Blue Chip Issue 81


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.
Blue Chip takes this opportunity to wish the FPI a happy 40th anniversary.

Issue 81 • Oct/Nov/Dec 2021

The Official Publication of the FPI



Meet the Financial Planner

of the Year finalists



Lelané Bezuidenhout,






Your clients

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their money.

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MAXIMISE their wealth

Mature professionals are at a stage in their lives where they have accomplished their career goals despite

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This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. The material has been created for distribution to intermediaries only and is not for distribution

to the public. The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty gives any representation,

warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. If there are any discrepancies between this document and the

contractual terms and conditions the terms and conditions will prevail. Any recommendations made by an adviser or broker must take into consideration the client’s specific needs and unique

circumstances. For more details about benefits, definitions, guarantees, fees, tax, limitations, charges, premiums/contributions or other conditions and associated risks, please see the product

terms and conditions. Liberty Group Ltd is a Licensed Insurer and Authorised Financial Services Provider (no. 2409). T’s & C’s Apply.

Digitally speaking

Blue Chip speaks to Bongani Khulu, senior executive at the Liberty Group, about why

digitisation is driving the future advice model – “human-augmented advice”.

The value of human advice has a digital dimension

It is not a controversial thing to say that the future of advice is digital

using all the best advantages offered by emerging technologies

which are continuing to evolve at an astonishing pace.

This means we are in an age where clients are expecting a lot

more from us in terms of what we offer both in the practical quality

of advice and the way we use technology to create efficiencies to

make their lives better through embracing digital tools. In doing

this, we need to find harmony between the digital and the human

dimensions of these interactions. Clients have a lot of choice, they

know what they want, and we need to offer cutting-edge service

and advice that allows confident decision-making.

Financial planning is about two commodities, the value of

advice, which is the critical commodity, and the commodity of time,

which is a form of efficiency. To build trust, both these elements

need to be a key part of the relationship-building process.

Our decisions are based on creating a brighter future: part of

this is a goals-based approach to deliver on the outcomes that we

set out in our philosophy.

Liberty’s advice philosophy

At the core of what we do at Liberty is our advice philosophy

which places the customer at the centre of what we do,

empowering them through the delivery of a human, living

and outcomes-oriented experience. In the first instance, our

advice must be human: in making the connection with clients

we must be aware of the humanity in what we do. Secondly, it

must be living. The living part speaks to the journey we want

to take with our clients, but also the advice that we give must

navigate our clients through their lives in a way that makes a

significant difference. And finally, our advice must deliver the

desired outcomes. When we speak about the desired outcomes,

it is what clients have asked for at the beginning of the process.

Ultimately with the smart enablement that we have been

building, partnered with the likes of Microsoft, Salesforce and

other global tech players, the resulting outcome will be a collective

“human experience” delivered through the relevant channels,

underpinned by a modern, digital, human-augmented platform,

supported by personalised client solutions.

Artificial intelligence and big data are driving Liberty’s value

of advice

Using artificial intelligence and

big data has several advantages

if used correctly. It improves

responsiveness, optimises client

engagement and improves the

client experience so that it is more

focused on individual needs.

Human augmentation is still

attractive to the client as it provides

both personal and balanced

advice – balanced in terms of time

and digital engagement. In terms

of advisor productivity, it provides

the commodity of time because

of its efficiencies. At this level,

adoption is critical to help build

an advice culture which helps

financial advisors win.

Bongani Khulu, Senior Executive,

Liberty Group

This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. The material has been created for information purpose only and does not

contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and

accepts no responsibility or liability as to the accuracy, or completeness, of the information presented.

Liberty Group Ltd is a licensed Insurer and an Authorised Financial Services Provider (no. 2409). Terms and Conditions, risks and limitations apply.

Blue Chip takes this opportunity to wish the FPI a happy 40th anniversary.


Rob Macdonald, Fundhouse, writes in his first of what we hope will be many

columns (page 17) that the FPI’s vision of Professional Financial Planning for All

is noble but he believes that if this vision is to be achieved, financial planners need to

re-imagine how they see themselves and the profession.

In an exclusive interview with Lelané Bezuidenhout, CEO of the FPI, on page

20, she tells us that a big change that she would like to see in the industry within

the next five years, is that financial management forms part of the South African

high-school curriculum. She feels that we need to teach children from a young

age how to work with money to address the poor savings culture in South Africa.

Many adults are struggling with financial strain, which has been compounded by

the effects of Covid in the last 18 months. Financial strain can be largely attributed

to a lack of financial knowledge. Our article on consumer education (page 107) tells

us that a lack of financial knowledge leads to high levels of debt, low savings rates

and little to no investments. Financial literacy is the ability to make sound decisions

regarding how much to save, when to invest and when (and not) to get into debt.

Globally, investors are aligning their portfolios with their ESG beliefs. While

South Africa has lagged this trend to some extent, ESG investing is taking hold as

investors look to bolster their risk analysis processes and generate more sustainable

returns over the long term. Old Mutual writes about climate science and why it is

important for long-run capital allocation (page 62). Momentum Investments speaks

to us about the Sustainable Development Goals (page 34) and Sonja Saunderson,

CIO, Momentum Investments, gives us her take on responsible investing (page 35).

Chris Rule, CoreShares, takes the passive vs active debate to a new arena on page 64.

Dr Gizelle Willows, Nudging Financial Behaviour, writes about the perils of risk

tolerance questionnaires. She says that understanding your client’s capacity for risk

is key to advising them on a sound investment strategy. Questionnaires remain the

simplest and most common method of assessing risk tolerance but take heed of Dr

Willows’ sage advice on page 86 before using them. Failure to use questionnaires

correctly may result in an excessively risky portfolio. On page 88, Kim Potgieter

writes about helping clients through unexpected transitions.

Do not miss our in-depth interviews throughout this edition of Blue Chip.


Alexis Knipe, Editor


In this


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.


ISSUE 81 |


Publisher: Chris Whales

Editor: Alexis Knipe

Online editor: Christoff Scholtz

Designer: Tyra Martin

Production: Aneeqah Solomon

Ad sales:

Sam Oliver

Gavin van der Merwe

Jeremy Petersen

Bayanda Sikiti

Venesia Fowler

Vanessa Wallace

Managing director: Clive During

Administration & accounts:

Charlene Steynberg

Kathy Wootton

Distribution and circulation manager:

Edward MacDonald

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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.







Blue Chip speaks to Bongani Khulu,

senior executive at the Liberty Group, about

why digitisation is driving the future advice

model – “human-augmented advice”



By Alexis Knipe




Message from the CEO of the FPI




University of the Free State SFPL




Milestones, news and snippets



Column by Florbela Yates, Head of

Momentum Investment Consulting




Column by Rob Macdonald, Head of Strategic

Advisory Services, Fundhouse



The FPI celebrates its 40th year

anniversary this year




Blue Chip speaks to Lelané Bezuidenhout,

CEO of the FPI



Meet the three Financial Planner of

the Year finalists



Francois du Toit, Director, PROpulsion

Podcast on winning an FPI award last year




A look at why awards matter


Special-Purpose Acquisition

Companies are the latest frenzy, by Fundhouse




By Mike Adsetts, Deputy Chief Investment

Officer, Momentum Investments




By Sonja Saunderson, CIO, Momentum





By Motlatsi Mutlanyane, Head of Alternative

Investments, Momentum Investments



Blue Chip speaks to Hymne Landman,

Head of Momentum Wealth and Momentum

Wealth International at Momentum Investments




By Natalie Harrison, Global Fund Specialist,

Momentum Collective Investments



Blue Chip speaks to Ferdi van

Heerden about Momentum Global Investment

Management’s latest acquisition of Seneca

Investment Managers Ltd.



Blue Chip met up with Scott Cooper,

Marriott Investment Managers





Capex levels have slumped in recent years, which

has led to supply-side problems. By Schroders



Blue Chip speaks to Andreea Bunea, Head

of Global Equity at Old Mutual Multi-Managers




The online investment platform powered by

OUTsurance, now allows financial advisors to offer

uncapped global equity exposure to their clients





Investing in well-diversified portfolios that comprise

more than just one asset class offers the most

appropriate route to navigating a challenging

investment environment. By Coronation




Glacier International offers access to

international investment opportunities.


COVID-19 vaccine

misinformation can harm

your health and financial











Climate science and

why it’s important for long-run

capital allocation



Taking the passive versus active

debate to a new arena



Blue Chip speaks to Brendan de

Jongh, Head of Research at PortfolioMetrix,

about their Sustainable World Equity Fund of

Funds launching in South Africa








No smoke or mirrors


Discovery Invest making sense of the

retirement landscape. Part 3



PASA discusses the latest draft

of the Upstream Petroleum Resources

Development Bill





1nvest speaks about the evolution in

the index landscape



Blue Chip speaks to Paul Fouché,

Chief Investment Officer from New Road






By Rob Macdonald, Head of Strategic Advisory

Services, Fundhouse




By Old Mutual Wealth




Blue Chip chats to Rory Brachner from

DoshGuide, a site to connect people that need

personal finance advice with a community of

flat-fee financial advisors




Where you (the financial planner)

can bridge the gap




By Kim Potgieter



The new book by Matthew

Blackman and Nick Dall



Momentum Financial Planning tells

us that Covid-19 vaccine misinformation can

harm your wellbeing








Discovery Invest making sense of the

retirement landscape. Part 4







Blue Chip sat down with atWORK’s chief

technology officer, Werner Koekemoer, to

discuss the biggest IT challenges facing

financial planners




We caught up with atWORK’s business

development executive, Trevor Stacey




Breaking the barriers



Ancillary Financial Services informs us on

compliance under POPIA




By Novare






We’re No. 1

Thanks to our incredible staff.

And we will do

even better

We won’t be happy until every client is.

Metropolitan is part of Momentum Metropolitan Life Limited, a licensed life insurer and

authorised financial services (FSP44673) and registered credit provider (NCRCP173)


Lelané Bezuidenhout CFP®

CEO, Financial Planning

Institute of Southern Africa


rebranding and

future plans

The CEO of the Financial Planning Institute looks

forward to the imminent FPI Professional Convention

and other exciting industry developments.

How quickly has 2021 gone? It seems like we

were grappling with the chaos of 2020 only

yesterday, now 2022 is suddenly around the

corner. I am just glad that summer is on its way,

and hopefully a bit of “normality” along with it.

Reflecting on the year fills me with pride for everything

that the FPI has achieved, despite the constant challenges

that present themselves in these upside-down times.

None of it would

have been possible

without the support

of our members, our

corporate partners

and our professional

practices. Thank you

and thank you again.

It is all about trust. A financial

planner who achieves the CFP®

designation demonstrates that

he or she has all the necessary

education and experience

to give advice impartially,

professionally and ethically.

Knowledge is power

By the time you

read this, Financial

Planning Week will be

done and dusted. It’s

an ongoing consumer initiative designed to highlight how

important financial planning is in a healthy society. Every

October, the FPI coordinates a range of initiatives to drive

home this message, including events, media interviews,

articles and social media posts.

It is all about encouraging everyone in the industry to

promote the benefits of comprehensive financial planning,

to highlight the value of FPI professional membership, and

to distinguish between proper, holistic financial planning

and product-orientated financial advice.

New look, same focus

FPIMYMONEY123 is the FPI’s financial outreach programme,

launched in 2012.

Over nearly a decade, it has touched the lives of thousands

of people, helping

them with personal

financial management,

budgeting and saving,

and showing them how

to deal with debt.

The time had come

to take the programme

to the next level, so we

enlisted the creative

brains at The Agency to

breathe new life into the

brand. As Sage Bassett,

head of design and

strategy, explains: “The rebrand called for a new approach,

including a refreshed logo and visual identity, a full website

redesign and the building out of brand assets like social

media campaigns.”

The redesign is guaranteed to take FPIMYMONEY123

to new heights and will hopefully empower thousands

more South Africans to take control of their finances.


While technology is a fantastic way of facilitating the

client and advisor relationship and driving efficiency,

it can never replace the human connection.

Why professionalism matters

In September, we ran a print campaign to remind the

community of the tremendous value of the CERTIFIED

FINANCIAL PLANNER® designation. The CFP® designation

is internationally recognised as the professional standard

for financial planning professionals and gives consumers

confidence that the financial planner they’re dealing with

is suitably qualified and up to date with developments in

the industry.

It is all about trust. A financial planner who achieves

the CFP® designation demonstrates that he or she has all

the necessary education and experience to give advice

impartially, professionally and ethically.

Full steam ahead

For our premier event of the year, the 2021 Professional

Convention on 25 and 26 October, the FPI has taken the

decision to go 100% virtual, partnering with The Conference

Company to bring you a truly engaging online experience.

The decision ties in perfectly with the theme of the

convention, “The Future is Human”. The theme was

chosen by our members, and it reminds us of the crucial

relationship between client and advisor, which is at the core

of every financial plan. While technology is a fantastic way

of facilitating that relationship and driving efficiency, it can

never replace the human connection.

Get ready for live polls, Q&A sessions and fun, gamified

elements that will enable attendees to interact at all times.

Message other participants directly using the Meeting Hub,

or even have a one-on-one video meeting. And because

all the presentations will be available for 30 days after the

convention, attendees can go back and watch what they

missed – and earn CPD points while they’re at it!

Of course, a conference is nothing without a stellar

line-up of speakers. Going 100% virtual has allowed the

FPI to pick the best of the best. Highlights include worldrenowned

cognitive neuroscientist Dr Caroline Leaf,

internationally acclaimed future strategist John Sanei, and

transformation coach Nick Elston, who will share his own

inspirational story of overcoming adversity to inspire you

to prioritise self-development.

If you haven’t already done so, book your seat now at

What’s next?

As always, we are constantly updating and amending our

strategy to ensure that the FPI remains relevant to our

members during these ever-changing times. And we’re

getting ready for 2022 – time flies.

I hope to see you at the Professional Convention or at one

of our upcoming workshops.

Until next time,

Lelané Bezuidenhout CFP®

CEO, Financial Planning Institute of Southern Africa


On the money

Making waves this quarter

Collaborative partnerships, professional convention and midlife money makeover



The Collaborative Exchange and the Association of Black

Securities and Investment Professionals (ABSIP) have

entered into an agreement, whereby both parties have

agreed to work together in areas of their respective

businesses where such opportunities are identified.

ABSIP is the lead custodian in transformation in the South

African financial services industry. Both parties have

identified several projects that are mutually beneficial.


The Financial Planning Institute of Southern Africa (FPI) Convention

2021 goes virtual – prepare to be wowed. The FPI’s 2021 “The Future is

Human” Convention will be held as a pure digital event. Due to Covid-19

restrictions and the vast demand for convention seats, the FPI is hosting

1Life, an alternative solution


for financial Date: advisors

25 and 26 October 2021

its 2021 convention as a digital-only event. To ensure that attendees get

the maximum benefit from the convention, the FPI has partnered with The

Conference Company and world-leading digital events software provider

EventsAIR to bring you a truly mind-blowing digital experience.


The FPI decided to give attendees what they really wanted at this

year’s convention, and asked its members to choose the theme,

topics and speakers. “The Future is Human” was selected as a theme

because now, more than ever, financial planners and advisors are

using technology in every aspect of their practices, from practice

management to financial modelling.

Venue: Online

Time: 08h00 – 17h00

CPD: 12.5 verifiable hours


FPI member: R2 500

Non-member: R3 000


by Kim Potgieter

I wrote Midlife Money Makeover in the middle of the Covid pandemic.

While this pandemic has taught us many things, it also highlighted

the many difficult challenges clients of the financial services industry

face. I have listened to heartbreaking client stories and have had many

discussions with planners about the tough conversations with clients

going through momentous changes.

With this book, I wanted to find a way to help clients and planners,

no matter the type of transition – whether it’s midlife, death, divorce,

loss of income, retirement or any other. It’s about pausing, tuning

in and really listening to what’s going on in your client’s head and

heart; 12 and then

guiding them through practical steps to formulate

a sustainable plan for reinvention.

There is a certain liberation in knowing that you have choices for

every aspect of your life – including your money. And when clients

decide to own that power and start to consciously create a life that they

are excited to live, chances are they will end up living their best lives.

This book is a call to action to take control of both your life and your

money – and to put money where it belongs – as

an enabler of your life.

The Change in Mindset Journal accompanies

the book. It is designed as a workbook and

contains many additional exercises to guide

people in healing their relationship with

money and create their best lives.

Midlife Money Makeover and the Journal are available for

purchase on Kim’s website, in all

good bookstores and e-tailer websites.

On the money

Making waves this quarter


The number of umbrella funds available, as well as the assets under

management in umbrella funds, has grown significantly over the last five

years as smaller standalone funds seek to manage costs and administration

procedures more efficiently, according to a recent Financial Sector

Conduct Authority (FSCA) report. Employers who decide to transition

from a standalone arrangement to an umbrella fund are tasked with

choosing retirement fund solutions that lead to the best outcomes for their

employees. This can prove challenging, as the available service offerings

vary considerably.

Understand the governance of the fund

Each umbrella fund is governed by a board of trustees tasked with

performing an oversight function and making decisions that ensure the

best possible outcomes for members. Hazel Hopkins, senior partner at

Axiomatic Consultants, advises employers to examine the structures of these

boards, paying careful attention to the balance between sponsor-appointed

trustees and independent trustees, and to ascertain whether members have

any input when it comes to appointing trustees.

