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What you can reasonably expect from your financial adviser

 I wasn’t quite sure what to expect, but anticipated a discussion about the clients’ financial situation, their short-, medium- and long-term goals and whether anything changed in their personal circumstances that warranted a change to their portfolio. Perhaps some reassurance about their investments being positioned for the long term in spite of difficult market conditions and an explanation of the fees the adviser was earning?

So when the adviser spent about 20 minutes of the hour-long discussion explaining (quite superficially in my opinion) what the clients’ options were with regard to their endowment policies, I was taken aback.

Was I being unreasonable thinking that this engagement should have gone differently? Was I being overly critical? Expecting too much?

(Perhaps my real concern was a comment suggesting that an 8% drawdown rate from the clients’ living annuity would be appropriate at a future date. According to the Association for Savings and Investment South Africa (Asisa), living annuity policyholders withdrew on average 6.44% of their capital as income in 2015. Although a general rule of thumb suggests that pensioners shouldn’t draw

7 Ways to Give 2017 a Financial Kick in the Pants

  •  Prepare an itemised list of all your expenses and divide the expenses into Group A, being fixed expenses, such as car repayments, other debts and payments you are contractually bound to pay monthly. Other discretionary expenses you are able to reduce or even cancel without suffering any negative legal or financial consequences such as entertainment, clothing, cable TV should be included in a Group B.Select certain Group B expenses you wish to reduce or stop [that gym subscription?), do so and allocate extra payments to shorten the outstanding payment periods (and reduce the interest payable) of Group A expenses or start a small rainy day account for those unexpected financial surprises. Which expenses should be reduced and in what order of priority will depend upon circumstances such as interest rates, tax deductibility, outstanding payment periods and so on. Always a good idea to consult a professional to assist you in making the correct decision.
  • Make an appointment with your financial planner to verify whether your life, disability, dread disease and accident benefits are adequate or surplus to your needs

Pension investment options

 Once an appropriate level of risk has been determined the investment portfolio constructed on your behalf should reflect this level of risk. The performance of your living annuity will therefore be linked to the appropriate level of risk and your personal needs which is the income you require.

As you are now 61 years old, which is considered young due to increased longevity, and with the limited information provided, I have assumed that you have no liabilities or dependents and as such would be able to take on a moderate degree of risk.

If you do not have any other sources of discretionary capital you may need to consider withdrawing a lump sum to give you some liquidity and transfer the balance to a living annuity to draw your income.

At retirement of your pension you should be able to draw 1/3 as a lump sum of which up to a maximum of R500 000 could be tax free as long as you have not withdrawn any lump sums from retirement funding previously.

Any lump sum

The 8 Financial Commandments

When I first started my blog (nearly a year ago!) I had a page that was dedicated to my “financial commandments.” They are the rules that I try to live by and the ethos of this blog. After redesigning the website a few months ago, I realized that they had gotten lost in the shuffle.

The “commandments” were the reason I decided to create my blog and the guiding principles with which I try (and sometimes fail) to live my life. (J. from Budgets Are Sexy was also kind enough to feature the on my favorite blog ever—his own!)

A lot has changed in the 8 months since I wrote them: I paid off my debt, I learned  am learning how to be kind to myself, and I’ve made some big life changes. But somehow, the “commandments” still ring true.

So without further ado, here they are:

1. Avoid Waste

99% of humans are wasting insanely large sums of money. Don’t be one of them

2. Only spend money on things that truly make you happy.

If it doesn’t make you happy or make you a better person, don’t even bother opening your wallet.

When It Makes Sense to Buck the Traditional Financial Advice

Traditional financial planning advice might look something like this:

  1. Establish an emergency fund
  2. Pay off debt
  3. Get yourself on track for retirement

That’s all nice and prudent, but is prudent always the right move?

I say no. Sometimes it pays to buck the traditional advice and be a little daring.

What Do You WANT?

No one lies on their deathbed feeling fulfilled because they made all the “right” decisions. No one is ever truly satisfied by checking off all the boxes someone else laid out for them.

True happiness comes from doing the things that matter to YOU. The things that scare you a little bit, excite you a lot, and just feel downright important.

Going back to the example above, assuming you suddenly and unexpectedly had a large amount of money, what if you asked yourself the following questions before making any decisions about what to do with it:

  • When you’re 80, what will you regret not having done?
  • When are you happiest in your life right now?
  • Is there anything you’ve been wanting to try but felt like it was too big a financial risk?

Maybe you’ve been wanting to quit

4 Steps to Merging Finances with Your Partner

I work with a lot of new couples who are in the midst of merging their financial lives for the very first time. In fact, my fiance and I are in the process of doing it ourselves too.

