2013 marks a watershed year for employee benefits

The National Treasury has already introduced proposals to strengthen the retirement savings of all South Africans through a series of discussion papers, including the preservation and portability of retirement savings, levels of governance, creating level playing fields for service providers and the widening of competition, regulation in the draw-down phase, as well as the taxation of contributions. Cost has been alluded to in the aforementioned documents, but a fifth document on cost is still awaited.

The Employee Benefits Exco of the FIA is currently engaging with a number of other industry bodies to provide comments on these various discussion papers and the National Treasury has already commenced consultation with the industry on these proposals.

From the discussion documents, it is clear that there will be a number of challenges for financial intermediaries going forward.

There is a huge focus on cost and any fee earned by an intermediary will now have to be aligned with the value added to the consumer. It is also clear that the consolidation of the employee benefit industry that we have seen over the last couple of years will continue, which will reduce the number of intermediaries in the employee-benefit industry.

Financial advice is valuable and needs to be properly remunerated

One of the main challenges facing the FIA in this regard is the need to convince the authorities that financial advice is valuable and needs to be properly remunerated. From a number of discussion papers, it is clear that the authorities sometimes view advice as an additional and unnecessary layer of cost for the consumer.

Changing that perception will be a serious challenge for both the FIA and the rest of the industry in 2013. We will need the assistance of advisers throughout the industry to do that by ensuring that they provide proper advice in every instance, charge appropriately for the advice and communicate the advice and the charge transparently to their clients.

With that as a basis, we believe that the FIA will play a significant role in convincing the government of the important role that financial advisers will play in the government's drive to strengthen the retirement savings of all South Africans.