#46 Wynand Gouws – Transcript

Louis van der Merwe
Welcome, Wynand. I’m so happy to have you here today. For the listeners and the people watching today, Wynand is the author of to 100 and beyond. And we have the pleasure of chatting to him today to unpack a little bit how we got to writing his book, what the magical ingredients are that like really inspire them to do this. And I think this is a wonderful, wonderful book for not only for people that are managing their finances, but also for young financial planners know people starting out in the industry, finance, thank you for joining me, tell us a little bit how you got into being inspired to write your book.

Wynand Gouws
Thankfully, it’s probably one of those things up, I always wanted to do a bit of writing, you know, writing runs in the blood, my dad was a journalist, my brother’s a journalist, I did some articles every now and again. So I always wanted to do it, but never had time until locked down and 2020. So we actually just that week before lockdown was announced, we moved to law cozy place in the West Coast. And we pretty much had peace and quiet, and nothing to do for a few months. So I decided good time to do it and pack the dining room table, I’ve put in the extra bedroom, and I sort of locked myself up for almost three months, not permanently, but you couldn’t do anything. And remember the ridiculous times when the kids were out, they couldn’t go on the beach, because they call the police. So I had plenty of time to actually start writing the book. So that’s where it started. And then you sit down, you just start jotting down sort of the chapters that you think is going to work and you start writing. Then after locked down and life happened again, 10, things became back to normal. And it must have been almost 12 months after that I eventually kind of said, Listen, I’ve put in all the work. Version one was basically done. So routed back to front, but I never reviewed it. And then I had to stand back against I call. Now I’ve got to see if all of this makes sense. And that takes a bit of time again as well. So that was phase two, sort of a year later. And then the work starts to put it out and see if there’s any interest, you know, to put it out to public service. So that’s the process.

Louis van der Merwe
Oh, well done it, it takes the world slowing down for you to tackle a project like this. And it’s so nice. Looking back today, yours is something I’ve made, I want to talk a little bit about the main area that you tackle. And that’s the problem with longevity. As financial planners, we tend to rely on our clients. Awesome. Oh, how old did your parents get? You know, what is the information telling you? And what’s the data telling us about longevity?

Wynand Gouws
There’s probably I mean, there’s two interesting parts. The one before longevity, we sort of briefly spoke before end is the story about retirement. You know, if you kind of look back to where retirement started, you know, from all available records that seems to have started sort of 13 BCE in the Roman Empire. When soldiers were given retirement package after 20 years of service. Now thinking back then I expect the average life expectancy was 35, or 40, or even less. So most of them never retired, then it kind of moved on to Germany and Europe, sort of an 1880s, they started retirement schemes as we know it and for retirement. And he started kind of in 1920 with if you want to call it mass production or index industrialization, the interesting thing is, if you look back at all of that, you know, post the Roman Empire, retirement age has always been 65. You know, so it started in 1880, then a 1920, it sort of really gained traction in the way that we note retirement planning. And during that whole period, retirement age was 65. So when retirement was developed, most people never lived to retirement date. So it was never actually a really a big issue. But if you look at at the moment in SF, so firstly, that hasn’t changed. And the one thing that has changed the numbers that you talk about, as people are living longer, you know, just sort of like the headline stats, you know, the, if you look at the numbers, you know, people are born today, one and two will live in 200. You know, if you look at what the UN is saying, they kind of saying, you know, by 2050, that’s not too far off, you know, 100 will be the norm in how long people live. And the numbers just carry, you know, over the last 100 years, life expectancy increased by 25 years. You know, during the first part of that it was a lot quicker the increase in developed nations. And the second part was a lot quicker and developing nations, obviously is technology and, and knowledge sort of like spread to developing countries. But at the moment, you know, you probably for every four years you live you need to add on another year of longevity to your life that gets added that you didn’t plan for. So the numbers are scary at the least. And I think most people completely underestimate how long they live for it. And you probably know if you ask people you know, as you say, if you ask your parents in yourself now only do you think you’re going to live? Even if you look at most of the numbers used that kind of goes into the 80s normally normal mortality stuff 80 to 86 or something. And most people say that I’m not kidding. Good day. So I think people completely underestimate the numbers. And you know, what we kind of say is if you look at joint mortalities, so husband and wife, one of them has a high probability to live into their mid 90s. So at the minimum, you need to plan for mid 90s. If you can afford use of 50s. For a young couple, you probably need to plan for 100, you know, if you’re in your 20s, or 30s. And that’s different to think what we normally do, what you

