This article was first published in the 4th-quarter 2015 edition of Personal Finance magazine.
The high level of professionalism among South Africa’s financial planning elite, the members of the Financial Planning Institute (FPI), is nowhere better showcased than at the annual Financial Planner of the Year Awards held by the FPI and Personal Finance. The 2015 winner, Wouter Fourie of Ascor Independent Wealth Managers in Pretoria, not only epitomises a financial services professional, but also someone who is making a valuable contribution to the development of the profession in South Africa.
It might be worthwhile to remind ourselves of what we should expect from a professional in any field. Among other things, he or she should:
* Be suitably qualified, with a professional qualification, preferably recognised internationally;
* Have acquired considerable practical experience;
* Continually keep abreast of new developments in the field; and
* Have integrity, abiding by a code of ethics and putting the interests of you, the client, above personal considerations or interests.
If you are looking for a financial planner, or if you have one and are not satisfied with the service you are receiving, Fourie and his company provide a good example of what is available to you if you are prepared to look – and pay – for it. More and more people in South Africa are willing to pay for professional financial advice, just as they would pay for any other professional service, instead of obtaining supposedly “free” advice from advisers who rely on commissions.
Fourie is a qualified Professional Accountant (SA) with a postgraduate qualification in advanced taxation. In common with all senior members of the FPI, he holds the international Certified Financial Planner (CFP) designation, having completed the Advanced Postgraduate Diploma in Financial Planning (specialising in investments and estate planning) from the University of the Free State. His experience in comprehensive financial planning and wealth management spans more than 18 years.
Fourie has been invited to be guest speaker on TV channels Kyknet and Summit TV, and on Afrikaans radio station RSG and various smaller stations. He has also been a guest lecturer at the University of Pretoria.
Outside work time, he is a keen mountain biker and volleyball player and enjoys a good gym workout. When not playing sport, he enjoys reading, watching rugby, cooking, and doing DIY projects around the house. Most of all he treasures spending quality time with his family: his wife, Iléma, son, Enzo, and daughter, Chantou.
In 1997, Fourie started his own accounting and tax consulting practice in Pretoria. In March 2005, the Ascor Group was formed after he merged practices with Martin de Kock of Pro Deo Auditors.
As the chief executive of Ascor, Fourie has seen the business expand from specialising in accounting, tax and auditing for small businesses to providing the entire gamut of financial services to both businesses and individuals – from accounting to financial planning, employee benefits, and estate planning and administration. Ascor has a staff complement of 25, which includes four CFP professionals and several interns (it was the first practice in South Africa to implement an internship programme for CFPs).
“We saw a need for holistic planning for small business owners and individuals, so we expanded into financial planning, and now offer a one-stop multi-disciplinary service. The name Ascor is an acronym for Associated Specialist Corporations,” Fourie says. “What I think gives us an edge in the market is that we have everything under one roof. We don’t have to outsource any professional services, so we have full control over quality. And we have taken the lessons we have learnt from the accounting and auditing environment and applied them to the financial planning environment.”
Ascor is an independent practice, and Fourie says the firm is registered to sell the products of 12 carefully selected financial product providers. The firm has done a thorough due diligence on each of these providers, in accordance with the requirements of the Financial Advisory and Intermediary Services (FAIS) Act, and it regards the 12 as the top companies in South Africa with which to deal.
“We look for quality, not quantity,” Fourie says. “The FAIS Act requires us to disclose to our clients the companies we have contracts with. In terms of the requirements, you need to be registered with a provider and do a due diligence on that provider before you can offer their products. However, these providers have no financial stake in our company. We are not prescribed by any provider in terms of volumes or products, and that makes us totally independent.”
As a client of Ascor, you are not limited in your choice of where to invest, because the product suppliers Ascor uses have investment platforms, such as Glacier by Sanlam and Allan Gray, that provide access to the full spectrum of collective investments and direct share portfolios.
Fourie is proud of the diversity of clients Ascor attracts. It differentiates between pre-retirees – working professionals, executives and business owners – and retirees, widows and divorcees. And although many live in Pretoria, they can be found across the country and across the globe. Most overseas clients have South African connections, Fourie says – they are either working overseas, permanently or on contract, or have retired to foreign shores.