Adv. Christi Franken, business development executive at Efficient Benefit

Consulting, agrees and says it is important to identify any conflicts of interest

that the trustees may have – particularly when dealing with “one-stop

shops”, as trustees should be able to make unfettered decisions.

Vusi Maswili, director at ASI Financial Services, says that in addition to

testing the credibility of trustees, one should examine the annual financial

statements and reports, explore the fund’s track record, find out how many

complaints have been lodged against the fund and whether there have

been any non-compliance issues. This can help paint a picture of how well

a fund is managed.


The Hamburg-headquartered German software developer, novomind

AG, has started to intensify its activity in the South African market.

With a local presence in Cape Town, and the cooperation of local

partners, novomind ensures customer proximity. According to the

novomind claim, “Customer focused. Technology driven”, proximity to

customers and a consistent focus on their unique needs, has always

been key to novomind’s success.

Being a German and European technology leader in its specific field

of expertise, novomind develops efficient software solutions for fast,

modern and high-performing online operations in commerce and

customer service. Among novomind’s customers are institutions and

associations, as well as government agencies of all sizes, financial services

providers, mid-sized companies and international conglomerates.

While novomind’s software is partly cloud-based and on-premises,

the company’s SaaS (software as a service approach) means that it can

be integrated flexibly in almost any environment. “With our software

technology, we are enabling our customers to continuously increase

their number of digital customer relationships across all channels and

to strengthen the value of these relationships”, says Michelle Greeff,

novomind Business Development Manager in Cape Town. “We are

passionate about South Africa and would like our software solutions to

create an impressive digital footprint all across the country.”


Company directors in South Africa feel predominantly negative about

economic conditions facing South Africa in coming months and are

also increasingly concerned over a shortage of skilled labour as well as

sometimes onerous union demands.

That’s the top line from the 2021 Institute of Directors in South Africa

(IoDSA) Sentiment Index – the sixth iteration of the study. The survey

seeks to gauge how South African directors view the current operating

climate. The survey was conducted earlier this year when South Africa

was on a national adjusted Level 3 lockdown due to the rising cases

of Covid-19. The IoDSA’s Vikeshni Vandayar says: “Governance and

corporate services who oversaw the report say while serious macroeconomic

concerns understandably remain around the boardroom

table, there is a welcome upside in that the perception of general

business conditions has improved from 2020.” She believes this may

be because of the positive adaptation to the so-called new normal

conditions of remote and virtual working.

This year’s survey included key questions around technology and its

uptake given the Covid-19-driven move to a virtual workplace. It’s an issue

that patently needs more top-level attention with just 46% of respondents

believing boards are devoting enough time to discussion around technology

and its future role. Only half of those surveyed believed that directors had a

high-level understanding of cybersecurity risks. Vandayar says while directors

are learning to live with the flux and mutability caused by the pandemic,

most respondents still feel the uncertainty of the South African economy has

impacted their business the most. To that end, corruption and inadequate

government service delivery remain in the top-ranked challenges affecting

business. Energy security is not as much of a concern as it was two years ago

but still ranks highly along with inadequate government service delivery.

On the money

Making waves this quarter

Educating your journey


When you choose to study with Milpark, you do not merely have us

as an education provider, but as a partner on your journey. Within the

School of Financial Planning and Insurance, we have an excellent team

of lecturers, who all have years of practical industry experience giving

advice to clients.

We offer the perfect combination of academic, theoretical and

practical – exactly what you need in such an applied field as financial

planning. We also have strong ties to industry and regularly involve

other subject matter experts in our teachings, to ensure that you get

exposed to more than just one way of thinking

and providing advice.

Our alumni have proven to excel in the FPI’s

Professional Competency Examination for CFP®

professionals, achieving an 18% higher pass rate

than our next competitor in the recent March

2021 exams. Partner with Milpark Education

on your journey to becoming the best financial

planner you can be for your clients.

Head of School: Financial

Planning and Insurance,

Pietro Odendaal







Choose Milpark Education’s School of Financial Planning & Insurance as

your partner on your learning journey to becoming a

Certified Financial Planner ® Professional.

Our Postgraduate Diploma in Financial Planning offers:


Register for your PG Dip in Financial Planning by contacting us on:

086 999 0001


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How do we build

your portfolios?

By Florbela Yates, Head of Momentum Investment Consulting

As a discretionary fund manager

(DFM), our clients look to us to

construct robust and diversified

portfolios that will perform

through the cycle regardless of which

asset class or investment style is in favour.

We are also expected to reduce volatility

wherever possible. In delivering on our

promise to clients – building portfolios to

achieve their unique investment goals over

a pre-determined time frame – we follow a

disciplined and proven investment process.

Florbela Yates

We call this process outcome-based investing

and follow three main steps.

The most important step is determining which asset classes we

need exposure to in order to maximise the probability of getting

to our investment objective (or performance outcome) over the

relevant investment horizon. Research done by our investment

teams in both South Africa and the UK shows that most investors

can’t stomach big bouts of volatility and disinvest when portfolios

are perceived to be too volatile. We therefore make sure that

we do not put too much of the client’s capital at risk over any

one-year period. Our modelling focuses on achieving the ideal

balance between capital protection and getting to the outcome,

to make it palatable for clients to remain invested.

The next step is to identify which styles will further increase

the probability of achieving the investment outcome. The

first choice in this step is whether to invest actively or

passively, and the two are not mutually exclusive. For some

asset classes it makes sense to invest via active strategies

while others may be better suited to a passive strategy.

Unless we are satisfied that active funds will consistently

outperform their benchmark after fees, we would prefer to

access that style using a passive or smart-beta strategy. But

the decision to do so is an active one.

We then determine the appropriate allocation to different styles

(such as value, quality or momentum within equities) to ensure

that the overall blend outperforms through the cycle, regardless

of which style is in favour.

Where we do use a passive strategy, the three main

considerations for going passive include:

• Costs: Even though passive fees are generally lower than

active funds, the rule remains that we look for consistent

outperformance after all investment fees. That means, after the

passive index fees as well as the DFM or multi-manager fees.

• Predictability or consistency: Does the passive fund increase

the predictability of that strategy within a portfolio? Consistency

is important. We do not chase an outcome at all costs, but rather

try to ensure that we consistently outperform over the relevant

investment horizon.

• Diversification: Nobody can predict which asset class, investment

style or sector is going to be the best performer over the period.

We focus on building diversified and robust portfolios designed to

perform through the cycle.

The third step involves identifying managers that are experts in a

particular strategy. We believe in using specialists and when we

select the funds to execute on a particular strategy, we make sure

that they are, in fact, able to do so. We also ensure that there isn’t

too much overlap between the underlying strategies, sectors or

stocks they are invested in. So, when we look through the portfolio,

we can better determine both the level of diversification as well as

the expected performance during various market scenarios.

Another factor that has gained importance is environmental,

social and governance (ESG) issues and their impact on

investment portfolios. Our manager research process includes

an ESG filter, and we determine the integration of their ESG

policy in their investment process. We take our corporate

activism seriously and believe that ESG is an integral part of

any investment decision.

There are many moving parts in any investment decision. And

they are often integrated. Understanding the interaction between

funds and the impact on the investment journey is a complex task

and requires skillful resources.

Understanding investment markets can be complex. But so

are human beings. Our clients are unique – they have varying

investment outcomes, different investment horizons and

liquidity requirements.

We understand this and we build solutions that cater for their

different needs. Because with us, investing is personal.

For more information, please contact your financial advisor or

Momentum Investment Consulting at

Momentum Investment Consulting (Pty) Ltd is an authorised financial services

provider (FSP32726) and part of Momentum Metropolitan Holdings Limited and

rated B-BBEE level 1.



Professional financial

planning for all

An opportunity to re-imagine our profession

Rob Macdonald, Head of

Strategic Advisory Services,


Rob Macdonald has held

several senior positions in

the investment industry.

At Fundhouse, he acts as

a consultant and coach

to financial advisors and

develops and facilitates

training programmes in

behavioural coaching and

practice management. Before

joining the financial services

industry, Macdonald was

MBA director at the UCT

Graduate School of Business.

He is co-author of the book

Rethinking Leadership and has

consulted, written and spoken

widely on a range of topics.

Macdonald has a Master’s

degree in Management

Studies from Oxford University

and is a CFP® Professional.

The FPI’s vision of Professional Financial

Planning for All is noble. But I believe if

we are to achieve this vision, financial

planners need to re-imagine how they

see themselves and the profession. I was recently

reminded of this challenge in conversation with

two financial planners.

One planner shared how he had spent

over 60 hours doing work for a potential

client. The client complimented him on the

quality of his work and his advice but decided

to implement the recommendations himself.

The planner had not agreed a fee upfront for

the work.

The second financial planner shared her

frustrations about a proposal for a R30-million

client. The planner was frustrated she had

not followed her normal advice process. The

client had insisted on getting an investment

proposal with recommendations upfront. The

planner usually only talks about investments

towards the end of her process. Even if the

client agrees with the recommendations,

they may not use the services of the planner

to implement them and definitely won’t pay

for the proposal.

Some might argue that these were two

difficult clients. Or were they just smart? Getting

professional expertise and advice for free.

Contrast the experience of the two planners

with that of the cardiologist I recently consulted

due to an irregular stress ECG. After a physical

examination, the cardiologist sent me for a CT

scan. Days after the cardiologist’s bill had been

settled, I got the news that I was fine. Payment

was not dependent on the outcome of the

cardiologist’s report. Imagine if we only paid

medical bills if we liked the results we got. And

yet many professional financial planners operate

like this. They do an analysis and present a report

or proposal in the hope that the client likes what

they see.

If professional financial planners working

with wealthier clients don’t get paid for all

the work they do, what hope is there for the

poorer sectors of our society to get professional

financial planning?

A few years ago, independent financial

planner Gregg Sneddon and I approached

the then FSB with a proposal to realise the FPI

vision of Professional Financial Planning for

All. We envisioned a replication of the medical

model which gets health services to the poor,

through government-backed public hospitals

and clinics.

Last year, I saw first-hand the power of

the medical model when my neighbour’s

housekeeper had a heart attack while jogging.

Treated in a public hospital she made a full

recovery. As a “poorer” member of society, she

didn’t have to pay for the world-class treatment

she received, but those treating her got paid

for their work. The public health system has

doctors who range in ability from worldrenowned

specialists to new graduates doing

community service.

Applying the medical model to financial

planning, newly qualified financial planners

could do their “community service” within

public financial planning clinics. Like doctors,

they could choose to go into public service or

private practice. More experienced financial

planners could work in the public or private

sectors, or straddle both. And they would

be remunerated in both sectors, probably at

different rates.

Financial planning for poorer sectors of

society is often nothing more than selling a

funeral policy. The broader financial health

of the individual is not considered. Through

a private-sector lens, it’s not economically

viable to do more than this. To achieve the FPI’s

vision of Professional Financial Planning for All,

we need a public financial planning service. It

will also ensure financial planning rightfully

becomes a respected profession, where the

value lies in the financial planner’s expertise

and advice, not in the product.



Life begins at 40

The FPI celebrates 40 years of financial planning excellence this year!

The Financial Planning Institute was founded as a nonprofit

organisation called the Institute of Life and

Pension Advisors (ILPA) in 1981. Despite the name

change, it has always had one primary aim: ensuring

high professional standards in the vital field of financial advice.

In the 1980s, the life insurance industry in South Africa suffered

from a poor public image and a lack of trust in its frontline

personnel. While there was a general recognition in the industry

that something had to be done, it took a few individuals with the

necessary passion and commitment to bring ILPA into being. They

had a vision of creating a professional body along the same lines as

those of which already existed for accountants, actuaries, lawyers

and doctors.

A global trend

Although it was formed as an independent South African

initiative, the ILPA was not conceived in isolation. On the

contrary, its birth was part of a worldwide trend towards

professionalising the financial advice sector. The increasing

complexity of financial support and investment mechanisms

and the scandalous behaviour of a small minority of ruthless

rogues who robbed people of their life savings had made

professionalisation a priority.

This global movement was born in America, but it wasn’t long

before other professional financial planning bodies sprung up

across the globe. The early pioneers of the profession in South

Africa looked to the US, the UK and Australia for inspiration.

Through travel and research, they were able to establish a

professional standards body to rival the best in the world.

One of the results of this research was the introduction of the

Certified Financial Planner® mark to South Africa. The “three most

important letters in financial planning” are reserved for financial

planning professionals who have attained an internationally

benchmarked standard of knowledge that is backed up with


sufficient practical experience and high

ethical standards. The introduction of the

CFP® designation played a major role in

professionalising the industry in South Africa.

The FPI was a founding member of the

international Financial Planning Standards

Board (FPSB), which is today the custodian of

the CFP® designation. The FPSB is dedicated

to managing, developing and operating

certification, education and related programmes

for financial planning organisations around the

world, including the FPI.

Local is lekker

While the ILPA was born out of a desire to

bring international standards to South Africa,

the industry in this country has more than

held its own when it comes to innovation.

The FPI has made its several invaluable

contributions to financial products and

professional standards, not least the

development of two local trademark levels

of membership: Associate Financial Planner

(AFP) and Registered Financial Planner (RFP). These two

designations serve as vital stepping stones for aspiring advisors,

while also reassuring the public that these advisors meet a

guaranteed standard of professionalism, expertise and ethics.

The FPI is uncompromising in establishing and maintaining

professional financial planning standards in Southern Africa.

It plays a major role in ensuring that the public has access to

competent financial planners who are professionally qualified,

are experienced and have agreed to abide by its code of

conduct, ethics and practice standards.

Many top financial institutions have adopted the FPI as an

independent standards partner and its members include both

general practitioners and specialists in particular branches

of financial planning. The FPI is recognised as both a SAQA

Professional Body and a recognised controlling body of SARS.

Since its origins, the FPI has widened its scope by turning its

attention towards creating a profession that includes people

representative of our diverse South African nation.

The FPI continues to focus on robust consumer education

around financial matters and the benefits of dealing with an FPI

professional member. The Institute also places major importance

on ensuring that its competency standards remain relevant to the

ever-changing regulatory environment and keeps up with the

latest trends in technology and behavioural science.

Onwards and upwards

The global pandemic has shown that Southern African financial

planners are a young, agile and hungry group of professionals

who are all for embracing change and the advances of the

Fourth Industrial Revolution. Here’s to the next 40 years!

This article is an excerpt of Mike Aldridge’s fascinating book, The History of the FPI.

The FPI is


in establishing

and maintaining

professional financial

planning standards

in Southern Africa.



Making a

difference in the

lives of others

After a journey of over 20 years, Lelané Bezuidenhout is now the CEO of the FPI where

she makes a difference in people’s lives by serving the FPI’s vision of professional financial

planning and advice for all. Blue Chip was honoured to interview this esteemed leader.



Lelané, you were appointed as CEO of the FPI in June 2019.

Please describe the trajectory that led you to this point.

I started my career in the financial services industry 22 years ago.

I have always had a passion for finding solutions to problems and

strengthening processes that complement business needs. From

a young age, I was a natural leader. My strengths are positivity, and

being a mentor, coach and relator.

Reflecting on my journey, I realise that each teaching moment

was necessary to prepare me for role of FPI CEO. There is nothing

glorious about being a CEO, it is a position that comes with great

responsibility and accountability.

Discipline and agility

are two of the most

critical components

of financial success.

What are the defining highlights of

your career?

While I am thankful for all that I learned

there, leaving the corporate world

was one of the defining moments as

it moved me into uncharted waters.

The world outside the security of a big

corporate is different and offers divergent opportunities.

Joining the FPI was another defining moment. It is quite a

humbling and enriching experience, at the same time, to work for

an NPC, as it is most definitely my calling to serve others.

What do you deem to be the most critical component to

financial success?

Having a personalised financial plan with clearly defined goals and

adhering to it. Discipline and agility are two of the most critical

components of financial success. The discipline to stick to the

plan, and awareness of the ever-changing financial and regulatory

environments. We need to understand that while a financial plan is

formed around one’s unique goals and needs, it is not cast in stone

and must change at various life stages.

Please outline areas of growth for the FPI in the past two years.

The FPI has been through the forming, storming, norming and

now performing stages. The area where a lot of progress was

made in the past two years was formulating a robust governance

structure based on King IV principles. Our governance body,

the board, has come a long way in the past two years and is

instrumental in moving the FPI forward, from a strategic point

of view.

The FPI strengthened its stakeholder relationships by ensuring

that we have a multi-layer engagement strategy across the FPI

and not just in the office of the executive. There is a succession

and contingency plan should a key staff member leave. We

became more risk aware and refocused on a robust enterprise risk

management strategy.

We enhanced our digital capability and increased our footprint,

which resulted in a larger audience across all our social media

platforms. This links into the FPI’s strategic objectives in creating

a greater awareness about the value of financial planning and

working with the FPI’s professional members.

The past two years have been challenging for all considering

the Covid environment – but despite these challenges, the FPI

managed to retain 97% of our professional members.

Our consumer education team had massive successes in

moving our FPIMyMoney123 programme online (see FPI YouTube

channel) to ensure that we are there for consumers that need help

with basic financial matters. Another area where we experienced

growth was in our online CPD offerings. We improved the quality

of our speakers as well as the content that speaks to professional

financial advice and planning.

