Remember when I said that I might be firing my financial adviser?

Well, I don’t think I ever qualified that statement. I wrote a bit about how she was quite the Negative Nancy on my goal to become debt free and how she nearly laughed me out of the room when I estimated needing only a third of what she tried to budget for my living expenses, and you can read a bit about that here and here and a little more here. But all of that has probably never expressed that the reason I want to fire my adviser is because I’ve found that, all things considered, I currently have no use for her.

It’s story time, kids.

Little birdie here wants to tell you another story…

When Can A Financial Adviser Be Useful?

First of all, anyone who primarily earns a commission from selling you financial products is more likely to be a product salesperson than a financial adviser. I don’t care what their qualification is. I don’t care how many years they spent in school. As long as they have clear incentive to sell you certain products instead of others, there will always be a conflict of interests. And when it comes to them securing their own financial future as opposed to securing yours, who do you think will win?

Not you, my friend.

But sometimes a fee-only financial adviser has an important role. They can help you set up a financial plan in line with your goals and risk profile. They can advise you on the best ways to invest your short, medium and long-term funds with consideration of costs, volatility, risk tolerance and liquidity requirements. Most importantly, they can help you avoid making costly mistakes due to panicking during a market crash or falling prey to questionable investment opportunities. This, I believe, is the ultimate role of a financial planner. To keep you from making expensive mistakes with long-term consequences.

How I Realised My First Financial Adviser Was Not Useful

As a bit of backstory, I’d just had the disastrous experience of having met a potential adviser for the first time. He sat me down and coldly laid out a plan for me without ever asking about my goals or my personal financial philosophy. He knew nothing about where I’d come from, or what my fears and strengths were. He knew nothing about how much I wanted to save, when I wanted to retire, how I wanted to structure my lifestyle. He came to the meeting with an already printed stack of papers and forms, with my name, age, non-smoker status and anticipated starting salary already typed in as if that made it more personal. Then he proceeded to tell me what we were going to do and how we were going to do it, which insurance products he had selected for me and what my monthly retirement and discretionary savings needed to be. At no point did he explain his rationale or elicit my opinion.

I was so shocked and offended that I left that meeting with the resolution never to meet with him again. It was such an insult to me that he just assumed I was another cookie-cutter face that he could dictate a life plan to and that I would not have any ideas or thoughts of my own. I was worried about what I would do–the idea of earning in a few months while having spent the last six years relatively frugal but with very little financial literacy made me feel overwhelmed–but I already knew working with him wouldn’t work. I simply wasn’t comfortable.

Then I met up with an old classmate on campus who raved and raved about her financial planner. I was desperate for someone but also skeptical. I wasn’t sure what I wanted, but I knew at that point that one thing that mattered to me was being addressed as an intellectual equal. My friend gave me her adviser’s number and we met up within a few days.

Introducing The Promising Sarah

Sarah* is a lovely lady. She’s in her mid-fifties and has a very maternal vibe to her. The first time we met up, she took me and another friend out to lunch at a trendy cafe on campus. (At that point, I hadn’t yet learned that there’s rarely such a thing as a free lunch). She sat and spoke with each of us about our different backgrounds. She asked us where we grew up. She asked us how money had been managed (or mismanaged) in our respective homes. Because this friend and I already knew pretty much everything about each other, the only barrier was talking to a complete stranger about our pasts. But Sarah made it so effortless. She was attentive. She was understanding. She picked up on our various financial fears and attitudes quickly. She was scribbling away on her notepad and by the end of the lunch had a list of points for our different scenarios that she wanted to focus on first.

My friend raved about Sarah when we got back to res. As someone who is very extroverted, she was particularly blown away by how Sarah had made her feel. She loved that she gave her individual attention despite the joint nature of the meeting. She loved that we already had two solo follow up meetings scheduled. She loved that Sarah had picked up that she would want to incorporate tithing and traveling to see family into her budget.

