To give you an idea of what a financial planner can do for you, we asked the three finalists in this year’s Financial Planner of the Year competition about their approach to financial planning.
Personal Finance: What value do your clients receive for the fees they pay?
Barry O’Mahony: Generally, our clients are busy people who are often at the top of their industries. They are serious about getting their financial affairs in order, but they don’t have the time, knowledge or inclination to get it done. They pay us to help them get it done – to make sure they are continually on track, that they are not wasting money because of bad spending habits and expensive or old financial products, and that their investment strategy ties in with their lifestyle goals.
We also review plans – a process that is seriously underestimated – because legislation changes, markets move, new products are launched, new fee structures are introduced or there are new insights.
How do you charge clients for your advice?
The initial meeting is free of charge. At this meeting, we assess if we want to, or can, work with a client, as much as the client sees if he or she wants to work with us. Veritas and our planning process is not for everyone and, importantly, everyone is not for Veritas.
At the initial meeting, we get a sense of the work involved and quote a fee for a financial plan that a client can pay for and take away.
If a client wants us to implement the plan, we will charge a fee based on a sliding scale on the assets that we manage directly. We don’t charge for implementing the plan or for obtaining suitable products.
Do you spend time with clients in line with the fees they earn for you? In other words, do certain clients get more time than others?
We ask clients how often they would like to see us. We are available at any time, and clients do not pay extra for that extra time. We want to be there when a dramatic event happens, such as death or divorce, and we don’t want our clients to regard us a grudge purchase at that critical time.
Do you believe your fees will pass the Treating Customers Fairly (TCF) test, and if so, why?
Absolutely. Our fee structure has, since the inception of this business, been exactly what the TCF principles are aiming at. We are constantly looking at the level of fairness to the clients.
How much time do you spend coaching clients about their finances, talking to them about themselves, their goals and their attitudes to money? How much time do you spend developing a financial plan for them?
We are quite different to most South African planners. We concentrate on the people first and what they want to achieve. We spend quite a bit of time on this aspect initially, asking good, open questions, and, in certain cases, we work with a coach.
A financial plan could take four or five meetings, and the background work could take another 10 hours. We do not kick someone out after an hour, saying “time’s up”.
How many clients do you personally look after?
I have 105 relationships.
Who is your ideal client? Are some clients unsuitable, because they have too little money or won’t take your advice?
There are people who are unsuitable as clients. The ones we watch out for most are the do-it-yourself clients. We have learnt the hard way that they don’t work well with financial planners in the long term. They have trust and control issues. They also don’t want to pay for the advice.
What activities are you participating in during Financial Planning Week?
Together with Netto Invest and Crue Consulting, Veritas will host a workshop for 20- to 35-year-olds at 6pm on Monday, November 25, at the Allan Gray Auditorium, 1 Silo Square, Victoria & Alfred Waterfront. Clients have been invited to send their children or grandchildren in this age group, but the event is open to the public.
The three companies will also host a workshop in English, Afrikaans and Xhosa for domestic workers on budgeting and debt and how to save efficiently. This will take place at 4pm on Thursday, November 28, at the Claremont Hall on the corner of Wilderness and Bath roads in Cape Town.
* You can find out more about O’Mahony and his approach to financial planning in the fourth-quarter 2013 edition of Personal Finance magazine, which is on sale in bookshops and retailers.
CV
Qualifications: BA Honours in Economics from University College Cork, Ireland; Diploma in Business Administration, University of Limerick, Ireland; Diploma in Social Studies, University of Oxford; Postgraduate Diploma in Financial Planning, University of the Free State.
Previous jobs: Share portfolio manager for Appleton Asset Management; director at Brait Unit Trusts; head of practice development at ipac South Africa (now Acsis).
Other: Founder of the JDI (Just Do It) Foundation Trust (which supports projects in impoverished communities), the Vuka Wednesday Rugby League (a township rugby league) and Cool Play (a life skills training programme). Finalist in the 2007 Financial Planner of the Year competition.