We delivered two very successful conventions in 2019 (faceto-face)

and 2020 (completely virtual due to

the pandemic).

We managed to turn the FPI ship around

while we, as a team, refocused our outputs on

moving the profession forward and focusing

on our vision and mission statements as well

as our strategic goals.

What are the FPI’s core values?

Our core values are none other than the core values that we expect

our members to adhere to, being:

• Client first. Acting in the best interests of our clients

• Competence. We believe in upskilling our staff

• Confidentiality. Information that we hold on behalf of members

is protected

• Diligence. We take pride in what we deliver

• Fairness. We treat others how we would like to be treated

• Integrity. Always be honest, consistent and transparent

• Objectivity. We avoid all possible conflicts of interest

• Professionalism. We are excellent at everything that we set out

to do.

What are the FPI’s near-term objectives?


• The FPI leads the financial planning profession and professional

advice space through articulation and implementation of a

robust and well-defined strategy.

• Secure organisational sustainability (GCR, financial, operational

excellence and the FPI’s B-BBEE level).

• Lead diversity and inclusion in the financial planning and

advice profession.

• Grow the number of professional memberships.


• Empower consumers by creating awareness of the benefit of

professional financial planning and advice through financial

education and a pro-bono programme fully supported by members.

• The value of professional planning is showcased to consumers

through a brand ambassador programme and media engagement.


• Achieve regulatory/legislative recognition and protection of

financial planning as a profession and the FPI as the standardssetting

body for the profession.



• The FPI designations, and in particular the CFP®, are must-have

designations for consumers of financial planning and advice.

• The FPI designations are recognised by employers as musthave

designations for employees.

What are the FPI’s long-term strategic goals?

• Leadership. The FPI is the pre-eminent financial planning and

advisory standards authority for competent and ethical financial

planners and advisors. The FPI’s designations represent the

standard of excellence for financial planners and advisors and

their respective disciplines in South Africa.

• Awareness. The public is widely aware of the value of the

financial planning process and of the CFP® certification and

financial advice related designations.

• Recognition. Financial planning is recognised as a profession.

The FPI is recognised by regulation/legislation as the standards

setting body for professional financial planning and advice.

• Standards. The FPI has established standards of excellence

for financial planning and

advice, and members are in full

compliance with our certification

programme standards.

What is your strategy in terms of

membership growth?

Our goal is to grow professional

membership across our advice and

financial planning professional

designations. Focus areas include

attracting and retaining younger professionals as well as a more

diverse membership base.

Engagement with our recognised educational providers,

corporate partners and professional practices are key in

ensuring growth in both independent financial advice and tied

agent environments.

Our focus is on growing our professional competency

examination (PCE) support as we need to increase our pass rate

and improving our mentorship programme.

We are using more agile technology to assist us in managing

our pipeline, as we have quite a few affiliates on our database

who haven’t completed their journey in becoming professional

members of the FPI. This is evident from a study we did together

with SAQA a while back.

Please tell us about the industry benchmarks that the FPI

has fashioned.

The FPI Professional Practice Standards as well as the FPI Code

of Ethics. The Code was reviewed with the assistance of the

Ethics Institute of Southern Africa. The purpose of the Code is

to promote ethical behaviour. The Code incorporates rules of

professional conduct that instill confidence in the members. It

includes the framework for financial planning, known as the “six

steps of financial planning”.

The FPI set clear education standards for both the financial

planner and advisor. We aligned our curriculum and competency

standards with the globally recognised standards of the Financial

Planning Standards Board (FPSB), in which the FPI is the only

licensed affiliate in Africa.

Via robust industry engagement with practicing financial

advisors and academia, we authored and published the curriculum

and competency standards for financial advisors. The curriculum

includes class-of-business training for most, if not all, classes of

businesses as defined in the FSCA’s fit and proper requirements

(BN 194 of 2017).

We published our CPD policy that serves as a benchmark for

many financial service providers who must have a CPD policy as

per FSCA subordinate regulations.

We have published thought leadership papers on robo-advice,

pro-bono initiatives and transitioning to a fees-based financial

planning practice. The FPI members’ focus is advice-led and

not product-led which makes the transitioning to a fees-based

model paper very relevant to

the advice-based community.

The FPI is the pre-eminent

financial planning and

advisory standards authority

for competent and ethical

financial planners and advisors.

From a public policy point of

view: the FPI is very involved, via

our stakeholder engagement

strategy, in matters such as

the Retail Distribution Review,

national health insurance,

treating customers fairly via

active participation in public

comment into the Conduct of

Financial Institutions (COFI) Bill, the retirement and social reform and,

as mentioned, transitioning to a fee-based financial planning practice.

How can you ensure that a financial advisor's advice process is

aligned with the FPI’s code?

The FPI is not a regulator, but a professional body that sets

professional standards that include practice and competency

standards. Our practice standards are aspirational and are

conduct-based rather than rules-based. It is advisable that

financial planners and advisors align their processes to the

practice standards of the FPI as they will inherently comply with

FAIS regulations which are still very rules-based.

What changes would you like to see happen in the industry over

the next five years?

I would like to see the regulatory environment stabilise. Over the

past 20 years, we have been faced with constant regulatory changes.

I would also like to see more guidance from Treasury, the Financial

Sector Conduct Authority and the Financial Sector Transformation

Council on how to develop a more diverse and inclusive industry

that is representative of the demographics of South Africa.

A big change that I would really like to see in the next five

years is that financial management forms part of the South African

high-school curriculum. We need to teach children from a young



age how to work with money to address the poor savings culture

in South Africa.

What are the latest trends, developments and innovations in

this sector?

The latest developments speak to the digitalisation revolution that

we are experiencing. We have seen robo-advisors developing in

the past few years to such an extent that a definition had to be

written into FAIS regulations (BN 194 Automated Advice).

Advisors and planners are increasingly making use of

technology to improve their practices and relationships with

their clients. More and more, clients prefer to meet online via

platforms such as Zoom, MS Teams and Skype. The pandemic

has accelerated the development of digital strategies within

the industry. This led to the need for skills development in the

use of technology, understanding AI and its risks as well as

behavioural finance.

Please share the FPI’s recent milestones and celebrations.

Milestones: The FPI celebrated the launch of our first integrated

report since adopting the King IV principles. We increased our

social media following and digitalised our FPIMYMONEY123

programme to ensure that consumer education would still

continue throughout the lockdown levels when face-to-face

numbers were restricted.

The FPI is involved in setting a national consumer education

curriculum at regulatory level and continues to be involved in

ongoing discussions around incoming regulations.

The FPI had a fantastic virtual professional conference in

2020 and will have another one in 2021. We took our PCE,

which has always been a face-to-face exam, completely online

by incorporating AI and learning management systems to

ensure security.

Celebrations: The FPI achieved good results despite 2020. We

met all our targets and managed to keep costs down. We are also

turning 40 years old this year!

One of the FPI’s missions is to provide financial planning for

all. How can the FPI grow the pro-bono programme so that it

provides advice to all South Africans?

We need more of the FPI’s professional members to give back to

the community by participating in the pro-bono programme.

Members can claim CPD hours for the pro-bono work they do.

Access to advice and financial inclusion are quite high on the

agenda of FPI as well as the regulators. We need to make it easier

for all South Africans to have access to advice. It would be great if

a tax incentive, such as a tax deduction for paying for advice/fringe

benefit see the light of day.

We also need corporate South Africa, especially the FPI

corporate partners, to contribute financially to the profession via

sponsorships that will enable us to do so much more with our

consumer education outreach and financial literacy programmes,

which are available at no cost to the public.

How does the current pro-bono scheme work?

The FPI developed the material needed for members to present

the FPIMyMoney123 programme to a group of people. Members

of the public, schools, churches and employers, etc that want the

FPI to present the programme can visit to book a

session with a professional in their area.

The FPI professional members that present FPIMyMoney123

may claim CPD points.

In 2021, the FPI celebrates 40 years of financial planning

experience. What does this mean to you personally?

Confirmation that the FPI is part of the greater global community

when it comes to the financial planning profession. It also means

we are a professional body that the members can be extremely

proud of. We have reached many milestones over the past 40 years.

For me personally, it means that we are an agile, young but

robust profession that has so much more to give back to the public

at large as well as being involved in the career journeys of young

upcoming professionals.

In the 1980s, the FPI’s focus was solely on professionality in the

industry. What is the FPI’s focus now?

In the 1980s, the FPI as it stands today, did not exist. The FPI those

days was called the Institute for Life and Pension Advisors (ILPA)

and focused predominantly on the life and pension space. When

we became the FPI we started to focus more on advice-led activities.

We participated in the global job analysis survey earlier this

year and will soon be updating our competency framework and

curriculum to include learning outcomes that include financial

planning technology and behavioural finance.

Our focus is on the professionalisation of the industry at

large, especially the financial planning profession. This will

remain our focus for as long as we have consumers that make

use of the financial advice and planning services delivered by

our professional members.

Please share with us, the importance of the FPI’s strategy and

vision of “Professional financial planning and advice for all”,

against the backdrop of our current disruptive world.

Professional financial advice and planning go together. It is

not possible to separate the one from the other. It is of critical

importance that the FPI, as the standard setter of financial planning

and professional financial advice, continues to set relevant

standards for the profession in the face of the current disruptive

world, always taking our members into consideration.

Since the start of the global pandemic, people lost their

jobs, or had to take salary cuts. Families have lost loved ones,

often with no valid will or life insurance in place, sometimes not

even a funeral policy. The current times that we live in have no

doubt reconfirmed the FPI’s vision and highlighted the critical

importance of speaking to a professional financial advisor. People

can visit to find a FPI professional member

in their region.



How has Covid changed the FPI?

It has accelerated our IT strategy in that we moved faster into a fully

digitalised world. It opened the rest of the world to our members

who can now participate in FPSB webinars and online events.

Covid led to the FPI changing its world-of-work completely – we

work in a hybrid fashion now where staff work a minimum of 15

hours a week in a hot-desk environment and the rest of the week

from their homes.

Covid has changed the way the FPI measures outputs and

engagement with our members. Engagement with members has

increased by more than 50% via our digital tools and platforms.

Lockdown for the FPI did not mean shutdown; it led to an increase

in staff productivity and member engagement.

Our members now have more time to spend time with their

clients via online platforms. Technology platforms also enhanced

a lot of their capabilities that resulted in members doing less

admin as some of the functions were automated. Our FPI members

indicated, via a recent study conducted by the FPSB, that 60-80%

of their client meetings will remain virtual after lockdown is over.

Why has the FPI vision and mission changed to include

professional financial advice?

The FPI stepped into the advice space a few years ago as we

realised there were no real standards or competency frameworks

in the space. We have since developed a competency framework

and curriculum and registered theFinancial Services Advisor (FSA)

designation with SAQA.

We have two career pathways for FPI professionals – one that

is advice-led and one for financial planning. Updating the vision

statement also aligns with our advocacy stance around financial

advice and planning. Advice focuses on professional financial

advice that could include product advice as well, whereas planning

focuses on holistic financial planning linked to life goals, objectives

and long-term planning.

The end of your first year as CEO collided with the pandemic.

What did it teach you as a leader during this time?

It taught me that as a leader, you need your team and cannot afford

to be a lone ranger. When I stepped in, one of my mottos was and

still is, “Where there is unity a blessing is commanded”. I have seen

this manifesting throughout the pandemic as the team worked and

stood together.

It taught me to reach out to other leaders to learn from and

lean on each other. I realised how important it is to take good

care of oneself for the sake of the team. A tired CEO does not help

the team at all!

Why was 2020 a significant milestone for FPI advocacy?

During 2020, we reconfirmed our position in our response to the

draft COFI bill that the term financial planner needs legislative

protection. This is to ensure that a financial planner must have

the necessary abilities, skills and knowledge in place. Completing

a holistic financial plan takes a high level of technical knowledge

that stretches across all the financial planning components as

articulated in the global financial planning curriculum standards.

We need to get this right for the sake of the public at large.

Why is the protection of terms important for consumer protection?

The reason why this is so important from a consumer protection

point of view is that there are a lot of people that profess to do

financial planning and they do not. Selling a product to address a

single need (like a funeral policy) is not financial planning.

Financial planning focuses on the holistic picture that takes into

consideration financial and asset management and investment,

risk, tax, retirement and estate planning. It focuses on professional

financial advice and not product-led advice but may include

product advice as well. It takes a highly skilled individual to

ensure that the relevant qualitative and quantitative information

is collected and analysed using complex financial needs analysis

methodologies to ensure that a custom-fit financial plan is designed

and implemented for each client. One cannot merely copy and

paste one client’s financial plan for another as we all have different

goals, needs and financial objectives in life.


Aspirations as a child?

Primary school – to become a singer. High school – to

become a geologist or graphic designer. None of that

came to fruition, but I am still singing in the shower and

studying rocks that I pick up from all over the world and

arranging them in an artistic way in my garden.

And now?

To be needed where I am. To be present and relevant and to

participate in matters that make a difference in the lives of others.

I am a servant leader and will continue to be one.

Best advice ever received?

Don’t take comments seriously from someone that does not know

you personally.

What does the word family mean to you?

Everything. When no-one else is there, your family is there for you.

What do you enjoy doing when not at work?

Nature walks, studying something/learning something new and

riding off-road bike with my husband (he is a pro, I am not).


After 11 years of working for a large insurer, Bezuidenhout

joined the Office of the Ombudsman for Financial Services.

In this role, it became clear that there is a lot more that the

industry can do to ensure competent financial advisors

and planners serve the public. This is where her journey at

the FPI began, as the certification manager, then the head

of certification and standards. She believes that we have a

great profession that is yet to achieve its fullest potential!





The Financial Planner of the Year Award, the most prestigious award in the industry, endeavours to

acknowledge extraordinary Certified Financial Planners® from across the nation who demonstrate innovation

and professionalism as well as commitment to their clients. Meet the top three financial planners of 2021.



How has the process of applying for the Financial Planner

of the Year Award benefitted your business? Have you

made any significant changes to your business during the

application process?

I did not make any specific changes to my business during the

application process. For me, the most significant benefit of going

through such a rigorous process is that it made me step back and

appreciate the amazing progress that my practice has made in the

last years.

Do you believe that the FPI can improve the selection process

in any way?

My greatest desire is to get more and more people into the

industry and qualify as CFP® professionals. I suppose emphasis

could be placed on training and mentoring as part of the criteria

for selection. In that case, I believe it will motivate successful CFP®

professionals to assist younger aspiring professionals in obtaining

a CFP® professional qualification and ultimately becoming part of

this wonderful competition and organisation.

What are the changes that you would like to see in the financial

planning industry?

I would like to see better education of financial planning and the

industry at schools. If children are educated about the financial

planning industry while they are young, I do not doubt that it

will ultimately lead to a perception of professionalism and attract

strong candidates to the industry.

What are your long-term objectives – including those on

diversity and inclusion?

In 2018, I built and started a primary school with two of my

clients. We started with nothing and built a school where more

than 120 children are currently receiving the highest quality

education. This made me realise that one of my most important

long-term objectives is to deliver good-quality education

to South African youngsters regardless of their economic

background, race or gender.

Another objective of mine, which goes hand-in-hand with

my passion for education and the training of youngsters, is

the involvement of more junior advisors in my practice. When

a new junior advisor joins my practice, I always discuss the

importance of education in general, and the CFP® professional

qualification in particular. I also make my office and staff

available at no cost to junior advisors to give them a headstart

in the industry.

I chair a national advisors’ forum for over 2 000 advisors,

where I always aim to share my experiences and methods with

other advisors, especially young advisors so that more and more

clients can receive quality advice. I see it as a “pay-it-forward”

system, where the circle of inclusion continues to grow to the

benefit of everyone, including advisors and our clients.

I really hope that I can make a positive difference in people’s

lives. My father started working as a financial advisor more than

40 years ago, and I am genuinely in love with this wonderful

industry, and my passion for

financial advice, advisors and our

clients is in my blood.

I like to have a positive outlook

on life; I also do like to have fun and

spend time with my wife, Alida, who

enables me to thrive in my industry.

I have three kids, Christof (four

years old), Hans and Philip (both

one year olds). Life with twins is

always exciting with lots of time

to laugh with them and teach my

kids about my core values being

integrity, honesty, respect and

always being humble.

Hendrik Spies, Certified

Financial Planner®, Spies

and Associates



there is room for improvement. So, for me, it has been a fantastic

journey to find what the values are that I want to hold at the

centre of everything I do and then build a vision for our clients,

our practice and what I want to contribute to the financial

planning community.

Do you believe that the process of selection can be improved

in any way?

In a digital age, the process can be streamlined a lot more by

digitising the application process.

There are some “mental barriers” for people to enter because

they think their practice needs to be “perfect” before entering.

I think the action of entering (or deciding to enter) puts you

on a path to really delve deep into best practice standards and

starts a process of continual improvement in your practice that

sets you up to move from a good to an amazing practice. So,

what can be improved is a message to encourage financial

planners to start the journey because what you learn along

the way is priceless.

What are the changes that you would like to see in the financial

planning industry?

While there have been some great improvements in the way

clients are being charged fees, I think we can do better to align

services delivered with fees charged to clients.

Something great that is starting to emerge is that more

and more financial planners are learning skills to coach and

upskill clients to make better financial decisions and even

change the way they think about, and the associations they

make with money.

