Factors influencing middle income black professionals’ intention to seek financial planning assistance

With the rising day to day expenses especially post retirement when income streams are running low, financial planning helps to better manage such events more effectively. Through a proper financial plan individuals do not just deal with wealth creation and wealth protection but are able to start from the basics of budgeting, were individuals are taught how to live within their means. In South Africa, financial planning has been seen to be focusing on the more affluent clients. This has resulted in a distinct lack of academic literature done on middle income black professionals in relation to financial planning. This is despite the increase of the black middle class population which has been accompanied with an increased purchasing power exceeding that of the previously wealthier white middle class. The growth of the black middle class in South Africa has been accompanied with stumbling blocks, ranging from the lack of financial literacy of the black middle class, negative attitude towards the financial services industry that influence financial decision making, and the pre-existing perception that are built on the lack of financial awareness, a legacy left by the history of division that South Africa had. Therefore the main aim of this study was to investigate the factors that influence middle income black professionals’ intention to seek financial planning assistance. Both secondary and primary data were used to help achieve the primary research objective of the study. An in-depth literature review on the financial planning industry in South Africa that included the nature of financial planning, the role of the financial planner, the six step financial planning process, the importance and benefits of financial planning, current trends in the financial planning industry, financial planning and the middle income black professionals and the factors that influence the middle income black professionals’ intention to seek financial planning assistance was conducted. Selected study of the literature revealed six factors that might influence an individual’s intention to seek financial planning assistance, namely Attitude, Awareness, Family financial norms, Financial self-efficacy, Trust and Perceived rewards. A theoretical framework was proposed illustrating the relationships between the factors influencing middle income black professionals’ intention to seek financial planning assistance that were to be empirically tested. A positivistic research paradigm was followed and a quantitative approach was implemented. Snowball and convenience sampling was used and a total of 300 questionnaires were distributed to middle income black professionals in the Eastern Cape. For the purpose of this study, middle income black professionals refer to qualified working individuals in the middle income bracket, including teachers, nurses, administrative workers, office-based municipal workers and employees in the private sector, such as those working in the banks and retail supervisors. These were distributed to verify their intentional behaviour with regards to seeking financial planning assistance. From the 300 questionnaires distributed, 271 usable questionnaires were yielded. Statistical techniques including descriptive statistics, Pearson’s product moment correlations and multiple regression analysis were performed on the gathered data. Demographic data relating to the gender, age and first language of the respondents was collected. An exploratory factor analysis was undertaken, and Cronbach’s alpha coefficients were calculated to assess the validity and reliability of the measuring instrument. As a result of the factor analysis the operational definitions were rephrased. The Cronbach’s alpha coefficients reported were all greater than 0.7, deeming the scales measuring the various dimensions reliable. Descriptive statistics were calculated to summarise the sample data, and Pearson’s product-moment correlation coefficients were established to investigate the associations between the variables. Significant positive correlations were reported between all of the variables. The results of the descriptive statistics showed that the majority of respondents agreed that Attitude (77.73%), Financial self-efficacy (61.13%) and Perceived rewards (76.98%) were the most influencing factors. The results of the multiple regression analysis revealed that three factors had a significant positive influence on the dependent variable Intention to seek financial planning assistance, namely Attitude, Awareness and Perceived rewards. The factors Family financial norms, Financial self-efficacy and Trust were rejected as there was no significant relationship found between them and the Intention to seek financial planning assistance. Based on the results, it is recommended that financial service providers focus on financial education by engaging with the middle income black professionals through accessible media such as radio and television. Furthermore, financial service providers should shift from a sales orientated philosophy to a lifestyle financial planning advice philosophy that encourage value for the service rendered to the client and sells benefit than product. The Department of Education should put in place basic financial planning curriculum that can be deliverable at schooling level and is examinable in order to improve the basic financial knowledge and awareness amongst the next generation. Lastly the middle income black professionals are encouraged to read their documents when taking out financial products as well as financial related articles to develop their financial knowledge