Financial Independence Coach Show Ep2: How do we Naturally create Freedom, Meaning and Wealth?

Daune Elgin has been quoted in saying: “Simplicity of living means meeting life face to face. It means confronting life clearly, without unnecessary distractions. It means being direct and honest in relationships of all kinds. It means taking life as it is …”

Hazel Henderson stated that … don’t wait for anyone to deputize you or authorize you or empower you. You have to just start with yourself … and put one foot in front of the other.

Rupert Sheldrake said that basically morphic fields are fields of habit and they’ve been set up through a habit of thought, through habits of activity and through habits of speech. Most of our culture is habitual… hence the freedom we want is created daily through our daily habitual activities. Should our activities, thoughts, speech constantly be negatively influenced and we ourselves keep repeating this negativity… we will never be able to create the order needed for freedom to exist.

Want to know what this all has to do with budgets, financial literacy and financial independence … watch the in-studio recording, raw sample.

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Financial Independence Coach Show: Ep2 -Testing format and recording

Stepping into a new project can be daunting, especially when it is a completely new arena. Yes, I have been on YFM … but those three sessions was two over the phone and the one in the studio was not even 10min long. Taking these steps into talk radio is a challenging and existing adventure. After episode 1, we decided to record the full session, to be able to post it on our YouTube channel and start getting content follow there as well. For me, it is a way to measure my personal performance for myself.

When you speak to those who know me intimately, they will tell you that I am actually an introvert. Although I have learned … and mastered the skills to be an extrovert, to the extent that almost everyone I meet is convinced of the fact that I am an extrovert, I am an introvert by nature and nurture.

So much so, when I requested a few close friends, clients and family to review the following recording … one of my friends/clients told me that I am being a hypocrite… a hypocrite? … for preaching to him about being your natural self and here I am being … well an introvert, not my lively, bubbly, energetic and all most overbearing self.

Truth be told … sitting in the studio for me is like sitting in my “cave” enclosed in my research, my studies, my creative process and just following the flow of my natural thought process to come to solutions and resolutions. Admittedly, that is not what this show is all about and should we wish to achieve the aim of this show, I will have to change the structure and my presentation. Ultimately this show is for you, the listener, to assist you to move forward. TO enable you to naturally create your own freedom, meaning and wealth!

Michael, thank you for your honesty and brutal feedback. I promise I will adjust the content to reflect the other side of my personality as well…

Without further delay, here is episode 2 of our new show on BrandLive.co.za

With gratitude,

Yvonne E. Venter-Louw

 

Re-Blog: How financial advisers get it wrong when they discussing insurance with clients

I have found this refreshing and accurate of what is happening in my profession, and I thought I’ll share it with you – as I could not have written it better…

“Clients are too often being presented with comparisons of hypothetical values for the in-force policy versus some sales proposal/illustration”

By Barry Flagg – Nov 7, 2016 @ 3:51 pm

Meet and greet

Imagine this.

A (prospective) client has a significant investment in a particular asset. You receive notice that the costs being charged inside this product are being increased. In addition, this notice includes forward guidance downgrading future interest earnings expectations by 50 basis points and cautioning that interest earnings expectations could be further reduced by as much as another 100 basis points.

Now imagine the client’s reaction to such news. What would they want to know? For most assets, clients would want to know how increased costs measure up against alternatives, right? And how reduced performance expectations relate to asset class benchmarks, right?

Instead of measuring increased costs against peer-group alternatives and reduced performance expectations against benchmarks, clients are too often being presented with comparisons of hypothetical values for the in-force policy versus some sales proposal/illustration.

Never mind that neither the in-force illustrations nor sales proposals disclose the costs charged inside policies. Never mind that interest earnings expectations are often different in each policy, that features and benefits often materially differ, or that such comparisons are now considered misleading, fundamentally inappropriate and unreliable by financial, insurance and banking industry authorities.

Without the information necessary to understand internal costs, the reasonableness of performance expectations and differences in features and benefits, clients too often blindly choose the illustration that looks better. If such an analysis were presented for any other client asset, the financial adviser likely would be laughed out of the room. Such analyses are also increasingly the source of complaints, arbitration and litigation.

How would advisers who follow a prudent process answer these questions? The West Point Draft of the Best Practices Standard for Life Insurance Stewardship, vetted by leaders of nearly every profession with clients who own life insurance, provides a checklist for the prudent selection and proper management of life insurance.

The best practices standard says questions about cost increases can be answered by reviewing internal policy costs relative to both the original proposal and representative benchmarks. If costs in the original proposal were among the best available rates and terms, and the cost increase is nominal, then the opportunity to reverse the cost increase is modest or nonexistent after considering transaction costs involved in exchange for an otherwise lower-cost product.

On the other hand, if a client doesn’t know whether costs in the original proposal were competitive or excessive, the increasingly frequent announcements about cost increases present an opening to talk to clients about what they are being charged in their policies and whether such costs are acceptable, and to answer their questions in ways they can understand.