Financial planning is key to help education, but a big

part of the population has very limited or no access to

financial education or financial planners. I would love to

see technology being used to give everyone access to basic

financial education.



How has the process of applying for the Financial Planner

of the Year Award benefitted your business? Have you

made any significant changes to your business during the

application process?

When applying for a competition where you know you will be

measured against the best financial planners in the country and

the highest practice standards internationally, I was forced to

look at everything our practice does critically and see where

What are your long-term objectives – including those on

diversity and inclusion?

I want our practice to become one of the best in the country

for clients to work with while adhering to

the highest professional standards and

continually improving our clients’ financial

positions through excellent financial

planning. I want to empower all financial

professionals from all different backgrounds

to build better businesses and achieve

better outcomes for their clients.

I would like to build bigger and better

communities within the financial services

profession between people from all

backgrounds to better understand and

learn from each other.

I want to use technology to give more

people access to financial education.

Henri le Grange, Certified

Financial Planner®,

Le Grange and Associates




How has the process of applying for the Financial Planner of the Year

Award benefitted your business? Have you made any significant

changes to your business during the application process?

This is my second year of participating in the FPI Financial Planner

of the Year competition. Last year, I made it through to round

two as well. I thoroughly enjoyed the journey, the process and

competing against like-minded individuals within the financial

planning community.

Over the last two years, we have refined our business systems

by incorporating some of the key financial planning principles

and processes and adjusting our written proposal structures to

focus more clearly on the six-step financial planning process.

Two key roles that I place significant importance on were

confirmed during the application process, namely 1) that a

stringent and regular review process plays a vital role in the success

of a financial plan, and 2) active participation in our investment

committee to enhance my ability to provide up-to-date and

comprehensive investment advice to clients.

Having formed an integral part in growing Hewett Wealth to

where it is today and making it through to the final round of FPI

Financial Planner of the Year highlights the hard work that we have

put in to establish a financial planning practice that I am extremely

proud of. I feel that the industry will benefit from our tried-andtested

processes and procedures.

Do you believe that the process of selection can be improved

in any way?

I understand the severe impact Covid-19 has had on everyone’s

business from a financial and operating perspective, so I

must commend the FPI for managing to keep this annual

competition running.

Other than timeline communication, I thoroughly enjoyed the

application process, presenting my comprehensive financial plan,

and the process of running through the operations of my business

systems and methods during the site visit. I look forward to sharing

my views during the panel discussion.

What are the changes that you would like to see in the financial

planning industry?

Building a truly independent, professional financial planning

and advisory business should always start with the client

in mind – a clear focus on ensuring exceptional outcomes

for clients over the long term and delivering an all-inclusive

client experience.

I would like to see a greater emphasis placed on professionalism

(Certified Financial Planner®) when dealing with clients’ financial

affairs. Secondly, I would like to see the industry move towards

a more sustainable and mutually beneficial business model,

including the move away from the upfront revenue model.

Lastly, access to financial advice for lower-income groups and

appropriately costed models to meet their needs. Historically

these models have been costly, turning individuals away from

saving for the future

What are your long-term objectives – including those on

diversity and inclusion?

When Hewett Wealth was established in 2016, we set out

to establish a truly independent, professional financial

planning and advisory business focussed on ensuring

exceptional outcomes for clients over the long term. We

are proud of what we have achieved as a team over the

last five years. We have established a truly independent

advisory business, with a national footprint, without

compromising the integrity of the advice process and

client experience.

We would like to cater for the diverse South African

population in the long term and we would love our “employee

make-up” to reflect the same. However, given the size of our

business, the short-to-medium focus is to grow my branch in

Cape Town and ultimately expand our reach with a focus on

our target market. Key focus areas highlighted for growth are

as follows:

• Scaling advice through technology

to allow our employees to focus

on providing our clients with the

comprehensive value proposition

and review process they have

become accustomed to.

• Continually enhancing our value

proposition and product offering for

the ever-changing financial climate.

• Hiring employees to enhance our

expected growth.

• Building on service provider and

financial advisor community


Ryan McCaughey CFP®,

Executive Head: Western

Cape, Hewett Wealth

Blue Chip wishes the three finalists the best of luck!

It truly starts

with you

In 2006, it was all about winning, receiving an award, and being

recognised as the top in the country. That focus and mission

turned out to be a bit of a disappointment at the time, but

probably the biggest and best lesson for me.

I attended my company’s annual conference in 2006 and,

sitting in the audience watching the top 10 consultants

receiving their awards, I told myself, “That’s going to be me

next year.”

Lo and behold, in 2007 I made it to the top 10. I had achieved

my goal. My award and recognition were imminent.

The disappointment

All areas of the business came together for the conference at Sun City.

There I was, in my tux, excited beyond measure. I mean, the awards

event was held in the Superbowl. What a moment.

It then took a turn. There were so many people, most of

whom were chatting while the awards were being announced.

We weren’t called onto the stage, but rather asked to stand up

at our table when our names were called. I was behind a rather

large table decoration. No-one knew who I was, or even that

my name had been called. I was devastated. My moment had

been denied me.

The lesson

It was only many years later that I realised that the reason I had been

disappointed was because I had set my sights on the wrong things

for the wrong reasons. It was only then that I was able to let go of

the disappointment.

I realised that focusing on doing good work, doing the right thing,

and serving others is where the real satisfaction comes in. If you’re

recognised for that, then you know it was truly deserved.

If your focus is on winning an award, what is left after you

have done that? What you can do is continue to do great work,

make a positive impact on other people’s lives, and make a

difference, simply because you live out your calling, your

passion, and your purpose.

The journey since 2015

It was only in about 2015 that I managed to figure out my

calling. I began to focus on creating learning content for financial

planners, so as to equip them with the necessary technical

financial planning skills. As the offering and library of content

grew, I started offering CPD-accredited content, and in 2017, I

launched an online learning platform.

I kept creating content. In 2019, I launched the PROpulsion

Podcast to bring fresh interviews with a variety of guests that

would help financial planners even more.

March 2020: A turning point

In March 2020, when President Ramaphosa announced that South

Africa was going into level-5 lockdown, my world came crashing down.

I was stressed and I thought that it was the end of my business. What

was I to do? I couldn’t stop it, neither could I change it.

Inspired by someone I watched on YouTube, I thought that

the best thing to do was something that would take my mind off

what I couldn’t control, and where the outcome was uncertain.

I decided to go live on my YouTube channel every day as

long as lockdown was in place. Twenty-one days became 35

days, became 49 days, and eventually, 75 days. When we moved

to level 3, I went live twice a week, and as we moved to lower

levels, once a week.

The show is still going live every week, and we’ve produced

and broadcast more than 150 episodes of superior quality

content for financial planning businesses.

It’s not about me, but it started with me

The audience grew, and at some point, it evolved from an audience

to a community. The show brought people together, and they

started supporting each other through the very difficult time. So

many people stepped up and introduced me to other people, to

guests, to new ideas.

I made a promise that I would show up every day, no matter

what. That promise led to a place I never expected, and I am

eternally grateful for everything that transpired as a result.

When the Financial Planning Institute of Southern Africa

recognised me for the role that I played over the years in

helping advisors and furthering the Certified Financial Planner®

designation through the “It Starts with Me” award, it was a great

honour and totally unexpected.

The biggest lesson

When we take the focus off our own

self, our needs, our aspirations, and

our goals, and we set out to make

things better for and inspire others,

that’s when we unlock a whole

new world, new experiences, and a

greater level of satisfaction.

Receiving this award was

incredibly special, but it belongs

to everyone who opened doors for

me, who support me, who allow

me to do what I do, and who keep

me going. I appreciate every one

of you.

Francois du Toit, Director,

PROpulsion Podcast

I made a promise that I would show

up every day, no matter what.




This year marks the 20th anniversary of the FPI Financial Planner of the Year Award – the

most prestigious industry accolade that will change the life and career trajectory of one

talented individual. To mark the occasion, let’s take a look at why awards matter.

Winning the competition gave rise to a whole

whirlwind of new experiences,” says Hester van der

Merwe from Ultima Financial Planners, the 2020

FPI Financial Planner of the Year. “On a personal

level I have been connecting with awesome people, doing things

I have never done. For the practice, it has given our business

development team a very positive new angle to work with.”

On 25 October this year, Hester will pass the baton to a new

winner, and they will experience their own “whirlwind of new

experiences” as they spend 365 days in the limelight. That’s the

power of the FPI’s most prestigious award, something that 2013

winner Barry O’Mahony from Veritas Wealth will testify to: “When

we won, the effect on existing clients alone was extraordinary,”

he says. “They were so proud of their own decision to choose us.

Additional business, referrals and public engagements followed.

In the years that have passed, we are still living off the title.”

Financial Planner of the Year was launched in 2000 for

FPI members, and the inaugural winner was crowned in

2001: Debbie Netto-Jonker, the founder of Netto Capital and

Netto Invest. “The whole team was infused with a new sense

of purpose and rediscovered pride in their work,” she says,

remembering that moment. “It’s something that continues to

this day.”

Back when Debbie won, the media was filled with stories about

people suffering the consequences of inappropriate financial

advice. The mainstay of the industry at the time was the sale of risk

and investment products, often recklessly and with disregard for

the people who were buying said products. Financial Planner of

the Year changed that, shifting the focus from commission-based

sales to fee-based advice, with the client’s financial wellbeing

front and centre. The award also highlighted the importance of

professionalism in the industry and went a long way to reverse the


When we won, the

effect on existing

clients alone was


profession in diverse communities. Last year, Didintle Mokonoto, a

writer and financial inclusion strategist, was the winner.

Harry Brews’ Award: Previously the Chairman’s Award, this award

was introduced in 2010 to celebrate a remarkable individual who

has served the financial planning profession over a lifetime. In

2020, the winner was former divisional executive of regulatory

policy at the FSCA, Caroline Da Silva.

It Starts with Me: This award highlights a financial planner

who works tirelessly to promote the CFP® certification. Last

year’s winner was Francois du Toit, the founder and director

of PROpulsion Learning and Technology.

Top Candidate: This award recognises the year’s top-performing

candidate in the FPI’s CFP® Professional Competency exam. 2020’s

brainiac was Brandon Else.

negative public perception that had dogged financial planning

in the past.

Over the years, the competition has evolved to become even

more stringent. Besides the standard client testimonials, finalists

also have to have financial plans assessed, and they are judged on

competency, practice management skills, knowledge of the wider

industry and their ability to be a spokesperson for the profession.


Financial Planner of the Year is not the only FPI award. At this

year’s Gala Dinner, winners in five other categories will also

be announced:

FPI Professional Practice of the Year: BDO were the inaugural

winners of this new award in 2020, which recognises that

successful financial planning is always a team effort.

Diversity and Inclusion: This award honours an individual who goes

to great lengths to raise awareness about the financial planning


The FPI’s awards are important for a number of reasons. By

entering, CFP® professionals become better at what they do.

By pitting themselves against the best in their field, they are

immediately made aware of areas they can improve on, and how

they can better their client service. Should they win, or even

be shortlisted, their reputation

will be instantly enhanced, and

they will benefit from incredible

marketing opportunities. They will

simultaneously begin to attract

top talent to their practice and

existing staff will be motivated to

go the extra mile for clients.

But perhaps most importantly,

the awards move the whole industry

forward. Recognising the outstanding

achievements of colleagues raises

the bar for all financial planners and

practices, and is central to achieving

the FPI’s vision of better financial

planning for all South Africans.

This year’s Gala Dinner is imminent...

Who will be smiling in 2021?

Navin Ramparsad, Chairman

of the FPI Board



SPAC Attack

Special-Purpose Acquisition Companies are the latest investment frenzy as investors

ranging from hedge funds to everyday investors rush to access these speculative

assets in the hope that they might be investing in the next Tesla or Amazon.

What is a SPAC?

Special-Purpose Acquisition Companies (SPACs) are essentially

publicly traded companies that have no operations and hold nothing

but cash. A SPAC is a publicly listed shell company whose sole purpose

is to raise capital through an IPO and use those funds to buy a private

company, which in doing so, takes that company public. In effect, they

provide an easier way, a back door, for companies to list on a stock

exchange to be able to access public investors.

The founder of a SPAC is called a “sponsor”. These sponsors are

the face of the company and are responsible for:

• raising the funds that will be used to make the acquisition

• the management of the SPAC in the lead-up to the merger

• finding potential businesses to acquire.

For this, they are typically given a 20% stake in the SPAC with

the other 80% going to investors.

SPACs are also known as “blank-check companies”, because

investors commit funds months before they have any idea which

company the SPAC is targeting to purchase, placing all their trust

in the ability of the sponsor to find a good deal. Since SPACs

do not make anything or own any assets, it is the founders who

are the main draw. Investors bet on founders having the right

connections to identify a future winner, close a deal and bring

it to market.

From the time a SPAC is set up it has two years to complete

a merger, failing which investors can redeem their shares/funds.

If this happens, the sponsor will refund all investors and will

also lose any expenses they have incurred in the setting up and

management of the SPAC, leaving the sponsor out of pocket.

Why have SPACs gained so much popularity recently?

Over the past two years there has been a significant rise in the

number of private companies using a SPAC to list, and last year

they accounted for 56% of all companies that went public in the

US, up from 30% in 2019 and 21% in 2018 [1] . This back door, coupled

with investors’ willingness to take on the speculative investment

risk, has created a market that is now being compared to the tech

bubble in the early 2000s.

Once dubbed “the poor man’s private equity fund”, SPACs give

everyday investors an opportunity to invest in an early-stage

company in a hot sector before it goes public, an opportunity

usually limited to institutional investors and wealthy individuals.

This opportunity, coupled with the recent willingness of investors

to take on the risk of speculative investments in search of the “next

big thing”, has led to an insatiable increase in demand for SPACs.

2020 was a bumper year with SPACs raising more than four times the

amount of capital they did in 2019, and there is no sign of abating

as SPACs have already raised more money this year than in 2020.

Because of this investor demand to invest in the “next big

thing”, SPACs have focused on sectors that have given rise to

some of the most successful and quickest-growing companies

in recent history. It should come as no surprise then that SPACs

have focused on finding opportunities in the technology sector.

Table 1: Sectors SPACs are targeting

Tech* 74% 70%

Cannabis 3% 1%

Energy 7% 7%

Healthcare 11% 15%

Media, Telecom 4% 3%

Sustainability 4% 6%

*Tech” is inclusive of “Tech”, “FinTech”, “Property technology” and “Biotech”.




“SPACs provide an investment vehicle that benefits all

parties involved. However, like many investments, if the

story sounds too good to be true, then it probably is.”

Although the increase in investor demand is the primary

reason for the rising popularity of SPACs, a SPAC is also very

beneficial for their founders as well as the private companies

they take public.

Founders. In addition to their 20% shareholding, founders

generally receive an option to buy additional shares at a

significant discount at a future date, in exchange for providing

the initial upfront capital. The result of this is that a founder

will receive a sizeable shareholding in exchange for very little

upfront investment.

Private companies looking to list. Taking a company public

via a SPAC is much easier than going through the traditional

IPO process. Firstly, it is quicker, as a standard IPO process can

take anywhere between eight and 18 months, whereas with a

SPAC this can be done in under six months. Secondly, because

the SPAC is already a listed business and has gone through the

IPO process themselves, the regulatory requirement is far less,

as the private company does not need to go through the full

rigorous IPO process. This allows these companies to get around

the upfront regulatory framework.

So far so good then… Not so much

At this point you might be thinking that the story so far sounds like

a good one, as SPACs provide an investment vehicle that benefits

all parties involved. However, like many investments, if the story

sounds too good to be true, then it probably is. Digging a little

deeper, there is evidence that this is generally a case of large

institutional investors benefitting at the expense of the everyday

investor. Below we look at some of the reasons why this is the case.

1. Poor long-term performance

The performance of SPACs between the time of listing and the

actual merger is often very good. A study performed in December

2020 [2] found that out of the 193 SPACs still looking for investment

opportunities, only one was trading below their initial share price.

It is often at this point that everyday investors get lured in by the

hype and the promise of opportunity to invest. This hype is often

created by online message boards such as Reddit and other media

that speculate about the potential of an investment.

Unfortunately for investors, the performance of SPACs after

a merger has been far more disappointing compared to the

pre-merger hype and promise. In fact, a recent study[3] which

examined 47 SPACs that merged between January 2019 and June

2020, found that on average SPACs lost about a third of their

value in the 12-month period following a merger.

Despite this, retail investors remain keen to invest. This is

likely due to the attention drawn by the few SPAC mergers that

have generated significant returns, such as Virgin Galactic and

Draft Kings. These success stories help feed the narrative that

SPAC investing provides an avenue for everyday investors to

profit from access to high-tech, disruptive industries.

This, however, is not the case for founders and pre-IPO

investors (who are largely institutional investors) as the same

study found that 58% of early investors (pre-IPO) sold their

investment prior to the merger and received an average return

of 11.6%. SPAC sponsors did even better by achieving an average

return of 32% for the 12-month period post the merger.

2. Conflicts of interest

One of the biggest criticisms of the SPAC structure is the inherent

conflict of interest that sits between the sponsor and everyday

investors. This conflict arises because a sponsor only gets “paid”

when a deal is made. Therefore, it is in their best interest to get a

deal done and not to drive a hard bargain when negotiating and

risk losing the deal – something that would be in the investor’s

best interests.

