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Louis van der Merwe
Welcome to another episode of Ensombl advice South Africa. Today, I’m sitting in the office of Dr. Jeannie de Villiers-Strijdom, who I had the privilege of 15 years ago, being my lecturer at the University of Stellenbosch. You definitely shaped the path going forward, Jeannie, it’s lovely to be here.

Jeannie de Villiers-Strijdom
Thank you very much, Louis. It’s a privilege to be on your podcast.

Louis van der Merwe
Just driving into Stellenbosch. It looked very different from 15 years ago, but yet so many elements stayed the same. The same names the same way we’re giving advice. Tell us a little bit about your role here at the University of Stellenbosch. You mentioned that you’re an extraordinary senior lecturer.

Jeannie de Villiers-Strijdom
Yes. And I’m also a postdoc fellow. So I do research on the university’s behalf. So I got to be a postdoc fellow. When I graduated in March 2021 as a as a doctor in financial planning, and yo the university said, well, they think I should continue my research career. And I also lecture, so I lectured this term in financial planning for third year students.

Louis van der Merwe
That’s wonderful. I mean, we don’t hear of a lot of people that have the title of doctor in financial planning. Are there other doctors in financial planning?

Jeannie de Villiers-Strijdom
Oh, that’s a good question. Last year, I attended a conference in Florida, United States of America. And I of course, was introduced to many doctors also with a CFP qualification. So that was a bit highlight for me and at that conference, I shared my my the main results of my PhD studies.

Louis van der Merwe
Can you share with us a little bit of what the research was on?

Jeannie de Villiers-Strijdom
Yes, I researched annuity decision making. So annuity in this case is the annuity decision that you take at retirement. So as you know, in South Africa, you are obligated to utilize as a portion of your pension or provident or ri fund interest to purchase an annuity, this is a big decision that you must make. And they are two main annuity income options. The guaranteed life annuity that you buy at a life insurance and you’re guaranteed that income up until your death, and then the living annuity, which is a worldwide, the most popular option, we invest money, and you withdraw in South Africa between two and a half and 17 and a half percent of your income. So I had a wonderful supervisor, Professor Johan De Villiers, and he said the something that keeps him up at night. And the thing that keeps him up at night is why does everyone go for the living annuity option? And I started researching this topic. And it’s known worldwide, it’s been dubbed as the annuity puzzle. Because why are everyone going for this option where there are so much and uncertainty? And especially with people living longer? Why are they not going for the route that protects them from the longevity risk living too long? And yeah, so that’s what I researched annuity decision making and looking at the factors that relate to our eventual decision and then our satisfaction in retirement.

Louis van der Merwe
That’s fascinating, because, yeah, I think it would we’ve done within our businesses to say for certain type of client, typically, when the funds are not sufficient, we want to make sure that they first consider the life annuity. Yes. What was your findings, how much of this was bought, you know, I sold through the advisor in terms of steering, hey, we’re gonna go down this box versus client selected, because I would imagine that a lot of clients don’t necessarily have the financial knowledge to make that decision.

Jeannie de Villiers-Strijdom
Yeah, is the same when we go to the doctor, and we need to make some kind of medical decision, we trust the expert. So Daniel, Kahneman and Tversky, they did very interesting research, which fits very nicely into this topic. And they said, people look through some decisions through a certain frame. And then they get to a specific decision. And this annuity decision, especially from the advisors, vantage point, they look at it from an investment frame or from that lens. So they, when they explain to the client, they options, they look at risk and return characteristics of this choice. But they do not look at the annuity decision from a consumption frame, you know, will we be able to, to have a certain level of consumption up until the end of our lives. And it’s these biases, these cognitive biases, not only from the clients perspective, but also the advisor that really interests me. So what was interesting in my research is that people go for the living annuity route, because they they have this hope of earning and above average return on this pot of gold, this pot of money. And by looking at it from that perspective through that lens, but they don’t think about the potential of not having enough money of outliving their money. And there’s also a very interesting cognitive bias called Risk odor bias. It’s very easy for us to access near periods in our imagination, like it would be very easy for us to imagine being hit by a bus, but the possibility and the possible consequences of getting very old and being old and in poverty. That’s difficult for us to imagine because it’s a far off period. So becoming aware of these cognitive biases when we make decisions is important because then we can overcome the mental shortcuts and the antiviruses and the irrationalities in our decision making. So that’s sort of the findings.

