October 11, 2021

Choosing the Right Clients for Your Practice with Rajen Devadason – Transcript

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SUMMARY KEYWORDS

malaysia, financial planning, people, singapore, called, malaysian, philippines, financial planner, diversification, years, money, writing, dollar cost averaging, long, clients, financial freedom, business, book, securities commission, important

SPEAKERS

Gwen Lazarito, Rajen Devadason

 

Gwen Lazarito 

Hey guys, welcome to another episode of the financial planners, South East Asia podcast when here and today we have a multifaceted financial planner. So he’s not only a senior financial planner, but is also a columnist, and author. He’s also a professional speaker and the CEO of our D wealth creation. Ladies and gentlemen, please help me welcome Rajen Devadason on a thank you so much for joining us today Rajen.

 

Rajen Devadason 

Hi, Gwen. It’s actually Rajen. So it’s Rajen Devadason. I am so honored to be on this podcast. Thank you for asking to hear a little bit about my story.

 

Gwen Lazarito 

The pleasure is all mine. So I’m actually very grateful for Hooi Lim for introducing me to you. So I actually did ask a little bit about you from from Hooi. And so I wanted to learn a lot of things from you. But I wanted to start with your origin story. So how long have you been in the financial advice industry?

 

Rajen Devadason 

That’s a good question. Let me think back. Now you actually referred to me as a senior financial planner. I guess my only real credentials for seniority is I’ve been around a long time, and I’ve got sufficient white hair to justify that. But I think I’ve been making money from financial planning for, what 25 years, I think as we chat now in August 2021. If I cast my mind back to 1996, I think that’s probably when I first started making money. And he was specifically about writing on financial planning. So as you well know, because I guess now you get an opportunity because of your podcast to be able to chat with people throughout Southeast Asia who are in the financial planning and financial advice, spaces that most people tend to enter financial planning through fairly predictable paths, they will either come from not either but will come from insurance or they will come from investing or they will come from banking, or they will come from state planning my case, my entry was actually through writing. So this is actually what happened. I won a scholarship when I was 18 years old, to leave Malaysia and to head to London to do my A Levels. And so I stayed on in the UK for quite a while I did my a levels, I did my degree and then I worked in the UK for a short while as a trainee chartered accountant. I left the UK in late 1989. And I had a stack of credit card bills, which I’ll tell you about later. But by the time I managed to land a job in Malaysia, it was I think already like March 1990. And that was with the TV station as a cadet broadcast journalist. And I didn’t stay there very long. I didn’t like it very much. And then I went around looking for another job. And I landed a job as a business writer for a magazine called Malaysian business. And I had a wonderful time there. I stayed with the magazine for 49 months, four years in one month. And you know, because I’ve had plenty of jobs. That by far was actually my best stint as a conventional employee. I was fortunate enough to actually win an award It was called the Citibank pan Asia business journalism award. And at that time, there was like one winner per country per year from Asia, and two winners per country per year from Latin America. And so that, that basically became a two week seminar, I think, basically out of Columbia University in Manhattan. And I got to mix with very, very high quality people had a really lovely time. And so when I got back to Malaysia after that, that award and the ability to go to Colombia and visit Bill Clinton’s White House and go to New York Fed, and let’s see the World Bank as well, it was a wonderful time. And then as soon as I got back to work, and I was at my desk I found out that even though my bosses had put me up for promotion, which is very, very minor would have meant, I think 60 ring get more per month, which is only about 15 US dollars more per month. But the HR department apparently said that because I also got a promotion the year before that, you know, there’s no reason to give me another one. Yeah, just save the the budget for someone else, I was pretty upset. And I then was more open to taking a job as an investment analyst. And ironically, the person who hired me to be an investment analyst for what was then called Standard Chartered securities in Malaysia was actually the same boss who had hired me for Malaysian business. So it hired me and then about nine or 10 months after I had joined, he moved on, and eventually became in a really high caliber investment analyst. And then head of research. So he had offered me a job, I think, a year before, but I was having so much fun that I said, No thanks. And then he offered it to me again, when I was rather disgruntled about losing out on this 15 US dollar per month increment. Yeah. And so I became an investment analyst. And I found that I had gone from being a journalist who was at least externally perceived as being good to being a really terrible analyst. I mean, my, when I made that jump, my salary, increased 200%, which means my income, my monthly income tripled. But my job satisfaction I think plummeted about 90% or so. So I was pretty miserable. And I really felt like I was a lousy analyst. So as I was getting more and more disgruntled on the job, I kept thinking, Well, what is it that I actually want to do? And I had mentioned to you that I’d want a scholarship to do my a levels in London, the scholarship came from the a level college there, it’s called Davis’s college. And it opened many, many doors for me, but my exam results were okay ish. I think by one metric, I probably had like the second highest in the state I was born in which is Malacca, but nothing great, you know, and people are competing at a national level. There’s no reason why I should have been given that scholarship, except that they had also asked for an essay. And I think it was the written essay that actually took me over the hump as it were. A couple of years before that I won a national school essay writing contest. I think the title was right about a mathematician you admire. And I picked Galileo, Galileo. So I remember one school holiday, I went down to Singapore, stayed with my favorite Auntie, I was chatting with her yesterday, actually. And I used Singapore’s very, very well equipped public libraries. This is long before the time of, you know, broad based internet, right? So you had to go to the library and actually get books. So I want that, and then it just opened doors. So writing was always a lot of fun. And so now, I’m in Standard Chartered securities being miserable, right? So I’m thinking, what would I be happy doing? And I figured, you know, if I if I ran my own freelance writing outfit, I’d be very happy. So I’m actually answering your question when how I entered financial planning. So what happened was, I left this incredibly high paying job to start my own business. And then the first month hit me and I realized, oh, no income coming in. highly stressful. Yeah. So because of very, very bad financial planning on my part, I ran out of cash, there was no cash flow. And so I began to sweat bullets. And thankfully, I was actually rescued by a phone call from Singapore. A new magazine was starting up called Smart investor in Singapore. And I went down for the interview and was offered the job. So I went to Singapore and then I don’t know whether you know, because I know you’re based in the Philippines. But from an exchange rate perspective, the Singapore dollar is much much much stronger than the Malaysian ringgit. Right now. The exchange rate is roughly three Malaysian ringgit to one Singapore dollar. Now, to add salt to the wound, as it were, Malaysia and Singapore will actually the same country from 19 from September 16 1963 to August 8 1965 August 1965, Malaysia effectively kicked Singapore out the the Federation that had been formed out of Malaya, Sabah, Sarawak, Singapore and Brunei basically had been invited but it said No, thank you. No, thank you. So when I They’re in Singapore working. This was in 1996. So 25 years ago, exchange rate was 1.8. ringgit to the Singapore dollar. And so you know, Singapore is just zoom the head of Malaysia recently it is the strong man of Southeast Asia. Yeah, a lot of it boils down to leadership. I won’t go into the Philippines because I don’t know very much. But I do know that that one stage, the Philippines was actually the second most successful country in Asia. Second, I think only to Japan. It was

