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throughgrowthinnovation

Issue 33 (2 of 2014) | R30.00 (incl.VAT)

Official journal of the Financial Planning Institute of Southern Africa

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Contents4 LETTER FROM FPI

MOVERS AND SHAKERS UNDER 35

8 Hardi Swart, CFP®, 26

10 Vumile Msweli, CFP®, 27

12 Kyle Jacobs, CFP®, 28

14 Dr Liezel Alsemgeest, CFP®, 33

16 Famida Singh, CFP®, 33

20 Yashika Rambujan, CFP®, 33

22 Warren Wheatley, CFP®, 35

26 FPI NEwS AND EVENTS

40 CLIENT ENGAGEMENT

EMPLOYEE BENEFITS

42 The impact of retirement reform on financial advisors

44 Restructure of provident fund retirement benefit

HEALTHCARE

50 NHI: Toward affordable healthcare for all

INVESTMENT

54 There is value in an investment advisor

58 Where have all the predators gone? Hedge funds poised for a come-back

PRACTICE MANAGEMENT

60 Growth through mentorship

62 Don’t fear the tech: The benefits of technology for financial planning

66 Safeguarding your corporate information in a BYOD world

REGULATION

68 Fee structures

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13

throughgrowthinnovation

Issue 33 (2 of 2014) | R30.00 (incl.VAT)

Official journal of the Financial Planning Institute of Southern Africa

It is an enormous pleasure to belong to a noble CFP® professional community in these great and interesting times. It’s times like these that direct us to think differently and look at the way we do things to enhance the lives of our clients. Life is not cast in stone; we have the ability to

change the industry through innovation.

The financial landscape has changed globally as well as locally, where client centricity has become more important than ever before. The focus has shifted, and our clients and consumers are more informed.

The high level of consumer debts in South Africa remains a concern. This provides an opportunity to embark on facilitating consumer education and pro bono interventions, with the assistance of FPI.

South Africans need us to assist them with their life planning, let us grab this opportunity and raise the bar by offering financial planning for all. There is a difference between ‘giving direction’ and ‘directions’. It is now time to increase our efforts by giving informed direction to our consumer.

It stands to reason that things cannot remain the same. If we do not grow, we run the risk of not being relevant in the future. Continued growth and learning is important.

It is a privilege to have CFP® professionals who are competent

and have good charisma and character to service the needs of consumers at all levels — the ‘C’ effect.

FPI continues to develop professional, compliance and ethical standards for CFP® professionals. We also represent members’ interests with legislators, regulators and consumer bodies.

The institute is matchless in its reach of the financial planning market. We have influence on government and regulators; our standards are set through a world-class Code of Professional Practice; we are uniquely positioned as the certification body in South Africa for the global CFP® designation and hold the reputation for quality professional development.

With this in mind, and in line with this year’s FPI Professional Convention theme, let’s grow our profession through innovation, in order to serve our South African community by providing better professional financial planning for all.

I look forward to working together in our goal to create a financially healthy South Africa. We hope that financial planning (knowing how to create, preserve wealth and to finally create a legacy) becomes a number one priority for everyone.

Growth through

innovation

Letter from fPI

4

Adv. Sankie Morata,CFP ® New Chairperson of the Financial Planning Institute

35Kyle JacobsAG E - 2 8

Hardi SwartA G E - 2 6

Vumile MsweliAG E - 2 7

&shakersMovers

AND

Contact uswant to share feedback on the profiles?Interested in being featured in our next issue?write to us atmarketing@fpi.co.za.

under 35

6

35Warren WheatleyAG E - 3 5

Dr Liezel AlsemgeestAG E - 3 3

Yashika RambujanAG E - 3 3

Famida SinghA G E - 3 3

In this issue, FPI is shining a spotlight on CFP® professionals under 35 years old. From a total list of 796 young professionals we have carefully selected these seven outstanding CFP® professionals to profile. We didn’t consult a crystal ball, so we can’t confirm that these trailblazers will still be the crème de le crème in decades to come, but we sure wouldn’t bet against them.We celebrate and acknowledge their excellent work and

significant contribution to the industry. We also feel that they are bringing much-needed talent to all facets of financial planning and streams of specialisation.

So big ups to these young folks with the big ideas, the big jobs, and the big tenacity to realise their visions!

Here are our seven movers and shakers, starting with the youngest and moving up.

Mandisa Magwaza, Value Proposition Consultant at the Financial Planning Institute.

7

8

Hardi Swart

Age – 26

Region – Western Cape

Position - Director at Autus Fund Managers

Hardi Swart, CFP®

How did you choose this career?

Twelve years ago my dad passed away and we inherited a farm. At the time we were living in Limpopo and relocated to the Western Cape so that my mother could pursue a new career opportunity. It became difficult for us to effectively manage the farm from another province so we decided to sell it in 2007.

We appointed a friend to manage the family investments. He did this carelessly by investing our money in two portfolios only. Sharemax went bankrupt so we lost a great deal of money and PIC did not yield much return.

At university I met and dated Anemike who is now my wife. She introduced me to her dad who is a financial planner. One day at a braai, I shared my story with him. He invited me to his office and reviewed my portfolio. He was able to pick up some perplexing issues such as my brother and I having 10 policies individually, each structured more or less the same. Through some investigation we discovered that the financial planner advised these policies because of a competition. It was disappointing to find that the advice we received was structured for the purpose of winning a competition, and not with the genuine intention of having our best interest at heart. After being done in twice I decided I wanted to pursue this career choice.

9

Hardi Swart

young advisors. We discussed the topic of remuneration. I informed them how fortunate I felt for the work I was involved in and to be part of Autus. I had the privilege of being present at meetings with senior staff members where I extracted much learning about our industry.

Secondly my employer, Autus, supported my development as a young financial planner by providing a salary without the extraneous pressure to sell, so that I would always place my clients’ needs first. One of my friends who was part of the discussion shared his worry of having to sell two policies by the end of that week, otherwise he would not make ends meet for that month. Naturally, I was thinking of the poor client who will have no idea that the help he received would be driven by a target, and not to the fulfilment of his needs. I also empathised with the plight of the advisor, who I felt was a good advisor in a tough situation. The industry is still driven by an undertone of sales.

I decided to assemble young advisors by creating a forum where we could all learn from each other the challenges we face as young professionals and how we overcome them. When we meet we also invite reputable speakers who can impart their knowledge and expertise to us. We try to slightly diversify our speakers and themes, for example, we invited Andrew Merryweather who once appeared on Carte Blanche. He shared with us his touching story of how he became paralysed through an attack, how his life changed and how his situation would be so much better if he received proper financial planning. He was left paralysed and did not have any insurance.

We young advisors are taking ownership of the legacy we want to leave behind. I think the financial planning space has changed drastically; history shows that the career was previously chosen by default. The representation of the industry was that of advisors who had no passion or ambition to assist people with financial planning. Instead many people opted to sell policies as a means to get out of a difficult financial situation they may have found themselves in. We aim to change the image of this profession.

what mistake have you seen amongst your peers that you have been able to rise above?

From my personal experience of losing a lot of money, I feel I was able to avoid mistakes that could have negatively damaged my clients’ portfolio. Through the Autus rules and my personal preference, I have invested my clients’ funds into Financial Services Board (FSB) regulated products. I think some advisors still seek opportunities to somehow make a quick buck where they can by placing clients’

While still studying B.Com Management Accounting at Stellenbosch, my father-in-law invited me to intern at his practice for three months so that I was exposed to what this career choice had to offer. I loved the experience and the values that were held within Autus. I saw how everyone strived to make a remarkable difference in clients’ livelihood and how the honest intention came back to the business tenfold. I then decided to pursue the CFP® designation and have not looked back since.

You formed the Young Advisors Forum; tell us what it is and what sparked this idea?

A few years ago I attended the FPI Annual Convention and was chatting with other

money at risk with strange investments.

what is your role at Autus?

I have broad responsibilities but I am also involved in client engagement. This is the most fulfilling part of my job; serving our clients. I have seen how my clients have progressed through the years through the right advice. I also feel rewarded when I receive a compliment or a note of gratitude from a client.

Tell us of a compliment from a client that comes to mind.

Anemike and I serviced a young client some time ago who had inherited a large sum of money and wanted to invest it. After doing analysis on her portfolio, I noted that she had accumulated a large sum of debt through university fees. Taking into consideration her age and other dynamics, I advised her to settle the debt first. The easy road, of course would be to invest her funds and earn commission.

Months later she sent a heart-warming email thanking us for our advice and also admitting that she was initially quite disappointed with our recommendations. She mentioned of her eagerness to grow her funds instead of settling debt. Our young client now understands how valuable and holistic our advice was to her. Most of all she realised that we placed her interest first without an ulterior motive. In her case she was fortunate to receive a bursary to study further and approached us again now being debt free and ready to invest.

How do you make the CFP® designation work for you?

I inform my clients that I am a CFP®

professional and the credibility it represents. I feel that I have worked hard for this designation and there is no reason why I should hide this nor be apologetic about it. I also take the time to show them the CFP®

professional video from the FPI website to help them better understand the concept of financial planning.

As a CFP® professional I feel distinguished from other advisors. I also feel good about adhering to the code of ethics stipulated by FPI and also believe in continuous professional development.

In your opinion what are the three things one should never do in this business?

• Never over-promise and under-deliver• Don’t be dishonest, even about mistakes • Always put the needs of your client

before your own.

Vumile Msweli

10

Region – Gauteng

Position – Head of Commercial Account Services at First National Bank

Vumile Msweli, CFP® Age – 27

when did you realise you wanted to be successful?

When I was in standard 6 I was attending Holy Family Convent and read about St. Mary’s Diocesan School for Girls (DSG). I really wanted to attend this school and decided to work harder to improve my grades so that I could secure a scholarship. It was there that I gained exposure to so much that life has to offer. I decided then that I wanted to grab every opportunity given to me and to make a success of my life. I truly enjoyed studying, so I did it while working.

Tell us about your academic achievements and your experience of studying overseas?

I completed various postgraduate executive

courses from the Gordon Institute of Business Science (GIBS), New York University, as well as Harvard. I also hold a Master’s in Business Administration (MBA) from the University of London. Currently I am studying a doctorate in Applied Management at Switzerland’s University for Graduate Studies.

Studying overseas gave me perspective. The world, for the longest part of my life, was Chesterville (a town in eThekwini in the KwaZulu-Natal). My world opened up and my perspective changed after engaging with people from Asia, Australia and other counties I visited. In South Africa we are a melting pot of cultures and you are able to interact with different people, however abroad you experience this on an even larger scale. My academic qualifications, those I have achieved at home and abroad, required a lot of traveling, discipline, late nights, being strict with

my time management and plenty of sacrifices. I have enjoyed the manner in which international institutions have an exploratory approach to learning. There is no right or wrong. It is all about going out to investigate and discover the answers yourself.

Tell me about your childhood in Chesterville. what were the money lessons you learnt from your parents?

My mom was a single mother and I was raised in a home with my grandparents who taught me a lot about wealth creation. They were individuals who were entrepreneurial, very disciplined and did not spend everything they had making smart financial decisions was their way of living. When I needed school uniforms it was not a surprise expense and was budgeted for, well in advance. My grandfather also

Vumile Msweli

11

because that was not the career path I had chosen to carve for myself. So knowing when to say no has been a pitfall I have more often than not avoided.

what is the most fulfilling part of your job?

This might sound cliché but it is the people I work with. I am blessed to have a boss from whom I learn a great deal. I feel personally challenged and mentally stimulated here at FNB. Eldorette is amazing analytically, as she thinks in layers. She has the incredible ability to grasp things at a strategic level, go in-depth and break things down in granular form. This pushes me as an individual to constantly be thinking five steps ahead in a holistic manner.

what has working for reputable companies taught you?

• Investec – taught me to play hard and work even harder, life isn’t a practice run so give it your all.

• Barclays – taught me the power of discipline and the value of balance, I can surprisingly do more than I thought and do it brilliantly.

•Nedbank – taught me the beauty of security and how it doesn’t exist in corporate, so be ready for anything and be prepared to listen to your inner voice, and not external noise, for guidance.

which leadership traits do you admire?

I admire people who value their people and demonstrate Ubuntu; recognising that there is a soul behind a person and that people are not robots. This can be difficult when executing strategic decisions; Ubuntu can assist you to help people love the environment they are in. This kind of inspiration drives all of us to do more than work, it encourages you to give of yourself and your best in the corporate environment.

I also admire people who are flexible and able to change with the times, especially when they have been in an organisation for a long time. Adaptability and a willingness to learn and grow are vital to being successful in any endeavour.

How would you invest R100, R1000, R10 000 and R1 million?

• R100 – I would put it into a bank savings account with reasonable interest rate, left to compound.

• R1000 — I would put it into a property unit trust.

• R10 000 – I am conservative so I would put it into a treasury bond.

• R1 million – I would split it into two; R500 000 in trading stocks and R500 000 in property investments, I believe in hedging.

invested in property, mostly residential, and this taught me from an early age the importance of short-term sacrifices to enable long-term rewards. It taught me that by delaying instant gratification, one can create long term wealth.

Is there a significant achievement that you think changed your life forever?

No, I am not easily satiated. I thought I would feel a big sense of achievement when I attained my MBA but now I am looking forward to completing my doctorate. I take the moment to enjoy success achieved but for me, it’s a case where I quickly look for the next mountain to climb. There have been moments in my life that have been a turning point for me. Some of these have been provided by interesting literature that provided practical lessons in how I relate in life, relationships and my finances, these include The Bible, The Richest man in Babylon and The Secret.

How do your personal values align to that of FNB?

We at FNB strive to make our client experiences seamless. This has its challenges, but in everything we do our clients are at the heart of it. The value of service is one I hold highly, be it service to my colleagues, family, friends and my community, and this is the FNB way of doing things. I try to have a heart of ‘How can I help?’ I believe that work is more than what you do, but giving of who you are. I enjoy the opportunity to give of myself. FNB supports volunteerism, so in that spirit I volunteer on Saturdays by teaching accounting and english to high school learners in Soweto.

Research shows that there are low levels of financial literacy in South Africa, tell us about the interesting way you address these issues, in your personal capacity?

Working in a financial institution exposes you to greater body of financial knowledge. As a financial planner I naturally share my expertise within my own personal network. I also take the opportunity to pass on useful life lessons to my students that I teach on Saturdays. The conversations I have with them can equip them for life. They also often have aspirations of reaching the same goals I have achieved, and may not know how, or may believe that finances are an obstacle.

I advise them that most of my studies as early as high school were funded by bursaries because I worked hard to raise my grades. I channel my learners to institutions that offer bursaries. I teach them basic finance skills like not spending everything you earn, learning to live within your means, and that credit is a tool to assist you, not a way of life. I also try highlighting bad money habits they may adopt from home.

How have you made the CFP®

designation work for you?

When my grandfather passed away I worked hand in hand with the executors to assist in the winding down of his estate. I was able to give the woman who raised me, my grandmother, peace of mind because I was equipped to deal with all the complexities that came with my grandfather’s estate. I’ve never felt more proud as a CFP® professional.

what mistake have you observed amongst young professionals that you have been able avoid?

I have avoided saying yes all the time. There have been opportunities in my career that may have brought short-term glamorous perks and financial perks which I purposefully declined

Kyle Jacobs

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Region - Eastern Cape

Position - Senior Wealth Planner at Standard Bank Group

Kyle Jacobs, CFP®Age - 28

what led you to choose this career?

I had always wanted to be a chartered accountant. In my first year of studying, Griffith University held a financial planning seminar. At that stage in Australia, there was a big drive for the financial planning career. The broad-based overview of financial planning presented in the seminar inspired me to make the transition from chartered accountancy.

How did Standard Bank support you in your journey to attain the CFP® designation?

I returned to South Africa after my first year of undergrad to complete my qualification. I was one of the few graduates that were selected to join the Standard Bank graduate recruitment programme and I haven’t looked back since.

The graduate programme provided a good foundation and allowed me to learn the basics of the job, without the pressure of having to sell. Spending this time focusing on the core basics of a good financial planning practice, definitely gave me the jump start which has allowed me to achieve all that I have today.

Attaining the CFP® designation was a big milestone for me because I understand the power that the mark has in the industry. There is growing regulation in the industry and a drive towards true professionalism. At Standard Bank they are very supportive of anyone pursuing the CFP® designation, as they understand the importance of continuous professional development.

How do your clients benefit from dealing with a professional?

I deal with the client’s financial livelihood; I think it is imperative for me to be on top of my game. I invest in myself by continually developing as a professional. Achieving the designation was not easy, however I feel that the hard work pays off, allowing me to give my clients the quality advice that they deserve. Running a professional practice means not only focusing on client acquisition but also paying close attention to client retention. I take the time to keep in touch with my clients and conduct regular reviews. The financial planning environment is ever-changing and the client therefore needs continuous coaching through these times.

