Your first salary lands. After deductions, there’s something left over – and you’ve seen enough FinTok to know that you should be investing. So, you open an investment account, set up a monthly debit order into a balanced ETF, and pat yourself on the back. Job done, right?
For now, yes. But your financial life won’t stay this simple for long. Before you know it, you’ll need to call in a financial adviser to help you manage your money and plan for your financial future. The question is: when should you seek out advice, and how long can you keep doing it yourself?
If your setup is simple (one salary, one TFSA and one ETF), DIY is more than fine. A tax-free savings account (TFSA) with a diversified exchange traded fund (ETF) covers a lot of ground. The information is free, the products are transparent, and the fees are low. For now, your financial plan is clear: save, don’t spend, and stay invested in the market.
Many people seek out advice because life has happened. In the South African context, the moments that may push people over the line could include landmark events like:
Your First Proper Job: The complication isn’t about the salary itself, but about the paperwork around it. Should you take your employer’s group life cover as your only insurance? Is your pension fund contribution enough? Do you need gap cover on top of medical aid? Do you need income protection? Are you over- or under-insured? A trusted and qualified financial adviser will help you find the answers.
Buying Property: The bond is the easy part. The harder questions are the ones the bank won’t ask: is your life cover enough to settle the bond if you die, or will your partner (or parents) inherit the debt? Do you have building insurance separate from the bond’s compulsory cover? Should the property be in your name, a trust, or a company?
Having a Child: This is the moment your financial life stops being about you. Education is expensive, so a structured education plan, an updated will, updated beneficiaries and revisited life cover all belong in the same conversation.
Changing Careers or Going Independent: Leaving a corporate salary means losing group cover, employer retirement contributions and often medical aid subsidies. You need to rebuild all of that yourself, and the tax rules for provisional taxpayers are a different beast. If you’re self-employed, requirements such as income protection may be even more important. Proper financial advice can prove invaluable.
Supporting Family: Helping parents, siblings, or extended family deserves to be included in a proper plan, not on the edge of your budget as an afterthought. A financial adviser who’s worth their fee will help you protect your own future without pretending your obligations don’t exist.
Proper Financial Planning: If you’re asking, “which ETF should I buy?”, then you’re asking for product advice. That’s a Google-able answer, and honestly, most advisers shouldn’t be charging you for it. Proper financial planning asks different questions. What are you saving for? When do you need the money? What happens to your dependants if you die or become disabled tomorrow? Is your money in the most tax-efficient investment solution? How do all your policies, investments and debts fit together?
There are real risks in going DIY on your financial planning for too long. They’re structural and boring, but they’re very real. You could be underinsured – only to find out when a claim is rejected or a family member is left with debt. You could be paying tax you don’t need to pay, because your investment portfolio isn’t structured properly. You might be losing years of retirement compounding because you didn’t translate your Regulation 28 fund into an age-appropriate accepted asset allocation. And you could die without an updated will, leaving your intended beneficiaries to fight the Master of the High Court for years after your passing.
A professional adviser will ensure that these details (which you may not have considered) are handled properly.
So here’s your game plan. Start DIY. Keep it simple. Max your TFSA, own broad ETFs, and don’t panic when the market wobbles. But the day your life stops being simple – the job, the bond, the child, the career – then it’s time to pivot and pay a fee-based, qualified financial planner for a proper sit-down.
By Siyabulela Nomoyi, Quantitative Portfolio Manager at Satrix
Disclaimer
Satrix consists of the following authorised Financial Services Providers: Satrix Managers (RF) (Pty) Ltd and Satrix Investments (Pty) Ltd. The information does not constitute financial advice. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.
