Lifestyle financial planning aims to achieve clients' lifetime goals through financial independence by focusing on lifestyle goals and using a team of strategists to provide comprehensive services like tax planning, retirement planning, cash flow planning, etc. The financial planner acts as a partner and buffer between the client and portfolio managers, with the goal of an ongoing relationship and annual meetings to review the clients' strategy and ensure it can achieve their goals. Asset allocation is key, determining most of returns and risk, while stock picking and market timing have less impact.

1. lifestyle financial planning
Gerrit Viljoen

2. lifestyle financial planning

3. the traditional relationship
attempting to beat his peers
portfolio
manager
planner
buffer between the portfolio
manager and you
you
your relationship is with the
financial planner

4. a partnership …
... to achieve your lifetime goals through financial independence
lifestyle goals
you

5. a partnership …
... to achieve your lifetime goals through financial independence
lifestyle goals
strategist
o tax planning
o retirement planning
o cash flow planning
o debt planning
o estate planning
o risk management
o portfolio benchmark
you
planner

6. ... to achieve your lifetime goals through financial independence
return
target
lifestyle
goals
strategist
o tax planning
o retirement planning
o cash flow planning
o debt planning
o estate planning
o risk management
o portfolio benchmark
portfolio
adviser
you
planner
a partnership …

7. calendar returns with 40% tax
Year SA shares SA bonds SA cash SA property Int shares Int bonds Inflation
1994 22.5% -22.5% 6.6% 6.3% 9.6% 2.9% 9.8%
1995 8.6% 29.5% 7.8% 6.3% 24.2% 20.0% 6.9%
1996 9.6% -3.7% 8.4% -15.6% 45.6% 30.8% 9.5%
1997 -4.3% 28.2% 8.9% 13.7% 20.4% 4.4% 6.1%
1998 -9.6% -4.6% 8.1% -5.0% 49.7% 35.9% 9.1%
1999 60.5% 26.5% 9.3% 45.9% 30.8% -2.6% 2.2%
2000 0.0% 14.5% 6.6% 22.0% 5.2% 22.7% 7.0%
2001 29.8% 13.2% 6.4% 2.2% 29.4% 56.1% 4.5%
2002 -6.7% 11.5% 6.9% 25.8% -44.0% -16.6% 12.5%
2003 16.1% 13.9% 7.7% 34.5% 0.2% -11.9% 0.3%
2004 25.4% 11.3% 4.7% 35.4% -4.6% -7.0% 3.4%
2005 47.3% 7.0% 4.1% 47.2% 21.9% 5.6% 3.6%
2006 41.2% 1.5% 4.5% 25.5% 19.3% 5.8% 5.9%
2007 19.2% 0.3% 4.9% 24.0% 5.7% 5.2% 8.9%
2008 -23.2% 13.4% 7.0% -7.8% -19.9% 43.5% 9.5%
2009 32.1% -4.7% 5.2% 10.6% 1.3% -16.9% 6.3%
2010 19.0% 11.7% 3.9% 26.6% -0.9% -6.7% 3.5%
2011 2.6% 5.4% 3.3% 5.9% 14.8% 28.6% 6.1%
2012 26.7% 12.7% 3.2% 33.2% 19.8% 8.2% 5.6%
2013 21.4% -2.7% 5.0% 2.5% 56.6% 20.4% 5.3%
Average 15.2% 7.4% 6.1% 15.7% 11.6% 9.7% 6.3%

9. source: Financial Analysts Journal, May-June 1991 “Determinants of Portfolio Performance”
Brinson, Hood and Beebower 1986, 1991.
asset allocation determines the
majority of returns and risk
asset allocation 94%
stock picking 4%
market timing 2%

10. implementation
direct
portfolio
manage the managers
portfolio
advisor
unit trust funds
fund manager
fund 1
fund 2
fund 3
fund 4
fund 5
shares property
SA
shares
SA
bonds
SA
property
int.
shares
cash
Manager 1
Manager 2
Manager 3
Manager 4
Manager 5 Manager 6
Manager 7
Manager 8
Manager 9
cash bonds

11. inflation plus 5-7 strategy
risk of a negative return
any 5-year
period
2%
any 1-year
period
18%
any 3-year
period
5.7%

12. -30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1 2 3 5 10 15 20 25 30
21.0%21.8%23.0%
25.2%
30.0%
34.7%
39.5%
50.2%
-22.9%
-12.2%
7.0%6.3%5.5%4.2%
-7.5% -2.7% 2.1%
20.3%
likely range of returns
Inflation plus 7-9 strategy

13. Inflation plus 7-9 strategy
risk of a negative return
any 1-year
period
any 3-year
period
any 5-year
period
21% 8.1% 3.6%

14. your lifestyle financial plan

15. some useful advice
To invest successfully over a lifetime does not
require a stratospheric IQ, unusual business
insights, or inside information. What’s needed
is a sound intellectual framework for making
decisions and the ability to keep emotions from
corroding that framework”.
Warren Buffett
Warren Buffett

16. ongoing service commitment
I administer the financial side of your life
regular reporting
communication
access to planner & staff
annual planning meeting

17. comprehensive annual meeting
lifestyle objectives
cash-flow management
adjustments/increases to saving amounts
investment strategy assessments and review
market discussions and performance benchmarking
assessment and review of investment income vs objective
affordability of current plan
inter-generational planning
liaison with your appointed tax and legal advisors

18. reviewing your strategy
ensures that your strategy is capable of achieving
your lifetime goals through financial independence
keeps you:
informed
involved
in control

19. recap
How do you comply with TCF?
Are all your clients in the same funds?
How do you do fund manager selection? Do you have a scientific process?
How do you determine the appropriate asset allocation for the risk appetite?
Who helps you with software that aligns your clients goals with reality?