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Things (environment, industry and clients) are constantly changing and you can’t do the same thing over and over again believing that your clients will also benefit from your monotonous ways. One always needs to be on top of your game. That is the difference between someone who has 20 years of experience (with growth) and someone that has one year experience repeated 20 times.

A good financial planner is always well prepared.The saying “success is merely preparation meeting opportunity” stands true in this career.

If you do it properly from the beginning, success will come, even though the progress may be perceived as being slower. Shortcuts may bring immediate success but it is not sustainable.

who is your mentor?

My grandfather. His success has been my biggest motivation. From him I noted that success was not something one could achieve overnight, and also saw that successful people were better managers of their own money. I often gain valuable insight from the successes my clients have achieved in their businesses. I share my knowledge with them but when I listen carefully there is always something knowledgeable

I can take from them too. Reading books by various inspirational authors also contributes to my personal growth. I am passionate about what I do and I love knowing and reading about the developments in the financial planning industry.

what is the most rewarding part of your job?

I feel a sense of fulfilment when I see my clients reaching their financial milestones. It feels good when they share their appreciation for my work. Little did I know when I was studying that I would be so enthralled by what I do.

what mistake have you observed amongst young proffesionals that you have been able to avoid?

I think often young professionals entering the industry forget the greater good that our job is set out to deliver. It is vitally important to both set and manage your clients expectations throughout the relationship. There are often major pressures or demands which sway logic in providing sound advice. It’s very important to stay grounded and level-headed at all times, ensuring that the clients’ needs are the main focus.

what are the worthwhile challenges that have impacted on your personal/career growth?

Being a financial planner is quite a challenging job with ups and downs. You learn as you go and often encounter rejection, particularly in the beginning. Those moments enable growth and resilience. I have learnt to pick myself up through most disappointments.

Growing up I surfed as a junior professional surfer so I have always been very driven and competitive; I don’t take failure lightly. I know where I want to be in the next 10 years and I have set up goals in order to achieve this. At stages, when things aren’t going to plan, I look back and reflect on past successes, to give me motivation to move forward. In saying this, I have to accept that some disappointments and challenges are inevitable and part of the job.

which has been your biggest sacrifice throughout your career?

Sacrificing my time; I often commit 12 hours to work a day. I feel that when you are still building your practice you need to invest more time to get it off the ground. However, I try my best to keep a balance between my professional and personal life.

How would you describe a good financial planner?

A good financial planner will always put the needs of the client first. This will come back to you tenfold. I can’t stress enough the importance of holding the CFP® designation as it provides a good basis for the advice you give. Clients pick up on advisors who just say what clients want to hear in the hopes of selling a product.

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Tell us about your current role at the University of the Free State?

I started working at the department of Business Management in 2005 as a research assistant. I became a lecturer a year later. I have always had an interest in finances but when I was doing my Masters in Business Management, interest intensified. I joined the Centre for Financial Planning Law at the beginning of 2013. I lecture the role of economics in financial planning. I also run the research part of the Centre. I love the practicality of it and even though I don’t practice, I apply the lessons in my personal life.

You seem to enjoy studying; a lot of people would find it difficult to invest time and effort into academics. How does this work for you?

Region – Free State

Position - Lecturer for Centre for Financial Planning Law at the University of the Free State

Dr Liezel Alsemgeest, CFP®

Age – 33

Liezel Alsemgeest

I always try to better myself and have over the years developed a passion for learning. This has not always been the case. After completing my matric I took a gap year and went overseas. When the gap year ended I didn’t want to return home nor study. I was just not in the mood. My parents forced me to come back and bargained with me; as long as I get 50% for my studies they would be happy. Once I started learning I couldn’t stop.

I first pursued a B.Com degree in Economics, after that I completed my Honours degree in Investment Management and thereafter my Master’s degree. During my Masters I did the financial planning post-graduate diploma while working full time at the university. As a university employee you are also encouraged to complete a PhD so that has been attained as well.

what are the worthwhile challenges that have impacted on your personal and career growth?

I think that every time you start something and end it successfully, it contributes to your self-esteem, so it is necessary to always finish what you start in life. I would say that completing my academic qualifications has been a lonely road that I have taken on my own. I have had ups and downs but once my goals were reached I felt proud. I am fortunate to have a partner and family that have always been very supportive.

what personal trait would you attribute to your stamina?

That’s a bit difficult because I am a natural procrastinator (laughs). I set myself high goals

15

and can be quite hard on myself if those goals are not reached. I am a competitive person, I always want to be the best and have a passion for learning.

According to statistics, financial illiteracy is high among South Africans. Tell us about the interesting work and insights collected from the research you have conducted paying special attention to this topic.

My Masters and post-doctoral work focused on this issue. I have always been interested in how people think and feel particularly about money. I have even observed how, within my own family, how different people approach money in completely different ways. The area of research I pay special attention to is how we relate to money from childhood through

to adult life, and what contributes to our money decision making.

Insights that emerged were that, part of SA’s financial illiteracy crisis stems from the fact that we do not have a society that is strong in maths and accountancy. Education can help bridge this gap. On the other hand sometimes having an education does not mean that you will always make the right financial decisions for yourself.

Since doing the study, more research issues have sparked my interest. I am also probing into the psychological and emotional issues people have, and how these issues relate to money. These issues seem to have a stronger influence on managing money correctly.

What I am exploring at the moment is the idea that people who hide from problems, struggle the most with managing their money.

People who feel money is a taboo subject and would rather not discuss personal finances are most at risk, because they tend not to think about saving enough for retirement. They generally don’t seek the service of a financial advisor either.

How do you uplift your students to be the best they can be?

The financial planning law classes are smaller than most, which provides an opportunity for me to interact with them at a deeper level. Every student in my class wants a bright future, they want to learn and become successful. My role is not only to educate the technical aspect of learning but I try to take the time to get to know them. I try to be as approachable and knowledgeable as possible. Most of all I enjoy motivating them.

what is the most fulfilling part of your job as a lecturer?

Having students come back to me and say thank you and tell me that I have made a difference in their life. It is also rewarding when I see them grow through the years and also see them succeed in the work environment.

Your philosophy in life would be?

Balance in everything; work, life and social.

why is education important in this career choice of financial planning?

I think that without the necessary education you can try wing it and get by, however I feel it would be irresponsible to deal with other people’s money without the necessary education to back you up. One of the biggest responsibilities in this vocation is to place the client’s welfare first; continuous professional development is key. You have to do your best to be the best you can be.

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FamidaSinghFamida Singh, CFP®

You have a strong career track record. How did you get to where you are now? Take us through it in a nutshell.

I had my secondary education at Ixopo High School in the Midlands. When I completed high school I did not have the means to pursue a tertiary education so I decided to come to Johannesburg to temp, so that I could fund my studies. I was asked by an agency to do a maths aptitude test – they clearly liked the results because the agency was able to secure an actuarial product development position for me. Being part of the actuarial product development team within Liberty, during the formative years of my career, allowed me to discover the world

of investments, risk and financial planning. When you come from humble beginnings you understand what a big enabler money is, and how important it is to drive the education around responsible financial planning. I used to draw up my mom’s budget when I was in primary school.

One of the key lessons I have learnt is that one should not use career choices to chase after money. It is vital to love what you do. I personally chose to refuse offers that simply offered me more money, and instead I chased my passion and everything else just fell into place. Don’t get me wrong, money is crucial for survival; therefore one should find the balance between a career that they love and one that can sustain them. Finding a job that

pays you 50 percent more can be career limiting if it does not fulfil you, especially when faced with obstacles. Overcoming those obstacles just becomes that much harder.

what is the most fulfilling part of your job?

SA is faced with major challenges. Ninety six percent of our population are retiring without sufficient funds to carry them through to their retirement. I have worked in the pre-retirement and post-retirement world. It is fulfilling to know that the advice I give, and the work I do, changes lives for the better. In educating all stakeholders I am fulfilling a need and closing the gap. Our business is about people and changing lives - that is the starting and ending

Age – 33

Region – Gauteng

Position - Head of Investment Distribution, Marketing and Retention, Liberty Corporate

at Liberty Group

17

FamidaSingh

point. I feel part of something that evokes a passion to always want to do it better.

According to statistics, financial illiteracy is high among South Africans. Tell us about the work Liberty is involved in to address this reality.

Liberty drives a lot of Corporate Social Investment (CSI) initiatives to ensure we are pushing education. Our fundamental theme at the moment is ‘Own your life’ and ‘Knowledge is power’. We not only talk about this in our advertisement, but we live it as well. In a recent initiative we raised a significant amount to uplift a school in KwaZulu-Natal.

when did you realise you wanted to be successful?

I have always known that I wanted to be successful. When I was a child I needed to ensure I made my mark. I loved academics, even throughout my career. Academics exposed me to a bigger world than that which was beyond my immediate environment. I was able to see the world through different eyes; books took me beyond the hills of the Midlands to a world of opportunities. That exposure fuelled my drive to explore.

As a child I had an insatiable curiosity and quickly learnt four languages. I loved the technical world; I had to understand how school subjects apply to the real world. I also enjoyed reading literature such as Shakespeare and Cry the beloved country. As a child I had a deep love for mathematics and it became a subject that I was naturally good at it. I read Aristotle, Socrates and Plato before and throughout my adolescence. I lived on a farm so there wasn’t much else to do.

The first theory I was enchanted with, was the theorem of Pythagoras. This was part of the syllabus but I always wanted to know more. Philosophy and science also got me into trouble when I started believing in God but not in religion. I was somehow viewed as a rebel, not a believer but a questioner.

How has the CFP® designation worked for you?

‘Ignorance is bliss’ you don’t realise what you don’t know until you start delving into subject matter and understanding technical dynamics. I have a high regard and deep respect for people who have pursued the designation. This

career path is vital, particularly in SA where there are high levels of financial illiteracy. The financial advisory world is complex. Being part of Liberty as a product provider, the challenge for us it to understand the plight of advisors in their quest to enrich their clients’ lives. Secondly we seek to continually create products that are right for their clients. Lastly the designation enabled me to advance in my career and also to walk in the shoes of an advisor and understand the challenges they face.

what personal investment has contributed to the level of success that you have reached?

Invest in yourself through hard work and education. Get your paws grubby. Understand how to make things better, your love for what you do will carry you. I was committed to earning my stripes and understanding where I wanted to be and what I wanted to do. I did that with rigour and passion. I always wanted to understand everything in-depth. This attitude has always been with me and I hope to die with it.

what mistake have you seen amongst your peers that you have been able to rise above?

I have seen that my peers and young graduates set themselves monetary goals, and have a higher appetite for immediate gratification. This elicits unhealthy emotions and unhealthy behaviour. Ultimately unrealistic goals leave you deflated and demotivated. The feeling of disappointment derails most youngsters and can lead to destructive behaviour. Most environments require hard work and perseverance.

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Most career choices, even from high school, are driven by the amount of money one could earn, are you suggesting that monetary goals are irrelevant?

I think monetary goals are important but it must not be the be-all and end-all. Being financially free and independent is one of the greatest goals of most individuals, and even though it’s rarely achieved, it is certainly a healthy goal. If a youngster approached me today and told me they wanted to be a financial planner because they want to be rich overnight, I would tell them that they should reconsider. When you are a CFP® professional, you invest in people; you invest in lives. You deal with:

• The corporation who needs retirement funding for their employees who ordinarily would not plan for retirement on their own.

• The retiree who needs help managing their money, so that it lasts them for the remaining days of their lives.

• The orphans who have lost parents and need someone to manage the inheritance, so that they can get a decent education.

So to sum it all up, this is a people business. You invest in people and they in turn will invest in you. Financial success will then automatically follow.

In your opinion, to what extent do consumers value the concept of financial planning?

Consumers are driven by bells and whistles, and you may find that even the perceived

financially independent crowd are still driven by immediate gratification. The challenge is to help clients understand what the best sustainable solution is for them. Consumers are still bought with a free purse, membership and movie tickets. They don’t see the real value of what they are buying. I think it is important for clients to understand what they are buying and how this meets their needs. Incentives are good because they attract and secure membership but the consumers must also be aware and have a full understanding of what it is they are really paying for.

Financial firms have a role to play in improving public trust. Things like communicating in plain language and educating consumers about financial freedom can make a difference.

what personal sacrifices have you made to further your career?

As a young adult I worked and studied concurrently while my peers were enjoying their lives and the privilege of attending university. I was fortunate to have a supporting husband who encouraged me along the way. I could have just worked and not studied, that way I could have absorbed more personal time into having fun. In hindsight though, it saved me a lot of trouble because I became more involved in my career and developed a deeper love for it.

where does your internal drive and strong internal locus of control stem from?

I have always been curious, the thirst and satiation for that curiosity never ends. The more I know the less I know. I have been like this for a very long time. As a technical person I had a deep interest in what drove people. As I child, I looked at the world and wanted to understand what actually dictates the inequality. Observing that some people live in wealth while others live below the line of poverty, I knew that I wanted to have a better life for my family. The secret truth to wealth, aside from living within your means, budgeting and investing is self-belief. Dream and believe you can do it. Most people will tell you that, but I must admit that it is one of the most difficult things to do. Realism must not be in your way, the psychological boost must kick in.

which risks have reaped the biggest rewards for you?

Venturing into the sales environment has allowed for growth, the opportunity to negotiate, influence and to physically receive the cold face of clients. Sales is risky as your entire worth is dependent on whether or not you can close a deal and how much value you bring to the organisation. This has been the most satisfying area for me because I have been able to influence clients and I continue to see tangible results. Distribution and sales drive any business from a growth and sustainability perspective.

which philosophy do you adopt?

I have never stopped to think about it. I am committed to doing what I love. You may think this is a luxury but it is not. It is my beginning and end point. I refuse to do something that I can’t put my heart and soul into. I love the fact that I can convert my technical ability to assist people and change lives. This is the biggest motivating factor for what I do. For as long as I can still find tangible evidence to support what I think, I can apply myself in anyway. My fundamental philosophy is to understand what it is you are doing and to do it to the best of your ability.

As a mother who does not follow religion, how does this affect the raising of your kids?

I believe in God. I believe in a strong value system and it is something I impart to my kids. I teach them to do what is right and not what is prescribed. I raised my two gorgeous sons by explaining cause and consequences.

Day after day, you witness their tail-wagging devotion. They lend their big, brown eyes to safely show their owners the world. Once again proving that the things you trust most never stop working to earn it.

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Day after day, you witness their tail-wagging devotion. They lend their big, brown eyes to safely show their owners the world. Once again proving that the things you trust most never stop working to earn it.

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Yashika Rambujan

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Region – KwaZulu-Natal

Position - Agency Manager at Liberty

Yashika Rambujan, CFP®

Age - 33

So tell us about your role at Liberty. what are you really involved in?

As the agency manager at Liberty, I manage a team of approximately 33 financial advisors. My team composes of young advisors who are brand new to the industry right up into those who have been in the industry for over 20 years. Our branch is a very seasoned and experienced branch, with a wonderful group of people. I manage the sales, production, development and training aspects of the branch as well as HR, compliances, etc.

And what led you to choose this career as a CFP® professional?

Well now, that is a very interesting question. A lot of people talk about where they are in life as a result of their own design and some may feel that fate had something to do with it. I believe the view of the latter. I acquired a law qualification and was a non-practicing attorney. One day by a fleeting moment, I noticed an advertisement in the newspaper to join the financial planning industry. I decided to send through my application and have been happy and content ever since. Joining the industry was not something I intended. My story is not of someone who was at school and decided they wanted to be a CFP® professional when they grow up, let alone join the financial planning services industry.

So my destiny unfolded and I feel privileged to be

Yashika Rambujan

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young and my mother-in-law had passed away. So I endured some sacrifices.

The philosophy that keeps me going is knowing that in order to achieve great things, one must execute actions that those around you may not be so keen to take on. I have always wanted to stand out of the crowd in a positive way. What drives me is the need to tackle challenges and achieve my goals. I remember holding my new-born daughter in one hand, and preparing for exams with a book in the other. Looking back I ask myself what compelled me to do that but I guess it is knowing that life is short and we always have to try and excel in what we do with the short time we are given on earth.

what mistake have you seen amongst your peers that you have been able to rise above?

I wouldn’t call it mistakes but lessons that have not been learnt yet. Robin Sherma is one of my favourite authors; he says that the purpose of life is a life of purpose. I feel that young professionals struggle to remain in an industry because they may not know where their passion lies. Even though my entrance into the industry was by default, I quickly realised this is what I am passionate about and could excel in. Young professionals lack staying power because they do not have the reliance to overcome challenges.

I am also fortunate to come from a good background where my parents invested time in me and instilled good values during my upbringing. My mom and dad are my inspiration. Both parents did not have a matric but made sure that my siblings and I attended university. My family support has been tremendous throughout my career. I come from a good value system and this reflects in my work ethic and personal life.

what is the most fulfilling part of your job?

