#37 Marius Fenwick – Transcript

Louis van der Merwe
Welcome to another episode of Financial Planners, South Africa. Today I have my business partner, mentor and good friend Marius Fenwick with me Marius, thank you so much for joining us today.

Marius Fenwick
No, Louis, thank you. It’s a privilege.

Louis van der Merwe
Marius our journey started almost 14 years ago. But at that stage you already quite involved and settled in financial planning. give our listeners a bit of a background of how you made the career change into financial planning.

Marius Fenwick
Yeah, I think it goes back a while started off my career in mechanical design and engineering field that progress to where I had my own business in contract packing and the freezing operation and transport it’s a very capital intensive very labor intensive to cut a long story short got a bit over eager burned with the with the big boys and and made a statement at that stage saying that, should I ever start a business again, I’ll be involved in business. I’m a certainly more rely on my own intellectual capital and not have something that’s capital intensive or labor intensive. I also had a passion for for working with people always enjoy the people aspect of whatever I do that was always marketing involved in marketing. And then it just so happened like I think like many guys are getting tired, enticed and approached by one of the insurance companies and that stage was Liberty life. And that approached me. Yeah, took a gamble started start with him. And after a year within that year, I realized that I’d rather go independent I don’t like the setup of the lodge of the large corporates and have to join a practice as a independent.

Louis van der Merwe
Yeah, I mean, what is thought we’ve had quite a few guests on that started with liberty as a really good training ground. And what we see is that they get to a point where they’re frustrated, you mentioned that you’d like to have a business where it’s not capital intensive and it’s not reliant on on other people and talk us through how the financial services model works where you’re not too dependent on other people and how you can start in a building your own intellectual capital and promote that to clients.

Marius Fenwick
Yeah, I think the same not being dependable on people other people I think it’s maybe a bit of misconception I think in our industry you’re very dependable on other people. I believe that irrespective in what business you are the success of businesses the strength of its of its people and something that I’ve always believed in identify your own weak points and surround yourself with people that have stronger points in those areas that you have a weakness in heavy that spot why approached you at the time I saw that I’ve got challenges on the IT side and where the industry is going and I just thought you know where the future’s headed towards financial services we need younger blood in and yeah, I think that was a that was a challenge I think it’s not is an industry in particular South Africa where the average advisor is quite old and it’s a challenge getting young guys with talent especially with your getting into the industry is difficult given the remuneration basis and I think that’s why a lot of guys with within the large corporations like the liberties the sudden norms and old Mutual’s become frustrated Production Production targets starting at zero every every month. And also very early in my career that first year, I realized I want to build a model, we rely on recurring income, which is basically mainly on the investment side. And that’s why I’ve always focus more on the investment side and, and move forward from there.

Louis van der Merwe
You know, this problem with bringing in younger advisors and I think specifically, non white advisors to be more representative of South Africa is a dilemma that we have, how do you see us fixing the remuneration structure? You know, is it through giving them a loan to work back? Is it through providing a salary is a true providing clients? Like what’s your take on that? That’s both stainable from a business, as well as for the individuals starting out?

Marius Fenwick
Yeah, I think if we look at the, if you look at the ground roots, we look at where most people start with the insurance companies, that model is going to change there. And as long as you force people to or not force people, but as long as your remuneration model is incentivized by production. And it’s a tough business, I mean, no one wakes up the morning shot if you want to go want to go buy life insurance. So it’s stuff you have to market and you have to go and find clients add see they’ve got to move in the same direction as attorneys and accountants have an internship, pay the guy minimum wage, give him to experience that and then start start working from that side. But unfortunately, life insurance business models works on on product sold administration fees, long, long term front front costs, and that’s where they make the money. So until their business models don’t change, it’s going to be a challenge for individuals like ourselves or for independence. Or we know that we that we said let’s take all funds, stick it to the pot, and everyone shares equally. That’s a model that I think that that can work very well, as long as everyone is like minded, has the same passion and has the same goals. I think it could work well, in a small team like ours, we know in a big team, it’s going to be a it’s going to be a challenge, especially if got cars on the opposite side of the of the pond where one one is a hard worker is motivated, he wants to earn big income the other guys plodding along just happy to survive, you know, then then immediately gonna have conflict. So it’s tough, it’s difficult. But I don’t know what the ideal solution is. I think a lot of people have tried and no one has come up with the ideal solution.

Louis van der Merwe
Yeah, this concept of building a good company culture and attracting like minded people, so that you don’t have a few individuals, you know, taking the lion shame. I want to talk about kind of the culture when you moved away from Liberty and started your own practice. Tell us about those early days, like, What year was this and you know, what was the setup like?

