Journal of Financial Planning: September 2023
WHO: Louis van der Merwe, CFP®, CeFT, FPSA
WHAT: Director and Co-Founder, WealthUp
WHAT'S ON HIS MIND: “I would say, very early on, try and put yourself in a position where you feel completely out of your depth. And then figure out what skills do you need, and what are the things that excite you?”
In university, Louis van der Merwe knew that he wanted to do something in business, but the idea of financial planning was relatively unknown to him until he had a chance encounter.
“I happened to study my undergraduate degree at the University of Stellenbosch. I started off with a bachelor’s in commerce with the idea of going more towards marketing. My dad had studied accounting, and his feedback was that accounting is great, but use it as a tool—don’t go into that as a career. So I knew I wanted to do something around business but didn’t really know where to start. And then in my second year, one of the big names in South Africa in the financial planning industry, Professor Niel Krige, came to speak to our class of undergraduates. He told us about this wonderful career that’s becoming more professionalized: it is the CERTIFIED FINANCIAL PLANNER™ designation. It’s the kind of work that you can do that couples the technical side [with] dealing with clients. And the piece that was very attractive to me was the tax deductibility of a lot of your expenses, believe it or not. So I ended up electing financial planning as my major.”
Fresh out of university, among the first class that got degrees in financial planning in South Africa, he had to look for a job in the midst of the 2008 market crash.
“I knew that I wanted to go the independent route. I didn’t want to go for any kind of tied agencies. I knocked on about three doors. All of them said, ‘You can come and work here, but we can’t pay you.’ Fortunately, I found a medium-sized auditing firm that is now part of Mazars, which is a relatively big audit advice and tax practice. They had a financial services arm, and they were looking for an administrator with the idea to maybe move into the advice role. So I joined them and started out literally filling out forms, pushing papers around.”
The company was different than he expected, and the role didn’t quite suit Louis. He felt the firm in general wasn’t investing enough in itself and the employees, and Louis was wondering what would happen in the future as their already old clients aged further. Robo-advice was the latest thing people were talking about, and Louis thought it would be best to get on that as soon as possible.
“There was this boom of robo-advice. I really enjoyed using technology. We built a prototype, pitched it back to the business. And then the business said, ‘Well, this looks interesting. We’ll have 50 percent of this new venture, and we’re not going to refund you for any expenses that you incurred to put this prototype together.’ So four years into my career, that kind of forced me to resign.
“I thought, ‘I’m going to try and give this a shot.’ I started up what was going to be a robo-advice business. I really wanted to create a very simple process for people to manage their own investments. I thought it would be a bunch of younger people having very small investments, [but it] turned out I think in our first month we had about 500 or 600 people visit our website; a few of them interested, but no one had the courage to actually commit to an investment.”
He discovered that he didn’t have a technology issue, but a marketing issue.
“Either we were going to have to get a ton of money to spend to convert more people into clients, or I could use all of these people’s contact details as potential leads. I started doing that. And it was predominantly clients very close to retirement that were unhappy with the experience of their current advisers, [where the clients] were sold products. All of a sudden, this business had a very quick kickoff with new clients coming in. The business is called WealthUp. It’s still going today. We’re an independent, small financial planning business. We have six staff members, adding the seventh person now.
“It’s been a very interesting progression through time to say, ‘Well, where is financial planning going?’ Initially, we thought it’s going to be very technologically based, and people are going to do their own planning, [but we] quickly realized we need to move the technology to a place where the clients can’t see it—it just runs your back office more effectively. And that [worked] for a very long time. We didn’t really have to hire administrators or paraplanning staff. We’ve really been using technology very well in our business because we didn’t have any legacy issues.”
From creating a robo-advice platform to an app to incorporating it into their backend for a more streamlined client experience, Louis has found a balance that has been working for over 10 years. In that time, and partially due to the specifics of the South African market, he has found a niche serving widows and people in transition.
“Within South Africa, you have to do a postgraduate degree before you can write the CFP Board exam. For a lot of people, [they think] ‘We need to become CERTIFIED FINANCIAL PLANNER™ [professionals],’ and that that’s the peak of our career in South Africa.