Seeing growth in my advisors. Seeing them being moulded into CFP® professionals and adding value to the lives of their clients. I also feel fulfilled when someone thanks me for my contributions to their growth.

which risks have reaped the biggest rewards for you?

Answering the ad in the paper! Making a bold career change. Being in legal became a comfort zone so the career change stretched me and enabled me to be a better person.

How would you describe brand Yashika?

Professional, knowledgeable, has good values and strongly believes that knowledge is power!

bounds. Previously when you had conversations with people informing them of being a financial planner, they saw this as being synonymous with broker and therefore could not quite understand the prestige of the profession. I acknowledge the great work FPI has done to elevate the profession. For any profession to exist I think a professional body is important.

I appreciate the mandate of the institute such as ensuring the proficiency of financial planners by exams and continuous professional development. Ultimately the true beneficiaries of your engagement with the professional body you belong to and your commitment to CPD, are your clients who will have confidence in knowing they are working with a trusted professional.

How has the knowledge that you have gained and the experience as a CFP® professional rewarded you personally?

Phenomenally! Coming from a legal environment, when I first joined the financial planning industry I joined via the bank. I remember colleagues talking about investments, estate plans, retirement planning and I knew very little about it. As I grew within the industry my knowledge enhanced and then I began to understand this holistic concept of financial planning.

Achieving my academic qualifications and also pursing the CFP® designation was a very integral step in the process of me gaining insight. I don’t think I would have been able to adequately advise my clients and progress in my career without the qualification and designation.

what are the worthwhile challenges that have impacted on your personal career growth?

The one that stands out would be completing my post graduate qualification in financial law. When the exams were around the corner I began to feel ill. I visited the doctor and found out I was pregnant with my second child – so that was not planned (laughs). My morning sickness was overwhelming and I had to make a decision whether to take a break in my studies or carry on. I decided to plough through because I am a strong believer of finishing something you start.

A few months later I had my baby and the university (University of the Free State) congratulated me for being one of the top three students in my class. I have always had challenges around the time of completing of my studies. Even when I completed my CFP®

designation board exam my first child was still

part of such a wonderful profession. Wonderful in terms of its lucrativeness and the level of professionalism the profession now embodies. I have observed that it is slowly becoming a preferred career that the younger generation are aspiring to.

So since taking that leap of faith, I have remained in the industry and have taken roles with a legal focus, as that is where my natural flair is. I have also ventured into the sales aspect within the organisation because I enjoy the face to face interaction with clients and also motivating young professionals to perform.

what would you say to a high school learner who wanted to become a CFP® professional and didn’t quite understand the rewards of the career?

I would take into consideration that their perceptions of reputable careers would be medicine, legal and charted accountancy and use that to help them understand the concept of financial planning and what makes the profession as desirable as the above-mentioned careers. I would also mention that the career is one of highest ranked career choices internationally. I would tell them that this is the perfect career for people who have the desire and are passionate about changing people’s lives and empowering them beyond today.

That being said I think that the profession from a few years ago when I entered the industry to where it is now, has moved in leaps and

Warren Wheatley

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Region - Gauteng

Position - Managing Principal and Co-founder of TSS Capital

Warren Wheatley, CFP® Age - 35

In a nutshell tell us how you got to where you are now?

Since standard 8 I have always wanted to be a professional. I considered engineering, medicine and charted accountancy. Six weeks prior to finalising that decision I read an article in the Business Times that stated that chartered accountancy was the highest paying career choice. Looking back, I am a little embarrassed of that now, but it was the major contributor to making my decision. At that time my focus was being financially secure and earning as much I could. I chose financial accountancy because of the financial rewards that it promised.

I completed my undergrad at Wits and worked part time doing my articles while completing

my honours as full time study became unaffordable.

I decided after ‘mastering’ auditing it was time for a career change. I joined Alexander Forbes as a retirement fund consultant and that is where my financial planning career started. Alexander Forbes acknowledged the quality of the CFP® designation early on and insisted that their consultants pursue the CFP® designation. In my tenure at Alexander Forbes I grew quite quickly. My career progressed and I later joined Absa as a wealth manager and investment banker. After two years with Absa, I felt confident that I had developed a complementary skill set and required expertise to set up my own financial services practice. My practice is a year old now.

what were the push and pull factors that led you to set up your own practice?

Push factors:The push factors out of a corporate environment were the bureaucracy and red tape required for organisations to do business within the legislative requirements. The processes and

Warren Wheatley

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controls required to ensure compliance in large businesses predictably slow down delivery which becomes frustrating when you are a service orientated individual with an entrepreneurial flair. I’m not suggesting that you can cut corners in smaller organisations but they lack the rigid structures often found in large corporates.

I have always had a desire to provide clients with a comprehensive solution to all of their financial needs. This desire could at times be limited by the organisations lack of technical ability in that area or simply not having the appetite to offer that service. Large corporates, for example, have difficulty in quickly concluding distribution agreements with suppliers who are competitors as well, which could limit the range of solutions available to the planner.

These were some of the reasons that prevented me from fully servicing the client. I saw a niche in the market for a wealth management business with true open architecture and the ability to have meaningful and value offering partnerships, where clients can be solutioned holistically.

Pull factors:I was a reaching a phase in my life where I needed to be more flexible. I have a son who started living with me. I wanted the freedom to have breakfast with him before school, take him to school, and attend cricket and soccer matches. I am now able to catch up with work at night while he is asleep.

Venturing into entrepreneurship gave me that freedom and flexibility. Also there are no limits to what I could achieve. When you work in an organisation you set your expectations

what mistake have you observed amongst young professionals that you have been able avoid?

One of the mistakes I have successfully avoided was job hopping for a higher salary. I was at Alexander Forbes for more than 10 years. I left Alexander Forbes to learn a new industry and not necessarily make more money. Most young professionals move on for a promise of a higher salary before they have had a chance to fully understand their job, the division they work in and the company. It is important to understand not only the small space you occupy, but the full value chain and how you fit into the bigger picture.

I am not advocating that one should be stagnant in any organisation. In my tenure there was visible and tangible evidence of growth.

Young professionals also get complacent with regards to continuous professional development. Read, study, research to keep yourself relevant. Keep yourself sharp. Learn things, when the budget speech is released don’t just read the summaries. If you prefer summaries then at least read a few different ones so that you will be able to pick up any omissions. Stay at the cutting edge of the industry.

why do you value the CFP® designation?

When I first pursued it, the designation was a requirement at Alexander Forbes. In today’s environment one needs to invest in themselves through education. I consider holding the designation an asset that keeps generating income for me. It’s vital for this career. A postgraduate education is important.

The other reason why I valued the CFP® designation even earlier in my career was that other respected individuals in the company were designation holders so it was something to aspire to.

within certain parameters, for example, salary increases in line with inflation, and bonuses will be a percentage of your total cost to company. Your expectations and aspirations are inherently limited in that environment for a number of rational reasons. By starting my own practice, those limitations were stripped down completely. From day one I would be in charge of my own destiny.

what are the worthwhile challenges that have impacted on your personal and career growth?

I have been quite fortunate that throughout my career I have had bosses who others have viewed as dictators or tyrants because of their exacting and demanding standards. I however chose to view them differently. These were individuals who were tough, and crucified you for mistakes and demanded your best efforts at all times. I appreciated them for their unwavering and unapologetic insistence for excellence and so I developed superior technical skills from that experience. One of my bosses was so demanding that I remember doing three to four drafts of a document before handing it to them for review.

When I joined Alexander Forbes as the new guy, I would hear that the last five people in my role only lasted 6 weeks. My former bosses were challenging to work with; they humiliated you and broke you down. I don’t think it was intentional it was just their teaching style. Fortunately my make-up could endure that type of training. My tenacity and sense of discipline pulled me through. I had ambition to not only strive for more but to look beyond the present difficult circumstances.

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what do you think your clients value most about you?

I think my clients value that I am thorough, and obviously my expertise. In my advice, I bring comprehensive and well-researched solutions. I have strong conviction in any recommendation. I never confuse my clients with too many options where they can find themselves dyslexic with choices.

My solutions are specifically tailored to the clients’ needs. I learn about my clients, this may be time consuming but I feel it is important to know their aspirations, lifestyle issues, their fears, their current and prospective financial situation. Besides the financial rewards, I am open to the intangible rewards that this career choice brings. The intrinsic sense of achievement, feeling good about solving someone’s problems and other critical issues. This career could offer you none of these things if you are not open to them.

Do you expect the number of people seeking advice from financial planners will increase, decrease or stay the same within the next five years?

I think the market is complex. What I would like to see is more and more people seeking financial advice, not because the market is becoming increasingly complex, but because they understand the value of advice. This is one of the critical issues we are tackling at FPI. The challenge at hand is that some consumers have a bad experience with a product salesman. By increasing the number of professionals, we want to enrich the experience of receiving financial advice for consumers.

Tell us about the volunteer work you are involved in at FPI.

I volunteer as a director and serve on the board. A donation of time and expertise. Initially I thought it would be time consuming but so far I’m finding it quite manageable. I also hope to open my practice for the Financial Planning Week. I also volunteer to do ad-hoc requests that involve my expertise.

Prior to my close involvement and engagement with the professional body, I did not appreciate some aspects such as the vision of FPI, and how dedicated the team was to achieving that vision - ‘Financial planning for all’.

One of the sub-tasks of achieving that is having a professional community of qualified and ethical financial planners who are out there servicing the public. This requires that these professionals belong to a professional body. I knew that this was the goal but I didn’t realise how critical our goals are.

Secondly I did not realise how many people were committed to realising these outcomes. This was highlighted by the skill set and calibre of the members of the board. The amount of time and effort, and how freely available they make themselves, was inspiring. I felt humbled to be part of something this great – making sure that people have access to qualified financial planners.

I always knew how professional and passionate the staff was through my previous interaction with them, however I never had a full appreciation for the extent of effort required to keep this machine running.

Your philosophy in life?

• Fortune favours the brave.• The more I practice the luckier I get.• If you are not part of the solution you are

part of the problem.

which risks have reaped the biggest rewards for you?

So far it would be starting my own business and investing personal capital to realise that goal. I think I am unemployable now. I don’t think I can return to a restricted routine of a nine to five environment. I take risks when servicing clients - financial planners don’t explore alternative solutions often enough. They would rather stick with what they know.

If they understand the Allan Gray balanced fund, which is all they recommend to clients, without exploring and technically testing it themselves, ultimately, the client will bear the brunt.

How would your son describe you?

It would depend on his last interaction with me. Sometimes we are buddies when we play PlayStation together – he would say my dad is great. If he brings a bad report home or has done something he shouldn’t have, he would say that I am mean and nasty. Overall he would describe me as ambitious, hardworking and committed.

His dream, by the way, is to work for me and take over the business one day.That’s refreshing; the norm is the parent pushing the child to take over the business.We were busy putting our website together and he was helping me draft the corporate profiles of the directors and staff members. He is nine and actually wanted me to include his picture to say that he will be the future CEO.

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FPI NEWS

Meet FPI’sadvisory panel

The Certification Advisory Panel provides input and advice on certification best practice, including FPSB’s certification standards. The Marketing and Communications Advisory Panel’s

objective is to regularly advise the executive on appropriate marketing and communications’ strategies that can further the overall mission and strategic objective of the institute.

Members of the Certification Advisory Panel are:

Wouter Fourie, CFP®

Wouter is the CEO of Ascor™ Independent Wealth Managers; he is a qualified financial planner with over 16 years’ experience in the field of comprehensive financial planning and wealth management. Wouter is also a qualified professional accountant (SA) with postgraduate qualifications in advanced taxation. He has been invited as a guest speaker on Kyknet TV, Summit TV, RSG Radio and various other radio stations, and is a guest lecturer at the University of Pretoria. He is the vice chairperson of the FPI Northern Regional Committee.

Vanessa Kruger, CFP® Vanessa is the operational risk manager at the Standard Bank Financial Consultancy and has over 11 years of experience in risk management. In July 2013, Vanessa started working at Standard Bank Insurance Services, monitoring key operational risks, governance, incident management and various other disciplines. She holds a B.Com degree from the University of Pretoria and a Postgraduate Diploma in Financial Planning from the University of the Free State (UFS). In 2004, Vanessa was awarded the Blue Star Award.

The Financial Planning Institute of Southern Africa recently formed two advisory panels, namely: the Certification, as well as the Marketing and

Communications Advisory Panels.

Anton Swanepoel, CFP®

Anton has over 20 years’ experience in the financial services field. He is the co-founder and director of Amity Wealth, an independent network for professional investment advisors. He is a part-time lecturer for the University of the Free State’s Centre for Financial Planning. He also lectures at GIBS in association with the University of Pretoria, Marcus Evans as well as Educor, and is an accredited training provider. Anton is a CERTIFIED FINANCIAL PLANNER® professional and was one of six finalists for the FPI/Personal Finance Financial Planner of the Year competition in 2003. Anton is currently busy with his doctorate in investment planning (LLD).

Wessel Oosthuizen, CFP®, FPSA®

Wessel is an advocate of the High Court of South Africa and the general manager for the FPI Centre for Professional Development. For the past eight years, Wessel has served on numerous international committees as chairperson or member. Since 2006 he has served as a member on the Financial Planning Standards Board (FPSB) Certification Committee which sets international standards for CFP® professionals. Wessel is an honorary editor of the South African Financial Planning Handbook and managing editor of the Estate Planning and Fiduciary Services Guide, 2013.

From left (back row): wessel Oosthuizen, Lelane Bezuidenhout (FPI), Sherma Malan (FPI), Godfrey

Nti (FPI). Seated from left (front row): wouter Fourie, Vanessa Kruger, Anton Swanepoel

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members

advisory panel

Members of the Marketing and Communications Advisory Panel

Kim Potgieter, CFP®, is a director at Chartered Wealth Solutions, a financial planning practice specialising in retirement planning. Kim is also a non-executive director at FPI, and one of only two accredited financial life planners in South Africa. Kim established an online resource for retirees, Retire Successfully and the Women in Finance Forum, which is a mentoring network for female financial planners.

Yolande Reynecke, CFP®, studied through UNISA and obtained a B.Com in (2002). From 2000 to June 2010 she worked for a successful family business specialising in educational products and recruitment for BAE Systems. She also worked at Standard Bank Financial Consultancy in July 2010 to August 2013 as a senior financial planner. She is currently self-employed and is completing her MBA at Henley Business School.

Wouter Fourie, CFP®, is the CEO of Ascor™ Independent Wealth Managers. He is a qualified financial planner with over 16 years’ experience in the field of comprehensive financial planning and wealth management. Wouter is also a qualified professional accountant (SA) with postgraduate qualifications in advanced taxation. He has been invited as a guest speaker on Kyknet TV, Summit TV, RSG Radio and various other radio stations and a guest lecturer at the University of Pretoria. He is the Vice Chairperson of the FPI Northern Regional Committee.

Warren Ingram, CFP®, is the co-founder of Galileo Capital. He was the FPI’s Financial Planner of the Year in 2011 and the FPI Media Award winner in 2013. He has been a financial planner since 1996 and a CERTIFIED FINANCIAL PLANNER® professional since 2005. He authored Become Your Own Financial Advisor and is a regular guest on CapeTalk and 702 Radio.

Natasja Norval-Hart, CFP®, has over 15 years’ industry experience and is a current member of the FPI Board of Directors, the FPI Strategy Board Sub-Committee, FPI Remunerations Board Sub-Committee and Chairperson of FPI’s Audit Committee. Further to a B.Com Economics degree she holds an Advanced Postgraduate Diploma in Financial Planning. Natasja is the executive head: financial planning, at Sasfin Financial Advisory Services. In 2010, she was awarded the prestigious FPI Financial Planner of the Year award.

Barry O’ Mahony, CFP®, came to South Africa from Ireland in 1993 on an Oxbridge Rugby Tour. He joined Appleton, the asset manager, as a portfolio manager and was later head of client services. After five years he joined Brait Unit Trusts as the marketing director and was then made head of practice development of iPac South Africa. Barry founded Veritas Wealth Management in 2004. He holds a Bachelor in Economics, a Diploma in Business Administration, a Diploma in Social Studies (from Oxford) and a Diploma in Financial Planning.

Gerald Mwandiambira, CFP®, is the principal wealth manager of a financial and business consulting company that offers independent advice to clients. He is also a personal finance and stokvel writer for a women’s interest magazine in South Africa, and host of a financial education TV show on Business Day TV. Gerald is currently writing a financial education handbook for consumers.

Hardi Swart, CFP®, obtained a B.Com Management Accounting degree at Stellenbosch University and a Diploma in Business Consultation at Stellenbosch University in co-operation with the Syracuse University in New York. He completed his Postgraduate Diploma in Financial Planning at Stellenbosch University. Hardi joined Autus Wealth in 2010. He is a client liaison, responsible for marketing, and is a valued member of the financial planning team.

