Speed dial your advisor

TEAMWORK: CLIENTS MUST SEE THEM AS FINANCIAL JOURNEY PARTNERS

Approach your personal finances like you would a business’ finances.

Ioften hear about individuals who cannot remember their financial advisor’s first name. There are many parallels we can draw between the value a financial manager can add to a business, and the value they can add to your personal finances.

There is much to be learnt from approaching your personal finances similarly to how you’d approach a business’s finances.

In South Africa 70% to 80% of businesses do not make it past the five-year mark. On the personal financial front, we are often told that only 6% can retire comfortably. Achieving financial success requires hard work and a clear strategy. But while many will accept this is part and parcel of achieving business success, few are willing to invest similar time in their financial success.

Cash flow is the origin of monetary survival. Cash flow is the cumulative scorecard of your collective business/individual. Businesses generate cash flow from the successful management of a product/and their operational resources. Individuals generate cash flow from selling time and knowledge for salaries/self-employed income. Individuals need to manage the consequences if their cash flow suddenly dries up.

Credit management: The level of business/personal debt should be carefully managed and is a key indicator of future financial progress (considering the cost of credit). Credit adds risk within each business and personal finance scenario and is one of the biggest stumbling blocks towards reaching financial independence.

Diversification: Successful businesses diversify their income streams to be less dependent on one product, market, currency or geography. Investors should aim to successfully diversify their assets across different asset classes, currencies, geographies and service providers.

Succession: Succession planning (who takes over ownership/ management) remains key for long-term business survival. Similarly, you will need to take these decisions in your personal capacity when leaving assets behind to benefit your family.

Insurance: Longterm (buy and sell agreements/keyman) and shortterm insurance are vital for business continuation (cash flow). Not all business risks can be managed by good managers. Risks that cannot be managed have to be insured. Insurance brings these risks down to an acceptable level. Individuals should insure their lives, assets, income and health to prevent their financial plans derailing.

So, why do I not remember my advisor’s name?

Reasons could include:

You have not heard from your advisor in a while.

You feel your financial situation is relatively straight-forward/ don’t need much guidance.

You do not see much value add/ active involvement from your advisor.

A good financial advisor will take the time to get to know you, understand your challenges, and would want to know about the highs and lows in your life. Clients who are serious about building their personal financial wealth and independence, should engage and acknowledge that a financial advisor is their partner on this journey.

Change your life by putting your financial advisor on speed dial.

Richus Nel is team & business owner at PSG Wealth

Risks that cannot be managed have to be insured