Marius Fenwick
So I joined liberty, the end of 1997. I left them at the end of 1998. And I then joined a joined a practice as independent within two years, PSG bought in into us. And that was the first time that I also had exposure to a larger corporation within the independent practice. Few things, I think expectations and things that happened today, I wasn’t too happy that either and I broke away and started my own, my own practice. So I ran independent on my own, just with an assistant for about three years. And then I was approached by by, at that time was, was Roland, where they had a requirement for someone to come and look after their after their business. Basically, during the time that I’m in practice, I had a small core of clients, I think I had 35 or 40 clients. And I’ve always had that kind of attitude, right, that small, small amount of clients and look after them properly, and they become your source of income, they become a source of referral and recurring income. So that worked well. At accounting practice, obviously, that’s different you work for you work for shareholders, and shareholders one profits. So the pressures on to to continuously grow the book, which is not a problem. I mean, that’s the basis of any business. I’ve actually became a shareholder and try to change the model to try and incentivize the younger guys and people admin staff to also become part of the larger circle. I mean, as advisors, and I think in any business like that, whether it’s the business bursal BA or whatever, as advisors, I mean we just as strong as an admin team. And I always felt it was unfair that the admin guys did a lot of the footwork, but basically just got a salary. That at that stage, I think rd firm, myself and the other advisors agreed to forfeit some of the income and incentivize the admin guys so that’s where the whole idea of creating a pot and sharing started. And yep, I think the the shareholders were epic was adding depth to to pay salaries that value As we’re forfeiting, and the admin admin guys were happy. But at least that created a environment where everyone was either in the game even when it had their foot in the in the water, and it just worked. Well, the child well,

Louis van der Merwe
I want to highlight that piece, you said, you’re only as strong as your administration backup or your support team. Before our discussion, we spent a little bit of time talking about draining someone in how much time other than, you know, financial investment it actually takes to build someone’s skill up? How long do you think it would take a administrator to become really proficient in what they do? And what do you think are the key things to look out for, for someone maybe hiring an administrator or an assistant role in their business?

Marius Fenwick
You know, look, I think our business, it’s, it’s a forever changing game. And so whatever learning game, you never stop learning, never stops, stops changing. And I think the challenges, you know, are there. So I think whatever you’re getting involved in as an advisor, or as an administrator, must be willing to adapt and change. You know, you’ve got, you’ve got to move with the times, if you look at the industry changed since I started up to now, I mean, it’s been a, it’s been a 360 degree turn, and but what we said with 20 degree turn, and I can’t see the changing, you know, it’s just evolving and going from there. So I think the, the important thing is to is to get like minded people, and a people’s person, I think, administrator must have a focus for accuracy. There must be a bit, not just a bit, but there must be very much focused on detail. And quite frankly, if you’re an advisor, you probably is some kind of a marketer as well. And generally, we are not very good at admin. So we need that back that back to almost a little policeman to make sure that we stay in line. So I think accuracy data to detail and service, you know, there must be service orientated. You know, as soon as the client starts interacting with the admin side, and they can make or break your business. So it’s important that everyone has skill sets to, to to act with clients. And once again, you know, they should be the backbone of one’s one’s business ideas, advisors should set up the the relationship, agreed to the service, and from there for the day to day stuff that must become the administrators role, the liaison with the client, and taking basic taking over your practice from the admin side, and from the servicing side. So crucial. I mean, I think they absolutely crucial to do to the business.

Louis van der Merwe
Yeah, like you mentioned at the beginning, that your foundation, and they need to be rewarded financially. But you also need to find this unique individual that has attention to detail, but also can can work with people. I’m curious in, in the early days of, you know, being an independent, how did you bring in clients, you know, you spoke about building up to an amount of about 40 clients, which compared to the insurance is quite low? How did you attract them? What was the value offering? And how did you build this capacity to bring in clients, because that’s often something we see younger advisors struggle with, you know, this concept of, oh, I need to go and find clients, but clients or people my age, they don’t necessarily fit my ideal client. So talk us through how you approach that.

Marius Fenwick
No, that’s, that’s, that’s a tough one, you know, if you, if he joined the industry, I mean, Liberty had this thing, called it almost like a fortune 100 list, you know, so the day you walk in to start your training, you’ve got to take a list with 100 names. And those names are only made up of your friends and family and whatever. I don’t think I got a quarter through that list. I mean, I’ve never in my life made cold calls, I hate it. So I’ve always tried to set up percent of influence. In the early days, I worked with an old Small Business Development Corporation, that’s now business partners, and they were a nice source of risk business. Now, you know, we spoke about investment side just now where we’re like to build a business. But I also found that the risk business, especially on the business insurance side, created a lot of a lot of opportunities, talking to you guys on the business insurance side in terms of buying cells, etc. is less personal, because becomes a business decision in a business discussion. And I’ve always found that easier than a one on one way you can try and convince someone to do something that they probably don’t really want to do. And from there, once that’s in place, it evolves and it grows out and expands into investment planning, retirement planning, etc, etc. So from day one, I try to get my my set and my Centers of Influence sorted out, and then just rely on class to refer. You know, the one thing that is in the insurance industry always taught you is you don’t walk away without getting a referral. Now, I’ve long stopped doing that, but that’s not a bad thing to have to ask in a nice way of a client and if you’re happy with what I’ve done, do you know any of your friends or whatever that that That’s quite the same requirement that you might have all that’s got a problem that we might be able to assist. You know, nowadays, we’ve evolved in looking more at lifestyle planning, than financial planning, and then the kind of financial advising with within our business model. And I think that creative and more opportunities, you know, as soon as you can get into a discussion, doesn’t matter what the discussion is, somebody there’s a need and requirement, even if it’s a psychological requirement, not not a financial requirement, that builds a relationship and that relationships creates a platform for people to refer other clients to you. So quite often a client that doesn’t got money, but scholar has got a strong, strong, influential Becker background or skill set is probably more with the client with a five to 10 million Rand.