I, on the other hand, had loved the geeky stuff. Sarah had let us chat for a while before she started introducing us to the concept of insurance. She explained the different kinds of cover available. She explained why we would need to have own-profession disability cover as doctors, as opposed to more general disability insurance. She had forms and graphs and tables. And she had options. She let us each leave the meeting with handouts that compared three different policies for each type of insurance so that we could ask questions when we next met up. It felt like she respected us and wanted us to make the decisions that made sense for us, but that she’d guide us through the process.

Finally, it felt like we’d met our match.

Adviser…or Salesperson?

The next few months were a whirlwind. We had our life-changing final exams. We had to put in a lot of work on our final clinical rotations. We had to register to become taxpayers. I received the news that I may not graduate because my account was so far in arrears. I tried an failed to get loans and last-minute bursaries to cover the shortfall. We applied for internship posts and then found out that the government had absolutely no system in place to allocate internship posts anyway. My friend got one of her top five choices, I got none of mine and was second-rounded. It was a stressful time. Sarah kept in touch. She helped us set up our bank accounts for our working years. She took us carless schmoes to SARS and waited in the long queues with us to get us registered (or, in my case, to update my tax information since I’d already been employed before). She set up our disability and life insurance. She encouraged me when, for the second time, I didn’t get placed at my choice hospitals. The year was running out and I didn’t know where I’d be working, but she assured me that she’d had clients who got placed late despite stellar academic records and compelling essays. She also assured me that my financial situation would work itself out, although she wasn’t a fan of my plan to agressively pay off my student debt myself.

Final exams flew by. I did well and even scored a couple of distinctions.

We graduated. I got a fees-owed statement instead of a degree.

She texted her congratulations.

I got a phone call telling me I’d been placed practically in the middle of nowhere.

I moved.

I started working.

I got my first paycheck. The insurance debit orders came off. I rejoiced. Sweet, sweet adulting.


In the month between graduation and working, I’d started reading up quite a bit more seriously about finances. Sarah had been quiet, but it was the festive season and I hadn’t been expecting her to work over Christmas. So I thought I’d get myself clued up with the glorious library that is the internet. Before I even received my first paycheck, I knew that I wanted to be financially independent in my thirties. But something was funny with my financial plan…there was very little talk of investing. We’d briefly touched on it before–“There are some great unit trusts I want you to look at next year”–but Sarah’s focus had always been getting us insured, which I guess is one of the first tiers of financial planning, while saying we’d “get to” the investing stuff. I was impatient; I was uneasy.

My friend had also noted the radio silence and so had started seeing a different financial adviser who “visited often” and “called regularly”. For her, face-time had always been an important feature (remember her reaction that first day?) and so she wasn’t too happy with the fact that Sarah had been so quiet. The new adviser didn’t offer anything substantially different, but that’s another post for another day. At least he was there. She didn’t fire Sarah though, which I thought was strange and a little unfair.

By late February, when I still hadn’t heard a word from Sarah, I decided to give her a call. In summary, she said she’d just been thinking about me and was about to call too to discuss the next step. She sent me some documents of unit trust fact sheets and we discussed them over the phone. My financial reading up until this point had equipped me enough to know what questions to ask this time. I inquired about the choice of unit trusts (active). She told me they had outperformed the benchmark over the last five years and were likely to do so in the future. I winced. I asked her about the costs. Her reply?

“So, a fund like this will have returns of about 15-20% per annum, but the fees can be as high at 5% because it’s such a high performing fund. But I’ll do some things on my end to bring your fees down to as low as 2-3%. How does that sound?”

I gawked through the phone. Surely that was a joke.

Let’s forget those “average returns” for a minute and zoom in on those costs. In South Africa, we don’t have Vanguard or Schwab funds or any other really low-cost options. Some ETF’s aside, the lowest our fees get are about 0.45% including VAT. That’s nothing to sneeze at, especially since in some international markets (ahem, America) TERs can be as low as 0.02%. But still, I can’t imagine what an adviser would be doing to merit acting like 2-3% is low. That’s criminally high. So I bit the bullet, finally, and asked her how exactly it was that she was my adviser but hadn’t quoted me for a single cent yet.

