests, approving expenses, sending invoices, and tracking payments. In turn, this will free up employees’ time, reducing the burden of manual tasks and enabling them to focus on the more strategic tasks.

Another advantage ESM can offer finance teams is the ability to adapt to each department’s minimum requirements for data privacy. Accounting, for example, needs additional layers of compliance built into the system.

ESM can also facilitate cross-departmental collaboration, helping finance professionals to communicate with the wider business and perform tasks more effectively.  Organisations can use ESM to incorporate all internal services into a single platform, offering employees a well-rounded view of the business and promoting a sense of community across all levels of an organisation. This will boost productivity, whilst enhancing visibility and control.

Ultimately, the current job landscape has brought with it a new set of challenges. Organisations in the FS industry looking to navigate the storm and retain top talent must refocus their efforts on bolstering the EX. Embracing a new era of technological innovation that empowers employees and boosts engagement is a critical step in this process.

 

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Finance

The penny has dropped – the finance sector needs Data Governance-as-a-Service

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By Michael Queenan, Co-Founder and CEO at Nephos Technologies

 

In our data-driven world, the amount of data is growing exponentially and it’s predicted that the amount generated each second in the financial industry will grow 700% this year. Leaders of financial services organisations have realised two things since the start of the pandemic – that data on their customers and services is their greatest asset and that they must embrace technology to make intelligent business decisions to grow successfully and outperform competitors.

Since the financial sector holds arguably the most valuable and sensitive information, organisations must do more than just store this data. They need to ensure its security, integrity, and governance so that it’s useful in improving the brand’s customer experience, innovating products and services or predicting future trends to improve risk management.

Yet without a robust data governance model – a strong set of rules and processes for what data means, and how it is categorised, owned, accessed, stored, and used – data is worthless. Only when an effective data governance model has been established, will data meet regulations and be secure. Data leaders must shift gear in their data processes to avoid hefty compliance penalties and unlock potential value from their data assets.

 

The data governance challenges faced by financial sector organisations

The barriers for achieving ‘good governance’ are many and varied. Ignorance of the benefits of data governance is a major hurdle for developing a governance strategy. Many financial firms have invested – at significant cost – in data governance tools, but struggle to deliver the benefits they are looking for. Many don’t have the right skills and resources to maximise or set the right metrics to measure the business value. Some are compromised by unoptimised gaps in their approach.

With many different elements to master, data governance is complex – from identifying the right tools to managing the challenges presented by encryption, all whilst ensuring that data quality is sustained and data is managed responsibly.  The negative impact of misplaced investment in ineffective data governance strategies can be significant, for the short and long-term.

 

Why data governance matters

With the acceleration of digital adoption in the financial services industry, it has become crucial to deliver seamless, intelligent customer experiences. Data governance is the key to managing data flow, ensuring compliance, and scaling up. Proof that data governance matters is evident in the Master Data Management Market growth prediction, from $16.7 billion in 2022 to $34.5 billion by 2027.

Data governance is a comprehensive methodology for ensuring the quality and security of the company’s data. The various benefits of an effective data governance strategy include minimised risk, coherent policies, metrics and processes, and better implementation of compliance and enhanced data value. However, for financial services, there are significant advantages as a result of the following:

  • Data governance saves the company money by increasing efficiency. Precious time can be saved by having good quality data and a single source of truth, with less duplication of data, and less time needed to correct data errors.
  • Good data governance gives the business confidence in having accurate and trustworthy data, the holy grail for delivering outperforming customer experiences.
  • A data-driven culture can also be introduced to your business through good data governance. With the ability to gather critical customer and market insights that can guide the direction of your business, data governance allows financial institutions to drive innovation and gain competitive advantage.

 

Bridging the governance gap with Data Governance-as-a-Service (DGaaS)

Increasingly organisations are turning to the ‘as-a-Service’ model to bridge the gaps in their data governance capabilities, as well as ensure critical alignment between objectives and results. This dedicated approach aims to minimise the risk of investments and delivers the strategy and proven technologies required to ensure data governance success.

DGaaS can be applied across each major component required to deliver good data governance. First, it uses software tools to scan all data within a typically complex financial services data infrastructure in its data discovery and classification phase. Without this detailed insight, organisations can’t always identify their data assets, any data mishandling and the level of risk generated.

The next part of the process is creation and documentation. This means organisations can drive their governance objectives through to execution, while removing the operational and recruitment overheads, which means they can purely focus on value created from data. In doing so, organisations can convert the raw outputs from the toolsets into meaningful business outputs.

With a holistic approach, DGaaS allows financial services organisations to focus on the transformational potential of data while critically staying compliant.

 

Reaping the benefits

Data is a vital asset to enable financial sector organisations to build the right capabilities to deliver their services and remain competitive. With a robust data governance model, financial firms can assess risk, predict trends, and seize market opportunities based on data-driven insights. Only data-driven processes, built on high quality and effectively governed data, will enable them to build outstanding customer experiences. It’s essential that leaders realise data governance is a fundamental discipline, not a luxury, and establish an effective model to formalise processes and responsibilities before their data lets them down.

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