Blue Chip Journal, Issue 77

christoffscholtz

Blue Chip is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.

Issue 77 • October 2020

www.bluechipdigital.co.za

The Official Publication of the FPI

How to navigate

volatile markets

Florbela Yates, Momentum

Investment Consulting

THE GREAT

DEBATE

ARE BOUTIQUES BETTER?

The value of a

life-centred approach

Financial planning with life planning at its core

MEET THE THREE FINALISTS

FPI Financial Planner of the Year 2020

Johan Swart • Hester van der Merwe • Henri Le Grange


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LOCALLY.

OF INNOVATION


ONTENTS

ISSUE

77

OCTOBER 2020

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06

08

12

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22

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26

31

WHAT’S HAPPENING AT THE FPI?

Message from the CEO

EDITOR’S NOTE

By Alexis Knipe

ON THE MONEY

Milestones, news and snippets

MONEY TABOO

The University of the Free State introduces its

innovative financial coaching programme

ASSET MANAGER HEADWINDS

For a well-established industry, there is a surprising

amount of ongoing changes taking place

NAVIGATING SUCCESS

Blue Chip sits down with Zisanda Gila, Lead Portfolio

Manager, Momentum Investments

CAN SOUTH AFRICANS REBUILD THEIR WEALTH

AFTER LOCKDOWN?

Andrew Ratcliffe, Private Client Wealth, on how

to manage your finances in the mass economic

devastation that the coronavirus has left in its wake

RETIREMENT PLANNING IN THE TIME OF COVID

Nedgroup advises on how to navigate a

smoother retirement

LEADING BY ACTION

Blue Chip catches up with Kondi Nkosi, Schroders,

Country Head, South Africa, to find out what is

happening in the offshore investments sphere

HOW TO NAVIGATE VOLATILE MARKETS

Column by Florbela Yates, Head of Momentum

Investment Consulting

WHY SOUTH AFRICA IS AN ATTRACTIVE

DESTINATION FOR INVESTORS

Petroleum Agency SA invites the world

to discover our nation’s riches

BOUTIQUES ARE BETTER – RIGHT?

The great boutique debate

IDENTIFYING, PARTNERING AND GROWING

Zama Zulu, Portfolio Executive at RMI IM,

tells Blue Chip about her role in mentoring

South Africa’s top investment talent

32

34

36

38

40

42

44

46

48

50

52

54

56

TUNING IN TO THE BEAT OF HER INNER DRUM

Alida de Swardt, CEO of RMI IM, inspires leaders to use

their skills combined with positive energy and a growth

mindset to successfully achieve goals

ARE YOU WORKING IN THE MESSY MIDDLE?

The balance between financial security and living well

MANAGING HUMANS NOT ASSETS

An overview of the Humans Under Management

South Africa 2020 virtual conference

WOMEN IN FINANCE

The power of women coming together

WOMEN AS FINANCIAL PLANNING CLIENTS

Creating value for the female market

WEATHERING THE STORM OF COVID-19

Financial planning coach Louis van der Merwe speaks

about benefitting from the shock

THE VERY FIRST FINANCIAL PLANNER

OF THE YEAR

Debbie Netto-Jonker, CFP®, Financial Planner of the Year

2001, recalls what winning the award meant to her

10 REASONS

Why you should not miss the

2020 FPI Professionals Convention

FIVE “AHA MOMENTS” TO LOOK

FORWARD TO AT THE 2020

FPI PROFESSIONALS CONVENTION

The first-ever 100% digital FPI Professionals Convention

THE POWER OF SUPERIORITY

Michelle Hoskin inspires all to make

excellence your standard

BE THE EXAMPLE

Kate Holmes on bringing your absolute best self

to your clients

BUILDING A FINANCIAL PLANNING BUSINESS

Kim Potgieter reveals the value of a life-centred

approach in financial planning

WHY CHINA? WHY NOW?

Satrix deliberates if now is the time to be

investing in China

2 www.bluechipdigital.co.za


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FOREWORD

Lelané Bezuidenhout CFP®, CEO, Financial

Planning Institute of Southern Africa

What’s happening

at the FPI?

Planning for the first-ever FPI Professional Digital

Convention 2020 enters the final phase. And an MOU

with the Actuarial Society of South Africa.

Greetings from a slightly warmer Johannesburg.

I can’t believe it has been three months since

I last wrote to you. 2020 has been unique in many

ways and the full reliance on technology during

lockdown opened so many doors via quite a few digital

platforms, enabling us to stay in contact with our members

and key stakeholders.

We are busier than ever and between planning the

Convention and doing our bit to help our members (and

their clients) navigate the economic wake of the pandemic,

we are focusing on fully embracing the lessons we learned

from these shaping, turbulent few months.

Covid-19 highlights the value of an FPI membership

With the growing national budget deficit and real GDP

expected to plunge, you don’t need me to tell you that

times are tough. Financial planners and advisors may not be

frontline workers in the conventional sense of the world –

but we certainly are at the coalface of the economic struggle

facing many normal South Africans.

The advice we give our clients and the strategies we

implement for them could very well be the difference

between making it through the pandemic unscathed and

being financially devastated by it.

Now, more than ever, your clients need a financial advisor

they can trust; someone who can implement a tailormade

financial planning strategy that will help each family to

weather the Covid-19 storm as effectively as possible.

At times like this, clients need to know that they have

entrusted their wealth and financial wellbeing to the very

best in the business – you, a proud professional member in

good standing with the Financial Planning Institute.

Our first digital FPI Convention is just around the corner

Planning the Professionals Convention is always timeconsuming

– but we don’t usually have to conjure up a

venue out of thin air! Putting together our first digital event

of this magnitude hasn’t been easy, but it has been extremely

educational and it has also been richly rewarding to see how

our team has pulled together to come up with an event that

promises to deliver a very successful 31st convention.

As always, we have a fantastic blend of local talent and

international speakers covering the latest trends in financial

planning including:

• Integrating coaching and financial planning

• How to succeed in the new game of business

• Transition to fee-based practices

• Succession planning

• Embracing Financial Planning technology (FPtech) into

your practices

• Behavioural coaching

• Regulatory updates, and much more

Then, one of the biggest decisions has been choosing

a platform to host the Convention on, and I am happy to

announce that we have partnered with the best of the best.

Asset TV has years of experience in connecting the financial

community digitally and their virtual conferencing platform

will not disappoint. We have recorded previous sessions

with Asset TV and feel very comfortable that the financial

planning event of the year is in very good hands.

The Convention provides 11.5 verifiable CPD hours and

will take place on 27 and 28 October 2020. Don’t miss out!

Register at www.fpicpd.co.za

4 www.bluechipdigital.co.za


The advice we give our clients and the

strategies we implement for them could

very well be the difference between

making it through the pandemic unscathed

and being financially devastated by it.

Take care of your CPD requirements with our Convention package

To assist you in complying with CPD requirements – whether Regulatory and/or FPI

professional member CPD hours, FPI has put together an affordable and extremely

convenient package that will help you to obtain most of your verifiable CPD hours in one

fell swoop. The package to members and non-members includes:

MEMBERS

• (Online) FPI Professionals Convention

• Estate and Tax Online Forum

• Retirement and Investment

Online Forum

• Annual Refresher (face-to-face event)

Stronger together: We’ve signed an MOU with ASSA

In giving further effect to our strategy and mandate, FPI recently signed an MOU with

the Actuarial Society of South Africa (ASSA) that will see us work together to improve

the long-term financial wellbeing of all South Africans and their families. For decades,

both organisations have worked hard to give input on regulatory changes, to educate

consumers and generally improve the financial health of all South Africans. But now we

will support each other’s views as it relates to our respective mandates for the greater

good of the consumer. If the last few weeks are anything to go by, I am convinced that

combining our skillsets will be great for all of our members and the South African public.

Onwards and upwards

While the first wave of the pandemic seems to be tailing off, all of us in the financial

planning industry know that the real hard work is yet to come. As financial planners, we

need to band together to help South Africans to not just withstand the economic impact,

but to emerge stronger from it.

Hope to “see” you at the Convention…

Warm regards,

Lelané Bezuidenhout CFP®

CEO, Financial Planning Institute of Southern Africa

NON-MEMBERS

• (Online) FPI Professionals Convention

• Estate and Tax Online Forum

OR Retirement and Investment

Online Forum

• Annual Refresher (face-to-face event)

At times like this,

clients need to

know that they

have entrusted

their wealth

and financial

wellbeing to

the very best

in the business

– you, a proud

professional

member in good

standing with

the Financial

Planning Institute.

SAVE THE DATE!

FPI Professional Digital

Convention 2020

This year our FPI Professionals

Convention will take place entirely

online. Members can log in to the

event on 27-28 October 2020.

Visit fpi.co.za and download the

awards guide for more information.

www.bluechipdigital.co.za

5


EDITOR'S NOTE

A wealth

of words

It is time, again, for the FPI Professionals Convention and this year the Convention

celebrates its 31st year. Another reason for celebration is that the three final

contenders for FPI Financial Planner of the Year 2020 have been announced. Three

CFP® professionals stood out this year for their expert knowledge and superior clients

service: Hester van der Merwe, Henri le Grange and Johan Swart. Congratulations! The

winner will be announced at the FPI Awards Ceremony on 27 October. Blue Chip will be

interviewing the winner in our January 2021 issue.

The golden thread that runs through this issue of Blue Chip is seeing beyond the money

to the human need. Rob Macdonald, Fundhouse, suggests in his article, Are you working in

the messy middle?, that perhaps it is time for financial planners to acknowledge that their

primary role is to help clients achieve a life well-lived. On page 52, Kate Holmes attests

that by moving beyond the numbers, you can show clients the true value of financial (life)

planning. Kim Potgieter, in her article Building a financial planning business, contends that

for life planning to be successful, it must be at the core of everything you do as a business.

It needs to be part of your DNA, your values and your culture. And it has to be authentic.

After entering the financial services industry 13 years ago, Kim Potgieter realised that

it was a male-dominated industry with little support for females. Kim felt strongly that

women in the sector needed a forum to meet, share experiences and learn from each

other, so in 2013 she founded the Women in Finance Network (page 38).

Palesa Dube, Wealth Creed, argues that the finance industry must become deliberate

in creating a value proposition that speaks to the needs of the female market if we are to

make any meaningful strides in attracting this market segment. Research shows that, in

South Africa, only 3.5% of active funds are managed by a female portfolio manager or a

female-only team. Alida de Swardt, CEO of RMI IM, is passionate about the empowerment

of women in financial services. “There’s a lot of research that shows that diverse workforces

achieve so much more,” she says in Tuning in to the beat of her own drum on page 32.

RMI IM forms part of our focus on boutique managers, and James Downie, MitonOptimal

debates whether it is better to invest in a boutique manager or a more established manager

(page 26). Each article in this issue delves deeper, debates, deliberates and delivers a wealth

of insight into the makings of a blue-chip financial planner. Enjoy the read!

Alexis Knipe, Editor

Blue Chip Journal – The official publication of FPI

Blue Chip is a quarterly journal for the financial planning industry and is the

official publication of the Financial Planning Institute of Southern Africa

NPC (FPI), effective from the January 2020 edition. Blue Chip publishes

contributions from FPI and other leading industry figures, covering all

aspects of the financial planning industry.

A total of 10 000 copies of the publication are distributed directly to every CERTIFIED FINANCIAL

PLANNER® (CFP®) in the country, while the Blue Chip Digital e-newsletter reaches the full FPI

membership base. FPI members are able to earn one non-verifiable Continuous Professional

Development (CPD) hour per edition of the print journal (four per year) under the category of

Professional Reading.

Special advertising packages in Blue Chip are available to FPI Corporate Partners, FPI Recognised

Education Providers and FPI Approved Professional Practices.

blue-chip-journal

ISSUE 77 | OCT 2020

Publisher: Chris Whales

Editor: Alexis Knipe

Online editor: Christoff Scholtz

Designer: Simon Lewis

Production: Lizel Olivier

Ad sales:

Sam Oliver

Gavin van der Merwe

Jeremy Petersen

Bayanda Sikiti

Venesia Fowler

Managing director: Clive During

Administration & accounts:

Charlene Steynberg

Kathy Wootton

Printing: FA Print

PUBLISHED BY

Global Africa Network Media (Pty) Ltd

Company Registration No:

2004/004982/07

Directors: Clive During, Chris Whales

Physical address: 28 Main Road,

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Postal address: PO Box 292,

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www.bluechipdigital.co.za

Tel: +27 21 657 6200

Fax: +27 21 674 6943

Email: info@gan.co.za

Website: www.gan.co.za

No portion of this book may be reproduced without written consent of the

copyright owner. The opinions expressed are not necessarily those of Blue Chip,

nor the publisher, none of whom accept liability of any nature arising out of,

or in connection with, the contents of this book. The publishers would like to

express thanks to those who support this publication by their submission of

articles and with their advertising. All rights reserved.

6 www.bluechipdigital.co.za


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On the money

Making waves this quarter

Focus on: The technology sector

TECH SECTOR ONE OF A FEW TO SEE POSITIVE EARNINGS GROWTH

The technology sector has been one of the major beneficiaries of the current pandemic. Technology,

staples and pharmaceuticals were the only three sectors to record positive earnings growth in the

second quarter of 2020 in the US, while overall US earnings growth was down 33% year on year.

Covid-19 has fast-tracked some of the structural trends that were already playing out, as entire

populations have had to embrace e-tail and working from home for the first time. While some of this

shift will be permanent, there will be parts of tech spend that were merely a pull-forward of demand,

and as such are not sustainable going forward. Careful analysis is required to distinguish and quantify

these shorter-term effects and reflect them in valuations.

As the economic growth starts to recover, we are likely to see a recovery in cyclical and leisure stocks.

This rotation may be funded by tech stocks as they have been the clear winners to date. However,

underlying tech fundamentals remain extremely strong and in fact many structural trends have been

further entrenched.

• By Nicole Agar, Senior Portfolio Manager & Lead Tech Analyst, Truffle Asset Management

“Underlying tech fundamentals remain

extremely strong and in fact many structural

trends have been further entrenched.”

– Nicole Agar

Emigrant retirement 3-year capture

South Africans who have emigrated or plan to permanently leave South

Africa have until 28 February 2021 to effect financial emigration. National

Treasury has laid down the new law: the consequence otherwise is your

retirement money will be locked in for three years, you are not allowed

to touch it, and best apply it to your personal circumstances.

The time is now

South Africans leaving South

Africa have little over four

months to financially emigrate

under the current dispensation,

and thereafter to withdraw their

retirement funds, before it is

locked in for a period of threeyears

minimum.

• Jonty Leon, Legal Manager for

Expatriate Tax Compliance at Tax

Consulting South Africa

8 www.bluechipdigital.co.za

Satrix hosts first virtual JSE listing

It is Satrix’s 20th-anniversary year and we had plenty of celebratory

plans to fill up everyone’s diaries. Then Covid-19 hit, and holding

happy gatherings became a thing of the past. Adapting quickly to

the new normal, the Satrix team changed direction to still make

things happen.

The result was another first for Satrix, introducing the industry

to virtual listing events for ETFs on the JSE. Our first event was

held earlier in May this year when we listed the Satrix SA Bond

ETF. We then took it up a notch in July by listing the Satrix MSCI

China ETF, along with an initial public offering (IPO). This digital

listing event meant that the entire Satrix team, all stakeholders

and partners as well as every single client who had participated

in the IPO on our digital platform, SatrixNOW, could be invited

to attend the event.

In total, we had over 500 attendees who enjoyed a digital

walkthrough of how the trading screens operate by the JSE’s

Martin Koch as well as experiencing the blowing of the iconic

kudu horn. At Satrix, we are constantly innovating for our clients.

We have a few more ETF listings planned for this year. Please look

out for them.


On the money

Making waves this quarter

Cryptocurrency: The chameleon commodity

Daniel Kibel, co-founder of CM Trading, shares insight on the current

cryptocurrency landscape: “The cryptocurrency market is still relatively

new and it has completely changed the trading landscape. Regulations

are still quite lax in the crypto space and it’s a particularly volatile

commodity. But it rose to widespread popularity almost overnight

and has seen an unprecedented boom during the pandemic.

Global crypto standards

“The South African cryptocurrency exchange is called Luno.

It was established in 2013 and is based in London. Luno was

recently acquired by the New York-based Digital Currency

Group (DCG), who have backed more than 160 blockchain

companies in 35 countries.