Louis van der Merwe
plan for, yeah, that can be very scary, just looking at these massive numbers saying, Where do we start? And one part, one of the chapters you mentioned, as early as possible, save as much as possible. And I think you mentioned that invest as aggressively as what you can you tackle in your book, quite a few different areas. You know, one of it is basic financial planning ideas, or one of it is, you know, these Ponzi schemes that we’ve had, and I really enjoyed that chapter, just looking back and saying, Why did people fall in these traps? Can we talk a little bit about that what you saw in your, in your own research,

Wynand Gouws
schemes and scams and lost fortunes, and probably, you know, having been in the industry for a while as well, is it becomes very real, we need to deal with it firsthand. You know, you spoke about some personal client experiences before we started, and I remember being in Cape Town, and one of the schemes relative value arbitrage, you know, it was rife in Cape Town, and people would come to us and say, Listen, my clients investing these things, what should I do? And every time you look at it, you just kind of think that it’s so obvious, you know, this is a scheme, the data is wrong. If you look at the prospectus, you just can’t find any supporting evidence. The historic numbers are all just wrong. So I think the reason it, it seems obvious, you know, to if you want to call it the trained eye, and it’s normally very simple, you know, it’s back to that point. If it looks too good to be true. It is. I mean, so that then you always start investigating. But back to your question, why do people faltered? It’s sadly normally the most vulnerable, that forefront, you know, so people that didn’t do all the right things, they started too late. They cashed in the pension. They didn’t do the right stuff. Now they get to a point where they desperate. And in their desperation, they need to look for something that’s better than what the market provides, you know, so. And that’s always nice schemes. It’s always the point is, it’s better than what you can get from doing normal investments or normal savings. And certainly people for Fall threat, you know, if it was the property syndications that we had 1020 years back the share Max, as if it’s the relative value arbitrage has, you know, offers the latest one cryptocurrency scams, if you look at some of them, they provided a guaranteed return of point 5% per day, and are trying to compound point 5% per day, the numbers are just absolutely ridiculous. But people fall for it, sadly, because they need that extra bit. And they fall for these schemes. So it’s a sad state of affairs that people fall for it. But it still happens. It’s still a big reality

Louis van der Merwe
surveillance, if you’re not looking at, you know, high returns as the holy grail to fix your problem. You tackle it in your book quite well, all the different other areas. Where should someone start, let’s say someone in their early 40s that are saying, I’m worried that me and my partner might live to 100 or beyond? I know that I’m not going to get super returned somewhere. Where do they start?

Wynand Gouws
The US sort of talk about that the lessons My dad never told me, because I think reality is you know, finances not something that when we grew up spoken about at home, and still today, people don’t talk about it enough. It’s not in textbooks, it’s not taught at university. But but some of the basics are very simple. So I’ll just start in the very basics, then expand slightly. One of the guys I used to work with Marina Rue, you know, economists, the he always kind of used to simplify stuff and saying, there’s only three or four things you need to do. You know, very simply, if you look at it, you need to start early as possible, save as in as much as possible. So as that 15 20%, we kind of normally learn in the textbooks and get a decent return. So if you try and do those basics, right, that’s the good starting point. But I think too often people try and overcomplicated and get one of the elements, you know, often in you know, people try and get the asset mix, right? Or is it passive as a debt? Is it you know, what’s that mix? That’s important, but just start early, save enough, get a decent return, which is relatively easy, then you can try and be smart and fancy around it. And I love that quote, The The Richest Man in Babylon, which your lovely little book, The parallels, and it still kind of says a part of what you earn is yours to keep. So I think if people take away that one bit, and I mentioned that in the book as well. Part of what you earn is yours to keep and the sooner you start doing that in putting away 15 or 20% You know, then you’ve started then you can try and do stuff better and smarter and use tax breaks and other stuff. But that’s that’s the starting point.

Louis van der Merwe
I love that a part of what you earn is yours to keep. And it reminds me of Robert Kiyosaki and the Rich Dad, Poor Dad, you know, pay yourself first. And so all of them seem to have a similar theme just get used to putting money in your own pocket. Mike Gardner talks about the four, the Four Bears, and you wrote a book for four children around spending, saving, investing, and giving. And so this would speak really to the investment piece of them. Who was this book originally written for? Who did you have in mind when you when you read this,

Wynand Gouws
it was probably intentionally kind of written for two audiences. And you probably caught that when you read it as well. It is very specifically and I always when I started, I had a goal and saying, I want an easy reading book. And I don’t want more than 200 pages. And I want it to be simple, so that anybody can pick it off the shelf. So my intention was kind of always a go to guide for financial planning. But that talks to a key issue the hands I mean, throughout the book, the key theme, as you’re going to live longer, you really need to think about this stuff and what you need to think about. But it’s written as an easy simple reading book, targeted 200 pages, we almost got the and I always suspected there might be a very particular area for financial planners new or coming into the industry. It’s got a lot of learnings from myself learnings from all the readings, but but there’s a lot of very good stuff in the in things you need to know. And you pick up through experience, you know, having been in the industry for more than 20 years,

Louis van der Merwe
you have I’ve almost seen this as a bit of a textbook, you can jump between chapters, you can say, Oh, this looks interesting to me. It’s not necessarily one that you’ll pick up and start from the beginning to do the end. Was that your intention?

