Helping entrepreneurs retire with confidence

By: Farzana Botha, Segment Manager, Sanlam Risk & Savings

Farzana Botha

A recent Sanlam survey found that starting a business was the second highest priority for most South Africans. Nearly 70% of black respondents said this was their top priority. In a nation where the small business sector is the ‘engine’ of the economy, this is hugely encouraging, says Farzana Botha, Segment Manager at Sanlam Risk and Savings. As a financial adviser, it’s imperative to help your entrepreneurial clients manage their fluctuating income smartly to save sufficiently for retirement. Just 37% of respondents said they were saving consistently for their wind-down years.

Botha, who is married to an entrepreneur, says the law of averages applies, “While income varies, patterns like seasonal trends often emerge. Calculate their average income over time, and, using these trends, identify peaks and troughs and plan accordingly.”

Here, Botha shares some suggestions for helping your entrepreneurial clients manage their money with confidence:

1. Allocate extra amounts towards their retirement contributions when possible. For example, if their income peaks in December, encourage them to bolster contributions over the summer season.

2. Maximise all opportunities for tax deductions.

3. Select products that suit their specific circumstances. For example, is a fixed-term endowment or tax-free savings account better for their long-term goals? You can help them experiment with different scenarios and outcomes with tools like the Sanlam retirement calculator.

4. Ensure they contribute to an emergency fund. When a client is ‘funding a dream’ and building a business, it’s pivotal to help them manage risk, and plan for the worst. Have a buffer in place.

5. Keep learning. In the Sanlam survey, education was cited overall as people’s top priority, but particularly for the 25-34-year-old age bracket. Entrepreneurs should prioritise financial upskilling to ensure they have the skills they need. As an adviser, you are their trusted financial coach – there to support them and ensure they have the building blocks in place.

Botha says that the Global Entrepreneurship Monitor (GEM) shows a growth trajectory of entrepreneurship in South Africa, with the nascent entrepreneurial rate increasing by 7.3% in 2019 to 10.5% in 2021. Additionally, the new business ownership rate nearly doubled in the same period, with total economic activity rising by 6.7%. She says, “This is wonderful to see; however, the monitor also highlighted that 53% of people indicate they would not start a new business due to fear of failure.

“Financial literacy is a critical means of empowering prospective entrepreneurs to have the confidence to commit to an entrepreneurial journey. Sanlam’s purpose is to empower all Africans to be financially confident, secure and prosperous. SMMEs are a major focus for us. We know that by empowering entrepreneurs, the backbone of the economy, we build a better South Africa for generations to come.”

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