And not all of Ascor’s clients are in the high-net-worth category. There are different levels of planners at Ascor, accommodating different levels of affordability, Fourie says.
He says lower earners also benefit from the pro bono work he is involved in with the FPI, whose MyMoney123 financial literacy programme and other programmes target poorer communities, companies, schools and colleges.
Fourie’s involvement with the FPI has increased in recent years, thanks largely to the encouragement and support of his financial planner colleagues. But it also comes from his own desire for positive change. “You can’t just stand on the sidelines and scream at the ref; you need to get involved,” he says.
As the chairman of the FPI’s Pretoria regional committee, earlier this year Fourie was elected by his fellow members to represent them at board level, and he is now a director of the institute. He also chairs the FPI Certification Advisory Panel and sits on the FPI Practice Standards Working Group. At the FPI, he says, he feels “the heartbeat of professionalism” and is in a good position to judge how the profession is standing up.
In his years in professional practice, the biggest change Fourie has seen has been the move towards professionalism. “The industry has moved away from product pushing to having young advisers who are hungry to move to the next level, raise their qualifications and be recognised as professionals,” he says.
There have also been great changes in legislation (in the past year alone, the Financial Services Board has issued about 200 notices that affect financial planners), technology (the industry has already introduced “robo-advisers”), a huge improvement in the quality of financial products, and better business management among planner practices. Importantly, he says, the FPI has moved away from being simply a members’ organisation to being a truly professional body that represents financial planners in South Africa.
Fee-based practice
Ascor is an independent, fee-based practice, and its type of fee structure is becoming common among financial planning businesses.
Pricing options are based on the two legs of financial planning: advice (getting to know you and drawing up a financial plan), and the implementation of that advice. Fourie explains that Ascor charges a fee per service, not a time-based per-hour fee, and any commissions earned by the company on products in the implementation phase offset what you pay.
* Advice and planning. You pay a once-off fee, which can cover a full financial analysis that provides an overall picture of your finances, a single analysis of a specific aspect of planning (for example, your retirement investments), or an analysis of a specific product. The amount you are charged depends on the complexity of your finances. If, for example, your estate includes close corporations, trusts, and offshore bank accounts, and you have to take account in your will of dependants from a previous marriage, you’ll pay more than if you have no dependants and your assets simply involve a property, discretionary savings in local unit trusts, and retirement savings.
* Implementation. If you decide to use Ascor to implement your plan, depending on the financial products chosen, Ascor will act as an intermediary, servicing you for the life of the products you are using and up to five years after they have run their course.
You can be a pay-as-you-go or contracted client. Contracted clients receive 12 contacts a year and four reviews, of which two are face-to-face reviews. Typically, fees are collected via debit order or by way of a deduction from assets under management.
All charges and commissions are disclosed and thoroughly explained in your contract or financial plan. “We don’t like surprising our clients,” Fourie says, adding that, in order not to compromise the quality of its service, Ascor limits the number of clients per adviser. “When we get more clients, we bring in young advisers as part of our mentorship programme, and pay them a salary, not commission,” he says.
STRUCTURE OF A POLISHED FINANCIAL PLAN
The financial plan of a client submitted as a case study by Wouter Fourie as part of the requirements of the Financial Planner of the Year Award gives a good idea what a thoroughly prepared plan entails. It follows a structure formulated by the Financial Planning Standards Board (FPSB), an international body that owns the Certified Financial Planner (CFP) designation and to which the Financial Planning Institute (FPI) is affiliated.
Not all CFPs follow this structure. Fourie says: “I believe there needs to be a standardised format, like you have a format for financial statements for auditing requirements, and we’re probably moving towards that on the financial planning side as well, so it’s easier for clients to compare apples with apples.”
The drawing up of the plan is one step in the FPSB’s recommended six-step financial planning process. The planner must:
1. Establish and define his or her professional relationship with you. This involves, among other things, establishing what the planner is qualified and licensed to advise you about and sell you, and what and how you will pay for the service provided.
2. Collect your information. The more comprehensive the details of your finances and personal history you provide, the more detailed and relevant the resulting advice will be. This step also involves you defining your needs, concerns and goals.