Wynand Gouws
Yeah. And it’s very specifically kind of, as I say, when I say Darla started writing it really looking at it’s trying to have a natural flow to what is the big issue we fell it we facing it is the fact that you are living longer? What are the basics you need to write, but it does go through to then eventually in saying how do you do this stuff, you know, so toward the back. And if you’re retiring retirement property, you know how to think about it, how to think about investing in property. So you’re quite right, it tries to cover from starting out to eventually thinking about in retirement, and then back to the purpose, as I often talk about these multiple chapters in retirement as well. So depending what chapter you’re going towards, what are the key issues. And that might be then at the moment, one chapter, a few chapters might not be relevant. But as you progress, or as you look at stuff, you probably might flick back and look at stuff that might that’s more relevant at the time. So tries to address from getting started to a chapter on on retirement to retirement homes, and one of the options now do they work? So you’re quite right, people might read either all of it, or a partner flick to something that might be of more interest at that point in time.

Louis van der Merwe
When and let’s chat about that. The point where someone is now retired, or as you say, moving into their new chapter, and they need to draw a sustainable income from from the investment pots, what are the things that they are getting wrong at the moment, and sometimes with the help of without the help of financial planners? You

Wynand Gouws
know, I think, firstly, you mentioned in the book is, you know, I think quite often we think about retirements, a line in the sand, you know, you plan for retirement, which is at a date and point, you know, be at 5560 65, whatever that retirement date is, and you plan for that starting at 65. I think for a living so much longer. And if we look at just how life has evolved, you know, you need to think about multiple chapters in retirement firstly. So that’s the starting point. Now point to make in the book, again, is saying, it’s not about it doesn’t start with your financial plan. It starts with back to the point your life plan. So you first need to sit back with your spouse, partner, whatever, ideally, way before retirement talk about what do those next chapters look like. And for most people, particularly that I deal with, they are quite different, you know, so there could be a first chapter which might involve continuing work in consulting doing some stuff either in previous employment or doing something very different. But they might be intentional partner first chapter, which is saying, I’m not physically retiring from work, I’m doing other stuff, stuff, I want to do stuff that I love, or I need to continue working because the numbers don’t work. But but there’s a first chapter which could be a almost a bit of a hybrid between working and retiring then it could be two or three chapters after that, you know, after that might be weird becomes a bit more if you want to call it active retiree but not working. So still alive, traveling, seeing the kids seeing the world but intentionally, the work stops and that could be a last chapter which might or might not have all involved frail Kim. So I think the starting point is all of those chapters look different for everybody but discuss start with saying, What is life look like after 65? What are my chapters, it might be 123. And it might be more, but for some people, once you figured out those chapters, then you can start building your plan around it. And that plan might have been at normal retirement age at 65, you might not need income at all, all you might need something to provide a wee bit of income, reinvest other stuff, keep it for long, etc. So there’s many multiple financial or investment strategies, but it’s got a plan for the life plan. First, that those different chapters,

Louis van der Merwe
someone said last week, we don’t have financial goals, we have life gold with a price tag on it. And I love that because you know, as you saying it should start with with your life plan, it should start with the people involved with you. In South Africa, a lot of people rely on property as an income stream post retirement. Can you tell us a little bit more what you cover in the book around property? Because you mentioned that earlier as well.

