Fleming and Nti

Bruce Fleming and Godfrey Nti, the chief executive of the Financial Planning Institute of Southern Africa (FPI).

Fleming speech

Bruce Fleming gives his acceptance speech.

Group line up

Godfrey Nti, Bruce Fleming, Sanki Morata, the chairman of FPI, and Laura du Preez, the editor of Personal Finance.

 

 

 

Why you should be concerned whether your adviser has a compliance officer

Laura du Preez

It is difficult enough finding a good financial adviser with whom you are comfortable, so do you also need to worry about whether the adviser has a compliance officer?
Richard Rattue, the chairman of the financial advisory and intermediary services sub-committee of the Compliance Institute of South Africa, says knowing that your adviser has a good compliance officer helps you to know your adviser is abiding by the law, will make proper disclosures to you, record the advice he or she gives you and enters into sound agreements with you.
Financial advisers also consult their compliance officers when conducting a due diligence on a provider of financial products.
Rattue, who is also the managing director of Compli-Serve, a company that provides compliance officer services to financial advisers and other professionals, says the Financial Advisory and Intermediary Services (FAIS) Act stipulates that all financial services providers with more than one key individual – typically, more than one financial planner who is a partner in the business – or one or more representatives (employees of the financial planning business who provide financial advice) has to appoint a compliance officer.
The Act states that financial advisers who run a one-person business do not have to appoint a compliance officer but must themselves fulfil the duties of the compliance officer, as specified in the FAIS Act.
Rattue says a financial adviser operating alone who appoints him- or herself as a compliance officer can be a recipe for disaster, because these advisers may not have the expertise to ensure that they comply with the relevant legislation or indeed the time to read up on the myriad of regulations. For this reason, it is often these advisers who find themselves before the FAIS Ombud following a complaint by a consumer, he says.
The compliance officer has to monitor the compliance of your financial planner with the FAIS Act and to report on this to the Registrar of Financial Services Providers at the Financial Services Board (FSB).
Rattue says the key things that a compliance officer will check are whether an adviser is licensed to provide advice on the financial products he or she is recommending and that he or she completes all the necessary paperwork.
The compliance officer should also flag if the adviser is recommending any “exotic” products, such as unlisted shares or property syndications, and ask questions about these products and their financial soundness and suitability for you.
A compliance officer will also ensure that the adviser complies with money-laundering legislation and keeps a register of gifts and declares any conflicts of interest in selecting and recommending financial products.
If a compliance officer resigns from a contract with a financial services provider, the officer has to advise the FSB that it has done so and give a reason.
Compliance officers themselves have to be licensed in terms of the FAIS Act. To obtain a licence, they are expected to meet certain fit and proper requirements relating to their business operations and educational qualifications.
People with a wide variety of educational qualifications can become compliance officers, and over the past three years the Compliance Institute has developed a curriculum for compliance officers and has registered two professional designations, Compliance Practitioner and Compliance Professional, with the South African Qualifications Authority.
These professional designations will be conferred on members of the institute who have successfully completed the relevant board exam and have met the work experience requirements.
Rattue says compliance officers who are members of the institute abide by its code of ethics and can be subject to the professional body’s disciplinary process.
Unfortunately there is no quick and easy way to establish if a compliance officer is a member of the institute, but your financial adviser should disclose the name of his or her compliance officer, and you can ask about that professional’s qualifications and whether or not he or she is a member of the Compliance Institute.
The FSB’s website (go to www.fsb.co.za > Departments > FAIS) offers a search facility for financial services providers that reveals the name of the provider’s compliance officer, but no other details.
If you have the name of the company for which the compliance officer works, you can also check on the FSB’s website that the compliance officer is licensed by the FSB.

Finding a good financial adviser
Financial advisers may have a variety of qualifications, but you can be sure those who hold the Certified Financial Planner accreditation have a relevant qualification and are members of the Financial Planning Institute (FPI). The FPI has a code of ethics and a disciplinary process for planners who contravene the code.

Bruce Fleming is 2016 Financial Planner of the Year

Bruce Fleming of Citadel Wealth Management is the 2016 Financial Planner of the Year, the Financial Planning Institute (FPI) of Southern Africa said in a press release.

The announcement was made at the FPI’s awards ceremony gala dinner on Tuesday night, where it recognised leaders in the financial planning profession for their outstanding level of professionalism and ethics.

Each year, the FPI honours a Certified Financial Planner (CFP) professional with the Financial Planner of the Year Award.

