The introduction of the two-pot retirement system has changed the way clients engage with their savings. For the first time, many are interacting with their retirement funds in a more immediate way, creating space for more frequent and relevant conversations with their financial advisers. For you as an adviser, every withdrawal request is more than a transaction; it is an opportunity for your advice to move from a periodic review to real-time decision support.
While the two-pot system is a practical intervention in a constrained economy, the scale of withdrawals highlights underlying financial strain. By early 2026, more than R60 billion had been withdrawn, with the most common reasons, according to an Old Mutual survey, including debt consolidation, school fees, and day-to-day expenses.
This points to a pattern. For many clients, the savings pot is becoming a routine source of liquidity rather than a last-resort mechanism. But, this shift has consequences: retirement savings are not designed to function as a recurring income supplement and, in the current economic environment, they are difficult to rebuild once accessed.
Beyond the administrative action, these withdrawals reveal a significant gap in financial security. This presents a tangible opportunity for you to reframe the conversation. A withdrawal request should be viewed as a diagnostic moment rather than a transactional event, providing critical insight into how a client manages financial disruptions and where planning weaknesses exist.
At this point, it is helpful to frame the discussion with focused questions. What triggered the need for this withdrawal? If the same situation occurred again within the next 12 months, what would the outcome be? What form of financial protection could have prevented the need to access retirement savings?
These questions help identify whether the issue is a single event or a recurring risk. This clarity moves the discussion beyond the withdrawal itself to your client’s broader financial position.
In many cases, the answers will point to income fragility rather than poor financial discipline. Clients are not always overspending; they are often under-protected. A short period without an income can be enough to create financial pressure that requires intervention.
And this is where income protection should enter the conversation.
Temporary illness or injury is more common than many clients realise. Research shows that a 30-year-old male is six times more likely to experience an injury or illness that prevents him from working for two weeks or more before retirement, than he is to pass away*. Bidvest Life’s 2024 Claims Report also shows that more than half (52%) of income protection claims during the year came from clients who had claimed before, indicating that temporary illness and injury are rarely once-off events.
Without the right cover in place when illness or injury strikes, even a short disruption can have a cascading effect. Expenses continue. Debt obligations remain. School fees and household costs do not pause. In the absence of income protection, retirement savings inevitably become the fallback.
There is also a broader shift in how clients perceive financial advice. Historically, many conversations have focused on investment performance and long-term growth. While these remain important, periods of financial stress tend to redefine a client’s priorities. They often become less focused on returns and more focused on stability and continuity.
There is also an educational component. Many clients do not fully understand the long-term impact of withdrawing from their retirement savings. They may not comprehend how early withdrawals reduce the capital available for compounding, or how this can materially affect their retirement outcomes.
Explaining this in the context of a real decision is more effective than addressing it in theory. With the right advice, clients who are considering a withdrawal can see the immediate benefit alongside the long-term cost, creating a more balanced decision-making process.
In the context of advice in the age of AI, this becomes even more relevant.
Digital tools and AI can model retirement scenarios with increasing accuracy. They can project outcomes, test assumptions and provide data-driven insights. These capabilities are valuable and will continue to improve.
However, they cannot replace the role you play in interpreting decisions under pressure. They cannot contextualise the data, understand a client’s circumstances or guide them through the trade-offs. When a client’s reaction to financial pressure is influenced by urgency, uncertainty and emotion, human judgement remains essential. How you interpret machine-generated data and translate it into practical, relevant advice has the potential to be a win-win situation for both you and your client.
Empathy
Your empathy, and the solutions you offer in these emotional times, can strengthen your client relationships, help your clients to balance the risks versus the alternatives and improve their financial resilience when challenges arise in the future.
The two-pot system is not just a policy change or an opportunity to access funds; it is a shift in how and when clients need advice. By treating each withdrawal as an opportunity to engage, dissect and protect, you can deliver more meaningful outcomes for your clients. Your expertise, and your “personal touch”, together with the support of digital tools, ensure you are well positioned to help your clients navigate their immediate challenges and still achieve their long-term goals.
Clients who feel supported through periods of financial pressure are likely to become more confident in their short- and long-term financial planning. They are more likely to act on your recommendations and to remain committed in their relationship with you. In turn, this translates into a more stable client base and a more sustainable advisory practice for you.
* Non-smoker; retirement age 70; 2019 Risk Reality Survey