It’s not an easy thing to figure out. There are logistics to handle, habits to change, emotions to manage, and often it feels like there is never enough time in the day for any of it.

But successfully managing money together is key to creating a happy partnership, so here are four pieces of advice as you go through this process yourself.

1. Focus on Joint Goals, Not Joint Accounts

It’s tempting to get caught up in the logistics of joining your finances. How do you create joint accounts? Which accounts should you join? What if you want to keep some money for yourself? Does that mean your relationship is in trouble?

Ignore all of that. It doesn’t matter. At least not at the start.

What really matters are your joint goals. What are you working towards? What is your shared vision for the life you’re

The 3 Hypocritical Financial Planner

As a financial planner, my job is to help people make smart financial decisions. That means planning ahead for big purchases, making rational spend vs. save decisions, and generally being purposeful and thoughtful with your money.

It’s a noble endeavor, but the truth is that we’re all human and we all make less-than-optimal decisions from time to time. Myself included. Here are three examples where I made decisions that were frowned upon by my financial planning alter-ego.

#1: The Big Indulgence

My brother got married. It was a beautiful wedding, lots of fun with friends and family, and he and his wife had a great time. It was also a little awkward for me. As the older, single sister at the time, I honestly felt a little self-conscious.

So what did I do? I spent a LOT of money on makeup: brushes, blushes, two types of foundation, extra eye shadows. I went nuts! It was an emotional decision through and through. It was way more than I “should” have spent, and

Financial Planner as Consultant

On my blog, one of the topics I like to cover is explaining how the personal financial advice industry works. Most people get financial advice from someone who is a salesman of insurance, annuities, mutual funds, and other products. You can also get help from someone whose main profession is something related like a CPA or lawyer who offer advice as a side business. The best way to get advice however, is from someone who functions as a consultant.

There are financial advisors out there that charge by the hour for financial advice. They often call themselves financial planners to distinguish themselves from financial advisors. You can find these financial planners through industry associations like the Garrett Planning Network and

I say it’s best to work with a consultant style of advisor because the consultant works only for you. Ask yourself what someone’s motivation is. A financial advisor employed by an insurance company or investment company (like Merrill Lynch, Morgan Stanley, Fidelity, Vanguard, etc.) has sales managers above them making sure they sell a certain number of contracts every month. You don’t want to be one of those sales targets. It may work out for you, and there

What You Should Know About Financial Advisors Online

When you’ve realized it’s time to get some professional help from the financial services industry, you’ll probably start with a Google search. You might enter phrases like “financial planner,” “financial advisor,” “investment advisor” or “wealth manager,” plus the name of your city, in hopes of finding the right person to guide your financial life.

Unfortunately, these terms can be used by a long list of people offering many different services, including mortgage brokers, credit “fix-it” agencies, stockbrokers and insurance salesmen. There’s no guarantee that the people showing up in your search results are qualified, under what regulatory authority they operate, what legal protections you have if you work with them, and how they’re compensated.

When evaluating professional financial advisors, consider these three main categories: certification, compensation structure, and registrations or licensure.


Some professions are pretty clear about who’s who. When you see the letters “M.D.” after a name, you know that person is a medical doctor. Someone with a Ph.D. has a doctorate in philosophy. In the financial services industry, however, there are more than 200 designations that can follow a person’s name.

The following are some of the most prominent certifications associated with the financial planning industry:

CFP (certified financial planner): This is

For a Successful Financial Plan, You’ll Spend Money And Time

On the surface, the cost of a financial plan is simple: generally between $2,000 and $4,000, depending on its complexity and where you live.

But dig deeper and you’ll find that the plan’s success also depends on you spending time to implement it.

Consider the case of a young physician who recently came to my office inquiring about a financial plan. His primary issues were cash flow with tax considerations, debt service and investment advice. I suggested he would also need an insurance review and estate planning, since he had none. At the conclusion of our getting-acquainted meeting, my colleagues and I quoted a fee for the financial plan and what it would include. He decided to work with us.

Next we had a goal-setting meeting and collected his pertinent financial documents such as his tax return, investment statements, debt statements and more. We provided risk-tolerance questions and discussed his short- and long-term goals in greater detail. Then there was an interim meeting where we reviewed his goals — to be sure we prioritized them correctly — his risk-tolerance results and his investment analysis.

A couple of weeks later, we had a plan-delivery meeting, where we reviewed

A Checklist for Your Financial Plan

“What’s in your wallet?” Most everyone has heard the question posed in commercials for Capital One credit cards. It’s pretty catchy, but perhaps an even more important question is this: What’s in your financial plan?