I was not surprised to find out that she was compensated via commissions for all the products she’d sold me thus far, and any products she hoped to sell in future. This had never, in any of our conversations, been disclosed before.

By this point, the tone of our conversation had changed. She could tell I wasn’t impressed and I could tell that she’d cottoned onto the fact that I’d been doing some reading.

That phonecall ended shortly after and I didn’t hear from her again.


Emotionally Taxxxxed

The South African tax season begins mid-year (calendar year, that is). Most South Africans do their own taxes. Corporations or individuals with complicated assets and portfolios and income streams often consult with a tax practitioner and/or an accountant.

Apparently, so do regular salaried doctors.

The following e-mail popped up in my inbox:

Hmmm…I wonder if she gets a referral commission for every doctor she refers to this lovely and helpful tax person…

This is a post for another day, but I politely declined the services of the tax practitioner. Not because I don’t see value in what they do, but more because my tax situation did not merit outsourcing at this point. Honestly, I had only been employed for the last bit of that tax year (January and February) since I’d just graduated, I had no medical aid contributions for that period, I had no retirement savings for that period since I was using all my money on paying back my debt, and insurance premiums (life and disability) are no longer tax deductible under SA law. I had literally one income, one IRP5 and a sizeable but easily calculated tax deduction due to me. Also, I was pretty sure I was going to be audited since I didn’t work last year but have worked before, regardless of whether I filed my taxes myself or not.

So I kept it moving and successfully filed my taxes in the quiet little SARS branch of the little town where I’m working. Of course, my “financial adviser” heard about this, and was quick to finally get in touch to find out whether she’d be getting her commission I’d changed my mind.

Now, now. Let’s not be judgmental! She was probably just concerned.

At this point, I decided it was time to have a real conversation. I sent her an e-mail detailing why I’d decided against using the services (but thank you very much) and that I would reevaluate next year if my medical aid and retirement savings and investment plan started to complicate the picture.

This is when my adviser finally got back to me to plan my retirement savings six months after I’d started earning a salary. After the usual bit about how I’d just been on her mind she finally started her sales-pitch with her go-to investment/insurance firms.

“Oh, that’s okay,” I told her. “I’ve already got an RA.”

“Oh,” she replied, clearly taken aback. “May I ask with who?”

“Sygnia**,” I replied rather proudly. “I chose their passively managed index funds. And I decided, since I can’t access the funds until I’m 55 according to legislature, I’d pick the maximum allowable equity allocation, so I’ve gone with the Skeleton Balanced 70 fund. I’m looking at their other products too, I might go with them for my Tax Free Savings Account but there are some ETFs that are looking good too, so we’ll see.”

There was a really pregnant pause. Like, post-dates pregnant.

I thought she was just processing the fact that the frugal little final year student she’d met all those months ago was now an educated investor, knowing how to select equity allocation and aware of the benefits of passively managed funds.

I was wrong.

The following exchange felt so bizarre and out of body, that I’ll never forget it for as long as I shall live.



“Never heard of them,” she said quickly. Too quickly.

“Really?” I was incredulous. “Are you sure? They’ve been making so many waves, challenging the long history of ridiculous fees in South Africa’s finance sector, you must have.”

“No,” she said firmly. “And I have to warn you–” Heavy sigh. “–that there are lot of scams that you’re going to get enticed into. Lots of companies will try to take your money and prey on the fact that you’re young and are looking for quick investments. They’re going to take advantage of the fact that you don’t know a lot about investing. You need to let me look at these things before you sign up, I can help you make sense of them. Your field is medicine, and I know you’re very smart and capable of making complex medical decisions, but this is finance. It’s different.”

“But Sarah, this is obviously a company with a long track record, even if their retail products are more recent. It’s not very different to when SATRIX was new,” I said, feeling my heart sink as something I’d long suspected started to become clearer. “Let me send you their fact sheets, and some links to information about their history. Maybe this could be something you add to your suggestions for the students you see later this year. It’s a great competitor on costs alone–their expense ratio is so low!”