Trading in crypto – the upsides

“Buying crypto and holding onto it may be a viable passive investment.

But trading Bitcoin also means you can speculate and potentially profit

regardless of whether the price goes up or down.

“Ultimately, the volatility of cryptocurrencies is what makes it

such an interesting and exciting space to trade in. Quick

price changes can bring increased risk but also potentially

higher returns. If you would like to get involved in the

cryptocurrency space, begin with thorough research on

the current trading environment. And most importantly,

partner with a reputable trading company.”

• www.cmtrading.com

What’s making the rand tick

• Bianca Botes, Executive Director at Peregrine Treasury Solutions

The rand’s nadir in 2020 came unexpectedly just

over a week into South Africa’s extreme lockdown.

The local unit bottomed at R19.08/$ on 6 April

2020. After its rapid decline to that level, it spent

the next six months in a generally strengthening

trend, although experiencing setbacks along the

way. By 18 September, the rand had clawed back

over 15% of its value to reach R16.13/$.

But this was still some way off the R13.99/$

level at which the rand kicked off the year. And

while the timing of the rand’s recovery mirrors

the country’s lockdown, it’s important to realise

that the two are not connected. If local factors

were being taken into consideration, the rand

might have moved in the opposite direction.

As a result of the lockdown, the South

African economy suffered untold damage

with estimates for 2020 growth ranging from

a contraction of 8% to 12%, while the global

lockdown measures and risk factors weigh

heavily on the local currency.

The SA economy needs stimulation

There aretypically two levers to stimulate a

faltering economy: fiscal stimulus and monetary

stimulus. Traditionally, fiscal stimulus is an increase

in government spending combined with a

reduction in taxation, while monetary stimulus is

deployed by the central bank, consisting of interest

rate cuts and the purchasing of government

bonds, also known as quantitative easing (QE).

In effect, these measures leave more money in

the hands of businesses and individuals, which

increases their ability to spend money on goods

and services, thereby boosting the economy. QE

has not been used for stimulus, stating that it is

purchasing bonds in the secondary market to

provide liquidity and is not QE, the essence of it is

the same: purchasing government bonds, albeit

not directly from the government.

Can this save SA's economy?

Two questions arise on the back of the

aggressive stimulus deployed: 1) Is it sufficient to

save South Africa's economy? Most likely… “no”.

The local economy was in a recession before the

pandemic, and the subsequent lockdown will

see economic turmoil for years to come. With

the mass closure of businesses, we saw a rapid

increase in unemployment. This will, in turn,

lead to additional fiscal pressure.2) Where to

from here? One cannot rely purely on stimulus

to save the economy. While it remains a valuable

tool for cyclical downturns, it cannot correct or

counter structural shortcomings. Government

policies will require drastic reform towards progrowth

economic policy that will aim to attract

foreign direct investment (FDI), and support the

business environment.

Where does this leave the local currency?

Stimulus, in the absence of demand shocks such

as those brought on by the lockdown, will lead to

inflation, and the devaluation of currency. In the

absence of demand, stimulus will fail to generate

an uptick in inflation; however, the lockdown

is not infinite, and should too drastic measures

be taken now, such as allowing the SARB to

purchase government bonds directly from

Treasury as a means of funding, the effects could

be catastrophic in terms of severe devaluation of

currency and hyperinflation as seen in Zimbabwe.

What is driving the rand?

Local stimulus pales in comparison with the

US and rand strength has been a reflection of

dollar weakness. The rand will find bursts of

strength from dollar weakness, but the local

unit’s underlying trend points to a weakening

currency in the long term. We would suggest

making use of any rand rally to fill up on foreign

currency requirements.

10 www.bluechipdigital.co.za


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info@thecollaborative.co.za | 082 | | 082 568 568 1795 1795 | www.thecollaborative.co.za

| | www.bluechipdigital.co.za

11


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financial industry expert.

This intensive coaching intervention

will be presented online over 12 weeks

and will leave you equipped to build

your own unique, client-focused

financial coaching and advice practice.

“Personal financial attitudes, behaviours, beliefs and anxieties

are passed down from generation to generation and herein lies

the possible solution to this problem. Financial openness in the

family context could prepare children for the real world, while at

the same time foster trust. Parents, however, should be very careful

about the specific information provided to children, as well as the

financial messages (sometimes non-verbal) that children receive.

“Parents need to ensure that children grow up to have healthy

financial attitudes and beliefs to become financially healthy adults

that would instil the same values in their children. This can only

be done by trying to rectify the mistakes, negative messages and

The programme will enable participants to:

• Engage in a powerful, highly effective approach to coaching,

leading and advising for positive change.

• Learn how to use language to address the concerns of your

clients more effectively and in doing so, build trust, long-term

relationships and increased value.

• Understand moods, how they influence actions, and how to shift

and manage them to get better results.

• Develop a vocabulary to enable you to observe the narratives that

impact on your clients financial and personal wellness.

• Support clients to design and live a life of purpose.

12 www.bluechipdigital.co.za


ASSET MANAGEMENT

Asset manager

headwinds

For a well-established

industry, there is

a surprising

amount of ongoing

changes taking place

behind the scenes

We are at an interesting point in the local asset

management industry, with several headwinds

facing asset managers. Where we have the ambition

of looking for high-quality, stable investment

propositions, these are generally quite hard to identify, and

when we do find them, we have a permanent anxiety around

their ability to sustain themselves at this high level. The extent

of organisational, process and people changes within an asset

management business is higher than you would expect.

Being a good fund manager

does not easily translate into

being a good business leader.

Human capital businesses, by their nature, have relatively

low barriers to entry and so we find a fragmented industry,

dominated by relatively few large players. There are over 80

separate, independent asset managers in South Africa [1] . Profit

margins in asset management are attractive which attracts a lot

of competition, but is there room for all of them? Below we list a

few of the headwinds we are observing across the industry, where

we need to objectively evaluate the potential for these issues to

impact our outlook for the funds we cover.

Headwind #1: Access to asset flows. No Money, No Honey.

The ability to build a sizeable client base has proven exceptionally

difficult for smaller managers. In part, this is due to how the

industry has migrated towards fewer “gatekeepers” – platforms,

discretionary fund managers, multi-managers and the like, rather

than establishing close relationships with the end investor.

However, much of this “underachievement” rests with the

managers themselves where the ability to build a good asset

management business, in addition to a good investment process,

is not something we have seen occur frequently.

The resourcing applied to good business management has

been far outweighed by the value placed on investment-related

intellectual capital. The problem is that in many cases, being a

good fund manager does not easily translate into being a good

business leader, and so their success in gaining market traction

has been underwhelming.

A consequence of this is the migration of a number of smaller

asset managers (“boutiques” in the colloquial, but essentially small

asset managers) towards some form of distribution agreement

or partnership whereby a business with a large footprint of fund

buyers acting for the client creates a linked deal with individual

asset managers looking for assets to manage. We count around

80% of the independent fund managers we cover having a form

of “inhouse” distribution to get access to assets to manage. Relying

simply on investors to “buy” funds seems to be a thing of the past.

By design, managers who need access to this asset pool also

have less leverage in a fee negotiation, so they can potentially give

up their “crown jewel” mandates at relatively low fees, creating

longer-term business longevity questions.

Secondly, where smaller managers have partnered with fund

distributors, they are often allocated mandates where they are not

necessarily ready in terms of their capacity to manage the assets.

A balanced fund for example requires the full suite of expertise:

local and offshore equity, fixed income and asset allocation, and

this requires a substantial investment over a long period of time

to establish.

Ultimately the asset managers are becoming dependent on

fund distributors, and this leads to headwind # 2: fees.

14 www.bluechipdigital.co.za


ASSET MANAGEMENTINVESTMENT

Fee pressure creates an additional business model problem, where

advisor’s business. The advisor has the

ability to consistently and efficiently

small managers implement their generally investment advice have a higher hurdle to make ends meet,

and large

across their

managers

client base by using

typically

a range

have high legacy cost bases to fund.

of portfolios through a Discretionary

Category II licence, either that of the DFM,

or their own.

A fourth benefit of outsourcing to a

Headwind #2: Fee DFM pressure. is one of governance The Big Squeeze. and compliance.

While assets have The increasingly DFM should moved be able from to large ensure scale, that low-cost

institutional pools similar towards clients retail are products, treated we consistently have not seen a

commensurate (and reduction therefore in fees reduce to TCF reflect concerns), this. The that average

investor is still paying the advisor a premium has a documented for investment investment management

fill the demand for offshore assets from investors. In many cases

there are high-quality fund managers coming into South Africa, at

significantly lower fees. Not only does this lower the fee potential

for existing local managers (headwind #2), it also reduces their

potential market share (headwind #1).

despite the cost process, efficiencies and of running that comprehensive larger unit trust due funds. Why

is this so? Common diligence sense is should provided tell on us the that funds many used. competitors

should drive down The high RDR investment discussion fees, paper not led preserve to many them. We

do see signs of this claims changing: that independent financial advisors

• A few of the (IFAs) smaller would fund struggle managers to survive are reducing and thrive costs to try

to entice new once clients. RDR is implemented, and that IFAs

• “Premium” larger would managers need to who either have sell captured their business the lion’s to share

of the market a have corporate had mixed or outsource performance, to a DFM. undermining the

Headwind #5: The value cycle. How Low can you Go?

Value managers gained prominence in South Africa in the postdot-com

era when overpriced new-economy share prices imploded,

allowing the old-economy value managers to outperform. Asset

flows chased performance and many investment products oriented

toward a value style. Post the Global Financial Crisis (GFC) we have

seen a difficult environment for value managers, where for the

premium fees they We charge. do not agree Investors with are that questioning assertion. We whether long-term most business part, expensive partner to shares an advisory have stayed • Global expensive, and local and portfolio cheap construc

this premium believe is worth that paying. the majority of investment IFAs business. value shares have stayed cheap. This long-term capabilities. underperformance

• With clients do increasingly not have to organised make material in collective changes in groups, We believe has had that several the two casualties most important where businesses • The skill have and either relevant closed experience of

negotiating power their business is starting to to comply shift from with the RDR, fund and manager factors that doors, advisors lost significant need to consider flows or when needed to core change investment their investment team.

to the investor. we This do not trend believe is consistent that this should with what be the we see choosing approach a DFM are: to survive.

• The DFMs back-office compatibility w

the UK market, reason and has for resulted using a in DFM. large-scale It is an fee added reductions • Understand With the this unique value value bias being proposition prevalent in the many advisor’s investment current pro- processes.

to investors. benefit but should not be the key driver. of the cesses, DFM structural given how industry different underperformance the • The scale has been of the commonplace,

business.

DFMs’ and offerings has led investors are, and to question how • their The fee fund structures. managers, and

Fee pressure creates In summary, an additional the services business of model a quality problem, various

where small managers DFM can generally benefit a have financial a higher advisor hurdle in the to make this value move proposition to alternatives complements including low-cost the passive funds.

ends meet (small following assets at ways: lower fees), and large managers typically advice process.

have high legacy • cost An bases evidence-based to fund (large assets, investment declining fees). • Make What sure can that we there expect? is a good culture

In our opinion, DFMs do have an impor

role to play in helping advisors

Offshore there has philosophy been a strong and process pattern that of aligns large with managers and philosophy We believe the fit between trends highlighted the advisor above professionalise are relatively entrenched,

and grow their busines

merging to deal with the the business’s lower fees advice expected framework in future.

• A sustainable investment range that is

Headwind #3: Emigration able to cater risk. to All different My Bags client are needs Packed.

and the bar DFM. headwind #5 where conditions today ensure are very consistent much in investment favour outcom

Meeting of these value-based considerations approach. will decrease However, improve the trends communication of increasingly to clients

the probability difficult access of “buyer’s to assets, remorse” pressure from on fees, enable new offshore advisors competitors

to focus on their core

Emigration is nothing • Consistently new, but it comes managed at a time portfolio now when an we advisor and disruption who getting of investment something teams through of giving emigration comprehensive are here financial ad

do see vulnerability, solutions especially across in the client larger base managers. Looking different to from stay. what they expected, and to clients.

back, today’s established • Access to a winners dedicated made team their of investment gains building ensures that We when expect differences to see consolidation of opinion

strong investment specialists propositions in a market where life company emerge, or there attrition is common among ground investment and

asset managers • held Consistent the majority and of assets. cost-effective

Rolling forward respect to businesses. between the The parties industry to simply allow for has a

today, these businesses implementation have reached high across levels different of market share, compromise too many that fund does managers not disadvantage for what

managers have benefitted investment as a platforms result, and so they can start to look the client. has been a relatively slow-growing

outside of our borders • Constant given compliance the success with they the have various had. South Key factors pool of assets. to investigate Going forward, when carrying we are

African-specific risks regulatory also undermine requirements. the long-term stability of out any your keeping due diligence a keen eye on the on DFM these options issues

management team. We have seen a few departures already include: and and the potential implications for

expect to see more All DFMs soon. are This not does created have the equal potential to hollow • Whether funds the DFM we cover. is independent We hope to see and

out investment teams, Advisors which are clearly do not ordinarily spoilt for choice run with given deep levels how the important strong independence businesses emerge is to the so

of cover. all the DFMs now operating in South Africa. advisor. that we have the luxury of choice

However, because they are still a relatively • The in investment future. philosophy and

Headwind #4: Offshore new concept competition. to many advisors, David vs choosing Goliath. a performance history of the DFM.

With similar trends DFM offshore can be (fee overwhelming. pressure, distribution The right pressure) DFM • we The depth [1] Source: of the RMI DFM’s Boutique global Asset and local

have seen global has managers the potential increasingly to be come a transformative,

into South Africa to research Management capabilities. Study, 2016

Ian Jones, CEO, Fundhouse

15

www.bluechipdigital.co.za

www.bluechipjournal.co.za

2


PORTFOLIO MANAGEMENT

NAVIGATING

SUCCESS

Blue Chip sits down

with Zisanda Gila from

Momentum Investments

Zisanda, you are lead portfolio manager at Momentum

Investments. Please share with our readers your journey that

led you to this point of your career.

I have been in the investment profession in different capacities for

over 15 years and my portfolio of responsibilities gradually evolved

over the years. My journey in the investment arena began when I

joined Metropolitan Asset Managers as a fixed-income dealer, and

I later moved to a money market analyst and co-portfolio manager

role working under supervision. In 2015, I started in my current role

as lead portfolio manager at Momentum Investments, managing

over R40 billion of assets across various money market strategies

within the fixed-income team.

From joining the financial services industry more than a decade

ago, I have found my career to be a fulfilling and meaningful one.

Coming from a family where perfectionism was encouraged, and

given my strong mathematical background, academically my

career was on course. However, the actual journey did not come

without its difficulties. Having someone in your corner and having

the right determination and the drive to succeed boosts your

chances of success in the industry. I have found mentorship to be

very pivotal to my career navigation. It has made me aware of my

strengths and developmental areas and encouraged me to take

opportunities that come my way.

Please tell us about the funds that you manage.

Our money market funds range from low-risk

cash funds to enhanced yield strategies. All

our funds aim to provide liquidity, inflation

protection and enhanced cash returns superior

to banks’ overnight deposit rates. We offer these

solutions in segregated portfolios, collective

investments and pooled funds across our assets

under management.

What is the strategy for these funds?

Our outcome-based investing approach

helps in solving for appropriate investment

outcomes and helps our clients understand

and articulate their needs and return

expectations. We construct our portfolios

to align with regulatory requirements

in the clients’ respective industries of

operation and ensure the clients’ objectives

are achieved by first formulating interest

rates views and aligning investments with

clients’ risk appetite and tolerance. We consider management

of risk to be a fundamental aspect of portfolio management. As

a result, significant emphasis is placed, within our investment

process, on the identification and monitoring of risk.

Fundamental credit research and analysis plays a defining role

in our asset selection and asset allocation decisions. This is key

and supported by our research to seek risk-adjusted returns from

the various curves and assets. Since credit risks can have many

layers, diversification is a continually moving target. I believe

diversification of strategies leads to more consistent returns over

time. We therefore buy a variety of asset classes from various curves

that meet our valuation and risk hurdles. This is the classical theory

of not placing all your eggs in one basket in practice.

Please outline their performance.

The performance of the portfolios is measured against the STeFI

benchmark, with an outperformance objective of up to 1.50%

above the benchmark. We strive to attain the highest possible

return on investment for our clients for a given (usually low)

level of risk, consistently over a long period. A highlight was the

Momentum Enhanced Yield Fund winning the Raging Bull Awards

in 2019 and 2020, as the “Best South African interest-bearing shortterm

fund on a risk-adjusted basis” over five-year periods. This

achievement has motivated and brought the team together in

pursuing a common purpose of delivering superior returns.

