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The strain of consumer debt on SA’s financial advisers

Ian Wason

By Ian Wason, CEO of the IDM Group

Just as death and taxes are certainties, so too do all financial advisers and insurers know that  monetary crises come and go.

That said, for anyone working in the financial-services industry today, it can often be quite difficult to picture South Africa’s current consumer debt crisis coming to an end any time soon.

A 2015 World Bank report found South Africa to be the most indebted consumer nation in the world. To which, the National Credit Regulator (NCR) has concluded that about 21 million South Africans are in debt, of which 10 million are more than three months in arrears on at least one of their accounts. It’s not a rosy picture and should hardly come as a surprise to most financial advisers who are, no doubt, inundated with calls from prospective clients who want to escape the clutches of debt.

At DebtBusters, we estimate we will receive about 100 000 calls this year alone from South Africans who want to take active steps towards getting out of debt. Of these calls, we will help an estimated 17 000 people on a path towards a debt-free life, saving them well over R100 million in interest and fees.

The challenges

It’s a calling we are happy to take on but it is not without its challenges. The strain of helping someone whip their financial life into shape cannot be underestimated. When the South African government announced regulations on limiting interest fees and loans in November 2015, it resulted in a 30% boom in unsecured credit. As South Africans wake up to the terrifying realities of high interest rates charged by lenders, rising inflation, and mounting debt, more and more of them are turning to us to put a stop to it.

Over the years, I have seen the workload of financial advisers in both my own business and across the sector rapidly piling up as we try to curb the damage caused by our country’s consumer debt crisis. Work-life balances that were once at an even keel are increasingly tipping under the weight of clients’ debt. Burnout is quickly becoming a word used by many of our colleagues.

It is, however, not just the pressure on the financial-services workforce and resources that is troubling. Dealing with indebted clients daily – hearing stories of personal and micro loans that can’t be paid off, once-loving relationships strained by money woes, and bad credit ratings that stop our clients from buying a car or their dream home – can take its toll on the emotional well-being of these professionals.

Even the most bullish adviser is not immune to the joint pressure of a financial crisis and struggling clients. For example, a 2013 study in the Journal of Financial Therapy found the 2008 stock market crash left 93% of financial advisors in the US suffering from some sort of post-traumatic stress disorder. I wouldn’t be surprised if South African financial advisers are feeling equally shaken.

The way forward

As financial advisers, we are driven by a need to help others get their lives back on track and to find solutions to the financial problems placing strain on their pockets. Above all, we know that people matter. Just as we care for our clients and show them the way out of debt, so too should we take the time to step back and help ourselves deal with the stress of mounting phone calls and emails.

We will not be able to help our clients out of the worst consumer debt crisis in South Africa’s history if we do not first help ourselves. Our work as financial advisers makes us problem-solvers, but we need to start with the problem in our own lives: burnout. We need to take a moment to step away from our desks – as necessary as our work may be – and to spend more time with our loved ones. What better way to remind ourselves of one of the central truths of our work: that people matter.

In our work at DebtBusters, we are frequently in conversation with employers about the benefits of financial wellness programmes for employee motivation and productivity. It is time for us to take our own advice and take care of our own well-being at work, too. Only then can we properly focus on guiding South Africans out of debt and towards a better life.

 

END



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