 

Gwen Lazarito 

the tiger economy or something like that.

 

Rajen Devadason 

Yes. And you guys will call Tiger long before Malaysia was and but it really boils down to national leadership. So Singapore has been very, very consistent. So what happened was I was with that team for a while, the magazine was called Smart investor magazine. And I started being sent off to cover financial planning related events. Now, I was really, really interested in financial planning, because in late 89, when I actually left the UK after being there for seven years, mainly in London, but in general, in and around London, I left again, very bad financial planning. I left London with a stack of UK credit card debts. And so I came back to Malaysia. And for many, many years, I actually converted the bulk of my Malaysian earned income to Sterling, I would get a pound draft. And I would mail it back to my branch manager in London, or NatWest bank. And it took me years to pay off, but I paid off every single UK credit card debt that I had. Unfortunately, I’m a very, very slow learner. And so to celebrate getting other UK credit card debt, I got into Malaysian credit card debt long along the way. Yeah, I have been paying attention. And I had actually been learning how to do some of these things. So that second ignominious episode with credit cards ended a lot quicker than the first one. So like I said, I entered financial planning because of writing. And it’s just that I’ve made so many mistakes that people call me a senior financial planner in Malaysia now, simply because I’ve been around a long time. But prior to COVID, if I’m on a platform or whatever, whether I’m speaking at a small workshop, or a seminar or large conference, one of the most important points I bring up is that I tell the people listening, look, I’m not speaking to you, from a position of strength. I’m speaking to you from a position of abject stupidity. But the point is that financial planning is an incredibly powerful process. And if you let it, and if the right people guide you, chances are you’re going to end up much better off than if you never went down that particular path of personal finance. So I hope I answered your question. I hope I wasn’t Wittering on for too long.

 

Gwen Lazarito 

No problem. It was actually really nice. You covered up a lot of points there. And it’s very interesting that you really opened up to us about your story, because I think a lot of us are actually has a similar story. Like for me, I too, came from like a background that I thought that I was really good with money. I didn’t have any credit card until now. I still don’t

 

Rajen Devadason 

have a credit card. operate only on debit cards.

 

Gwen Lazarito 

Yes, I’m still afraid. Yes, I know. And I didn’t have debt. So I didn’t have a credit card. I didn’t have any debt. But I didn’t have savings as well. So and I thought that I was like the best single mother out there because I didn’t have any debt. And I was able to sustain my family and all that. And then I met this financial advisor who became my husband. And he Yeah, and he opened the my mind to why I was missing out on a lot of things. So I think that your your, your story resonates to a lot of listeners to this podcast as well, because we came from a place where we thought that we were good to go. But we really needed financial advice. Which leads me to my next question, is that because you’ve had this background like who is your ideal client now?

 