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FPI NEWS

The Financial Planning Institute (FPI) is pleased with Financial Planning Standards Board’s (FPSB) recent announcement of

the appointment of Gerhardt Meyer, CFP® as the chairperson of FPSB’s Regulations Advisory Panel.

Meyer, who is a former FPI chairperson, has served as a committee member on FPSB’s Regulations Advisory Panel for the past four years, and will now lead this distinguished panel as chairperson until 2016. He holds a BCom (Law) Degree and an LLB Degree from the University of Stellenbosch. He is also a CERTIFIED FINANCIAL PLANNER® professional, and an advocate of the High Court of South Africa. He currently heads up the legal department at Old Mutual’s Retail Affluent division.

“I am honoured and humbled by my appointment. I look forward to working with

the FPSB Panel in implementing all set out objectives, and in driving the profession’s growth strategy in line with the global financial planning standards,” added Meyer.

FPSB’s Regulations Advisory Panel is responsible for recommending strategic direction to FPSB’s board of directors and the FPSB Council on regulatory and legislative matters relating to the financial planning profession globally. This year the panel will focus on achieving the following objectives:

1. Identifying existing FPSB member organisation regulatory engagement strategies.

2. Creating a database that can be used by existing or new FPSB member organisations to develop territory-specific regulatory engagement strategies.

3. Identifying issues for which FPSB may need to develop a global policy or position.

4. Developing a document that explains FPSB’s position on financial planner remuneration to external audiences.

5. Defining the distinction and value of financial planning (both distinct from, and inclusive of, financial advice).

Noel Maye, CEO of FPSB commented, “FPSB welcomes increased recognition by regulators and legislators for the public service role of CFP® certification and FPSB member organisations in having financial planning recognised as a profession globally. FPSB relies on the work of its Regulations Advisory Panel, under the leadership of Gerhardt Meyer, to guide the organisation’s development of strategies and programmes to effectively engage regulators and governments on partnering to oversee financial planning as a profession around the world.” Godfrey Nti, FPI CEO added, “We are pleased with the appointment of a South African to lead this panel of experts from around the world.

Gerhardt has a deep wealth of experience in the regulation of the financial planning profession, both locally and internationally.

His appointment is an achievement for the South African financial planning profession, and uniquely provides a local connection to the global financial planning standards that will help elevate the current level of the practice of financial planning profession.”

It really does start with you. The status and honour of the CFP® designation is up to the certificants to celebrate and promote. How

do you know you have been introduced to a CA, an advocate or a doctor? They take it upon themselves to inform you. So why should the CFP® designation be different? Essentially, it is the combined efforts of all CFP® professionals that will help to make a difference in increasing brand awareness of the CFP® mark amongst consumers.

Doing your bit to bring awareness to the CFP® designation is easy:

Letting others know• Introduce yourself to people as a CFP®

professional. • Educate your fellow colleagues about the

value of being a CFP® professional and encourage them to visit www.fpi.co.za.

• Inform your clients of the value you bring as a CFP® professional.

To find out more about this programme, please email community@fpi.co.za.

FPSB appoints Gerhardt Meyer as Regulations Advisory Panel Chairperson

Volunteer•Mentor a CFP® certification student.• Volunteer at school and university

career events and promote your CFP® certification and your pathway to achieving the global symbol of excellence in financial planning.

•Get involved in your local community via schools, charities and other community activities.

Publicise the CFP® mark• If you write a blog, talk about your CFP®

professional status and other interesting aspects of the industry for your clients and colleagues to read.

• If you write editorial for newspapers or newsletters, be sure to include the CFP® mark with your name as the author.

•Mention the CFP® mark with your name in print, radio, yellow pages or TV advertising.

•Make sure your biography explains that you are a CFP® professional.

Entrench CFP® mark into your work life•When recruiting planners in your practice,

make CFP® certification a mandatory requirement.

• Frame and display your CFP® professional certificate in your office or boardroom.

•Display the CFP® mark logo on your office signage.

•Highlight what CFP® certification means on your website.

Invest in your personal brand•Continue to seek to grow and invest in

yourself and your career.• Attend CPD events and keep abreast of

industry changes.

Know your professional body• Keep yourself updated with FPI news.• Let us know which benefits you aspire to

have.•Get involved with FPI programmes.• Become part of the community of FPI

professionals.

The ‘It starts with me’ programme

YOU ADHERE TO THEHIGHEST STANDARDS,YOU PUT YOUR CLIENTSINTERESTS FIRST

YOU ARE AN ACCOmPLISHED CFP®

PROFESSIONALLET PEOPLEKNOW

YOU ADHERE TO THEHIGHEST STANDARDS,YOU PUT YOUR CLIENTSINTERESTS FIRST

YOU ARE AN ACCOmPLISHED CFP®

PROFESSIONALLET PEOPLEKNOW

30

About Financial Planning WeekThis is an ongoing effort by the Financial Planning Institute (FPI) to make financial planning a fundamental aspect of South African’s lives. It cannot be done in isolation, and is a continued effort, celebrated by the industry and other key role players. The aim of this initiative is to:

• Raise awareness of the importance of financial planning and provoke a call to action to all stakeholders for the benefit of all South Africans.

• Encourage industry members to promote the value of financial planning to their clients.

• Provide a platform for professional financial planners to discuss the necessity and progress of a financial planning profession.

• Encourage consumers to take positive ‘planning’ action.• Promote the benefits of comprehensive financial planning to South

Africans, other financial planners, financial services providers and regulators.

• Promote the value of the CFP® designation to the industry and public. • Differentiate the nature of financial planning from that of product -

oriented financial advice.

Financial Planning

Week

Ways you can get involved to help promote

The 2014 date for the Financial Planning Week has been set. This initiative will be held from 25-29 August 2014.

FPI NEWS

How to get involved• Reach out to your friends, family, clients and colleagues about

the importance of Financial Planning Week and why they should spread the word about the importance of professional financial planning advice.

• E-mail your clients a link to the Financial Planning Week website, add the link, or even insert the Financial Planning Week logo into your email signature.

• Get social on Twitter, Facebook and LinkedIn and remember to use #FPW2014.

• Comment on financial planning blogs and online articles and tell people about why you think financial planning can benefit South Africans.

• Hand out copies of consumer brochures which highlight the importance of financial planning to your clients and colleagues.

• Host information sessions on subjects related to financial planning.• Host an FPI MYMONEY 123™ session.• Provide free financial planning consultations during that week.

For more information or to volunteer, e-mail volunteer@fpi.co.za or contact 086 1000 FPI (374).

32

Next generation

certificationstandards

Contribute to the critical discussion on enhancing standards.

As the pre-eminent standards-setting body for competent and ethical financial planners, the Financial Planning Institute (FPI) benefits the public by creating

and upholding rigorous professional standards for the financial planning profession, with the CFP® mark as its symbol of excellence.

The launch of the FPI Strategy in 2012 marked the culmination of nearly two years of effort

devoted to formulating a comprehensive, long-range strategic plan to provide on-going direction to FPI. This plan ushered in a new era of professionalism in financial services and was designed to move FPI to pure professional body status. This was achieved when the South African Qualifications Authority (SAQA) formally recognised FPI as a professional body at a prestigious event where the Minister of Education, Dr Blade Nzimande, awarded FPI a certificate of recognition.

In his foreword to the FPI Strategic Plan, Godfrey Nti, CEO, stated that in order to achieve the strategy, the institute, as a professional body, will continue to set higher standards for the financial planning profession. The Next Generation Certification Standards was developed with this strategic thrust in mind, and FPI have since launched a countrywide consultation process to elicit members’ and industry players’ input on how the standards should be lifted.

FPI NEWS

33

FPI is the only licenced body in Southern Africa that may award the CFP® designation. Financial Planning Standards Board (FPSB) is the licencing authority and audits FPI on a regular basis to ensure that it adheres to the prescribed standards. During the 2013 audit, FPI achieved 96 percent in its audit – the highest results ever achieved, worldwide. Apart from the strategic premise, FPI also had to evaluate FPSB’s strategies and determine how, and to which extent, it will be pro-active in implementing these.

When drafting the discussion document, downloadable from the FPI website, the following questions were considered:

• Should FPI increase the certification standards, and if so, what would the result be of increasing the standards on the reputation and status of the CFP® designation?

• Should FPI recognise the knowledge of candidates that belong to other professional bodies and grant them access to the Professional Competency Exam (PCE) without further studies? If so, which bodies or designations will be considered?

• Should the Mentorship Programme become compulsory for any new entrant to the financial services industry that would like to become a CFP® professional?

• Should FPI, apart from increasing the examination standard and experience

vetting, bring in the submission of a financial plan by a candidate, to evaluate the candidate’s ability to practice financial planning?

The Next Generation Certification Standards discussion document allows for some debate around the following CFP® certification specific matters:

1. The restructuring of the current FPI certification requirements, the fundamental pillars of certification being:

• Education – the certification department embarked on expanding the learning outcomes into a set of specific and detailed outcomes, per financial planning component.

• Examination structure – introducing a multi-tier approach to the CFP® professional competency examination in the form of a closed book, multiple choice PCE1 exam; an open book, constructed response PCE2 exam, as well as the evaluation of a financial plan. Incorporating a challenge examination for specific designated professionals or applicants with relevant qualification and senior experience in financial planning.

• Experience evaluation – some criteria are established to ensure fairer and more defensible experience evaluation.

Introducing the compulsory Mentorship Programme for all new entrants to the financial planning industry and, in support of this, award mentorship centre status to recognised financial planning employers.

• Ethics – a candidate will be required to attest to their abiding by the FPI Code of Ethics and Professional Responsibility upon application for membership on any level.

2. A discussion around the different certification standards for FSA™ certification and CFP® certification.

3. Reinstatement and re-certification requirements.

4. Specialist designations and higher qualifications.

The consultation process will run from April to July 2014 and all FPI members and employers of CFP® professionals are invited to contribute towards this critical discussion topic. The discussion document may be downloaded on the FPI website,www.fpi.co.za, and feedback or questions should be submitted to certification@fpi.co.za on or before Thursday, 31 July 2014.

The FPI certification department is currently compiling a countrywide road show and would welcome your invitation to discuss this document at your own premises.

34

According to recent research results, CERTIFIED FINANCIAL PLANNER® professionals are more productive, generate higher revenue and reduce corporate

risk. These results revealed a very strong endorsement of the CERTIFIED FINANCIAL PLANNER® certification by companies of all sizes in the financial services sector.

Ninety-two firms from 12 territories, including: Australia, Austria, Brazil, Canada, China, Germany, India, Ireland, New Zealand, Singapore, South Africa and the United States, representing the financial planning, banking, insurance, brokerage and employee benefit sectors and a broad range of client wealth, were surveyed.

The key findings from the South Africa survey include: CFP® professionals equals productivity

• 80percentoffirmssaidthatCFP® professionals see a higher rate of growth in assets under management compared to those who do not hold the designation.

• 80percentoffirmsbelievethatCFP® professionals generate higher revenue, with 60 percent reporting that their business revenue actually increased as a result of employing CFP® professionals.

CFP® professionals make great employees

• 80percentoffirmsreported that CFP®

Research shows that 80 percent of firms say CFP® professionals positively impact their bottom line and significantly reduce corporate risks and complaints.

CFP® professionals

professionals average longer terms of employment.

• 80percentoffirmsseehigherratesof career advancement from CFP® professionals.

• 75percentoffirmsexpecttoincreasethe number of CFP® professionals in their employ over the next 12 months using a combination of hiring and actively supporting their existing financial planners/advisors to achieve the certification.

positively impact bottom line

FPI NEWS

35

CFP® professionals lower compliance risks and complaints

• 80percentoffirmsreportedthatemploying CFP® professionals lowers compliance and legal risks compared to financial planners/advisors without this credential.

• 60percentoffirmssaidthatCFP® professionals have fewer complaints laid against them compared to those who are not certified.

CFP® professionals ensure satisfied clients

• 80percentoffirmsmentionedthatemploying CFP® professionals has a positive impact on their clients’ satisfaction and retention.

• 80percentoffirmssaidemployingCFP® professionals help differentiate their business from competition.

• 60percentoffirmsconfirmedthattheywere experiencing a growing demand among high net worth clients to be serviced by CFP® professionals.

Godfrey Nti, Financial Planning Institute of

Southern Africa’s CEO says, “The results of this survey says only good things about the increasing pre-eminence of the CFP® designation as a symbol of excellence in financial planning and advisory services.”

“With an increasingly competitive landscape, coupled with the recent spate of regulations premised around the fair treatment of customers, financial planning and advisory companies of all sizes are starting to seriously rethink their business models in favour of client-centricity. The enormous value that can be provided by CFP® professionals in this effort is perfectly captured in the results of this survey,” adds Nti.

Furthermore when comparing prospective CFP® professionals against financial planners/advisors without certification, the research revealed that:

• 80percentoffirmsviewedCFP® accreditation as favourable when employing financial planners/advisors.

• 60percentofthefirmssupporttheirfinancial planners in maintaining CFP® certification.

• 40percentoffirmsofferrewardstofinancial planners/advisors attaining CFP® certification.

David Kop, CFP®, FPI’s head of membership and corporate relations says, “Through our FPI Approved Professional Practice™ and FPI Corporate Partner™ firms’ programmes, we are working closely with these signatory firms to help establish the CFP® mark at the heart of their operations, align their internal training programmes with FPI’s high certification standards and provide hands-on support to their employees on their journey to becoming CFP® professionals.”

“The results of this survey should serve to reassure these companies that they are on the right path and at the same time serve to encourage more companies to foster a stronger brand association with the CFP® mark. It is also clear from the survey results that CFP® certification gives financial planning and advisory professionals a competitive advantage in a very tough industry. If your quest is for a very successful and rewarding career in the financial services industry then CFP® certification is the perfect and logical path to follow,” concludes Kop.

Contact media@fpi.co.za for the full research report.

Since its formation six years ago, FISA has built a strong reputation:

• Membersknowweareactivelypromotingtheirinterests

• ThepublicarechoosingtodealonlywithFISAmembers

• Awarenessoffiduciarymattershasgrownthroughthemedia

• Theauthoritiesareconsultingusonindustryissues

FISAmembershipisopentofiduciarypractitioners,financialplanners,lawyers,accountantsandanyprofessionalwhomeetsourmembershipcriteria.FISAhassignedaMemorandumofUnderstandingwiththeFPI,allowingeachother’smemberstoearnCPDpointsforvariousactivitiesandevents.For the first time, FISA memberscanattendtheFPIconferenceattheFPImemberrate.

FISA making its mark

Join us today! www.fidsa.org.za

ESTATES | WILLS | TRUSTS | ESTATE PLANNING | BENEFICIARY FUNDS

36

Events Calendar 2014

Continuous Professional

ABOUT THE EVENT:Two things that are crucial for all financial planners are practice standards and practice management, as it forms the foundation of any financial practice. At this event we will explore the development of an ethics vision and how the eight codes of ethics principles can be linked to a financial planning practice.The following aspects will be covered:• The future of financial planning in South

Africa in light of the Retail Distribution Review (RDR).

• International best practice principles in business management.Practical implementation of client segmentation.

• Enhancing your client value proposition and increasing your profitability.

•Contingency planning and practical implementation of your contingency plan.

SPEAKERS: Dr Theo Marais, Jon Mackintosh

Dr Theo Marais is an associate at FireSeed. He joined the industry in 1995 with a strong background in corporate tax. He spent two years with then top branch of Southern Life before building an independent financial practice. This he sold in 2012 to pursue his vision of consulting on and developing

training modules in business ethics and practical leadership applications. Currently, Dr Marais consults on ethics and leadership development in addition to lecturing young minds in Stellenbosch and Cape Town, and recently published a book on some of life’s thorny issues, appropriately named Embrace Jou Kaktus!

Jon Mackintosh, managing director at Encore SA, was a stock broking manager at Count Wealth Accountants where he oversaw the introduction of stock broking services to all franchises. He then became state manager for Count, overseeing business in South Australia and Tasmania and was later appointed general manager of Count’s largest subsidiary, Compound Investments. Jon, along with partners Graham Peatey and Matt Fogarty founded The Encore Group with the express intention of providing tangible, real and direct business solutions to financial planning and brokerage firms.

WHEN:22 July Western Cape23 July Eastern Cape24 July KwaZulu-Natal25 July Free State30 July Johannesburg31 July Pretoria

Retirement planning (half day workshop)ABOUT THE EVENT:With one of the top financial planners in the country secured for this event, it promises to be a practical session. Running through the process of retirement planning, Shaun will highlight topics like how to engage with your client and how to use the analysed information to create strategies and make appropriate recommendations to your clients. Shaun will also cover the importance of assisting clients to make appropriate investment decisions with the emphasis on risk and return.