“It was definitely a tough process, but it’s been worth it in the end. Entering the competition for the third time, I am looking forward to working closely with FPI and continuing to make sure that my role is executed at the highest standards set by the Institute. My role as a CFP professional is to help everyday people make the right decisions when it comes to their financial future. I am grateful for this honour,” said Fleming, who has been involved in the financial planning industry for about 20 years.

Godfrey Nti, the chief executive of the FPI, said: “We acknowledge the level of professionalism and ethics adhered to by Bruce as a CFP professional. This award recognises the individual with understanding of their role as a financial planning professional, as it also showcases the highest standard of financial-planning advice provided to their clients.

“His role as the new FPI and CFP mark brand ambassador is to continue elevating the financial planning profession. We certainly look forward to working with him in promoting the institute and the CFP mark, as well as creating awareness of the value of professional financial planning.”

Other award-winners announced on Wednesday night were:

  • The FPI Harry Brews’ Award recognises the CFP professional who has made a significant life-long contribution to the financial planning profession and the FPI. This award went to Ester Venter.
  • The FPI Media Award acknowledges the outstanding contribution to promoting the FPI and the CFP designation in the media. The award was presented to Sydney Sekese.
  • The FPI It Starts With Me Award honours the CFP professional who actively communicates the significance of the CFP designation and regularly volunteers in the FPI’s consumer outreach initiatives. For the second consecutive year, the award was presented to Kobus Kleyn.
  • The Top Student in the CFP Professional Competency Exam Award recognises the student who achieved the highest rating in the FPI CFP professional competency exams. The award went to Monique Malan.

Q&A with Bruce Fleming of Citadel Wealth Management

PF FlemingIt’s third time lucky for Bruce Fleming as the 2016 Financial Planner of the Year – he is the only financial planner in the award’s 16 years who has been a finalist for three years in succession. This year has also been marked by another milestone: a move from Consolidated Financial Planning, where he was the head of Private Clients, to Citadel Wealth Management, where his title is advice partner. A business degree and a law degree underpin Fleming’s financial planning qualifications: the Certified Financial Planner (CFP) accreditation from the Financial Planning Institute (FPI) and an Advanced Postgraduate Diploma in Financial Planning from the University of the Free State.
Why financial planning, when you must have had many other career options?
After I completed my LLB, I knew that my path was not in practising law. I joined Old Mutual Trust in 1995 as a legal adviser and, although I was not directly involved in financial planning, I recognised its importance in everyone’s life, regardless of income level. Only after I joined Acsis in 2000 did I begin to practise financial planning, and I have not looked back. I am grateful every day for the opportunity to help people achieve their financial goals.

How big is the practice, and is there an optimum size for a financial planning practice in your opinion?
I am part of a large practice at Citadel, with 102 advisers across the country. I think there’s an optimum number of clients that one adviser should look after, bearing in mind that the adviser needs to review all clients at least once a year.

Can you provide advice on all kinds of financial products, including risk cover and medical schemes, and recommend any asset manager?
I provide financial planning solutions to clients, as opposed to giving advice on a product. I am not limited to any one solution and create bespoke financial plans for each and every client and prospective client I see. I outsource to experts the parts of the holistic financial plan that I am not a specialist in, such as healthcare protection and short-term insurance.

The Financial Planner of the Year Award is designed to encourage CFP professionals to lead by example. How would you define leading by example in your profession?
I am very passionate about encouraging people who are developing careers in financial services to, first, become a member of the FPI and, second, achieve the CFP accreditation. The FPI has a code of ethics that all CFPs need to abide by and top of that list is placing the client’s interests first, which should be the core value of any financial planner.

What are the most important “don’ts” for a financial planner?
Don’t put your interests ahead of your clients’ or prospective clients’.

Can any consumer approach you for advice, or is there a qualifying level of investment, savings and/or income?
Our business is structured in such a way that we are able to offer solutions to a broad spectrum of clients, from up-and-coming young professionals and entrepreneurs to high-net-worth individuals. Having said that, financial planners typically build their businesses on a specific target market and, where appropriate, we are able to refer consumers to appropriate planners. We believe that every household should have access to financial advice.

How accessible is the financial planning profession to the ordinary consumer in your view?
I believe it is very accessible. What I hope is that all consumers are put first, and they are given advice for their unique circumstances and not for the personal gain of the planner.

What should a consumer consulting a financial planner for the first time expect from him or her?
That the financial planner is genuinely interested in the consumer’s unique circumstances. In terms of the FPI’s practice standards, the planner needs to explain to the consumer who they are and what they do, inform the client about the purpose and value of financial advice and detail their competencies. The planner then needs to conduct a high-level discussion to determine the consumer’s needs and define the scope of engagement.

