Working overseas more than two decades ago, I had an opportunity to accumulate my first real savings. I didn’t know how to invest those savings or how to obtain advice to do so.
Old Mutual was a brand I knew from home, so I visited one of their advisers in Hong Kong, worrying about what the charges might be and feeling powerless to do anything but blindly follow the advice given.
On returning home, I started working at Personal Finance as a sub-editor. Four years later, I started writing for the publication and interviewed Debbie Netto-Jonker, the first winner of the Financial Planner of Year Award, which Personal Finance set up with the Financial Planning Institute.
Netto-Jonker asked me if I had a financial plan, because she thought I could not write about her, as an adviser, without understanding how a financial plan works. Pregnant with my first child, I was embarrassed to admit I did not, but that I did want to make the best plans for my family.
I have had a financial planner since, even though I obtained my own financial planning qualification. I am not sure whether this makes engaging with a financial planner easier or more difficult, but there is one key reason I don’t do my own financial planning: time and access to information.
I have learnt, both through Personal Finance and through using a financial planner, that it takes a lot of work to make the best decisions about your life, disability, income protection and dread disease cover, because you need to determine your needs and find the best provider to meet those needs.
Even if I could find the time to determine my and my family’s needs, I do not have time to do a proper due diligence on each provider’s products, or to keep up with every change to each provider’s policies. That is the job of my financial planner.
I also do not have time twice a year to pull together all the information required to do a proper check on my retirement and estate plans to see whether I will be able to retire on a reasonable income, or if I died before retirement, whether there would be enough to provide for my family.
Besides the confidence that comes with knowing that those needs have been taken care of, I know that my will is up-to-date and my investments for my children’s education are doing fine.
I am a busy professional with a family, so it is easy for things to sit on a “to do” list for many weeks. But having a financial planner means someone ensures that I turn up for the review meetings and agree about what has to be done. The admin is done for me, and I sign the documents knowing that I have made well-considered decisions.
For the past 15 years, that has been one of my best investments.
My other best investment has been in the time I took to increase my knowledge and, in particular, to obtain a Postgraduate Diploma in Financial Planning.
Another winner of the Financial Planner of the Year award, Warren Ingram, wrote in a column for Personal Finance last year that a sure-fire way to build wealth is invest time and money in yourself. This will enable you to create significantly more wealth over your lifetime. You need to ensure that your income will increase over the course of your career, he says, and for me that meant studying through my maternity leave and the first few months of my second-born’s life.
I learnt, from writing up a presentation by Morningstar’s behavioural economist Sarah Newcomb, that you have to remember your personal economy and know your own value. Behind your income stream is your labour, time, energy, intelligence, experience and knowledge – for which your employer or your own business must reward you, she said. These wise words have been, and will continue to be, a valuable financial lesson.