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The #MoneyMakeover competition is being run by City Press with financial services company Momentum. Over the course of a year, six candidates have been trying to save money and reach their financial goals. Each is partnered with a financial adviser.
None of our #MoneyMakeover candidates could have achieved what they have without their financial advisers, who helped them create realistic financial goals that they could achieve within a year and create financial plans for the future.
This week, we interviewed three financial planners who have been working with the candidates over the past few months.
What motivates you?
Momentum financial planner Ike Diale, who has been in the industry for 22 years, strongly believes in the power of employee benefits because, for most South Africans, their only form of investment is their company pension fund. “For many people, it is not only the one nest egg they have, but also the only thing to bequeath to their children. In addition, owing to a lack of financial literacy, awareness or discipline, coupled with affordability, it is the only income replacement and security they have.”
Felix Gqomfa has worked in the industry since 1992 and became an executive financial planner at Momentum two years ago. For him, the best part of his job is getting parents to prioritise their children’s education and to provide for them when they are no longer around.
“I feel that I am the voice of the voiceless,” says Felix, who adds that he also enjoys educating and empowering people around budgeting and investing, especially when it comes to saving them from investing in pyramid and Ponzi schemes.
After receiving a Bachelor of Commerce with honours in financial economics, Lance Lawson spent 12 years working overseas before joining Momentum as a financial planner a year ago. His decision was motivated by his need to help people solve their financial worries and make positive changes in their lives. “Each day is different and every person’s circumstances are unique, which makes it interesting.”
The mistakes people make
- Trying to keep up with the neighbours
Ike says, in his experience, the most common mistake made by people is not having a financial plan and then trying to live the lifestyle of the people next door. They may not have the same resources or don’t realise that their peers are indeed living in extreme debt. As a result, they end up using credit to supplement their income, rather than living within their means.
- Not preparing for the worst
“The most common mistake I’ve come to recognise is that clients do not have adequate and affordable protection against risks,” says Lance.
Felix agrees and gives an example.
In 2008, he was working at Absa when he met a twentysomething couple who had just got married and wanted to take out an education plan for their two-year-old daughter.
Felix did a need analysis and realised they had nothing in place should the father, as the breadwinner, died or became ill. The cost of death cover was R500 a month, but they decided instead to put the money into a monthly investment.
“A year later, the woman came with her child and sat in the same chair, but wearing black. When our eyes met, I knew.
“She cried and told me her husband had been involved in an accident and had died. He left no inheritance, except for a few months’ contributions to that investment.
“I still wish I had insisted more. I could have made sure the daughter had a brighter future.”
The best financial advice
Ike believes the only way to financial success is to have a plan and also to ensure you have a board of advisers. “These are people who, in addition to your financial adviser, are successful individuals and who want to see you succeed as well. They act as a sounding board for your financial transactions.”
For Lance, paying off debt is the best investment you can make, followed by retirement planning. “Think about dividing your salary in two – the one you earn now and the one you are saving for your retirement.”
Felix believes the best advice is professional advice. “If your car is having problems, you take it to a mechanic. For your finances, see a financial planner.”
The clients that make it all worthwhile
For any financial planner, the greatest reward is seeing a client flourish because of good advice. While all our candidates have rewarded their advisers by working hard at staying on budget and paying off debt, Ike shared a story with City Press about one of his favourite clients.
Dani first consulted Ike in 1998 when she started working at the age of 22. Her employer didn’t have a pension fund or medical aid, but Dani wanted to make sure she had the right insurance and investments in place for her future. Ike created a comprehensive financial plan that included risk cover and medical cover, as well as investments for herself and an education plan for her son. At the time, her take-home pay was R2 800 and her monthly contributions came to R600. That meant that 21% of Dani’s salary went to taking care of her and her family.
“The most remarkable thing was her discipline, her involvement and her constant calls for information and advice. She would call me whenever she had doubts about financial matters and would send me a spreadsheet of all her expenses. We would make changes if needed,” recalls Ike.
After four years, she asked Ike for “permission” to buy her first property.
She had saved enough money in her unit trust investment for a 30% deposit on a flat. Dani paid off the first property in six years and then bought a townhouse.
“Given the performance of her investments, she was able to come up with more than 20% for a deposit, even though the bank offered her a 100% bond,” says Ike.
“If Dani was able to put 20% of her salary away for her future – on her income and with a child to support – anybody can.”
How did you get out of credit card debt?
SMS the keyword DEBT and your answer to 35697. You can also email us at trending@citypress.co.za. SMSes cost R1.50. Please include your name and province.
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Do you have a financial planner?
SMS the keyword ADVICE and your thoughts to 35697. You can also email us at trending@citypress.co.za. SMSes cost R1.50. Please include your name and province
Join the #MoneyMakeover journey at city_press.atavist.com/money-makeover, on Facebook at facebook.com/CPMoneyMakeover or on Twitter at @CPMoneyMakeover and get involved by using the hashtag #MoneyMakeover
