CLOSEUP

58 PERSONAL FINANCE | 4TH QUARTER 2016

BRUCE FLEMING’S CONVIVIAL MANNER IS,no doubt, one reason his clients keep goingback to him. The others are more profound:a passion for his profession and an obsession

with putting his clients’ interests first – which, even ifit wasn’t enshrined in his profession’s code of con-duct, would be fundamental to his character.

Fleming is this year’s Financial Planner of the Year,the annual award of the professional body for finan-cial planners in South Africa, the Financial PlanningInstitute (FPI). The accolade hasn’t come his way forlack of trying – he was runner-up in both 2014 and2015 – and the way he pursued the award says a lotabout his sheer tenacity. Fleming is the first to recog-nise the huge benefits the award brings, in terms notonly of personal recognition and achievement, butalso of professional development.

Fleming has been in the financial planning indus-try for 21 years, and, although it took him a few yearsto find his niche, he has never looked back. He hailsfrom Durban, and completed a BCom LLB at theUniversity of Natal in the 1990s. When he arrived inCape Town in 1994, he took the first job he could get,as a bookkeeper for a commercial diving operation.Then he spotted an opening at Old Mutual as a finan-cial planner and the die was cast. That early foray intoplanning did not work out, and he moved over to OldMutual Trust as a wills consultant and then to OldMutual’s legal department as a legal adviser.

Four years later, he was approached by AndrewBradley, who was establishing the Acsis financialplanning group and who would become the group’schief executive. Bradley invited Fleming on board asa compliance officer. When Fleming turned thatdown, he was offered practice development manager,with the job of identifying top financial planningbusinesses in South Africa and bringing them into theAcsis fold as strategic partners (see Bradley’s book onpage 11).

One of the financial planning companies Flemingidentified was Betty & Dickson Financial Services,which evolved into the Consolidated group. On visit-ing the company’s managing director in Johannes-burg, Fleming was invited to open an office in CapeTown, which he did, and there he built his experienceand profile as a financial planner. By then he was afully qualified Certified Financial Planner (CFP), hav-ing completed his Postgraduate Diploma in FinancialPlanning at the University of the Free State in 1999.He followed this with the Advanced PostgraduateDiploma in Financial Planning in 2001.

Fleming has now come full circle: he is back at OldMutual as part of its Private Wealth Management divi-sion, practising as a financial planner. At the begin-ning of the year, Consolidated was bought out by theCitadel group and, soon after receiving the FinancialPlanner of the Year Award at the FPI’s gala dinner inJuly, he left Citadel to move back to Old Mutual. A

A passionateprofessional

Bruce Fleming won the Financial Planner ofthe Year Award this year after being runner-uptwice – a testament to his extraordinarycommitment to the profession and his faith inits potential to change and improve lives.Martin Hesse chatted to him.

4TH QUARTER 2016 | PERSONAL FINANCE 59

few years ago, Old Mutual absorbed Bradley’s Acsisgroup, so Fleming is intimately connected with OldMutual Wealth’s people and completely attuned to itsbusiness philosophy.

It’s a philosophy that was pioneered in SouthAfrica by Bradley at Acsis: lifestyle financial planning.Essentially, this involves a fee-based structure, mean-ing there are no commissions on financial products,because they tend to deflect a financial planner’sattention from providing for your best interests. Moreimportantly, it is a holistic approach, in which yourfinances are not dealt with in isolation from all theother aspects of your life.

As a result, Fleming gets to see people from allwalks of life and at all stages of life, unlike somefinancial planning practices, which focus on indivi-duals who have already made copious amounts ofmoney and don’t know what to do with it. Many ofhis clients are what he calls “accumulators”: peoplestarting out in their careers, or in mid-career, who arein the accumulation stage of building wealth.

“The beauty about what we do is that every clientis regarded as unique. Some practices segment their

clients into age groups, or the amount of funds undermanagement, but I find that quite a funny thing.Every person is different. It’s like going to a doctorwith a problem: just because I’m sick, it doesn’t meanI’ve got the same disease as you.

“Lifestyle financial planning is first about findingout your lifestyle objectives,” Fleming says. “For accu-mulators, these might be that you want to retire oneday and to maintain your lifestyle in retirement – youmay want to travel every two years (you might havechildren overseas), and that will cost you XYZ intoday’s terms. You may want to change your car everyfive years. So it’s nuts-and-bolts objectives that youcan touch and feel.

“Then you match the investment process withthose lifestyle objectives. What return do we need tomeet those lifestyle goals? We haven’t even talkedinvestment yet. We’ve looked at what the clientwants, what they need, and then at what returns theyneed in order to attain those objectives.