Louis van der Merwe
It’s fascinating, Jeannie, what strikes me is that the work that you do with students is not too dissimilar. Right? Because you also have to think about your future self. How would the student today be happy with this decisions they made 15 years from now? Do you bring that work into the classroom,

Jeannie de Villiers-Strijdom
I tried to, especially after my PhD, did get sort of the, the life skills and and your to bring some aspect of that into into the theory. And I think the industry is more moving towards that incorporating such soft skills, and decision making skills and understanding how we make decisions, how we arrive at certain decisions to understand that and to become aware of of inconsistencies or sub optimal behavior. I spoke specifically also found in my research that people in retirement 10 years in retirement, receiving living annuity income, they are more dissatisfied. And I could relate that specifically to people who at the start thought that the living annuity option is such a good option because it has this potential to earn above average return. So this characteristic that in the beginning, they found, do them towards this product at the end, related to the dissatisfaction with with being a living annuity owner. So I thought that was quite that was the biggest surprise, surprising result of my of my research. Yeah,

Louis van der Merwe
this is fascinating, because I think if clients knew that, if we propose that within our, you know, the options that we discussed, to say people tend to be dissatisfied with this option, I would imagine that they would be a different outcome. And at the same time, if you’re wearing a wealth manager hat versus a financial planner that maybe looks at, you know, what is the future hold, we just spent yesterday at Helderberg retirement village as a team, just speaking to some people that was a bit of a community outreach, because one of our team members has family there. And it struck me that these people had very few options. And these are people in the 70s and the 80s. And financially, things happen that they couldn’t be afforded options. How did you bring in, you know, people in late retirement years and their satisfaction, because I would imagine those are difficult conversations to to research. How did that take place?

Jeannie de Villiers-Strijdom
Your sir, I did a questionnaire or survey based research. So I sent out a lot of questionnaires, and then I analyzed the data. I think also an important aspect now that you talk about people later in life is that the living annuity option requires active management and choosing a withdrawal rate and, and the underlying funds and making sure that the money keeps space, the investment rate keeps also pace with inflation. And people later in life, especially when the person who handled the finances the spouse who handled the finances dies first, it becomes more difficult more of a challenge. When you lose your your mental health, or you get a client could get dementia, whatever. Those financial decisions become even more of a challenge challenge later in life and with illness and spouses passing away. So yeah, I’m a real advocate for at least putting on the table. This other potential option, this guaranteed annuity option that, you know, won’t give you sleepless nights and you know, it’s there. It’s guaranteed. Yeah.

Louis van der Merwe
And in South Africa, we have wonderful products like just annuity with these with profit annuities. Yeah, yet it’s sometimes it’s complex to explain to clients, I think as financial planners, we fall in the trap of this is the way it’s always been done. Yeah. Have you find our financial planners good at challenging the narrative of saying, Oh, this this way, we’ve always been doing it. We need to relook at it. Was there maybe a new wave of people revisiting the way financial planning is done?

Jeannie de Villiers-Strijdom
Yeah. That’s a good, a good question to ask. I, I think it’s important and I think that’s the role of academia in financial planning is to to ask the difficult questions and to look at alternatives and to question the way that we’ve been doing things and so are they perhaps other ways and what is the research side? Can we ground this in, in in empirical research? And and I think there’s definitely a case to be made to at least have that conversation especially also with with clients in retirement. Are you still happy with with with your current choice or because my father at age 76, he was a mathematics professor at this university for over 40 years. And he chose the living annuity. And I remember when there’s sort of a market correction, the worry, I saw the worry. And but so he keeps on going with his living annuity. And then when when I graduated, and and I found that retirees, you know, they are dissatisfied with the living annuity. And he said, Well, perhaps we should revisit my retirement choice. And so at age 76, he switched to a guaranteed life annuity and he says he sleeps much better at night, especially now with the random the banks in America, you know, he sees the market turning down, and it doesn’t affect him.