“You can send anything you want, but I’m telling you now that as your adviser, I can’t recommend any product that claims to have an expense ratio less than 2%. It’s just not feasible. No company can sustain that. I’m sure their costs are buried in under-performance or other fees they don’t tell you upfront.”

Like commissions? Or like the advisory fee you won’t be getting from the RA I set up myself? I thought sarcastically. I should have said it. I really should have said it.

But despite everything, I’d always liked Sarah and I couldn’t muster the energy because I was so heartbroken to be discovering that my financial adviser was one of two very dangerous things: either incompetent or unethical.

Could She Be Incompetent?

If she truly didn’t know about Sygnia, that suggests to me that she isn’t well-versed in the full range of products available to investors in South Africa. How can someone claim to be a financial adviser but not have the necesary information required to advise individuals based on the different pros and cons of a range of products? If, after extensive comparison of all options, she still wanted to push Sanlam or PPS or whatever investment options, sure, no biggie. But to be completely ignorant, not just of an outlier, but of one of the biggest companies in South Africa with one of the lowest cost structures offering the types of funds (ie passively managed funds) that are proven to outperform the vast majority of funds over the long term…Whew. I certainly don’t want my financial life managed by someone who doesn’t care enough to either stay up to date or to research the best options for me.

Could She Be Unethical?

It’s more likely, above any other possibility, that she was lying. All the breadcrumbs leading to this conversation point in that direction. She did know about Sygnia, but was likely put off by the fact that they don’t offer commissions to salespeople, they cap the maximum fee a financial advisor can charge, and their client education subtly discourages the use of heavily feed advisory services since that is just another factor that bites into the total return of the portfolio. Also, how could an advisor be justified for charging a recurring fee on a passively managed RA? They aren’t doing anything, they aren’t helping you rebalance that part of your portfolio or pick individual stocks, they aren’t preventing you from pulling everything out in a fit of panic before retirement age (the government regulations do that quite well). Ultimately, my selection would have made the most sense for my pocket and the least sense for her pocket. 

Her pretending not to know Sygnia and then trying to paint them as a predatory upstart would benefit her bottom line, and probably also is the company line of the places she gets commissions from. What makes this particularly upsetting is that not only does she have a moral obligation to put my interests as a client above her own, she also has a legal one. She signed a fiduciary agreement. (That’s supposed to be binding, and yet, here we were.) This is the same agreement she signs with all medical students she gets her clutched into advises, and yet she couldn’t even be open to the idea of considering options for them that may be better than what she was most compensated to sell recommend. If she truly was ignorant, she still is dodgy for not even being willing to do the homework and look into the options that would set them up for better retirements.

Oh, wait, we haven’t gotten there yet.

Hope It Works Out For You

Here’s a juicy excerpt of the reply I got after sending her the documents and links I promised. Prepare to have your mind blown by how professional it was.


That’s right.

Hope it works out for you.

Now, riddle me this. If a financial adviser’s value lies in helping clients create the most suitable financial plans for their goals and risk profiles, and preventing them from making stupid mistakes with long-term consequences, would it not behoove them to say something more than “hope it works out for you” when their clients suggest something contrary to what they would recommend. I mean, let’s pretend Sygnia really is a predatory pyramid scheme-esque company. Sarah has told me multiple times how smart she thinks I am and how her biggest interest is my financial security. So, if she’d found anything worrisome in the documents, she would have read further. Asked around. Done some research. And if that research had shown her that I was stepping into shark-infested waters, her e-mail would have contained the kind of information that would allow a “smart” person like me to dodge a major bullet.*** She would have laid out the pros and cons, the statistics, the research, the studies. She would have given me alternatives and their fund fact sheets. She would have said something.

