| I understand the pushback on advisors that insist on doing you a plan, only to give you some CRM cookie-cutter report, heavy on where you need to spend more, but light on real insight – it’s a great way to justify parting you from your money into grudge purchases, right? Absolutely, that is what they were taught in study school, it’s all part of forcing brokers to apply their mind to the client and find out what your needs are (and is required by the FAIS act). Then there are the fees on the suggested ‘solutions’ that have a nasty habit of eroding returns, saying nothing of the ‘early termination penalties’ still imposed by some insurance investment platforms. If you were exposed to some of these shenanigans in the 90s and noughties, you are justified in being disillusioned and wanting to DIY as much as you can. Been there, done that, but got over it (thanks to some positive experiences) and actually joined the profession relatively late in life. In your early years, when you’re fighting to stay alive, put food on the table, pay off a bond and raise children, putting money into retirement is furthest from your mind. I hate to be that ‘when we’ person, but spare a thought to the boomers who were caught in defined benefit pensions in the 80s and 90s, who, when they left might have got 0,5% growth per annum on their contributions (when inflation was in double digits), and all the company contributions were left behind (until those were paid back years later, if you were lucky and on the ball).  Early on, risk to your long-term wealth must be the top priority – preserving your ability to earn an income if you become disabled or look after your dependents if you die. Hopefully, there will come a time, probably in your 50s, when you have paid off your bond and your progeny have found the wings and are no longer dependent on ‘Daddy ATM’. (If you’re not on track to achieve that, you can read one of my blogs on that here.) Up to this time, just do the best you can. If you’re not contributing to a company pension, then at least have an RA (on a LISP, please!) and an emergency fund where you can at least try and get ahead of the game. You might start a stock portfolio where you can get a feel for markets (and feel that gut-wrenching disappointment when it turns south). I put out a weekly newsletter that summarises all that and puts it in an easy-to-digest format. Drop me an email if you want to go on the mailing list.  At age 50, it is probably the optimum time to have a financial, retirement and estate plan. You have 15 years to figure out retirement and get your spending priorities in line. Sure, it’s never too late, but if you give yourself some wiggle room, then the outcome is going to be better – not because you magically put more away in investments, but because you can manage your expectations and adjust your lifestyle accordingly. Nobody wants a nasty shock when you do decide to retire and get faced with the unpleasant prospect of having to downscale your lifestyle significantly or find another job for another 5-10 years. I have seen it too many times, and it is heartbreaking. I’m not going to go into all of the reasons why you need a financial advisor (you can read one of my blogs on it here), but just be cognizant of one thing: when you’re in retirement, you don’t have the time to catch up on mistakes. Early on in your career, get your hands dirty, make your own plan, make your own investment mistakes. Get that out of your system, but climb off that Dunning-Kruger mound you might be sitting on, and discover the power of smart collaboration while you still have the chance to get on the smoother path to your retirement event.  What you need is a partnership with a financial advisory professional. It’s not unlike partnership with other professionals – sure, a surgeon will do the higher-grade stuff on you that they have been trained to, but you are going to have to play a part – even if it’s just so you don’t rip out all your stitches. A well-qualified (CFP®) and experienced planner/advisor will get to know your personal circumstances and objectives, understand the (local and international) tax, estate duty, Trusts and quasi-Trusts, regulations, estate complications (like forced heirship, SITUS tax), medical costs, financial risks and how to mitigate them, global macro and micro economics, cycles and ‘super cycles’ – this is their day job – and believe me just keeping up to date on all of that takes hours each week. One last comment on this – yes, advisors and planners can help you with the asset allocation, etc., in your investments to optimise their returns – but that is primarily the job of an asset manager, the power of a planner is as much about what they save you, even if it just from yourself. Anyone who reads my posts regularly knows that I am not a fan of a ‘fee for plan’ – a once-off plan that should last the rest of your life. A once-off fee for a static asset like a new house is great, but when it comes to your finances, not only do your circumstances change over time, but markets, regulations, sectors and economics change by the minute. A once-off plan is better than nothing, sure, but when you’re coming into a time where you’re going to switch your investments into an income and do something else, sometimes known as retirement, then you don’t want the architect-equivalent of a ‘plan’ cobbled together by an amateur. A “boer” can “maak a plan”, but they aren’t usually optimal. You could, of course, do the CFP® certification yourself; it only takes about 2 years and costs around R50k. (Having both an MBA and CFP ®, believe me, it is no walk in the park, and a large percentage of people fail on the first attempt, but you’ll have the technical knowledge of the RSA environment, but not the experience and offshore knowledge – that would need more time).  