How has Covid-19 affected your portfolio of funds?

At the heart of our fixed-income strategies is daily liquidity

management. During the Covid-related sell-off in global financial

markets in March, our portfolios were not spared of the outflows

from underlying investors. There was a brief period in April when

the banks had excess liquidity, and we were able to sell back our

bank paper holdings to raise cash for these liquidity requirements.

There was also notable portfolio de-risking and asset class switches,

which resulted in cash neutral positions.

What is the outlook of the funds?

The funds’ strategy has been to invest in fixed-rate notes as

the interest rates continued to fall and the curve flattened. We

continued to increase duration as the market goes through periods

of risk-off. We remain cautious of credit quality but are finding

more attractively priced opportunities as spreads widen to our

fair value levels. We maintain hurdle rates in the different funds

through a combination of fixed and floating when valuation

supports our investment decision.

Zisanda Gila

“We consider management of risk to be a fundamental

aspect of portfolio management.” – Zisanda Gila


BRAVE/6432/MOM/E

Your clients’ investments

and the world we live in.

Why not grow

both together?

At Momentum Investments, we want investors to do well and do good. We believe investments that consider social and

environmental implications, are the ones that really pay off. So we support environmental, social and governance (ESG)

investing, also known as responsible investing. ESG examines the long-term health and stability of the market as a whole

to help create investments that are good for both your clients and the world we live in. We’re here to help your clients

achieve their goals on their investment journey. Because when it comes to sustainable investment growth, for us it’s personal.

To find out more, visit momentum.co.za

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.


WEALTH MANAGEMENT

Can South Africans

REBUILD their WEALTH

after LOCKDOWN?

Coronavirus has left mass economic devastation in its wake

Pre-pandemic, many investors had already externalised

funds to mitigate the erosive impact of South Africa’s ailing

economy, but what about those who are only now looking

at investing offshore? Covid has had far-reaching effects so

where do the clever opportunities lie for South Africans to rebuild

their wealth post-lockdown?

According to Andrew Ratcliffe, director at Private Client Holdings,

a smart option for investors to build a diversified offshore portfolio

is with actively managed certificates (AMCs), which have become

increasingly popular for a number of reasons.

“In the past, South Africans invested offshore through options

such as feeder funds and asset swaps, as well as by utilising their

offshore allowances, but there are now new-generation offshore

investment opportunities available – such as AMCs – which offer

a smart way to invest offshore and are a great building block for

those looking for diversification

in their portfolios,” says Ratcliffe.

“AMCs, otherwise known as

‘inward listed notes’, have been

around for some time but have

only recently become popular,

given South Africans’ appetite

to explore alternatives in the

current environment.”

Ratcliffe advises that local

investors can access and benefit

from the performance of the

global investment portfolio with

an AMC (such as the PrivateClient Global Growth Portfolio) rather

than a vanilla index tracking Exchange Traded Fund (ETF). “These

portfolios aim to optimise risk-adjusted returns by diversifying

across a number of asset classes, including equity, alternatives,

listed property and fixed income. Private Client Holdings’ managed

AMC is focused on generating Alpha while outperforming the

indices and delivering a decent risk-adjusted return for our clients

while not following conventional products.

“AMCs give the investor the ability to access offshore companies

and growth strategies without the need to expatriate funds for

foreign investment purposes. This removes any reliance on JSE-

Listed Exchange Traded Funds (ETFs) to gain offshore exposure

through a local segregated investment account. In addition, an

investor’s offshore allowance is not utilised as the AMC is a South

African Rand-denominated inward-listed security, which makes it

a tax-efficient vehicle where portfolio rebalances/reallocations do

not create a taxable event.”

According to Ratcliffe, unlike traditional passive financial

instruments, AMCs are characterised by a discretionary, and

therefore active, management of the underlying assets. The

composition of the underlying assets changes over time based on

decisions made over the life of the certificate by a third party (the

portfolio manager). This does not trigger a capital gains tax event.

“AMCs can also be constructed to be entirely bespoke, taking the

strategy and preferences of the investor into account – perhaps

they wish to focus on biotechnology or renewable energies, for

example – while also being aware of the risks of high concentration

of shares in any one sector.

“New-generation offshore investment opportunities

such as AMCs offer a smart way to invest

offshore and are a great building block for those

looking for diversification.” – Andrew Ratcliffe

18 www.bluechipdigital.co.za


WEALTH MANAGEMENT

“AMCs combine the flexibility of structured products (favourable

tax structure, low entry level, speed of issuance, and efficient

cost structure) with those of classic investment funds (portfolio

diversification and adaptability to different market conditions).”

This kind of investment is suitable for investors who:

• Own companies, trusts, and living annuities (as well as

for individuals).

• Are looking for exposure to a global growth portfolio but have

either utilised their annual offshore allowance or have SARB

approval issues.

• Would like to replace the use of locally listed offshore passive

ETF strategies with an actively managed equity instrument.

• Can withstand some market and currency volatility in pursuit

of enhanced dollar returns over the medium to long term.

“All investors are taxed on Rand gains, but only when they

sell the AMC in its entirety. There are no situs inheritance tax

issues, so this is still tax effective from that point of view. AMCs

are a great, well-priced investment

vehicle for people who are close

to retirement as they form a solid

building block in one’s living

annuity. They offer an easy bespoke

way to diversify retirement funds,”

says Ratcliffe.

“The AMC has proved to be a sound

strategy in the current Covid-19 bear

market. Many South Africans are look-

ing at alternative options out of

fear for the current climate in South

Africa – political turmoil, economic

crisis, fraud and corruption, new

restrictive regulations and concerns

around prescribed assets have South

Africans running scared. Over the past

100 years, South Africa has had one

Andrew Ratcliffe, director of

of the strongest-performing stock

Private Client Holdings

markets in the world; however, one

needs a crystal ball to tell if it will be

different this time and whether South Africa can survive the next

hundred years.

“Added to this, more South Africans are becoming part of the

global village as they travel abroad more regularly or consider

relocating overseas – AMCs offer a good alternative to get one’s

investments offshore without following the conventional avenues.

“Whatever your reasons, it is short-sighted to not look at

diversifying offshore and AMCs offer an easy, bespoke, affordable

and tax-efficient solution for the overseas diversification of

investment funds,” says Ratcliffe.

“The PrivateClient Global Growth Portfolio AMC has yielded

great results for our clients and for those looking to diversify it

makes absolute sense to consider this AMC.”

PRIVATE CLIENT HOLDINGS

Private Client Holdings was founded as a corporate

tax consultancy in Cape Town, South Africa, in 1990.

Since then the company has developed into a fullspectrum

Asset and Wealth Management Company

and multi-Family Office with six specialist divisions:

Wealth Management, Portfolio Management, Financial

Services, Fiduciary Services, Cash Management and

Risk Management.

Private Client Holdings are taking the lead in southern

Africa when it comes to providing high-net-worth

families with an all-inclusive wealth management

solution and recently secured second position overall

in the Top Wealth Manager: Boutiques in the Intellidex

Top Private Banks & Wealth Managers Awards 2019.

They also placed third in the Passive Lump-sum Investor

Award and second in the Successful Entrepreneur

Award. The award they are most proud of is placing

second in the People’s Choice Award – an award based

purely on feedback from a confidential client survey.

Private Client Portfolios, the Portfolio Management arm

of Private Client Holdings, has been awarded the title of

“Best Investment Advisory Team – South Africa 2019” in

the Capital Finance International Award – this London

based CFI.co awards programme identifies individuals

and organisations worldwide that truly add value

through best practice within their industry.

For further advice or information contact Andrew Ratcliffe on

Andrew@privateclient.co.za or Private Client Holdings on (021) 671 1220

or visit www.privateclient.co.za

www.bluechipdigital.co.za

19


RETIREMENT PLANNING

Retirement

planning

in the time

of Covid

How to navigate a smoother retirement

Retirement matters – to everybody. Generally, it is our biggest

asset and one we spend years and years accumulating. It

is no surprise therefore that there are a lot of decisions to

be made with regards to these savings as we draw near to

old age – decisions which have long-lasting impacts.

Making these decisions at the best of times is daunting – but

against the backdrop of Covid-19, it is an even more intimidating

task and, understandably, people feel vulnerable, regardless of the

retirement savings they have accumulated.

tax-free investment. However, remember that your tax-free savings

currently have a lifetime limit – so if you withdraw from this, you

cannot replace it and you would be foregoing the long-term taxfree

savings. The final option is to use your retirement savings, if

they are accessible.

For those who are not yet 55 years old and have a preservation

fund, you are permitted to make one withdrawal. However,

you would not be able to access the money in your Pension or

Provident Fund, if you are still employed.

What should you do if you are preparing for retirement?

For many people it’s time to start looking at retirement differently.

The reality of retirement has changed. The savings one has

accumulated at retirement are no longer guaranteed to last

through your retirement years due to higher costs of living, the

effects of forces like inflation and longer lifespans. Encouragingly,

the engagements that the Nedgroup Investments team has had

with people approaching retirement reveal that many people see

this stage of life as an opportunity to reinvent oneself. While

retirement from formal employment is likely, many people are

open to other avenues of generating income thereafter.

Ensuring a sustainable retirement capital is crucial. Staying

informed with regards to your financial affairs, keeping in touch

with financial experts and practicing responsible spending are still

paramount for people approaching or in retirement.

What if you need money now due to Covid-19?

Many people have been made redundant or have fallen on hard

financial times as a result of the Covid-19 pandemic. No amount of

planning could have prepared people for this kind of event, so it’s

important to remain realistic in terms of financial needs.

Before dipping into retirement savings, the best place to start

is with your general savings. The second option is to use your

The Nedgroup Investments

MyRetirement Solution offers an

in-person and online support

system designed to help people

make better decisions about

their retirement investments.

Tracy Jensen, Senior Investment Analyst, Nedgroup Investments.

If you are in the unfortunate position of having been retrenched,

you have the option of taking a cash portion from your retirement

savings, which will receive favourable tax treatment. The important

consideration to be aware of here is that you are reducing your tax

benefits at retirement.

On the other hand, if you are 55 years or older, you have the

choice to retire from any Preservation Fund or Retirement Annuity

Fund that you may have. If you choose to retire, you will have

to commit to a minimum withdrawal amount. This needs to be

20 www.bluechipdigital.co.za


RETIREMENT PLANNING

carefully considered. The important thing to balance is your need

for income now and your long-term need for income.

Can you afford to retire early?

An analysis of the income you plan to take in retirement will give

you a real sense of how achievable this is for you. A survey of

people approaching retirement revealed that, generally, people

overestimated the income they assumed they could draw down

in retirement by about two to three times.

The Nedgroup Investments MyRetirement Solution offers

an in-person and online support system designed to help people

make better decisions about their retirement investments.

Book a free, no-obligation session with our retirement coach

to help you answer the question of what a sustainable income is

for your circumstances.

The cumulative effect of delaying

your retirement by three years

has a six- to nine-year benefit.

What impact does delaying retirement have?

There is also the option to defer retirement. Delaying retirement

by just three years can have a huge impact on your position in

retirement. This is due to you contributing towards your retirement

fund for three extra years and that you will be drawing an income

for three years less. In addition, the power of compounding is

most effective in the final years before retirement. The cumulative

effect of delaying your retirement by three years has a six- to nineyear

benefit. Another good tip is to use the years leading up to

retirement to deleverage your finances to reduce the burden on

you in retirement.

How much money is enough to retire?

Calculating how much money you need to save for your retirement

is a conundrum for most people. Using tools like the Nedgroup

Investments MyRetirement Solution is an advantage.

Some important things to remember when deciding how

much is enough to retire on:

• You should grow your income relative to inflation. Inflation

is the silent killer to retirement savings.

• Consider your medical costs as they generally increase

above inflation.

• Study your expenses and be realistic about what you

absolutely need to live on and what is “nice to have”. This will

give you an idea of what retirement income you will need.

• A rule of thumb is to aim for a retirement income of 60-70%

of your final salary.

What are the options in retirement?

At retirement you typically have two options of how to use your

retirement savings to provide you with an income:

• Life annuity

A life annuity provides a guaranteed income for your

(and your partner’s) life with set increases. However, you

are not able to leave capital as inheritance. You also have

no flexibility to amend your income or change providers

in future.

• Living annuity

A living annuity, on the other hand, allows one to

choose your income each year. It is market-related and

will fluctuate depending on the performance of its

underlying investment portfolio and therefore does not

guarantee that the income will last. With a living annuity,

it is possible to leave money behind as inheritance.

Each annuity has pros and cons, so choosing one annuity

seldom meets all a retiree’s needs.

Another option is to split your savings at retirement and

purchase both a life and living annuity. Currently, the law neither

prohibits nor allows the purchasing of multiple annuities, so it is

worth checking with your provider what they allow.

The best of both worlds: Nedgroup

Nedgroup Investments offers the Living Annuity Plus. Designed

to address the most typical concerns and limitations of traditional

annuities, the Living Annuity Plus

effectively provides longevity

protection while still allowing

retirees the flexibility to select

their income and enabling

provision for an inheritance.

Free retirement

coaching session

The MyRetirement Solution has

a dedicated and experienced

retirement coach available

to help people approaching

retirement develop a plan

for their unique needs and

expectations. The coach is

available to them for life and

can walk pre-retirees through

several scenarios with the tool

so that they can see the impact

of their retirement decisions

before making them.

Liezel Momberg, Head of Legal,

Nedgroup Investments.

For more information, visit https://myretirement.nedgroupinvestments.co.za/en/

www.bluechipdigital.co.za

21


OFFSHORE INVESTMENTS

Leading by action

With a career built on sterling positions within the financial services sector,

Kondi Nkosi has found the seat that will forever change his profession: the

seat of Schroders, Country Head, South Africa. Blue Chip caught up with

him to find out what is happening in the offshore investment sphere.

Kondi, you took over as Schroders’ Country Head, South Africa

in April 2020 – an extremely difficult time to take over the reins

of an offshore investment company. Please tell us about your

last few months.

It was a very challenging time from many perspectives, let alone

from an investment markets’ one. The primary focus for us was

the health and wellbeing of the team on the

ground. Fortunately, in our firm, it is relatively

easy to work from home without any impact on

the ability to do our work, given the investment

in technology we have made over the years.

We spent a lot of time interacting with our

partners and clients, reassuring them that we

were navigating the turbulent times in markets.

There were several investment management businesses that either

succumbed to the economic fallout of the pandemic or had to

reassess how they do business. Schroders was in the fortunate

space of having a strong financial position and a diversified

business model that allowed us to navigate the tough times

without having to seek external assistance or having to reduce

staff on a temporary or permanent basis.

What is your leadership style?

I am a strong believer in leading by actions and bringing people

along with you. “If you want to go quickly, go alone. If you want

to go far, go together.”

Why should investors consider offshore?

Offshore provides diversification to an investor’s portfolio. It is a

prudent approach for investors to diversify their exposures so that

they manage their risk.

Other global markets have significant comparative advantages

that may not be available in South Africa (industries like aerospace,

high-tech biomedical research and others). Opening oneself to

those opportunity sets can potentially help enhance the returns

on an investment portfolio.

It allows investors to get exposure to other economies that

may be experiencing higher degrees of

“If you want to go

quickly, go alone.

If you want to go

far, go together.”

economic growth. For example, investing

in a fund that invests in domestically

listed China A-share companies, that

derive the bulk of their revenues from the

domestic economy, allows for diversified

exposure to the China theme. While there

are South African companies that derive

some revenues from that economy, it would not compare to the

domestically listed Chinese companies.

Last year, the FSCA approved four funds to add to Schroders’

comprehensive range of offshore options. Please give an

overview of these funds.

We have been adding to the menu of funds that are approved

by the FSCA and now have a broad range of 12 funds that have

received approval. Last year, we added four more [see below].

Three more funds were approved by the FSCA in 2020:

Schroder International Selection Fund (ISF) Global Gold (invests

in companies worldwide that are involved in the gold industry),

Schroder ISF Global Equity (another global equity fund that looks

for underpriced shares relative to our expectations for future

growth) and Schroder ISF Global Managed Growth (a flexible asset

allocation, multi-asset offshore fund that aims to outperform a 60%

global equity/40% global bond benchmark).