If a consumer is consulting you for the first time, what fees should he or she expect, and when?
The financial plan should be seen as a founding document. Before it is delivered, the consumer needs to understand that fees will be paid, how much they will pay and, importantly, exactly what they will be getting in return. The advice contained in the financial plan is very specific to the consumer, and a lot of work goes into producing the financial plan, so the client should be prepared to pay for this. The relationship with one’s financial planner should be a long-term one. The plan should be continually reviewed in line with the consumer’s changing circumstances, legislative changes, economic developments, and so on. Once again, a consumer should be prepared to pay for this service.

Are fees negotiable?
Financial planning business models and fees vary from fixed amounts to variable percentages. Choose your planner based on your needs and their value proposition, and find a suitable financial planner and pay accordingly.

Do financial planners also receive a percentage of the investment returns?
Some financial planners/wealth managers levy a performance fee based on out-performance of a predetermined investment benchmark, others charge a fixed percentage based fee. There needs to be a clearly stated set of objectives and requirements the financial planner needs to deliver on (and be paid for).

How would you sell financial planning services to a sceptical consumer?
I don’t believe we need to “sell” our services, because the value of the advice we give and the positive impact it will have on a person’s financial well-being is clear. It is important that, from the outset, both the adviser and the client trust each other and invest in their relationship in order to realise success for both parties.

What aspect of their finances do people need most help with, in your experience?
That is the joy of being a financial planner. Everybody is unique and so are their specific circumstances. As financial planners, we need to appreciate that and help them in the specific areas that we identify they need assistance with.

Are there aspects of your profession that could and should change, or be improved?
I think that every financial planner should strive to become a CFP, because that is the pinnacle of our profession. I also agree with the Retail Distribution Review proposal that consumers should pay “as and when” fees, as opposed to commissions, when making investments.

As winner of this award, which indicates that you are at the top of your profession, what is your next goal?
Being the Financial Planner of the Year has been a goal of mine for a number of years, because it puts me up against the best in our industry. As the ambassador of the CFP trademark, my goal is to promote it, not only to the general public, but also to the industry as a whole.

What do you find most difficult about your line of work?
When people don’t follow our advice and land up worse off because of that.

What pro bono/volunteer work do you do if any?
I participate in the “teaching a child to save” campaign run by the South African Savings Institute, and I assist in financial wellness workshops at various companies, schools and universities. At a business level, we are committed to running a number of corporate social responsibility initiatives.

What is your family situation? And how do you relax?
I have been married to Noelene for 15 years and have two children: Abby (10) and Luke (8). I love playing golf and travelling with my family.

Q&A with Francois le Roux of Private Wealth Management, Old Mutual Wealth

 

PF LeRouxIt has taken 15 years in “holistic lifestyle financial planning” in the affluent and high-net-worth market sectors to take Francois le Roux to the top of his profession. Professional values came naturally to him after nine years as a practising attorney before he joined Private Wealth Management, a division of Old Mutual Wealth. Even before he made the leap into financial planning, he had an MBA and had passed various examinations through the South African Institute of Financial Markets. Since then, he has passed, cum laude, the Advanced Certificate in Tax through the University of Pretoria. He also has the Postgraduate Diploma and Advanced Postgraduate Diploma in Financial Planning from the University of the Free State.

Why financial planning as a career?
After doing the MBA, I wanted to combine my economic and management sciences background with my legal expertise and still be a professional adviser. As an attorney, I sensed that there was a need in the market for an advice-driven financial planning model for the high-net-worth market, and I believed I could be successful in such a model.

How big is your practice? Is there an optimum size for a financial planning practice in your opinion?
Private Wealth Management has a staff complement of 156, of which 71 are financial planners. We have a national footprint with eight offices countrywide. I am supported by practice administrators, a para-planner, a business coach, a practice management coach, legal advisers and marketing specialists. The optimal number of clients per planner in this sector of the market is about 150. However, this could increase significantly if the offering is a different one.

Can you give advice across the whole range of financial products, including medical schemes and risk cover, and all asset managers?
Due to our market focus, we are not tied to Old Mutual’s products, and we have contracts in place with a wide range of product providers covering investments, risk cover (long term and short term), medical schemes and group benefits. We therefore offer access to a wide range of local and offshore asset managers.

The Financial Planner of the Year Award is designed to encourage financial planner professionals to lead by example. How would you define leading by example in your profession?
Professionalism is pivotal to me, and has always been my guiding light. Thanks to my grounding in the legal profession, ethics, professional fees and accountability have been central principles since the start of my career. I am a passionate financial-planning professional, and it’s this passion and energy that creates action, focus and commitment to what we do.

