At times the success of a financial plan is immeasurable

How much wealth you accumulate or the returns you earn on them are not always a measure of how much value you can get out of using a financial adviser, top financial advisers told the recent Financial Planning Institute’s conference held in Cape Town.

While it is worth measuring assets, liabilities, net worth or returns, there are times when the value of financial planning is difficult to measure, Ricardo Teixeira, head of people at BDO Wealth, said.

This is because textbook financial plans are not always the best outcome when people are experiencing life events, planning for mortality or for their families or how to live well, he said.

Teixeira then asked four former winners of the FPI’s Financial Planner of the Year to give examples of cases where planners helped clients achieve the best outcome with their money but an outcome that could not be measured in numbers.

How a plan can bring family together

Warren Ingram, co-founder of Galileo Capital, said he had a client in his early sixties who owned a successful small business. After many conversations, he admitted he felt unfulfilled and missed his adult sons, one of whom lived overseas and another in another city. He wanted them to join his business and live closer.

Ingram met the sons and established that they were keen to move into the family business but did not want to compromise their parents’ financial future.

Ingram helped the family plan to ensure the parents' financial future was secure and then the sons were able to start working with them in the business. The sons in turn had their own families and everyone was happier. You can’t put a number on that multi-generational fulfilment, Ingram says.

How a plan can accommodate risk-aversion

Ian Beere, chairman of Netto Invest Group, related the case of someone he knew personally who was the son of a widowed client. Beere had experienced the man to be extremely cautious with money and very careful about what he spent.

In exploring the mother’s life, Beere found out that her early married life had been characterised by her husband’s struggles to keep a job, and many instances of the family losing their home, car and other possessions. The woman told Beere that when her son was young, he told his mother he would make sure this kind of thing never happened to him.

The son lived overseas and had his own adviser who told him he was invested so conservatively it was reckless and he was losing out on returns. The son was uncomfortable taking more investment risks and turned to Beere for a second opinion.

Beere did a calculation for him showing him that he had already saved enough to live comfortably off his savings at his current income level until age 100. This gave his friend a lot of comfort that his future income was secure.

As the man planned to continue working and saving, Beere advised him to leave his current savings invested conservatively but to invest his future savings more aggressively. He explained to him this meant that if the markets did well, he could spend more on future holidays, but if the markets performed badly, he could down scale back his holidays without affecting his future base income.

Beere said this compromise helped the man take a little more investment risk and be more relaxed about his money. Given his past, having no risk of jeopardising his future income was a good solution.

How plan can ease end-of-life

Wouter Fourie, chief executive officer at Ascor Independent Wealth Managers, related the case of a couple in their late forties who were both working corporate jobs, had good incomes and were saving well.

The couple were in good health, but the woman did not have any severe illness cover. Fourie recommended that she take out some of this cover as illness is a risk.

Six months after taking out cover she was diagnosed with stage four cancer. The policy paid out and she was able to fulfil her dream of taking a holiday to the Greek islands. Shortly before she died, she thanked Fourie for helping her to prepare for her death.

That's when you realise that it's not always about the money, Fourie said. It's not always about helping people to manage money in their life but about helping people to manage their lives and the challenges they develop, he said.

Planners help people prepare for retirement, we help people prepare for investments, he said. But planners also help prepare people for life and unfortunately, life is unpredictable, Fourie said.

How planning can help the grieving

Nicola Langridge, a wealth manager from Private Client Holdings, said she advised a couple after the woman was diagnosed with brain cancer. The woman made all the financial decisions for the couple and their two young children, as well as for her parents.

Langridge said the woman was worried about how her husband would make financial decisions alone and wanted to know that he had an adviser who would assist him after she died.

She also had certain financial goals – about the school her daughters should attend, about the funding of their future weddings and for her husband and daughters to go on regular holidays.

After his wife died, the man said putting these financial goals in place gave him peace of mind as he didn’t have to make rushed decisions while he was grieving.

We tend to make stupid emotionally driven decisions when we are grieving. Having a plan already put in place that you can follow just makes grieving easier, Langridge said.

How to find a planner willing to connect with you

Kim Potgieter, managing director and head of life planning at Chartered Wealth, said at the FPI conference that most of us are reluctant to share our financial goals because we are scared of being judged.

But a planner should be a good listener and encourage you to explore what you want to do with your money, she said. They should also explain the relevance of your relationship with money and explore yours with you and how it may influence your thinking in a non-judgmental way, she added.

We all go through many life transitions – including a new job, starting a family, losing family, divorce, retrenchment and retirement – all of which are often emotional times. A good planner should listen with empathy and use those times to connect with you, Potgieter said.

Working on your financial life plan in this way will enable you to own and stick to it, she added.