Making an Honest Living Through Lifestyle Financial Planning with Dirk Groeneveld

So grab a coffee , sit back and let's get ready to blast off . I'm your host , frans van der Toij . Mr Grenneveld , good morning , welcome to Propulsion Live . Finally .

You've walked a long road , you know , and and at the heart of it all the way that I've summed it up is that you want this profession to become what it is meant to become , on the one hand , but also for our younger financial planners and advisors .

And if I say younger financial advisors and planners , I almost want to want to define it as two different things . There's like brand new to the industry , and then there's people who haven't evolved from where they started . Like that's also for me , new , maybe in some sense , and this is such an important conversation for us to have .

So thank you very much , looking forward to it . First question let's kick it off is just tell us a little bit about just your journey , like where did you start ? Just very briefly , where did you start and where do you find yourself now ? And then we'll get into a conversation around lifestyle , financial planning and all that good stuff .

I finished school , did a three year diploma , went to the army , went overseas , came back my dad told me I needed to get a job , and he's broke and eventually got me a job at 22, .

When I was 22 with Southern Life , had no idea what I was gonna be doing but then was sent to Great West of it for short I don't know 10 days and basically taught sales techniques , came out with the right book this is where it is before computers and then , yeah , you were basically set free and you had if you were lucky , you got a pile of orphan leads .

Um , otherwise , those who remember the Yellow Pages we would literally do cold calling . Being a PE , I was too afraid of meeting someone I might notice , so I would drive to dispatch and to euthanate every evening to try and sell an RA or a 10-year endowment or a family or education provider , and then from there've joined a independent group for a while .

I've worked out very quickly that stuff that we're doing was not to kosher , so I was forced to go on my own and then I was approached by glenn and mib and I started running their financial planning division , mpe , and then also in cape town .

Um , it was around , yeah , about 2000 when those who remember there was the dot-com crash and then there was also where the RAND was . You know , in those days , if you put your money in any fund that had dot-com behind it or offshore behind it , you were getting 30% , 35% returns , probably three or four years in a row .

The RAND then strengthened massively and , uh , asset managers weren't answering their phones . Uh , and I realized that , as much as I was trying to help people , I was actually just appalled by these various companies to to sell their ways . I was fortunate that I then , through a friend , got in contact with IPAC .

It was bought from us to SA by Andrew Bradley and I flew to Cape Town , met Andrew , explained my problem and he explained what they did and basically decided overnight to adopt this concept of lifestyle financial planning , which meant going from earning commission on investments to to fees , which was obviously was quite , very tough at that time .

Long story short then . Yeah , it was a year later , so I started client care as a franchise and then getting around eventually followed and and I had my own business .

So , yeah , I was basically a solo advisor for many years , did all my own admin , everything myself , yeah , and then and now I have built a team and trying to build a business , a lifestyle financial planning business , with . We've got two other CFPs in the business , alex and Ben . Our offices are in PE .

I've now been in St Francis for three years with an office here which is getting nicely busy . So , yeah , that's it really on how I've got to where I am , and I suppose the biggest change was embracing this concept of lifestyle financial planning .

I mean , one of the speakers at the Global Financial Planning Conference was actually also speaking about how she dropped out after 18 months because of lapses , because of the way that the industry works and all of that , and then only like how long after that did she come back after having to do admin for many , many years , kind of thing .

And it's unfortunate because I think we're losing some great people . But we'll get to that part of the conversation . You know lifestyle financial planning .

There's a couple of things about this I just want to know , like , if you say lifestyle financial planning , if you have to explain that to somebody who knows nothing about our profession , how would you explain that ?

Does it sound like it makes sense ? I don't really know what these things are , but I'm kind of going to go along with it . I mean , a lot of people who are great entrepreneurs , so they're very good at creating wealth .

I've never really dealt with stock markets or , and certainly not planning , and so , yeah , I think , I think the way we we do it , it's really difficult and it's it's been a real uphill battle and that's probably why I'm so passionate about it , because it's much easier just to go with the flow .