There is no one-size-fits-all answer to this question. Generally speaking, the reason to have a financial plan is to better balance your current needs with your future needs and goals. And everyone has different goals and needs.

Unfortunately, few individuals have a comprehensive financial plan, one that brings together all elements of their financial life. This inability to see the complete picture can lead people to make very costly mistakes. The bottom line is that many folks will fail to achieve the financial life that they want simply because they failed to create and follow a plan to get them there.

What goes into a plan

In general, a financial plan has two halves: what we call “defensive elements” and “offensive elements.” Below is a checklist you can use. Print it out and put a check mark next to each item that would be appropriate to address in your own financial plan.

Defensive elements of a financial plan may

Financial Uncertainty And Planning

Benjamin Franklin once wrote, “Tis impossible to be sure of any thing but Death and Taxes.” But even death and taxes are uncertain enough to present significant financial planning challenges.

Unfortunately, it is quite easy to conclude that financial planning is a waste of time because no one can know the future. But we do know that we’ll need to set something aside for the future, we won’t earn wages out entire life, and prices will probably continue to inflate. The only other crucial assumption we need to make in financial planning is that every other assumption we make is wrong.

Let’s face it, managing our finances and making important money decisions involve making a lot assumptions:

  • How much will I save? Spend?
  • How much money will I be making? For how long?
  • How much will I need for emergencies?
  • Should I buy or rent?
  • What if I need to move for work?
  • How much should I invest? Keep in cash?
  • How much money will I need to retire?
  • Inflation?
  • When will I retire? Will that be in a bull or bear market?
  • How much risk should I take?
  • What will the markets return?
  • How much insurance do I need?
  • How much will healthcare cost?
  • What will my

Six Realities Financial Advisors Need to Know About Index Annuities

“These are complex contracts with many pros and cons,” offers Nuss. “In exchange for a guarantee, you’ll never lose any principal, you’ll typically get only part of the market’s gains as an interest credit.”

Nuss, like plenty of other financial industry wealth managers, says there are plenty more reasons to like fixed index annuities, but only if you read the fine print, do your homework and recognize how fixed index annuities really work. For financial advisors – and their clients – who want some insurance against a big market drop, here are six key elements of fixed index annuities that warrant closer inspection:

Potentially higher return rates, with market protection – Fixed index annuities are geared toward investors (especially retirement savers) who want principal protection but are willing to withstand some interest-rate uncertainty, Nuss says. “You get an opportunity to earn more interest than you can get from a fixed-rate annuity or a bank certificate of deposit, allowing you to shelter some of your money from market risk without locking in a lower interest rate,” he notes. “Both your principal and all previously credited interest earnings are fully guaranteed, regardless of future years’ index performance.”


Tips How You Get Out of Debt

“Improve finances” is usually the second most common New Year’s resolution right behind “lose weight.” For many, “improve finances” is simply code for “get out of debt.”

In the same way those extra pounds take a toll on your body, the weight of debt can be felt physically by way of unnecessary stress.

There’s no worse feeling in the world than to have your paycheck go into your bank account on the 31st, only to watch it disappear a day later due to a series of recurring payments.

The problem for many is that they don’t know where to start or the best approach to take.

For example, should you pay down your credit card with the highest interest rate first?

According to the Harvard Business Review, the answer is no.

Step 1: Unsubscribe from Unnecessary Emails (

(It takes less than 3 minutes and it’s free) will show you all of the email lists you’re subscribed to and allows you to unsubscribe from any of them with one simple click.

When I took this first step, I was amazed to find that I was on 323 email lists! (sidenote: I don’t

The Secret Way to Make Huge Financial Gains

In many cases, a raise can be far more powerful in helping you reach your biggest financial goals. And it may not be as hard to get as you think.

The Power of a Raise

Let’s say you currently make $60,000 per year and you’re able to negotiate a 10% raise (more on how to do this below).

Assuming that 25% of that new income goes to taxes, that means you now have an extra $4,500 to save each year, which is almost enough to fully fund an IRA.

Looking at it another way, that extra $4,500 represents a 7.5% return on investment, which is right in the range of what experts expect from the stock market.

So by negotiating a raise, you’ve given yourself a stock market-like 7.5% return. And unlike the stock market, that 7.5% return will be consistent year after year.

And if you’re investing that $4,500 each year, you’ll earn additional returns on top of your contribution. Assuming a 7% annual return, that investment will grow to $197,393 after 20 years and $454,828 after 30 years.

Plus the increased salary sets a higher baseline for future raises

Top 5 Financial Mistakes Beginners Make

There’s a lot of financial advice out there. Enough that your head starts to spin when you try to take it all in, understand it, and figure out which pieces are relevant to you.