SPEAKER: Shaun Latter, CFP®

After gaining extensive experience in the financial services industry, specifically financial planning, on both a strategic and technical level, Shaun turned his attention to private client advice. Having identified the need for a quality, advice driven business, he founded Quaestor Wealth Management which specialises in retirement and investment planning. Shaun holds an Advanced Postgraduate Diploma in Financial Planning and is a certified Life Coach. He is actively involved as a member of FPI and was a finalist for the 2011 and 2012 FPI Financial Planner of the Year competition.

WHEN:19 August Western Cape20 August Eastern Cape21 August KwaZulu-Natal22 August Free State27 August Johannesburg28 August Pretoria

Practice standards and practice management (half day workshop)

Develo pment

FPI EVENTS CALENDAR

37

Financial Planning and Trusts (half day workshop)ABOUT THE EVENT:This event will consist of two parts. The first part deals with legislation and important court cases regarding trusts. The second part will deal with the implication and impact of legislation on financial planning and the advice we give to our clients. The second half will be more practical in nature and will include some case studies. This half day event aims to give delegates a better understanding of some do’s and don’ts around trusts, as well as the latest in case law rulings.

SPEAKERS: Dr Stefan StrydomGert van den Berg

Stefan Strydom holds a B. Com (Hons), CTA and a B.Com (Law), LLB, LLM, LLD from the University of the Potchefstroom. He is a Chartered Accountant and is an associate director in the Trusts and Estate division of PricewaterhouseCoopers. He has presented at various seminars between 2006 – 2014, on the law of trusts & estate planning, amongst others, for SAICA, FPI and SAIPA.

He also presented on budget reviews at a number of seminars. He is a member of the SAICA tax committee in the Free State.

Gert van der Berg is an associate director at PricewaterhouseCoopers – Estate and Trusts in the Advisory Services Department. He holds a B.CIV., IURIS from the University of Free State and an LLB from UNISA.

Gert has presented at seminars on estate planning, trusts and administration of estates, specifically for organisations like SAICA and various others. He lectures at the University of Pretoria to taxation master’s students.

WHEN: 16 September KwaZulu-Natal 17 September Western Cape 29 September Pretoria 30 September Johannesburg 8 October Eastern Cape 10 October Free State

Member - client get togetherThe financial planner-client get together is a not-to-be-missed event. The purpose of the event is to discuss FPI as a professional body and the importance of using CFP® professionals as financial advisors. Other important consumer issues will be highlighted such as debt, planning for retirement and saving for life goals. This is an opportunity for clients to gain insight on the true value of our members and the esteem their designation holds. The event will be held in October in various regions.

Gert has presented at seminars on estate planning, trusts and administration of estates, specifically for organisations like SAICA and various others. He lectures at the University of Pretoria to taxation master’s students.

ABOUT THE EVENT:The Annual Refresher Workshop will be presented for the 10th year running. The main aim of this workshop is to provide financial planning professionals or individuals like attorneys and fiduciary practitioners, with an update on all legislative changes, court cases, determinations and important info that has an impact on financial advice.

Personal Financial Planning. He co-authors the Financial Advisors Development Series and the Financial Planning Handbook published by LexisNexis.

Marius has lectured at the Universities of the Free State and Stellenbosch and has been training financial intermediaries for over 20 years.

wessel Oosthuizen, CFP®, FPSA®, is an advocate of the High Court of South Africa and the general manager for FPI Centre for Professional Development. For the past eight years, Wessels has served on numerous international committees as chairperson or member. Since 2006 he has been a member of the Financial Planning Standards Board (FPSB) Certification Committee which sets international standards for CFP® professionals. Wessel is an honorary editor of the South African Financial Planning Handbook.

WHEN:11 November Pretoria12 November Johannesburg13 November Johannesburg14 November Eastern Cape18 November KwaZulu-Natal19 November Western Cape20 November Western Cape21 November Free State

Contact usFor further information, please email events@fpi.co.za or contact the FPI events team on 086 1000 FPI (374).

SPEAKERS: Marius Botha, CFP® Wessel Oosthuizen, CFP®

Marius Botha, CFP® acts as editor of the LexisNexis Butterworths quarterly journal, Insurance and Tax. He is also responsible for the annual updates of the LexisNexis Butterworths publication Corporate and

Annual Refresher Workshop (full day workshop)

38

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CLIENT ENgAgEmENT

To successfully connect with someone, you have to connect with them on three levels – mind, heart and gut. With this in mind, here are eight tips that will help you to connect better

with your clients:

Listen and focus on the client

Listen listen listen. I can’t advise a client about anything until I’ve listened to what they have to

By Kim Potgieter, CFP®

tips to connect better with clients

Clients are no longer impressed by analytical facts and numbers alone; they need some kind of emotional connection too. The ability to connect with people is an essential skill to possess – especially when your job involves daily human interaction.

CLIENT ENgAgEmENT

8want to know that they are communicating with someone who is not too different to them, but who knows more about wealth management. We all fundamentally experience the same emotions throughout our lives, perhaps just in different circumstances. Don’t be afraid to talk about lessons you’ve learnt and to show your vulnerable side. It creates a space where the client can share, and is another important element when nurturing trust and building strong relationships.

Treat everyone like a 10

Make your clients feel important. Water down your programmed opinions when it comes to things like beauty, wealth, status, age and race. Treat everyone with respect. Be curious about your clients’ lives and their dreams. Showing a genuine interest in someone’s life goes a long way to making them feel important.

Be positive

It takes a lot of hard work at times, but having a positive attitude makes such a difference when interacting with clients. Make sure your eyes and smile communicate warmth and respect. Try not to pass judgement or to criticise any of your client’s past actions. Remember that attitude is not a feeling you get – it’s a direction you choose.

Communicate clearly

Lastly, don’t assume people will understand what you mean or what you want.

If you are serious about honing your ability to connect, I suggest you read Making the Client Connection by Mitch Anthony, and We all Communicate, Few Connect by John Maxwell.

say. Try to minimise the noise in your head that comes from your life outside of the meeting room, and concentrate on your client with your full attention. It is also important to leave your assumptions at the door so that you start the meeting with a blank slate.

Ask the right questions

You don’t need all the answers, but you do need to ask questions. Often clients are nervous about sharing the details of their life. By asking the right questions, you can lead your client through the conversation and at the same time, focus the conversation and get the information you need. This is a subject Mitch Anthony addresses in his book Your Clients for Life and which I highly recommend you read.

Treat everyone with ultimate respect

Meet people at their level. Greet them with enthusiasm. Everybody matters, but not everyone treats all people like they matter.

Show empathy

Everyone has emotional pressure points that drive or motivate their decisions. When people can tell you are authentically empathetic towards their circumstances, they are more inclined to let you in and trust you. This is a huge step toward building lasting relationships. A lot of the time, you will need to read between the lines and suss out what it is your client is really trying to say. Once again, asking the right questions will give you more insight into the full story.

Be real

People want to talk to a professional who is a real person. What I mean by this is that they

29

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42

CLIENT ENgAgEmENTRichard Carter, Head of Product Development, Allan Gray

Many of National Treasury’s retirement reform proposals are likely to impact independent financial advisors. At first glance,

compulsory retirement fund membership, compulsory preservation, and default annuities may even appear to be detrimental, but opportunities do exist. In the long run, reforms are good for financial advisors as well.

Compulsory membership doesn’t preclude the need for retirement planning

One of the reform proposals speaks to compulsory membership of pension funds. You need not be concerned that compulsory membership will mean less business in terms of individual funding solutions. In practice, clients need more than just product advice; they need a solid financial plan, encouragement and help in addressing the gaps preventing them from achieving their goals.

Until most South Africans begin saving when they start working, and never cash in their savings along the way, the money saved in an employer’s fund won’t be enough to retire on. Even when the system and investor behaviour improves, many clients probably won’t want all their savings tied up in a compulsory scheme and will need advice as to what products to use.

Advice to small businesses

If compulsory membership comes into play, advising small to medium-sized businesses on how to set up compulsory retirement savings solutions for their employees presents

The impact of retirement reform on

opportunity. This is the chance to extend your product offering and grow your client base.

Individual retirement annuities managed on a group basis is an excellent choice for employers looking to give their employees control over retirement savings. Individuals become members of the retirement annuity fund in their own right. Aside from the employer, employees may also need guidance on the best underlying unit trusts for their age and circumstances.

Compulsory preservation opens up long-term opportunities

Another proposal speaks to enhanced preservation, which will remove options, and potentially, the need for advice, for people changing jobs. However, over the long-term, more investors will arrive at retirement age with more capital, which means a greater need for good, independent advice and the ability to afford it.

Default annuities present financial planning opportunities

Treasury’s proposals envisage trustees playing a more prominent role in assisting retirement fund members in the transition from working and contributing to a retirement fund, to being retired and earning an income – from a default annuity.

It is not yet clear exactly what the obligations on trustees will be. But whether they merely offer a default annuity product at retirement, or go further and offer a more comprehensive

service, individual members will need targeted advice when it comes to assessing if the default option is suitable for them, and in making individual member choice around underlying investments (if the default product calls for it). Encourage clients to take a long-term view

Few of the proposals are yet finalised; these are still discussion documents. The environment is slowly changing, but it is unclear when proposals will be signed into law. The problem is that today’s good advice, based on the facts at hand, may change tomorrow.

For example, the recent increase in the amount that can be withdrawn from a retirement fund tax-free (from R315 000 to R500 000) took many financial advisors, clients and industry players by surprise. Clients who applied for a withdrawal shortly before the budget speech and received a tax directive, are still subject to the previous tax-free limit.

Probably the most sensible approach, for now, is to communicate with your clients and encourage a long-term view to their retirement savings, to avoid reputational risks associated with being caught off-guard.

Create a compelling value proposition

Financial advisors help their clients make sense of complexity, and products available, and in so doing, better equip them to match an investment to their needs, and how to react when things change. Most importantly, they help their clients manage themselves with discipline.

financial advisors

Many of National Treasury’s retirement reform proposals are likely to impact independent

financial advisors.

EmPLOYEE BENEFITS

29

44

EmPLOYEE BENEFITS

Restructure of provident fund

retirement benefitGovernment’s ambitious retirement reforms, aimed at aligning and easing the tax treatment of provident funds and pension fund lump sums, may well eventually lead to provident funds being entirely phased out.

By Neesa Moodley-Isaacs

45

Restructure of provident fund

one changes jobs, retirement savings will automatically be transferred to a preservation section within the members’ fund, before funds can be accessed. This intention, to establish a preservation section so that the benefit is transferred to an external preservation fund for full preservation, is still being debated, and is some way off. Currently, when one changes jobs, retirement savings are either transferred directly to another retirement fund of the employees choice or they are transferred to a bank account and the member has to transfer it to a new retirement fund at their leisure, in which case it is after any tax has been deducted.

“The new system will remove the temptation to spend your retirement savings. The money will already be in a tax-efficient, cost-effective savings vehicle. This is a good, tactical and clever move by the South African Revenue Service. It also leaves the option to access the funds if you have a financial crisis,” adds Hanekom. “People’s financial behaviour can often be relative to their income levels. On the other hand, some people just overspend with no thought as to the consequences. The new retirement reforms mean that although these big spenders will still be able to access their retirement savings, it will take them longer to do so,” he says.

Disciplined savers will be less tempted to access their savings with the new withdrawal rules and limits. “Those who run into bad debt problems will still be tempted. At the end of the day, if someone wants to spend their savings, there is very little you can do to stop them. We are already seeing a high number of divorces that take place simply so that people can access their retirement funds,” Hanekom notes.

Implications

Where employers offer employees both a pension and provident option, the new system can reduce administration fees. “The fund can be collapsed into one structure, which will reduce fees. If your employer offers two separate pension and provident funds, there

retirement benefitT

he reason for this and other sweeping changes about to occur in retirement funding is that government wants to encourage South Africans to save more and to discourage the

increasingly common phenomenon of people cashing in their retirement savings when they change jobs. The end result is that less than six percent of South Africans eventually retire with sufficient savings, which increases the burden on the State, when they apply for the social old age grant.

Kobus Hanekom, head of general consulting at Simeka Consultants and Actuaries, says the retirement reform process is being phased in slowly, but is very necessary, “Especially when you take into account the overall savings scenario in South Africa and how we rate internationally.”

The sad reality is that South Africa’s savings and investment rates are low, particularly in comparison to other emerging economies such as Brazil, Russia, India and China (BRIC). And the forecast for the next couple of years is not positive.

Hanekom points out that the average working South African contributes about 15 percent of their gross income to their retirement savings, which is a high percentage. “The problem comes about when you see how often South Africans cash out their retirement savings upon changing jobs. ”

“They often have the best intentions of saving more money to make up the difference. But these intentions fall by the wayside. Even if the person increases their contributions later, they

will never be able to make up the difference that compound interest would have made on their savings,” he explains. So even though we have a retirement savings structure in place, it is not sufficient.

This is further complicated by the fact that working careers have evolved and the days of working for one employer until you retire, are long over. Now, it is not unusual for someone to change employers up to 10 or 12 times within their entire career.

Changes ahead

The retirement fund industry has a year to implement ‘T-day’ which takes effect from 1 March 2015. “T-day is, among other things, about changing the way tax deductions work and, from 1 March next year, pension and provident funds will be taxed in the same way,” he says. Benefits related to contributions made from March 2015 will also be paid out the same way.

So, if a person has a provident fund currently and they retire in 20 years’ time, they will still be able to withdraw as a lump sum all the contributions they made prior to 1 March 2015, together with all investment growth on those contributions calculated up to the date of retirement. However, all the contributions made (and investment growth) after 1 March 2015 will have to be utilised at retirement on the same basis as a pension fund, with only a maximum of one-third paid out as a lump sum, and the balance used to buy an annuity.

Another retirement reform that is looming on the radar is ‘P-day’ which is the first step towards removing the option to take a cash payment upon withdrawal. The intention is that employees will have to transfer their withdrawal benefits to a preservation fund (or a specially established preservation section within their retirement fund). No date has yet been announced for implementation of P-day but it will change the withdrawal rules for retirement funds.

This potential change brought in as a product of retirement reform ensures that when

46

is no immediate reason to merge the two. Companies may opt to do so going forward, if they wish to administer only one fund,” Hanekom says.

The flip side to this however, is that administrators now have to run two accounting systems on each provident fund to cater for pre- 1 March 2015 and post- 1 March 2015, which could increase costs.

Taxation changes

In his Budget Speech earlier this year, Finance Minister Pravin Gordhan changed the way that retirement fund withdrawals are taxed, making it less attractive for people to access their savings before retirement and more attractive

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for them to preserve their savings.

With effect from 1 March this year, if a member changes jobs and withdraws a lump sum from their retirement fund, the first R25 000 will be tax-free. However, the tax they pay on subsequent withdrawals has now been increased to discourage them from accessing their retirement savings.

Withdrawals before retirement will be taxed as follows: • Amounts between R25 000 and R660 000 –

18 percent tax. • Amounts between R660 000 and R990 000

– a tax of R114 300 plus 27 percent of the amount above R660 000.

• Amounts more than R990 000 – tax of R203 400 plus 36 percent of the amount above R990 000.

•When a member retires, the available tax-free lump sum has increased from R315 000 to R500 000. The larger increase in the tax-free lump sum is intended to ensure that lower-income workers do not have to pay tax on their lump sum retirement benefits. The tax they pay on the amounts in excess of R500 000 has also decreased.

• Amounts between R500 000 and R700 000 will be taxed at 18 percent.

• Amounts between R700 000 and R1.05 million will be taxed at R36 000 plus 27

percent of the amount above R700 000. •Withdrawals of more than R1.05 million will

cost the client R130 500 plus 36 percent of the amount above R1.05 million.

Costs to be cut

“We recognise that households must be encouraged to invest in their future, including investment in homes and saving for retirement,” Minister Gordhan said in his Budget address.

In addition to the retirement reform measures outlined above, Minister Gordhan announced that, “Further steps will be taken to make sure that you have a secure income in retirement. Unnecessary costs in the system will be cut.” To this end, an agreement has been reached with the Association of Savings and Investment South Africa, on a way forward to reduce the level of charges for retirement savings products. Draft regulatory reforms around this are expected to be made public shortly.

“Legislation has already been passed by parliament to improve governance over pension and provident funds, and to align the rules and tax treatment of pension and provident funds. We still seek improved coverage and preservation of retirement funds and lower costs in the system,” Gordhan added.

29

The DiscoveryFinancial Planning

SummitThe first ever Discovery Financial Planning Summit was held at the Sandton

Convention Centre on Thursday, 15 May 2014. The event was attended predominantly by financial planners, who were tied and non-tied agents of

Discovery, as well as key individuals in the financial planning industry.