Louis van der Merwe
And you we all do people in financial planning. My mother has a guaranteed annuity income, your father now has a guarantee. There is absolutely a place for people’s peace of mind.

Jeannie de Villiers-Strijdom
Absolutely. Yeah. And that should also just be something to consider and to have on the table. Yeah.

Louis van der Merwe
And these are difficult conversations. Right? Because on the one hand, the financial models are geared towards incentivizing advisors. Absolutely. Yeah. Go the living annuity route. Yes. I want to ask you the the infant annuitization options that we’re seeing, so people retiring from the employer, the the umbrella fund, or the standalone retirement fund has to not offer them infant annuities. Yeah. Are those things successful? Is it being taken up?

Jeannie de Villiers-Strijdom
That’s a good question. I don’t have any numbers. But I have a friend that is retiring soon. And you know, I said that you should definitely consider it. Because I mean, just from an economies of scale perspective, the costs are very competitive with such big fans. Yeah, so So I think it’s a great move towards protecting clients interest.

Louis van der Merwe
Yeah. And that time of your life when everything is changing, your career is coming to an end. You have to transition you have to make the most important decision of your life in terms of your finances, but also, what are you going to be doing with the rest of your of your life? I want to rewind a little bit to find out how Jeannie ended up in the financial services give us a little bit of that backstory.

Jeannie de Villiers-Strijdom
My my story also, I was an economics student here at Stellenbosch University. And my one of my lecture is in my honors here, Christy my learn from artists his practices involve the Wii paddle, he said that for one of the students in the class is going to offer a job opportunity in Durbanville those days and I worked very hard that year. And I got the job and he had a small boutique asset management firm and then financial planning practice. And I started out being very interested in the in the asset management the investment sides, but as I saw how Chris to interacted with his clients and the relationship and the trust that formed and how you become involved in people’s life stories and their decisions, and life outcomes, I thought, well, maybe I should shift the gears to more the CFP route. And I enrolled from applied to do my my CFP qualification at the University of the Free State. And your I think in 2006, I received my CFP designation and then we my husband got a job in Stellenbosch and being born and bred Stellenbosch go, I thought, well, you know, we’re not going to pass up this opportunity. I’d love to come back to Stellenbosch. I really enjoyed our time in Durbanville. But I thought, yeah, let’s do it. And then I contacted imyfone Nika from fin focus financial planners in Stellenbosch and I said, we are going I’m going to return to Stellenbosch and I love financial planning. I have my CFP qualification or almost I almost have it and do they have a job for me and me funny Kalka husband is Professor Anton friendica, at philosophy at the University of Stellenbosch, she said, Let’s make a plan. And they I worked for a couple of years, but I also kept contact with Professor Neil Korea. So he’s to this day, my mentor, and he was one of the founding directors of momentum. And he for the last part of his career, he thought he’s going to give back and have a career in academia. And he was extremely successful. One of the five red lectures here, as you will know, a department business management and wrote many articles published peer reviewed articles. In any case, I made contact with Professor Neil Korea, and in 2006, we had a meeting and he said, he wants to start an undergraduate module and focus area in financial planning. And he knows my dad quite well. And, you know, academics teaching that that blood runs through my veins now no question about it. And basically has said, Would you be interested in being a lecturer yet Stellenbosch University develop this module? And let’s see how it goes. And I remember that I went to my mom and dad’s house, and I said, Well, you know, this is your dream job. Take it. And you’re so in 2007, I was employed yet Stellenbosch university and for 10 years, I lectured financial planning at second and third year level. And Professor nuclear was also the founder of the Postgraduate Diploma in financial planning, but is presented at the Stellenbosch business school. Yeah, so I’ve had a wonderful career up to now. Just these

Louis van der Merwe
names that you that you mentioned, are the giants of our industry and our profession, guiding us. And now you get to make a difference in the future coming through. I’m curious, what were the skills that you had to work on moving from financial planner to lecture? Is that something that just wasn’t running in your veins, and you could just step in and present and now teach, being mindful that I think I was part of your second year class. I didn’t see the first version. But I saw the second version. Tell me about that change, because that’s a big shift. Moving from, you know, ultimately working one on one with people now presenting in a big class teaching how, how easy or how difficult was that for you?