Rajen Devadason 

Well, that’s a really, really good point. Um, Malaysia is a very, very diverse, very cosmopolitan country. But I am incredibly unhappy with a lot of the government policies. It is my firm belief that over the last 50 Two years because of ill conceived government policies, Malaysians ability to actually compete in a meritocratic global marketplace. That ability has actually been, it’s been weakened. It’s been diluted, for instance, the level of English proficiency among Malaysians. So if you go back maybe 40 to 60 years ago, I think was, you know, pretty much one of the best in Asia, probably second to maybe India and the Philippines. Sorry, third, maybe after Singapore, sorry, beg your pardon, India and the Philippines. But other than that, we were very, very good. But because of misplaced nationalistic policies, Malaysia has been sliding. And right now, every time they do a study on the quality of our local graduates, two things are actually missing. One is the ability to communicate wisely in English. And the other one is actually critical thinking skills. So it’s just very, very sad. And we’re going down a particular path that I think is depressing. That’s not to say there is no hope in the future. Yeah. But things are looking grim at the moment. So I’m not going off on a tangent, I’m actually answering your question. My ideal client is actually a middle to upper management employee, or a business owner. And that individual may own a very large business or just a small SME, it’s fine. But he or she effectively needs to be English proficient. This is not mainly because I’m exercising some level of snobbery. It’s actually because of my own linguistic limitations. So I’m only bilingual and most people in my country know at least three languages, sometimes four, but I’m only bilingual, and it’s only English, Malay. And my Malay is pretty bad. I mean, I can go to a stall and I can order food like sappy and stuff. But other than that, God help you if you’re trying to get a decent sentence out of me and mulay. I remember, before I won that scholarship to do my a levels in London, I finished off the equivalent of all levels in Malaysia, and I got what was a C three, basically our grading system for our at that time, it was called SPM, which, when translated would be MC E, which is goodness, our Malaysian Certificate of Education. So that’s what SPM is in melee. And the grading system basically ran from one to nine, a one, a two, a one was better, and then C three all the way to C six, and then P seven, P A and F nine. Now I ended up getting remarkably a C three, four, my molay. And the only person more surprised than me was my Malay language teacher. And, yeah, it’s usually the day that I went to get the result he said, he saw the results, he would have called me we had the number of the house. Because he I remember when we had our trial exams prior to the big exam, I think I had like the second highest mark in the entire form, but I failed the mulay one mulay paper because he failed me by half a mark, I think he was trying to send a message, and therefore I technically fail the entire exam. So so it’s always my Malays, my mother language skills are rotten. And because of my linguistic limitations, my ideal clients need to be proficient in English. And in terms of my my practice, I’ve actually got four foundational practice principles. And so I don’t accept all clients who approach me, typically, potential clients will approach me because they have read something that I have read, I beg your pardon, they’ve read something that I have written, or they’ve heard me on TV or radio or see me interviewed somewhere, for again, pre COVID because they heard me speak on some in some public event. But I’m, I believe very strongly that the financial planning process is of value to everybody. Now, my licensing regime that I’m under is the Malaysian licensing regime. So I am a licensed financial planner, and my license comes from the Malaysian Securities Commission. Back in 2004. Malaysia became the first country in the world to actually control the term financial planner. And with that came all kinds of restrictions. The pickup in the number of licensed financial planners over the years has actually been quite slow. I think even now, we’re only at the few 100 level. I don’t think we’ve crossed 1000 people in terms of licensed financial planners. So whether it’s 600 or 700, licensees, I’m not really sure. But you must also understand that Malaysia has got two financial regulators, the Securities Commission, and we’ve also got what’s known as Bank Negara Malaysia, which is the central bank. So Bank Negara Malaysia takes care of our banks and our insurance companies. And the Securities Commission, which was established in 1993 basically takes care of the capital market. I have a special place in my heart, the Securities Commission, because on the day that the SEC was established, at that time, I was still writing for Malaysian business magazine, because I wrote for the magazine from work for the magazine from June 1 1990, to June 30 1994. And the Securities Commission was launched in 1993. On the day that it was launched, my cover story formulation business broke the story. So the data the SE launched, I had the chairman of the Securities Commission on the cover, and I remember my cover title was What’s up, Doc? That’s because that time he was Dr. Mani Majid. Now I think he’s done three Malaysian titles dancer, Dr. Mani Majid, and I had done a personality profile on him some time back also for the magazine. So we got to know each other. And he was kind enough to invite me to his home, and I was able to interview him in his home office a couple of weeks before the SC actually launch on that very first day. So yeah, so it’s been good to me. And I’m very, very happy that I actually have the license there. So I was telling you about foundational principles. Yeah. So as far as my practice is concerned, I’ve got four founding principles. I believe financial planning can help everybody. But there are only a few 100 licensed financial planners in Malaysia, that comes under the C’s purview. Under Bank Negara Malaysia. There is another legal designation, which is called financial advisor. And I know grant at the beginning of this podcast, you were effectively using financial advisor as a generic term. So I’m just clarifying issues that as far as the licensing regime in Malaysia goes, financial advisors are one group and financial planners are another very, very confusing because as far as members of the public are concerned, yeah, we’re one on the same. So I hope I didn’t confuse you. So as I said, the Malaysian Securities Commission has been very, very kind to me. And what’s important to understand is that because we Malaysia’s got two financial regulators, the Securities Commission and Bank Negara Malaysia, the financial planning community comes under the SEC and the financial advisor community comes under the comes under the purview of Bank Negara Malaysia. So my licenses is from the