The summit addressed the following topics:

• Creating an ecosystem, by Adrian Gore (chief executive officer of Discovery) Gore provided an interesting talk on the dire need for financial planners in South Africa. He spoke on the need to save people from being destitute, because without proper financial planning, they are at risk of eventually ending up in this unfortunate state.

• Succession planning, by Tom Deans (Canada) Tom Deans focused on the technical skills that are needed by financial planners to successfully draw up a succession plan. He also addressed the role of the financial planner in assisting businesses, especially family businesses, in their succession planning. He is the author of two best-selling books on the topic. Deans has become controversial in his advice

to business owners. He advises them to sell their business if their heirs do not wish to pursue the vocation that the business demands i.e. parents should not force their children to proceed with the legacy of a business from one generation to the other if the child has no interest in what the business is about. The opportunity here is for financial planners to recognise this niche and facilitate the processes of succession planning.

• The Financial Services Board (FSB) 24-month outlook for the financial services industry, by Jonathan Dixon This talk focused on the technical side of things; the speaker provided insight on some of the regulation issues such as Retail Distribution Review (RDR) and Twin Peaks. He addressed the formation of these ideologies and how they have the consumers and the advisors best interests at heart. Dixon addressed the basics

and rules of financial planning, and also touched on the trends within the industry and the direction it is taking.

• Branding yourself for success, by william Rossi, CFP® (USA) Rossi spoke about personal branding and how it can help one stand out from the crowd. He touched on the various ways in which CFP® professionals can utilise their designation to build a professional and strong brand.

• The state of our nation, by Colin Coleman Coleman spoke about the economic state of the country; he focused on its affects and how financial planners should strategise when helping their clients. He also gave insight as to how politics effect the world of financial planners.

• How elite advisors get to the top and stay there, chaired by Rob Macdonald This was a panel discussion represented by two FPI Financial Planner of the Year winners as panellists, Natasja Norval-Hart, CFP® (2010 winner) and Barry O’Mahony, CFP® (2013 winner). The other members of the panel were successful financial planners and Hylton Kallner, chief marketing officer for the Discovery Group.

• Becoming a rainmaker; how to acquire affluent clients and keep them, by Matt Oechsli (USA) Matt focused on how financial planners can attract and maintain relationships with elite clients. He provided delegates with tangible real life examples.

48

EVENTS

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50

Toward affordable healthcare for all

NHI:

HEALTHCARE

While many national budget commentators felt that the National Health Insurance (NHI) scheme was not a great feature in the Finance Minister’s speech at the end of February, and remain doubtful about implementation, it is firmly on the agenda and progress continues.

By Christy van der Merwe

51

In his national Budget Speech, former Finance Minister Pravin Gordhan stated that the Department of Health’s (DoH) white paper on the NHI, and the National Treasury’s financing paper

have been completed, and will be put before cabinet shortly. Although no concrete timelines have been given for this, it has been made clear that the implementation of the NHI will take place over a 14-year period, with the ultimate end goal of a health sector that works for all South Africans.

It is the 14-year roll-out period that has garnered misgiving among certain quarters, with one economist – economists.co.za director Mike Schussler – stressing that initiatives that politicians promise 12 or 14 years down the road, rarely ever happen. However, the budget outlines concrete developments on the NHI front, and government remains adamant on implementation, which it says will improve public sector health delivery, and reduce the high cost of private healthcare in South Africa.

“NHI pilot districts have been established in every province, supported by funding for NHI as a conditional grant. In addition to hospital and clinic building and refurbishment programmes, R1.2 billion has been allocated for piloting general practitioners’ contracts. An Office of Health Standards Compliance has been established to ensure that public healthcare provision meets the required standards. A new funding framework for the National Health Laboratory Services and associated research activities has been agreed,” said Gordhan in his Budget Speech to parliament.

“I am extremely encouraged by the comprehensive and structured way the minister is dealing with the issues and the 11 pilot projects that are up and running. A lot has been achieved in understanding the issues and then taking effective action,” says Len Deacon, CEO of independent

for the infrastructure components of the two grants.

Within the NHI component of the national health grant, R1.2 billion is budgeted over the next three years to begin contracting with general practitioners, develop new reimbursement mechanisms for central hospitals and improve their revenue management. Spending on this component has been low in 2013/14 because of delays in reaching agreement on remuneration of general practitioners. This amount of R1.2 billion is to staff NHI clinics with doctors’ services in addition to the nurses’ services.

Overall, R492.4 billion will be spent on healthcare over the next three years. This is the second largest sector of expenditure for the government, coming in just after expenditure on education. In the 2014/15 financial year, the government expects it will spend R154 billion on healthcare (out of a total expenditure of R1.1 trillion), which is about 4.1 per cent of the country’s total gross domestic product.

The national budget’s overall healthcare expenditure includes R600 million allocated for the introduction of the new Human papillomavirus (HPV) vaccine, which protects against cancer of the cervix, while a further R1 billion will be allocated for the HIV and AIDS conditional grant in 2016/17 to continue the roll-out of antiretroviral treatment. A total of 2.5 million people are currently under treatment, and 500 000 new patients are expected to join the programme each year, explains Deacon.

Government says that it recognises that the health system needs to be strengthened as a precondition for NHI. The Office of Health Standards Compliance will be launched in 2014/15 as an independent public entity responsible for inspecting health facilities and improving the quality of health provision. The new office receives funding of R369.5 million over the medium term.

health industry consultancy Len Deacon and Associates, following a feedback session on NHI to the parliamentary portfolio committee of health.

The budget states that NHI will be phased in, with a focus on upgrading public health facilities, producing more health professionals and reducing the relative cost of private healthcare. Delving into greater detail, the budget document outlines that two NHI conditional grants will support contracting doctors and establish new financial mechanisms for hospitals, and pilot health service innovations in 10 pilot districts. The national health insurance grant receives a medium-term allocation of R221.9 million to strengthen district health structures, improve procurement and pilot innovations within targeted districts. A total of R18.1 billion is budgeted over the next three years

102 Total number of new clinics

92 Clinics with earthworks completed

74 Number of slabs completed

83 Number of clinics with super

structure delivered

69 Number of clinics with superstructure installed

38 Number of clinics with roof installed

17 Clinics with finishes complete

8 Equipment and furniture installed

52

HEALTHCARE

Requirements:

Qualified financial advisers in the following areas are invited to apply:

Central Johannesburg, KwaZulu-Natal, Eastern Cape

• Experience in the medical schemes industry

• Compliance with the FAIS Act

• Commission & target driven

• Ability to work independently

On offer:

• A competitive commission structure

• Training & advisory support

• Leads & cross-selling opportunities

Services of competent, experienced,

financial representatives are required

for our tied agent

Medihelp is an authorised financial services provider

SMS “ ” to 32291adviserAn SMS costs R1. Free minutes do not apply.

municipal ward-based primary healthcare agents, and district specialist health teams; and contracting of GPs to work in public clinics.

Deacon says that Minister Motsoaledi provided truthful feed back details of the facility audits undertaken at the clinics where the 11 pilot NHI programmes were taking place over the last 18 months. OR Tambo Municipality in the Eastern Cape was said to have fared the worst in these audits, and from August 2014, three hospitals and eight clinics will be built or refurbished in this area.

The minister also shared the plan of new clinic structures to increase space, which will result in 102 new structures being built, and will greatly improve patient access in the pilot areas. He announced the following details:

These clinics would follow the tenets of the ideal clinic, which include adequate administration; proper clinical guidelines and integrated chronic disease management; medicine supplies and laboratory support; good staffing and professional etiquette; availability of doctors; infrastructure and support services; essential equipment; health information management; communication; district health support systems and input of partners and stakeholders.

Motsoaledi said that design for future hospitals would be based on what has proven successful, and would not be redone for each and every tender and would initially be based on the design used in Western Cape.

The Health Minister emphasised the six building blocks of a healthcare system, as outlined by the World Health Organisation (WHO), which are leadership and governance; access to essential medicines and other commodities; a strong health sector workforce; health systems financing; health information systems and health service delivery. He said that the item that is neglected most often is health systems financing; the “rich get cover, while the poor don’t”.

Motsoaledi explained that the NHI pilot project work is based on the WHO service availability and readiness assessment methodology, which measures and provides a standard health facility assessment questionnaire to assess, map and monitor service availability and readiness.

It covers areas such as facility infrastructure and amenities, water supply, telecommunications and electricity, basic medical equipment, availability of a health workforce, medicines availability, diagnostic facilities availability, infection control, and specialised services among others.

Considering the current state of public healthcare facilities, the improvements envisaged under the NHI would certainly provide drastic relief among many South Africans currently unable to afford private sector healthcare.NHI progress to date

Immediately prior to delivery of the national Budget Speech, the health parliamentary portfolio committee heard from Health Minister Aaron Motsoaledi, who was reporting on the 11 NHI pilot programmes, which are currently underway throughout South Africa.

Deacon, who was in attendance at parliament for the progress update, says that it seemed clear, for the first time that the two ministers, of health and finance, are singing off the same song sheet with regard to NHI. “This is great improvement as they need each other to achieve the massive objectives and requirements for all our citizens,” he reiterates.

The focus at the 11 NHI pilot sites would be on infrastructure development and maintenance; human resources planning development and management; quality of health services with emphasis on standards for cleanliness, safety and security of staff and patients, attitude of staff, infection control, long queues and drug stock outs; re-engineering of the primary healthcare system in three streams – school health programmes,

29

Requirements:

Qualified financial advisers in the following areas are invited to apply:

Central Johannesburg, KwaZulu-Natal, Eastern Cape

• Experience in the medical schemes industry

• Compliance with the FAIS Act

• Commission & target driven

• Ability to work independently

On offer:

• A competitive commission structure

• Training & advisory support

• Leads & cross-selling opportunities

Services of competent, experienced,

financial representatives are required

for our tied agent

Medihelp is an authorised financial services provider

SMS “ ” to 32291adviserAn SMS costs R1. Free minutes do not apply.

54

INVESTmENT

It is not that asset allocation and correct risk strategies are not important - ask anyone who has seen a pension portfolio too conservatively invested for 20 years. It is a fact however, that investments are not

the whole package.. The better reasons to hire a financial advisor include:

• Checking that clients are saving enough to build sufficient retirement capital. Even brilliant investment returns cannot magically produce retirement income out of too little savings.

• Advisors press clients to answer questions they don’t want to be asked, such as how they plan to take care of their ageing parents, whether their wills are up to date, how they are going to educate their children or what they will do if they lose their jobs. These are the types of questions that most clients are too uncomfortable to ask themselves.

• Advisors put together believable financial plans. Very few people ever plan properly. It takes time and can be uncomfortable

There is value in an

investment advisor

Janet Hugo, CFP® Hugo Capital in association with Sterling Private Wealth

I am sure that many clients believe that they hire a financial advisor principally to outperform the stock market. While it is true that clients with advisors do outperform those without, by as much as 1.82 percent per annum according to Morningstar research, the more important fact is that investment performance has very little bearing on whether these clients can live or retire as they would like.

and yet it really matters. Without a full cashflow analysis, how will an advisor determine an asset allocation within a risk strategy that the client can live with and have faith in?

• Advisors identify risks in their clients’ portfolios that they might overlook, like being overweight, chasing equity performance, being too conservative for the long term, having insufficient manager diversity, being too sector or single stock concentrated.

• Advisors talk their clients through market volatility. Many clients will energetically claim they don’t need this hand holding. It’s hard to project an image of ourselves being petrified during a significant market correction, and our recollection of past pain has been shown to fade over time. Another voice besides their own during turbulent markets can be invaluable to clients.

• Advisors help clients identify their biases. Many of us think we don’t really have any, which is exactly the point.

55

Yes, financial advisors are costly. But if they are able to provide the services described and particularly if they are able to provide that service early in a client’s investing life, their value can be significant. The catch is that if you pay an advisor, your investments have to do even better to gain

real value from the advice. Good financial advice doesn’t just cost, it pays.

In 2012, two major studies emerged that attempted to put a price on financial advice. In September 2012, research from Morningstar came up with a number: 1.82 percent per year.

That may not sound like much, but the power of compounding led researchers to project that it could mean an extra 30 percent in income per year for retirees who receive financial advice, compared to those who go

it alone. Morningstar called that added value ‘Gamma’.

Another research paper put out by the Centre for Interuniversity Research and Analysis of Organisations (CIRANO), titled Econometric Models on the Value of Advice of a Financial Advisor, found that the presence of a financial advisor led to an increase in a household’s financial assets.

When ‘identical individuals’ were compared, those who had a financial advisor for between four and six years, were found to have 58 percent more financial assets than their unadvised counterparts. Interestingly, the longer respondents worked with a financial advisor, the bigger the benefit on their returns.

What’s most interesting about both studies, however, is where this added value actually comes from. Perhaps surprisingly, it’s not from choosing investments.

Do advisors pick better investments?No they don’t. Financial advice has run into obstacles over the years in that most studies find that on average, experts don’t beat market benchmarks. In a nutshell, that means that most advisors and investment managers don’t choose investments that perform much better than an index fund, which naturally should incur lower fees.

Case in point: A study published in the Journal of Investing in 2012, made the same conclusion as many others before it, by determining that active portfolio management failed, on average, to add value above the fees it charged to investors.

However, the Morningstar study and the CIRANO report determined that the value of financial advice didn’t come from better asset selection – at least it was not the most significant contributor.

The Econometric Models paper stated that advised savers’ rates of return were only 3 percent higher than those who received no advice, which hardly accounted for the 173 percent difference in assets that mounted between the investors who received advice and those who didn’t, over a 15-year period. The question then becomes, if financial advisors aren’t helping investors choose better investments, where is the additional value coming from?

56

The power of financial advice Morningstar’s report clearly defines, that it’s the little things that many investors tend to overlook that made the biggest difference. The CIRANO and Morningstar reports zeroed in on these factors:• Improved portfolio diversification, asset

allocation and appropriate risk strategy.•Withdrawal strategy.• Tax efficiency and use of tax-advantaged

savings vehicles.• The use of traditional investment products

versus guaranteed-income products.• Investing with a goal of meeting an investor’s

specific needs and timeline.• Less speculative trading.

The most important factor here was using a withdrawal strategy that was dynamic; one in which withdrawals were re-assessed on a regular basis to ensure they were sustainable, based on market conditions and the correct asset allocation.

The second biggest factor was tax efficiency. This refers to the use of investment strategies to help reduce an investor’s tax liability. Most investors, when asked why they seek financial advice and what their advisors do for them, will probablynot immediately reference these points.

The CIRANO report found that the tenure of advice also had a sizeably positive impact on investor assets. They found that investors who retain advisors for 4 to 6 years were 1.58 times better off than investors without advisors, and that this multiple increased to over 2.73 times for investors with advisors for over 15 years.

An open and shut case - not reallyWhether financial advice boosts returns enough to be worth the cost is a debate that’s likely to continue indefinitely. In truth, advice is hardly a scientific thing, and even when it comes packaged with the best intentions, it’s still subject to human error. There is, of course, a significant variability between advisors in terms of the results they produce for their clients – and the fees they charge to produce those results.

Even so, Morningstar’s report does suggest that the way in which investors view financial advisors may need to shift. Rather than seeking an advisor to select investments, what they should be looking for is someone who

will sit down and listen to their specific needs and financial goals; someone who will consult with them regularly and ensure that their wealth strategy and investment goals are on track and, most importantly, someone to look out for their long-term interests and ensure that they have more than just a portfolio filled with appropriate solutions of today’s environment.

Your clients will be better off having an advisor assist them to understand their risk profile and risk budget relative to their portfolio and their goals, and interpret their asset allocation and investment returns in the context of their lives. Without doubt the studies show they will be better off with your advice.

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29

Where have all the predators gone?

Hedge funds may not have been making headlines the way bitcoin or social media investments have, but Jaco Jansen, Head of Investment Services at Maitland believes that

hedge funds are poised to rediscover their place in the investment ecosystem.

Jaco Jansen,Head of Investment Services, Maitland

Hedge funds poised for a come-back

INVESTmENT

58

One of my favourite childhood memories will always be scanning the game reserve bushveld for animals. Some days we went for hours

without spotting anything big or exciting. Heading back to camp on one such day, someone caught a glimpse of an unusual outline in the long grass. Straining my eyes through the savannah I could eventually make out the silhouette of a lioness sitting motionless, meticulously picking out her prey. As the herd inched closer, heads down, happily grazing and completely oblivious to the pending danger, she gets ready to pounce. With painstaking precision, the lioness struck, easily taking down an older impala ewe.

Witnessing nature’s brutality up close inevitably leaves a lasting impression. The conversation around the campfire that night was focused on the question, why are there predators? My father explained the need for the natural balance of the ecosystem to be maintained through the right balance between prey and predators. Over the past five years there has been precious little talk about hedge funds. Unlike bitcoins, biotech or social media investments, hedge funds are certainly not fashionable or headline-grabbing. Yet we believe that hedge funds are poised to rediscover their place in the investment ecosystem.