Jeannie de Villiers-Strijdom
I remember before my first lecture, I was afraid that my voice would not come out the right way. Because I’ve never spoken in front of many people. But I remember standing in front of that loss, and it’s your something came over me. And I knew this is exactly what I’m supposed to be doing. Yeah. So I think it’s, it’s, it’s a passion, and it aligns with your life purpose. Because I’m introverted, and perhaps a bit shy. But but but when I when I have a purpose, and I feel this is what I am yet to do, then that melts away and and something else takes over. I think what also helps is, I’ve sung in, in my dad’s choir, the lipid does choir for most of my life. And I think being on stage and singing in front of audiences, I think, perhaps that helped. Also,

Louis van der Merwe
that showmanship, projecting your voice, and we’re sitting here with two microphones that really feel like we’re gonna break into a song. Surely that’s, that’s wonderful. And it’s, it strikes me that talking about your purpose, and the purpose that you’re doing right now, is very close to the work that we do every day with clients, figuring out the purpose. What do you think the next thing is has in place for you in financial planning?

Jeannie de Villiers-Strijdom
Well, I would love to continue lecturing. And I would love to continue my research. I’m doing interesting research on financial literacy and financial behavior. Conventional wisdom says that if we have objective financial knowledge about interest rates, diversification, shares, et cetera, we will make better decisions. We will pay off our day diligently. We will save but we are not seeing that happening. I mean, worldwide, there’s a problem with If savings people don’t save, they don’t save enough. And you’re so I, I love to ask these questions and to delve deep into that. What are we missing? What what are the factors should we develop to, to ensure that people in the future make better decisions? Is it the way to control financial control? Is it planning? Is it? Should we start from very young, from a modeling from parents? Should we encourage parents to open savings accounts for their children? Well, you know, what, what are also the psychological factors? The role of procrastination, and all of these things? How, what should we know? What can we change to see an improvement in people’s financial behavior? So, I’m very excited to think that I have wonderful data that I’ve collected. And I’m just waiting for for the end of the term, and then I’m going to analyze it, I’m very excited to see what’s going to come out, and how can we help people to improve that aspect of their lives?

Louis van der Merwe
It sounds like it’s a lot more to do about behavioral economics, and then applying that to the world of financial planning.

Jeannie de Villiers-Strijdom
Yes, absolutely. That’s where my interest lies. My grandmother, on my father’s side, she was a psychologist, and I remember as a child being very curious about her psychology books. So it’s almost as if that part of me is also developing, and the combination of psychology and financial planning. That is a sweet spot for me,

Louis van der Merwe
this financial planning handbook is lying here between us that just celebrated the 20 year anniversary. And we’re seeing in America, the inclusion of the psychology of personal financial planning is I know that there’s quite a few people in South Africa working on this, do you think it’s slowly going to increase in terms of importance within this profession? And do you think there’s a place within the the teaching curriculum and undergraduate

Jeannie de Villiers-Strijdom
Absolutely, and I feel passionately about it. Interesting, interestingly, I applied for for a job just after my graduation in 2021, I wanted to spread my wings a bit, you know, keep your options open, and I applied for a job at South Dakota State University in North America. And, Louis, you won’t believe but they gave me a three hour interview, I was totally exhausted, we can learn lessons from them from interviewing people. And in any case, it went very well. And and we were very excited about an adventure overseas for a couple of years. But in the end, I didn’t get it. And I asked them, just give me some feedback, I just want to learn from the experience. And they said, across the board in America, or the universities, the financial planning students take, concurrently, financial therapy, or something to that effect psychology or financial planning and behavioral finance. And I have no experience in lecturing these subjects. And, you know, based on that, it was a good interview, but you don’t have that and other, you know, the other applicants had it. So I feel very strongly that we must align with those universities and, and bring these concepts. It’s very important. It’s important for the investment students for the financial management students and the financial planning students. And it’s going to be more so everything the markets are driven by people’s emotions, fear, greed.