I’d like to make it a little easier for you by pointing out some things NOT to do.

Here are five of the biggest mistakes I see people making when they first start trying to improve their financial situation.

1. Obsess Over Investment Strategy

There’s often this feeling that if you can just find the perfect investment strategy, your financial success will be guaranteed.

So you read articles, listen to the experts on TV, and tinker with your investments, all with the hope of finding an edge that puts you over the top.

But here’s the truth: the returns you earn, good or bad, have almost no impact on your bottom line until you’re a decade into the process.

What does matter, a lot, is your savings rate. It may not be sexy, but simply saving enough money is far more important than any other investment decision you can make.

2. Forget About Irregular Expenses

Social Security Survivors Benefits

Social Security Survivors benefits are paid to widows, children, parents and ex-spouses of covered workers.

The Social Security program actually consists of three benefit programs that make payments for various reasons. They are:

  1. Retirement benefits,
  2. Disability benefits,
  3. Survivors benefits.

This post covers number 3, Survivors benefits. These are not the same as the benefits commonly referred to as spousal benefits.

If a worker, who is covered by Social Security, dies and leaves family members behind, they are the “survivors” and are covered under the Survivors benefits program. Social Security will use the deceased worker’s record to calculate payments for his / her family.

There are four eligible parties that may receive payments after the worker’s death. They are the widow (or widower if the wife dies first), children, parent, and ex-spouse. Each has detailed rules for eligibility.

A widow(er) will get benefit payments if:

  • They are age 60+, or
  • Age 50+ and disabled, or
  • Any age and caring for a worker’s child under 16 or disabled and entitled to benefits on worker’s record.

A child will get benefit payments if:

  • They are under age 18, or
  • Between 18 and 19 and still in secondary school, or
  • Over age 18 and

Start 2017 With a Financial Cleanse

Do you feel like you’ve lost control of your finances recently? Maybe you went overboard during the holiday season, or you’ve become lax in monitoring your spending.

Whatever the reason, here are some steps to reset your financial baseline in 2017.

Track your spending for the next 30 days
This exercise is as painful and time-consuming as it sounds. I’m listing it first because it’s the most important step. If you execute just one item on the list, do this. My wife and I did at the beginning of last year and we’re still seeing benefits.

The practice of tracking will make you more focused and frugal when it comes to spending money. You can compare it to a person tracking all of their calories or recording the weight they lift at the gym.

Assess all recurring subscriptions
Many people use at least one subscription service, such as a gym membership, styling subscription, wine club, meal delivery service, credit monitoring service or video streaming app. There’s nothing wrong with holding these subscriptions as long as you know how many you have and are receiving the value you expect. Ask yourself whether you’d join now if you weren’t already a member.

Save your annual

Don’t Retire But Rewire!

The full title is “Don’t Retire – Rewire! 5 Steps to Fulfilling Work That Fuels Your Passion, Suits Your Personality, and Fills Your Pocket” by Jeri Sedlar and Rick Miners, a husband and wife team. Although I believe the title is perhaps a little too cute, I found this book to be a valuable resource as I contemplated my future and I have given the book to many clients since. I recently read it again in preparation for an OLLI class I will be leading at SVSU this April entitled “Someday Is Here”. Both the book and the class address the lifestyle side of retirement as opposed to the financial side

The authors have included helpful checklists, quizzes, exercises, and quotes. Some are entertaining, others more useful. They also track four people who retired the old way and “flunked” retirement as well as four pre-retirees who reject the traditional definition of retirement and are “rewiring.”

Don’t Retire – Rewire!” Touches on the history of retirement. “Society has changed. Retirement was invented by Bismark, first chancellor of the German Empire, in the late nineteenth century, when most people didn’t live long enough to worry about what they

Are you in control of your finances?

Despite a tendency to procrastinate and an allergic reaction to paperwork, I’ve always prided myself on the fact that my finances are well managed.

So when a financial wellness assessment gave me a score of 3 out of 5 and suggested “attention [is] required” I was taken aback.

The financial wellness tool in question has been developed by ZAQ Consultants & Actuaries to evaluate the financial situation of individuals holistically. A free assessment, which requires you to answer four sets of questions about your debt, savings, insurance and financial stewardship, is done online and a four-page report flags areas of concern in each category (if any). An average financial wellness score is also supplied.

Niel Fourie, actuary at ZAQ, says good financial advisors often require clients to have at least R1 million or more in assets or to earn a big salary, which leaves a “missing middle” who struggle to access financial advice. This would typically include people who earn between R5 000 and R30 000 a month who haven’t saved a lot of money and who are most likely to be over-indebted.

He says the pending introduction of the Retail Distribution Review in South