“Only then do we look at investments. So, in orderto achieve that return, we say, ‘This is whatyour investment will look like; this is the level >>

PHOTOGRAPH: IAN LANDSBERG

Bruce Fleming at the Old Mutual Wealth offices in Century City, Cape Town.

CLOSEUP

60 PERSONAL FINANCE | 4TH QUARTER 2016

of risk. Are you prepared to stomach that risk?’And if they’re not prepared to stomach it,

then we go right back to their objectives and say,‘Okay, then instead of retiring at 60, you retire at 65,and instead of going overseas every two years, whatabout every five years?’

“If it is a retiring client, you may mitigate risk byputting some of their money into a type of guaran-teed investment for the next four or five years, so theyare guaranteed that income, and then they can take abit more risk with the money they’re going to needonly in five or six years’ time. It’s a different scenarioif you’ve got a guy who is 25 who is prepared to takea long-term view. He can take a lot more risk, becausehe’s got the time.”

The younger generationGIVEN THE NATURE OF YOUNG PEOPLE, WOULDa freewheeling, partying 22-year-old just out of uni-versity make the effort to see a planner?

“They do if their parents tell them to,” Flemingsays. “A lot of them will come kicking and screamingto see me, but by the time they walk out, their eyesare as big as saucers, because they have typically justfinished varsity and have 35 or 40 years of workinglife ahead of them. What happens if they have anaccident and their earning power disappearsovernight? We use those scenarios. You’re drinking atnight; you’re driving; you’ve got a high-octanelifestyle; what happens if you can’t work tomorrow?

“With someone who’s just out of varsity, who hasa student loan, who’s looking at buying a house andgetting a car, we don’t even talk finance at the firstmeeting. We talk, ‘What do you want? What do youwant to achieve? Do you want to be debt-free by 30?Do you want to get married and have a family?’

“So first, we look at short-term goals, such as pay-ing off short-term debt and taking out disabilitycover. Then we look at medium-term goals, and typi-cally that would be saving up for a deposit on ahouse, getting married.

“And then we look at long-term goals, which are amoving target as you earn – and we don’t talk infla-tion-linked increases as far as these guys are con-cerned; we talk promotional increases (a lot higherthan inflation), especially if they are graduates. So weneed to be seeing these guys regularly, at least once ayear, to bring them back on track.”

Ultimately, Fleming says, it’s about building a long-term relationship so that a client who comes to youas a 22-year-old keeps coming for the next 40 or 50years. Unfortunately, Fleming says young people tendto accumulate bad debt and often need a good dose offinancial education. “This generation is interested ininstant gratification,” he says. “They will go toTafelberg Furnishers and buy a fridge on hire pur-chase. So a lot of that initial talk to clients is educa-tional. It’s explaining to them the expense of debtand the opportunity costs of paying 20-percent

interest on hire purchase, as opposed to saving upand paying cash, delaying your gratification.”

As part of their education, clients need to knowcertain investment basics, so that they don’t panicwhen the markets go awry. “I’ve got a client who is anengineer, and at our first or second meeting we weregoing through the whole [investment] thing … engi-neers are very analytical, so it takes a bit longer. I saidto him, what I’m going to do is to educate you, andcontinually coach you, and he turned round and said,‘Are you telling me I’m not educated?’

“He’s a structural engineer, so I said, ‘Yes, I knowyou’re very educated, because you build bridges androads, and stuff like that. Well, I’m also educated, butthere’s no way I’d be able to build a bridge. I’m goingto educate you about what I do, so that when we haveour annual meeting you ask me relevant questionsthat I actually have to tackle. So I’m not just comingto you and saying, “Here’s your portfolio, it’s done,XYZ, now you’re on track, thanks” and off you go.You’re going to be asking educated questions, becauseyou now understand what’s going on.’

“What you find with a lot of clients is that they’retoo intimidated to ask questions, because they thinkthey’re going to come across as stupid,” Fleming says.

The investment processUNLIKE MANY FINANCIAL PLANNERS, FLEMINGdoes not get involved in the nitty-gritty of invest-ments and investment products. Once he has estab-lished what return you need, according to the lifestyleplanning process, he uses the services of an invest-ment manager who structures a portfolio according tothe required return profile.

“I do everything right up to targeting therequired return. I’m not a CFA (Certified FinancialAnalyst), I’m a CFP professional, but I need to becomfortable that whoever I am partnering with canachieve the targets.