Louis van der Merwe
Do people in the psychology departments talk about finance? I don’t know if you have any friends there? Because I’m curious. I mean, we have in America, this financial therapy designation that you can only really obtain, if you go through the technical side of, you know, the American Finance model, yet we have nothing like that in

Jeannie de Villiers-Strijdom
South Africa that I’m aware of.

Louis van der Merwe
Is there a place to walk into the psychology department and say, Hey, who’s interested in finance?

Jeannie de Villiers-Strijdom
Yeah, I mean, you’re giving me an idea. We should we should draw from them. And we don’t need to reinvent the wheel. Yeah. So I would be very excited to be part of a movement in that direction. And to explore that further.

Louis van der Merwe
There’s some fascinating people in America and what I’ve seen is that often it’s around family dynamics. These internal systems that they talk about. So it doesn’t necessarily have to be counseling, but it can just be understanding human decision making and what drives our decisions. Absolutely. And I would love for us to see that in South Africa. Because just speaking to the students this morning, very few of them had a default in the human sciences, like there was only a few hands that were raised that were interested in psychology yet. In hindsight, that’s actually

Jeannie de Villiers-Strijdom
what we do. Yeah, yeah. And as you also said, in the lecture this morning, Louis, that with with artificial intelligence, the technical side is going that those aspects, the development of AI is going to take care of many of the technical aspects. So what we have to offer is really understanding the human side of financial planning,

Louis van der Merwe
I really look forward to seeing that develop in South Africa, because now we have wonderful universities, with wonderful lecturers that can set this this pathway. But yet, we still see a big drop off in financial planners, I think about 70, or 80% of them leave the industry very quickly. Yeah. Have you seen a change in that over the last, you know, 1015 years? Or is that an area that got its own challenges and things that are maybe not. So

Jeannie de Villiers-Strijdom
we try to help the third year students to get placed at good financial planning firms. And it’s very important that it’s a reputable firm, that is not sales driven, and that the students receive at least for two years a fixed salary, so that they are not cold, calling clients, et cetera. So you know, the results are very mixed. I spoke last year to do some of my old students, and some of them landed with amazing firms, and they are doing so well. And they’ve been in the industry since, and they have happy careers. But I’ve also seen the other side where they had dramatic exposure experience. And yeah, they’ve been thrown up a telephone book and say, do cold calling and sell and your salary is based on you just in commission. So that is, that is not what what I stand for. That is not financial planning.

Louis van der Merwe
So this shows all about the positive evolution of financial advice. And it’s getting to a point where we’re professionals and we’re getting remunerated. If you had to leave a set of instructions for someone to look for a financial planner, let’s say it’s a family member, what would those instructions be? What are the other things that you look for when you would interview a financial planner?

Jeannie de Villiers-Strijdom
Okay, so Well, firstly, the technical side must be there. Yeah, I mean, the academic side is obviously important for me. So I would definitely not consider someone without a CFP qualification because in that way, I know that that person has certain minimum experience and education, you know, they have a certain standard. And they adhere to a certain code of ethics. So that is very important. And then I’m actually a client of an advisor at fin focus in Stellenbosch. And he also has a CFI qualification, which I liked, because I like to talk about the technical side of my investments. So I think that’s a great combination to have. And he’s also an admitted attorney. And when we reviewed our world recently, it was very nice to talk to someone who also has that kind of background. And then very important for me, is empathy. If I’m sitting and talking to someone about my world, and I’m talking about, you know, things that are hard, you know, what will happen? If my husband and I pass away at the same time, what will happen to our children? And will we set up a trust, I want to talk to someone that I can look in the eye and I feel comfortable, and I feel that they relate to me and my fears and my worries, that is very I don’t want to talk to a robot. I don’t want to download a world. I want that tile in my experience. Yeah, that you know, I want to just sit with someone and and talk once or twice a year about my situation and how things have changed. And I’m also very excited about the industry. What are the new products? What are the new trends means and yeah, it’s it’s, it’s a nice feeling to have a place where I know I can can safely have these discussions around financial planning