Hedge fund growth from 2003 to 2007

In the run-up to the credit crisis, hedge funds became increasingly popular and were often held out as the panacea for all investment objectives. Investors found favour with nimble and fast-moving arbitrage funds which exploited the inefficiencies in markets, created by large institutions whose transactions were often motivated by factors other than valuation or relative price attractiveness. Long-short equity

According to the Financial Planning Institute Investment Industry Sector Group (ISG):

Hedge funds, like any other investment products, are not created equally. Proper due diligence must be done by financial advisors when considering investing in a hedge fund. An important factor to note when choosing a suitable hedge fund is the third party custodian assigned to that fund. Since a hedge fund is a pool of funds gathered for investment purposes, a third party custodian is required to house and safeguard the securities and assets of the fund. A custodian can be a trust company, bank or similar institution. The more reputable the company, the less the risk of the monies being handled in a dishonest manner. Further, custodians play an important role in terms of governance, by separating managers from the securities and investor records. The custodians are also responsible for the administrative functions of the hedge fund. Custodians cannot provide financial advice to clients.

The FPI Investment ISG will be providing commentary in future additions on hedge funds. Hedge funds have not been widely used in South Africa by retail clients and we look forward to shining the spotlight on them for our members.

funds mushroomed where the talented fund manager could identify alpha generating opportunities, both on the long side and on the short side, whilst hedging the market risk. The industry grew rapidly between 2003 and 2007 and in essence, became a victim of its own success. Talent, by definition, should always be limited in supply but the allure of the ‘two and twenty’ fee model (two percent management fees and twenty percent performance fees) attracted a lot of mediocre investment managers to the industry. The size of many funds ballooned and the arbitrage opportunities dwindled and eventually evaporated as the hedge fund trading volumes dwarfed those of the institutional long-only investor. Problems were further compounded by the vast number of leveraged positions carried by the proprietary trading desks of investment banks which were promptly unwound during the credit crisis.

With hindsight, it should hardly be a surprise that when the number of predators had increased so rapidly, the natural balance had been distorted and it would self-correct at some point to move back towards equilibrium. In the wake of the worst financial crisis in 80 years,

hedge funds experienced large outflows, many shut down altogether and much tighter regulations forced investment banks to aggressively scale down their trading desks.

Despite delivering returns consistent with their long-term objectives over recent years, sentiment towards hedge funds has remained negative. Closed-ended listed hedge funds are trading at discounts to the net asset value of the underlying assets whereas, leading up to 2007, most of these funds were trading at premiums. In many cases, the discounts to net asset value have steadily been widening as the allure of eye-watering long-only equity returns have again overwhelmed the retail investor.

Over the long-term, hedge funds (after fees) have outperformed traditional asset classes. Similarly a portfolio with 1/3 allocated to equities, 1/3 to bonds and 1/3 to hedge funds over the last 24 years also comfortably outperformed a traditional balanced portfolio with 50 percent invested in equities and 50 percent invested in bonds.

59

Wouter Fourie, CFP®,Professional Accountant (SA) |Director Ascor Financial Advisors

60

Formal mentorship in financial planning might be the ‘tipping point’ taking the financial planning industry to the level of being recognised as a professional

career - taking its rightful place next to our colleagues in the auditing, accounting, law and medical professions.

In this article, we’ll look at what is meant by mentoring, the benefits thereof (for the mentor and mentee) and how the Financial Planning Institute (FPI) has embarked on expanding and growing the profession by providing a formal FPI Mentorship Programme.

What is mentoring?

Mentoring is a relationship between two people with the goal of professional and

Growth through

mentorship‘How little things can make a big difference’, ‘the boiling point’, and ‘the moment of critical mass’ as explained by Malcolm Gladwell in his book The Tipping Point, come to mind when I sit down and write this article.

personal development. The mentor is usually an experienced individual who shares knowledge, experience, and advice with a less experienced person, or mentee.

A mentoring partnership may be between two people within the same company, same industry, or same networking organisation. However, when the mentor and mentee come together, the relationship should be based on mutual trust and respect, and it typically offers personal and professional advantages for both parties.

Benefits of mentoring

For an organisation, mentoring is a good way of efficiently transferring valuable competencies from one person to another. This expands the organisation’s skills base, helps to build strong teams, and can form part of a well-planned succession planning strategy. Many apprenticeship schemes (auditors, accountants and attorneys) are based on the principles of mentoring.

Benefits to the mentor

Becoming a mentor can enrich your life on a personal, professional and financial level by helping you do the following:

• Be recognised as a subject matter expert – being a mentor means you are

an expert and are recognised as such.• Build your leadership skills – It helps

you develop your ability to motivate and encourage others. This can help you become a better manager, employee and team member.

• Improve your communication skills – Because your mentee may come from a different background or environment, the two of you may not speak the same language in a figurative or even literal sense. This may force you to find a way to communicate more effectively as you navigate your way through the mentoring relationship.

• Advance your career – Refining your leadership skills can strengthen your on-the-job performance, perhaps helping you get that promotion to higher management – or into management in the first place.

• Gain personal satisfaction – It can be very personally fulfilling to know that

PRACTICE mANAgEmENT

61

mentorship you’ve directly contributed to someone’s growth and development. Seeing your mentee succeed as a result of your input is a reward in itself.

• Duplication provides financial leverage opportunities – Financial reward comes from building a team of champion mentees (the same way auditors and attorneys do). A team of well trained and equipped professionals.

• Opportunity for a well-planned succession planning strategy — providing a next generation of professionals that could successfully take your business to the next level and providing you with an exit strategy.

Benefits to the mentee

A trusted mentor can help a mentee do the following:

• Gain valuable advice – Mentors can offer valuable insight into what it takes to get ahead. They can be your guide and sounding board for ideas, helping you decide on the best course of action in difficult situations.

• Develop your knowledge and skills – They can help you identify the skills

and expertise you need to succeed. They may teach you what you need to know, or advise you on where to go for the information you need.

• Improve your communication skills – Just like your mentor, you may also learn to communicate more effectively, which can further help you at work.

• Learn new perspectives – Again, you can learn new ways of thinking from your mentor, just as your mentor can learn from you.

• Build your network – Your mentor can offer an opportunity to expand your existing network of personal and professional contacts.

• Advance your career – A mentor helps you stay focused and on track in your career through advice, skills development, networking, and so on.

• Become a business owner – Opportunity to buy into a business and become a business owner and not just an employee.

FPI Mentorship Programme

FPI believes, and various researches have shown, that for new entrants in the profession, engaging in the supervised practice of financial planning by practicing experts is the most effective method of gaining professional experience. Such is the strength of this belief that FPI has recently modified its certification standards to now incorporate supervised practice of financial planning as an acceptable method of gaining relevant experience toward CFP® certification.

FPI launched a mentorship programme in the first half of 2012, which provides a mechanism for CFP® professionals to mentor aspiring financial planners to assist them in meeting the experience requirement of the institute to be certified as a CFP® professional member of FPI.

The aim of the FPI Mentorship Programme is to enable students to gain the relevant and sufficient experience in a formal services-under-supervision (SuS) programme and is designed to be a proactive development process for helping candidate financial planners develop and enhance their financial planning skills over a minimum period of one year.

Since the experience requirement to attain CFP® professional status is normally three years of relevant industry experience, the mentorship programme is meant to facilitate focused learning and competency and ultimately condense the learning curve.

I personally think that this is a game changer, and will set aside the professionals from the rest.

If you are interested in participating in this programme, either as a mentor or mentee, please email certification@fpi.co.za.

Killing himself with 30 a day.

RYNO

62

PRACTICE mANAgEmENT

By Christy van der Merwe

The benefits of technology for financial planning

Don’t fear the tech:

Mobile technology has revolutionised financial planning and wealth management, allowing advisors to access unlimited

content from wherever they may be. Financial planners can access information without having to download it and store it on a device, which is viewed as a security risk. As well as simplifying everyday operations significantly, the well-informed use of smartphones and tablets goes a long way to enhance the image of a financial advisor, because clients will be able to see first-hand that their financial planner is forward-thinking and embracing new ideas and technology.

?

63

Smartphones and tablets mean that when meeting with clients, financial advisors can do scenario planning then and there.

Mobile technology enables financial planners to adjust goals, spending priorities, assets or other information online from your mobile device and show clients the results in real time, and explain what the impacts will be. This mobility also means that financial planners can easily open client statements, confirmations, scanned images of documents or financial plans using a mobile device, and answer their questions without ever needing to print hard copies.

Taking down information has also become a different ball game. Before, during or after meetings with clients, financial advisors can take extensive notes for storage, or retrieval from your mobile device to your contact management solution. Also, if you have e-mail encryption or can easily upload to a secured location, your mobile device could be used to take pictures of clients, assets, important documents or notes for use later when completing plans.

While face to face interaction is always preferred, this is not always feasible, particularly if clients live in remote areas or have very little time available to get to a meeting place. Video conferencing applications mean that advisors can conduct a video chat to help fully understand a client’s opinion and feelings by viewing their body language and facial expressions.

Another benefit of mobile technology is that it also means it is a lot easier to keep track of your clients’ hobbies, interests and prospects, because you can use news and special interest apps to get insight into certain sectors.

Sharing news and updates with clients shows them that you remember and care about their interests, and the mobility means that you can access this information anytime, and anywhere.

The iPad, or tablet is viewed as the ‘must-have’ business tool for advisors. It gives high-performing individuals a way to improve interactions with clients. Of course having the latest business tool does not mean much if you are not making the most of it.

There are a host of applications that can be downloaded onto tablets, and getting the right ones can be hit-and-miss at times. Simply searching, or browsing in your device’s app store can unearth a multitude of options available for all manner of things, such as creating infographics or charts to present information, or to make connections, and even manage your time more effectively. We highlight some of the recommended apps for busy financial advisors.

Networking and marketing:

1. Twitter: Share your own information, and reach out to the right markets.

2. LinkedIn: Manage professional relationships and connect with people you meet immediately.

3. Skype: Allows for face-to-face video conferencing.

4. FullContact Business Card Reader: Uses the device’s camera to transcribe the information on cards into text and imports the contacts.

5. MailChimp: Allows you to create and manage your e-mail campaigns, e-mail marketing lists, add new subscribers, and view reports.

“Mobile technology enables financial planners to adjust goals, spending

priorities, assets or other information online from your

mobile device and show clients the

results in real time, and explain what the

impacts will be.”

RYNOPays a packet for risk insurance as a smoker.

64

PRACTICE mANAgEmENT

Productivity:

1. Beesy: Take notes, create to-do lists and track tasks and projects.

2. DropBox: A cloud based hard drive, which allows you to share and store information.

3. PaperPort notes: A highly recommended note taking tool (US accounts).

4. Evernote: A way to keep track of web clippings and notes to reference later.

5. Paper: Allows you to write down notes or draw ideas, and save your sketches for later.

Finance:

1. HomeBudget Lite: A useful budgeting tool that can be shown to clients for their own personal use.

2. Quotestream: Acts as a portable stock exchange that lets you monitor clients’ investment portfolios in real time.

3. Journal of Financial Planning: A US based organisation, but available as a free download.

4. Retirelogix: Shows clients how different sources of income can help

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Investment Solutions. 17 years. With confidence

Investment Solutions Limited is a licensed Financial Services Provider. FAIS licence number 711.Registration number 1997/000595/06.

65

Stuff magazine editor and technology and innovation guru, Toby Shapshack, chats to The Financial Planner about technology in financial planning in South Africa.

• Ingeneral,doyouthinkthefinancialservicesindustryinSouthAfricaisusingtechnology to the best of its ability?Shapshack: Probably not. If I think of my interactions with financial planners and advisors, they could do a much better job of showing comparisons by using the kinds of visuals that are easier to understand. In the age of infographics, it’s silly to use spreadsheets when you can use clearer means of explaining products and returns to us poor investors. I don’t speak maths as a first language. I need a sympathetic, articulate translator.

• Whatisyourtoptiptofinancialplannersandadvisorswhoshyawayfromincorporating technology into their everyday routine?Shapshack: I always laugh when I am asked for tips by companies who want to ‘go digital’. Digital is like air. It’s akin to asking a fish what it thinks of the water. Digital should be intrinsic and fundamental in everything every business now does. Technology is as much a part of being digital as decent wireless broadband. By no means am I advocating overwhelming people whose routines predate this digital deluge. Sound business practice is to use the best tools you can. Very often, older adoptees to technology resist it more out of change aversion than any other reason.

• Whatwouldyourecommendasthe‘musthave’gadgetforfinancialplannersandadvisors to simplify their business?The iPad seems tailor-made for informal discussions about financial planning, be it in a coffee shop or boardroom.

• Howcanfinancialplannersandadvisorskeepuptodatewithrapidlychangingtech, gadgets and software available?Reading Stuff magazine is a good start.

• Whatadvicedoyouhaveforfinancialplannersandadvisorsreluctanttoembracesocial media – is this a must have in the financial planning arena?I’ve heard of doctors increasing their clients by 25 percent through using social media. Social media has followed the same hype cycle of all other new media, and we’ve gotten to the mature point where people recognise that Twitter is mostly about marketing: Either you are marketing a product or you are marketing yourself. No industry can spurn these new networks and the communication that happens there, which, to the youthful users, is considered real communication.

That old adage ‘fish where the fish are’ is never truer. You have to adapt to this new environment and find ways of communicating that cut through the clutter and talk directly to your clients.

Shapshack will be speaking at 09:30 on the second day of the FPI Professionals Convention, 26 June 2014, on Innovation and Technology in Financial Planning.

them achieve their goal, and what their shortfall might be.

5. Compoundee: A financial calculator to work out compound interest, and how much investments will be worth over a certain period of time, as well as rates, duration, deposits and initial investments required to achieve a specific accumulation.

6. Bloomberg Finance: A resource allowing you to get real time data on stocks, and portfolios, currency conversions, company news and more.

Life and entertainment:

1. Flipboard: A personal magazine that combines your interests in one place.

2. TripIt: Allows you to store flight, accommodation, itinerary and hotel information. It checks flight status, and even keeps track of your reward points.

3. Pocketplan: Provides updates on events taking place in Johannesburg and Cape Town - from foreign language classes, to salsa dancing, exhibitions and bands.

4. waze: A navigation system that also provides information of traffic, accidents, and police in your area, as supplied by other users reporting on the roads.

5. Zite: A daily magazine, customised to your preferences, allowing you to keep up to date on specific interests without wading through different publications.

Altrisk is a division of Hollard Life Assurance, an authorised financial services provider (FSP 17697).

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Plus we’ll help him quit.

If your clients smoke talk to them about Altrisk’s Proactive Smoker – it could save their life and their pocket.

For more information speak to your Altrisk broker consultant or go to www.altrisk.co.za

We’re your type of risk insurer.

SAVE THE RYNO

66

By Fred Mitchell, Symantec Division Manager, Drive Control Corporation

PRACTICE mANAgEmENT

This is due to BYOD enabling employees to use the devices of their choice while business investment in information technology (IT) is reduced. However, despite the

benefits of BYOD, security remains a concern and a factor that may hinder adoption.

Aside from the well-known challenges of network access, permissions and bandwidth abuse, information security is another concern, and one that many organisations neglect to consider. BYOD and its related mobility trend require organisations to rethink their information security policies and procedures in order to ensure their sensitive corporate data does not become vulnerable to a variety of breaches.

BYOD offers the ability to dramatically reduce IT spend on end point devices, while catering to the requirements of employees to use the device of their choice on the corporate network. This helps to improve productivity. For smaller businesses that may not be able to afford the latest technology,

The Bring Your Own Device (BYOD) trend has steadily gained popularity across all sizes of business, from small operations right

through to large corporates.

BYOD worldSafeguarding your

corporate information in a

BYOD enables employees to still use this technology without cost to the company. However, if employees are all bringing their own devices onto the business network, and organisations do not control the information on these devices, they are left open to vulnerabilities, in that sensitive information can be lost, stolen or can fall into the wrong hands, with potentially dire consequences. Information needs to be managed, especially when employees use the same devices for both work and personal purposes.

Take for example, an employee with his or her own personal laptop and mobile phone, which are connected to the company network but are also used after hours for personal functions. For work purposes, this device requires access to corporate networks and corporate data, such as servers, email and other business information, but the device itself does not belong to the organisation. If this employee resigns from their position, and the information on these devices is not backed up, stored and then removed, and access to the network withdrawn, this former employee retains potentially sensitive information outside of the company’s control.

With the impending implementation of the Protection of Personal Information (POPI) Act, this poses a serious problem, not to mention the threat of this information falling into the wrong hands or being used against the organisation. In addition, whether the employee remains at the organisation or not, mobile devices by their very nature, are prone to theft or to being misplaced, with the result that information is stolen or lost.