Louis van der Merwe
I think that So Drew Maurice, earlier this week, I spoke to a group of younger financial planners, and one of the slides I had was marketing equals relationships, because it is about creating these touch points and finding a way to help someone and then ultimately see, you know, financial fruit from that maybe over time. Now, how long do you think it should take an advisor to become profitable? Is it is it fair to be profitable in month? One or two? Or does it take years to get there?

Marius Fenwick
So the pension your business model, I mean, if you look at the, if you look at the life insurance, again, you must be profitable from month one, if you’re not, you’re gonna die, because you’re not gonna, you’re not gonna have any income. So the difference is, do you want to build a short term cash flow? Or do you want to build a business, our business is a people’s business. And the only way to build a long term sustainable business is to build that relationship with people. And if your first introduction to a client is one of aggressive approach SNESs, and for selling and your sign on the dotted line kind of thing, that’s going to be a long term client, and that plants can refer someone. So it depends on your model. But I think you can start building a, a practice or your own your own line of business, the British short, brief short period of time, but to build a sustainable long term income takes time, you know, it can take you 345 years, to get to a point where you can say, Listen, you know what, I’m not, I’m not distressed this month, because I want to get it in by the end of the month, like you do in the recurring income kind of recurring income field. We know advisors, they’ve been in industry for 15 years, and every month, they wake up this audit on what they get into the month. And that’s a horrible business model, mainly focused on the risk side. But if you can, if you can build your business, and quite often it’s a matter of luck, if you can sign up 10 clients with with with with with a fair amount of assets, let’s say 5 million plus assets, and maybe a retirement fund, you know, then you’ve got a you’ve got a business that you’ve got a fair amount of sustainable income over a short period, you know, but it’s, it’s, it’s difficult, especially for the younger guys, I think, as I mentioned to you, right, when you started as well, your biggest challenge as a young guy is to deal with the older guys with money, you know, Guy of 5055 60, doesn’t want to talk to a 21 year old about his 20 million Rand, he’s got his pension fund. So that that’s a huge challenge to the to the younger guys. And the only way to overcome that is to get your skill set to the point where you can convince the guy, that’s not what I’m talking about. For the young guys out there, you know, upskill, as quick as you can get your qualification sorted out, get the top of your game and convince the client should not convince the client, but by your actions and your advice. If you can show the client no more than they than they do, and you’ve actually quite knowledgeable, that will lead to referrals.

Louis van der Merwe
I completely agree with that. And I would add the fact that there’s a team behind you and that you’re not giving advice on your own. They’re just saying, Hey, I’ve partnered with someone else, a mentor, someone that’s going to supervise and oversee your advice, I think brings that sense of comfort for someone to say okay, you might be the main contact person, but there’s more than just one advisor behind them. How do you think advisors should be setting up these kind of mentor mentee roles? And where do they find a mentor I was very lucky to find you and to find new within the business but for people that don’t necessarily have that way should they start living I

Marius Fenwick
just want to go I just want to go back one step you know it’s it’s nice having the team and stuff behind you. But the younger that comes into the industry, it doesn’t matter if you’re sitting in an office with 20 guys around you you’re on your own you know the current model, you’re sitting next to your biggest opposition everyone’s fighting around the around the around the same fight for the same client. And that’s why I hate that model. And that’s that’s why we suggested quite early on to adopt the quarterback model where everyone says doesn’t matter brings a client to the table. That also gives you the freedom to pull in other specialists to come assist you with a with a client. So for young guys, I mean try and get your center of influence If you if you can’t get into a practice where, where, in a way the guys have a similar kind of approach, look at joining an accounting firm look at joining attorneys that are client focused that got this need for financial planning inside of practice. There’s some guys individual set that have both very successful businesses, as a single guy inside the office of an attorney, as long as those individuals in the attorney firm, also buy into the concept of financial planning, you often find that accounting practices, you know, the accountants tend to do that themselves with individual clients and not always doing the best job. And they not always that keen to to refer clients as, as we know. But yeah, it comes back to the center of influence until you can get to a point where your group of advisors, which which changes the ballgame completely, then you must get the culture where the guys work as a team, try and get cars to focus specialize in certain areas. So if you see a client, he might have two or three or four advisors for that matter, each one dealing with his own area of expertise, and then he’s got a team looking after him. And then you can start approaching the whole thing of a family office, we look at the total Finance, Financial Affairs and risk parameters of a of individual and his family and the trust, etc, etc, then you’ve got a business,

Louis van der Merwe
you’re moving away from sitting next to your biggest competitor, I think is key. And getting to a point where, you know, we almost remove a little bit of an ego and saying, Okay, I know that you have a better skill set in terms of dealing with this specific client and using that relationship. Reflecting back on your journey, is there anything that you would change, or you would do differently? Um, specifically, when it comes to building a business or building a client?

Marius Fenwick
I think I think I was, I was fortunate. I think I was, I was lucky in many instances. But I’m just I’m so grateful. And that, that adopted the idea of less clients with high income earlier on. But it’s nothing really that I would, that I would that I would change, I’m pretty happy the way things have turned out.