“Returns above inflation are non-negotiable. We’llapproach a manager on whom we’ve done a due dili-gence and say: ‘The client needs to achieve a return offour percent above inflation. Can you do it?’ Andthey will tell us what the portfolio will look like:50 percent equities, 20 percent property, and so on.And they’ll tell us the risk associated with the port-folio – for example, that the chance of a negative yearis one in five. I go back to the client and say, ‘This isthe portfolio, and the chances are pretty good thatyou will have a negative year once in every five or soyears. Can you live with that?’

“Very few clients say they’re not prepared to.And the beauty about doing things this way is thatwhen there is a bear run, such as the one in 2008,the clients don’t come running to us to change ourstrategy, but say: ‘Is this the negative year you weretelling us about?’”

But are minor adjustments made to portfoliosaccording to the changing investment environment?

>>

CLOSEUP

4TH QUARTER 2016 | PERSONAL FINANCE 61

“The fund managers tweak the portfolios all thetime. And if there’s a major change in long-term out-look, there may be major changes to your asset allo-cation as well. But as long as you’re communicatingthat all the time to the clients, they’ll be happy.You’ve got to have tactical changes.”

Fleming gives a good example of how the lifestyleapproach can benefit even someone with relativelylittle accumulated wealth: “One of my very firstclients retired in 2000, when we met by chance. Hehad R650 000; that’s all he had. It was quite early inthe days of living annuities, so the question was, ‘Dowe go living or guaranteed?’. We did the lifestyleplanning process, and it was clear that, if he went fora guaranteed annuity, he would never have main-tained his lifestyle. So we targeted specific lifestylerequirements, [put him into a living annuity], andhe’s maintained his lifestyle for the past 16 years, justby monitoring his lifestyle objectives annually. Hewould never be where he is today had we not hadthat chance meeting back in 2000. He’s one personwho would shout from the rooftops about lifestylefinancial planning.

“I spend a lot of time with my retired clients –that’s just the way it is, because their potential to earnis gone. That’s why I take financial planning so seri-ously: if we mess it up, the client is history. If a doc-tor makes a mistake while you’re on the operatingtable and you die, well, you’re dead. If we make a mis-take and the client is 65, the client has another 20years to go. What are they going to do? Land up withtheir kids, or in a home? I think financial planners areas important as doctors.”

Raising the professionFLEMING’S PASSION FOR HIS PROFESSION IS PAR-ticularly evident in his support of the FPI’s objectiveto raise financial planners to the level of the estab-lished professions, such as doctors and accountants.

“Part of my job as brand ambassador for the insti-tute, as the FPI Financial Planner of the Year, is to raisethe level, first of financial planning, but even more soof the CFP designation. Again, the doctor analogy: ifyou’re sick, you don’t go to your mate who is a med-ical rep and get a pill from him. You go to a doctor. Itshould be the same if you need financial help: you goto the professionals, and they are the CFP profession-als. So part of my job this year, together with the guysat the FPI, is to raise the status of the CFP mark, notonly for the public, but within the industry as well.”

First on Fleming’s busy agenda as Financial Plannerof the Year was a trip to the United States inSeptember for the annual conference of the FinancialPlanning Association (the FPA, which is the FPI’sinternational affiliate) in Baltimore. Chatting beforehe left, he said: “These are the top financial plannersin the world, so I’m going to try to bring back a lot ofinformation about new developments and trends inthe financial planning industry.

Bruce Fleming receives the Financial Planner of the Year Awardfrom Godfrey Nti, the chief executive of the Financial PlanningInstitute of Southern Africa.

“Then I’m going on an FPI road show throughoutOctober and November to all the regions in SouthAfrica, and I’m going to talk about the new interna-tional trends, as well as my journey to becomingFinancial Planner of the Year. I don’t see it as a pinna-cle, because I think there’s still a long way to go, but Iwant more CFP professionals to enter the FinancialPlanner of the Year competition.

“Even if you don’t win, it can be the most reward-ing thing you’ve ever done in your career, because itstretches you to places you don’t think you could go.And it means you’re getting the best minds in theindustry looking at a financial plan of yours, and thatcan be intimidating. Then they come into your busi-ness and do a complete audit on it. And then you’resitting in front of a panel for an hour, with the topminds in the industry firing questions at you. I mean,it can’t get any better than that. After the interview, Isaid to one of the FPI people: ‘I don’t need drugs, justput me in front of a panel and I come out on thebiggest high you’ve ever seen.’

“Half of the presentation to fellow CFP profes-sionals will be: I’m just a normal guy like you, I started in the industry without a cent to my name.I’ve been through exactly what you guys have beenthrough and I’m now the FPI Financial Planner of theYear. Why don’t you do it?

“The other half of the presentation will be aboutwhat I learn in Baltimore.” q