SEC Securities Commission. With regard to the types of clients that I take on, because we only have a few 100 licensed financial planners in Malaysia, and we have a total population of more than 32 million people, probably 15 million working adults, you can tell there’s a huge mismatch because the best working definition of financial planning that I know of, and that I use pretty much every day comes from an old version of the CFP Board of standards website yet only you can find it in the current website, the 17 word definition. Financial Planning is the process of meeting your life goals through the proper management of your finances. I just love that definition is so simple. And so I believe that financial planning can help lots of people. But I also very, very jealously guard my my time. And over the years, I have learned that if I have even one client who is a bad fit for my practice, then my quality of life actually plummets. So when people approach me because they have read something I have written or they read something, you know, a quote of mine when I was interviewed, or they saw me on TV or heard me on radio, I try and help them by teaching them the basics of financial planning. But I don’t say yes to everyone who wants to hire me. I’m very, very careful. And so I actually have four foundational practice principles. So I’ll just tell you what those are and then I’ll give you a little more detail. If we start have time. Yep. So my four foundational practice principles are number one, delayed gratification. Number two, it’s diversification. Number three, it’s buy low, sell high. And number four, it’s intense client education. So I actually share this information freely with people who approach me. And then we have a chat. Sometimes we have several meetings before, you know, I actually go ahead and I tell them about my consulting modules, and how they might conceivably hire me Should they want to do that. So when it comes to delay gratification, as you well know, today, gratification is the opposite of immediate gratification. And delay gratification does not mean giving up stuff that is bad for stuff that is good. delay gratification actually means giving up stuff that is good, very often, for stuff that is great down the road. Unfortunately, as I’m sure you can tell, given my two extended periods of problems with credit cards, that delayed gratification does not come easily for me, nor did it come easy. Or nor did it come easily. For my father. My father was actually my late father was actually married four times. My mother, my late mother was his second wife. My father had 10 children in all, and I’m just in the nondescript middle, so second way, second child. And when my father died, my older brother who unfortunately has also passed away, he sat down and did account and he said that our father, who was very much an automotive man, had bought 76 brand new cars in his lifetime. And that’s just the cars that my brother could come up with. So my father, basically, I think, he passed away on April for 2008. He continued to practice law in the state of Malacca, right up to the end of the year 2007. And so my father had a reputation as being a successful lawyer. But he always used to tell me that he was a very bad businessman. And what he actually meant was, he was very bad at managing his money. And so I have a natural predisposition to want to embrace immediate gratification. And clearly, my father did as well. And I’m not saying I got that from him, because I think many of us have this issue. But over the years, over the decades, over the miles, I’ve worked out that delay gratification is very, very important. So ideal client must actually be willing to exercise some level of delay gratification. With regard to diversification. I remember, because my parents actually split out when I was one year old. And so we left my mother took my oldest sister VG and me and also babe in arms, and we left Malacca, and we went to a beautiful town in the north of Malaysia called typing in the state of para. And so we were there for a year I was a baby, so I had no clue. And then we ended up in Mumbai, and I’m actually speaking to you now in Mumbai, which is kind of Central. It’s about an hour south of Kuala Lumpur, you’re driving if you want to want to drive from Kuala Lumpur to Singapore, an hour out of Kuala Lumpur. youthpass seremban. So we ended up in strongman. And when we when I was very young, and we were living in strongman, my mother would sometimes take me to the wet market. And she learned very, very quickly, even as a small boy, I mean, I wanted to help my mother and I would carry bags, but my mother, after a few rather sad episodes, never give Rajan eggs to carry so Rajan doesn’t carry eggs. Okay. So obviously, when I was very young, she also told me, you know, that old saying, don’t put all your eggs in one basket. And that actually, for all of us in in finance, we understand that as diversification. And so when I talk to my clients about diversification, I start off with saying, basically, don’t put all your eggs in one basket. Remember, I was telling you I was complaining about the drop in English standards in Malaysia over the last 50 years, I have had episodes where I have been speaking maybe in, in schools or in churches or in universities, and I’ve had relatively intense or not very intelligent, relatively young individuals. And when I say things like, well, you know the saying, don’t put all your eggs in one basket, and I am very often greeted with blank stares. That’s how bad it is. It’s horrific. So I need to make sure that when I’m speaking to new clients, that they understand what I mean and then I talk about diversification. And then I explained to the clients that I actually believe in three different dimensions of diversification that I will construct portfolios for them with diversification across geographic regions. Which basically would be like the second dimension. The first dimension for diversification, obviously, would be across asset classes. So number one diversification across asset classes using risk of a relative relatively risk, often relatively risk on asset classes. And then I would tell the tell them that depending on what they would like, I can build a combination of savings and investment portfolios using three, four or five asset classes. If it’s five asset classes, the full menu, then I’ll talk to them about cash, talking about fixed income, talk about equities. And because of everything that’s going wrong in Malaysia right now, to the extent that I can, I’m actually far more predisposed to put my clients money in overseas funds outside of Malaysia than in Malaysia. Now I’m, I’m optimistic that you know, something good can happen in due course, but right now until it does, Malaysia, I think is going to not do very, very well. And then of course, COVID is wave five of COVID is hitting every country, I believe, in the Philippines as well. You guys have quite an issue right now. Yeah. There’s some kind of big lockdown in Metro Manila.