The standard also says questions about reduced interest earnings expectations can be answered using RATE: the risk tolerance of the client, the corresponding asset class preferences, the planning time horizon, and the performance that’s reasonable to expect. As such, if reduced interest expectations are consistent with historical performance for the asset classes into which cash values are invested, then reduced interest earnings expectations are likely reasonable.

Conversely, policy earnings expectations set by hypothetical illustrations are too often unreasonable. For instance, the expected rate of return reflected in hypothetical illustrations can vary from as little as 2% to as much as 8%, even though invested assets underlying policy cash values are required by regulation to invest in the same asset classes, and even for different products from the same insurer where assets underlying cash values are actually invested in the same assets.

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No wonder clients are more comfortable talking about almost every other asset on their balance sheet than life insurance. Use the best-practices standards to talk about life insurance in the same way clients talk about every other asset on their balance sheet.

Barry D. Flagg is the founder of Veralytic Inc., an online publisher of life insurance pricing and performance research, and product suitability ratings. Follow him on Twitter @BarryDFlagg.”

With this in mind, as Professional Financial Advisors, we all have to agree that the laws that are being implemented globally are for the best interest of our Profession and those of our clients.

A few days ago I sent an article that Tony Vidler made me aware of, to Kobus Klein with regards to a Financial Advisor who has been barred for churning.

Although regulations, compliance and all the other jargon might seem like a waste of time and paper for some clients – believe me when I say there is a good reason for it all and it is all to safeguard you the client much more than us as financial advisors.

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To our continued success,

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Impulsive Spending – Move! Magazine

14 July 2016
Attention: Thulisa Mancotywa

Move! Magazine’s proposed article on Impulsive Spending.

Thulisa,

Thank you for your request and the opportunity to provide you with input on this article; I firmly believe that your target market will benefit from it.

However, should you use any of the content of this letter – kindly send me the final draft before it is published for sign-off of using the content and crediting it to my name.

Kindly take note: before answering the questions you posed, I want to make it very clear that any individual reading these answers should seek the professional advice and coaching of a professional financial adviser/ coach/ accountant. The content of this letter is for information purposes only and should in no way be taken as individual direct advice of any sort.

All of the information contained in this letter is based on personal experience, knowledge, anecdotal evidence and physiological research in the specific field. Although I have strived to be as accurate and complete as possible in this letter, notwithstanding the fact that I do not warrant or represent at any time that the contents herewith are up to date and accurate, due to the rapidly changing nature of the Internet.
While all attempts have been made to verify all the information provided in this letter, I assume no responsibility for any errors, omissions or contrary interpretations of the subject matter within. Any perceived slights of specific persons, people or organizations are unintentional.
In practical advice books, like anything else in life, there are no guarantees of income made. Readers are cautioned to reply on their own judgement about their individual circumstances to act accordingly.
Although I am a Qualified Financial Advisor by profession; this letter is not intended for use as a source of legal, business, accounting or financial advice. All readers are advised to contact me in my professional capacity or refer to the services of a competent professional in legal, business, accounting and finance fields.
I assume no responsibility for the use or misuse of the information, or any injury, damage and/or financial loss sustained to a person or property as a result of using the content of this letter. The information contained in this letter is for informational purposes only.
ALL RIGHTS RESERVED: No part of this letter may be reproduced or transmitted in any form whatsoever, electronic or mechanical, including photocopying, recording or by any informational storage or retrieval system without express written, dated and signed permission from me.

What is the difference between normal spending and impulsive spending?
First, the reader must understand the distinction between what is seen as normal and what is seen as impulsive spending. And although the ‘norm’ is not always the ‘norm’ for all individuals – there are some that will describe what you and I describe as impulsive spending as their own ‘norm’.

Now I know there are those that will argue with me on the following, but this is how I assist some of my clients to understand what their own normal spending would be described as.

The easiest way to distinguish what is the normal spending for any individual is to establish what are the basic needs which the individual has every month, month after month. Purely by this measure can you then state it to be the normal spending habit of an individual.

For instance, although both Miss X and Miss B have the same basic needs – such as housing, nourishment, transport, clothing, and so forth; Miss X might have an additional financial dependent where Miss B does not. Thus they would have two different normal spending patterns a month. Please also understand that a financial dependent is not always or only a child or children but in some instances, it could be a niece or nephew, a grandmother, grandfather, father or mother who is dependent on your reader to meet certain financial needs.

Once the reader has established her own normal spending month after month, of her own basics and those of her dependents; any other spending would fall in a category of additional need. Because the lines between the two can get very blurry at times – confusion between the basic need and additional need is a common occurrence in a lot of households.

Impulsive spending is not just on frivolous items that do not fall within the description of the basic or additional needs but could also be on this basic or normal need fulfilment.

For example, although the normal spending includes nourishment, the purchasing of ‘take-aways’ on the way home, because you are too tired to cook, would classify as impulsive spending.
A home-cooked meal would cost for argument sake, let say R50 feeding 2 adults and three children
‘Take aways’ would cost for argument’s sake R180 feeding the same 2 adults and three children

Now although the basic need for nourishment has been met – the impact on the normal spending or better known as your monthly budget would result in 3 and a half meal times budget spends in one instance of not being in the mood to cook.

