01 Dec What could change in 2024?
What could change in asset and pension fund management in 2024? Salt EB’s Head of Business Development Wimpie Vermaak discusses 5 top-of-mind shifts.
1. Personal Finance Apps.
Such apps have been available for some time, but they will become more sophisticated and intuitive through AI.
South Africa has a low level of personal savings and a high level of personal indebtedness. Apart from many other applications, an app can help a user with basic ‘what if’ scenarios to aid their financial planning.
For example:
- What will interest rates look like in the next couple of years?
- If I commit to debt now, will it still be affordable in 2 years’ time?
- What impact can inflation have on my personal cash flow over the next 3 years?
As just one relevant example, over-indebtedness severely reduces the ability of South Africans to save for retirement. An intuitive app can, as a minimum, allow them to understand impact.
2. More Education.
Improving knowledge is a global trend but particularly relevant in South Africa. Whether it’s an industry body or the private sector, the need is to educate in schools and organizations. Having an app (described in the previous point) is one thing but it loses some relevance if users do not know what to model into the app.
This approach is aided by the younger generations’ thirst for important knowledge.
3. AI and Machine Learning.
Artificial Intelligence and Machine Learning will play an enabling role in the previous two points but can play a defining role for asset and pension fund managers. First, it will help with research. Second, it can anticipate areas of cybercrime which greatly impacts the investment company and its clients or members.
Cybercrime is rife. To highlight the point, two years ago cybersecurity was the rocket science sector in technology. In 2023, it moved to commodity status. In other words, cybersecurity is now a have-to-have.
The burning question of yesterday of ‘Is my investment safe’ remains relevant today but has been joined at the hip by ‘Is my data secure?”
4. The Crypto Age.
Spectacular failures have dented the promising crypto start but provided valuable lessons which will empower future initiatives.
Will asset managers develop their own digital wallet offers, or outsource it to third-party providers? How will they manage the efficacy of the process? Some companies will embrace it to get closer to investors, others could see it as a strategy to offer a compelling value proposition in terms of cost, security, transparency, and liquidity.
Let’s see who does what in 2024!
5. Flexible Retirement.
Whether it’s about wanting to stay active or not having sufficient funds to retire on, some product options cater for flexibility but this trend adds a layer of complexity in the retirement planning process.
So, it’s no longer about “What do I need to earn when I retire” but it now also deals with “What do I want to do when I reach retirement age?” Start a business? Work part-time? Work full-time if my skills are in demand? And of course, illness can ruin the best of dreams and plans, bringing extended risk into the equation.
Will new products emerge? Will regulations recognize the trend? Will investment advisers ask new and different questions?
There are many questions to ask and be answered in 2024, but what is certain is that change beckons as it does every year!
Wimpie Vermaak
Head Business Development.
Salt Employee Benefits
vermaakw@salteb.co.za
salteb.co.za