Louis van der Merwe
Yeah, I mean, it’s a it’s consistently working at it and servicing those clients. And, you know, most of your relationships with clients has been for four decades. Why do you think that is,

Marius Fenwick
I think it’s an all thing people, people, by people, you know, I think if you’re honest with your clients, you tell them when something goes wrong, and be honest with them. And you can build their trust, and they can confide you in anything. And we find clients that have been class for 1015 years. And at some point, we find out, you know, this, these investments or something in their lives, that’s going on that we that that we never knew about. And we thought we knew the clients. But I think it’s very much a case of just building that relationship and reliability. If a client wants something, you’re offering the service. I’ve never sold returns, it’s always always providing services saying we had to sort you out, we took off your needs. I think as soon as you start getting into the game where you you get a client by promising a better return that is received or lost. I think that that’s that’s a, that’s a loser’s game. You know, that’s gonna work until you can do it until the next year, when you can’t what happens then? You know, so it’s very much that relationship building thing and where clients can pick up the phone and they know you they if you’re not they were assistants, they we administrators, whoever. But yeah, it’s just just just what clients are comfortable with. It’s the same as going to your doctor. I mean, why? Why have you got your family doctor for the last 1015 years? You don’t change them every year? You know, so it’s exactly the same thing. It’s just just building that relationship.

Louis van der Merwe
Yeah, the communication channels. I think opening with clients and making sure that they feel comfortable reaching out to you is a is a key point. Where do you see this kind of balance between speed in terms of getting to someone and comprehensiveness and guiding them to make decisions for someone starting out or maybe even the middle of day Korea? If you have more than 100 clients or 200 or 300 clients? How do you still manage that? I know you focused on building a smaller base with a high touch point, but you know, we do find that balance.

Marius Fenwick
Yeah, it’s it’s it’s you know, I can’t speak for the guys sitting with the with the do three 407 100 clients, I just don’t know how they do it. There must be many of those clients that don’t that they don’t get serviced. I mean, even in a small client base like mine, they are you know, the bottom end of the clients don’t get the optimal service like they should do it stuff. I think in terms of how quickly to get back to a client I think it depends on the urgency I think whenever client new or existing one has a query respond ASAP I mean, I think response and accessibility I mean, if I sit in front of the TV on a Friday night and eight o’clock and a client phones accidentally even or sends me a message or WhatsApp or whatever, are answering and quite often they say you don’t have to answer now you know, I want to be on Monday and I just sent back well they know That was the question, or the answer now that I deal with on a Monday morning, keep your answer on Monday. So I think it comes back to passionate industry. You know, if you enjoy what you’re doing, you’re, you’ll be there for your clients. It doesn’t matter what day what, what day it is or what time it is. And the main thing is just get back in timeously agree on when whatever the query was, or what the requirement is to get that sorted out? And, and be honest with your clients, you know, they’ll ask you something you don’t know, tell them? I don’t know. But tell them, I’ll get the answer, get back to you within a day, or two, or three or whatever. Never lie to a client, don’t try and wing it and try and sound clever. Um, it’s quite embarrassing to go back and say, You know what, I was actually completely wrong. To roll this out, don’t know and come back with the right answer. And class that always expect you to know,

Louis van der Merwe
you’re guessing in this industry is not a good strategy. I think we’ve seen some examples where advisors just get the answers. And you can maybe do that in an exam. But you can’t do that in

Marius Fenwick
real life. The problem is, the problem is, is that guest gets put into practice, you know, if that that gets implemented on an assumption, and that in some assumption turns out to be completely wrong. You know, that’s the, that’s the quickest way of losing a client,

Louis van der Merwe
Morris, you spoke about passion, and I know that you have a passion for educating and sharing concepts and simplifying financial planning for the masses. You’ve been writing quite actively with Moneyweb and writing a lot of content over the years. And hopefully your book gets published as well, in the, in the future, where does this passion comes from? come from? And weigh? Have you seen the benefit from that?

Marius Fenwick
Yeah, I think it, I think it comes back from just just wanting to help people, you know, if you’re sitting and, and you can see someone is on a way to a train Smash. And it’s obvious, you know, I think one tries to intervene in a way that can that kind of system. But also, if I look at it, just to get close, closer family, you know, if we don’t have to go look for if you look, it should go and see where there’s been a bit of a financial crisis in financial planning, with all due to the lack of financial planning. So I’m quite passionate that people should start early enough, understand the the effects and the power of something like compound interest, why it’s important to protect your income, etc, etc, which we don’t focus on that much. But I mean, what we should. So it’s just, it’s just a passion to make sure that people reach retirement age. And they they’ve got sufficient income just to carry on with a, you know, with a current lifestyle. And, you know, there’s way too many people that fail with that. So, to me, it’s quite important that people think, realize, and start planning as early as possible. And just show them you know, it’s not that difficult. It’s doesn’t have to be complicated. And quite frankly, you don’t have to start with 50% of a salary. The sooner you start, the better and the less you have to have to put away and get into that culture of saving. So it’s just for people to be self self sufficient and, and, and financially independent. Especially when it comes to retirement. In a lot of people. As you know, when one of my favorite favorite questions, when I speak to a group is saying that 110 1000 Random month today, how much capital do you need? And just look at the answers. And even among educated groups, I mean, you know, 90% of people get it wrong. They’ve got the complete wrong perception in terms of how much capital actually need to get a fairly decent income,

Louis van der Merwe
Are they under estimating at all over estimating, or over

Marius Fenwick
estimating what they can actually get through an investment? You know, so if you’re asked the question, the 10,000, some people say 500,000, Rand, some, say, a million Rand and some say, 5 million Rennaissance. Okay, great, you’re on the right path. You don’t need that much. But I mean, if that’s your, if that’s your ambition, and you’re planning and you plan towards, that’s fantastic, because you’ll never be disappointed. But, you know, we get people that you know, that, that that retire, and unfortunately, you come across them too late in life, that’s going to have a requirement of X amount. And, you know, they’re going to need three, four times more than what they can actually, what again, imagine managed to accumulate over the time, and purely just because they either had bad spending habits or they just didn’t start saving and investing early enough.

