TRANSFORMATION No, no, and no Advocating a new mindset for financial advisors By divine decree none of us know where our careers will eventually lead us. I started my career back in 1982 as a qualified analytical chemist with Warner Lambert Pharmaceuticals (WL), only to change my profession six years later to become a business planner at WL. Ironically, my nickname at WL in the 1980s was Mojaff. My affinity for financial planning started in 1995/96 when I was contracted to the first LISP company, TMA, and “sold” my first unit trust investment to a former colleague at WL. I learned my first very expensive lesson as secretary of an investment club at WL in 1998: never try to time the market. Fortunately, it was with my own money. After two lucky strikes I got it horribly wrong the third time. At the time I also obtained my BCompt degree from UNISA and I acquired the proficiency of being circumspect, especially with “broker-the-salesman” characters who had a reputation for selling products that clearly were not in the clients’ interests. Soon after I left the corporate world in 1999 I had a nauseating encounter with one such salesman. His sole aim was to make a quick sale and score big on commission, but I could see through his pitch and unceremoniously disarmed him. That was my second important lesson. Also in 1999, some friends and I invested in a paint manufacturing business. Disaster struck when our factory went up in flames in 2000. Our insurers declined our claim and I faced another radical readjustment, from a senior position at WL to a jobless and penniless state three years later. After finally closing down the businesses in June 2003 I carefully considered my options. After one job interview, I decided that working for a boss is not for me. A friend who helped me at the time asked why not start my own business? It was a light bulb moment, almost as though the chemistry at WL and the paint factory had prepared me for this – my own business in financial planning! Another friend of mine assisted me to enter the industry and set up shop as financial planner from my own home. My vision was to add value to clients’ lives, and not to pursue personal interests above that of my clients. It was particularly challenging getting the required training in an environment where the average financial advisor had already been in the profession for over 20 years. Everyone seemed to complain about the FAIS act, although I was of the view that it was an overdue and effective measure to contain the broker-the-salesman persuasion. I recall a case where a broker advised a client to cash in his provident fund and invest it into an equity fund offered by his company. This clearly served his own interests while his client would have to 62 www.bluechipjournal.co.za
TRANSFORMATION pay an exorbitant amount in tax. Churning is another lemon in our industry. Another client was persuaded by his broker to change his life cover every second year. Again, this served the interests of the broker and not the client. By 2007 I had obtained my post-graduate diploma in financial planning and in 2013 I worked on my Advanced CFP in Estate Planning and Risk Management, although I did not write the Risk Management exams. These competencies are necessary to provide the best service to clients. Just as we would like the best qualified health professionals to look after our health, so should we ensure that the best qualified financial advisors look after our financial well-being. The Three No's In order to help transform a mindset we have banned three words that carry a terrible stigma at our offices. If a consultant uses these words, they get fined R50. The offending words are: • Broker. I believe the word refers to a glorified salesman and we definitely are not salespeople. • Sales/Selling. As professionals we do not sell products. Instead, we develop financial plans/financial homes. The different investments are rooms within the client’s financial home. The size of the financial home and rooms depends on the goals and needs of the client. • Commission. Commission is what you earn when you sell something. As professionals we add value to our clients’ financial well-being and get paid a fee for that. How that fee gets paid differs from one advisor to the next. Each one of us should take responsibility for a mindset transformation in ourselves and the industry as a whole. So too should the various service providers, typically recognised as the companies green, blue, red, etc. Mohamed Jaffer (Dip Analytical Chemistry), BCompt (UNISA), CFP (Stellenbosch) Key individual and financial planner at Mojaff (Pty) Ltd. www.bluechipjournal.co.za 63