“So I had to go and look abroad [to see] what else is there and how do we add to this designation? I came across the work of Susan Bradley, from the Financial Transitionist Institute. I went through that process. At that time, there were two other people in South Africa that finished the designation, the CeFT designation, to be able to call yourself a Certified Financial Transitionist. The idea is to work with people going through major life changes.
“The challenge was [most people] didn’t really know that they needed to speak to a transitionist. They just knew traditional financial planning was not really working for them. [For example,] you’ve just lost your spouse and someone’s trying to sell you a new investment. Maybe not the best strategy. In 2021, I finished my designation, and that has put our business into a shift to become a transitions-based practice.
“We want to have the CERTIFIED FINANCIAL PLANNER™ designation at the core, but then ideally have some specialist areas. There is also a specialist area in South Africa called the Fiduciary Practitioner, which essentially is what an estate planning attorney would do, which is very neglected in South Africa.
“We’re trying to gently navigate that space; not becoming the expert but having that expert team behind us and delivering it in a way where clients just navigate that transition a little bit easier than then on their own. [I’m] spending more time now trying to figure out who do we need to add to the team to be able to deliver this advice consistently and in a way where a client feels like they have a relationship with the business and not just the person, which is trickier than what I thought. I think the business part is as challenging as dealing with clients.”
In addition to his work at WealthUp, Louis has been engaged as the host of the Ensombl Advice South Africa Podcast, which he started just weeks after the first COVID-19 lockdown.
“In South Africa, we had very hard lockdown, and I got a message through LinkedIn saying, ‘can we have a chat? We’re looking for someone to host our podcast in South Africa.’ I had a call with Clayton Daniel, the CEO of Ensombl. He had just done episode 250 of the Australian Financial Planning podcast, and his pitch to me was, ‘We want to create this thing. I’ve been doing 250 of it, and the only thing I did was interview people that I thought were interesting, and I use that to apply it to my business. Do you want to do the same?’ Well, I thought, let’s give this a shot.
“[The podcast] was really around how do I build a new skill? It’s about expressing some creativity. The most important piece is having good quality conversations and someone [listeners] want to listen to.
“About a month into the podcast, we found out my wife was pregnant. So now I had a business, there’s COVID going on, there’s a baby on the way, and every week I need to have a conversation with someone around the profession. When we got to episode 14, I said, ‘I think I’ve had enough of this. It was interesting at the beginning but now it’s just really a schlepp.’ Fast forward a year and a half later, we’re almost at episode 100. That’s coming out in the next few weeks.”
Louis went through a coaching course, which he found to be very helpful. Even though it was a great boost to him, Louis stresses that the trick is finding out what area you need work in. While you do need to learn the basics, you don’t necessarily have to be the best—you just have to be better than the other person down the street.
“Instead of trying to copy what everyone else is doing, figure out your own passions and where your own areas of strength lie. You might find that outside of the profession, you might find that by volunteering, you might find that by going into a business that you have no clue about. At one point, my girlfriend ran a clothing business. And I started helping her trying to figure out, how do you build an online e-commerce website? How do you run payroll? I had no idea what was going on, but I could look at the business and I could say, ‘What skills do I need to cultivate to help this business?’
“I would say, very early on, try and put yourself in a position where you feel completely out of your depth. And then figure out what skills do you need, and what are the things that excite you? For some people, it might be helping, it might be coaching, it might be transitionist work. For someone else, it might be submitting insurance claims and being the person when someone has problematic insurance claims.
“Sometimes you might be accidentally good at something, which leads you down a whole other path. And maybe you want to explore it. I would say be flexible in your career objectives, but be laser focused on the skills that you want to build.
“You don’t necessarily have to be the best. You just have to be a little bit better than the alternatives that your clients are considering. Someone might say, ‘Well, from these five advisers that I’m looking at, you stand out in this specific area.’ People kind of link skills, so they think that if you’re good in one piece, they just automatically link it to everything else related to finance. It’s finding that piece where you are clearly a lot more proficient than the alternatives that they’re looking at, and then figuring out how to link the rest of that person’s life once you have the opportunity to speak to them. Because then it’s easy. The part that’s tricky for most people is getting that first call.”