“ This year, as well as in 2016, the bulk of assets under management per client were between R3m and R10m ”

- 2017 Top Private Banks & Wealth Managers survey

“ 60% of private bank clients rate the quality of advice they receive as ‘very good’ or ‘excellent’ ”

- 2017 Top Private Banks & Wealth Managers survey

“ 57% of clients rate their broker's service as excellent, up from 40% last year ”

- 2017 Top Stockbrokers survey

“ 6% of stockbroker clients execute trades worth more than R100,000 a month ”

- 2017 Top Stockbrokers survey

“ 40% of stockbroker clients average monthly trades of R5,000 or less ”

- 2017 Top Stockbrokers survey

“ 42% of clients chose their broker through word-of-mouth recommendations ”

- 2017 Top Stockbrokers survey

“ Of the 100 largest JSE-listed companies, 87 conducted BEE deals, 35 of which included public benefit organisations ”

- 2017 Empowerment Endowment

“ R32.6bn in endowments are now held by foundations set up as a result of BEE deals that will support charitable activities ”

- 2017 Empowerment Endowment

“ The percentage of wealth management clients who are “extremely likely” to recommend their institution declined to 53% from 78% last year ”

- 2017 Top Private Banks & Wealth Managers survey

“ This year, 35% of wealth management clients say they receive excellent value for money, down from 54% last year ”

- 2017 Top Private Banks & Wealth Managers survey

“ More than 70% of wealth management clients rate the quality of the advice they receive as ‘very good’ or ‘excellent’ ”

- 2017 Top Private Banks & Wealth Managers survey

“ R51.6bn value created specifically for charitable recipients through BEE deals ”

- 2017 Empowerment Endowment
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Researching Capital Markets and Financial Services

Amount invested in tax-free savings accounts doubles over the last year

A total of R5,174bn has been invested in tax-free savings accounts as at end-February 2017, close to double the R2,6bn from a year earlier. And 459,848 TFSAs have been opened since inception in March 2015, with 207,172 of those having been opened in the 12 months to end-February 2017.

The average account value is R11,251.

Those are the headline numbers from a survey of all TFSA providers conducted by financial research house Intellidex in March this year, covering to 28 February 2017, the end of the tax year.

This is Intellidex’s third survey on the TFSA market. It sourced figures from all TFSA providers in SA, gathering information for the 12 months to 28 February 2017, adding to data collected on the previous two years since TFSAs were launched. The study focused on all TFSA providers including stockbrokers, asset managers, banks and life insurers.

A total of 26 firms responded to a questionnaire sent in March 2017, though some were from different divisions of the same firm (eg, banks’ cash and stockbroking TFSA offerings). We estimate the sample includes more than 95% of the universe by assets and the results are a reliable guide to total market activity.

The main goals of the survey are to assess the impact of TFSAs on savings behaviour in South Africa and on institutions in the investment industry and the products they develop.

The full report can be accessed at www.intellidex.co.za/tfsa2017.

Other key findings include:

  • A total of 207,172 accounts were opened in the 12 months to end-February 2017 (averaging 567 accounts a day).
  • The net number of accounts opened (after incorporating accounts closed) rose by 39% from the previous year.
  • Respondents believe that 13% of TFSAs opened in the year to end-February 2017 are by first-time savers, indicating that the accounts do have a reasonable effect in galvanising people to become savers. It should be noted that an unknown number of these are held by minors, where parents have effectively donated the balance.
  • About 70% of the assets held in TFSAs are new to the firms that manage them (rather than being transferred from existing investments). While some of these would have accrued to the firms in the absence of TFSAs, it does indicate that the TFSAs provide a means for firms to attract new assets.
  • Of the 207,172 new accounts opened in the 2016/17 tax year, 157,331 (76%) of clients held existing accounts with their TFSA provider.
  • Cash TFSAs offered by banks continue to dominate the market. The major asset class held in TFSAs is in the form of cash at just over 47% (from 51% the previous year), followed closely by equities, which rose from 36% to 40%.
  • However, the other asset classes have seen strong growth in average account balances compared with banks. Total equities under management more than doubled to over R2bn. Similarly, the average value in collective investment schemes grew 29% to R27,452, while that of life insurance accounts rose by 16% to R16,680. In contrast, the average account value for bank balances barely changed.
  • An estimated 49,841 TFSAs, or 13% of all accounts, have been opened by first-time savers since inception.
  • Appears that annual limits are not serving as a hindrance to low-income earners, with only about 8% of new accounts invest the full amount on opening the account.

Intellidex launched the website savetaxfree.co.za last year to help savers identify account providers. The site has tools to assist users to identify accounts that match their needs, with more than 500 hits per day. The survey of TFSA providers helps regulators and those in the market understand the trends and features of tax-free savings market.