Loyalty comes at a price - sometimes to yourself!

By Neels Stander

The other day I had the opportunity to consult with a TREOC member and his wife to advise them on the critical importance of life cover (Risk cover) for their TREOC Trusts - their money making machine. The answer I received from the client stunned me, to say the least. He informed me, with great bravado, that "he was not planning to die" and therefore acquiring life cover of any sort, would be a waste of money.

After consulting with him for almost an hour, and by seeing the desperation in his wife's eyes for me to talk sense into her husband, the client realised that it was necessary/essential for him to take sufficient risk cover for his trusts/money making machine. Approximately halfway through completing the application form, he stopped and asked me "if he couldn't take the insurance policy out through his own broker". How is that for irony, the client firstly doesn't "believe" in insurance, but has "his own" insurance broker.

I asked him the following questions -

• Is your broker/financial advisor a property investor?
  
• Is your broker familiar with the TREOC Way and the TREOC double trust structure?
  
• Does your broker understand the complexities of refinancing and property investing?
  
• Does your broker have access to a unique customized computer program that can calculate to the nearest cent how much risk cover he would need for his property portfolio's current and future shortfalls?

To all the questions he answered: "no, not that he was aware of ".

I then described the scenario of opening a multi-million rand business. I asked him whether he would employ only the best/most competent and experienced people to manage his business and advise him on the finer matters of the particular industry, or would he employ any old " Dick, Tom and Harry" because he knew them from way back. His answer was that he would only employ the best/most competent people.

I looked him in the eye and asked him why then in heaven's name, would he want to make use of an advisor who knows nothing about his multi-million rand property/money making machine/business. Doesn't his property portfolio deserve the best possible advice that money can buy, and with that he proceeded to complete the application form.

As you can see dear reader, when it comes to you and your family's financial security, you owe it to yourself and most of all to your family to get the best advice possible. The insurance industry does not cater for a property investor's needs; it does not even promote individual property investing. It trains a sales force to sell endowment and annuity policies to the uninformed public.

Research has shown that most financial advisors rarely invest in the products they sell to their clients. Just the other day, I met with and spoke to a few financial advisors that attended one of our TREOC seminars in Gauteng. They were amazed by the TREOC concept, and the feedback was that they couldn't wait to implement it in their own lives. I asked if they were going to tell their clients about the power of investing in property and the TREOC seminars. You can guess what the answer was - a resounding "NO" It makes you think, doesn't it?

There still are a number of TREOC members that make use of "their own broker", only because of the loyalty factor, that they have known him/her for years or he/she has always managed the family's (including their parents) financial planning. More often than not, he/she is the culprit that sold them and their parents the endowment and annuity policies in the first place. With financial advisors/brokers like these, who needs enemies?

Imagine if the first financial advisor that you or your parents for that matter had met years ago, had advised you against endowment and annuity policies, and had advised you to buy entry level rental properties. How would your (or your parents) financial situation look today? Does your "own" financial advisor really deserve your business and loyalty? Sometimes it makes my stomach turn to think what a difference it would have made to many of our members' lives, if their financial advisor was a TREOC Risk Managers financial advisor from the start.

At TREOC Risk Mangers, we will always promote property investing and the finer matters associated with it. We will assist and advise all TREOC members in taking out sufficient risk cover, which will be structured correctly according to their TREOC trust structure, for maximum tax efficiency.

Choosing a financial advisor is for many people an emotional decision, it should not be. The financial advisor should be a property investor himself, someone who understands the TREOC Way, who can add value to you. If not, you should walk away.

You have a new investment vehicle, your new TREOC property money making machine - compare it to a high performance Ferrari. You would only surround yourself with experienced, competent and specialised Ferrari mechanics. Likewise with the TREOC service providers, experts in the services you require to make your money making machine run smoothly and at high revs.

Finally, a point to remember - the backup oilcan, your risk insurance policy!

Happy House Hunting!