Impulsive spending, as I would classify it – is any and all spending that has not been pre-planned and budgeted for on a month-to-month basis.
What are some of the common reason that makes people want to spend money impulsively?
Impulsive sending would generally be earmarked by either a physical or emotional need of fulfilment that the individual wants instant gratification on.

Although the need or even want for the fulfilment of any physical need is not the issue – it is the instant gratification that creates issues. Any purchase that has not been pre-planned and budgeted for can create in itself massive implications for any individual or household.

Furthermore, most emotional spending is impulsive, of which a great deal is regarded after the fact; maybe not for the fact of now owning the product that was purchased, but rather a regret of the money that has been spending.

Best known as “Retail Therapy” – it provides the individual with a stimulus to satisfy an emotional need or want. Although this need or want might be justifiable, the instant gratification of that need or want is where impulsive spending occurs.

Another common reason individuals spend impulsively is purely to keep up with the individuals next to them. This is another example of an emotional need or wants been met purely because … “my friend has one…”.

Is impulsive spending common amongst specific groups of people?
Impulsive spending, in my own experience, is not just found in a specific age, income or even ethnic group. Impulsive spending can occur in any of these groups.

Should you wish to link impulsive spending to a group label – I would say it is a group of individuals that are not disciplined in pre-planning and budgeting any and all need or want fulfilment. It could very well be an individual that has a stable month to month income or even an individual with a very irregular income.

Strangely enough, I have found it is the individuals that can least afford it that is more subjected to impulsive spending.

Is this an addiction that can affect relationships, lifestyle and even health?
This question should be answered twofold…

Is it an addiction: Yes and no… In some cases, the emotional needs or wants for instant gratification can become an addiction. However, in most cases it is purely a lack of … I won’t say knowledge or even understanding, but rather a lack of practical implementation of financial planning and accounting measures that creates issues for the individual.

Does it affect relationships, lifestyles and even health…? Yes to all the above.

Relationships can be seriously affected to the extent of ending the relationship. On official records, there is many divorces – which are due to one partner’s lack of financial discipline and the other partner’s lack of willingness to maintain the relationship due to financial issues.

Further to this, the individual’s lifestyle will be affected by impulsive spending to the extent that they could end up in such a deep debt hole, that the only solution at the end of the day is to declare themselves insolvent

Health issues are also very common. This can be either due to the emotional turmoil (stress) related to the regret after the fact or the constant “month that is left after the money has ended”; or due to a physical lack of basic needs fulfilment as a result of impulsive (over) spending.

What is your advice to Move! Magazine readers about the importance of financial planning?
Before I give the readers any “advice”, there is something that the individual must understand clearly. Financial Planning is not buying a policy or starting a savings account or even taking out medical aid… No – financial planning, the same as accounting starts with what may seem two of the smallest of things, that is overlooked by many individuals …

Income should always be greater than Expense!
You fail to plan – you plan to fail!

This is where most individuals misinterpret financial planning and thus then fail to implement it in their own lives.

One of my own personal mentor’s favourite sayings is that “Money flows to where it is best respected and protected” … This is where proper financial planning adds not just emotional and physical value to the individual’s life… BUT when implemented, disciplined and managed, it will create monetary value for the individual.

Personal Financial Planning, in my opinion, should already be taught to children as soon as they are capable to understand what money really is… a tool to obtain and maintain wealth!

Purely by teaching them the correct basics of personal financial planning, we would not just raise a generation that would be capable of implementing this, from the first day that they start looking after themselves financially; but also a generation that will change any country’s economy in leaps and bounds.

For those who were not privy to this kind of upbringing or background understanding – I would urge those individuals to seek not just a financial planner/ broker/ advisor, but a financial coach/ mentor to guide them through a process of reconditioning of their own financial habits. This will include not just the initial planning but the accounting and recording of your own financial habits, teaching you how to constantly monitor and adjust your behaviour to ultimately achieve your own financial freedom.

So to come back to the original question – the importance of (proper) financial planning?
Financial planning is not just of vital importance for any individual who wants to live a financially sound lifestyle, but also impacts greatly on the economy of the country!

It all boils down to the less the country has to spend on taking care of those who could not, did not or cannot take care of themselves financially, the more the country can spend on progress in its own economic growth, instead of just trying to maintain its current standard.

I hope and trust that this information assists you in your article. Should you have any further questions or need information feel free to contact me via email.

Yours truly,

With Love, Gratitude & Grace

  • Yvonne E. Venter-Louw
  • YEVL (Pty) Ltd.: Founding Director & Principal
  • Researcher, Advisor, Educator, Coach, Mentor, Keynote Speaker & Host of the Financial Independent Coach show on YouTube
  • Personal Thesis: The Psychological impact of past experiences (and the rehabilitation thereof) on daily driven financial decisions.
  • Naturally creating and experiencing Freedom, Meaning & Wealth!

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