Louis van der Merwe
You had the chicken or the egg effect. Once they start getting interested in finances, they start reading and they start actions, but it’s the ones that are not yet interested that maybe being

Marius Fenwick
I think, also just the education side. I mean, we know in South Africa, particular I mean, we are total property bulls. You know, every every person we speak to this close to retirement or in retirement and if you speak about the wealth, quite often a lot of the wealth come came from from historical property ownership and property sales. And everyone’s still got that mindset even youngsters that killer buy property as much as property is going that that’s it quite often that becomes the main asset. been a fair amount of time. So you know, property is not always the greatest, the greatest asset to own as a retirement vehicle, unless you own five or six of them, someone else is paying off your bonds and the day you retire no bonds, that’s great. No, then that that’s not that’s not a bad way of thinking and approaching it. But in general, too many people view the, especially the main residence as the as the as their main asset. And quite often that is the main asset, and that that’s problematic, because that assets not going to provide you an income.

Louis van der Merwe
Yeah, that lack of liquidity. I know, you often get the question, should I be paying off my bond faster? Or should I be investing? And you recently wrote an article for many web as well? How do you explain the concepts and the trade offs to clients and maybe share with us your approach? So that advice other advisors can learn from that?

Marius Fenwick
Oh, well, it’s exactly what I’m saying, you know, if you and I blame the face for that, in a big way, you know, quite often, if you historically over the years, you’ve quite often saw the articles in in press saying that whatever speak up, you’ve got sticking in your bond coupon as quick as possible. That’s fantastic. Now end up in retirement, you’ve got a property that’s paid for, but you’ve got no proof dump provision. So it’s got to be a balance. You know, it’s in the last article I mentioned, you know, this, there’s no right or wrong answer depends on your circumstances. If you if you belong to a pension fund, or you have belong to pension fund for the last 20 years, you’ve always preserved the capital when you left the company, and you’re sitting there with, you know, four or five, six times your annual income, then for all means, get your bond, you know, take your extra 10,000 Rand a month and stick into your bond. If you don’t have that, you’ve got to start thinking Hang on, how am I going to retire one day, then rather allocate that or a large portion of it to, you know, to a retirement fund or to voluntary investments, but you have to build your your income paying, but the day that you retire, apart from your your property, census, having a property that’s paid for you’re living in a palace, but you have got money for food just doesn’t make sense. So it’s a matter of balance. And as a rule of thumb, you know, God say to people, if you don’t know what the circumstances are, do it half off, stick 50% into investments take 50% of your bond, that I’m not a believer of sticking everything into your bond, kill your bad, ditch your high your high interest debt, your credit card, overdraft, etc kill that absolutely. Before you before you pay off your bond, because your bond rate should be much, much lower than your this quality of bad debt, right? Like your credit cards, etc. But it’s, it’s tough, but you need to build that investment portfolio. Without a doubt.

Louis van der Merwe
It’s interesting, because clients often say I don’t want to put every all my eggs in one basket. But when it comes to selecting a course of action, that pick the simplest route around just going to say to my bond, I’m going to pay off this or I’m going to invest everything in this one fund. And what you’re saying is that it’s often just a combination of different things. Why do you think it is that they have this block against, you know, multiple avenues?

Marius Fenwick
I think the main thing when it comes to property is not understanding investments and returns, you know, so if you sit with people, and we’ve done it on many occasions, even at this board that connects to us here now, where people said, you know, they fixated on property, and I can explain why. And there’s so give me an example now that recently sold a property for three off many wrecks. That’s fantastic. How long did you owe the property? Now that ended for 15 years or 20 years? Why did you buy the property for? They bought it for 680,000? Rand, whatever? So yeah, that that sounds like a great return to some 680 to three million Rand, that is a good return. They said, Yeah, actually, it’s a good return. Okay, so let’s, let’s go back a step. Let’s look at the acquisition costs, the maintenance costs, etc. I’m not talking about your, your main residence, I’m talking about a bad a bad a bad a investment property. But the main main reason this as well, because they quite often measure their wealth by the Maine Maine residents, and what you stripped out and so right, the day you bought the property, you paid registration costs, you pay draws for cost, if you go look at your levies that you paid, etc. If you take all that into account, and then all of a sudden you’re sitting with with with low single digit, single digit returns. Even if you don’t take that into account, it’s highly unlikely that you could ever return that’s doubled double digits. And people don’t realize that but as soon as you show them 10, but that’s what investments do. 680,000 Rand grows to more than 4 million Rand over this period. That’s just pure. That’s just pure math. I mean, it’s not it’s not that property, is that great. That’s what it’s supposed to do. That’s a function of inflation. And once you show them that and say, But why did you rather look at something that’s more liquid? That’s probably going to give you a much better return if you go to historical returns of asset classes, and especially if you start diversifying globally, you know, then all of a sudden starts making more sense and they already didn’t realize this, we thought this is such a fantastic investment. And quite frankly property as I said, May on many occasions, I mean, I owned a few properties as well. But if investment property is not bonded and you’ve got someone else paying that bond in that interest and paying your investment, it’s actually a terrible investment. So if you want to, if you want to buy a property, or if you’ve got a lump sum of 5 million Rand or whatever your decision is to go and buy rental properties, that’s probably one of the worst decisions you can make.

