Is the internet a viable financial tool?
26 August 2016
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On mobile, on digital, on demand, this is Old Mutual Live, the Money Coach edition. Hello and welcome, my name is Chris Gibbons. Joining me now from Old Mutual in Johannesburg is Lynette Nicolson, Research Manager at Old Mutual. Lynette, welcome, good to have you with us.
Lynette Nicolson: Hi Chris.
CG: The focus in this edition of Old Mutual Live Money Coach, the recently released 2016 Old Mutual Savings and Investment Monitor, one of the most in depth studies on how, where and why South Africans save. Lynette, the study was first carried out in 2009. Since then we have had a major, major development, it has grown by leaps and bounds, I’m talking, of course, about the internet. Where does that fit into the big picture?
LN: Well, the internet is an interesting one because absolutely people use the internet to source information, to compare different institutions with each other. There’s no doubt that people do that. I think when it comes to financial products or financial services people definitely look around on the internet. But I think at the end of the day they still want somebody sitting face to face with them to discuss and to make that final decision and put the pen to paper.
Are people buying services online?
CG: 2009 was just two years after Apple launched the first iPhone and yet now, 2016, the phone is the most common channel for internet access, that we know. But are we buying financial products online in any significant volume?
LN: We have found through the Savings and Investment Monitor that the percentage of people who actually say they will buy, not look for information, but buy online is not that great. I think if it reaches 20% of our sample, that’s on the upper end.
But having said that, in other studies that we’ve done in addition to the savings and investment monitor, where we ask people different products, financial products would they buy. You have somebody more inclined to buy a short term insurance produce online. People have preferences, but talk to me about a savings or an investment product and talking to me about performance and returns, then maybe that’s not their preference.
CG: Buying online or not buying online, one thing I guess, online research, is that another?
LN: Yes, 100%, they would definitely look around. Maybe send a few emails out, asking for information and of course, I don’t need to tell anyone, the institution or the provider back first with answers, definitely has an advantage.
CG: In the middle, sitting between buying online and research online are people looking for financial advice online?
Are people looking for financial advice online?
LN: That’s an interesting one because I suppose you need to define what financial advice is and I think depending on what you say. If you’re talking around financial advice, being somebody saying to you, yes, I think you should do this or I think you should do that, which is how I interpret advice, or this is best for your situation. People definitely do want that face to talk to.
CG: Does this change with the income brackets?
LN: Yes, it does, so the higher up we go in income, you have more people looking to a financial adviser or a broker. The lower you go down, you have more people talking, word of mouth, looking at the media, looking at TV etc. However, there is one interesting thing here Chris.
That is that when we ask people, anyone, why have you never approached a financial adviser or a broker? And we often ask our staff this. They always say to us: It must be because of cost or it must be because of trust. None of the above. The biggest reason that people do not approach a financial adviser is because they feel they do not have enough money and they feel sensitive about exposing their financial situation to a third party.
CG: Is that a valid fear?
LN: I think so, well, from the respondent point of view, I can understand that fear. Not knowing, I think it also has a dependency on us, as a financial institution to make people feel comfortable, provide the right advice.
CG: I was going to say, obviously you’re looking for somebody who earns a million rand a month and you can then sit down and treat that person like royalty. But surely somebody coming to Old Mutual who doesn’t earn a huge amount of money would be just as welcome?
LN: Absolutely and that’s what we need to extend to them that we need to be the advisors, no matter what your income level is.
How can we utilise the internet better?
CG: Bring it back to the internet for me, a final question for you and I must just add that you’re listening to Old Mutual Live, the Money Coach edition, on demand, visit dogreatthings.co.za. Talking to Research Manager, Lynette Nicolson. How could we use the internet in a smarter fashion, from a financial point of view?
LN: I think the internet, there’s so many ways, whether that’s on mobile, whether that’s on a computer. I just think there’s a few things that we need to be very quick. So that’s the one thing. For all our consultants, is queries do come in, queries for advice, we need to be quick, we need to be the first back.
Because we need to understand that people are not only coming to us, they’re shopping around or looking for information around. I think we also need to keep everything simple. The internet has a tendency to be very busy and make things complicated. It needs to be simple.
CG: This has been another edition of Old Mutual Live Money Coach, my name is Chris Gibbons and with me on the line from Johannesburg has been Lynette Nicolson, Research Manager at Old Mutual. Lynette, thanks for having been with us.
Remember, please free to get in touch any time. If you have any questions for me or topics you would like covered on Old Mutual Live Money Coach, just feel free to send them direct to me at firstname.lastname@example.org. I would be delighted to hear from you. Until the next time, thank you for listening, Old Mutual Live, on mobile, on digital, on demand.