SCHRODER INTERNATIONAL SELECTION FUNDS


Schroder ISF

Global Sustainable Growth

A high conviction, global equity offering,

managed by our Global Equity team, that

focuses on companies whose growth

prospects we believe the market has

underestimated. These companies aim

to provide positive earnings going

forward. A cornerstone of the process

is also the degree of sustainability

(determined by our inhouse model)

these companies display.

22 www.bluechipdigital.co.za

Schroder ISF

All China Equity

This fund invests in companies

that derive a large portion of

their earnings from China,

irrespective of where they are

listed. Our team believes that

these companies are, or will be,

able to consistently generate

returns on invested capital above

the cost of capital, and thereby

generate returns for investors.

Schroder ISF

Asian Equity Yield

An Asian equity fund managed by

our Asian equity team. We have had

a presence in Asia since the 1970s

and the team has a strong track

record. The fund invests in comp-

anies in the Asia Pacific (excluding

Japan) region that pay dividends

now but also retain enough cash

to reinvest back into the company

to generate future growth.

Schroder ISF

US Dollar Liquidity

A fund that invests in

US$ money market

instruments. It provides

investors access to

wholesale money

market investment

securities and aims to

provide income by invest-

ing in short-term bonds

denominated in USD.


COLUMN

HOW TO NAVIGATE

volatile markets

Sound advice by Florbela Yates, Head of Momentum Investment Consulting

What a year 2020 has been so

far! The effect of the Covid-19

pandemic on South African

economic growth has been

severe and markets around the globe

continue to be volatile, not only as a result

of the pandemic but also due to investor

sentiment and political issues.

So how do investors navigate these

times? The starting point should be to

sit down with your client and establish

whether their circumstances have changed

and, if so, whether their existing portfolio

still meets their requirements. Then, it’s

also worth ensuring that the investment

manager appointed to run the portfolio

is actively doing so. The world has been

through severe pandemics, US presidential

elections, recessions and market volatility

before. Markets go through cycles and

we don’t know how long or severe the

current crisis will be. But we do know that

you should highlight the importance of

continuing to save and staying invested

so that clients can still meet their financial

obligations and achieve their long-term

financial goals.

If portfolios delivered disappointing

returns, it’s worthwhile understanding

what has driven these returns. Don’t sell

out just because you see another portfolio

doing better. History has taught us that

selecting funds based on short-term past

performance is dangerous and invariably

leads to poorer outcomes.

Ensure that you are comparing like with

like. What asset classes are the portfolios

invested in? Do they have similar offshore

exposures? How do they compare to the

peer group average over the longer term?

And engage with the portfolio manager to

understand what they are doing to position

the portfolio for the future.

The unit trust statistics continue to

show a trend towards de-risking as

investors continue to lose faith in the more

aggressive funds being able to deliver

on their performance expectations. The

problem with exiting after poor returns is

that you lock in those losses. Investors that

are prepared to wait for a future recovery

may not only make back these losses but

potentially have some gains.

Markets go through cycles and we don’t know

how long or severe the current crisis will be.

You should also consider the other

costs of disinvesting and switching. Your

client may still incur capital gains tax, and

there is the opportunity cost of being out

of the market when the recovery starts.

People wait for confirmation of recovery

before committing. So, investors who exit

portfolios after a market downturn and only

enter again after the recovery is confirmed,

lose out on both sides of the investing

cycle. While those that remain invested

will experience the shorter-term volatility,

our statistics show that they are invariably

compensated for staying in the market.

True diversification requires investments

in several asset classes and there is a

very strong argument for South African

investors to have a portion of their assets

invested in offshore markets. The amount

again depends on your client’s personal

circumstances and risk appetite.

At Momentum Investment Consulting,

we believe it is as important to learn from

our past, as it is to consider the positioning

of our portfolios for the future. We spend

time investigating the current market and

trying to determine which changes are

structural versus those that are cyclical.

In a low-return uncertain environment,

being in a diversified portfolio isn’t

enough. It’s important to look deeper to

gain an understanding of the drivers of

return given the current interest rates and

growth expectations. It’s also important to

understand that real returns don’t come in

a straight line and to be realistic about the

real return expectations. Over the short

term, real returns are unlikely to be as high

as we have seen before, but by having

exposure to quality assets which tend to be

more resilient, we believe there are enough

opportunities out there to deliver on our

clients’ longer-term objectives.

Florbela Yates, Head of Momentum

Investment Consulting

www.bluechipdigital.co.za

23


THE PUBLIC EYE

Why South

Africa is an

attractive

destination

for investors

Petroleum Agency SA invites the world to “Explore South Africa”, and to discover the robust petroleum

resources that have the potential to drive this economy. CEO Dr Phindile Masangane tells Blue Chip

how investors can benefit from the South African oil and gas upstream sector.

Please tell us about the history of Petroleum Agency SA.

Petroleum Agency SA (PASA) has its roots in the Petroleum

Licensing Unit of the then national oil company, Soekor (the predecessor

of PetroSA). In 1999, following the Norwegian model, it

was decided that regulation of the oil and gas upstream industry

should be separated from the national oil company, and the

Agency was formed through a ministerial directive.

The Agency has successfully attracted major explorers

to South Africa and facilitated the acquisition of many new

large seismic surveys and some exploratory drilling, through a

period affected by legislative issues and a major oil price crash.

The company has grown from an organisation of about 25 to

85 staff today and is held in remarkably high regard by the

local and international oil and gas industry that it serves. Currently,

the agency is actively involved in shaping the new stand-alone

upstream legislation and in guiding government with its decisions

regarding the possible exploration for shale gas.

South Africa has a particularly

good petroleum resource potential,

which remains unexplored.

What is PASA’S core business function?

PASA has three main functions. The first is to attract investment to

South Africa’s oil and gas upstream industry through investment

into exploration and production of oil and gas in South Africa. We

have a team of geologists and geophysicists who interpret data

gathered through past exploration activity to determine prospects

and use this to attract exploration companies.

The second function of PASA is to regulate the upstream

industry in terms of the Mineral and Petroleum Resources

Development Act, its regulations and other applicable legislation.

The Agency has staff responsible for ensuring legal, technical

and environmental compliance as organisations enter contracts

with the state to explore for oil and gas.

The third function is to act as the national archive for all

data and information produced during oil and gas exploration

and production in South Africa, and to curate and maintain this

data for use and distribution. Other functions include advising

the government on any issues pertinent to oil and gas as well as

carrying out any special projects, as directed by the government.

Where is the Agency at in terms of its market position?

The Agency’s competitors are similar organisations in Africa,

and beyond, attempting to attract oil and gas exploration

24 www.bluechipdigital.co.za


investment to their countries. For a long time,

South Africa has not been seen as a destination

for such investment, paling into insignificance

in relation to countries such as Angola and

Nigeria, both rich in oil, and even more recently

Mozambique with its enormous gas discoveries.

Our political stability, relatively advanced

development, independent courts and equitable

terms have always been our strong hand. The

recent world-class Brulpadda discovery and

South Africa’s potential for shale gas are helping

to change perception and the upcoming standalone

oil and gas legislation will further strengthen

our position.

You have recently taken over the position as

CEO of PASA. Please share with us some of your

ideas in terms of plans and strategies growing

and improving PASA?

South Africa has a particularly good petroleum

resource potential, which remains unexplored.

Prior to 1994, we did not have international oil

companies in the country due to the political

sanctions. All the exploration activities for oil and

gas in South Africa were undertaken by Soekor.

Oil and gas exploration is a highly capital

intensive and high-risk business that cannot

be left to a national oil company to do alone. In

the democratic era, we have attracted several

international oil and gas companies, including the

majors like Shell, Total and ExxonMobil and have

seen a few of our blocks being licensed. Significant

exploration activity in terms of 2D and 3D seismic

data collection has taken place since then, mainly

by international oil companies.

Where we are, is that we need to enter the next

phase in terms of exploration – that of significant

drilling activities. We need to move to prove the

resources we have. This will be the game-changer

for South Africa’s upstream oil and gas industry.

The recent discovery by Total and its JV Partners

in Block 11B/12B (Brulpadda) is the first giant step

in that direction.

My role is to work with industry and the

department to fast-track these developments

including finalising the Upstream Resource

Development Bill. As we enter this phase in our

industry development, we want to ensure that it

is an inclusive and diversified industry in terms of

race, gender and participation of SMEs.

What would you consider to be PASA’s main

challenge ahead?

South Africa is playing catch-up in terms of

upstream oil and gas development compared

to other countries in the region. With the

correct policies, fiscus proposition and domestic

industry off-take opportunities we can win. PASA’s

challenge is to ensure that both international and

local energy companies see this value proposition

in South Africa and choose our country. In this low

oil and gas price environment, companies are

inclined to cut back on capital investments,

and we need to partner with them to sustain

the momentum.

What do you predict the company’s

biggest success will be in the future?

A vibrant upstream oil and gas industry

that contributes to the security of our

nation's energy supply and the economy

having a substantially reduced

dependence on imported gas.

Do you think that a woman

leader, in your position in

the energy sector, will make

a different impact on the

company’s business?

Women are naturally long-term

visionaries and PASA is an important

institution in the South

African energy landscape. For the

country to properly regulate the

industry that is about to burst

into the next phase of increased

production, I am looking at the

long-term sustainability of PASA

as well as PASA’s capability to

grow in tandem with the anticipated

growth of the upstream oil and gas

industry in South Africa.

Any blue chip advice for readers?

The next phase of drilling in

the South Coast is starting in

September 2020 and it is in deep

waters, deeper than 1400m, similar

to the depths where the gigantic

Rovuma gas finds in Mozambique

were made.

Follow PASA on Twitter for

more on this exciting economic

development [@sa_petroleum].

DR PHINDILE C MASANGANE: PHD

CHEMISTRY, MBA, BSC (MATHEMATICS &

CHEMISTRY)

Dr Masangane was appointed as the Chief Executive

Officer of the South African upstream oil and gas

regulatory authority, Petroleum Agency South Africa

(PASA), in May 2020.

Before then, Dr Masangane was an executive at

the South African state-owned energy company, CEF

(SOC) Ltd, which is the holding company of PASA.

Dr Masangane was responsible for clean, renewable

and alternative energy projects. In partnership

with private companies, she led the development

of energy projects including the deal structuring,

project economic modelling and financing on behalf

of the CEF Group of Companies.

Her responsibilities also included supporting the

national government in developing energy policy and

regulations for diversifying the country’s energy

mix. In 2019, Dr Masangane was Head of Strategy

for the CEF Group of Companies where she led the

development of the Group’s long-term strategic plan,

Vision 2040+ as well as the Group’s gas strategy.

Between 2010 and 2013, Dr Masangane was

a partner and director at KPMG responsible for

the Energy Advisory Division. In this capacity, she

successfully led the capital raising of $2-billion for

the Zimbabwe power utility, ZESA/ZPC’s hydro and

coal power plants expansion programmes.

25


ASSET MANAGERS

Boutiques

are better

– right?

The

great boutique debate

The debate about whether it is

better to invest in a boutique

manager or a more established

manager has been argued for

years. It joins the list of value vs growth,

onshore vs offshore, small cap vs large cap,

flat fee vs performance fee and many other

hotly contested comparisons.

Firstly, one can become bogged down

in definitions about what constitutes a

boutique. Most agree it is a function of

the size of assets under management but

is it the size of, say, the equity portfolio

or balanced portfolio or the size of the

manager’s total assets under management

across all mandates? For example, many

larger, more established managers allow

proven professionals to manage relatively

tiny specialist portfolios within a much

larger house. Conversely, some boutique

portfolios are sizeable.

Secondly, it is not clear what is meant

by “better”. It seems to make sense that

a “better” manager outperforms a not

so good one. However, the argument

becomes more nuanced about before and

after fee performance and the power of

the brand. Many investors are prepared

to sacrifice some (usually, poorly defined)

amount of performance for the peace of

mind of being invested with a manager

with a powerful brand splashed all over

airports and televisions.

Luckily, the South African investment

market is both world-class sophisticated

and quite small so this article will concentrate

on the South African industry

and within that equity only funds or

funds that are listed in the ASISA General

Equity category.

Boutique managers

cover a much wider

range of returns.

The better ones tend

to be dramatically

better. However,

the poorer ones

have been awful.

That category has 75 funds listed

in it; fortunately, many of those can be

ignored for this exercise due to specialist

mandates such as funds that invest in only

technology shares, for example, or Islamic

funds or themes such as value, emerging

markets and others. The final constraint is

to consider only active managers and not

passive or index-tracking managers.

This analysis has highlighted twelve

boutique managers and eight larger or

more established managers.

Before examining the specifics of what

South African boutique managers have

achieved, there are some theoretical

agenda items usually propounded in the

boutique debate:

PRO BOUTIQUE

1. Smaller managers are nimbler and can

buy in and sell out of their positions

more easily.

2. Boutiques managers can take meaningful

stakes in smaller companies without

hitting JSE limits on ownership or

in-house liquidity constraints.

3. Managers with smaller assets tend to

have higher concentration or fewer

shares in their portfolios.

4. There is a tendency for early-stage

managers to be owner-managed rather

than part of a large institution and so

have more “skin in the game”.

26 www.bluechipdigital.co.za


ASSET MANAGERS

PRO LARGER MANAGERS

1. Companies seeking capital at the earlier

and, conceivably, more profitable stage

of their developments look to raise that

capital from more established managers.

2. Larger managers carry more clout with

companies if they wish to encourage a

company to change the way it operates.

3. Managers with a brand attract stickier

money and the fund managers do not

have to worry about the profitability

of the organisation as it has already

achieved critical mass.

4. The best talent can gravitate to larger

managers as their budgets allow the

best systems, research, access to company

management and/or career development

opportunities.

management caused by the size of assets

under management.

An extract from their August 2020

analysis is below:

portfolio but doesn’t want to breach a limit

of owning more than 10% of the company’s

free float of shares is limited to 15 shares

on the JSE. A smaller manager managing

The list above is by no means exhaustive

and it would require a much longer article

to debate the pros and cons of each and

several other points without, necessarily,

reaching a clear conclusion.

Kagiso Asset Management publishes a

monthly analysis of the limitations of fund

Source: Kagiso Asset Management

The circled number is interpreted as

follows: A manager that has R200bn invested

in South African equities and wishes to

take a meaningful 5% exposure in its equity

only R10bn of South African equity has a

choice of 89 shares. This means that the

larger managers simply have a smaller

playing field for their high-conviction plays

and anything outside of the list of the 15

largest shares cannot have a larger than


ASSET MANAGERS

Smaller managers are nimbler

and can buy in and sell out of

their positions more easily.

5% exposure in the portfolio. This, typically, means that the larger

managers have a longer tail of smaller exposures in their portfolios.

So, how have the boutiques stacked up historically against the larger

managers? The charts (right and on page 29) show performances to

30 September 2020 for the year-to-date (YTD), one year, three years

and five years. They have been ranked within their size band with the

boutique managers (BM) on the left and the large managers (LM) on

the right and the sector average in dark grey within each band.

The following charts require some scrutiny.

Over all periods, the boutique managers cover a much wider range

of returns. The better ones tend to be dramatically better. However,

the poorer ones have been awful.

There is, indeed, some consistency across periods with BM1, BM3

and BM9 being the consistent good performers in the boutique space

and BM8, BM10 and BM11 being the laggards.

The consistently good large managers are not as obvious but LM1,

LM3 and LM5 have not done well.

Truffle_BlueChip_Oct 2020.pdf 5 2020/09/22 16:33

Truffle

Asset Management

Truffle Asset Management is an authorised FSP. Full details and basis of the award are available from the manager.

The value of experience.

For more information about our funds visit

www.truffle.co.za


ASSET MANAGERS

It has not been clear that boutiques have, as a group, outperformed

large managers over any period. As with any investment

decision, investors should embark on considerable due diligence

research before choosing a portfolio or, better still, use the

services of a professional advisor with the correct credentials and

experience to pick the more successful managers.

Managers

with smaller

assets tend to

have higher

concentration or

fewer shares in

their portfolios.

Source: FE Analytics, MitonOptimal

James Downie, Head: Institutional

Asset Consulting & Optimisation,

MitonOptimal South Africa

GETTING 2

KNOW Melanie Stockigt

Head of Fixed Interest, Tantalum Capital

Describe your journey in asset management

I started out in financial markets in 1997 at Standard Bank. Working in

the heart of the Treasury division, I had exposure to many aspects of the

market, but my true passion was working with institutional investors. It

was therefore a natural step when I migrated to the asset management

world. I spent a few years at Coronation before embarking with my

partners on the exciting journey of building Tantalum Capital.