 

Gwen Lazarito 

Yes. Yes, definitely. Here too, in in in Cebu. But there’s a lot stricter in Manila. Yes.

 

Rajen Devadason 

Okay. Well just stay very, very safe. So diversification, as I was saying, various asset classes. What was I saying cash, fixed income, equities, investment, real estate. And with investment, real estate, I tell people, it’s not the home that they live in. But if they have brick and mortar investments, like a condo or a house where they can collect rent, or a shop lot, or a warehouse or a factory, or they can just buy rates directly, real estate investment trusts that are listed or they can use real funds. So that would be for asset classes. And then we also talk about alternative investments, of which, you know, you can get used hedge funds, but hedge funds are not readily available in Malaysia. But once the board is reopened, people can always drill down to Singapore advice and hedge funds if they want structured products, foreign currency, various other things. My favorite segment, if that’s the right term, within the alternative investment space, is actually commodities, whether they be soft commodities, or hard commodities, because commodities represent the stuff of life. Our civilization is built upon the utilization of commodities. So I’m still answering your question, the ideal client, are they going to be committed today to delayed gratification? Do they comprehend what I’m saying but importance of diversifying and actually diversifying across three dimensions number one across asset classes, number two across geographic regions, meaning, don’t put all your money in Malaysia, don’t put all your money in the Philippines don’t put all your money in Australia, they’ll put all your money in the US or in China or in India, try your level best to spread your money across the planet. And do all of that. And hopefully you’ll do okay. And then the last dimension of diversification is actually to diversify the insertion of cash flow from risk of to risk on and with risk on investments, you obviously have oscillation of values. During bull markets, valuations will rise during bear markets valuations fall. And so the best way to do that best ways to do that would actually be value cost averaging, and dollar cost averaging, dollar cost averaging is much, much easier to implement. And therefore, we can actually set up an idiot proof plan. And if it’s idiot proof, then chances are you’re going to stick to it a lot longer. So I explained. So as I’m explaining my approach to potential clients, I’m also watching them. Now this is something that I actually learned as a journalist. It’s not just a case of asking who, what, where, when, why and how. You also want to be able to get a general sense and if you’ve been around long enough, you can tell when people are not being genuine, and you can tell when people really are hungry to learn. And I I like working with people. You know, ideally, my practice will grow much bigger if I only accept big clients, fat cat clients, people with with many, many millions of US dollars, and I do have a high end clients as well. But the truth of the matter is, I love my work. I mean, it’s taken me such a long time to get to this point where I can pick and choose my clients. I spoke to you about my late father, when he pretty much closed his practice at the end of two And then seven, he was a month passed his 85th birthday. So from my father, from the perspective of my father’s work in Korea, I actually plan to retire early, meaning I plan to retire at 75. Now I’m actually 57 years old now as I chat with you. So you know, God willing, none of us knows whether we have even one extra day. But when it comes to retirement planning on a global scale, the biggest risk that people face is actually longevity risk, that we will actually live longer than our money can last. And so if I can, I would like to continue working at least to the age of 75. Most people, especially if they are conventional employees, they don’t exactly love their jobs. And quite a few people hate their work. When I have the retirement conversation with them, when they tell me, I can’t wait to retire, and then I want to do and then I say, well, that means you’re not retiring, you plan to do something else. So when I crunch the retirement needs numbers, and at this juncture, I can begin to do it in my head, at least the first iteration, and then I can talk them through and tell them how much they will require and retirement assets and how much they actually have, then we try and work out how much time they actually have. And then we’ll see. But I believe financial planning, as I’ve mentioned already is very, very important to everyone. And so there are times when I actually accept relatively small clients. And I also commit about 20% of my, my working year for pro bono work. So you know, this is to basically help people who can’t pay my fees, but I’ll just help them with the savings portfolio, help them start very, very young, very, very small. And the level of gratitude that you can actually extract or receive from individuals can be very, very heartening. So where was I? Yeah, so diversification, I mentioned that. The third principle is actually buy low sell high, which actually also ties in with dollar cost averaging. because ideally, what we all want is to buy at the lowest point and sell at the highest point at every cycle. But God doesn’t ring a bell to tell us when the lowest point is has been reached or when the highest point has been reached. And so dollar cost averaging, I think, if it’s well structured, is a very, very good way to bring down the weighted average cost of whatever investments you may be putting your money into. And the fourth principle is intense client education. I am looking for long term plans. I’ve got many clients who have been with me for more than 10 years, more than 12 years, more than 15 years, some clients a few 20 years. And I find that very, very heartening. And so we’ve got to the point now where the clients will tell me, okay, can you talk to my children? Can you get them started in the fact that, you know, because to the kids, then I’m uncle Rajan, right. And I’m 57 years old. So I’ve actually had some of the youngsters say, Uncle Rajan, how much longer you’re going to be in the business. So I sort of calmed him down saying, God willing, my target retirement age is 75. So over the next 18 years, hopefully, I can at least teach you what needs to be done. So I hope I’ve answered your question. I’m sorry, I’ve taken so long, but I tried to give you as much detail as possible.

 

Gwen Lazarito 

Oh, that’s actually very nice that you’ve shared that. Because I think this is very important for financial advisors, especially the ones who are starting out that they don’t pick and choose. And that’s because they’re always afraid that the money won’t be rolling in if they start doing that. But I also and I appreciate that you shared this that it’s important for, for you to pick and choose. Because it’s important for our mental health as well and for our longevity in this respective career. Yeah, and I want to tackle on that as well. Well, well, while we’re in this topic, is that why do you think is very important, for or first before? Before that question, I guess, my question would be, when did you start feeling or seeing in your business that your business can sustain if you start choosing your clients instead of receiving everyone who comes to the door?

