The Importance Of Financial Advice In South Africa

Posted on: 24th December 2024 in Financial Planning

Is today the first time you’ve ever considered getting professional financial advice? 

If you aren’t currently working with a financial adviser in South Africa, you might be wondering what you have to gain by doing so, and ultimately if it’s worth it. 

A common myth is that financial advice is just about retirement planning. In reality, good advice is designed to support you in building financial resilience across each stage of your life. 

To give you an overview of just how crucial expert input is for your financial health, these are some of the top ways you can benefit from financial advice when living or working in South Africa. 

Navigating The Nuances Of Wealth Management In South Africa

At Holborn Assets, we have offices located across the globe. One of the reasons for this is that depending on where you are based, the financial laws and regulations will naturally differ. So it’s really important that any financial advice is highly specific to where you live and work rather than being generalised. 

As a HNWI living in South Africa, you will likely be familiar with some of the challenges that apply here. These include high taxes, the volatility of the South African Rand (ZAR) and fluctuating inflation rates. 

Each of these challenges can pose barriers to your long-term financial success, especially without expert input. 

However, when you seek financial advice, you can be sure you are doing everything you can to maximise all available opportunities. 

Since time cannot be reversed, now is the time to secure your future financial projections with the above challenges in mind.

Capturing Opportunities As A Millenial Or Gen-Z

Financial advice is important throughout your life, but if you do happen to be reading this post at an earlier stage of your career, then there is good news on the horizon. 

That’s because one of the key headlines from the Sanlam Financial Confidence Index 2024 is that “younger generations in South Africa possess more financial openness and optimism than older ones.” 

One of the areas the report highlights is the so-called ‘hustle culture’, as many young South Africans now have multiple streams of income. For some entrepreneurs, it may be the case that you have wealth that was not the result of generational wealth. Therefore, you may benefit from some advice to pave the best way forward. 

Whatever your circumstances happen to be, the fact remains that by creating a financial plan at this early stage, you have the most opportunity to benefit in the future. Working with a financial planner is the best way to make that happen! 

Making Tax Less Taxing 

With South Africa having one of the highest marginal tax rates globally, HNWIs can be significantly impacted. 

Similar to other reasons why you might seek financial advice, a professional adviser can ensure you are taking advantage of any strategic options when it comes to paying tax. This doesn’t just include personal income tax, but all other types of tax that may apply to you. 

At Holborn Assets, we help our clients navigate offshore banking and investment options. 

However, unless you speak with a financial adviser, it’s impossible to know if you are doing everything to not only remain compliant with the law but also to be tax-efficient. 

Facilitating Potential Emigration

BusinessTech recently published an article stating that of the 400,000 South Africans that have emigrated since 2000, just 28,000 have returned. 

Some of the most common locations where South Africans emigrate include the United Kingdom, Australia, The United States, New Zealand and Canada. 

If you have any plans to relocate elsewhere in the world, then financial advice can also support you on your journey. Specifically, to reduce the impact of common pitfalls such as tax liabilities and foreign exchange regulations. 

Even if you are unsure about your options, talking things through with a professional can help bring some clarity, while ensuring you don’t make any rash financial decisions. 

International Portfolio Diversification 

Building an international investment portfolio by investing outside of South Africa allows you to diversify—especially with the aforementioned volatility of the South African Rand (ZAR).

Overall, investing in different economies can reduce risk if a particular country is experiencing a downturn whereas another is thriving. 

That said, not everyone has the knowledge, let alone the time to build a balanced global wealth portfolio. Once again, this is one of the many areas where financial advice can prove instrumental in your success. 

Discover: Offshore Investing for South Africans: What You Need to Know 

Succession And Estate Planning

Even if the idea of succession or estate planning feels a long way off now, it can soon creep up on you especially if you haven’t planned ahead.

Ensuring the smooth transfer of wealth to future generations can be complex in South Africa, especially with the various laws and taxes to navigate. There can also be challenging family dynamics to factor in.

HWNIs often have assets that are held abroad, meaning a cross-border approach may be needed for any estate planning. 

Whatever stage of life you’re at, ironing out all of the intricacies of your estate plan now is in your best interests. Not only will you gain peace of mind, but should you need to make any adjustments to your plan in future, it will be easier to do so when you’ve already given everything some thought. 

Financial Advice South Africa FAQs

We’ve covered some of the top questions that financially-savvy individuals living in South Africa frequently ask. 

If you have further questions or would like tailored advice, please scroll down to find our contact information. 

What Makes Good Financial Advice?

Primarily, the individual should have professional qualifications to be able to advise you. 

Specifically, they should be qualified in South Africa so that they have a full understanding of the financial laws and regulations which apply here. 

But on a more holistic level, your financial adviser should be someone who speaks a language you understand. They should be someone you trust, including when you need to access their expertise during tougher times. 

When you have the utmost level of confidence in your financial adviser, you can be sure the advice you receive will be of genuine benefit. 

How To Get Financial Advice In South Africa

In the age of the internet, many people believe they are financial experts! However, it remains essential as ever to only make financial decisions based on qualified advice. 

If you do decide to work with us here at Holborn Assets, we’ll treat you as an individual to understand your financial goals and your current position in relation to those goals. From there, we’ll offer you as much input as you need to nurture your portfolio so that your ambitions can be realised. 

In contrast, should you seek unsolicited advice, you can’t be sure of the intentions of that individual. Likewise, there is no recourse should things not work out when you don’t go through the proper channels. 

Why Is It Important To Have A Financial Plan?

Similar to reaching other types of goals such as getting fit or developing your career, without financial planning it can be difficult to stay on track. When you have a financial plan, you are not just outlining your goals but most importantly how you will reach those goals. In addition, you can mitigate the impact of unexpected expenses or other life events. By also regularly checking in with your plan, your financial goals are more likely to be reached. 

Is It Worth Getting A Financial Adviser?

As with any kind of service you might need in life, sometimes going it alone may seem easier, but it doesn’t always prove to be the best decision down the track. 

Your finances will ultimately determine your standard of living, and there may also be a generational impact to consider if you have any dependents. That’s why it’s really important to manage your wealth in the most strategic way. Since a financial adviser specialises in this area, they are best placed to help you. 

Granted, even the best financial plans can take time to come to fruition. However, your future self will be immensely glad of the work you put in today. 

What Are The South African Tax Brackets?

At the time of writing, the SARS tax brackets range from 18% to 45% for personal taxable income. For those top tiers, 41% applies to rates of income above R857 901, rising to 45% for rates of income above R1 817 001. 

Conclusion

No matter what your age is or where you are in your financial life cycle, you need good financial advice. Whether you are just starting your career, have plans to emigrate or want to ensure your retirement planning is on track, a financial adviser is there to support you every step of the way. 

Discover Our Financial Services In South Africa 

Has anything we’ve mentioned above given you food for thought? If you are in search of financial advice in South Africa, the Holborn Assets team is waiting to assist you. 

Our financial advisers can help you with a vast range of services including insurance, international investments, property investments, local investment, retirement planning and more. 

Discover our offices in Cape Town, Constantia, Durban, Johannesburg or Winelands. 

Alternatively, you can fill out our contact form and a member of our team will be with you shortly.