You know , to have the same discussions about funds and asset managers and timing and all this nonsense .

Really , um , where the place that we add value really is is in dealing with people and and understanding who our clients are , understanding why they're unique , um , what they want out of their life and how we can help them , you know , lead the best life that they've got that they can do with what they've got . So so it .

It really is difficult , but I think what happens if you , if you stick to it and you know , um , if you eat , sleep and breathe it , then eventually you know word does get round and you know we get all our business through referrals , or you know , I write a lot over here and the articles you know none of it is about which is going to perform well or

which fund you should be in . It's really about the human issues and I think , especially since COVID , I've seen a marked change in the way that people are viewing their own personal lives , which kind of plays into the whole lifestyle financial planning method . Yeah , that's the whole way of being .

Might be sitting here asking is because I think you've sort of highlighted maybe what's the main difference between lifestyle financial planning and traditional financial planning . It's literally the focus . But I think what a lot of people might be keen in understanding is but how does that impact the advice that you give ?

Because the question is always is the advice at the end not in many cases , not in all cases , definitely not , but in many cases a product ? So the big question is this client-centric approach and this focus on the client and their sort of issues and their problems and making that the center of everything .

How does this impact the kind of advice that you give at the end of the day , from a practical point ?

. You know , I know I'm quite harsh on traditional planning versus lifestyle planning , but I think it depends on people . So there are people who lifestyle planning , but I think it depends on people .

So there are people who maybe don't have or don't want to get as personally involved with clients as maybe I would want to , and they're not necessarily doing a bad job because they are still . You know , some planning is better than no planning at all . So let me just put that out there .

But you know , proper lifestyle planning means you spend a hell of a lot more time with our clients , getting to know our clients . You know we've got a three meeting onboarding process which everyone goes through , regardless how much they do have or they don't have . Um , I think also the limiting the number of clients that you deal with .

You know people who've got hundreds of thousands of clients , they they're . There's no ways they can do a proper job . I'm sorry , it's just impossible . I don't care how good your systems are or your backup people are .

So I think you've got to restrict yourself , each planet , to a certain number of relationships , which is probably a hundred's , probably the top end . And I think if you speak to top planners lifestyle planners some of them are way less than that . And yes , the products do play a role , obviously , in planning .

And you know I mean we still get paid , we've got an AM signing scale and you know the whole feed debate is a completely another discussion . But I think you just got to be honest with yourself . It's very , very simple .

You know deep down whether the end goal is a sale product or whether you're generally trying to help someone and then the product is just part of the planning that they need to be doing . You know whether the money is going into an ro or a trust or whatever structure is best for that client situation , or whether they need cover .

You know the big danger , when I went down this road as well , is that you you kind of feel guilty about putting a product in front of people and ben , who works with me , ben , hates talking about product . Um , but the reality is that there are these things that that that people need . You know income protection . People need it .

You know , if you can't earn a living , that's the most important insurance I believe you can have in life . So there is always a product in everything .

But I think deep down you know whether the end goal is to sell a product or you're generally trying to help a person and their family to sell a product or you're generally trying to help a person and their family .

They will typically go and say , I mean , it's the right thing to say this , but you look at what they drive through metrics and you look at what they drive through incentives and all sorts of other things . And then you say , but how do these two things align ?

And I think that's maybe an important thing to add to that conversation or to that piece that you just shared . It's like it's your intent , you know deep down inside , but also , does the metrics , or do the metrics that you track and measure for your business or your practice or whatever it may be Does it support that intent and that behavior ?

And is everything aligned ? Because that , at the end of the day , is probably the giveaway .

And although that stuff is important , it really isn't that important because the numbers show that if you buy into a decent equity fund over the next 30 , 40 years , you're going to be fine . 10% is going to be decided which fund you're in . 90% of your return is going to be dependent on the correct allocation , which is worldwide equities , I think .

I mean we've had instances where , you know , we've had clients who , through COVID I had a client who went through a terrible divorce cost him millions . He was in the rent industry ended up almost losing his business .