The best part of your workday?

My favourite part of the day is the first hour or so, before our investment

team morning meeting. I digest all the overnight market news, check

market movements and plan for the day ahead. The tempo of the day

can change so quickly in asset management though so often the ‘plan’

for the day takes an unexpected turn! There isn’t a single day that ends

without having gathered more information and knowledge and it’s a

privilege to have a career that’s so rich in intellectual growth.

What has life in lockdown been like for you?

From a personal perspective, it’s been wonderful to have so much

more control over the noise in my day, as we were fortunate to be

able to move seamlessly into the virtual world. The

asset management industry didn’t skip a beat, and

our access to information via conference calls and

virtual meetings has been so much greater than

it was under the constraints dictated by physical

meetings pre-lockdown. Having my work structure

integrated into the rhythm of my family unit has

also been a blessing.

WHY INVEST WITH US…

HIGHLY EXPERIENCED TEAM

TRUE MULTI-ASSET BOUTIQUE

OWNER MANAGED

NIMBLE ASSET SIZE

PROVEN TRACK RECORD

We have worked together

for more than 20 years

We offer skills in all the

asset classes including

global markets

Our funds are managed

with a strong

co-investment mindset

We are active

portfolio managers

We have a long track record

of consistent returns and

investment excellence

Founded in 2005, Tantalum Capital is a boutique asset manager with a strong partnership

culture and a co-investment mindset. We are majority owner-managed, and a proud affiliate

of RMI Investment Managers since 2015. Our portfolios are constructed from a single idea

generation process, and almost 50% of the Tantalum Capital team are women.


Reach financial planners

and associated practitioners

The official publication of the Financial Planning Institute (FPI)

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www.bluechipdigital.co.za

The South African Journal

for Financial Planners


ASSET MANAGEMENT

Identifying, partnering

AND GROWING…

the next generation of South Africa’s top investment talent

Zama Zulu’s career in the asset management industry started

in 2004 when she joined Coronation Fund Managers as a

junior business development manager. After 10 years at

Coronation, she left to join the debt capital markets team

at RMB, assisting various corporates and state-owned enterprises

(SOEs) looking to raise debt from the asset management market

through auctions or private placements. She was approached by

Rand Merchant Investments (RMI) Investment Managers to join

the team in 2016, where she is now a Portfolio Executive.

For more than two decades, the Group has had high exposures

to insurance businesses, namely Discovery, OUTsurance and

Momentum but were underweight in the asset management sector.

“Asset management has a high cash conversion rate and requires

relatively low capital to start, which made the industry attractive for

RMI Holdings to venture into as a means of diversifying its financial

services income stream” says Zama Zulu.

After listing in 2011, the RMI Holdings board made the decision to

reactivate the investment portfolio and so, in 2014, a new investment

team was appointed to execute this plan. Asset management

industry models operating globally were researched and the multiaffiliate

investment management model piqued the interest of the

investment team. In 2015, the RMI Investment Managers (RMI IM)

affiliate model was launched.

The company has since acquired minority stakes in 12 boutique

asset managers including Balondolozi Investment Services*,

CoreShares Asset Management, Ethos Private Equity*, Granate Asset

Management, Northstar Asset Management, Perpetua Investment

Managers, PolarStar Management, Sentio Capital Management,

Sesfikile Capital*, Tantalum Capital, Truffle Asset Management and

Visio Fund Management*.

RMI IM identifies and partners who they believe are South Africa’s

next generation of investment management talent and provides

patient and permanent capital along with strategic guidance to

ensure their long-term success. “We apply a long-term mindset

to each affiliate’s investment philosophy, and we monitor it over

medium-term periods. Short-term outlooks disappoint. Rewards are

met down the line,” attests Zulu.

“As a supportive but non-interfering shareholder, we provide our

boutique affiliates with strategic business and operational support,

access to insightful research and thought leadership and well as

asset-raising and marketing capabilities” adds Zulu. RMI IM believes

it is the support and guidance in these key areas that affords the

affiliates, which tend to be small- to mid-tier type entities, a better

opportunity for success.

* Equity stakes are held via Royal Investment Managers,

RMI IM’s joint venture with Royal Bafokeng Holdings.

Zulu’s role focuses on asset-raising initiatives, which involves

assisting the affiliate managers to achieve “retail-readiness”. As part

of their shareholder value map, RMI IM offers two areas of support

within the asset-raising portfolio: strategic advisory and coverage

support. “In terms of strategic advisory support, we ensure that the

affiliate managers understand the various trends in the retail industry

and how the industry works” says Zulu.

“We find that most of the affiliates are fairly new to retail due to

a strong historical focus on the institutional market,” she adds. “The

institutional market operates very differently from the retail market,

so we ensure that we provide our affiliates with useful insights on

the various dynamics at play via our research generated in-house on

market share and flows and any relevant client intel we may have.

These insights are considered when developing an affiliate’s retail

distribution strategy.”

“Short-term outlooks

disappoint. Rewards are met

down the line.” – Zama Zulu

In terms of coverage support, Zulu helps the RMI IM affiliates

navigate the various client segments within the retail market;

the discretionary fund managers, the multi-managers, financial

advisors and wealth managers as well as the LISP platforms. RMI

IM’s coverage support for these client segments is centred around a

core fund range that includes capabilities across various asset classes

and investment styles. In ensuring the company’s non-interfering

approach, Zulu’s input and guidance is provided, as

and when requested, into structuring fee policies,

pricing for potential mandates as well as general

preparation for new business pitches.

The RMI IM portfolio represents a world-class

collection of businesses with the potential to

become top-tier investment managers in South

Africa. Retail investors are sorely lacking proper

choice in managers, given the high concentration

of assets in the hands of the larger

managers and so RMI IM’s ambition

to challenge the status quo and

create a more even playing

field, will undoubtedly be

highly beneficial for the industry

as a whole.

Zama Zulu, Portfolio

Executive, RMI IM


Tuning

ASSET MANAGEMENT

in

to the beat of

her inner drum

Alida de Swardt is an ambitious and experienced financial

services specialist. She joined RMI Investment Managers

in 2016 as Head of Distribution and Marketing before

assuming the role of CEO in March 2018. While her

career in banking and investment management spans more than

two decades, she has not let the intimidating and male-dominated

industry divert her from her true self; a kind, passionate, engaging

and inspiring leader.

RMI Investment Managers (RMI IM) launched a multi-affiliate

investment management model in 2015, the first of its kind in

South Africa. Its aim is to identify and partner the best boutique

investment talent in South Africa by becoming a supportive, noninterfering

and long-term shareholder in their businesses. As a

100% subsidiary of JSE-listed investment holding company RMI

Holdings, it is well-placed to be a shareholder and partner of choice

for boutique investment managers. RMI IM is independent, has

patient and permanent capital and a solid reputation of backing

entrepreneurs building businesses in financial services.

The RMI Group has done this successfully with Discovery,

OUTsurance and Momentum, all of whom are now formidable

financial services firms in South Africa. To date, RMI IM has

invested in 12 boutique asset managers across various investment

styles and asset classes, including active, passive, traditional and

alternative investments.

Aligning with the entrepreneurial DNA

of the RMI Group is key. RMI IM’s business

model is such that only minority equity

stakes are acquired to ensure their

affiliates retain their independence,

particularly when it comes to

their investment capabilities. By

partnering with RMI IM, affiliates

can concentrate on what they do

best – managing investments

to achieve superior returns

for their clients.

The unique opportunity

Between 1990 and 2013, nearly 40% of investment management

firms started vanishing by means of acquisition, merger or

closure with the average lifetime close to only five years. Reasons

for this failure included lack of steadfast shareholder support,

poor business models, lack of differentiation and poor investment

returns. Post-Covid, it is expected that a similar trend will

once again emerge, leading to consolidation opportunities for

smaller players.

To address these challenges, RMI IM assists its affiliates with

brand credibility through the RMI association, business acumen

and strategic insight from its executive team and board, as well as

asset raising and marketing capabilities, operational robustness

and economies of scale.

Through its partnership with Momentum Metropolitan, a

distribution business that has a long history with the financial

advisor industry, it is able to provide additional distribution

capabilities to complement its affiliates’ own distribution teams.

Insights and relationships from these sources are used to

understand how best to service the changing advisor market.

Distribution: the lifeblood of asset management

While there tends to be a strong institutional support base in

boutique managers, albeit highly concentrated, these businesses

generally aspire to grow their retail following, which is a longterm

endeavour. To achieve this requires building a trusted and

recognised brand supported by a consistent, long-term investment

performance track record. With more than 650 active funds in South

Africa, investors are spoiled for choice, which makes standing out

in the crowd a real challenge.

The RMI IM team remains steadfast and committed to

their affiliates in helping them to overcome these challenges

while recognising that each business is at a different life stage and

therefore endeavours to assist them where most appropriate and

relevant. For RMI IM, it’s about finding a unique engagement model

with each of them, rather than assuming a blanket approach.

We remain confident in our ability to

stay the course and continue backing

management teams that we truly

believe have what it takes to succeed.

Alida de Swardt


ASSET MANAGEMENT

The company has a strategic ambition to help build the next

generation of significant asset management businesses and enable

them to reach their full potential. Through doing so, RMI IM hopes

to indirectly play its part in cultivating a savings culture in South

Africa while helping to transform its portfolio companies to better

reflect the society it ultimately serves.

Transforming the industry

Transformation within the asset management industry continues

to come under the spotlight as progress remains stubbornly

slow, particularly regarding female representation in portfolio

management and decision-making roles. According to a recent

industry report, in South Africa only 3.5% of active funds are

managed by a female portfolio manager, or a female-only team.

As a founding member of Athena, RMB’s gender equality

initiative, De Swardt is passionate about the promotion of gender

diversity and the empowerment of women in financial services.

She recognises that as a woman in a male-dominated industry she

naturally brings a different perspective. “There’s a lot of research

that shows that diverse workforces achieve so much more,” she says.

Talent is your biggest asset

“In asset management, your biggest asset is your talent,” says

De Swardt. “It’s a people business. Yet, I’m not always sure that

we prioritise the importance of interpersonal skills coupled

with technical capabilities.” She adds, “In business, people tend

to unconsciously employ individuals like themselves, which can

easily result in groupthink,” says De Swardt. “We should mindfully

be seeking out diverse talent in terms of skills, experience,

backgrounds and personalities to ensure we are constantly

challenging our approach and thinking.”

De Swardt leads by example as her own team at RMI IM, while

small from a headcount perspective, is incredibly diverse. “It’s

about achieving the right balance of gender, racial and cognitive

diversity within a team. As this, I believe, is when true creativity

gets unlocked.”

I find that you get the very

best out of people when you

give them the responsibility

and flexibility to deliver.

Partnering your team

The entrepreneurial heritage of the RMI Group is something that

De Swardt has learned first-hand through her 20-year association

with the Group. She leads with a strong partnership ethos.

“Through our owner-manager culture, we allow individuals to

own a part of the business and to drive it themselves,” says De

Swardt. “I find that you get the very best out of people when you

give them the responsibility and flexibility to deliver results in their

own unique way.”

De Swardt believes in surrounding herself with people that

complement her skills and experience and enabling others to

be the best version of themselves, rather than directing them or

micro-managing.

“Trust and respect are two key values of my leadership style.

Trust is given when work is outcomes-driven and not limited

to KPIs, and trust is built when you provide a safe space for

vulnerability.” She adds, “My team do not fear asking for help, as

trying to cover up weaknesses or vulnerabilities is not productive

or conducive to success.”

Trust and respect

are two key values of

my leadership style.

The driving force of her inner drum

Financial markets can be extremely volatile and so much of what

happens at a macro level is out of one’s control. From a young

age, De Swardt learned that to lead effectively, one needs to be

both resilient and realistic and to not be motivated by fear. She

inspires and motivates others to focus on what is in their control

by using their individual skills and talents in a meaningful way.

Combining this with positive energy and a growth mindset is how,

she believes, to successfully achieve goals and ambitions in both

life and business.

She was just seven when her father, a retail entrepreneur,

introduced her family to Peter Drucker’s management theory.

Her father taught her how to tune into her inner drum, to deeply

connect with its driving force and listen to it regularly as a guide

to know whether she is on the right track. She believes that by

tuning into your inner drum you can find your true purpose and

meaning in life.

Looking ahead

In July 2020, RMI IM began its fifth financial year and although still

in the early years of the business model, De Swardt is confident

that strong foundations have been built for long-term success.

Building enduring investment management businesses is a longterm

endeavour that requires patience, humility and stamina.

Looking ahead, De Swardt believes that RMI IM’s patience and

long-term outlook will stand the team in good stead to navigate

what will likely be another tough few years.

“Our partnership model was truly put to the test this year during

what has been an extremely trying period for everyone, not only in

the market but in our businesses and personal lives too.”

She adds, “So, we are now deeply focused on the ‘partner’ and

‘grow’ phases of our business model and while we don’t expect

the investment backdrop to get any easier in the next few years,

we remain confident in our ability to stay the course and continue

backing management teams that we truly believe have what it

takes to succeed; building critical mass, relevance and a credible

track record.”

www.bluechipdigital.co.za

33


, a

ist

a

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tly

nd

ut

at

as

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ng

rk

ur

at

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he

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as

et

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a

nt.

nt

ve

ed

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er

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ial

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as

?

improved by 40%. Operational costs fell,

FINANCIAL SECURITY with 23% less electricity and 90% less

paper used.

Perpetual Guardian, a New Zealandbased

financial services

Are you working

firm, moved to a

four-day week in late 2018. Productivity

improved 20% over an eight-week period;

an independent survey showed staff stress

The most

in the

levels reduced and work-life balance

MESSY

improved from dramatically.

As you think about innovating to keep sheet dat

up with constant change, don’t get stuck

on technology and forget about your

people. They may just end up working for a

business that has found a real way to make

MIDDLE?

a dent in traffic congestion!

References

David Rock, The Neuroscience of Leadership

– Improving Organisations by Understanding

the Brain, Talk at FPI Convention, 2012

Morgan Housel, The advantage of being a

little underemployed, www.collaborativefund.

com, 17 May 2017

The balance between financial

Ricardo

security,

Semler, The

the

Seven

new-age

Day Weekend,

woo-woo and living well Delivered over

Penguin Publishing, 2004

research 24 hou

Robert Booth, Four-day concepts week: trial such finds as lower meaning, freedom, health, relationships, learning,

what would it be? This is a question I often reflect stress and on, but increased always productivity, hobbies and www. sleep. What he is highlighting is the We manage all

come up with the same answer: security. theguardian.com, It’s boring, I know. 9 February trade-offs 2019we have to make to get the balance

resources

And not very original. But at its essence, McKinley that’s what Corbley, money Microsoft right Japan between Recently financial security and a

means to me. For others, the word may be a Gave little their more Employees exciting a 4-day life well-lived. Week – and An investment banker Incredibly easy

like “opportunity”, or “legacy”, or for Productivity Skyrocketed by 40%, www. will be happy to

some money may even be a “threat”.

tools

goodnewsnetwork.org, “Financial security”

8 November 2019 sacrifice sleep

I discovered how unoriginal my

to make more

LinkedIn Talent Solutions, 2019 Global Talent

Your gateway t

word is when I read Khe Hy’s blog, does not necessarily money. A highschool

teacher

Trends Report, 2019

You’re thinking about “financial

equal

developed with

Samantha “a McLaren, life well-lived”.

How these 4 Companies

security” the wrong way. Khe Hy has

faced with the

are Embracing Flexible work – and Why You


been dubbed the “Oprah for Millennials”. At the age of 35, he gave demands of a class of teenagers may Automatically u

up a lucrative career on Wall Street, resigning as Should managing Too, www.businesslinkedin.com, director not make a huge 22 amount of money but

May 2019


of BlackRock’s Hedge Fund of Funds division to figure out how is unlikely to survive without sleep. Both Full of excellen

to live “a more fulfilled life”. Hy suggests

are striving for a life data, fact shee

that we all seek financial security in some

well-lived.

form or other. A spin-off from Mazlow’s

Financial planners may see The their output opt

hierarchy of needs. We all want at the very

primary role as helping clients achieve

presentations

least to have enough money to survive.

financial security. As we can see, each

But Hy makes the point that “financial

person’s interpretation of this is Fully unique. supported

security” does not necessarily equal “a life

well-lived”. It prompts the question, “How

much money is enough?”