This conflict can also lead to situations where a weaker

company that is not able to list via the traditional IPO process

chooses the SPAC route instead. A good example of this is

WeWork, who announced in March 2021 that it planned on

listing via a SPAC called BowX. This comes with its failed IPO in

2019 after it struggled to explain issues raised about its business

model and governance during the due diligence process.

Putting it all together

With such a sharp rise in the popularity of

SPACs and the speculative nature of the

investments, many market commentators

have likened this SPAC mania to the tech

bubble and are predicting this will all

come crashing down. Although the odds

do not seem to be in the end investors’

favour, it is too early to say whether this

will be the case. However, for us one

thing remains true: focusing on the

fundamentals of an investment and

understanding what you are investing

in, versus taking a speculative bet chasing

big returns, will more often than not lead

to a much better investment outcome.

Peter Foster, CIO,







What are the Sustainable

Development Goals?

These days you can barely attend an investment conference or listen to an asset manager

without hearing about ESG and a new acronym, SDG, or Sustainable Development Goals.

In September 2016, the United Nations developed 17 sustainable

goals with 169 targets to address the challenges of promoting

sustainable development around the world. An approach was

sought to align and assist organisations across the government

and private sector to embed sustainability in their value chains.

The SDGs are a call for worldwide action by government,

business and civil society to end poverty, protect the planet

and ensure prosperity for all. The 17 goals are set out in the

diagram below:

Business has a vital role to play in addressing the sustainable

development challenges, and to balance the challenge of reducing

negative impacts while still enhancing shareholder value to the

benefit of all stakeholders.

Over the last few years, business leaders (along with the wider

investment community, regulators and other stakeholders)

have been faced by more of the negative consequences

of industrialisation. Think about climate change, and the

interconnectedness of the global community, as seen by the

current global Covid-19 pandemic and the recent worldwide

disruption to supply chains when the container ship Ever Given was

stuck in the Suez Canal. The need for more balance in sustainable

development around the world is clear.

At Momentum Investments, as part of the broader Momentum

Metropolitan Group, we support the SDGs.

We focus on the goals that align well with our business. These are:

• Goal 3 - Ensure healthy lives and promote well-being for all at

all ages

• Goal 4 - Ensure inclusive and equitable quality education and

promote lifelong learning opportunities for all

• Goal 7 - Ensure access to affordable, reliable, sustainable and

modern energy for all

• Goal 8 - Promote sustained, inclusive and sustainable economic

growth, full and productive employment and decent work for all

• Goal 9 - Build resilient infrastructure, promote inclusive and

sustainable industrialisation and foster innovation

• Goal 13 - Take urgent action to combat climate change and

its impacts

In considering how we approach our infrastructure

development programme and impact funds, these SDGs were a

key consideration in defining how we wanted to step up to the

infrastructure opportunity set.

One of the realities that has come to the fore is considering

the social dimension and impacts of the projects that we

undertake. As a real-world example, our increasing support

for renewable energy projects and the ultimate aspiration

of reducing the South African economic reliance on coal

crucially needs to recognise the social dimension of such

a transition.

In forming part of this transition, we need to engage with

various stakeholders to ensure the

social implications in the workplace

and wider community are managed

responsibly. This is the basis of our

support for a “Just Transition”. As

investors, we can make an important

contribution as allocators of capital

to consider that the transition

produces inclusive and sustainable


At Momentum Investments,

we have extensive experience in

investing in alternative and unlisted

asset classes. Having a strong and

well-capitalised balance sheet

allows us to take a long-term view on

unlisted assets to the benefit of our

investors. When combined with our

integrated approach to responsible

investing, we create differentiated

portfolios with a unique and

compelling value proposition.

Mike Adsetts, Deputy Chief Investment

Officer, Momentum Investments

To find out more visit our responsible investing page at or watch our roundtable where we

discussed how we make responsible investing real: Momentum Investments is part of

Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).

My take on

responsible investing


Responsible investing is a much-talked-about topic in the

investment industry right now, globally and locally. It is

important to not just follow the hype around responsible

investing but also understand the merits ingrained in

this approach when it comes to investment philosophies and the

construction of portfolios. Responsible investing for us is thinking

beyond traditional financial gains but also considering the effect

on society and the environment.

The history of responsible investing

Responsible investing originated from a religious perspective in

the 1920s when some investors placed restrictions on investing

in alcohol and tobacco. From these early roots, it has evolved in

numerous ways taking into account the priorities of the time. More

accountabilities drove a focus on governance, and climate science

has pushed climate change to the fore. With this rich history, my

firm view is that responsible investing is here to stay.

Today, consumers want a greater level of insight into their

investments. They ask about the real-world impact their

investments have. Millennials, for example, think very differently

about investment management. They have social media, apps

and news at their fingertips, making them more informed about

the relevance of investing and its effect on the world.

However, in a world of sceptics and “window dressers” (we

call them “green washers”), responsible investing can get a bad

reputation. “Green washers” are those who negatively implement

the principles for responsible investing. Here are some examples

to illustrate experience1:

• In 2019, British Petroleum (BP) was accused of publishing

misleading advertisements about its low-carbon energy products

when more than 96% of its annual spend was on oil and gas.

• In 2018, Starbucks released a straw-less lid as part of its

sustainability drive. However, with this lid, there was more plastic

in the system than before.

The lesson here is that consumers must ask for transparency

and have an active interest in understanding where their money

is going. There are numerous codes and regulations pushing this

agenda forward that we need to uphold as an industry.

We have been signatories to the United Nations Principles

of Responsible Investing (UN PRI) since 2006. This institution is

a global driver of integrating responsible investment practices

into investment decision making.

There is also ample evidence of the benefits of responsible

investing. A study by Morgan Stanley showed that, in an analysis

of 3 000 US exchange-traded funds and mutual funds, the

funds managed using environmental, social and governance

(ESG) principles considerably outperformed their traditional


ESG investing outperforming the markets

An analysis of more than 3 000 US mutual funds and exchange-traded funds shows that sustainable

equity funds outperformed their traditional peer funds by a median total return of 4.3 percentage

points in 2020. During the same period, sustainable taxable bond funds outperformed their

non-ESG counterparts by a median total return of 0.9 percentage points.

Source: Sustainable funds outperform peers in 2020 during Coronavirus (24 February 2021)

In a world where people are grappling with the after-effects

of Covid-19, the interconnectedness of all of us has also driven

growth in interest in responsible investing. There is a growing

cohort of investors who want to make meaningful investments

with real impact for the future.

For me, responsible investing is not charity but a real

opportunity we face daily to deliver investment returns in a way

that actively incorporates ESG principles. Our portfolios take on

the challenge of using capital to

improve our environment and

the people who live in it. This

strategy brings us closer to the

average person, as it informs

them how it can benefit them

and their community. That’s how

we make it personal because

investing is personal.

At Momentum Investments,

sustainable and responsible

investment practices are a

material factor underpinning

our long-term success, as well

as the success of our clients.

To find out more visit our

responsible investing page at



Sonja Saunderson, Chief Investment

Officer, Momentum Investments

1Source: 10 Companies and Corporations Called Out For Greenwashing (2 August 2021)

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).


Investing with purpose:

going beyond

financial returns

An integrated approach to any investing is critical, if you

are to invest responsibly, explains Mike Adsetts, deputy

chief investment officer at Momentum Investments.

“What that means is that we disaggregate environmental,

social and governance factors, and we think about every single

type of investment we make from multiple perspectives.

“You need to be mindful of what the implications are for

employees if you decommission a fire station or close down a

These portfolios are not only

setting the bar, but they are

beating it and exceeding

even our own expectations.

coal mine, for example. What are the alternative career paths in

the new renewable energy place that you can put them into?

That’s an example of what we consider from the environmental

and social sides.”

Broadly, Momentum Investments’ impact investment

portfolios focus on three areas – alternative energy, social

infrastructure and diversified infrastructure. “Sometimes

this means investing in the unlisted space, which can be

disconcerting to more traditional investors, but we believe there

is real value to be found there.”

Importantly for Adsetts, these investments are closely linked

to very specific United Nations sustainable development goals,

to which Momentum Investments subscribes. “This is a level of

commitment we think is unique – not only in how we’re investing,

but in how we’re matching these investments specifically with

common, international goals for a better, more inclusive world.”

In practice: responsible investing, with great returns

Leading the charge on this is Motlatsi Mutlanyane, head of

alternative investments at Momentum Investments. Mutlanyane

has the complex responsibility of identifying these purposeful

investments, while being sure they are not only right from a

responsibility perspective, but that they will generate good returns

on investors’ money.

“Finding purposeful investments may not be as hard as it

used to be but finding ones that will also generate a strong

return becomes more complex,” explains Mutlanyane. “This kind

of strategic, goal-orientated investing means that our investors

can hold us accountable at the end of the day. I believe it makes

for better decision-making, and better-quality conversations

with our investors.”

So far, Momentum Investments has constructed four local

portfolios, which are all generating strong returns, despite

the Covid-19 pandemic that has negatively affected many

other investments:

• Momentum Alternative Energy Fund. The portfolio is

predominantly invested in unlisted equity instruments but

can also hold unlisted debt instruments of sustainable energy

companies and projects. Equity positions can only be minority

positions. Finance is provided to alternative energy initiatives,

renewable energy and energy-efficient projects in South Africa.

• Momentum Diversified Infrastructure Fund. The

portfolio is invested in unlisted debt-like and equity

instruments. It is predominantly invested in South African

as well as Southern African Development Community

opportunities with positive social and environmental

delivery objectives. Underlying assets have stable and

predictable cash flows as well as strong environmental,

social and governance features.

• Momentum Social Infrastructure Fund. The portfolio is invested

in debt and equity instruments related to social infrastructure.

Social infrastructure refers to student accommodation, quality

affordable housing and non-urban shopping centres.

• Momentum Impact Fund. This is a multi-asset-class portfolio

with an impact focus. The portfolio gains its exposure through

the Momentum Alternative Energy Fund, the Momentum Social

Infrastructure Fund and the Momentum Diversified Infrastructure

Fund. Like the underlying portfolios, the portfolio targets

underlying assets that have a positive societal impact through

addressing social and environmental challenges.

“These portfolios are not only setting the bar, but they are

beating it and exceeding even our own expectations,” explains

Mutlanyane. “The lack of infrastructure development in South

Africa specifically – due to long-standing inequality – is in dire

need of investment. Investing in such economic infrastructure

certainly makes sense, because we’re able to see significant

ripple effects, their job creation at scale. That’s good for our

investors, and good for South Africans in areas where these

developments are.


Finding purposeful investments may

not be as hard as it used to be.

“Government seems to want to work with the private sector

to fund this kind of development. They’ve identified about 276

projects that they’re trying to get to a stage where they are

bankable, and can be converted into projects that the private

sector would be able to invest in. We’re already involved in

this – and we’re actually hoping that more of our competitors

will also get involved, so we can leverage this for everyone.”

The role of the individual investor

While the positioning of many of these investments does come

across as institutional in nature, individual investors may believe

that infrastructure investments are of less concern to them.

However, this is not the case, as there is a myriad of ways in which

individual investors can influence and gain exposure to these

types of investments. Below are three:

Firstly, it is important to raise the profile and intent with responsible

investments. As advocacy grows, the extent of integration and

availability of responsible-based investments will grow.

Secondly, individuals can exercise choice in the case of

retirement funds with member choice and also engage with

trustees to bring these issues on the agenda as well as influence

which investments the

principal officers and trustees

of retirement funds choose.

Thirdly, there is a wealth of

investment types available that

can have exposure to less liquid

investments, which include

preservation funds, endowment

policies and retirement annuities

– areas where retail investors can

exercise their own discretion.

As the trend and demand for

responsible investments grow

and expand, the availability of

the types of portfolios that can

be invested in will expand. This

is something that Momentum

Investments is excited by and

an area in which the company

will actively expand into as

investment managers.

Motlatsi Mutlanyane, Head

of Alternative Investments,

Momentum Investments

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).





In celebration of Momentum Wealth turning 25 years old this year,

Blue Chip sat down with Hymne Landman, Head of Momentum

Wealth and Momentum Wealth International at Momentum

Investments, to find out what sets Momentum Wealth apart.



Hymne, please describe the path that led you to your current role.

My love for mathematics, problem-solving and challenges led

me to study Actuarial Science. I joined Momentum Metropolitan

in January 2005, after changing careers from reinsurance

to investments. I had the opportunity to fill various roles at

Momentum and RMB Investment Bank before being appointed

in my current role. In this role I have a unique opportunity

to combine my skill set and experience with my passion for

investments, clients, financial advisors and our industry at a

company that I simply love.

What do you deem to be the most critical component to financial

success – irrespective of income/social standing?

I believe it is important to always understand all aspects of your

personal finances fully and to take personal accountability for it.

While I always strongly recommend partnering with experts to

complement your own skills, I believe that you should understand

the implications of your decisions. And never live above your means.

Think about the future and remember that compound growth is

your friend when you earn it, but your enemy when you pay it.

Momentum Wealth celebrates 25 years of continual innovation

and investment excellence this year. Please share with us a brief

history of the business.

We are proud to celebrate 25 years in the investment industry.

Momentum Wealth started doing business as Momentum

Administration Services

(MAS) in September 1996

and today we are one of the

largest investment platforms

in South Africa. We soon

established the business as

an innovative player in the

industry focusing on product

innovation, efficient administration and a personal approach

in partnering with financial advisors to help clients with their

investment needs.

In the early 2000s, we launched the Momentum Wealth

International platform in Guernsey as an offshore investment

platform for South African and offshore clients. Investing through

Momentum Wealth International gives clients a true offshore

investment experience, diversification from local solutions with

exposure to multiple global markets and solutions that offer

leading estate-planning and tax benefits.

A recent and very exciting development is our partnership with

FNZ, a leading global provider of digital-first wealth management

solutions. We understand that clients and financial advisors

have different requirements than in the past. Advisor firms are

increasingly adopting technology in their practices for ease of

use and to create business efficiencies, and clients want more

convenient access to their investment information. Through this

partnership, we are accelerating the transformation of our retail

investment platforms to better serve the investment needs of

financial advisors and clients in future.

The fact that we are celebrating our 25th birthday this year

doesn’t mean we are old and obsolete! Quite the contrary – we

have a solid track record of partnering with financial advisors

to grow and protect their clients’ wealth and savings. Today, our

business is stronger than ever before.

What sets Momentum Wealth apart?

Momentum Wealth is one of the largest linked investment service

providers in South Africa.

Personal relationships and strong partnerships are in our DNA.

Financial advisors and clients become our friends and they are our

families, our grandparents, our parents, our children, and their

children – we want to make their dreams and aspirations come

to life. Their investment is something personal. It helps them to

achieve their financial goals on their life journey.

When something is personal, it really matters. That is why with

us, investing is personal.

Please outline Momentum Wealth’s areas of growth (including

new offerings, products and services) in the past two years.

We have seen exponential growth across our main solutions

over the past two years. Most notably the increase in demand

for offshore investment solutions and for guaranteed investment

solutions such as life annuities.

From a new business inflow perspective, discretionary

offshore LISP products have always been popular in our industry.

However, current trends

Financial advisors and clients become

our friends and they are our families,

our grandparents, our parents,

our children, and their children

have shown strong support

for offshore life wrappers

because of their potential

tax, succession and estate

planning benefits to clients.

During uncertain

economic times and volatile

investment markets, guaranteed solutions offer the certainty that

clients need while still offering solid returns after fees and tax.

Please provide an overview of Momentum Wealth’s local platform.

The Momentum Wealth local platform provides clients with

investment administration services, as well as access to the

Momentum Investments team’s skill and expertise and those

of other reputable investment managers and discretionary

fund managers.

We offer a diverse range of investment and retirement solutions,

with access to local and global investment markets to suit all

investment needs. Whether the need is to create and grow wealth,

protect it, or earn an income from it, we have a personal investment

solution for each client on their journey to success.

With the help of their financial advisors, clients can choose

from the broadest available suite of local and global investment

components and instruments. From basic unit trusts and

personalised model portfolios to exchange-traded funds,

direct shares and personal share portfolios, as well as other

specialised investment products. With our comprehensive range



of tax wrappers, financial advisors can help clients structure their

personal investment portfolios for optimal tax efficiency and

craft them to suit their unique circumstances and goals.

Advisors look to investment platforms

to ensure that investment services

and administration requirements

are handled timeously.

What are Category III Administrative Financial Service Providers?

Category III Administrative Financial Services Providers are

investment platforms that are governed by the Financial Advisory

and Intermediary Services Act. They are generally still referred to as

LISPs, or linked investment service providers.

An investment platform is like a supermarket from which you

can access various types of investment components like local or

foreign currency unit trusts, shares and model portfolios. These

investment components can be accessed through various types of

product wrappers, such as endowments, retirement annuities and

living annuities. The product dictates the legislative rules of the

investment, such as how investment returns in the product are taxed,

the restrictions on withdrawals and if contributions are tax deductible.

These vary for each product wrapper. To summarise, the investment

component would determine the return on the investment, and the

product wrapper would govern other aspects of it like how this return

is taxed and how much of it can be accessed when.

So, in general, an investment is a combination of investment

components within a product, enabled by an overarching advice

process. Given that there are so many options available to clients, the

value that a financial advisor can add is tremendous. Each client’s needs

and circumstances are unique, and so their financial plan should be too.