What are the most important “don’ts” for a financial planner?
You are placed in a relationship of trust with every client, which requires the utmost good faith at all times. Never compromise and don’t take short cuts.

Can anyone approach you for advice, or is there a qualifying level of investment, savings and/or income?
In principle, yes, but if the client is not within our target market, we can refer him or her to an appropriate advice point within the larger corporate structure. Within the group, there are solutions available for all needs across the client spectrum.

How accessible is the financial planning profession to the ordinary consumer in your view?
The vision statement of the Financial Planning Institute (FPI) is “professional financial planning for all”. However, the number of Certified Financial Planner (CFP) professionals needs to grow in South Africa to make this more of a reality, reflecting the demographics of South Africa. Consumer education on financial planning is also important; consumers need to be informed of the importance of prudent financial planning.

What should a consumer consulting a financial planner for the first time expect from him or her?
The Financial Advisory and Intermediary Services Act prescribes that a planner should follow certain steps in an advice process, which include gathering all necessary information, conducting an analysis of the client’s affairs, choosing products that are appropriate to the client’s needs, and recording all of this in a client advice record that should be signed off by both parties. The FPI goes much further and requires CFP professionals to follow an internationally accepted six-step financial-planning process.

If a consumer is consulting you for the first time, what fees should he or she expect, and when?
Our financial-planning fees fall into three categories: (a) a financial planning fee paid after presentation of a holistic plan with detailed written recommendations; (b) an agreed fee if the client decides to implement the proposals; and (c) an ongoing advice fee, which is based on the value of the funds placed under advice. The fees for (a) and (b) will depend on the volume of work, time spent and the complexity of the relevant plan.

How would you sell the financial planning service to a sceptical consumer?
International research by Vanguard has proved that proper financial planning is linked to additional investment returns. Yet, very often, it is difficult to quantify the value of advice. A single intervention by a planner – for example, advising a client to stay the course under particular market conditions – can prevent serious damage to an investment portfolio, which, in turn, can easily offset years of adviser fees. Furthermore, detailed research done in Canada has proved the greater wealth achieved by households that had financial advice, versus those that didn’t. This has been proved to be true for all ages and income groups.

What aspect of their finances do people need most help with, in your experience?
Retirement planning is the greatest planning challenge for most people. No wonder, because the statistics of people actually retiring in a financially independent position is alarmingly low. Furthermore, bad cash-flow planning seems to be common. Very often, people don’t know exactly what they earn and what they spend. That’s a recipe for disaster. I have been keeping a personal budget since the day I started working. This brings discipline and focus – necessary ingredients for good personal financial management.

Are there aspects of your profession that could and should change, or be improved?
I have mentioned already that the number of CFP professionals should increase and should be more representative of South Africa’s demographics. The ageing adviser base is also a factor. We need more young professionals entering the profession. I think the fact that certain tertiary institutions are now offering graduate programmes with financial planning as a major subject will, in time, lead to standards being raised, as well as more well-qualified graduates entering the profession. And this leads me to the most important point: the ongoing and further professionalisation of financial planning in South Africa. We need to continue relentlessly to build our young profession to bring it on par with the traditional professions such as law, medicine, engineering and accounting.

What are you proud of in the way your profession operates?
I believe the FPI is doing a great job of elevating the standing of the profession. I am proud of the fact that my CFP designation is on a par with that of 160 000 other CFP professionals in 26 countries and territories around the globe, and that the FPI holds a Tier 1 rating with the international Financial Planning Standards Board, which controls the use of the trademark globally. We are world class!

What do you find most difficult about your line of work?
In my early years, when I had to scout for new clients, I always disliked calling them to make contact. Fortunately, that is a phase that has passed. Now what I find challenging is keeping up with new developments. Financial planning is multi-disciplinary; you have to keep up with legal amendments, fluctuating financial markets and a ton of stuff in between.

What pro bono/volunteer work do you do, if any?
I am a FPI mentor in a formal programme where I mentor a young financial planner. I am often involved in assisting individuals with their planning at no, or reduced, fees when clients request it. It is wonderful to give something back to deserving clients.

What is your family situation? And how do you relax?
I am married to Hannali, and have two children, Carlé (15 years old) and Fanie (18 years old). I am a certified workaholic. I go to gym, because I feel compelled to get some exercise, but must admit I don’t particularly like it. What I love is MTB/ mountain biking, which I took up about two years ago. I am out there every weekend on my bike, and love every moment.