He lost everything he absolutely been a client for 20 years and , um , just because he can't pay us , we don't say , well , you know we're not going to work with you . We're basically saying we can help you rebuild your life because we have that relationship and we understand what's happened and we know that we can help them get to where we are .

So so that relationship is not going to be profitable for a number of years , but it had been before and also it's the right thing to do . So , yeah , I mean I think just doing the right thing . I mean you're not going to make as much money as the guys have got maybe hundreds of thousands of clients and you are just selling stuff .

But I mean that's if you're in this business just to make money . I'm not saying that's a bad thing . That's not where I am . I mean , obviously we need to run a profitable business and we need to feed our families and we all want to live a good life .

But I think very clearly there are people who are focused simply on the money and then they will focus on the client to the extent that that brings in more money . And then there's where you put your care gene . Barry Armani calls it the care gene .

You put that first up front and then I believe that if we work with clients and we help them get to where they need to be over a 30 year relationship it is going to be profitable for the business . So it might take a little bit longer , you know , for that time to be really profitable .

And look , it is a challenge because we've got to run a business and every business is different depending on the number of planners to set up your overheads , things like that . So I think there's there's no simple answer .

I think the reality and I keep telling a lot of youngsters I deal with is that this is a really , really , really tough business to get started but once you break through it's probably it is the most rewarding business out there because we we have the privilege of getting involved in people's lives and changing their lives from the inside , and to witness that is

simply wonderful .

I haven't had the opportunity to really ask anybody , so I'm going to ask you this question , derek , one thing that you always say on social media , and something that's always somewhere in a post of yours , is real financial planning . So my question to you is this well , one you know why do you feel so passionate ?

And obviously this is not just you saying this is real . I mean , this is a thing with lifestyle financial planning , as far as I understand , like it's sort of labeled as as as real , or maybe even branded as a real financial planning . Uh , the big question is just um , you know , is there a reason specifically for that ?

And then just the second part of that question isn't there just a different value proposition , different kind of financial planning ?

. I've got no idea how you can plan . Cash flow planning means you have to have a monthly budget on what it costs to run your household annual budget , which includes holidays , school fees , things like that .

You've got to have goals , you know vehicles that you replace , you've got to have holidays that you go on , and you if you and I just and I know I mean Andy Hart will tell me that in the UK they reckon only 10% of advance is there and in this way they're way more advanced . They've got way more solutions than we have .

10% of advance is through proper cash flow planning and that's kind of what Andy calls real financial planning . That's like the basis of it . That's the start of it . So I think , with and in this country , I cannot believe that more of the big players have not bought out proper cash flow planning tools like proper , real things . That that I I mean .

I know that I don't have the people , though . Mutual is world class , it's absolutely world class , but without . When I made the change with ipec 22 23 years ago , the biggest impact to me was that there was a cash flow planning tool which , as basic as it was , just meant that you could actually you could do proper planning .

You know so , and it's planning which the client then understands . So I think that is really important , so I think that's an integral part of doing real planning . And then you know the focus . Just you know , very often the people talk about the client . That's an integral part of doing real planning and then you have the focus .

Just you know , very often the people talk about the client but then it kind of ends up being about the investments and all of that and the real planning is just . The whole focus is the clients . When you have your review , you don't sit down with a spreadsheet showing all the investments and this one's up , that one's up , top up your R&S .

I mean that's like one-on-one spreadsheet showing all the investments and this one's up , that one's up , top up your aura . This , I mean that that's . That's like 101 , that's . That's not a , that's not real advice .

I mean that is that's going to be taken over by our robo in any case I mean I think it's there already , maybe not in sa , but I know , certainly in the uk and the us . So real planning is is helping a client understand how the decisions they make today are going to affect their future self .

You know , 50 year old how do I look after 50 year old Dirk , how does he look after the 75 year old Dirk and make sure that he's okay while at the same time living a fantastic life now ? So that is real planning .

It's just really getting into someone's life , and if you're not doing that , then it's all about the money , which I don't believe is real planning .