Louis van der Merwe
Wow, I think that’s so valuable to hear, I think, you know, people have this concept of I know about compounding returns. But yet, when I look at my finances, I don’t always apply it. I don’t think, oh, what should this have been? And what would have inflation have been, and just sometimes unpacking that, and educating your client, you know, is very valuable. And also what you’re saying there’s explaining what asset classes what they should be expecting. Now, when it comes to investing in equities, in locally or globally? How do you how do you explain what can clients expect from these portfolios in the future?

Marius Fenwick
So I think we always start with the concept of investing, you know, the main objective of investing is to beat inflation. So if you don’t beat inflation, then you might as well go and blow your blow your money, go and buy, what you want to buy in the future was just gonna cost more not capable, for in the future. So many things start with inflation, and then you can start talking about the different asset classes and your expectation. And I think the general rule of thumb that I’ve always used and it comes out pretty close to that is if you start looking at equities, you can expect at about 7% above inflation, if you look at a equity fund 5% above inflation, low equity fell about 3% above inflation. And if you go back historically, it doesn’t matter if it’s on South African soil or or the or the global markets, it comes down pretty much to that, you know, so that it gets back to clients. Okay. We know what we can expect over a long term. And it’s not a one over three year we talking about 789 10 year kind of returns, how much return do you actually need to reach objective? So the main discussion goes around, what’s your objective? How much income to require at retirement should retire today, you know, you know, the old calculation, do the forecast with inflation. So right, in the future, you’re going to need 30 million rent, starting today? What’s your affordability? Other? What’s your affordability? Or how much should you start putting away at a certain return? And then go through the risk analysis and determine can you actually handle this volatility. And then it becomes a discussion telling a person you know, your your risk profile is such that, that you can’t handle this volatility, you’ve got to go for much more conservative portfolio. So you’ve got two options either got to put away more has got the affordability, no, we can’t, then the other options will come no choice, you’ve got to take on more risk, and then start the discussion around that, why they’ve got to take on more risk to reach objective, what they can expect. And just to just to basically chill over the time, not look at your investments. I think that’s one of the you know, one of the biggest mistakes too many investors make is, you know, looking at your in your fund value, investing value on a daily basis. I mean, that’s gonna drive you insane. And it’s gonna drive your advisor insane.

Louis van der Merwe
Yeah, also login logging in and looking at your own portfolio. Yeah. Marius, do you think advisors lose the value of money dealing with such large numbers? You know, maybe even in the beginning of your career, when you’re dealing with millions, and you look at your own budget, and it’s easy to spend?

Marius Fenwick
Look, I think it’s it’s, it’s difficult, I think it can very easily become depressing. And of course, you do deal with clients with portfolios, we’ll look at total asset value quite often with over 100 million Rand, I think it should actually be incentive to show you but hang on, you know, to achieve above, you can actually do it and quite frankly, not industry again, you know, I think it’s one of the industries that that can be highly financially rewarding. But it’s difficult, you’ve got to stand back and you’ve got to, you’ve got to almost float above the earth and look down and say, you know, we’ve got to, we’ve got to do to the ominous at arm’s length distance, and see it as a commodity, just see it as this and we’re talking about a concept, we’re talking figures don’t drive away then. So just like, I wish I drove the Porsche, like that car or live in this mansion with a sea view. I mean, that’s just going to go to depress yourself. You know, on that side, I think it’s important to also portray yourself to your client, as if you deal with these kind of clients on a daily basis, even if it’s your biggest client is your only one that’s sitting with even if it was 30 million Rand client as your biggest client. I don’t think you should always should it anytime that the client doesn’t use biggest client, you feel intimidated by it. You know, you need to do a job. And it’s just it’s figures. It’s just, it’s just figured out you could lead a very depressing life.

Louis van der Merwe
What do you think is the biggest lesson that you’ve learned from your client?

Marius Fenwick
No, that’s a tough one. We’ll live life now. You know, as our as our motto states, I think, a lot of clients, not just clients. I think as individuals, we always have this future plan of something you want to do so A day. And a lot of our financial planning goes towards you know, I want to retire independent and I don’t want to battle or whatever. And they do start accumulating wealth that they can actually enjoy after retirement. And too many times have we seen that life happens and they can’t do that their city with all the wealth and all the assets, but they’ve never really had the time to to enjoy it, or the new really took the time to enjoy it at the time, but they never took it because I want to save that for the day that retired. And unfortunately, as as people get older, as I said, life happens and, and medical conditions occur, family tragedies happened, etc. And you’re so live your life for today. plan accordingly. Don’t go blow all your money today. But don’t extend things for tomorrow, next week, next month, next year or 30 years down the line, have a plan that you enjoy the fruits of your hard earnings and, and we get to enjoy life I

Louis van der Merwe
think that’s spot on. And it’s often difficult for clients to wear two hats to say, I need to save as much as possible. But at the same time, I need to enjoy my money or even shifting from a 30 or 40 year time span of accumulating money to actually enjoying money.