3. Analyse the information. It’s now up to the planner to analyse what you have provided and do the necessary number-crunching.
4. Prepare and present the plan, with recommendations. The planner prepares a plan for you, with proposed ways for you to reach your stated goals.
5. Implement the plan. The active part of the process, which is usually ongoing. This may not involve the planner – you may decide to carry out the planner’s recommendations by yourself.
6. Revise and monitor the plan. Even if the planner is not involved in the implementation, it is important to “touch base” with him or her regularly to make sure you are on track and make necessary changes or revisions, especially if there are changes in your personal circumstances.
Documentation
Broadly, the documentation prepared by the planner includes:
* Introductory letter. Summarises the six-step planning process, and briefly details what you have discussed in face-to-face meetings with the planner.
* Client mandate. Details your specific requirements.
* Terms and conditions of engagement. Details both your and your adviser’s responsibilities under the client-adviser contract or agreement.
* Disclosure document. Details all disclosures the planner is required to make in terms of the Financial Advisory and Intermediary Services (FAIS) Act: contact details of the planner; routes available for complaints, including any internal complaints structures and the contact details of the FAIS ombud and the Ombudsman for Long-term Insurance; a list of product providers the planner is registered with and whose products it may sell; a list of the areas of financial services on which the planner is licensed to give advice; ties to product providers, if any; other conflicts of interest, if any; and the planner’s remuneration structure, explaining exactly how and what you will be charged.
* Executive summary. An easy-to-grasp summary of the planner’s full report and recommendations. The end of the summary provides an action plan for you to implement the recommendations.
* Detailed financial planning strategy document. Comprises the bulk of the financial plan. It provides full details of all the financial and personal information supplied by you, including the ages of you and your spouse, expected retirement date, details of your dependants, assets (including investments) and liabilities, and current cash-flow situation, with income and expenses. It also details assumptions made by the planner in doing the analysis, such as inflation rate, executor’s fees and the client’s current risk profile.
There follows a full analysis, including graphs and tables, under the following headings:
– Financial management. Assesses your overall financial position and how you are managing your finances.
– Asset management. Analyses your investable and non-investable assets, pointing out danger areas or flaws in strategy.
– Risk management. Deals with your medical cover and life and disability cover.
– Tax planning. Assesses your tax position and how to optimise it to become more tax-efficient.
– Retirement planning. Looks at your retirement savings, date of retirement, targeted income in retirement, instruments for generating an income in retirement (including the different types of annuities) and the liquidity of those investments.
– Estate planning. Looks at your will and how your estate will provide for heirs and beneficiaries under different scenarios.
Under each heading, your current position and specific concerns are noted, and proposed solutions are spelled out. These may include: paying off debt, establishing an emergency fund, selling certain assets, adjusting the asset allocation of investments, and setting more aside each month for retirement. (Not all clients will opt for the full analysis, requiring advice in possibly only two or three of the areas listed above.)
JUDGING PROCESS
The Financial Planner of the Year competition comprises three stages:
1. Submission of a financial plan. The candidate submits a client’s financial plan, which is assessed by a panel of Certified Financial Planner professionals and academics.
2. Visit to the planner’s office. The business premises of shortlisted candidates are assessed by a specialist team for compliance and practice management.
3. Presentation and interview. In the third round, the finalists present their practice to a panel of judges and are interviewed on industry trends, technical issues, legislative changes and client relationships.
The winner and runners-up were announced at a gala evening held by the Financial Planning Institute in Sandton in June 2015.
The runners-up for the 2015 Financial Planner of the Year Award were Bruce Fleming, the executive head of private clients at Consolidated Financial Planning, and Mark MacSymon, a wealth manager at Private Client Holdings.
LOOKING FOR A PLANNER?
The Financial Planning Institute (FPI) is the professional body in South Africa for financial planners with the internationally recognised Certified Financial Planner (CFP) designation.
To find a CFP or FPI Approved Practice in your area, go to www.fpi.co.za and select “Your financial planning”. You can also find information on advisers at www.financialadviser.co.za and www.objectivemoney.co.za