Wynand Gouws
I’ll just broaden that slightly, and then get back get back to property. And often I think one of the biggest failings are seeing retirement plans as people that are only dependent on one income stream in retirement. You know, we spend a huge amount of time in planning in that whole thing about diversifying bowling up assets towards retirement etc. And I think one should be a lot more purposeful and saying given that life plan after 65 those different chapters, what are the various income streams that work? Both personally that fit your your your financial personality, but also from a tax perspective that the normal planning perspectives. And that could include a traditional living annuity, which we now most people still use, it could include guaranteed annuities include could include dividends, and it could include property. So from that broader context, I firstly say in a broader perspective, there is a place for diversified income streams post retirement, and that’s not only about diversifying in a living annuity, it’s a bit broader than that property could be a part in that. And do raise the point and saying, you know, having lived through the sheer mix as the property syndications and I kind of say in the book, listen, I’m probably overweight my own portfolio property. So just take that I’ve got too much property. But what does worry me is the way that many of the new property schemes are being marketed. You know, it’s almost like little property syndications, except you buy physical versus buying a share in property. And I attended a few of these, you know, one always has to be open and sort of, you know, learn what people are doing and what information is being provided. And when you go into these sessions, that seems like the property gospel, you know, when you go out, then you have to start doing the hard work. And the key point I’m making property is saying it’s like any other investment. If you buy, buy it for the right price, and it becomes a decent investment. Many of the current things being marketed, I did raise a concern and saying, be sure you understand the numbers. Because once you dig into the numbers, firstly, the property returns are completely over estimated, you know, I’ve got the f&b an episode data kind of over the long term property doesn’t really beat inflation, it’s mostly lifestyle acid. So check the numbers, check the assumptions around historic growth and property. And check the assumptions around increases in rental income. Just those two things in every single proposal I’ve looked at, it’s completely over estimated, which means people are buying into a proposition that is faulty by design. So like any investment, get getting back to it, I’m overweight, buy for the right price. And when you do buy into any of these investment proposals, or you might see a syndication or proposition. Just be sure to double check the numbers and assumptions if you’re comfortable, it’s fine. But check those and check that you mind for the right price.

Louis van der Merwe
Range and I really like how you saying look at the data and let the data tell you a story and check those assumptions. But for most people, they don’t necessarily have the skills to interrogate the information or even know where to start looking. What would your advice be to those people?

Wynand Gouws
Yeah, and I think that goes back to both the investment schemes and property and I think for both of those often the is the benefit of a sounding board. So that is going to a professional certified financial planner. Either bouncing off ideas double checking checking assumptions, or in some cases might actually involve going to accountant or anybody similar as well. But firstly ideally look at the numbers if you’re unsure if the numbers looking too good to be true. Go to someone objective to provide a second opinion a Certified Financial Planner and the Simon property you know as I say it’s got a place them all abroad a diversified portfolio but to check it works, check the assumptions right? Get a second opinion and bounce it off your CFP, your financial planner,

Louis van der Merwe
and when and as a certified financial planner you mentioned quite a bit I at the firm that you’re involved in, which is Grandage, Mahara? What are your clients saying that you are now a published author? Or is this a surprise that’s waiting for them?

Wynand Gouws
I think I’ll probably get the feedback in the next few weeks or so this is, you know, the book sort of started off this week on the shelf, and the launch kind of starts in this week. So it’s only just started. But you know, to date, the feedback received from people is quite positive. I think most people haven’t actually gotten to read the book yet. So I’m looking forward to the feedback as people read it, and any of this audience, welcome any feedback online or any notes on what works? Are the questions or any constructive comments, you know, things we might have missed?

Louis van der Merwe
This, maybe talk a little bit about the role of kind of creating and publishing and just putting out more work as a financial planner, I know, you and your firm also do a lot of work to educate people? Where do we draw the line between doing pro bono work and education work? And actually, you know, just seeing clients? And depending on that, because there’s still this perception that financial planners are there to provide products to clients?

Wynand Gouws
Yeah, I think it’s, it’s a difficult one to answer because I think it depends on the structure of each business, you know, so when you set up a financial planning business, you’ve got a certain idea of how you’re going to position the business where your clients are going to come from, etc. The benefit of publishing stuff, I think, is twofold. The one is importantly, you know, I think people underestimate how much effort goes into publishing a article. Because you’ve got to check and double check and be sure your facts are absolutely correct. So you’re putting yourself out as a expert on the subject matter. And I think eventually, clients do see that, you know, they read it and kind of say, that makes sense. So provides credibility to both existing clients and new clients. And that’s an important part in building a business. So be that in writing an article or a book, it adds credibility to your, your business and your brand. And I think clients enjoy reading something that a financial planner has written, and is out in the public domain. So I think that’s absolutely fantastic way to draw the line on doing that versus pro bono work, I think, firstly, if one does it, you have to enjoy it, and it’s going to be a patient, you know, you can’t force yourself to write stuff or to publish stuff if you don’t really enjoy it. So if you enjoy it, it probably becomes a personal balance between saying, How much time do I have for this versus, you know, helping my clients, and it becomes that balance. So just back to the question on pro bono work, I think eventually, there’s a balanced, you know, previous spoke to to run off, but about the hardest one deal with it. Because what we found often is because you’re in the public domain, you know, and you’re presenting views and opinions, people often want to bounce off ideas. And that doesn’t become the one meeting or the one call, it often does end up in, you know, 10 hours of work or so. So I think it’s important to position your proposition to clients, or if you’re charging structure might be upfront. And when people do seek advice for they want the one hour of advice, that’s fine, but it is a professional service that you provide, and we need to charge appropriately for that service. If that ends up and 10 hours of work or a basic financial plan, depending on how your proposition is structured, the important thing is to if it’s a quick question, you address it, if plants do want to come in for advice, it’s important position and saying that’s perfect. Dealing with you as a professional, this is our proposition to how we can support you. And he needs to get that out upfront for clients,

