Saving money is notoriously unsexy. The prospect of putting away all your hard-earned cash for a rainy day, instead of spending it and treating yourself or your loved ones, is not something most people find exciting.
“It’s quite a tough job, you know, to convince people to defer consumption,” said Abubakari Addae, co-founder and CEO of LifeCheq, a South African fintech company.
LifeCheq is just one of a few fintechs that have sprouted in the past 10 years to meet this gap and make your life easier. From AI to flat-fee advice and tax affairs, LifeCheq, Doshguide and TaxTim are all making headway in the space.
But for Addae, financial planning allows people to unlock options that they never knew they had.
As a doctor at the beginning of her career, Addae’s sister had been sold life cover worth millions when she had no dependants and a savings policy, despite the fact that she had significant student debt to pay off. After reviewing what she had been sold and the poor advice she received, Addae knew he wanted to do something about the way financial products were being sold in the country. The idea for LifeCheq was born.
He started LifeCheq in 2015 as a consumer financial advice business with their own advisers serving clients. The company has since evolved to provide technology to financial advisers that essentially makes the job of delivering quality advice easier and more seamless. LifeCheq now has 100 employees spread across the globe and 8,000 financial advisers who use the platform to conclude more than a million transactions every year.
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As simple as online shopping
LifeCheq’s technology makes a financial planning session as easy and intuitive as possible without compromising on the quality of advice, according to Addae.
“The key thing is you have to first define what good advice is, and then systematise it,” said Addae. “At all levels of the market, people have complicated existing holdings... so it’s really about taking all that complexity and actually mapping all that out in a very intuitive process that’s really simple to engage with.”
Addae said this helped both the adviser, who was more productive through using the technology, and the client, who actually understood what they were being sold, and why.
“You’re trying to make it as simple as going online to buy a pair of shoes,” said Addae.
He emphasised creating a standard of what good advice was, and that it should be “baked in” the process.
“Quality in advice should not be up to the discretion of an individual adviser,” said Addae.
AI-powered technology at the core
LifeCheq used artificial intelligence (AI) in several ways, from the time advisers sat with their clients to analysing the numbers after the session. It allowed for a straightforward process that was easy for both parties to understand.
“When the adviser is done with the conversation, the AI in the background analyses the quality of the advice that was given,” said Addae.
The technology also made recommendations and in its own way held advisers accountable.
The system, which was agnostic and independent… would make a recommendation based on the client information and prompt the adviser to think or question if their advice was different from the recommendation and why.
“That’s sort of the crux of what quality advice is,” Addae said.
Tapping into the ‘unadvised’ market
Rory Brachner, founder and managing director at Doshguide, a fintech simplifying financial advice and the way people pay for it, says that his own negative experience led him to create a different kind of financial advice platform.
“I had a financial adviser who sold me a product that was totally the wrong fit,” said Brachner. “It was a retirement annuity [and] I ended up having to surrender out of it because it was just a terrible product with really high fees.”
Brachner’s retirement savings took a 25% penalty because of this.
He says that similar to the banking industry where there are many who are “unbanked”, the financial services industry has clients who are “unadvised”. This is the client Doshguide is trying to meet.
“You don’t really have access to proper personalised, like real financial planning, until you are probably in your 40s, or maybe even 50,” said Brachner. “And I think people are just a little fed up with being sold products when actually what they need is advice.”
Doshguide financial advisers use a flat-fee model. Instead of earning commission on products or policies they sell, advisers earn a monthly fee from clients in return for ongoing advice.
Brachner says that most advisers operate on a monthly subscription, but other payment models include an hourly rate or a project fee, where an adviser gets paid for building a financial plan for a client, for example. Clients can also opt out of their subscription at any point.
Brachner emphasises that people shouldn’t wait to start paying attention to the state of their finances. While it can be uncomfortable and overwhelming, he says a little action goes a long way.
“Doing nothing is really not a good idea because the biggest thing that you can do in your personal finance is to start, even if it’s small... Get in the driver’s seat,” he said.
Tax returns: a pain no more
Not only are strides being made in financial advice, but a parallel shift is occurring in tax compliance and filing tax returns. As far back as 2011, the tax advice sector was revolutionised with the introduction of TaxTim, a platform simplifying tax for all South Africans.
“We’ve built a product that allows you, in a very step-by-step guided manner, to file your individual or provisional tax returns,” said Daniel Swiegers, a director at TaxTim. “And then we’re integrated with Sars; once you’ve completed the process with us, we automatically file your tax return on your behalf.
Swiegers said that while TaxTim was not a regulated financial adviser, they did a lot of work to create awareness and understanding for people to better understand their own tax situation. Those who used the platform could choose between three payment packages, ranked according to the complexity of their tax returns.
TaxTim had about three million people visiting its website each year, most for the educational content about taxes.
Looking to the future
In 2024, LifeCheq received a R160-million equity investment from the Summit Private Equity Fund, managed by Summit Africa. This investment marks the company’s largest equity investment so far.
This will allow LifeCheq to fulfil expansion into other African and Asian markets.
“We want to enable even more accessibility,” said Addae.
As for Addae’s sister, she has since opened her own medical practice.
“Having made some of the right decisions gave her the freedom to start a practice,” said Addae. “This would not have been the case without that intervention.” DM