Old Mutual: Breaking into the Mass Market

Unathi to champion campaign to help South Africans save

When we think about celebrities, we picture the glitz and glamour and the last thing we consider is that they also plan and manage their finances. We see them in magazines and on television attending all sorts of functions and wearing the latest designer trends so it is difficult to fathom that they also need to be mindful of their spending.

Unathi Msengana is very cognisant of her spending and saving habits and despite her celebrity status does not believe in living beyond her means and keeping up with the Joneses. The multi-talented singer, songwriter, Idols judge and radio personality has partnered with Old Mutual on a campaign, for which she will be the ambassador, to help South Africans save and develop good money habits.

John Manyike, Head of Financial Education at Old Mutual, says: “We were prompted to partner with Unathi in this campaign because we believe she clearly understands the need to get the basics right with her money and set realistic goals that she is able to stick to. She is a role model to many and the aim of the campaign is for her to inspire people with her story and her practical tips.”

The singer, whose performance for United Nations delegates stirred legendary producer Quincy Jones to lead a standing ovation, encapsulates her practical approach in a few, short but powerful phrases. Unathi says, “We understand ourselves better than anyone else and know what our strengths and weaknesses are. For me, I know my weaknesses and therefore do not have any credit cards and retail accounts because the temptation to spend on credit would be too great. I save and buy the things I want with cash. The habit has forced me to budget and set goals that I diligently work to achieve.

“I also work hard in winter to enjoy the summer, which is something my husband and I agree on and we plan our trips and holidays and save to ensure we can enjoy our time off. I have figured out some ‘rules’ that work well for me and my family that enable us to be more thrifty and conscious about our spending and saving habits.”

Some of the “rules” Unathi applies include:

• Make use of discounts: we only go the movies on Tuesday, when screenings are cheaper.
• Save where you can: I take the N14 to my parents’ home in Pretoria so that I don’t pay toll fees.
• I save every month so that I am able to pay my children’s school fees in December for the next year. This way I don’t have to worry about it in the beginning of the year, when there are all sorts of other expenses.
• I draw up and stick to my budget. I also have timelines for my savings goals and it gives me a sense of achievement when I realise these goals.
• When I do additional gigs, like Idols, I use the “extra” income towards my home loan so I reduce the interest and my long-term debt.
• My philosophy is: “give me a rainy day, and I’m ready for it.” I always have a contingency plan. My grandmother passed away in May this year and I had funds available to help out the family. Last year our house flooded and I was prepared because I had savings available (Emergency Fund). I used it for industrial carpet cleaning and sorting out the disaster.
• I often redesign outfits that I’ve worn for special events so that I get multiple uses out of it. As an example, I used a dress I wore to the South African Music Awards in 2012 and converted it into a top and skirt, which I will mix and match with other items to create a completely different look. Being fashionable doesn’t have to cost an arm and a leg.

Unathi is clearly aware of her spending habits, budgeting and saving for her goals. One of the products that can assist Unathi in achieving her goals is the new Old Mutual 2-IN-ONE SAVINGS PLAN which enables customers to save for their long-term goals (like paying for their children’s education) while having the flexibility to access some of the funds in the short term (like when that perfect ballroom dress costs more than you’ve saved).

At the end of this month, Unathi would have completed paying the instalments on her car and can set this money aside towards some of her other goals. Says Unathi: “I need to start saving for my children’s tertiary education and I’m going to use the money I would have been paying toward my car instalments to do just that.”

The 2-IN-ONE SAVINGS PLANS were designed to help customers save for the long-term but provide them with the peace of mind that they will have access to funds in the short term if they need it. To encourage them to stay invested for the full term of the plan and to diligently pay their monthly contributions, these Plans have a unique Savings Booster, which is exclusive to this “first of its kind” product on the market.

The Old Mutual 2-IN-ONE SAVINGS PLANS Savings Booster pays a specific amount into the Long Term Pocket of a customer’s Plan when it reaches certain savings milestones, thereby increasing the fund value of the Plan.

Manyike points out that the ninth Old Mutual Savings and Investment Monitor (OMSIM), released last month found that 80% of respondents want to learn how to save, but 30% haven’t seen a financial adviser and about 30% do not budget at all.

“Unathi is ahead of the curve by knowing exactly where her finances are: while 44% of OMSIM respondents still believe their financial situation will improve in the next six months. Many still don’t have a real idea of the state of their finances. Knowledge is power and that’s never truer than with your own money, “says Manyike.

Source: Old Mutual (2014), “Unathi to champion campaign to help South Africans save”, 12 August, available at: www.oldmutual.co.za/about-us/media-centre/press-releases.aspx?NavID=1897&ContentID=4321 (accessed 27 February 2014).

Flexible new product provides for customers long and short-term needs

Old Mutual launched a unique new product that allows customers to save for the future while having access to their funds in the short term. The need for this product is reinforced by the findings from the latest Old Mutual Savings and Investment Monitor (released in July), which indicate that customers are experiencing immense financial pressure and that their savings have become a lot more short-term focused.

This new solution, called the 2-IN-ONE SAVINGS PLANS, consists of a Long Term Pocket that allows customers to save for their long term goals; as well as a Short Term Pocket that allows customers the flexibility to withdraw or top-up money when needed. The minimum contribution is only R150.00 per month and contributions are split between the Long Term Pocket and Short Term Pocket according to a pre-determined scale.

Says Anele Mbuya, an Old Mutual Marketing Actuary, “We know that our customers want to plan for their future, but find it hard when their everyday needs become more urgent than their long-term savings goals. The 2-IN-ONE SAVINGS PLANS give customers the best of both worlds.” “The product was developed as a result of feedback received from customers and advisors. Market research that we conducted also showed the need for a product that allows customers the flexibility to access some of their saved money in the short term, while continuing to save for the future.” To encourage customers to save and continuously pay their monthly contributions, Old Mutual will pay a specific amount back into their Savings Plans when they reach certain savings milestones.”

According to Mbuya, “This is a unique benefit of the 2-IN-ONE SAVINGS PLANS, which is meant to foster a savings culture in South Africa and encourage customers to stay invested for the full term of their Plans. Our business philosophy is to provide for the changing needs of our customers and with this new solution we offer accessibility, flexibility as well as investment growth with security. In short, we are saying that saving for tomorrow shouldn’t stop you from living today.”

Other product benefits

• The 2-IN-ONE SAVINGS PLANS also have an automatic contribution increase, to help keep pace with inflation, which customers can opt out of if they cannot afford the increase.
• The Long Term Pocket’s contributions are invested in the Old Mutual Smoothed Bonus Fund and the Short Term Pocket’s contributions are invested in an Old Mutual Money Market Fund.
• The 2-IN-ONE-SAVINGS PLANS have two variants – the 2-IN-ONE SAVINGS PLANS 4 EDUCATION and the 2-IN-ONE SAVINGS 4 MY GOAL.

Source: Old Mutual (2014), “Flexible new product provides for customers long, short-term needs”, 12 August, available at: www.oldmutual.co.za/about-us/media-centre/press-releases.aspx?NavID=1897&ContentID=4320 (accessed 27 February 2014).