I want to talk a little bit about driving change in the profession , because this is something I think that we like we very much .

This is very important to us and I know one of the views and feelings that you have is that you absolutely love this profession , but there's also a part of you that despises some of the things of where we are , and would you be open to just maybe elaborate a little bit on that and what changes you believe would be necessary for our profession to take the

biggest stride forward ? Sure , yeah .

You know I believe in lifelong learning , so we're're always learning , always , and it's important that we're always learning . And the day we believe we know everything of the day , the party's over . Um , but yeah , the reality is , if you go to any company , who gets the most recognition ? The people who bring in the most money ? So it is , and I understand why .

The people who bring in the most money . So it is , and I understand why . But it still rewards the best salespeople in the world . And again , it's not to say they're not bad people . They're just really good at sales and that can boost a lot of income . But everything is still geared around production . Youngsters coming into the industry .

I mean , there are very few businesses that are paying them salaries and allowing them to get into this . People come in with a postgrad and a CFP and , to be very honest , they know very , very little . I'm not going against the FPI at all . I love the people at the FPI , but practically I think it's just a lot .

You know there's so much to learn in this industry and it takes years and years for a 20-something-year-old to learn life skills , which is a big part of what we do and to understand what we're really trying to do here . So I think there's still too much focus on the money .

If you look at yeah , you go on LinkedIn and most people are talking about funds and fund managers . And if it's elections happening all around the world , what are we doing ? Do we move into cash ? Do we do this ? It's all absolute bullshit . At the end of the day , we are a bit different because we have been at a . This has been a very .

I think this is a historical point in South Africa's political history and the history of our country . Thank God , it looks like things are going around . I also think that there are not enough people who have been in this industry as long as I have that are giving back .

You know , this industry gives us so much , whether it's personally , whether it's financially , and I see people who have made obscene amounts of money obscene amounts of money who give nothing back . They don't help youngsters . They're always too busy .

I should be too busy , but I've got to chat later with some youngsters as well , because they want to get some info from me or get my opinion on something . You can't be too busy . You can't go through life simply taking and not giving back .

So yeah , and then unfortunately and I know this upsets some people , but I also believe there are a lot of people who are telling young advisors and when I say young , I mean young to the industry , not necessarily young in age telling them how to do our job but have never actually done it themselves .

And again , this is not a knock on any of them , but you know and and telling about my niche markets and this and that , and not saying they're good or bad .

But the bottom line is youngsters need to listen to people who are at the call first , who do every day what they do , and and I just I don't think there are enough experienced planners who are giving back , which is which is sad , because you know if you give an hour , if you give an hour a month or every quarter , it doesn't matter , but just help people ,

because the best way where newcomers are going to learn is from people who've been through where they're going to , that have been through those problems , and if you can circumvent that , instead of them taking 15 , 20 years to learn the right way of doing things , you know they can get that base set up very , very quickly and then grow from there .

So yeah , I don't know if that answers your question .

I also want to put that out there . But I mean , what would your advice be for new financials ? So , new youngsters coming in ? They've just finished their postgrad lessons , because a lot of times these days people are studying like while they're at university . They finish their postgrad and they go on and do these things . They then walk away with zero experience .

They don't know what to do . They land up in a position where they say , oh , here's your , you know , get a list of 100 people and start phoning . So what would your advice be for youngsters , if you will , but also for those who've been doing things the same way for many , many years and sort of wanting to say , but what is there a different thing ?

Is there more value I can add to my clients ? What would your advice be ?

One thing I don't understand is all life companies , all banks , all these corporate institutions have got millions must be millions of offer leads of people who aren't being looked after because of what the industry's done , where they're simply just churned out prices and they're earning income from .

You know , we have to through compliance , we have to , like get clients to sign every year that we can earn our fee and this and that where's a lot of the corp ? Well , all the corp is simply just have all this money flowing in and that money is an advice fee and these people aren't getting advice . An annual letter giving an updated statement is not advice .