But… perhaps there is light on the horizon, and it’s not the porch light of a dingy retirement home. You could spend some time developing your personal AI Agent, train it in your specific circumstances and develop your own plan. It takes time and a fair amount of effort, and considerable research, sure, but maybe not two years and not that expensive either. (You could get the CFP ® bible if you want the technical stuff.) Use other LLMs to check their homework (they do take shortcuts, lie and give you garbage if you don’t prompt them properly). AI is not a silver bullet and is not going to give you a plan that would otherwise cost you north of R30k. If you don’t know what you don’t know, then it’s going to be garbage-in-garbage-out, and you won’t even know. Some of the basic calculations you need to project outcomes are very complicated and highly dependent on the data you feed them. You’re going to have to get your ducks in a row so that you feed your AI (or advisor, frankly) the best data (and if you haven’t already, drop me a mail for my free RedFile organisational system). Every day, I see examples in the media where someone has taken advice from an AI Agent or model and made life-changing decisions on that info, only for it to be horribly wrong. Unless rigorously prompted, they can and do give you unrealistically optimistic and rosy outcomes to make you feel better (I kid you not). Retirement is a life-changing event; don’t let your disdain for the advisory profession, or a desperate need for the approval that comes with doing everything yourself, derail your sunset years. If you’re married and the CFO, don’t leave a mess for your spouse to try and unravel, either.  Remember that there are two sides to a wealth equation – wealth is what is left over after you have spent your income, aka Income minus Consumption equals Wealth. Get your agent to help you increase your income and reduce your consumption, and you are on a winning streak. This is where they can make a much bigger impact on your long-term wealth – the more touchy-feely stuff where you can take all the fluff and positivity to make a difference. Your wealth does not have an emotion, as much as some people think it might. A share is not going to burst into tears if you sell it because Uncle Jerry left it to you. The CRM programs that many brokers are using to give you cookie-cutter plans are tadpoles compared to the power of a personally trained AI (and yes, I have my own.) So, back to basics. In my experience, someone who forms a partnership with a planner before, at and in retirement is going to have the best retirement outcome. Where possible, find an Independent Financial Advisor to partner with who has a holistic approach (not just focusing on investments, but looking at every aspect of your life that involves wealth). A Family-Office ‘lite’ if you will. You don’t necessarily have to have a lot of wealth right now to find a planner-partner – you can find someone with the right attributes and attitude who you can ‘grow’ with. |
| Articles and Blogs: How to survive volatility in your investments NEW What to do when interest rates drop NEW Difficult Financial Conversations Financial Implications of Longevity Kick Start your own Retirement Plan You matter more than your kids – in retirement To catch a falling knife Income at retirement 2025 Budget Apportioning blame for your financial state Tempering fear and greed New Year’s resolutions over? Try a Wealth Bingo Card instead. Wills and Estate Planning (comprehensive 3 in one post) Pre-retirement – The make-or-break moments Some unconventional thoughts on wealth and risk management Wealth creation is a balancing act over time Wealth traps waiting for unsuspecting entrepreneurs Two Pot pension system demystified Keeping your legacy shining bright Financial well-being when dealing with Dementia and Alzheimers Weathering the storm Pruning your wealth farm Should you change your investments with changing politics? Taking a holistic view of your wealth Why do I need a financial advisor? Costs Fees and Commissions The NHI and what to do about it New-Normal for Retirement? Locking-In Interest rates – The inflation story Situs – The Myths and Reality Tax Residency – New Rules new headaches Are retirement annuities dead A new look at retirement Offshore investing – an unpopular opinion Cobie Legrange and Dawn Ridler, Rexsolom Invest, Licensed FSP 45521. Email: cobie@rexsolom.co.za, dawn@rexsolom.co.za Website: rexsolom.co.za, wealthecology.co.za |