Louis van der Merwe
that I would love to see those conversations. And I can imagine how potentially intimidating that could be to most financial planners having to present a financial plan to someone that does this for living. Yet, what you saying is what we hear from almost every client,

Jeannie de Villiers-Strijdom
I’m just I’m also just the client, when it becomes personal, it’s different, suddenly you feel a bit, you know, unsure? Am I doing the right things? Am I missing something? So, yeah, I think it’s important that, that even I go to a financial planet, because I also have blind spots?

Louis van der Merwe
Absolutely, absolutely. What are these things that you’re teaching your kids about? Finances? Are you are you going home? And and are they receiving a lecture about financial planning? Or do you have a different way of talking about money to your kids, kids in an intentional manner?

Jeannie de Villiers-Strijdom
Yeah. So my, my children are 13 and 12, almost 13 and 12, respectively. So we we’ve just opened two tax free savings accounts for each child. And, and I explained it to them, because I think it’s a very nice way for them to become interested in investments. And it’s interesting, I spoke to my daughter, I spoke to them separately. And what I want to teach them is not only are we putting away some money for them, and therefore not spending it today, as they would rather do, we are putting it away. And we’re not only putting it away, this money is going to grow so that they can one day go to university or start a business, you know, to it’s an investment in the future. And it’s interesting, my daughter, she I saw that she was processing everything I told her and she said, What’s a company? And what is a share? And what I asked these questions, and she said it was them quiet in the car. And later she said, Mum, is it like you are planting a seed, and then that seed will become a tree? And I said, Yes, you understand. And I think with the research on financial literacy, one of the components is a family, what I call family, financial socialization. And a subcomponent of that is being open with your children about finances. opening a savings account, modeling financial behavior. So we have discussions around money frequently in the house in a positive way. But what we we set limits for ourselves, we have a budget, and and we carefully consider things before we make purchases. So I think they, they’re off to the.it.

Louis van der Merwe
Sounds like they are the right path. One of my earlier guests, my God wrote four books on financial literacy and the for money bears, talk about saving money, spending money, investing money, but also giving money. And that’s such a nice framework that are often referred to with clients, thinking about the four things that your money can do. And creating these money, habits and money stories. I mean, our earliest money, memories start at the age of seven.

Jeannie de Villiers-Strijdom
And that’s that’s where the financial therapeutic process begins. As as I said, I spoke to Susan Bradley. And she said, she also always starts with asking someone but your first memory about money. And and a lot of these parts that form in our brains dictate how we think about money in the decisions we make. So we must start at the beginning.

Louis van der Merwe
Is that a question? We should be asking students almost like an essay in terms of applying to become a financial planner? Because what I’m seeing through the courses that we do is the work starts with yourself. Yes. Yet in the university, there’s very little space for that. Maybe it’s because of the curriculum of the self development work to almost to prepare you to become a better financial planners.

Jeannie de Villiers-Strijdom
That’s a very good point in my and I think as we introduce into the modules, aspects of the psychology of financial planning behavioral aspects. It will it will bring about room for these type of self development questions.

Louis van der Merwe
Jeannie, it’s been wonderful to have you on the show today. Thank you for having me.

Jeannie de Villiers-Strijdom
It’s been a privilege.

Louis van der Merwe
Yeah, it’s just going back to the roots. I wish you all the best for the lives that you’re touching and with your career.

Jeannie de Villiers-Strijdom
I appreciate it.




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