They could . I mean , why aren't they saying , right , we've got so many hundreds of millions coming in , let's employ graduates , let's pay them a salary and let's look and see if they can look after these clients ? I mean , to me it's like it's a straight fix .

I know why it doesn't happen is because that goes straight to their profit , you know , so I'm having a go at them , but you explain to me how , how that's not the truth . Um , so it's very difficult for youngsters . I think what youngsters got to do is is they've got to , um , they've got to look for someone to mentor them .

You've got to be brave , you've got to go out there and ask for help , and ask for help in , you know , in the right place . There are plenty of groups out there , um , even within big you know organizations where , where you can learn from each other and people can help each other .

Um , you know , don't be , if you're choosing this as a career , be brave , don't be scared to ask what you think are stupid questions , you know , um , and don't be bad , don't be scared to back yourself . You know , the majority of the industry speaks a language which is still old school .

It's changing and you can find these people on linkedin and I know that a lot of people will help if you reach out to them . But again , as I said up front , this is a really , really tough business to get into and if you're not going to get a break where you , you know , are paid a salary so that you can at least live just on that as well .

You know , when I made the change 20 odd years ago , I downscaled my lifestyle massively , massively , and I think not all but a lot of youngsters . You know the reason . They've chosen this as a profession because they've Googled the house , plan jobs and they come up as financial advisor , actually , and CFA .

So many youngsters , if they send their CV to me , you know , be aspiring CFP and plan to do a CFA . Now , those are two completely different jobs . So . So if you're just chasing this for the money , then I think , especially where the industry is going , you're gonna , you're gonna have a problem eventually .

So maybe you should rather , you know , look at something else , um yeah , fantastic , dirk .

I want to ask you , can you stick around for five minutes after this , because I want to get to some of the questions in the chat , but I just want to finish the main segment and then we'll . We'll sort of do this after this . So , just , uh , on behalf everybody , thank you so much for your time . I really appreciate it .

It's great to listen to you and to talk to you and to learn from you and to see , uh , you know , what is possible . So just a big thank you for your time and for sharing so openly . Thanks , thanks , brilliant stuff ,

okay , derek . So , um , let me see there was a couple of things here that I wanted to relate to you and to sort of maybe just get your your view on it . Um .

So , uh , grant said um , there appears to me to be , as is granular now , uh , to be a move away from the , from charging initial fees for financial planning , even amongst those who used to do it in favor of simply charging an ongoing advice fee linked to the product . So so so , grant , I guess the question is because he asked any views on this .

What I understand from his question is more around . You know , is this just the thing about not charging initial fees or earning upfront commissions and moving to an ongoing advice fee , or is it about more than just that ?

They've never done what we've done . They don't know how they've been doing what we do . I think there's too much discussion around the feed about where people actually don't . People haven't dealt with a decent financial planner .

They don't actually understand the value of really good lifestyle financial planning advice and that value , let me tell you , is absolutely massive because it changes people's lives . So we don't charge you upfront fee and my reasoning is my reasoning . I'm not saying there's a right or wrong way .

I don't want to get into fee discussions because I've got good mates here who charge fat fees . I just tell them they're ripping themselves off , they're being , they're undercharging .

The reason we don't charge an upfront fee is I understand that if someone comes to see me , they've normally been referred and if they find me presentable and I talk sense , they might choose to start working with us and , short of us stealing their money , we can give them poor advice by putting them in the wrong funds or whatever , whatever , and we ruin their

lives . Financial decisions can ruin someone's life and they've got no recourse . So I understand , I see that they're coming on risk and I'm prepared to share in that risk as well . We've developed an onboarding process which is non-negotiable . Everyone goes through it or they don't have the option of becoming a client .

And again , I'm only looking at building long-term relationships so that I understand . Initially there's housekeeping to be done , sorting stuff out , and once we get people on track , they never question our fees . We've got a sliding AEM scheme . When we go to clients and we say'd be lowering your fees , they they're non-plussed , they really , really don't care .