 

Rajen Devadason 

Oh, I think I made that decision long before the business was large enough for me to rationally start turning people away. I just made the decision that you know, my time is valuable, and what I have to say I think has great value. And so, actually, no, actually very, very early In the arm, I told you that the Malaysian legislative framework for financial planning changed in 2004, when Malaysia became the first country in the world to control the term financial planner, now my wife, Rachel and I, we established our company, which is called rd wealth creation, which you mentioned earlier, when you’re introducing me, we own the company 5050. She just lets me be the CEO. So that’s why you said CEO of rd wealth creation, but my wife lets me do it. So I’m the one who has to work for her. And she does everything that I don’t want to do. Seriously, I’m just telling you, which which audit documents to sign yesterday. And I’m just like, I’m so glad she’s there. Because I really don’t want to think about this nonsense. So I love the business that I’m in, I love the profession that I’m in. But you know, the business structure, just just smile and pay the accountants and the auditors and whatever is necessary. And then let other people do the job that they do better. So we established rd wealth creation in April 2001. So the company has been in existence now for 20 years in four months as we speak in August 2021. And from the very beginning, I actually decided, no, I would be careful. But despite that level of care, intermittently, I’ve actually had clients that were a bad fit. So you know, none of us is a perfect judge of character. And none of us can actually foresee what’s going to happen in the future. So I had a few missteps. But the decision to not accept everyone, that decision I made. More than 20 years ago, when I started the boutique financial planning outfit, I need to take a couple of steps back just to explain to you the timing of what happened. So in 1996, when I was rescued by that phone call from Singapore, and I joined the smart investor magazine team in Singapore, I was down there for a while, I learned the system. And the shareholders of I think it was called Pan Pacific media. That was the company that was publishing smart investor magazine in Singapore. The shareholders had a vision of replicating the Singapore smart investor model in various countries across Southeast Asia, when it made sense for the second experiment, after Singapore to be Malaysia, the second experiment to be based in Malaysia. And so I was transferred back to Malaysia as the founding editor of smart investor magazine. This is in latter part of 1996. And one of the cover stories that I wrote for my Malaysian version of smart investor magazine was of a company called KL mutual care mutual today, it’s called public mutual, same company. KL mutual then and public mutual now is the single largest local Malaysian unit Trust Company or mutual fund company. And I did a cover story on the company. And I remember the title of that was three wise men. So I put the CEO I put the number two person CEOs name was his, well, he’s no longer CEO, but his name is admin chia. The number two person good friend of mine, became a good friend of mine name is one would join. And then the third person on the cover was a guy called Chung, Chung, Chung, he was like the lead fund manager at the time. So three wise men put them there. And I got to know them. This was in 1996. And I, you know, my degrees in physics and computing, so I have a reasonable level of numeracy. But I had never heard of the term dollar cost averaging until in 1996. So really 32 years old at the time 1996 when I was doing that cover story on kale mutual, and then the idea of dollar cost averaging came out. And so I wrote a sidebar on dollar cost averaging. And I must have been really convincing in what I wrote because I convinced myself after the story was published, to trot over to the KL mutual office in seremban, was right near the wet market. And I said I want to invest I want to save and invest a little bit of money. Now this is in 1996, if you remember, or you may be too young, but Asian financial crisis the Asian financial crisis began in 1997 and continued into 1998. So I began dollar cost averaging with my own money in 1996. And I kept that throughout the Asian crisis. And then when things bounce back, after September 1998, I realized I made an enormous amount of money because dollar cost averaging really, really does work. But you have to have nerves of steel, and the whole world is falling apart, you have to have nerves of steel. And so during that period, I did the right thing. And there have been subsequent crises where sometimes I’ve done the right thing and other things. And other times I’ve made mistakes, but I make mistakes. I try and pivot very, very quickly. So in 96, I got to know the senior team in KL mutual. And in 1998, the company actually wanted to write, wanted to publish a book on financial planning. And so freelance writers were invited. Remember, I told you after Standard Chartered securities, I tried to start a freelance writing outfit. Yeah, because of bad financial planning, I was sweating bullets, and then I got rescued by the call to go to Singapore. So finish off the Singapore stint was the founding editor of Smart Investing magazine in Malaysia. And then then I was able to leave employment with smart investor. I, for a short while after that, I had smart investor as one of my writing clients. And then in 1997, I wrote my first book, it was published by times publishing out of Singapore, and it was called your A to Zed guide to the stock market. And then in 1998, my friends that I had got to know in 96, I was one of the external writers invited to make a pitch for this book, and they liked my idea. So I was brought in, and we ended up just before Christmas 1998. Finishing off and then Cal mutual published a book called financial freedom, your guide to lifetime financial planning. I was the external writer. I wrote that book in novel format. So it was a story. It was a series of stories that I love.

 

Gwen Lazarito 

Yes. Sorry. Sorry. I was saying that I love those novel types. So my favorite like finance book is The Richest Man in Babylon. So

 