Louis van der Merwe
when and this very much covers the topic of the expert role that financial planners confer full stress testing, you know, challenging the assumptions. But then there is another side, the human side, which you also mentioned in your book, that this is not necessarily the one that’s going to tackle the psychological aspects of it. But I do want to talk about a little bit, because it’s often very difficult for someone to go into this next chapter. How are you currently helping your clients going through that?

Wynand Gouws
Yeah. So I think, you know, even though I say we don’t delve into in detail, the purpose was in that, but it still does, to a large extent. Because I think a big part of that is back to the discussions on what is that next life chapter look like? You know, what are the plans? And it doesn’t matter if you’re currently 20 or 50, and part of the financial planning experience is what do your next chapters look like? You know, what are your plans? What are the ambitions? What are your dreams? Particularly if you think in the context of the book, it’s standing back and saying, What happens after 65 and it talks to the fact and saying, it’s not always it’s part of our role to guide clients on that. But also to help them in how to get the you know, start writing it down, go home, check to someone that you trust, you know, not just your financial planner, be it a spouse, be a partner, be it a friend, you know, sit down and talk to someone that you trust and that you can share your life with ain’t worth to start crafting that plan. We can assist in guiding clients to that extent. And then as they come back and sit with us, we can start putting the parts in to help them achieve that, once they’ve put the life journey together, so a lot of it that I kind of talked through helping clients in the journey, partnering with friends, colleagues, and putting pen to paper and like anything, you know, you’ve got to plot your journey. And then we can support and saying, how do we assess clients to get the

Louis van der Merwe
and oftentimes the finance part is such a big worry. And I think you’ve tackled it so nicely approaching it, breaking it down thinking about the principles, and kind of just moving ahead with that, you have a background in future studies, and you clearly think a lot about the future. What do you think your next chapter would look like? And, you know, what could we expect from that just as a fun little exercise?

Wynand Gouws
So I mean, part of it’s interesting, but I mean, part of writing the book is part of that next chapter. You know, so having been in a corporate for 2030 years of my life, you know, the first chapter started joining my friends and colleagues, a great admirer investments, part of the books that next chapter, you know, so the one thing that COVID tortoise as you can work from anywhere, you know, so we continue to serve clients, right across the country, internationally, you know, number of European countries, etc. And it’s odd, but I think COVID Clan, have forced clients, firstly, into what we expected for a long time, that you don’t need to meet face to face. And clients are increasingly comfortable with doing that. So back to that next chapter, you know, part of that next chapters, we’ve got a cozy little place up the West Coast, I see myself eventually going there, I first have to get a few kids through school and varsity. But if you’re talking next chapter, so the first chapter my, my current path has kids, you know, they’ve got to get through varsity. And in school, the chapter after that is not stopping working. But actually setting up my business, the West Coast, you know, I can very comfortably work from there, see my clients wherever they might be. And occasionally, you know, arrange the face to face meetings. But that’s the next part of the chapter. And that probably is the 65 to 70 parts or so, you know, because do so they don’t think I can sit at home, my wife might not be able to deal with it. And under 24 hours, 24/7 bases. So, you know, I need to keep busy. And that’s the 65 discerning part. So and after that is reassessing and saying is that now going to into formal? So yeah, the book kind of also talks to how I approach my chapters and thinking about it.

Louis van der Merwe
I like how it’s not too detailed and not too structured, saying, Okay, at this point in the future, then I can reassess. But your financial backing will have that. Last week, we had Sidney Divine, who’s a registered Life Planner. And one of the comments he made was that the industry that we’re in is the most lucrative industry in the world. And the money is not bad, either. We get to help people on a daily basis. And as you’re saying, you can do that anywhere, doesn’t have to be in your office, meeting people face to face finance. I want to thank you so much for being here today. It was wonderful having you. I look forward to sharing this book with colleagues and with clients. It definitely is one that’s going to be an off shelf. Yeah. Thank you so much.

Wynand Gouws
Great, thank you Louis. Great being here. Thank you.