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Two Hirsches, a listing and a challenge

By Arthur Goldstuck

The business world tends to be obsessed with training its people in job skills, but never goes the obvious step further: training in financial skills. This may well change in the future, as the new “life skills” emphasis of South Africa’s outcomes based education extends beyond the school system.

For now, however, there is no organised approach to the teaching of financial literacy. Except, that is, by financial institutions themselves. But the benefits are likely to be reaped only by those who have already embarked on the quest of upgrading their skills in this area.

There is a simple reason for this: once you get into the loop of researching financial options, you are likely to place yourself or find yourself on the mailing lists of those financial institutions who realise it is in their interests to educate both customers and potential customers.

This was underlined by two events presented last week by two separate organisations, namely Sasfin Financial Advisory Services (SFAS), and Tradek.com, which each offered a seminar-like lecture on financial strategy.

SFAS managing director Bryan Hirsch offered a “money sense” presentation on Blending Asset Management, while Tradek hosted Standard Bank’s Richard Hirsch, who gave a presentation on investing in Warrants – a simple matter, if you understand the techniques involved.

The audiences for these two events were highly revealing. Hirsch B found himself addressing mainly little old ladies on understanding overall asset allocation, and how to blend and rebalance existing investments. Hirsch R faced a packed room of bright young men, eager to play with their newly emerging wealth, and explained how Warrants leverage the price movements of expensive shares without the individual having the risk of investing in the shares themselves.

Among both audiences, the presentations represented not only an opportunity to get better financially qualified, but also a trend towards the financial education of investors in general.

Fact is, there is a drastic shortage of individuals willing to diversify from savings-type investments. The recent announcement of the delisting of Tradek came with just that as a pretext: not enough customers.

That relates directly to the potential success of the Telkom initial public offering next year. If you want the public to invest in Telkom, you are going to have to explain many things, not least how and why share prices go up and down (the Telkom guide to buying shares, now being handed out at post offices nationwide, only explains about prices going up).

And you’re going to have to explain all those acronyms, like the difference between DY and D-I-Y (that is, putting money under the mattress). Although Old Mutual and Sanlam introduced the masses to owning shares for the first time, they did not have to sell them ion buying shares. For Telkom, that is the heart of the matter. For them, financial education will be a business basic. They will have to drag their potential investors – wallets screaming in protest – into the world of equity investment.

As the Hirsch seminars show, there is plenty appetite for financial education among little old ladies and bright young men alike – market segments that are already in the risk game. The challenge now is to work up that same hunger among those who have never had an appetite for risk.

Arthur Goldstuck is editor of The Big Change and managing director of World Wide Worx, the leading independent technology and telecommunications research house. He can be contacted on arthurg@internet.org.za

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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