Rajen Devadason 

Babylon Georges classen is fabulous. Yeah, I, I revisited more than once every year, I loved August classic. I remember when I put my final full stop. On the first full draft of financial freedom. I remember ending the draft, leaning back, my writing, leaning away, pushing away from my writing desk, leaning back in my chair thinking if I die now, I have left my legacy. And so I wrote I co wrote the book. So it was adventure, one joy, and then a chap called Alex ceto. Alex is Malaysian, he was actually hired by Mr. Wong, the number two person to come back from New Jersey because he’d actually been doing financial planning in the US. And so he headed out financial care, Mutual’s financial planning division there. So and then I was just a very blur, external writer. But I had done a little bit of financial planning work in writing in 1996. And plus, I had the whole long history with the credit card, so I had done some reading on it. So I was very happy with that book. So 1998 we co wrote that, and then I worked on another book. Right? I do. But 1999 I did a political bio, which has nothing to do with this story. That bio was called the sebahagian, the life and death of goon squad Stevens. And then the following year in 2000, there was a sequel to financial freedom, which was financial freedom to financial freedom to through Malaysian equities and unit trusts. And again, that second book had three co authors, he was Edmund chia one one joy, Alex had been brought into the for the first book for financial planning, because this was not a financial planning book. He was an equities book, Alex wasn’t there and then it was me. So three co authors for the second book and four co authors for the first 1998 and 2000. Now you can imagine, even though I’m very, very, very slow learner, it was remarkable I mean, learning from people who are so much smarter and then having to write and rewrite and think and simplify. And so when even after the first financial freedom book came out, it was actually a best seller the financial freedom one was published in English and then I think in Malaya and then I think they came out in Chinese financial freedom to only in English, but the the series raised because I was I was actually quite good I, I negotiated a very, very good writing contract, so I made quite a bit of money. But the net proceeds after they had done the publishing and the printing and paying off me for ongoing royalties, we still managed to raise 800,000 ringgit for Malaysian charity. a whole slew of charities I was very, very happy with that project. We help people. So that basically was how I gained, I guess, an educational base in financial plan. But the book came out the first book came out in Christmas 1998. Very soon after that, people started approaching me asking me for financial planning advice, asking me to help them and I said, I really can’t I mean, I’m just a writer. And so, it took two or three years after that, I think a couple of years after that, before I actually earned my CFP. Now in Malaysia, the Certified Financial Planner, standard, professional mark, is governed is it’s taken care of, in Malaysia by FM, the Financial Planning Association of Malaysia, both limpy and I, because you mentioned we just now were involved as speakers and writers for the Financial Planning Association. She’s very, very good. She’s, she’s got a giving heart. And she’s a very, very successful financial planner. The bottom line is that once I got my CFP, Mark, then I thought, Okay, I have credentials, maybe I should start thinking about, you know, starting a boutique financial planning practice. And so after I got my CFP, that’s when I started my boutique financial planning practice. And that ran for, I think, three years until the legislative landscape in Malaysia changed and then I moved from one company to the next, etc. So right now, my financial planning principle company is actually the Canadian giant, Manulife Manulife has about a trillion Canadian dollars under management split relatively equally between the life fund, as well as the asset management side. But clients, when they hire me, they hire me through my company, which is rd wealth creation.

 

Gwen Lazarito 

That’s very interesting, because I feel like not everyone has really decided, like, when I actually I mentioned that, I used to be like a risk advisor. And I also had that idea that I wanted to, you know, pick and choose my clients. But a lot of my colleagues actually told me that it’s not really for us to decide, because here in the Philippines, we still work on commission. But I felt like it was important for us to to have that freedom to plant that seed now, so that we can sow it later. Because you mentioned like your your time was was important to you. And I think it because it is important to you that others will be able to see that your time is really important. But also I feel like mental health is also important, especially nowadays that you it’s really better for the longevity of your business to work with people that you actually like working with. So yeah, so that’s why it was very interesting that you were able to really have that discipline to pick and choose the ones that you felt was a good fit for you. So I guess wrapping up, I’d like to ask you, what would be your The best advice that you can give to, I guess, up and coming financial advisors or for those who financial advisors who are really hit by the pandemic and the, like the ongoing crisis nowadays, just to keep pushing through. A few

 

Rajen Devadason 

years ago, I created something called the Rajan David Dawson blueprint for financial freedom. And there are various iterations of it. You can do one set for conventional employees, another for business owners, and particularly when COVID basically exploded across the planet who declared a global pandemic on March 11 2021. week later Exactly. On March 18 2020. Malaysia shut down. I guess it happened. I’m not sure what the exact date is for the Philippines. But basically every country fell like dominoes. And what I found during the questions that were posed to me by journalists, in the early months of the beginning of the audit, we call it the gvcw. The great virus crisis is that the blueprint that I had put to Gather would also help businesses. And I’m sure what’s happened in Malaysia has also happened in the Philippines, we have had countless restaurants shut down permanently. We’ve had many, many hotels shut down. God knows how many airlines worldwide have actually basically just, you know, closed their doors, and I’m not going to fly anymore. So this particular blueprint has got five elements. So what I’ll do is I’ll share the elements and then I’ll, I’ll give people an opportunity if they actually want to learn about the blueprint for me, I actually run these free webinars pretty much once a month, and I talked about the blueprint. So if that’s okay with you, then I’ll just give them the details. But to begin with, definitely the the five elements of the blueprint are, number one, it’s actually active income, this is for an individual, if you’re running a business, then it’s the revenue that you bring in for a business that is not running on autopilot. If you stop turning up, you’re not gonna make any money. So you got to work on your active income. And very simple question is, do you want to have more or less? And the answer, obviously, is you want to have more? The answer is always you want to have more. And so how do you make sure right now we’re in a unique crisis situation, but things will eventually get better, this too shall pass and life will get better. It’s very, very important that we actually consistently maintain that message, because quite a few times when you have talked about the importance of maintaining mental health, and, you know, the number of suicides, attempted suicides, it’s just so tragic, what’s going on. And I think as people who have a professional foundation that actually can make a difference to the people of the world, to the adults of the world, it is our responsibility to try and communicate hope. And the way that a particular household or particular individual would need to strengthen his or her finances, grow your active income, and how do you grow your active income, you work harder, and you work smarter. And you know that I don’t know what the standard is in the Philippines. But in Malaysia right now, as with many parts of the world, normally when you talk about a full time job, people are working 40 hours a week, maybe five days a week, is that pretty similar in the Philippines, so you guys work longer hours?

 

Gwen Lazarito 

Yes, it’s like the work hard. And just work hard. Play hard, but still work hard. I work harder.