Investment platforms provide a universe of products and investment

components together with certain investment capabilities to advisors

for them to best meet the needs of their clients.

What, in your opinion, do advisors want from

investment platforms?

Advisors look to investment platforms to ensure that investment

services and administration requirements are handled timeously.

More importantly, they look to platforms to maintain their

regulatory obligations within reasonable costs, especially in

an environment of increasing costs. Our role is to continually

invest and optimise our platform through technology innovation

to ensure that advisors can increasingly remove the burden of

administration from their daily operations. Advisors also look

to platforms to provide a comprehensive suite of capabilities

together with their required range of investment components

to customise solutions for their clients’ specific investment needs.

What makes a successful platform?

A successful platform is one that can efficiently meet the needs of

advisors and their clients, offering a stellar and seamless experience.

It does so by providing a combination of a comprehensive suite of

investment components and capabilities that are enabled by cuttingedge

and reliable technology together with personalised service to

enhance the advice and investment process, execute transactions

efficiently and ensure the best interests of the client and the advisor.

To summarise, there are five ingredients to a successful platform:

• One: to offer a world-class service experience that meets the

requirements and fulfils the desires of advisors and clients,

within the ever-changing world we are living in.

• Two: superior technology. In a digital world, the security and

safety of the system and protection of information are some of

the non-negotiables.

• Three: simple business processes that can easily be adopted,

as well as digitally enabled processes.

• Four: demonstrable innovation and thought leadership

in our product offering. One such example is the use of

behavioural analytics to provide insights to advisors in

different market conditions.

• Five: it should have the ability to bring the investments

ecosystem into a one-stop-shop – some call this a supermarket

for investments. We feel it is more about making sure you do the

things to best partner with advisors and then do it exceptionally

well, offering a stellar experience for all.

Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider.

Momentum Wealth International Limited (FSP 13495) is an authorised financial

services provider in terms of the Financial Advisory and Intermediary Services

Act No 37 of 2002 in South Africa. Momentum Investments is part of Momentum

Metropolitan Life Limited, an authorised financial services and registered credit

provider (FSP 6406) (NCRCP173).


What were your aspirations as a child?

As a child, my parents gave me the gift of believing that I can do

and become whatever I aspire to do and to be. My interests have

always been vast and diverse, from performing arts and languages

to mathematics and medicine. It was a tough choice to choose

one field.

And now?

I aspire to make a difference in the world and to live life fully. It is

important to me to be kind, to pay it forward in life, and to make a

positive impact wherever I go and to whomever I meet.


Hymne Landman joined Momentum Metropolitan in January

2005. She filled various roles at Momentum and RMB Investment

Bank before being appointed in her current role in 2018. Landman

has extensive knowledge of the retail investments market, with a

particular passion for the LISP industry and the role of platforms in

enabling best financial advice for clients. She holds a BCom Hons

(Actuarial Science, Cum Laude) and qualified as an actuary through

the UK Institute of Actuaries in 2009.


The reason we have such specialised

solutions and capabilities is that we

have some really special people.

People who understand

that investing is personal.

Momentum Investments provides a multitude of investment businesses, tools,

solutions and capabilities to financial advisers and their clients. We have a diverse

set of investment options to suit each client’s individual needs. Together we then

manage it systematically so that they have the best chance of achieving their

goals. All thanks to our people – a team of passionate experts who understand

that it’s not just about the investments they’re managing, but also the people

investing their money. That’s why we say that with us, investing is personal.

Speak to your Momentum Consultant or visit

Momentum Investments


Momentum Investments


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


Finding specialist

global managers

The investment opportunity set available to invest offshore is

vast. There are specialist sectors and regions well positioned

to benefit from growth drivers such as demographics,

innovation, urbanisation and growing consumerism, and a

greater quantum of companies in which to invest and diversify.

There are also thousands of fund managers available globally

that are looking to take advantage of these opportunities to create

long-term growth for their clients. But how do clients decide

which fund managers to choose to manage their capital? Not all

managers are created equal, and the adage of “past performance is

not necessarily indicative of future results” couldn’t be truer within

the realm of asset management, which further complicates the

decision. Within this conundrum lies the benefit of a multi-manager

such as Momentum Global Investment Management (MGIM).

Having established the business in London in 1998, the true

benefit of MGIM is that we have a worldwide perspective. Our

investment universe and our client base are truly global, which

gives us unique insights into international trends, developments

and opportunities on offer. Through this global breadth, we

have spent 23 years creating global, well-diversified portfolios

by carefully selecting skilled managers that we believe can add

significant value over time. This entails looking beyond pure

performance figures to understand the true drivers of returns, the

investment teams behind the portfolio decisions, the style bias

implicit in a philosophy, and the consistency and repeatability of

the investment process.

The success of this process is best evidenced by our core global

equity solution, the Momentum GF Global Equity Fund1. With a

track record going back to 2009, the fund blends nine specialist

managers from around the world, including Robeco, Jennison,

Rainier and Contrarius. Be it high-conviction, active strategies or

data-driven, systematic strategies, the fund combines human

intellect with data science by incorporating carefully selected

managers for their specific investment style approach and some sort

of competitive edge. This brings several advantages for our clients,

including a blend of quality, growth and value investment styles,

lower underlying management fees, and access to specialist global

fund managers that many retail clients may otherwise not have

access to. This large and long-established global equity solution is

already available across the world and is now available to South

African investors.

A world of investment opportunity awaits and through providing

access to specialist global investment managers, the Momentum

GF Global Equity Fund has made investing in offshore equity that

much simpler.


1 This fund is eligible for investment by the general public as the Financial Sector Conduct Authority has approved the

application for solicitation in South Africa.


A combination of both

active and passive solutions

is key to solving for the

desired investment return

outcomes over time.

Systematic enhanced indexed funds: an attractive alternative to

passive funds

Passive strategies play a valuable role in financial markets today as they

provide access to various market exposures (beta) and are a means to

bring down costs. But passive funds are only a part of the solution,

because in the same way cost does not equal value, passive alone does

not solve for all investment outcomes.

A combination of both active and passive solutions is key to

solving for the desired investment return outcomes over time. There

are now investment vehicles available that use the attributes of

both solutions, combining the low-cost market exposures offered

in passive funds with the positive alpha profile that is associated

with a more active investment process.

These investment solutions, known as enhanced index funds,

employ a systematic data-driven and rules-based investment process

to slightly overweight securities with attractive characteristics and

slightly underweight stocks that are likely to contribute negatively

to performance over time. Unlike passive funds, which closely track

and hence earn the return of the benchmark, these systematic funds

can generate stable outperformance after costs over time with a low

tracking error against the benchmark.

We established the Momentum GF Global Sustainable Equity

Fund2 in May 2020 to provide investors around the world with

access to the advantages of enhanced index funds. Now this fund

is also available for South African investors.

The Momentum GF Global Sustainable Equity Fund is a

diversified, low-cost strategy that is well balanced across companies

that exhibit value, momentum and quality characteristics, as these

style factors have proven to show positive returns over the long

term. Environmental, social and governance (ESG) factors are also

incorporated in the investment process by excluding businesses

deriving significant revenue from controversial business activities

and ensuring a lower environmental footprint than its benchmark.

By overweighting stocks with attractive style factors and reducing

exposure to less sustainable companies, we

believe the fund is more likely to achieve

long-term stable outperformance versus

its MSCI World benchmark. Robeco, a

European-based investment manager

with more than 25 years’ experience in

systematic strategies and two decades

experience in ESG integration, selects and

continuously reviews all positions taken

by the fund. Robeco truly is a world-class

partner for our investors’ assets.

Although passive funds have a place

within investment portfolios, for costsensitive

investors wanting to increase their

chances of outperforming the market over

the long term, enhanced indexed funds are

a compelling alternative to consider.

Speak to a Momentum consultant to

find out more about these funds.

2 This fund is eligible for investment by the general public as the Financial Sector Conduct Authority has approved the application for solicitation in South Africa.

Natalie Harrison, Global

Fund Specialist, Momentum

Collective Investments

The editorials should be read in conjunction with the prospectus of Momentum Global Funds, in which all the current fees additional disclosures, risk of investment and fund facts are disclosed. The Fund is a sub-fund of the

Momentum Global Funds SICAV, which is domiciled in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier. The Fund conforms to the requirements of the European UCITS Directive. FundRock

Management Company S.A., incorporated in Luxembourg, is the Management Company with its registered office at 33, Rue de Gasperich, L-5826 Hesperange, Luxembourg. Telephone +352 271 111. J.P. Morgan Bank Luxembourg

S.A., incorporated in Luxembourg, is the Administrator and Depositary with its registered office at European Bank & Business Centre, 6, route de Trèves, L-2633 Senningerberg, Luxembourg. Telephone +352 462 6851.

MGIM is the Investment Manager, Promoter and Distributor for the Momentum Global Funds SICAV. MGIM is registered in England and Wales No. 03733094. Registered Office: The Rex Building, 62 Queen Street, London EC4R 1EB.

Telephone +44 (0)20 7489 7223 Email: MGIM is authorised and regulated by the Financial Conduct Authority No. 232357, and is an authorised Financial Services Provider pursuant to the

Financial Advisory and Intermediary Services Act 37 of 2002 in South Africa (FSP no. 13494).




During the past 11 years, as CEO of Momentum

Global Investment Management in the UK,

Ferdi van Heerden has been involved in many

mergers and acquisitions. Blue Chip speaks

to van Heerden about the company’s latest

acquisition of Seneca Investment Managers Ltd.

Ferdi van Heerden, CEO,

Momentum Global

Investment Management

What are the defining moments of your career?

Opportunities brought along by external approaches and internal

group changes and a “career wanderlust” to take bold chances.

These events were major catalysts in my career:

First was probably pre-university, after planning to do

engineering, I ended up with a Sanlam actuarial scholarship.

Joining Momentum at the start of its growth phase back in 1991

was a key moment in my career. The reverse takeover of the business by

Rand Merchant Bank formed great prospects. The creation of FirstRand

and the acquisition of Southern Life and Sage brought choices and

challenges. And an exciting position in Switzerland and the UK.

The key personal lesson for me is always leave on a good note,

which I have been lucky to do and has opened doors again for me.

Please provide an overview of Momentum Global Investment

Management (MGIM).

MGIM is an integral part of our broader Momentum Investments

business in Momentum Metropolitan, but with a truly global

investment outlook and capability set. MGIM was established in

London in 1998 as the international investment management

arm of Momentum Metropolitan Holdings Ltd. We manage a

wide range of investment solutions for a global roster of retail and

institutional investors (advisors and their clients from South Africa

and the UK as well as global IFAs specifically advising expat clients.)

Over the past decade, we have expanded our range of

solutions across several geographic markets, giving clients,

large and small, the benefit of our outcome-based investing



approach. We have had significant success in growing our client

base by working in close partnership with financial advisors and

wealth managers and we now have relationships in six continents.

All this makes us well-positioned to be the “first port of call” for

advisors when it comes to multi-asset solutions.

We manage multi-asset funds and model portfolios for our

clients, and we have a senior investment team that has been

together for more than 10 years. More specifically, MGIM is:

• A focused multi-asset specialist investment manager, with the

same outcome-focused philosophy as our sister companies.

• A superb, experienced and dedicated team with a wellestablished

diversified, disciplined approach, and a great

collegiate (“boutique”) can-do culture.

• Our business is built on long-term relationships with advisors,

wealth managers, Discretionary Fund Managers (DFMs) and trustees,

including other investment and service providers. We aim to deliver

risk-profiled portfolios with defined outcomes aiming to smooth

the investment journey, and therefore, keep clients invested over

the long term.

• With us, investing is truly personal.

Please tell us about MGIM’s acquisition of Seneca Investment

Managers Limited (SIML).

MGIM and our group invariably has an organic growth culture, but

we have grown through well-executed acquisitions. We attained

a range of model portfolios some years ago in the UK, and more

recently we acquired SIML.

When we were approached to participate in the sale process

of Seneca, the similarities between the businesses in terms of

culture, values and multi-asset investing were immediately

obvious, and SIML offered complementary skills to MGIM.

It has created a springboard for growth for the combined

business in the UK retail marketplace with the additional

benefits of a stronger offering and broader capability to deliver

to clients.

Despite the fact that Covid-19 reared its head so shortly after

initial negotiations, we believe the acquisition happened at exactly

the right time, resulting in a combined £4.7-billion of assets under

management and offices in both London and Liverpool.

The Momentum Multi-Asset Value Trust (MAVT) formed part of

the acquisition. What is its investment objective and approach?

MAVT is an independent entity, listed on the LSE, with an independent

board of trustees. MGIM (through the acquisition of Seneca) has the

investment mandate and distribution responsibilities for the Trust.

MAVT has a similar outcome-based philosophy to that of our multiasset


Its target is to deliver an annualised return of 6% plus inflation over

a longer investment term of five to 10 years. While it is a challenging

objective, it has been delivered over the past decade, and will

continue to be our focus. Aligned with this objective, is a commitment

to increase the dividend in line with UK inflation over the longer

term and again this historically has been delivered. We define the

investment approach as “refined value” across all asset classes.

The investment trust is unique because it:

• is risk-profiled, to benefit advisor solutions;

• has a discount control mechanism that enables liquidity; and

• has substantial historical reserves from which dividends can be

maintained even in tough times, without compromising on longterm

strategic investment allocation.

SIML’s slant towards out-of-favour companies affected its

performance during the pandemic in 2020 and after. Did this

impact MGIM?

It is true that Seneca is/was more value-focused in its approach.

As we all know, value was out of favour for a long time. However,

it was clear to us that they did not follow a classic value style of

investing, but more aligned to MGIM’s valuation-driven approach.

Value and the UK market saw a great bounce-back with the

announcement of the first vaccines in October/November 2020.

This resulted in the portfolios outperforming and the recovery has

been spectacular.

The two core inhouse Seneca funds have recently been included

in the FTAdviser Investment 100 Club which are the top five funds

in the UK domestic market in each of the 20 investment association

fund categories. Our funds were the leaders in their specific multiasset


The ex-Seneca investment team focus on finding unique ideas

and investment opportunities and has a track record of delivering

long-term value for their investors. These will be included in all MGIM

portfolios where possible, as they give uniqueness to the funds. Music

royalties, power of battery storage, etc come to mind as ideas.

Why is the deal a win/win transaction for both firms?

There are three audiences to consider:

• Clients (IFAs and investors). We have a far stronger combined

team and solutions range to support them in the UK. Our

solutions in other markets have started to benefit from this.

• Shareholders. An excellent outcome for Momentum Metropolitan

with a good return on the investment foreseen and targeted, and

for the Seneca sellers, a superb way to exit their shareholding to a

firm that can provide growth for staff and clients.

• Staff. There is a similar culture between MGIM and ex-Seneca in

terms of ownership and accountability, as well as the passion of

employees for the business.

Please give an overview of the funds that were rebranded

following the acquisition.

Five risk-profiled funds for the UK market make up the range:

• VT Momentum Diversified Cautious, Moderate, Balanced, Growth

funds, and the VT Momentum Diversified Income fund.

• They target UK CPI+3%, 4%, 5% and 6% respectively over different

suggested investment holding periods.

• These are currently only available to UK investors, as they are not

Section 65 approved in South Africa.

• MAVT, with a similar investment (multi-asset) focus, should

be available from stockbroking platforms in South Africa as

it is LSE-listed.



Many of the underlying holdings will be held in the South

African offshore funds of MGIM, being the Momentum Global

Cautious, Global Managed and Global Growth Fund, all of which

have been available to South African investors since their inception

in 2008 (with a great investment track record).

MGIM offers a range of seven risk-profiled managed model

portfolios to UK advisors and their clients, available on multiple

UK domestic fund platforms.

With the expansion of the company is MGIM still able to place

the client’s goals at the centre of the investment process?

Absolutely. Our shared outcome-based philosophy has most

definitely prevailed and is very much hard-coded in to our

investment process. This is the DNA of both MGIM and Seneca. If I

have to say so, even more so than before, especially given our skill

set and range of solutions for advisors in multiple jurisdictions.

The combined SIML and MGIM funds create a comprehensive

offering for advisors and DFMs. What is this offering?

Our MAVT investment trust has gained significant traction with

DFMs effectively recognising our different approach and wishing

to boost diversification within their own client portfolios.

We have a range of inhouse-managed model portfolios for

advisors and DFMs. We provide bespoke solutions where we

partner with DFMs in all our markets (including SA, the UK and

expat regions) as their investment engine.

MGIM has a range of single-asset-class funds that have been

developed over the years to enable our multi-asset solutions and

are now all in a UCIT vehicle and will soon be available in all our

markets to advisors and DFMs. These will make excellent additions

to DFM propositions and/or client portfolios across our markets.

Mostly, we are well-positioned and resourced to partner

with more advisor firms and DFMs to help them construct

investment offerings.

Where do you see MGIM expanding in the short term?

We will continue to focus on what we do best, which is our

outcome-based multi-asset and single-asset solutions, working

in partnership with and in support of advice-led investing. So, that

means really focusing on enabling offshore investing for South

Africans where they need this in their diversified portfolios, and for

our multiple international advisors. And gaining far more traction

in the UK domestic market and building on the recent acquisition

of Seneca is key.

We will grow our investment consulting practice, and work with

trustees of large pension schemes and charities.

What are the latest trends in this market that pertain to your

business directly?