Marius Fenwick
You’re also also clients and it’s an experimental thing. Clients worry too much about the children. It’s almost probably getting shut down for this. But quite often, you know you’re sitting with a client with with with substantial wealth, but they don’t want to spend any of it because it’s actually the children’s money. No, it’s not it’s your money. someday it will become your children’s money, but at least now. It’s like one of my clients that were flying to was flying to Canada economic class. I said why is he doing it? You’ve got the wealth fly first class, you know, you deep 70s Why are you flying economic loss and getting out that Saudi need physiotherapy. You know, so it’s extra 60,000 Rand, and it was a grudge buy. But now she goes, she flies first class. And we had a chat with the children, whatever. And I think that’s also the important thing. If you deal with with with with high net worth individuals. And it’s a, it’s a tight family fit. Discuss, discuss the discussions with the children get their buy in so they can back it up and that as well. And quite often the children say, you know, save money, it’s our money. And I think parents should realize that kids don’t always want to make some kids do. But kids don’t always rely on your wealth to, you know, to fall on them a very short period. So, yeah, absolutely.

Louis van der Merwe
So unpacking those assumptions saying, Okay, you, you expect your children to need this money, but maybe they just want, you just mean that and, you know, at some point giving them the permission to do that. Is that what you’re saying?

Marius Fenwick
Yeah, I think so. I think so. But just to just to get their mindset is that, you know, if you if you drawing down 2% of your wealth, on an annual basis, and you are 75 or 76 year old. Now, you don’t want to go overseas trip, because you know that this is actual tourism money. As I say, draw 5% You can still you can still enjoy your life, and get these returns and leave your end leave your children legacy that that will be that will be quite substantial. But as I say just too often, and to say it’s a parental thing, we can’t we can’t tell parents not to do that. But I think it’s our responsibility to tell to tell the people listen, don’t worry, there’s more than enough. You know, if if it starts getting to the point where it’s not enough, we must certainly will tell you.

Louis van der Merwe
I know you also have a strong opinion on on clients helping their children and giving away too much assets. How do you get them to a point where, you know, they let go of some of the money, but not too much of it?

Marius Fenwick
Yeah, it’s tough. You know, and quite often, when that happens, it’s precious on the children side. You know, as parents, we’ve got, you know, we’ve got the option how you raise your kids, and if it was always a matter of an expectation and just giving becomes very difficult to stop doing that when the children adults. And I mean, we’ve we know that if you look at especially with our trusts and stuff involved, if the parents pass away, and that money passes on to the children, by the second generation, that money’s gone, you know, so it’s, it’s unfortunate, there’s nothing that we can do about it, that’s a parental thing. And you’ve just got to, you know, have the discipline not to, as it parents want to give the children whatever they can, but there’s a fine line of giving them sufficient but giving them the the lessons of life and education as a much bigger, give them the physical rendered sense. So it’s just a matter of I think how you raise your children and how they other respect money and what you are what you’ve worked for that money,

Louis van der Merwe
your your your family ethos and your dynamics within your family. You mentioned, oftentimes, it’s the children that required that money and this week, I heard of an advisor that helped a client, get the parents to sign a commitment in terms of the amount of money that they will leave them in a state and include that in their financial planning. I’m curious to hear your views around that,

Marius Fenwick
ya know, that that’s, that’s, you know, it’s, it comes back to the point that I met early on, you know, the, it’s the parents money, you know, I don’t think children should have any entitlement to money. And by nature, children do have it. I mean, I look at my personal circumstances, when you do estate planning, I’m in a second marriage, etc. And I, and I believe that whenever I change anything on my on my estate planning, I discuss it with children or adults as well. And you can quite quickly realize that there probably are some other expectations to what your wishes are. And I think if you look at the community, I think the global community, I mean, there are a lot of second marriages out there. And I think that particular becomes a becomes quite a challenge when it comes to the planning. So it’s not just with, with, with expectation of children and leaving, when there’s a second family involved or you know, it becomes even more complicated. But you’re to get the get the parents to commit to something, you know what, then go and discuss with the parents and say to them, listen, life insurable, I’ll take out life insurance on your on your name, I’ll pay the premium, and that will be part of my inheritance. That’s fine. You know, 50 of your parents are happy with that. If you as a child want to go that route, you know, that’s your prerogative. But I think it’s grossly unfair to expect your parents to, to reach a commitment to Machu Picchu that Caracas or tai chi.

Louis van der Merwe
Yeah, I think what came to mind for me was controlling the things you can control, and you have no control over them changing the world tomorrow. But at the same time, like you said, there’s other practical ways. You’ve mentioned quite a few times now how you’ve applied some of your own life experiences to you know, what’s happening with clients, or how that’s improved your financial planning. For someone that hasn’t had those life experiences? How do we how do we share this in our community with financial planners? Or is it just through stories like we’re doing now?

Marius Fenwick
I think there’s a lot of there’s a lot of case studies, and there’s a lot of stories. And I think in the larger financial planning community, I mean, you’ll you’ll get a lot of stories. You know, as soon as you start chatting to a few guys, everyone’s got a good bed, and you won’t believe kind of story. And you know, what I should sit down and actually almost almost run a case study. And also, when you do planning for a family, especially as complex, you know, get the get the cars around cars around the desk and ask opinions. And there’s always something that creeps out that one does not plan for. And there’s always something that you thought might happen or doesn’t happen, you know, and actually, the opposite turns out to be true. So it’s stuff for guys out there that don’t that didn’t have experience. haven’t experienced that in the past. I think just going to get case studies. I think there’s a lot of literature and stuff out there a lot of articles being written. But it’s not. Not not not that simple.