To answer this question, Hy suggests

R20k, and that the process usually involved

four meetings. The potential client had

experienced so much value in just one

aspect of the first meeting that they were

moved to ask if this was R20k per meeting

– not because they didn’t want to pay the

fee but because they thought given the

value they had already experienced, this

was a possibility.

If you could capture in one word what money means to you,

The value in people

In a knowledge-based economy, when you

are providing a professional service based

on knowledge, experience, thinking and

interpersonal skills, to quantify anything

in terms of time – be it your employees’

working hours or the time spent with a

client – is a disservice to the value that

financial planners and their staff potentially

can add to their clients’ lives.

So the opportunity is ripe for the picking

to innovate with respect to how you get

and keep people and make them more

productive. LinkedIn’s 2019 Global Talent

Trends Report indicates that over 30% of

job-seekers will turn down a job if there are

not flexible work arrangements. Computer

giant Dell implemented flexible work

practices in 2009. US healthcare company

Humana did the same in 2016, using

technology to enable call-centre workers

to work that from we have home. to grapple with the “messy

More middle”, recently which sits Microsoft between in financial Japan

experimented security (“enough”) with a and four-day a life well-lived. week for For

their Hy, employees. the “messy middle” Without consists an adjustment of what he

Rob Macdonald, Head of Strategic Advisory

in remuneration. refers to as a lot The of the result? “new-age Productivity woo-woo”,

Services at Fundhouse

Money is simply a means to an end. So

perhaps it is time for financial planners

to acknowledge that their primary role

is to help clients achieve a life well-lived.

If this is the case, then much of the work

that a financial planner ideally needs

to do sits in the “messy middle” of their

clients’ lives. Given that this is full of

“new-age woo-woo”, many planners may

l.co.za

34 www.bluechipdigital.co.za


FINANCIAL SECURITY

not be that excited at the prospect. Particularly

given that financial planners’ training is primarily

technical and focuses on helping people achieve

financial security.

Most financial planners are happy to ask their

clients: “Tell me how much is enough, and I’ll work

out how much you need.” They are also willing to

offer: “I’ll put a plan together so that you can end

up with enough, dead or alive.” Because the middle is

messy, the average client will say: “I don’t know how much is

enough.” Now what? This is where a financial planner can choose

to help a client grapple with the “messy middle”. Or not. It is easier

not to get involved in this part of a client’s life. As Brené Brown

points out, “It’s much easier to talk about what we want and need

than it is to talk about fears, feelings and scarcity (the belief that

there’s not enough).” And after all, money is time. The first question

a financial planner is likely to ask is: “How long will this working

in the ‘messy middle’ take?” The answer of course is, “It depends.”

In the latter part of the 20th century, it was okay for financial

planners to avoid the “messy middle”. For the Baby Boomer

generation, conditioned by parents who had endured the Great

Depression and the Second World War, financial security effectively

equals a life well-lived. It is no coincidence that money means

security to me. Both my parents lived through these periods when

there was very little financial, physical or emotional security. My

mother’s father went to war when she was nine years old. He

returned when she was 15. He did not even recognise her at

the train station on his return home. An emotional desert had

developed between them.

For those born more recently, the story is different. The

developed world has so much more to offer than simply survival.

There is the opportunity to engage with the “new-age woo-woo”

stuff because there is more security in the world. Stephen Pinker,

among others, has written about how, despite the daily diet of

Perhaps it is time for financial

planners to acknowledge that

their primary role is to help

clients achieve a life well-lived.

indigestible news about what is going wrong in every sector of

society, the world is safer than it has ever been. And this applies

despite the Covid-19 pandemic. For perspective, the Spanish Flu

of 1918-20 is estimated to have killed up to 50-million people, or

2.7% of the global population at the time. At the time of writing,

there are 966 000 Covid-19 deaths or 0.012% of a global population

of about 7.8-billion people.

Not only is the world safer, but it is evolving fast. When it comes

to financial advice, I can get a Robo Advisor to work out how much

I need to have enough money for financial security. I have worked

with one named Eva. (They even have names.) And “she” was

extremely helpful. The process was seamless and cheap. But if

financial security doesn’t mean a life well-lived, then I need more

help than what I can get from Eva.

I need someone to help me navigate the “messy middle”. To

grapple with what I want from my

life. To help me make decisions on an

ongoing basis. To act as a sounding

board as I face transitions, big and

small. But I want that person to be

skilled in dealing with the “new-age

woo-woo” stuff. Because if they aren’t,

it is cheaper and easier for me to use

Eva, and maybe see a psychologist on

the side, when desperate.

So, as a financial planner, the

question to ponder is: are you working

in the messy middle? If not, beware

that Eva can’t wait to replace you, at a

fraction of your fee.

References:

Khe Hy, “You’re thinking about financial

security in the wrong way”, RadReads.co.

Heather Long , “Meet Khe Hy, the Oprah

for Millenials”, money.cnn.com,

31 December 2016

SOURCE: You’re thinking about “financial security” the wrong way - by Khe Hy, Radreads.co

www.bluechipdigital.co.za

35


EVENT

Managing humans

not assets

Humans Under Management South Africa 2020

H

ello, I’m Carrie Bendall. I’m one of the organisers of

HUMSA along with Rob Macdonald of Fundhouse, Pierre

Taljaard of Simple Wealth

Financial Planning and HUM

founder, practising UK Financial Advisor

and Financial Advisor Coach, Andy Hart.

The HUM event is all about turning a

money business into a people business,

helping clients behave their way to wealth, keeping them

disciplined, staying the course and making their dreams a reality.

It’s about managing humans, not assets.

“It’s about managing

humans, not assets.”

Held as a virtual event for the first time on Tuesday 8 September

2020, the agenda was full of short punchy talks delivered by a mix

of practising financial advisors and experts.

Here are some nuggets from the talks by

practising advisors.

Doing less to achieve wildly more

Andy Hart opened to reveal “The Hidden

Magic” of the behavioural financial advisor. Essentially this is

“doing less to achieve wildly more”. Investing becomes an exercise

of removing the unimportant – research, ratings, predictions,

36 www.bluechipdigital.co.za


EVENT

forecasts, annual performance, seeking top-performing funds.

Important becomes investing in things which have always worked

– a passive global equities fund, and then a long-term perspective

replacing headlines with history, nudging up your contributions

through all weathers, an informed definition of the real risks, not

outliving your money and continually updating your financial plan.

Important includes relieving clients from the stress of watching

the N-E-W-S day in day out. An acronym that stands for “negative

events world service”. Andy finished on the note, “The financial

dark forces peddle the unimportant, we remove it.”

Life planning and its business benefits

Kim Potgieter told the story of how her firm, Chartered Wealth

Solutions, built its Financial Planning business around life planning

by making it central to their process. Kim emphasised that their

role was to help clients get the most life from their money and that

Chartered Wealth Solutions did this by having different kinds of

conversations with clients.

The first thing they do with every single client is a personality

profile to give the advisor an understanding of how clients see the

world and then they explore:

• Where they have come from (history)

• How they have got here today (values)

• What they are going through (transitions)

• Where they are going to (goals and dreams)

• Relationship with money (what could be stopping them)

Focus on the person, not the problem

Recognising that great client conversations don’t always come

naturally to even the best financial advisor, practitioner Warren

Ingram, Galileo Capital, was interviewed by Rob Macdonald to

explore how developing a coaching way of being is essential for

opening up deeper, more fluid conversations with clients.

Warren talked about the importance of listening even when

it becomes uncomfortable to keep quiet. He also

suggested how easy it can be to start asking

different questions; to keep it simple without it

seeming like a major shift in style.

IQ + EQ = Real financial planning

Practitioner Scott Frank from Stone Steps Financial

in California talked about how he went about

creating a simple equation where IQ is the enormous

technical knowledge needed to be a financial

advisor and EQ is the emotional intelligence needed

to bring inspiration and energy to clients to inform

their why rather than their what. Scott shared how

he uses the Kinder Institute EVOKE process and

when in this process he can use Kinder’s three great

questions to achieve a deeper understanding of

clients, their lives and their dreams.

Andy Hart, Founder,

Humans Under Management

Building a black-owned financial planning business

Kagisho Mahura shared the story and evolution of his awardwinning

firm, Gradidge-Mahura Investments, founded in 2008.

It's a powerful and moving story of two friends who shared

a dream to create a leading private wealth management firm

serving the needs of an emerging market of black professionals.

Challenges became opportunities and thinking “outside the

box” was crucial to achieving the funding they needed.

IQ is the enormous technical

knowledge needed to be a

financial advisor and EQ is the

emotional intelligence needed

to bring inspiration and energy

to clients to inform their why

rather than their what.

Putting tech in its place

Tech enthusiast Louis van der Merwe demonstrated how putting

tech in its place can be a key driver of a creating and implementing

a client’s financial plan. He uses the tool Asset Map collaboratively

at a first planning meeting to help bring a client on board faster.

It’s a way of demonstrating immediate value as a guide that helps

the client build their full financial picture in a simple format. It also

leads to clients wanting to keep on adding to their picture as their

circumstances change.

All were great inspirational talks

about how to see beyond the money

to the human need. The event was

supported by six sponsors who

support the independent ethos of the

conference as “by advisors, for advisors”.

The sponsors were: Allan Gray, Old

Mutual Wealth, Prudential Investment

Managers, Coreshares, Coronation and

Ninety One.

If you couldn’t attend the event live

and would like to purchase access

to a recording of all the conference

presentations, please send an email to

andy@humansundermanagement.com

www.bluechipdigital.co.za

37


DIVERSITY

Women

in

finance

The power of women

coming together

38 www.bluechipdigital.co.za


DIVERSITY

After entering the financial services

industry 13 years ago, Kim

Potgieter, founder of the Women

in Finance Network, quickly

realised that it was a male-dominated

industry and that there was little support

for females. Kim felt strongly that women

in the sector needed their own forum to

meet, share experiences, support, mentor

and learn from each other, so in 2013 she

founded the Women in Finance Network.

The philosophy behind the network

is that if women in the industry work

together and inspire each other, they can

significantly increase their value adds to

their clients. Women have inherent skills

such as empathy that enable them to form

meaningful relationships with their clients,

and in the process, change the industry for

the better. Inspired by WiFN’s vision, Old

Mutual, Allan Gray and Chartered Wealth

partnered with them, sponsoring the

events. The FPI also strongly believed in the

philosophy behind the network, and they

too came onboard, sponsoring students

and graduates from the ASISA Academy to

attend the events.

Women who join WiFN receive

invitations to all the events and have

access to an online community of women

who are always ready to help and support

each other. Traditionally events were held

quarterly in Johannesburg, Cape Town,

Port Elizabeth and Durban. These events

provide the perfect opportunity for women

in the industry to have fun, connect and

learn from each other. They are a great place

to brainstorm ideas and much mentoring

takes place as a result of the connections

made. Covid has changed the format of

these events, and since lockdown, they

have managed to host four online events,

with each guest speaker carefully chosen

to support their members during these

uncertain times.

At one online event, Kim spoke to

the ladies around Brené Brown’s Dare to

Lead work, at another Colleen Joy Page

guided them through their Enneagram

types. As lockdown got harder, the WiFN

team noticed that many of the members

were struggling emotionally and that they

needed to draw on their inner strength, so

they invited Gabi Louw and Pippa Shaper,

from the Resilience Factory, to be guest

speakers. During this moving session,

they shared their journeys around what

resilience means, and the tools required

to be a resilient person. At their last event,

long-standing WiFN member Lisa Linfield

shared her journey around her inspiration

for her recently published book, Deep

Grooves. Their final online event for 2020

is a talk by entrepreneur, author and

philanthropist, Dr Judy Dlamini.

All proceeds from the events have gone

to the Reaboka Foundation. The Reaboka

Foundation is an NPC giving women the

self-confidence to take their lives into

their own hands and to acquire an identity,

respect and status within their community.

This year many of these ladies have been

unable to work, so money donated by WiFN

has been used for food parcels.

The Women in Finance Network is

looking forward to next year when life

returns to some sort of normality, and

the members of WiFN can once again,

meet, connect and support each other

face-to-face.

To join this network of dynamic women,

email Holly@wifn.co.za

Follow them online on Instagram,

@Womeninfinancenetworksa

Follow them on Facebook,

@Women in Finance Network

Visit www.wifn.co.za

www.bluechipdigital.co.za

39


FINANCIAL PLANNING

Women as financial

PLANNING CLIENTS

Creating value for the female market

McKinsey & Company has in a recent article [1] made a

compelling case for why, as financial planners and

wealth management firms, it is “a critical growth

imperative” that we are deliberate in creating a value

proposition that speaks to the needs of the female market, if

we are to make any meaningful strides in attracting and retaining

this market segment.

THE CHANGING FACE OF WEALTH

In what is commonly referred to as the great wealth

transfer, it is expected that in the next three to five

years, American female baby-boomers will, in essence,

control financial assets estimated at $30-trillion. This as

they inherit, and thus gain, more control on a further

$10-trillion, which currently is jointly owned but has

the husband as the primary financial decision-maker.

Women tend to be less involved in the management of

these assets while their husbands are alive.

Another factor expected to spur an

increase in the size of the female market are

the younger affluent women who are likely

to be more educated, have higher personal

earning potential and thus tend to be more

involved in household financial decisionmaking.

The indicators are no different

in South Africa. Recent research released

by the Department of Higher Education

indicates that there has been a marked

increase in female doctoral graduates over

the years, where it is reported that females

make up 53% of all doctoral graduates. [2]

A more intriguing number comes from the results of

a survey conducted by 1Life on 7 000 females aged

between 24 and 44 years where it found that 69%

of the respondents are the main breadwinners in

their households. [3]

McKinsey’s research also shows that seven in 10

affluent women, particularly widows, seek an alternative

wealth management relationship within a year of taking

reign on financial assets. Other crises such as a recession,

a divorce or the more recent Covid-19 pandemic also

cause clients to re-evaluate their service providers and assess if

their needs are adequately being met.

WOMEN MANAGE THEIR WEALTH DIFFERENTLY TO MEN

These factors should cause us to pause and reflect on whether our

offering and businesses are well-poised to participate meaningfully

in this new playing field. While our industry has taken notable steps

in preparing for this market, such as targeted marketing campaigns

and products, increased emphasis on financial literacy as well as

policies and efforts to change the demographic of staff members

across both the gender and racial lines, more is required from the

industry. McKinsey advises that “firms will need

to commit to a much more systematic approach

– transforming their business and client-service

models in ways that will acquire, retain and serve

women as long-term investors”. This starts with

a recognition of the growth and the potential of

the female market, coupled with a willingness to

truly understand the factors that drive women.

Equipped with this knowledge, an appropriate

strategy becomes easier to formulate.

The research highlights the

following six key differentiators [1] :

1. Greater demand for advice

Affluent female decision-makers

are more likely to seek an advisor.

Furthermore, they place more value or

preference on face-to-face interaction,

rather than a digital service offering.

2. Lower financial self-confidence

Many of the women included in the

survey “self-report lower confidence

in their financial decision-making

and investment acumen”. This speaks

to historic and socially ingrained norms

rather than intellectual acumen. It

further emphasises the need for broader

financial literacy interventions aimed at

women and conducted in a manner that

is empowering and offers the space for

them to pose questions without the fear

of being patronised.

3. Less risk tolerant

The women surveyed tend to prioritise capital preservation rather

than assume more risk in return for potential growth.

40 www.bluechipdigital.co.za


FINANCIAL PLANNING

4. Greater focus on real-life goals

The study revealed that women placed greater importance on life goals such as saving for

retirement and not outliving their assets in retirement, providing sufficiently for healthcare and

lifestyle maintenance. They are also more concerned about poor market performance compared

to their male counterparts. This makes women ideal candidates for bespoke financial life planning

with a like-minded financial planner.

5. Desire for personal fit with an investment advisor

The women surveyed placed high value on the connection they establish with an advisor. It is

important to them that they trust the advisor and have a good personality fit. Where they do not

feel these, they are more likely than men to switch the relationship as a result.

6. Pivotal life moments as a driver

Consumers are more likely to seek a wealth relationship after a major life experience, such as a

marriage, promotion, divorce, or the loss of a loved one. For women, divorce is a particular

differentiator. Women often experience greater financial impacts from divorce or separation than

men and are twice as likely as men to cite divorce as the reason for opening a new investment

account. The dissolution of a marriage is an even more powerful driver of switching financial advisors

than the loss of a loved one.