This is the biggest noise going on . People who are , do I say , jealous of what financial planners can earn and look . There are the guys who with the sales guys , who , who look , but they're great sales guys . So it would be the same in any other industry .

Um , compared to state agents , I don't believe estate agents as the value we do , because they don't get personally involved . You've got a transactional , our business is relational , so we're building long-term relations and and the real value I see of what we offer at client care is that when something happens in someone's life , they have an established relationship .

They don't need to go to five advisors , get five different opinions , all of which could be correct , but those people have no understanding of who the clients and their family is . So , yeah , on the fees , I think , like when you're starting off , you've got to earn commission on risk policies , whatever you have to .

You've got to feed your family , and let me tell you I've got a mate who's you have to . You've got to feed your family and let me tell you I've got a mate who's earning R90,000 a year through income protection . Without that , his family would have been devastated financially and in every other way .

So he doesn't care , whatever the commission , what was earned on that contract , because it's changed his life .

So I just think there's too much talk about it , and you know you've got really good financial planners arguing about fee models and I think it's , I think it's nonsense thank you very much for your view on that , dirk and um , the rest of it was a bit of a conversation , obviously , that sort of transpired off of this .

So he just made this comment through the other conversations here Better to try and measure client outcomes and reward salespeople who improve the overall financial health of their clients . This is a question that we've started asking .

I mentioned measures and things earlier on and a lot of times we obviously measure the financials , we measure activity , we measure all of these other things that make a business work . But the big question we've started asking is you know , are you measuring client outcomes ? Because that's , at the end of the day , the outcomes is what drive everything else .

Yes , initially , when you get started , it's all these other things probably help you get going . Is that just something ? Maybe just for interest sake ? I mean , what do you think about that , and is it something you actually track and measure in your business ?

I mean one thing we've noticed that clients who are good businessmen , who are good businessmen , who are making good money , when they come to us , well , number one , there's no plan and number two , they're squandering a lot of their money and we build a plan for them and if we look where they are after three years , they are way ahead of where they would have

been in the initial plan that we built .

So we keep on moving and I it's simply because , because there is a plan , when people , when go-getters , have a plan and they stick to it , believe me , like they'll settle their way be way before we plan to do it , because they're those kind of people and I think it's a really it's interesting question and I think it's something that we should be doing ,

certainly as a business , and I think anyone starting where anyone should be doing that . Just take a snapshot of where the client is today , you know planning , and then you'll look at it . Three , four years down the line , you'll think wow and that is the value that you add , even if you're looking at just financially .

And then when you sit with your , I mean , we've had clients , other clients , who retired in last year and he just said to me he said you know when , when you came to me and you made me do a budget and there was another six thousand a month and you made me put that away . You know , 20 years down the line , that money's allowing me to retire .

Now I mean , I don't even think about it that way . The client said to me . He said like this is the single biggest thing that you've done for me , you know . So are we not tracking that ? And but I think it is . I think it's important to track because it's also a way of showing , um , our value .

If we look after the soft stuff and we help people understand what they need to do , believe me , the financial stuff is going to compound a hell of a lot more than if you're just focusing on funds and numbers . But you're only going to see it later down the line .

I think the only thing we need to do is start bringing all of that data together for the business and have an overall view of what that looks like for the business as a whole . I think that's probably the next thing to sort of do from that point , dirk , thank you so so much once again , really appreciate your time and we'll be in touch .

Thanks , spencer Alrighty . So my guest next week is Gareth Hopkins Hopkins . Yes , gareth from Firestorm and him and I are going to get into a very interesting discussion just around different aspects of business and whether tech can actually help you drive all of those aspects of the business . So it's going to be a little bit of a different .

It's not going to be a tech discussion per se , it's going to be a blend of a few things . So really looking forward to chatting to you , gareth , next week .

So once again , thank you very much to dirk for his time and for everybody else who's been here . On that note , stay safe , be blessed and prosper and continue to raise the bar , even this . Love you all . Right , folks . That's a wrap for this episode of propulsion . I hope you got as much out of this as I did .

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