#FA Success 303: Pivoting From ‘Robo’ Investment Management To Financial Planning In South Africa, With Louis van der Merwe

#FA Success 303: Pivoting From ‘Robo’ Investment Management To Financial Planning In South Africa, With Louis van der Merwe

Welcome back to the 303rd episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Louis van der Merwe. Louis is the Director of WealthUp, an independent advice practice based in Cape Town, South Africa, that oversees the U.S. equivalent of nearly $60 million in assets under management for 115 client households.

What’s unique about Louis, though, is how he and his partner (in anticipation of a shift in the financial advisory industry to more automated client services nearly 10 years ago) developed a robo-advice technology prototype to help clients have their investments managed at a very low cost… which then struggled to gain traction with consumers, inadvertently giving them the inspiration to launch their own ‘fully human’ financial planning practice instead.

In this episode, we talk in-depth about how, after 4 months of development, the robo-advice prototype Louis and his partner created was not seeing the rate of success they had hoped (as most clients were not completing the process because they actually wanted and needed more investment advice than what self-directed technology could offer) which made them realize what consumers really needed was better financial planning. We also explore how, even though the auditing firm where Louis and his partner were employed was very interested in the prototype they built, they refused to purchase the product, which led Louis to a crossroads that ultimately led him to the decision to leave the firm and start his own financial planning practice, and how, even though Louis and his partner built their business based on how they could offer better portfolio management to their clients, they ultimately decided to employ a discretionary fund manager to outsource their investment management so that they could have more capacity to fully focus on their financial planning advice and the client experience.

We also talk about how, at just 24 years old, Louis decided to launch his own practice as he realized, if he was going to take a big risk, his age gave him the advantage to do so while avoiding the regrets that many successful entrepreneurs have of not starting their businesses earlier in life, how, while being considered for an “approved practice” award through South Africa’s Financial Planning Institute, their in-depth review process highlighted how Louis’ practice was not really following their 6-step process and motivated Louis to go even deeper with more financial planning services like estate planning and better demonstrating the impact of financial decisions to clients, and why Louis finds running an independent practice challenging as even though it has been 10 years and the practice has come a long way, there is always room to grow and new practices and skills to discover that can help transform the way he delivers advice to his clients and manages his team.

And be certain to listen to the end, where Louis shares why he feels that the financial planning profession is a helping profession and as an advisor it’s important to recognize that providing value in a client’s life can be as simple as giving one’s time and energy to help the client (as that is a rare commodity in life), why Louis believes it’s valuable for advisors entering the financial services industry to spend time discovering their individual strengths and find employment or build a practice that focuses on their own individual strengths to have a more fulfilling and successful career, and how Louis’ own definition of success has changed from early on when he hoped to build a big robo-advice technology enterprise to today where he can instead maintain a tight-knit group of clients so that he can have more time and capacity to make a difference in their lives (and be compensated well for his value) while still being able to spend meaningful time with his family… and have some fun, too.

So, whether you’re interested in learning about how the financial services industry and its regulations differ in South Africa, why Louis decided to focus more on financial planning and less on investment management, or how, even though Louis did not start a fintech company, he still integrates as much technology as possible to automate his back-office, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Louis van der Merwe.

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