If devices do not comply with an organisation’s security policy, the company network can be exposed to intruders and attacks. This includes not only information retention and deletion policies, but also traditional threats

like viruses, Trojans, worms and the rest of the plethora of cyber malware. Securing the network requires that devices are given the right levels of permission, and that devices are checked and authenticated for applicable levels of protection, including anti-virus and other end-point protection solutions. Remote management and wipe capabilities are also necessary to introduce a level of control over data stored on these devices.

The reality is that it is simply not possible to manage all of these devices manually. In an organisation with thousands of employees, if each one brings multiple devices onto the network, the scale of the problem has the potential to spiral out of control. The chance of human error with regard to manual policy implementation also introduces unacceptable levels of risk. Organisations need to ensure that they have the correct policies and procedures in place, and ensure that they have the right software to implement these policies and procedures, and gain the necessary level of control over information on these devices.

Security solutions for a BYOD world need to perform multiple functions beyond traditional vulnerability management. Solutions need to ensure the secure management of devices regardless of their location, deliver a view of compliance for regulations around information such as POPI, streamline the management of devices and applications with support for a broad range of platforms and operating systems, provide automated patch management for up to date software, and provide capabilities that enable mobility without compromising on network and information security.

BYOD as a trend is one that is here to stay, and organisations need to address these and other challenges in order to leverage the benefits without falling foul of security vulnerabilities.

Advisory Services

FundManagement

South Africa | Guernsey | Singapore | Isle of Man MitonOptimal South Africa (Pty) Ltd, registration no 2005/032750/07, is an authorized Financial Services Provider, License No. 28160. MitonOptimal South Africa (Pty) Ltd complies with all the requirements of the Financial Advisory and Intermediary Services (FAIS) Act (Act 37 Of 2002). The value of investments and the income from them may vary and you may realise less than the sum

invested. Past performance is not necessarily a guide to future performance and no guarantees are offered in respect of investment returns and/or capital invested.

MitonOptimal South Africa Advisory Services

www.mitonoptimal.com

As a financial planner, giving your clients investment advice and implementing that advice is a key part of your service. To do this properly is very time and resource intensive. The implications of getting it wrong are severe.

MitonOptimal partners with financial planners who recognize the importance of the investment function, but want to share this responsibility with investment specialists. In so doing, they free themselves up to focus on other aspects of their business - thereby adding even more value to their clients.

• Give your clients the best chance of consistently achieving their investment goals, over time.

• Help you meet your regulatory obligations and reduce risk, with respect to investment advice, implementation, ongoing management and communication.

• Free up your time, so that you can focus on other areas that are of most benefit to your business and your clients.

Investment AdvIsory servIces

• Research asset classes and make strategic and tactical asset allocation decisions.

• Research and select active and passive fund managers and products .

• Construct, monitor and review customized model client portfolios.

• Provide regular, comprehensive and customized reporting to you and your clients.

• Independence. We are an independent, owner-managed investment business with a presence in South Africa, the UK, Channel Islands and Asia.

• Expertise and experience. We have experienced investment professionals in both the UK and South Africa, dedicated to supporting our financial planner clients.

• Track record. We’ve offered investment advisory and portfolio management services internationally and in South Africa for over a decade.

• One size does not fit all. We customize our services to the needs of financial planners, their businesses and their clients.

• Ease of doing business. We have been managing model portfolios on all the major LISPs in South Africa for a number of years.

Working together, for you and your clients

If you want to find out more about how we can work with you, please contact us:

Cherie-Lee Stratford (W. Cape & KZN)t: 082 603 8306

e: cherie-lee@mitonoptimal.com

Adva Lewitte (Gauteng)

t: 082 777 7825e: adva@mitonoptimal.com

George Dell(National)

t: 082 809 4220 e: george@mitonoptimal.com

Deon Engelke(National)

t: 082 777 7825e: deon@mitonoptimal.com

Riaan Maartens (E. Cape & Free State)

t: 072 292 0292e: riaan@mitonoptimal.com

We do the folloWing for you:We aim to: Why use our services:

20140423 FPI Article.indd 1 5/12/2014 6:50:49 AM

Safeguarding your corporate information in a

Advisory Services

FundManagement

South Africa | Guernsey | Singapore | Isle of Man MitonOptimal South Africa (Pty) Ltd, registration no 2005/032750/07, is an authorized Financial Services Provider, License No. 28160. MitonOptimal South Africa (Pty) Ltd complies with all the requirements of the Financial Advisory and Intermediary Services (FAIS) Act (Act 37 Of 2002). The value of investments and the income from them may vary and you may realise less than the sum

invested. Past performance is not necessarily a guide to future performance and no guarantees are offered in respect of investment returns and/or capital invested.

MitonOptimal South Africa Advisory Services

www.mitonoptimal.com

As a financial planner, giving your clients investment advice and implementing that advice is a key part of your service. To do this properly is very time and resource intensive. The implications of getting it wrong are severe.

MitonOptimal partners with financial planners who recognize the importance of the investment function, but want to share this responsibility with investment specialists. In so doing, they free themselves up to focus on other aspects of their business - thereby adding even more value to their clients.

• Give your clients the best chance of consistently achieving their investment goals, over time.

• Help you meet your regulatory obligations and reduce risk, with respect to investment advice, implementation, ongoing management and communication.

• Free up your time, so that you can focus on other areas that are of most benefit to your business and your clients.

Investment AdvIsory servIces

• Research asset classes and make strategic and tactical asset allocation decisions.

• Research and select active and passive fund managers and products .

• Construct, monitor and review customized model client portfolios.

• Provide regular, comprehensive and customized reporting to you and your clients.

• Independence. We are an independent, owner-managed investment business with a presence in South Africa, the UK, Channel Islands and Asia.

• Expertise and experience. We have experienced investment professionals in both the UK and South Africa, dedicated to supporting our financial planner clients.

• Track record. We’ve offered investment advisory and portfolio management services internationally and in South Africa for over a decade.

• One size does not fit all. We customize our services to the needs of financial planners, their businesses and their clients.

• Ease of doing business. We have been managing model portfolios on all the major LISPs in South Africa for a number of years.

Working together, for you and your clients

If you want to find out more about how we can work with you, please contact us:

Cherie-Lee Stratford (W. Cape & KZN)t: 082 603 8306

e: cherie-lee@mitonoptimal.com

Adva Lewitte (Gauteng)

t: 082 777 7825e: adva@mitonoptimal.com

George Dell(National)

t: 082 809 4220 e: george@mitonoptimal.com

Deon Engelke(National)

t: 082 777 7825e: deon@mitonoptimal.com

Riaan Maartens (E. Cape & Free State)

t: 072 292 0292e: riaan@mitonoptimal.com

We do the folloWing for you:We aim to: Why use our services:

20140423 FPI Article.indd 1 5/12/2014 6:50:49 AM

68

REguLATION

David Kop, CFP® | Head: Membership and Corporate Relations at the Financial Planning Institute (FPI) Fee based vs. fee only

Fee based: A method of remuneration where the financial planner will charge a time or activity based fee, but the collection of the fee is offset against any product commission earned if a product is implemented. This method of remuneration allows for a transition to a fee only practice, but facilitates the collection of the fee. If a product is not sold the client would remain liable for the agreed upon fee and this would be payable in cash.

Fee only: Defined as, ‘A method of compensation where only a fee is received from a client, with neither the professional member nor any related party receiving compensation contingent on the purchase or sale of any financial product. For this purpose a related party shall mean an individual or entity from whom the professional members derives any direct or indirect economic benefit, as a result of the party implementing a recommendation made by the professional member.’ 1

Fee methods

There are four methods of charging fees outlined (See table below.)

With Retail Distribution Review (RDR) looming in South Africa the topic of advisor remuneration is a hot potato. The Financial Planning Institute (FPI) has released a discussion document about advisor remuneration. The purpose of this article is not to enter into the debate, but rather to discuss the advantages, disadvantages and potential conflicts of the various fee structures for planners who are considering the fee only or fee based route.

Feestructures

Method CommentsPercentage of Assets under Management (AUM)

The planner may charge a percentage of assets as an initial fee, and then an ongoing fee expressed as a percentage of AUM.

A fee for service The planner would list the services they provide and these services would be performed at a fixed fee for that service.

A retainer The client signs a debit order and a (normally) monthly retainer is charged.

An hourly rate The planner would prepare a quote before preparing any advice and bill the client for the hours.

Table 1: Fee methods

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structures Method Disadvantages AdvantagesPotential Conflict

Percentage of Assets under Management (AUM)

• Planner’s income linked to market performance.

• Focus is on asset management thus the other aspects of financial planning may be ignored.

• Exposed to competition from holistic planners.

• Planner’s income will increase as markets rise.

• Easy to explain to a client.

• No need to install fee collection processes as the fee is collected from the investment.

• Already in place with collective investment schemes.

• Could lead to potential bias to investment products.

A fee for service

• Risk of mis-quoting borne by the practice.

• Risk of non-payment for services rendered.

• No conflict of interest.

• Encourages efficiency.

• Limited scope for dispute based on fees, as all parties will be aware of the fee and the service.

• Still a need to continually source new business.

A retainer • Harder to come to an amount.

• May not collect fees even though service rendered.

• Will need to set up collection mechanisms.

• Business planning easier as annuity income will be built.

• Fewer potential conflicts with clients.

• May lead to an “I’m the expert,” approach as the planner would fear losing income if a client is referred to an expert (i.e. a tax accountant).

An hourly rate

• Can reward inefficiency.

• Limited number of hours a month that can be billed.

• May be more difficult with new clients.

• Need to develop systems to track bill and collect fees.

• Simple to explain.

• Planner would need to get to know the client upfront before quoting.

• High value placed on financial planning services.

• Can create an incentive to over complicate advice to bill more hours.

1 FPI Code of Ethics and Professional Responsibility on pg. 5 – Fee Only”

Advantages, disadvantages and conflicts

Implementing a fee based practice is not a one size fits all, and may not even be the solution for all clients. Many clients may prefer to stay on a commission structure as this will enable them to at least access financial advice. The advantages, disadvantages and potential for conflict are discussed below.

Best practice would imply that a practice should not stick to only one fee method but employ a variety of fee methods, including commission, depending on the needs of the client.

For example, a planner could set a fee for risk cover analysis at R 3 500. However should the client accept the proposal and the planner implement the risk product, the commission earned would offset the fee.

Another example could be where a planner charges an hourly rate for doing an investment analysis, as well as an AUM fee if the product is implemented with the planner.

Conclusion

The transition to a fee only or a fee based practice is not something that can be done overnight. While we do not know the final form that retail distribution review will take in South Africa, it is clear that at least for a portion of clients, a fee system will need to be introduced.

The fee method is just one aspect that needs to be considered. The FPI has developed a guide and toolkit to becoming a fee based practice, which was presented at the annual convention and is available for member download.

Planners and practices can best prepare for the transition by:• Revisingandcementingtheirvalue

proposition.• Understandingtheirservicesandwhatit

costs them to deliver this service.• Criticallylookattheirbusinessstructure,

staffing and CRM tools to ensure that they can deliver the promised service to clients.

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BCom Honours FInAnCIAL PLAnnInG

WHAt WILL I LeArn?The purpose of this honours qualification is to develop the student’s expertise in the discipline of Financial planning. Qualifying students will have the skills to provide financial and investment advice to individuals and also reflect on the holistic implications of such advice.

The following modules will help the student to achieve the purposes set out above:

Investment Planning, Tax Planning, Insurance and Risk Management, Estate Planning, Employee benefits, Retirement planning, Case Study, Research Methodology.

WHAt Work CouLd I do onCe quALIFIed?Students that qualify are employed by a wide range of financial planning specialists, some are employed by banks, retirement funds or other financial institutions as Financial Planners, Financial Advisors and Investment Analysts, but the majority end up as self-employed entrepreneurs.

WHICH ProFessIonAL Body CouLd I BeLonG to?The Honours in Financial Planning offers a successful candidate an opportunity to write the Board Exam of the Financial Planning Institute of South Africa (FPI) and if successful, an invitation to take up membership as a CFP® professional (provided the candidate meets the other requirements).

For more information on the FPI and a career as a financial planner visit www.fpi.co.za.

ContACthttp://www.uj.ac.za/fininvestman

dePArtment oF FInAnCe And InVestment mAnAGement

InVest In yourseLF – tHInk FInAnCe

A4 flyer BCom Hons 2014.indd 1 2014/04/22 2:33 PM

CLIENT ENgAgEmENT

PRO BONO

Barry O’ Mahony, CFP®, FPI 2013 Financial Planner for the Year and Founder of Veritas Wealth Management

Towards the end of last year Veritas Wealth Management heard about FPI’s Financial Planning Week, and spoke to a number of financial planning practices in Cape Town

who are also CFP® professionals. The group discussed how it could best use its collective experience, knowledge and time, to have the greatest impact.

The firms realised that as individuals, businesses, community members and more importantly, professionals, they have large circles of influence. If one considers a financial planning practice, each planner has at least 200 relationships that they are engaged with, on an ongoing basis. Most of these clients have children or grandchildren between the ages of 20 – 35 year olds, or in the South African context, they invariably have domestic workers and gardeners.

Pro bono, the value of

Research shows that pro bono activities have clear benefits to practitioners as well as their employers, over and above the ‘feel good

factor’ that comes from serving the community. Barry O’ Mahony, CFP®, shares his experience and views on pro bono.

giving back

The group of CFP® professionals invited their clients to send their children and/or grandchildren, as well as their domestic workers or gardeners, between the ages of 20 – 35 years old to an educational evening. The team booked the Allan Gray auditorium (kindly sponsored by them), and FPI supplied collateral for the guests as well as the FPI MYMONEY123™ financial education programme, to base discussions on. FPI also allocated funds toward refreshments.

The evening was based on various presentations given by CFP® professionals, explaining the CFP® professional designation, and urging participants to seek out a CFP® when they needed advice. A presentation was also given on personal financial issues pertinent to the audience. A panel was formed including one representative from each practice to answer questions from the audience.

Later in the week, the group rented the Claremont civic centre (kindly paid for by FPI), another CFP® professional offered an enlightening presentation, made even more interesting because the speaker could converse in Xhosa. This is definitely an advantage. It is fascinating to hear other financial planners use their own analogies and give great presentations.

What did Veritas get out of it?

Nothing. This project was about giving back, something financial planners are perhaps unused to, but something which needs to change. The companies had an opportunity to interact with their client base, and show them their willingness to help their children and grandchildren at important stages in their

lives. The presentations were also helpful to domestic workers and gardeners, in assisting them to become more financially literate and organised, an area where much improvement is needed in South Africa, to protect innocent consumers from unscrupulous financial services providers.

Building relationships with the next generation is important; and through projects such as these, a relationship is able to be formed.

Financial planners can easily hold presentation events and give back to the community. By gathering a few CFP® professionals, presentations can be offered at a nearby school to the parents and teachers, church groups or even your corporate clients. Use this as an opportunity to help them help their staff become more financially literate.

CFP® professionals could also set aside time to meet people one on one, but this may be very time consuming. Veritas found that group sessions were easier to organise and offered better results.

For financial planners and their colleagues; remember that pro bono work is not about trying to find new clients. In fact,the goal should be to end the week with no new clients at all. The objective should be to create awareness that there are great financial planners out there, called CFP® professionals.

Contact us

To find out more about the value of giving back, the benefits of pro bono, the volunteer opportunities available, and to get access to the recently published FPI pro bono paper on Skills-based volunteering: The mark of true professionalism, simply email volunteer@fpi.co.za.

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BCom Honours FInAnCIAL PLAnnInG

WHAt WILL I LeArn?The purpose of this honours qualification is to develop the student’s expertise in the discipline of Financial planning. Qualifying students will have the skills to provide financial and investment advice to individuals and also reflect on the holistic implications of such advice.

The following modules will help the student to achieve the purposes set out above:

Investment Planning, Tax Planning, Insurance and Risk Management, Estate Planning, Employee benefits, Retirement planning, Case Study, Research Methodology.

WHAt Work CouLd I do onCe quALIFIed?Students that qualify are employed by a wide range of financial planning specialists, some are employed by banks, retirement funds or other financial institutions as Financial Planners, Financial Advisors and Investment Analysts, but the majority end up as self-employed entrepreneurs.

WHICH ProFessIonAL Body CouLd I BeLonG to?The Honours in Financial Planning offers a successful candidate an opportunity to write the Board Exam of the Financial Planning Institute of South Africa (FPI) and if successful, an invitation to take up membership as a CFP® professional (provided the candidate meets the other requirements).

For more information on the FPI and a career as a financial planner visit www.fpi.co.za.

ContACthttp://www.uj.ac.za/fininvestman

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