New ways of work have emerged over the past 18 months. Digital

enablement and mobile execution are important, especially from

an advisor and investor perspective. For MGIM, this means working

closely with fund platforms to enable this. Climate focus and are

also very important and we have recently launched a number of

new funds following demand from our advisor network.

Closer to home, consolidation in distribution and end-to-end

vertical integration. Is this the end of independent advice? As a

firm, we drive advice-led investments; and work with and hope

to enable investment propositions of advisors.

In multi-asset management, finding asset classes that are

uncorrelated and can deliver a balanced outcome and a smoother

journey. The traditional 60/40 portfolio split is not appropriate for

the world of today, and hence we need to truly explore alternatives.

Analytics and the ability to source information globally across

multiple data sources.


Management style?

I do as I expect others to do. I am hands-on and do what is

needed. I enable people to develop their best selves, by giving

and creating opportunities.

Do you want to be liked or respected?

I have never aspired to win a popularity contest. I wish to be

respected for what I do, how I behave, and how I lead people and

the business. And hopefully, it will show that sometimes unpopular

decisions have popular outcomes.

Personal best achievement?

Most definitely convincing my wife to be my partner, supporter

and encourager in life.

Perhaps the biggest gratification comes from the people that

I appointed and saw achieving their own best outcomes. For me,

satisfaction comes from enabling people and seeing them flourish

and be successful – like how I was given opportunities in my career.

Currently reading?

Morality, by Jonathan Sacks. It is about restoring the common good

in divided times and about a Cultural Climate Change in the world

that needs urgent attention. The rise of selfishness, loss of trust, shift

from us to me. A progressive culture of inclusivity and diversity in

business is critical for success.

Blue Chip advice?

Stay true to who you are. Promote positive stories and responsible

behaviour. The world has enough challenges.


Van Heerden joined MGIM in 2010 after the position as CEO of a

start-up insurance venture in Switzerland for three years. He has held

several senior executive positions in both Momentum and Momentum

Metropolitan Holdings Limited, and the FirstRand Group, both listed

companies on the Johannesburg Stock Exchange. During his career of

almost 20 years with the Group, his responsibilities included heading

up Momentum’s individual life operation, the private pension fund

administration business, as well as FirstRand’s consumer banking

division. Van Heerden has 35 years’ experience in the life insurance and

investment industries in South Africa, the UK and Europe.


Looking for a true

global investment partner?

Momentum Global Investment

Management (MGIM) has a long

heritage of partnering with and

supporting financial advisers with their

investment management needs.

MGIM, Momentum Investments’ international investment business based in

the United Kingdom, focuses on designing, building and managing

outcome-based investing products, delivered through multi-asset, single

asset and tailored client solutions.

We follow a true partnership approach with financial advisers.

Because with us, investing is personal.

Momentum Global Investment Management Ltd (FSP 13494) is an authorised financial services provider.





Blue Chip met up with Scott Cooper, Marriott Investment Managers, to find out what his

take is on the inflation that is, and has been for some time, driving the markets.

What is Marriott’s investment style?

At Marriott, our investment objective is to create financial peace of

mind through more predictable investment outcomes by applying

an income-focused investment style. This investment style requires

the selection of securities that produce reliable dividends (income

streams), ideally growing for the long term.

Please outline Marriott’s portfolio security selection process.

How does it work?

A key discipline of Marriott’s income-focused investment philosophy

is to only invest in companies that produce reliable and consistent

income streams. To assist in this selection method, we apply a

security filtering process:

a. Market Cap Filter. International companies need to be listed on

S&P 500, FTSE 350, FTSE EuroFirst 300. This excludes smaller, more

speculative investments.

b. Dividend Filter. Companies that have not paid dividends over

the last three years are filtered out.

c. Economic Screen. We exclude companies vulnerable to changing

economic conditions.

d. Industry Screen. Companies operating in unpredictable industries

are filtered out, such as commodity producers.

e. Company Screen. We avoid companies with specific risks to

dividends, for example, companies with too much debt or that have

ESG concerns.

f. Yield Screen. Companies offering investors best value are selected

from the remaining pool of securities (Marriott’s investable universe).

A security/investment will only be included in a portfolio if it enhances

the portfolio’s yield/growth trade-off.

Our selection process filters out any security where future

dividends are hard to predict – a process which markedly

reduces the risks typically associated with equity investing.

These companies tend to share five characteristics which

ensure predictable dividend growth: 1) fulfil a basic need;

2) strong brands; 3) pricing power; 4) growing markets and

5) diversification.

By the nature of their business, they will be largely

unaffected by broad governmental, political and economic

decisions. They tend to fare well in both recessionary and

growth phases of the economic cycle as their products are

generally everyday necessities, with market dominance a

function of their brand. With a rapidly growing consuming

class, these companies are well-positioned to take advantage

of a growing demand for trusted brands – invest your money

where you spend your money.

Please tell us about Marriott’s international equity portfolios.

At Marriott, we have two types of international equity

portfolios. Firstly, our international funds. Excitingly, we

have just reduced the minimum on these funds to £1 000 for

the First World Equity Fund and $1 000 for the International

Real Estate and International Growth Funds. These funds

are listed in Dublin and invest in a range of high-quality,

multinational companies.

Secondly, we offer investors UK Sterling denominated

offshore share portfolios that enable investors to hold the

shares directly. Investors can choose between an income

growth and balanced option.

Why choose one of the international investment portfolios?

Investors can select one of two managed discretionary

portfolios, the IIP Income Growth and IIP balanced portfolios,

mentioned above.



Income Growth. This portfolio is fully invested in the shares of

high-quality, multinational companies and is designed to produce

inflation-beating income and capital growth due to its high equity

exposure. Capital growth will primarily be a function of income

growth as opposed to capital accumulation. A higher-risk option.

Balanced. This portfolio contains approximately 15% exposure

to our First World Hybrid Real Estate (FWHRE) Fund (which invests

in a combination of direct real estate in the UK and listed real

estate investment trusts) and is designed to produce inflationhedged

income and capital growth through a balanced asset

allocation including equities and real estate. Capital growth will

be a function of both income growth and capital accumulation.

A more moderate risk option.

Most IIP investors benefit from a reduction in US withholding

tax from 30% to 15% on dividends earned from US equities.

The total investment management fee is just 0.75%, reducing

to 0.45% on a sliding scale depending on the investment amount.

The overriding market theme for 2021 has been one of inflation.

Currently, we are facing shorterterm

inflationary pressures. What

is your take on this? Will these

pressures be sustained?

Inflation has been front-of-mind

for investors and asset managers

alike for some time now. There are

certainly two schools of thought

as to whether inflation will be

sustained. We still believe that

it will be transitory, driven by a

range of factors including supply

bottlenecks, base effects, rising energy prices, shipping delays

and other costs associated with the reopening of economies.

These factors are still very evident in recent data releases, for


• Recently, we saw the UK’s CPI jump to 3.2% from 2%, its largestever

increase in the 12-month CPI rate. However, a large part

of this was driven by base effects – in August 2020, the UK

government launched an Eat Out to Help Out scheme that

offered customers half-price food and drink to eat or drink in,

artificially lowering the 2020 baseline.

• Estimated Eurozone inflation, as at the end of August, jumped

to 3%. However, if you strip out the impact of rising energy

prices, the inflation rate is just 1.7% over the last 12 months.

• In the past few months, Consumer Price Index inflation in the

US has reached its highest level in more than a decade. We

have begun to see the headline inflation numbers trending

downwards as base effects and other inflationary pressures

begin to subside.

We also need to recognise that some inflationary pressures

are stickier than others and will continue for several months.

The shortage of long-distance truck drivers in the UK is a good

example of this. The shortage is putting upward pressure on

wages and these additional costs are flowing through to the cost

of transporting goods. Although the shortages will dissipate over

time, they will not disappear overnight.

Overall, we feel inflation will still be transitory, but the

transition may be slightly longer than some market commentators

initially suggested. At Marriott, our key focus remains to identify

companies that are well-suited to the long term but can effectively

deal with the shorter-term inflationary pressures.

In 2020, global debt climbed to an all-time high and the pace of

recovery has been uneven. Should investors be worried?

There is no doubt that the global economy faces a few challenges,

including an increasing debt burden. In 2020, global debt

climbed to an all-time high – approaching $300-trillion. Further,

it has become evident that the pace of economic recovery is very

uneven across the globe. China’s economy managed to surpass

pre-pandemic levels during 2020 and the US has just passed that

mark, but many other countries may not recover until 2023 or

beyond. The elevated debt levels

At Marriott, our key focus

remains to identify companies

that are well-suited to the

long-term but can effectively

deal with the shorter-term

inflationary pressures.

and uneven global recovery are

likely to weigh on global growth.

Should investors be worried?

I think that very much depends

on what they are invested in. Take

Proctor & Gamble, for example, a

company held in our international

equity portfolios, which has an

excellent track record of growing

dividends even through market

and economic turmoil. It has

increased dividends 65 years in a row, including a 10% increase earlier

this year (compared to a double-digit decline globally).

Aside from an excellent track record, the company has a strong

balance sheet, is diversified across countries and product lines, and

holds market-leading positions resulting in powerful brand loyalty

and pricing power. Last year, Proctor & Gamble was able to grow

its organic revenue and core earnings

per share by 6% and 11% respectively

despite the pandemic and, looking

forward, has already announced price

increases for key product lines later in

the 2021 calendar year.

At Marriott, we believe there are

a range of companies that are wellsuited

to the long term and which

can effectively deal with short-term

inflationary pressures. Companies of

this nature tend to be less volatile and

more resilient, meaning that outcomes

for investors are more predictable. Our

international equity portfolios contain

many such companies.

Scott Cooper, Investment

Professional, Marriott

Investment Managers



Why capex is key to solving

the supply chain issues

hampering the economy

Capex levels have slumped in recent years, which has led to supply-side problems from

steel to semiconductors and even a shortage of bicycles as well as HGV drivers.

There are many incentives for capital expenditure (capex).

Companies may invest in new technologies that help

boost productivity and allow them to become more

efficient. Or there may be inflationary pressures that

companies want to offset with less

waste, or through new equipment

that will allow them to become more

productive but will also help with the

use of raw materials.

So, there is always an incentive

for capex, but in recent years capex levels have not kept pace

with depreciation, particularly from about 2017. There was

also a significant deterioration in 2020, during the Covid-19

pandemic. As a result, a material underinvestment in capex has

built up in recent years.

A material underinvestment

in capex has built up

in recent years.

Some industries, such as coal and oil, have also consciously

underinvested due to environmental, social and governance (ESG)

pressures from investors.

Underinvestment and supply shortages

We are seeing numerous examples of supply

shortage, from steel to semiconductors, as

well as haulage drivers in the UK and shipping

containers in China. Consequently, there is

a huge tailwind of pressure to respond with

supply-side initiatives, which we think basically boils down to capex.

On top of the need for higher spending by corporates,

governments around the world are set to accelerate their spending

after the Covid-19 crisis. The EU’s recovery package, which will

begin to be spent in 2022, will be tilted towards green initiatives.



This could be for new infrastructure to charge electric vehicles

(EVs) or for the more efficient transmission of electricity and or

super-fast broadband. And then in the US we have President

Biden’s infrastructure programme, which will be focused on

spending on capital equipment covering renewables, airports

and mass transportation.

Governments around

the world are set to

accelerate their spending

after the Covid-19 crisis.

Perfect storm of inflation pressure and underinvestment

So, there is an underinvestment backdrop, combined with

inflation pressure which is encouraging companies to invest to

improve sooner rather than later. With a high backlog of orders

and supply shortages, we currently have a perfect storm to

encourage capex.

Our forecasts see capex growing by about 12% this year and

then by 8% in 2022, which has only recently been upgraded

by 5%. And this is a conservative estimate; we’ve already seen

revisions to this figure and expect further upgrades. We are now

about to hit peak capex, compared to levels seen in the past.

However, if these figures are adjusted for inflation, we are still

at much lower levels than we should be.

So, while capex is lower than it should be on an inflationadjusted

basis, it is also well below where it should be on a capex

to depreciation basis (ie a company’s total capex versus the rate

at which its fixed assets decline in value).

And then there are also government spending programmes

that are coming through.

What does this mean for investors?

This presents a two- to fiveyear

opportunity for investors.

To benefit from it, investors

are likely to switch away from

companies focused just on

industrial production. Instead,

they will move towards

providers of capital equipment

– covering robotics, process and

discrete automation products,

supporting software, energy

efficiency products, providers of

electrification and storage.

The likes of Siemens, Schneider

and Daikin as well as Caterpillar

or John Deere in the US could be

among the beneficiaries.

Robert Donald, Chief

Investment Officer,


The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder

Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes

only and it is not intended as promotional material in any respect.



Talking Global Equity

Blue Chip speaks to Andreea Bunea, Head of Global Equity at Old Mutual Multi-Managers.



Global equity has been the best asset class for local investors

over the past decade. What has been the main driver?

That’s right. Global equity returned 19% per year in rand terms

over the past decade to end August (as measured by the MSCI

All Country World index). Part of the story is rand weakness.

The currency traded at R7 against the dollar 10 years ago. As it

depreciated, it added about 9% per year to the return from global

equity for local investors.

But the main reason has been that global equities performed

well in dollar terms, despite the March 2020 crash. The return in the

10 years to the end of August was in the top 15th percentile of all

10-year periods since 1988.

But this headline performance hides quite a divergence, doesn’t it?

Indeed. We can slice and dice it in many ways, but let’s just look at

it from a regional and a style basis.

On a regional basis, the US has led the way over the past

decade by some distance, while non-US equity returns were

much more muted. The US is by far the biggest market in the

world, accounting for more than half of the major global equity

benchmarks, whether you use MSCI, FTSE or Datastream.

The US S&P 500 returned 16% annualised over the past decade,

compared to 7% in dollars for non-US equities (the MSCI All Country

World ex US index)

Valuations: S&P 500 vs MSCI All Country World Index ex USA

But perhaps the biggest reason for the outperformance

is simply the phenomenal performance of the big Internet

platform companies, sometimes simply called the FAANGs

(Facebook, Apple, Amazon, Netflix, Google) or FAMANGs (adding

Microsoft to the list). These companies have managed to capture

increasing amounts of market share from their more established

competitors over the last decade, using disruptive business

models and technologies.

The same level of success was broadly absent in other parts of

the developed world, driven by a combination of of less permissive

regulation, less access to readily available private capital needed

to support the growth of such disruptive models during their early

stages, and less focus on delivering shareholder returns.

This brings us to the style discussion.

One of the most notable investment trends over the past

decade has been the outperformance of “growth” as an

investment style over “value”. Broadly speaking, “growth”

companies can generate their own earnings growth, often

by taking market share and therefore are not as dependent

on economic growth. The big Internet platform companies

are classic examples of growth companies, as they have been

able to deliver fantastic growth to investors over the last

10 years. Value companies are those unloved shares trading

at cheap valuations but that

typically need a strong economic

cycle to boost profitability.

Now there are several reasons for the US outperformance,

one of which is that the dollar strengthened over this

period, which does depress the returns from outside the

US somewhat. Another reason is that US economic growth

far outperformed that of Europe and Japan over this

period, while commodity producers and emerging markets

disappointed relative to expectations.

How should investors think about

the impact of low interest rates on

growth companies?

In theory, today’s share price reflects

the present value of future cash

flows a company is expected to

generate. Those future cash flows are

discounted back to the present using

prevailing long-term real government

bond yields, with lower rates making

them more valuable today. The key,

however, is that growth companies

benefit more from lower interest

rates as they have a longer runway of

expected cash flows when compared

to value companies, who tend to

enjoy expected cash flows much

sooner. Some analysts even refer to

growth companies as long duration

assets, like long bonds.

This can potentially explain why US shares outperformed

counterparts in Europe or Japan. However, low rates by

themselves are not enough, as both Europe and Japan have

lower prevailing interest rates – negative rates in fact. What

also played in favour of US stocks was a continuous ability to

deliver earnings growth and margin expansion in line or ahead

of expectations, particularly among the tech innovators.



Performance of growth vs value

Do you think value can ever make a comeback?

Value companies outperformed their growth counterparts

before the global financial crisis in 2008, supported by a

booming global economy and a continued de-rating of growth

stock valuations from the very elevated levels achieved at

the height of the bubble in late 1990s. But the tepid

economic growth environment after the 2008 crisis favoured

growth companies, as investors were willing to pay up for

scarce growth.

As a result, the valuation spreads between value and growth

companies have once again reached close to extreme levels.

Add to this a strong global economic recovery and better

fundamentals and growth forecasts for value companies, and

we could see market sentiment continuing to support value

companies going forward. I think the question around the

length of the current market sentiment is a valid one, but very

difficult to predict.

Within this long outperformance of growth over value,

however, there have been mini cycles. Even over the past year,

there were periods when value outperformed, particularly after

news of successful vaccine trials broke in November 2020.

Therefore, diversification across investment styles is

important, particularly in the global equity universe, where

these factors are much more prevalent than locally. This is

because the breadth and depth of global equity markets

allow managers to express their preference for a specific

investment style without increasing the risk resulting from

undesirable concentration levels in their portfolios. With the

small number of companies listed on the JSE, this approach

becomes more challenging.

What about quality as a style?

I should add that different investors

will have slightly different ways of

classifying companies, but broadly

speaking, “quality” is an investment

style where investors focus on

companies with strong balance

sheets and competitive advantages,

such as having very well-known

consumer brands.