Palesa Dube CFP®, Wealth Manager,

Wealth Creed

NEXT STEPS FOR YOUR COMPANY AND TEAM

A clear take-away from this research is that it is critical for wealth management firms to revisit their

offering, if it is to make a meaningful effort in attracting and retaining female clients. The suggested

set of questions (Exhibit 1) is one such way for firms to delve deeper into the area. The advent of this

new market is not only lucrative but presents the wealth management industry with an opportunity

to make a meaningful contribution to society, in rewriting a past that side lined and excluded women

as an inferior class. The real opportunity is for the industry to respond appropriately to women’s

financial planning needs with a deep desire to uplift and do good. If we respond in this way, we will

be demonstrating stewardship and the least our noble profession demands.

EXHIBIT 1: QUESTIONS FOR MANAGEMENT TEAMS

• Where are we in the journey

to win with women? If we are

honest with ourselves, have we

had the impact we aspired to?

• Do we have a go-forward

playbook we are methodically

executing, module by module?

• Are we tracking our results in

a systematic way across the

measures that matter?

• Have we piloted new compensation

and incentive structures

to attract and retain more

diverse field talent?

• How are we seeking to build

capabilities among advisors

and the rest of the firm?

• Have we piloted new

service and product

offerings and corresponding

pricing models for

segment-specific client

acquisition (eg “white

glove” subscription models

for high net-worth women)?

• Do we have a segmented view

of our client base by gender and

household composition, with a

dedicated strategy to win with

each segment (eg joint babyboomer

households, millennial

women)?

• When we lose an account or

see a large transfer of assets

following a key life event (eg

loss of a loved one, divorce),

do we systematically capture

the feedback to inform our

go-forward strategy?

Source: McKinsey

https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management

Sources:

[1] Article: Women as the next wave of growth in US wealth management by Pooneh Baghai, Olivia Howard, Lakshmi Prakash and Jill Zucker,

July 29, 2020

[2] https://www.dailymaverick.co.za/article/2020-07-22-time-for-black-women-to-lead-in-higher-education/

[3] SA women embrace who they are: https://www.McKinsey1life.co.za/blog/honey-listen


TECHNOLOGY

Weathering the storm

of Covid-19

Benefitting from the shock

The impact of Covid-19 has been felt by every client and

financial planner. Fortunately, for the planners that

embrace change and technology, this impact has turned

out to be surprisingly positive. The concept of Antifragile

comes to mind which was first coined by Nassim Taleb in 2012

as “something that benefits from shock”. I believe that this shock

has helped many businesses to become more resilient through

embracing technology and a new way of delivering advice.

No longer are our clients limited to

working with a financial planner that is

situated in the same town or physically

close to them

No longer do we need to build a team

that sits in the same building to work

together. A distributed and diverse team

that communicates virtually can move

to a better client experience at reduced

Availability has become

key to ensure that

we are holding the

hands of our clients

during difficult times.

costs for the employer. You can now sit anywhere in the world

and service a client on the other side of the globe.

We’ve seen this play out in developed markets over the last

decade but now our clients have the tools necessary to accept

the delivery of digital advice. Just like software developers lead

with a mobile-first approach, so too can we lead with a digitalfirst

delivery of advice. Keeping the face-to-face interactions to

building the relationship and screen-to-screen interactions to

delivering and implementing advice.

As our clients have more autonomy

over their time through working from

home, this also creates a space to

engage with their financial planners.

Availability has become key to ensure

that we are holding the hands of our

clients during difficult times – be it

difficult times weathering the markets

or difficult times in their personal lives.

42 www.bluechipdigital.co.za


TECHNOLOGY

No longer are our thoughts shaped by local thought leaders

and a global community of financial planners has emerged

During a time when it is just as easy to connect to someone in

another country as it is to connect with your neighbour, we’ve seen

the rise of a global community of

financial planners who are willing

to share and uplift those around

them. Platforms like XY Adviser

and LinkedIn have proven to be

extremely valuable to learn and

share a better way of delivering advice but

avoiding common pitfalls and becoming

aware of our blind spots.

We have to deal with both the human

side as well as the technical side of financial

planning and we can learn a lot from other

markets. We can also be equally proud of

the South African financial planning landscape

which is on par with the leading

developed markets.

No longer are our clients expected to face

their fears on their own

During the lockdown, we had an interaction

with a new client who recently lost a loved

one and was due to inherit a lump sum of

money. The client opted not to switch on the

video during our virtual calls and this allowed

her to interact with a financial planner in a

safe and low-stress environment. Planning a

You can now sit anywhere in

the world and service a client

on the other side of the globe.

Louis van der Merwe, Certified

Financial Planner® and Coach

visit to a planner can be stressful for many clients as they might

not know what to expect and are sometimes pressed to share

information that might be very personal. Imagine sharing your

income, expenses and life goals with a stranger.

The value of financial planning

has increased overnight

as clients become aware of the

shortcomings in their planning.

In a recent survey, 28% of people

trust themselves as the main

source of financial planning, while only 24%

worked with a financial planner. It is near

impossible to become aware of our blind spots

and biases and working with a planner helps

to highlight the things you might be missing.

Mental health has become a mainstream

discussion point as people feel that it’s more

acceptable to discuss the impact of financial

stress. Our role as advisors is primed to help

our clients towards holistic wellness that

is underpinned by their finances, alongside

their eating, sleeping and movement habits.

We are extremely lucky to be in an industry

that is constantly increasing the value we

deliver to our clients. The discussion has

evolved to include a combination of product

information, financial planning and coaching.

One thing is for sure, the new way of delivering

advice and connecting on a human basis is

here to stay.

www.bluechipdigital.co.za

43


FINANCIAL PLANNERS

Financial

The very first

Planner Year

of the

Debbie Netto-Jonker, CFP®, Financial Planner of the Year 2001


FINANCIAL PLANNERS

I

received the inaugural Financial Planner of the Year award

back in 2001. This was a time when negative stories of people

suffering the consequences of inappropriate financial advice

filled the media. Up to this point, the sector generally only

recognised the best salesmen for their selling accomplishments

– not necessarily for giving the most appropriate financial advice,

which led to a negative perception of the industry.

THE VALUE OF ADVICE

With the introduction of the Financial Planner of Year award, clients

and prospective clients were exposed to fact that it was possible to

engage with quality advisors who used a sound advice process as

the capabilities and skills of the top 10 finalists were written about,

and they were invited to speak at financial planning events that

were open to the public.

Determining a winner of the award was based on client

testimonials, the assessment of technical advice, compliance, and

practice management. The focus is on the quality of the advice

given and the processes and procedures backing it up – not the

number of products sold. Bruce Cameron of Personal Finance,

Professor Colin Firer of UCT Graduate School of Business and the

panel nominated by the Financial Planning Institute lent the award

a combination of credibility and legitimacy.

After being recognised with this award I found that clients

became more comfortable with the value of advice and that

their confidence in its process increased. Clients now wanted to

learn from us, ask questions and be empowered to make good

decisions. And because clients knew that we were working in their

best interests, the level of cooperation we received from them also

improved. Now that people out there knew there were a few goodquality

advisors, all they had to do was find them. This is where

the media played such a crucial role in transforming the industry.

The Financial Planner of the Year

award was one of the first initiatives

that accentuated the importance

of professionalism in the industry.

A LONG-OVERDUE MAKEOVER

Selling risk and investment products had been the mainstay of

the financial advice arena. Now, with the focus shifting to serving

the best interests of the client, fee-based advice was highlighted

as the alternative to the typical, commission-based form of

compensation. In fact, we were referred to as “brokers” back then.

A term that persists to this day and that does not do us any favours!

The Financial Planner of the Year award was one of the first

initiatives that accentuated the importance of professionalism

in the industry – this was before FAIS was enacted in 2002. And

it encouraged others to embark on a journey to enhance client

service and experience. The media gave extensive coverage to all

the finalists, profiling all of us in detail. This coverage also explained

what financial planning was and raised the profile of the financial

advisor’s professional standing.

I must make special mention of Bruce Cameron and Laura

du Preez of Personal Finance, Andrew Bradley of iPac and the FPI

who sponsored the award in 2001. Their sponsorship at the very

beginning demonstrated a foresight into the need to focus on the

client that has largely changed how the industry operates today.

WHAT THE AWARD MEANT TO ME

Anyone who has ever received this award will tell you that they did

not win it alone! Professional financial planning is a team event.

I could not have achieved this accolade without the expertise of

Ian Beere and my team. As a result of the award, the whole team

was infused with a new sense of purpose and rediscovered pride

in their work. Something that continues to this day. With increased

credibility, we became more desirable as an employer and more

attractive to prospective clients and our professional network was

even more confident in referring clients to us.

RECOLLECTIONS OF WINNING

1. I felt that the value of my input became further recognised in

the financial planning community.

2. All the hard work I had put into building a practice management

system was vindicated.

3. Receiving the award reassured our clients that their financial

plans were soundly designed.

Debbie Netto-Jonker, CFP®, founder, Netto Capital & Netto Invest

www.bluechipdigital.co.za

45


FPI

0REASONS

why you should not miss the

FPI Professional Digital Convention 2020

1. Gain the tools to future proof yourself and your business

We decided on the theme for this year’s Convention – Future

Proof – long before Covid-19 was a thing. Now our theme is

more relevant than ever. Our incredible line-up of local and

international speakers brings decades of problem-solving

experience to the table and they are positively bursting

with ideas. Covid-19 may have blindsided your business – but

remember that your clients will now need you more than ever!

1

2. Learn much more about behavioural finance and integrating

coaching into planning

As the field of neuropsychology grows, it is becoming increasingly

clear that giving good financial advice is as much about

understanding the maths behind financial calculations as

it is about appreciating the intricacies of the human psyche.

We are thrilled to have nabbed some real thought leaders in

this genre, most notably Greg Davies, Frank Magwegwe, Rob

Macdonald and Mary Fourie.

2

3. Stay connected with your peers and discuss your mutual

challenges and opportunities

One of the most devastating impacts of Covid-19 is the way it has

sabotaged communities. Technology has gone some way towards

filling this void, but it is hard to underestimate the importance

of those conversations you have at the photocopier or in

the queue at OR Tambo. The FPI conference is being hosted

3

by Asset TV, world leaders in digital conferencing. They

know better than any of us that the “gold truly is in the hallways”

and they will ensure that there is plenty of space for authentic,

off-the-cuff interaction.

4. Make “Excellence your Standard” as you transition to a feebased

practice

The talk by Michelle Hoskin – aka Little Miss WOWW! – promises

to be one of the highlights of the event. Michelle will talk about

The Operations Management System (TOMS) that she has

spent the last 20 years perfecting with her clients in the UK.

TOMS provides a framework that will liberate you from the

day-to-day of running a business while maximising profit and

productivity. Building on her presentation, Almo Lubowski will talk

about how to make the transition to a fees-based practice.

5. Get a global perspective with a live update from FPSB

CEO Noel Maye

Who needs Bloomberg News when you’ve got a direct line

to global decision-makers? The CEO of the FPSB, Noel Maye,

will be joining us to share his insights into the year that’s passed

and the way ahead for our profession.

6. Keep up to date with the many developments in Financial

Planning Technology

As Greg Davies puts it, taking your practice to the next level

is all about “using tech to be better at the stuff that only

humans can do”. Take the opportunity to learn about all the

4

5

6

46

The “gold truly is in the hallways” and they will ensure that

there is plenty of space for authentic, off-the-cuff interaction.


Staying abreast of the latest regulatory developments is an

absolute must in today’s constantly shifting financial landscape.

latest offerings by visiting our incredible exhibitors’ stands. And

be sure to catch Greg’s talk and the technology panel discussion

where we will hear from several of the biggest players in this space.

7. Earn 11.5 verifiable CPD hours (and enjoy getting them)

Attending the Convention earns you 5.5 General hours, 4.5 Ethics

hours and 1.5 Technical hours. The fantastic digital platform

provided by Asset TV and the stellar line-up of speakers will

make them the easiest CPD hours you ever earn.

7

8. Keep abreast of all the latest regulatory developments

It may not be sexy, but staying abreast of the latest regulatory

developments is an absolute must in today’s constantly

shifting financial landscape. Caroline da Silva, of the FSCA,

will be giving us the lowdown.

8

9. Discover how to make succession planning and transformation

a positive experience

You cannot go anywhere without hearing someone grumble

about transformation and succession planning. But this is the

wrong way of thinking about both processes, say Warren

Ingram, Katlego Mei and Alex Cook. Their talks will show

how embracing transformation and succession planning as

positive experiences will change your life.

9

10. Get incredible value for money with our state-of-the-art

digital experience

Despite the truly stellar speakers’ roster, tickets for this year’s digital

conference are almost half their usual price. Add this to the

fact that you won’t have to book flights or accommodation

(or pay for lunch or lattes) and attending the Convention

is an absolute no-brainer. International visitors will love the

exchange rate ($180 for a two-day conference!) while locals can

take advantage of the great, value-for-money CPD package we’ve

put together.

10

11

BONUS REASON!

Now that we’ve shown you 10 ways in which attending

the Convention will benefit you and your business, let’s

talk about Reason #11. Your presence at the Convention

will provide an invaluable contribution to building industry

knowledge and cohesion. Progress is a two-way conversation and

we need you just as much as you need us. Hope to see you there.

BOOK

YOUR

SPOT

• The conference will be held on

27th and 28th of October 2020

and is 100% digital.

Tickets are R2 500 for FPI members and R3 000 for

non-members. Get yours at www.fpi.co .za

• Or take care of your annual CPD requirements with a discounted

package which includes access to the Convention,

the Estate & Tax online seminar, the Retirement & Investment

online forum and the FPI’s annual refresher. Members pay only

R5 200 and non-members R5 920. Book at www.fpi.co.za

Michelle Hoskin (aka Little Miss WOWW!) shares her

incredible secrets for transitioning to a fee-based practice.

47


FPI

Five “Aha! Moments”

to look forward to at the

FPI Professional Digital Convention

The first-ever 100% digital FPI Professional Digital Convention on 27th and 28th of

October 2020 has an irrepressible line-up of speakers from around the globe

While there’s no replacement for face-to-face

interaction, this year’s convention proves – yet

again – that every cloud does indeed have a silver

lining. Not having to worry about geographic

considerations has meant the FPI can call on some exceptionally

high-calibre speakers from across the country and the globe.

This year’s convention promises to have “Aha!

Moments” aplenty. But don’t take it from us – take

it from the speakers themselves.

AHA! MOMENT #1:

FACTS MATTER MORE THAN EVER

My talk, The Upside of Down, will show you

how vitally important it is to have a growth

mindset in a deeply complex environment

which paralyses many of us into inaction

through fear and indecision. In post-Covid South

Africa, facts matter more than ever. You cannot make

good long-term decisions if you are overwhelmed by fear.

My deeply empowering, fact-rich, multi-layered talk will challenge

your in-built biases and encourages you to confront widespread,

but often inaccurate beliefs.

• Bruce Whitfield, South Africa’s leading financial journalist and

radio personality

AHA! MOMENT #2: YOU CANNOT BE AWESOME ON YOUR OWN

I have been in the profession for over 20 years and

I am passionate about showing how to achieve excellence as your

standard. I will show you how Together Everyone

Achieves More (TEAM) and I will leave you in no

doubt that it’s impossible to be awesome on

your own. Building on these concepts, The

Operations Management System (TOMS)

developed by my team and I will show

you how to free yourself from the dayto-day

workings of your office while your

team delivers consistently high levels of

client service.

• Michelle Hoskin, aka Little Miss WOWW! of

Standards International in the UK

48

www.bluechipdigital.co.za

AHA! MOMENT #3: USE TECH TO BE BETTER

AT THE STUFF THAT ONLY HUMANS CAN DO

I will show you that on our own, humans are

fallible and prone to bias and inconsistency,

particularly in complex areas such as financial

advice. Luckily data and technology can provide

humans with decision prosthetics that reduce bias and

noise and ensure that human beings can be the best version

of themselves more consistently. In a nutshell, technology enables

humans to be better at the stuff only humans can do.

• Greg Davies, of Oxford Risk, has a PhD in Behavioural

Finance from Cambridge University

AHA! MOMENT #4: CHANGE REQUIRES A SHIFT

IN MINDSET, NOT JUST BEHAVIOUR

As human beings, we are pretty good at many

things, but managing change is not always one

of them. We may be creatures of habit, but – as

we have seen this year – the business world is

constantly changing. I will show you how to futureproof

your personal and professional goals by coming

less resistant to change. Because resistance to change is

often rooted in unexamined personal beliefs, change requires

a shift in mindset, not just behaviour. This shift requires

a process of identifying and adjusting these beliefs.