 

Rajen Devadason 

Yeah, but my question is, is 40 hours a week pretty standard in the Philippines?

 

Gwen Lazarito 

I’m not sure because I’m not in that industry anymore. But I think so. for Australian so they’re very into like, no overtime, but

 

Rajen Devadason 

oh work work life balance. But anyway, the the message that I put across in the Ratan Davidson blueprint for financial freedom is, particularly during this period of crisis COVID has made the world poorer, which means COVID has made the average human being poorer. And we can either just sit back and say, well, we’ll want to us this is the way it’s going to be. Or we can say, No, I don’t accept it. COVID may be stealing well, but I choose to continue to grow my wealth. And that means at least maybe for the first for the next 234 years, I think we’re gonna have to work harder and smarter than we ever have before, which I think for a lot of people will mean you say goodbye to the 40 hour week. And this may not sit very well with our Aussie crowd, but I’m just telling you where I’m coming from. And, you know, if you had cut, your hours have been cut, maybe you got to take on an additional part time job or a second part time job. If you’ve lost your full time job, maybe you need to take on three or four part time jobs. But I really think that for those who want to continue to increase their wealth, they got to focus on active income, and they’re going to have to say goodbye to 40 hours a week and consider a new norm of working 50 hours, 60 hours, 70 hours, the really hardcore people will be 80 to 90 hours. I recommend nobody goes past 90 hours a week because that’s how people drop dead from heart failure. But for a short season, to make sure that you maintain your income work harder than ever before. The next element, of course, is what I call operational expenses. Now, operational expenses are what we pay to maintain our lifestyle. What is your base currency in the Philippines right now? Is it pesos?

 

Gwen Lazarito 

Yes, Philippine press? Oh, yeah. Right. Okay.

 

Rajen Devadason 

So for a mid level individual in the Philippines, what would be an average salary or sorry mid level Executive what would be an average salary in pesos per month?

 

Gwen Lazarito 

I guess it would be around 2030 per once. 20 30,000 20,000 pesos to 30,000. pesos? Yes. Okay, so

 

Rajen Devadason 

let’s just assume it’s 30,000. I bet you in Cebu right now, you know, people who are earning 30,000 pesos a month and spending 30,000 pesos a month. And you also know people who are earning 30 and spending 25, earning 30, and maybe spending 20. And at the other end of the scale, you’ve got people who are earning 30,000, but spending 32,000, or 35,000, or 40,000, operational expenses come in. And so ideally, if you are serious about building up your finances and getting to the point of solid financial freedom, then you have to proactively decide that you will work hard to get your active income up, and you will control your operational expenses, using a written budget, not a budget in your head, a written budget pen on paper, or on an Excel spreadsheet. And so if you manage to get your operational expenses under control, then your active income grows. Because you’re working harder and smarter, you don’t spend as much you’ve got excess money, that excess money should go toward paying down your portfolio of debt. And there are various strategies to pay down your portfolio of debt. And so you meet all your normal monthly payments. And you also try and accelerate your payments because as we eliminate our debts, we actually de risk our lives. It’s very, very important. Every time we hit a crisis, and remember that this particular GVC, this great virus crisis will pass. Yeah, five or 10 years from now, another crisis will hit. And it will hit us from an unexpected direction. And every time a crisis hits, most people suffer. But there will always be a minority that enters this new crisis ready, crisis ready. And the people who are crisis ready, come out the other end far wealthier. And the two traits that they actually share are zero debt, a very low debt, and huge cash buffer or cash reserve position. And I call the cash reserve position, the emergency buffer the ebf. So of the five elements in my blueprint, I’ve given you four active income, operational expenses, take care of your portfolio of debt, build up your emergency buffer fund, and then hopefully you still got money to flow through and you got to start building your portfolio of wealth, which should be geared toward generating passive income. So that’s a lot of stuff and we can’t cover everything in this podcast. But if anyone actually wants to learn more about it, there are a couple of things they can actually do. So my name is Rajan, David Dawson. I’m sure if you’re listening to the podcast, they will have the correct spelling. People are welcome to connect with me on LinkedIn. People are welcome to follow me on Twitter. And I also run these I run at the moment I’ve got a suite of three webinars. Two of them are free and one is a premium paid one but all the information is actually found at Learn dot Rajan David dawson.com. So that’s HTTPS then it’s learn le AR n dot n Rajan David Dawson ra GNDV a DEA s o n.com. That’s pretty much it. Really, I thank you for the remarkable amount of time you’ve given me but I guess they’re gonna have to slap this down. This is way over the time that you

 

Gwen Lazarito 

that’s fine Rajat. So thank you so much. I will put all of those links to your your LinkedIn and your Twitter handle, as well as your website as well so that they can learn from and get to know you more and contact you possibly, if they’re interested in knowing more about or being part of your webinars or thank you so much for coming in. And very, very well said. Nothing beats being prepared, and I definitely definitely agree. So thank you so much, again, for coming on to the show. And yeah, let’s let’s get out of this pandemic. richer with a healthier, mentally and financially.

 

Rajen Devadason 

Absolutely, Grant. Thank you. I’m so honored that you actually reached out to me and I hope what little I had to say was of some use to some people. Care of Yourself, and I hope we get a chance to chat again soon.

 

Gwen Lazarito 

Yes, definitely. Definitely. So thank you so much, Rajiv, have a good one.

 

Rajen Devadason 

All the best way. Bye Bye. Take care.

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