Louis van der Merwe
Yeah, I think we sometimes we oversimplify financial planning, or we get stuck in the details, trying to predict everything and just saying, No, we can plan for what we know, let’s work with us. And when things Bob Bob will still be there. Like you mentioned at the beginning, this conversation, it’s about relationships, it’s about having a clear channel of communication, getting back to clients in a timeless manner. And being there for them. And working through this. And I

Marius Fenwick
think, I think we often try to overcomplicate things, you know, like the adviser you mentioned early on, where, you know, requesting a, a the parents to make a commitment or whatever, you know, my approach to that would be Listen, let’s lay that out your financial planning as part of your financial affairs, your cash flow, etc. If you do get that feature, that’s a bonus. So let’s go back that analysts can see what your you know what your situation is going to be. And you’ve got to manage around that and create your expectations around that. Because that’s a guarantee. You know, if you can write it into agreement, guess what that agreements get? It’s going to be worth squat. If for some, for some reason, your parents lose the investment. So don’t don’t don’t plan around a a dream of the future of something that might happen. Work with affects what’s available capital now, what can you put away and that rebuild your financial planning around? What did you get from your parents?

Louis van der Merwe
Yes, I think it’s maybe used as a quick fix to say we don’t have enough resources but hey, there’s there’s a family member

Marius Fenwick
talking about family members, I guess I’m from Mary married family. Typical example is that only son relied on his parents wealth and they had wealth. The mambu Money a bit, she had a bit of a gambling issue. And he relied on the property that was worth like 6 million Rand that will that’ll come to him to cut the long story short, she ran out of money. She, she became a bit dimensional. And she sold the property with the use of factory writers summer for a couple of 1000 Rand. So you know, he’s now turning 50 ish, the property is gone, he’s got no recourse, the guy that bought it. So they had a plan of 6 million Rand in your, you know, in your in your back pocket as a as a retirement vehicle. And nice got squat, you know, so even as a single child that rely on what your parents at some stage promised you that will, that you get all what you just expected this guy to come to you. I think in this case, it was a promise, but she just couldn’t remember and or circumcised circumstantial, just such that, you know, that turned out quite nicely.

Louis van der Merwe
As a as an only child, I’ll be sure to apply that thinking and hopefully my parents are listening to this as well. Marius, how do you see the future of financial planning? What What will stay the same 10 years 20 years from now? And what do you see changing the biggest scheme of things,

Marius Fenwick
I think what will be this be the same, I think especially especially over the next 10 years, I can’t see the industry changing in terms of how they pull people into the industry, unless some big independent advisory practices started practice to to professionalize the, the the industry in terms of getting guys in how you remunerate them, how you train him, etc. As long as the big insurance companies are going to be the main source of attracting guys to the industry, that’s not going to change, because that’s based on their business model. In terms of the servicing model to clients, I think it’s going to move and we’ve seen a big shift over the last five, six years, is going to be very much more a service of offering a holistic service in terms of planning, getting involved in much more just in financial affairs of of clients. And in many cases, I think financial advisors becoming the confidants of, you know, of many clients. So are seeing getting involved much more in the financial lives of clients, but just not, and it probably shifting towards fee based fee based kind of services. I think any practice that’s not seriously considering moving towards a, some form of fee fee paid service, I think they are going to probably come a bit unstuck in 1015 20 years time. But things happen so quick, in 20 years time, who knows, you know, I can’t even comprehend to think what it’s gonna be like, just the you know, just the advancement of technology, what we’re doing how we deal with clients, anything, we start to start including add to our, to our into The era to the quiver to have to service our clients. So I think the guys, I think they personally think the the industry is going to become much more more professional. On the independent side, I can see some of the large insurance companies already moving, also to holistic planning, financial planning, etc. I don’t know how they costed into their product offering, I think it’s still a matter of let’s do the life planning. But you still need this endowment to reach your goals kind of thing. I think there is a mind shift that’s happening slowly. But you know, the quicker that happens, the quicker the industry will become, will become professionalized. But yeah, I think there’s big changes on the horizon. And good changes, I think, necessary changes.

Louis van der Merwe
It points to your earlier comment saying that, you know, we should be lifelong learners. These are things that we’re going to be including in our business, it’s ways of dealing with clients, it’s building more skills and and God just incorporating that. So comment

Marius Fenwick
around and don’t ask me who made it that said that the future is not about your, your, your qualifications, or what your No, it’s what you don’t know, and your ability to relearn. Other words, if the old guy, you stuck in your old ways, you’ve got a problem. You know, you’ve got to have the ability to identify these. There’s new challenges and new things to learn, and your ability to relearn and rescale yourself. And I think in our industry, I think that’s very, that’s very appropriate. We can have to continuously upskill and reskill article fall behind him. And that happens quick.

Louis van der Merwe
Yeah, change is hard. And that’s why not everyone can tackle it,

Marius Fenwick
especially if changes happens like five times a week I can practice.

Louis van der Merwe
Thank you for enduring with our constant change. And I think it’s kept you young at heart as well. And your thank you, Marius. It’s been a pleasure to have you here today. And thank you for your partnership and your mentorship. It’s really It’s meant the world to me so just from a personal side and thanks for being here

Marius Fenwick
thank you much appreciate it