Selling Pensions to Sole Proprietors or Other Small Business Owners-Odunze Reginald C

Leo Burnet said “ Don’t tell me how good you make it, tell me how good it makes when I use it” Le Boeuf (1987;23) stated that customers will exchange their hard earned money for only  two reasons, and they are as follows:

Good feelings

Solutions to problems.

Continuing Le Boeuf  (op cited) stated that the success or failure of any business depends on how many it rewards with two things stated above and how well it does it” and as Francis  Rodgers , a former Vice President of Marketing for IBM put it ”The secret is to understand the customers problems and provide solutions so as to help that customer be profitable and feel good about the transactions”   Feeling good about a transaction brings out the best in the customer and makes him to be physical and emotional satisfied.

In marketing pensions to sole proprietors or small business owners, there should be a definite mindset, the mindset of an average Nigeria is to have something immediately or the next few years and not when she or she dies or retire, that has been the major reason, they shy away from insurance.

Therefore in achieving an adequate sales and marketing to sole proprietor of small scale businesses as regards to pensions is to develop products or services that can aptly capture the desire and aspirations of these types of customers.

Once products and services are developed that will meet their mindset, they will definitely key in to it and that will generate the necessary revenue.  Although developing and implementing such products or services needs the input of the regulatory body as the pension administration is much regulated.

The idea of pension has created a negative impacts on the minds and mentality of most Nigeria, as majority feels that these are pools of fund susceptible to corruption, embezzlement and other vices, therefore it becomes increasingly difficult to market these services to owners of small businesses who are less than the required industry bench mark .

Therefore what they need is a  developed product that will cater for their needs and by so doing a large of fund is being created that will have a multiplier effect on the economy and until we do that marketing pension to small and medium scale business owners will always be a herculean task

 Odunze Reginald C is the Lead Consultant, Chareg Consulting, Lagos

Will that new wife gives you a successful retirement?-Odunze Reginald C

According to  a recent research, the latest life expectancy figures reveal that a 6o year old pensioners today are expected to live off their pension for an average of 15 years- this is nearly a quarter of their whole life. That is why, any pension mistake could cost more, and according  to Robert Kiyosaki (1999) in his book ‘Cash flow quadrant, the Rich dad guide to financial freedom’ he noted that people invest for two basic reasons,

         To save for retirement

         To make lot of money

The first one underscores the importance of pension schemes, but one of the major mistakes people make is using the pension to marry a new wife especially in Africa and Nigeria in particular.

Most retirees end up using retirement money in marrying new wives and procuring new cars. By so doing they attract people’s attention to their lives, they also end up having issues with their immediate family members, especially their first wife who now feels alienated, even though they are not aware  that marrying a  new wife  will definitely set aside the existing will, if there was no update of the previous will.

 In an article in Yahoo Finance captioned “7 ways to Retire happy” Mandi Woodruff observed that “Happy retirees are more likely to be married” As common as divorce is in the U.S. today, the overwhelming majority of happy retirees were married (76%) and only 9% were divorced. Less than half of unhappy retirees were married, while one-quarter were divorced, Wes Moss found. 

This is right on par with what past research has shown about levels of satisfaction in married and unmarried people — over the long term, married couples are much happier. It’s fairly obvious why two may be better than one in this scenario — dual incomes can make a huge difference in a couple’s financial outlook. 

On the flip side, divorce not only reduces both parties’ income but is also expensive to go through. 

What it all means that marrying a new wife during retirement can offer a short term happiness to retirees as the pressures and the financial implication of maintaining two families may be devastating to the retirees, it also becomes increasingly difficult if the first wife of the retiree is enlightened as the law of intestate normally set aside the will, when a second marriage is entered into. 

Though there is law of Bigamy that makes it criminal for a one to enter into another marriage without divorcing the first marriage, with up to 14 years in jail for defaulters  But in Nigeria , this law seems to be redundant as most elderly statesmen enter into second , third and even fourth marriages without divorcing the first one.

What happens to a situation where the couple has entered a joint mortgage?

What will be the plight of the first wife that contributed for that mortgage, what about cases where the man has children and the desire of the second wife is to also have offsprings of her own. Will the retiree be able to cope with these issues coupled with harsh economy realities?

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Will that property in big city make or mar your pension pot?-Odunze Reginald C

Richard Dyson noted that “ while traditional pension saving is complex and unpopular with many, the phenomenon of buying-to-let is now growing at its fastest rate ever, spurred by rising rents and house prices and cheap mortgages”

In most developed countries in Europe and America, pension fund are being used for infrastructural development especially in the area of housing. But what they do there is that they build houses for lease and rent, and in some cases for outright sale. They discovered that of all investment in life, it is real estate that has the highest rate of return. As a house that was bought in 2012 for 25 million Naira cannot be sold for the same amount even within a period of 3 months. As both land and building appreciates over a period of time.  Jerry Lewis, the owner of Macdonald, once stated that he is getting his wealth through real estate and not through the restaurant.

But my interest in this presentation is the impact of property ownership in retiree’s life. Some cities have been noted to charge property tax; a typical case is that of Lagos and other major cities in and around the world.  Building house is a great idea and a solid investment, but what people do not know is that the type of house built is of paramount importance especially in the life of the retirees.

Building a house for commercial is a great investment unlike building houses strictly for residential only for the owners, if it is residential commercial purposes, it is also a good idea. But what I am adversely against is building magnificent house just for residential. That is a big liability.  This is because it may be difficult to maintain such property during retirement, as the pension pot may not be enough to offer adequate maintenances of the facilities during retirement as house owners or land lords do not make adequate provisions for sinking fund as it is only in Britain that make provisions for sinking funds as it relates to Building , other countries like Unites States , only  relates sinking funds to bonds  but In modern finance,  according to Bodie, et al. (2007) Essentials of Investments .in  Wikipedia  “a sinking fund is a method by which an organization sets aside money over time to retire its indebtedness. More specifically, it is a fund into which money can be deposited, so that over time preferred stock, debentures or stocks can be retired”

Enough of that digression, what we are saying is that a house you cannot adequate maintained should not be use as final abode for retirement as it will create more financial bottlenecks to the retiree and at the end making retirement life miserable.

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