• Frank Magwegwe, PhD, CFP®, is an award-winning

speaker and author of From Homeless to CEO

TO BOOK YOUR SPOT, SEE PAGE 47, OR VISIT WWW.FPI.CO.ZA

AHA! MOMENT #5: TRANSFORMATION CAN BE

A POSITIVE EXPERIENCE FOR YOUR COMPANY

Transformation and succession planning are such big

issues within the financial planning industry. There

are very few great examples of how this can be done

in a way that works in South Africa. I will give you insights

into how transformation can be a positive experience for

your company, your staff and for clients. There is so much good

that can be created from transformation that you should never

allow fear to stop you from taking this important step.

• Warren Ingram is an Executive Director of Galileo Capital, author

and radio personality


FPI

The power of

SUPERIORITY

Excellence as the standard

50 www.bluechipdigital.co.za


I

f

Having a business and a team whose sole focus is

striving for and achieving excellence is, was and

has always been the best line of defence.

you’re motivated by the fear of past events, you’ll behave

a certain way – but being motivated by the future and by

what you can achieve, changes the game. According to the

dictionary, “excellence” can be defined as the fact or state of

excelling, superiority, eminence. I don’t know about you, but this

definition inspires and excites me to do an amazing job in our

business and for our clients.

In these unprecedented times of what I can only personally

describe as chaos, it is certainly going to take more than simply

“doing a good job” to get us through the coming turbulent weeks

and months. With all the changes being made across businesses

and within teams, we have already seen that the acts of innovation,

creativity and, ultimately, excellence that make the difference.

We are seeing that it is the communities, teams, groups, family

units and friendship circles all coming together, going above and

beyond and applying the much-needed discretionary effort, that

are critical to making these differences.

Now anyone as passionate about the power of excellence as

I am will understand. And they will likely have been banging the

drum about the benefits of streamlined systems, processes and

controls that are well thought through and strategically planned

– the very things which are now proving to be the most essential

tools for businesses.

However, this is not an article on the value and importance of

business continuation and disaster recovery; this is an article about

why having a business and a team whose sole focus is striving for

and achieving excellence is, was and has always been the best

line of defence.

Like you, I own a business which has its day-to-day challenges

that we have to face and deal with and distractions that are

constantly pushing us to work in the business rather than on

the business.

So, how do you achieve excellence? There are many ways, but

nothing as complicated as you would expect!

Here are my TOP FIVE KEY INGREDIENTS FOR EXCELLENCE:

1) Your strategic leadership team must have the necessary

skills, abilities, qualities and attributes to add value in their

roles, to the team and the business as a whole

2) Your business must have in place, and maintain, objectives,

plans and processes for continual improvement. Ensure

that your commitment to quality and excellence is

maintained at all times

3) The needs and expectations of all interested parties are

considered fundamental to operational goals

4) All your team members have all the capabilities to ensure

that clients (internal and external) receive the best

possible service and that they demonstrate a high level of

competence at all times

5) Your services and systems are designed, engineered

and managed to meet your clients’ requirements by the

simplest and most cost-effective means possible

Once in place, your commitment to excellence should

be understood by – and communicated to – all the staff within

your business.

With all the changes

being made across

businesses and within

teams, we have already seen

that the acts of innovation,

creativity and, ultimately,

excellence that make

the difference.

Michelle Hoskin, Coach, Standards International

www.bluechipdigital.co.za

51


FINANCIAL PLANNING

Be the example

… or change the example

Imagine walking into a gym, wanting to get

in shape. You’re unsure where to start, so you

hire a trainer. The trainer shows up and has

all the knowledge in the world. The trainer

shows you the right movements, makes sure

you’ve got good posture and tells you which

muscle groups you’re working. But it quickly

becomes clear, the trainer has never gone

through the transition that you’re hoping to go

through. Worse yet, the trainer is not even in

very good shape.

Kate Holmes, CFP®,

Chief Innovation

Office, Innovating

Advice

The trainer is going to walk you

through some major changes, and

while they have the technical expertise

to do so, they haven’t done the tough

work themselves.

Are you that trainer in your client’s

lives? If so, you are not alone.

During a university commencement

speech, the comedian Jim Carrey said,

“Many people choose their path out of

fear, disguised as practicality.”

52 www.bluechipdigital.co.za


FINANCIAL PLANNING

Financial planners will recognise this, especially if you work with

clients heading into retirement. So often clients have taken the

practical path and worked to check all of life’s boxes. Go to school,

get a steady job, get married, have kids, save money, then retire.

Veering from this path can bring fear, either internally or through

the reactions from others.

There are people out there that

are ready and waiting for you.

And because we’re all human, most financial planners also take

that well-travelled practical path. It has been a way of life for so

long. But times have changed.

Many people and businesses (especially in financial services)

are operating in an outdated mindset. Even with the myriad

challenges in the world today, there’s never been a more exciting

time to be alive. We have the world at our fingertips and the

opportunities are endless.

For example, in 2013 I left a traditional investment advisory

business where I was a principal to launch one of the first

completely virtual, fee-only, monthly retainer financial planning

businesses. I then ended a long-term relationship and left the city

I was living in. As an open person, I shared all of this with my clients

who averaged in their 50s and included some high net-worth

people. This ended up completely changing the conversations we

had and clients started saying to me, as we worked through what

their short- and long-term goals really were, “You are the example

of acknowledging what you really want and making it happen.”

Now, I’m not encouraging anyone to quit your job, end your

relationship and move away (unless that’s what’s best for you).

What I am encouraging is that you take a deep and honest look at

your life and see where changes would be beneficial. Even small

changes can make a big difference.

Look at each area of your life: work, friends, family, relationships,

health and wellbeing – and ask yourself what you’d like more of,

less of and what has a time limit. It could be more time on health

and wellbeing, less of a toxic relationship and one more year in

your job.

Whatever changes are right for you, when you’re bringing your

absolute best self to your clients and you’ve gone on a path that

they might be going on, you’ll start to see different things. You’ll

pick up on different signals. You’ll know that you’ve done that hard

work of realising what is and isn’t working in your life and you

made the necessary changes so that you can be the example to

them of what’s possible in this one amazing life we each get.

It changes the conversation, builds stickier and more rewarding

client relationships and allows you to create fee and service models

to serve a broader range of clients. By moving beyond the numbers

and being the example, you can show clients the true value of

financial (life) planning and can more easily niche down to the

clients that are right for you.

There are people out there that are ready and waiting for

you. Technology allows clients to search for the planner that’s

the best fit, not just the one that’s closest. They want to work

with a financial planner they can relate to, that makes it easy and

enjoyable to work together and that has fee and service models

that suit them.

With the right mindset shift, all of this is possible in financial

planning businesses big and small. And while change can be

scary, sometimes the idea of things staying the same can be even

scarier. As concerns swirl about economic instability, regulatory

changes and the commoditisation of financial advice, know that

those that are innovating, personally and professionally, are the

ones that will come out on top and will be the most satisfied in

business and life.

I hope you’ll be one of those examples, leading the way, inspiring

others and highlighting the true value of financial planning.

While change can be scary, sometimes the idea of

things staying the same can be even scarier.

www.bluechipdigital.co.za

53


B

LIFE PLANNING

uilding

a financial

planning

business

Ihave always believed that financial planning must follow a

life-centred approach and have spoken at many conferences

about the value of life planning. My message was not always

well received; in part, because it’s difficult to measure the return

on investment, and because it takes time and skills that planners

don’t necessarily have.

Including life planning in our process at Chartered has been

a hugely beneficial and rewarding experience. It gives us the

opportunity to dream with our clients, we celebrate their successes

with them and most of all, our clients feel valued, supported and

safe. They become part of the Chartered Family and clients for life.

Our value proposition is not just about the return on investment –

it’s about giving our clients a return on life. Every interaction with

clients has one purpose: to help them get the most meaning from

their money, where money enables the life they dream of living.

For life planning to be successful, it must be at the core of

everything you do as a business. It needs to be part of your DNA,

your values and your culture. It’s about building trust, relationships

and changing the dialogue with clients. And it has to be authentic.

It’s not a process that is rushed so that financial discussions can

begin. It is critical that planners embrace and believe in life

planning and have the skills to guide clients

to plan a roadmap for their lives; help them

prioritise according to their values; and

base their financial strategies and decisions

on the clients’ priorities.

At Chartered, our business is based on

life planning. It’s the reason why clients

come to us. In fact, we do not talk to clients

about their money if they do not agree to

It’s about building

trust, relationships and

changing the dialogue

with clients. And it

has to be authentic.

Kim Potgieter, Director and Head of Life

Planning, Chartered Wealth Solutions

with life planning

at its core

life planning. We have implemented five steps to integrate life

planning into our business model.

1) Firstly, know your Why

If you are considering incorporating this process into your business,

you need to be clear on why you are doing it. The process is not

a quick fix or about adding a once-off additional meeting to the

financial planning process. It is also not something that you can

charge extra for. Life planning becomes a way of doing, a way of

being with clients, and is the centre point around which all your

business processes are aligned. So, first of all, be clear on your

rationale, the value that you are adding and what you want to

achieve for your clients.

2) Design and implement a life planning process that suits

your business

You may not need or want to follow the same process we do. This

is simply our way of doing. At Chartered, we start our process with

a personality profile. This is not only a valuable tool for gaining

insight into our client’s world view and values, but it helps them

understand their core personality and why they feel, think and

behave in certain ways.

We follow this assessment with a

conversation about the past: the client’s

history; where they’ve come from; and the

contributing factors that have shaped their

lives up to this point. This includes talking

about their earliest, most significant money

memories. Many clients are not aware how

the money messages they hear as children

54 www.bluechipdigital.co.za


LIFE PLANNING

impact their behaviour with money as adults. We also use this time

to guide clients to let go of the money beliefs and habits that no

longer serve them. As planners, it is so important to understand

a client’s relationship with money. It helps knowing what money

beliefs could trigger emotional and irrational responses, and how

their habits can potentially sabotage a solid plan.

The next part of our process is to guide clients to define

their values and life principles. We know that our core values

drive everything we do as humans, so this provides invaluable

information on what the client holds most dear. When we talk

about transitions that clients are undergoing, or may still be

going through, knowing what they value above all else directs

the planning process.

Finally, we encourage our clients to dream and ask them to

visualise a life that they are excited to live. The dreaming exercise

steers the goals and objectives of the life plan, and the financial

plan is then structured to enable this. The process takes time. We

often schedule at least two meetings with clients before we even

start talking about money. But every meeting is another step to

creating trust, respect and rapport.

Our clients receive a copy of the life plan once its finalised and

our planners and support staff keep it on record. They will always

refer to the life plan for every subsequent meeting with the client.

3) A life planning culture

To be authentic, your company values must align with life planning,

and pull through every experience, every department and every

individual in the company. From the security at the gate, to the

receptionist who greets the client, to the planner, administrator,

associates and articled planners, the philosophy must filter

through the entire culture.

4) Training – enhancing your client conversations

Planners need to be equipped with new skills so that they are

comfortable having brave conversations and building lifelong

relationships with clients. Planners start taking on the

role of coach and mentor – and this role involves authenticity,

vulnerability, empathy, non-judgemental listening skills and the

ability to inspire.

It starts with self-awareness and the commitment to invest

time and energy into self-development. We cannot ask clients

questions that we ourselves are not comfortable answering, and

I encourage planners to practise on each other. Learn how to ask

probing questions, how to read body language, how to respond

with empathy and how to cultivate real connection. Listening is

one of the most important skills. If you listen, your client tells you

what they want and need. It makes them feel valued and you can

build the financial plan according to their wishes.

We have found great value in the work of Dr Brené Brown

and use her teachings to be comfortable with emotional

responses such as vulnerability and shame that often stems from

money conversations.

5) Marketing life planning as a value-add

Your staff become your most important marketers, and your

clients, your most valuable ambassadors. It’s about walking your

talk and placing your life planning philosophy centre stage.

Our Chartered website showcases our philosophy, and our

additional Retire Successfully site is a platform where clients and

retire mentors share tips and stories on how they are living their

best lives in this phase.

We communicate regularly with our clients, through

newsletters, social media channels and a variety of lifestyle

events, always reminding clients that we are here to support

them throughout their journey.

A WOW client experience

Clients deserve to feel supported and valued and we express our

gratitude and care through thoughtful gestures and creating a

relaxing and enjoyable experience. Many of our clients pop in for

a slice of cake and cappuccino well before their review meetings.

Client advisory

Feedback is important. We schedule lunch meetings with small

groups of clients, and for the duration of the lunch, they become

the directors of our company. It’s invaluable to hear what’s

working, what should change and what their recommendations for

improvement are. Everything we do is about building relationships.

It’s not a transactional process – it’s helping clients to own their

power and feel confident that they can take the driving seat in the

design of a truly meaningful and fulfilling life.

We encourage our clients to dream

and ask them to visualise a life

that they are excited to live.

Benefits for Chartered

It’s a mutually-beneficial relationship – as much as our clients

enjoy spending time at our offices, connecting, learning, enjoying

delicious meals at our events, and meeting with their planners, our

staff feel that they are truly making a difference. We love what we do!

If you invest time and energy in getting to know your clients,

and continuously work on building solid relationships, they will

be your most loyal ambassadors and trust you to invest 100% of

their money. Life planning offers a unique value proposition with

the client at the core of your service. It may be a time-consuming

process, but in the long run, a win-win for both your client and the

profitability of your company.

www.bluechipdigital.co.za

55


HY ?

CHINA

Why now…

OFFSHORE INVESTMENTS

Is now the time to be investing in China?

China has been shrouded in mystery and subterfuge

for decades. Most savvy investors know that good

investment opportunities exist on the mainland, but

many barriers to entry have kept all but the boldest out.

Now as fears of a protracted and persistent trade war, a slowing

global economy and political protests in Hong Kong grow, we raise

the question again – is now the time to be an investor in China?

China is the second-largest global economy. It is the world’s

largest emerging market and has the second-largest bond and

stock market globally. Despite the size of the market, it is underowned

by foreign investors.

As China moves from an export-driven economy to one of

domestic consumption, the sheer size of its populations makes it an

attractive investment, especially in industries such as technology,

healthcare and luxury goods. As the trade war between China

and the US ebbs and flows, Chinese companies, especially those

which focus on the mainland, are less likely to be affected and

more inclined to grow.

China is the second-largest recipient of foreign direct investment

capital (FDI) in the world. FDI follows investor confidence in a

region and is used for manufacturing and service capabilities. In

2019, China received $137bn in FDI.

Investor regulations have been revised over the last decade or

more, making it easier and more appealing for foreigners to invest.

This has seen the inclusion of China A-shares in MSCI emerging

market indices, giving them greater visibility. As the Chinese

middle class continues to grow, citizen-friendly fiscal and consumer

reforms should be forthcoming, which could support mainland

demand and ultimately a wide variety of listed corporates.

China has demonstrated its ability to drive

economic growth. Into the future, this will be further

supported by increased infrastructure; policy reform;

global competitiveness; a large and increasingly

educated workforce; and export-friendly policies.

Overlay this with ever-increasing consumer

demand and it may be an investment opportunity

you don’t want to ignore.

What are the risks?

Investing in China is, however, not without risks.

China is a communist country. It has been criticised

for selective disclosure on various issues as well as regulatory

differences with the west. It has been accused of turning a blind

eye to insider trading and Chinese companies adhere to their own

accounting policies, which differ from GAAP.

Smart investors always weigh up risks before investing. Many

of China’s blue-chip companies are listed on foreign stock

exchanges too, which would hold them to their regulatory

standards. One way of accessing the Chinese market with relative

peace of mind is through a well-diversified ETF.

Accessing China from South Africa

The Satrix MSCI China ETF listed on the JSE is one way of getting

this exposure. It tracks the MSCI China Index which includes large

and mid-cap shares across China A-shares, H-shares, B-shares,

Red chips, P chips and foreign listings (for example, ADRs). With

just over 700 constituents, the index covers about 85% of this

China equity universe.

The MSCI China Index is dominated

by companies in the consumer

discretionary, communication services

and financial sectors. Familiar names

like Alibaba Group and Tencent

Holdings are the two largest constituents

of the MSCI China index.

Helena Conradie, CEO Satrix

56 www.bluechipdigital.co.za


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