Johannesburg - Most people who use financial planners have no idea what qualification they have, according to a survey released on Wednesday.
"People are not even asking... you'd think when asking what are the criteria to select a financial planner, qualifications would be in the top three questions," Acsis CEO Andrew Bradley said at the release of the Acsis financial security barometer in Johannesburg.
Around half of the respondents had a financial planner, either an independent broker or representative from a large financial institution.
Of those respondents who made use of a financial planner, 67% said their planner had a formal qualification.
However, when asked to specify the qualification, 43% could not do so while only 2% knew that their planner had the Certified Financial Planner qualification.
The survey of 400 people with a monthly household income of over R30 000 found that those who used a financial planner felt significantly more financially secure than those who did not.
Forty-four percent of respondents who had a financial planner said they had a high level of financial security, and 21% said it was very high.
However, only 28% of respondents who did not have a financial planner rated their level of financial security high, and 12% as very high.
"This shows financial planning does lead to financial security," said Bradley.
Respondents with a financial planner used on average 3.4 different types of retirement investments - such as unit trusts, share portfolios and retirement annuities - versus the 2.6 held by those without planners.
"For both groups, the most common provisions for retirement are retirement annuity funds and provident/pension funds."
The survey found those people with financial planners started planning for retirement on average three years earlier than those without planners.
The average age at which people with a planner started saving was 29.6 versus 33 for those without a planner.
“While this difference may not seem like a big deal, an extra three or four years can significantly boost your retirement savings as compounding works in your favour," said Bradley.
For example, a person who started saving R1 200 a month from age 29 and contributed for 36 years at a growth rate of 12% per annum, would have a fund valued at R7 352 114 when he retired at 65.
However, if he had started at 33 years and saved the same amount until age 65, the value of the fund would only be R4 626 307.
The survey found that a slight majority of people preferred to pay a fee for financial advice rather than a commission.
Bradley found this surprising as there are more advantages to paying a fee than commission.
Only half of the retirees in the survey - a small sample of 52 - were satisfied with the provisions they had made for retirement.
Fifty-three percent of respondents said they had saved enough to comfortably continue their lifestyle upon retirement.
"This means 47% of people don't have enough in retirement."
Of the 47%, 20% said they had not made provision for retirement and wished they had started earlier.
The other 27% said they had done as much as they could, but it was not enough to live on comfortably.