More likely, she didn’t read it. Or she did, and realised she wasn’t dealing with someone that was going to be flattered by the “you’re such a clever little busy doctor saving lives, let me worry about your money to take the load off” salespitch anymore, and that I actually knew what I was doing. So convincing me to reconsider for something she would earn a comission on would require some additional work, and she simply wasn’t interested in that. So since she could not mathematically or statistically convince me that investing my RA in those heavily commisioned insurance products or high-fee Unit Trusts would be a better idea, she decided not to risk looking like the predator herself by trying to push them without the facts to back it up.

So instead, like a teenager who has just been told that she won’t be getting her allowance because she overdrew her credit card, she sent me an e-mail that is the equivalent of an eye-roll and a “Whatever”.

Classy, and confirmatory.

So Where To From Here?

Obviously, somebody’s getting fired.

(Like that time the crew forgot to cut the lights at the right time during a Beyoncé concert and she fired them mid-song.)

The biggest problem for me is going to be extricating her from all of my insurance contracts. I’m very happy with my disability insurance, but the more I read about the different types of life insurances the more I believe that I was hung out to dry. Cancelling that policy may be expensive, but so will being inappropriately and under-insured. The biggest expense, of course, is due to the fact that she probably earned an upfront commission so the insurance company will try to recuperate that from me either by trying to retain me as a client or levying a hefty penalty on me.

I’m just so grateful that I was introduced to the personal finance resources that I was before  I could have gotten my investments tied up with this adviser. It really could have been so much more painful trying to detach her from my actual savings as well as my insurance.

I should have known, of course, that my best interests were not at heart when she tried to convince me not to take my student debt too seriously or tried to sell me a jetsetting lifestyle way before I even had a positive net worth! Despite (or maybe because of?) her knowing my financial fears, she was so focused on setting me up to apparently need financial advise for life. But we live and we learn and I take full responsibility for also not learning after my first experience that I should have done some research before ending up with a second one!

My advice to any final year students who are graduating from degrees where advisers prowl campus as the year draws to a close, ask the tough questions upfront. Don’t commit to anything, don’t sign anything, until you know exactly how these individuals get compensated and what their conflicts of interest are. I’m not against advisers earning a fair fee, but I’m against them peddling products instead of actually doing what they purport to do. Find out if the adviser thinks everyone should work to 65, or if they’ve ever had clients who were financially independent sooner. Ask them why they push actively managed funds with higher expense ratios despite the plethora of evidence that proves that passive investment wins over the long term, and fees can deplete up to a third of returns. Clarify your goals and be firm. So what if they don’t benefit from you becoming debt free or financially independent–you do. Don’t let them tell you otherwise.

And, last, but not least. Let them take you to lunch and take you to SARS and hook you up with different service providers, but don’t feel obligated to agree to anything in return. You don’t have to take whatever product is on offer just because you got a free meal or a free ride (look, you’re a student, take the freebies!) and if anything you can spend more time weeding out the potential scammers from the well-qualified, objective and ethical financial advisers out there.

And, if you’re willing to do the work, become your own adviser.****

Hope it works out for you! Truly.





*Names have been changed and personal information edited out of this post for obvious reasons. I don’t write any of this to vilify Sarah, I write it to tell my story.

**I am not compensated in any way for naming Sygnia, and this is not a fixed recommendation. Their fees are currently the lowest and their track record as a whole is excellent, but if they don’t remain competitive and ethical, I’m not above jumping over to their closest competitor (currently 10x). The beauty is that I picked a company that, on principle, doesn’t penalise you for seeing the light, unlike some insurance companies in South Africa where you pay hefty penalties if you decide you want to move your investments elsewhere. How they can legally do this baffles me, but there you have it.

***Mixed metaphors:I love you dearly.

****This does not constitute as financial advice, ironically. Please see my disclaimer. I’m only sharing my personal story to help others like me navigate the turbulent waters of personal finance without getting ripped off in the process. Junior doctors are especially at risk–these product salespeople have hounded me at work and pushed their way into my home even! If you need what they’re selling, be vigilant about how they are selling it and if it’s perhaps better sold than bought. 😉


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