Q&A with Yolande Botha of Galileo Capital

PF BothaAs one of just two financial planners in the Wealth Division of Galileo Capital, Yolande Botha has come a long way since she was a pharmacist with her own struggling business. When she was forced to shut up shop, she was attracted to financial planning by the potential to “change people’s lives for the better” and joined a life assurance company to gain broad experience of financial products and services. Ten years ago, she joined Galileo Capital and was mentored to become a fully fledged Certified Financial Planner (CFP) professional. She has the Postgraduate Diploma in Financial Planning from the University of the Free State.

How big is the practice, and is there an optimum size for a financial planning practice in your opinion?
We have nine advisers and 17 support staff in our group. In the Wealth Division, I am one of two planners and seven support staff composed of relationship managers, para-planners, practice managers and an operational manager. A financial practice doesn’t need to limit the number of financial planners, as long as it limits the number of clients any one planner may service. In our company, we have limited this to 120 clients per planner.

Does your advice extend across the full range of financial products and all asset managers?
We are an independent financial planning practice and can recommend any product and asset manager. However, we do limit the scope of our advice to investment planning. If clients need life or disability cover, or a will and estate planning, we refer them to experts in these fields within our group. We feel that you cannot be an expert on all aspects of financial planning and, although we keep ourselves updated on trends in risk, healthcare and estate planning, we try to ensure that our clients get the best advice possible in every aspect of their plan.

The Financial Planner of the Year Award is designed to encourage financial planner professionals to lead by example. How would you define leading by example in your profession?
You need to put your clients first. Always do the right thing. Solve problems and provide solutions, rather than sell products. You need to hold yourself to very high standards and conduct yourself in a way that makes you worthy of holding the CFP certification. As a CFP professional, you hold yourself to a code of ethics and a code of conduct, in addition to regulatory standards. You have to treat every person with respect and keep your interactions honest and fair – and that goes for your biggest client and your most junior staff member.

What are the most important “don’ts” for a financial planner?
Don’t be a product pusher and don’t look at your remuneration first. Some planners fall into the trap of treating every client the same. Every person has a unique set of circumstances and needs advice suitable for their requirements.

Can anyone approach you for planning, or is there a qualifying level of investment, savings and/or income?
Our group covers all categories of clients. One of the divisions is an automated service, or “robo-adviser”, called SmartRand, which deals with individuals who do not want face-to-face contact and people who are just starting to save. Verso-Wealth is another division that looks at the full range of client needs and also offers disability and life cover.

How accessible is the financial planning profession to the ordinary consumer in your view?
Not very, unless you are prepared to pay an hourly fee and do some work yourself.

What should a consumer consulting a financial planner for the first time expect from him or her?
There must be simple and understandable communication. Transparency is very important, particularly in the services offered, what the fees are and how they will be charged, and how the recommended products will work for you. You should expect your planner to be approachable, knowledgeable and experienced; there are no dumb questions when talking to your planner. You should expect to be treated honestly, fairly and with integrity.

If a consumer is consulting you for the first time, what fees should he or she expect and when?
Before delivery of a financial plan, either a consultation fee or no fee if there is an agreement in advance to develop a plan. After delivery of a financial plan, there would be a fixed fee, or a monthly advice fee. If the relationship continues, a monthly advice fee would apply.
Fees are negotiable and are usually negotiated upfront. There should be value for the client on an ongoing basis, otherwise they have the full right not to pay ongoing fees.

Do financial planners also receive a percentage of investment returns?
Our planners are paid a salary, but fees for clients are either a monthly fee payable by debit order or a percentage of assets under management, never both. We do not get a percentage of the investment returns.

How would you sell financial planning services to a sceptical consumer?
There are some consumers, about a third, who are fully capable of running their financial affairs efficiently and accurately. However, about two-thirds require varying degrees of input. Some require an objective sounding board and others full management of their investments. A great planner will deliver much better growth and performance for this group of clients by helping them to make intelligent and rational decisions in difficult times.

What aspect of their finances do people need most help with, in your experience?
There is generally a limited understanding of how financial products and investments work. People need most help with understanding how investment markets work, so that they avoid irrational decisions in difficult times.

Are there aspects of your profession that could and should change, or be improved?
There should be more transparency on fees and costs throughout the “food chain” of the financial industry, as well as within the structure of certain products. For example, it is difficult to compare one disability product with another.

What are you proud of in the way your profession operates?
The profession allows great financial planners to change people’s lives, particularly in difficult times when people need help most.

What do you find most difficult about your line of work?
Unethical product providers who do not treat their clients fairly.

What pro bono/volunteer work do you do if any?
Ten to 15 percent of our hourly consultations are pro-bono for those who cannot afford professional advice.

What is your family situation? And how do you relax?
I am married with a five-year old son. For relaxation, I love to read, I’m training for a half marathon and scuba diving is a passion.