These shares tend to be more

defensive in nature, which means

that they hold up better than the

broader market during a selloff, which

is what we experienced during the

March 2020 market drawdown. In a

market environment dominated by

an uncertain future, investors tend to

support the predictability and visibility

of annuity-type earnings streams

characteristic of quality companies.

On the other hand, such companies

tend to lag during subsequent market

recoveries, as investors turn their focus

to areas of the market that are likely to do well in an economic recovery.

How should a typical investor view all these various styles?

Should you jump between them, or just pick one and stick to it?

I don’t think one can successfully time when a particular investment style

will come into favour or fall out of favour, as these shifts in performance

trends tend to only become apparent with the benefit of hindsight.

Moreover, being caught on the wrong side of that trend could be

detrimental to relative performance, given the length of such cycles.

Therefore, our approach in the global equity fund is to combine fund

managers whose investment philosophies and processes tend to be

broadly underpinned by different investment styles.

But I also don’t think that managers need to be purists and cling

dogmatically to a specific investment style, as we acknowledge

that markets dynamics can change over time, and we wouldn’t

want them to miss out on any potential investment opportunities.

So, in our research we look for managers who stick to their knitting

and apply their process consistently over time rather than chase

the latest market fads, but who can also be quite pragmatic in their

investment approach.

Ultimately, we spend most of our time making sure our portfolios

are properly diversified and balanced so that we are not dependent

on the performance of any one style or market cycle.

South Africa is an emerging market. Should South African

investors have a separate allocation to emerging market equities,

or is that doubling up on risk?

I think a separate allocation is warranted and we have emerging

market (EM) specialist managers in our global equity fund.



There are three reasons for this. South Africa is a small

portion of the global emerging markets universe, accounting

for 3% of MSCI’s emerging markets index (and less than 1%

of the global index). There is a lot of opportunity out there in

the emerging markets universe. It is also worth noting here

that this universe comprises a heterogeneous selection of

emerging markets, with each market offering investors a very

different set of investment risks and opportunities. Taking

South African investments as proxy for emerging market

exposure leaves local investors deprived of many potentially

rewarding opportunities that tend to be unique to other

emerging markets.

Secondly, that EM universe has changed dramatically over

the past decade or so. It is now firmly centred on Asia, and with

a much larger exposure to technology shares and the growing

middle-class consumer in those countries. It is much less of a

proxy for commodity prices, which is what South African equity

is to an extent.

Thirdly, we have long believed that the global equity

benchmarks have too little exposure to emerging markets, only

12% even though emerging markets account for a much larger

share of global economic activity.

There is a concern that global markets look expensive. Is this a

good time to invest offshore?

Overall valuations look stretched by historical standards, but again

we need to scratch beneath the surface. For instance, the forward

price: earnings ratio on the MSCI All Country World index is 18,

which is near a level it last was in the early 2000 in the wake of the bust.

But we need to bear in mind that interest rates are much lower

today than in 2000 and this eliminates the potential for either

cash or bonds as a suitable investment alternative to equities. For

instance, the 10-year US government bond yield is 1.3% versus 5%

in 2000. European yields are negative. You can’t ignore that.

Valuations are very different across regions and companies. The

US is most expensive because investors are prepared to pay up for

those growth companies. Other markets are much cheaper.

Finally, global growth is positive, and companies are generating

incredible earnings. In this macro environment, it makes sense to

remain invested.

However, elevated valuations do suggest that the easy money

has been made, and that investors should not necessarily expect

the kind of returns we saw in the previous decade.

How do you find these managers?

We start by doing a quantitative screen, using the global databases

that we have access to. Here we look for some basic characteristics

like track record, size, domicile, benchmark, etc. From this screen we

can do more qualitative research on a short list of managers. The final

step is to spend time with managers to find out what makes them tick.

We really want to understand their philosophy and process. We want

to know who the key people are and how they interact. How do they

generate ideas? How do these ideas end up in a portfolio? When do

they buy and when do they sell? How is risk managed?

Once a manager is appointed, we have regular engagements

with them to monitor performance, but mostly to make sure we

still understand what is behind the performance and whether

that remains consistent with their investment approach. Once we

identify truly talented stock pickers, we tend to stay invested for

the long term and in some cases we have been invested with the

same global manager for over a decade.

The OMMM Global Equity fund was launched in March 2020

as a dollar-based UCITS fund. Despite the recent inception date,

it is worth noting that our expertise in global manager research

expands close to two decades.

You won’t get positive alpha

every day. It is lumpy.

Speaking of managers, where do you stand on the active vs

passive debate?

I think the main thing is that investors need to get value for money.

If you can find active managers who outperform, it is worth paying

somewhat higher fees. If you can’t, indexation is an attractive option.

We believe that skilled active managers earn their fees and then

some. Investors just need to be patient. You won’t get positive

alpha every day. It is lumpy.


Your clients’ wealth

deserves the world

OUTvest, the online investment platform powered by OUTsurance, now allows

financial advisors to offer uncapped global equity exposure to their clients.

The new product is called

the Global Wealth Builder,

and like all options from

OUTvest, it’s as easy as it is

cost-effective. Grant Locke, Head

of OUTvest, says, “Using an ETF

to access global equity exposure

is, we believe, one of the most

cost-effective ways to diversify

internationally for your clients.”

The Global Wealth Builder invests in the JSE-listed CoreShares

Total World Stock Feeder Exchange Traded Fund (ETF), giving

investors exposure to 25 developed and 24 emerging markets,

comprising over 9 000 stocks over 10 sectors – arguably the

most comprehensive global share-based investment strategy,

according to CoreShares. Locke notes, “When sourcing this

product, we paid particular attention to two things – that it

included exposure to emerging markets and was offered at

low cost.”

It adds to five other funds available through OUTvest (four

of which are bespoke), giving advisors the opportunity to

service all types of clients. It also sticks to OUTvest’s low ONEfee

approach, now applied to ETFs. Locke adds, “We have worked

hard with our partners to create a variation of our ONEfee

approach, specifically for ETFs.”

Locke adds, “It was important

for us to make this product as

accessible as possible. It’s why

we’ve incorporated our ONEfee

approach and, like the rest of

our products, made the process

virtually admin-free through our

co-branded platform.”

Through OUTvest, financial

advisors can create an investment

plan and implement it in a single sitting. Ongoing advice is also

simplified, thanks to automated annual reviews and advanced

investment tracking and monitoring technology, which gives

advisors and their clients instant access to information they need.

More information can be found on, with a

demonstration of the OUTvest for advisors’ platform available

on request.

When sourcing this product,

we paid particular attention to

two things – that it included

exposure to emerging markets

and was offered at low cost.

OUTvest is an authorised FSP. Collective investment schemes are generally medium-

to long-term investments. All investments are exposed to risk, not guaranteed (in

respect to capital or the return) and dependent on the performance of the underlying

assets. Both Exchange Traded Fund(s) (ETF) and unit trusts are collective investment

schemes, however, these products are priced and traded differently. A unit trust is

priced once a day, whereas an ETF is trading continuously throughout the day during

JSE trading hours. Benchmark: FTSE Global All Cap Index. Ts and Cs apply.


Service more

clients in less time.

Yeah, it’s possible.

Give upfront advice and implement it in a single

sitting with our white-label investment platform, built

from the ground up for financial advisors. Ongoing

advice? That’s just as easy, thanks to advanced

investment tracking and monitoring technology that

gives you real-time information when you need it.

Even annual reviews are automated.

Are you ready to streamline and scale

your advice practice with OUTvest?

To find out more

sms ‘out’ to 44599

or visit

OUTvest is an authorised FSP. All investments are exposed to risk, not guaranteed and dependent on the performance of the underlying assets. Ts and Cs apply. Free SMS. OV21/0177/E


Global multi-asset funds: a must-have

moving into a post-Covid world

In an environment where traditional global asset classes are

looking fully priced and many risks dominate the news flow,

investors seeking offshore exposure may be wondering how

best to go about it. It remains our view that investing in welldiversified

portfolios that comprise more than just one asset class

offers the most appropriate route to navigating a challenging

investment environment. Here’s why:

Pressures are building

High starting valuations for developed market equities. Most

developed market economies are amid a robust economic

recovery that has provided tailwinds for their equity markets.

These increases were stoked up by economic data that surprised

on the upside as the post-pandemic recovery, fuelled by monetary

stimulus, was more rapid than anticipated. Especially in the US,

equity markets are looking fully priced at an index level after a

record run since the market meltdown in March last year.

Prospects of higher global inflation. Savings rates are up, balance

sheets are in good shape, interest rates remain low and economic

lockdowns over the past year have meant significant pent-up

demand is waiting to be fulfilled as conditions improve. Against

this backdrop, it is not surprising that inflationary pressures are

building up.

Diversification and active management as a better forwardlooking


With high starting valuations and the prospect of higher

inflation among many risks facing global investors, we believe

alpha-generation through selectively identifying attractively

priced shares, in addition to diversification into other asset

classes, will be a better forward-looking strategy than just

owning the index. Our multi-asset class portfolios typically have

exposure to 40 - 60 shares, carefully selected out of a universe

of 2 500 - 3 500, which means they don’t look anything like

the index or our peers. This level of diversification is hard to

replicate on an individual basis.

Our multi-asset class funds are further differentiated in

that we hold many investment opportunities outside the

traditional 60% equity/40% bonds multi-asset portfolio to

sweat every basis point of potential returns. Thus, while we

continue to believe that it’s essential to have exposure to


One thing is certain:

actively managed

multi-asset class strategies

can add significant value.

equities, it is also important to include other assets – such

as infrastructure, high-yield income, global property, and

absolute-return investments – in our multi-asset class funds.

This is especially important in an environment where, in our

view, the global bond index offers a negative real return over

the next several years.

Each of our global multi-asset class funds benefits from exposure

to these non-traditional assets, with the extent of their exposure

in the portfolios dependent on the risk budget of the fund. This

ranges from around 30% in the Global Capital Plus Fund, with a

cautious risk profile, to 25% in the Coronation Global Managed

Fund, a moderate risk balanced fund, and around 15% in the

more aggressive Global Optimum Growth. The same funds have

effective equity exposure of 24%, 55% and 80% respectively, with

the balance held in cash and selected fixed-income instruments.

(Exposure figures are as at end September 2021).








as at 31 July 2021


Well-diversified portfolios

Building portfolios that span six

asset classes and look nothing

like the index takes extensive

research and a significant amount

of investment experience and

expertise. The combination of our

expertise and our robust triedand-tested

investment approach

enables our multi-asset class funds

to provide investors with exposure

to a wealth of opportunities in

traditional and non-traditional

asset classes. These opportunities

actively balance risk and returns

to deliver on our investors’ various

objectives across the fund range.


fixed income

Absolute returns

Inflation protection

High-yield fixed income

Real assets

Coronation is an authorised financial services provider.



Christo Lineveldt

Investment Specialist



Glacier International offers access to international investment opportunities. Traditionally,

this was via unit trusts and share portfolios, but investors can now access global market

indices via low-cost exchange traded funds directly through the Glacier International

platform. Blue Chip speaks to Andrew Brotchie, MD, Glacier International.

Please tell us about the new exchange traded funds (ETFs) that

are available direct on the Glacier International platform.

Clients have always had the ability to buy ETFs, but it required

them to open a custodian account within our platform and then

to trade directly with a third-party provider. We’ve recently made

available a range of ETFs directly on the platform. They can be

traded directly by our clients who have unit trust portfolios.

ETFs are very successful overseas and we do have a way to go

The Global Life Plan, an

offshore endowment, offers

investors financial planning

benefits including estate

planning advantages and

solvency protection.

to catch up with this trend locally.

We feel it was an important step

in our evolution to be able to

offer our clients direct access to

these investment opportunities

on the platform. It’s about us

expanding the ability for our

clients to access the various ways

of gaining international exposure

in their portfolios.

ETFs help clients control their

cost of investing. An ETF is a straightforward option to get access

to international investment opportunities without having to do

research oneself to try to find the best actively managed options

in a foreign country.

Why invest in an ETF?

Cost is a big driver. The other benefit is straightforward index

exposure to different opportunities. It allows quick-and-easy

access from a flexibility perspective. You don’t necessarily have to

research which fund is the most appropriate for a specific area or

sector; you can buy the ETF that covers an index relevant to that

area or sector.

How does Glacier International select its ETFs?

We offer a range of ETFs that our research team has selected.

We have a core offering that covers the major markets around

the world, such as the MSCI World, MSCI Emerging Markets, S&P

500, Euro Stoxx 50, Japan, and Developed Markets Property

Yield indices. We also have thematic (ESG) and specialist ETF

offerings, like gold.

Please provide an overview of the Global Life Plan.

The Global Life Plan, an offshore endowment, offers investors

financial planning benefits including estate planning advantages

and solvency protection.

Glacier International is responsible for the calculation, collection

and administration of any tax due, therefore the investor has no

personal tax administration to take care of. Any tax paid may be

less than they would pay in their personal capacity, depending

on their tax rate.

International estate duty rules won’t

apply in the case of the Global Life Plan.

In addition, the investor can nominate

beneficiaries to receive the funds on their

death, and these funds will not form part

of the winding up of the estate.

Why does an offshore life wrapper – or

endowment structure – make sense?

Traditionally, as South African markets

started opening and people started taking advantage of

international opportunities, they would either go direct or set

up an offshore trust, typically.

Today, offshore life wrappers

are the preeminent vehicle

for investing money offshore.

They offer many of the same

benefits as trusts, often

with significantly reduced

costs, as well as providing

administrative flexibility

to manage international

portfolios that can span many

jurisdictions. Their financial

planning benefits – as set out

above – as well as their ease of

administration really can help

to simplify the management

of a client’s international

investment exposure.

Andrew Brotchie, MD,

Glacier International

Franklin Templeton

is now MORE


At Franklin Templeton, we strive to always deliver more

for our clients. Our recent acquisition of Legg Mason

makes us the sixth-largest independent fund manager

in the world. Together, we bring extensive histories that

now offer more investment experts, comprehensive analytics

and research insights on the ground.

Franklin Templeton brings together an unmatched collection

of independent specialist investment managers (SIMs) to provide

their clients deep expertise and specialisation – within and across

asset classes, investment styles and geographies. And they offer

hundreds of strategies across active, smart beta and passive

approaches – in a full range of vehicles.

Our story

One thing has driven Franklin Templeton’s growth and evolution:

our focus on delivering better client outcomes. It is why we have

built a world-class investment firm that aims to offer the best of

both worlds: global strength and boutique specialisation. And it

is the reason clients in more than 165 countries have entrusted

us with their investments, making us one of the world’s largest

asset managers with US$1.55-trillion in assets under management.

Nimble where it matters

All told, our SIMs comprise approximately 1300 investment

professionals located across 20+ countries, giving us an ear to

the ground in the world’s most significant markets. And they’re

backed by a strong, global infrastructure with at-scale capabilities

in research, data analytics and servicing. This combination of

independent, entrepreneurial SIMs and global strength makes us

uniquely agile.

Unparalleled in our ability to customise

While our structure makes us agile, our scale lets us offer hundreds

of strategies across active, smart beta and passive approaches –

in a full range of vehicles. And we boast extensive multi-asset

capabilities. So, we never need to favour a particular type of

solution. Instead, we can provide options best suited to the unique

needs of every client, institutional or individual. And beyond

our core function of delivering investment returns, we provide

our clients with tailored support through a global distribution

platform, technology-based tools and value-added services.

Guided by long-term value creation

We believe it is just as important to drive long-term success as it

is to seize today’s opportunities. As a closely held public company

with an impressively strong balance sheet, we can invest and

manage our company for the long term. That’s what lets us

keep building on our long track record of developing innovative

products and tools for our clients, fuelled by our Silicon Valley

roots. Our values-based culture means we do the right thing for

our clients and our people.

One thing has driven Franklin Templeton’s

growth and evolution: our focus on

delivering better client outcomes.

All data as of 30/06/21. Assets under management represent combined assets of Franklin Templeton, Legg Mason, and subsidiary investment

management groups. Franklin Templeton acquired Legg Mason on 7/31/20.




Climate science and why it’s important

for long-run capital allocation.

It is now globally accepted that to limit the long-term extent

of global warming and its economic and socio-ecological

consequences, the world must rapidly transition to a

decarbonised economy, beginning now.

In August the United Nations’ (UN) Intergovernmental Panel on

Climate Change (IPCC)1 released its sixth assessment report on the

physical science of climate change.

The report shows unequivocally that the main climate driver is the

accumulation of greenhouses gases (GHG) in the Earth’s atmosphere

which is growing because of the burning of fossil fuels. The main GHG

is carbon dioxide, which represents

some 70% of global emissions,

primarily released through the burning

of coal.

Scientists are observing changes

in the Earth’s climate in every region

and across the whole climate system.

Many of the changes observed in

the climate are unprecedented in thousands, if not hundreds of

thousands of years, and some of the changes already set in motion

– such as continued sea level rise – are irreversible over hundreds

to thousands of years.

The report shows that we have to date warmed the global

temperature by 1.1°C since the mid-19th century. The current

global consensus is that we should limit global warming to well

below 2°C, preferably to 1.5°C, compared to pre-industrial levels.

These ambitions were legally agreed in 2015 by 196 countries in

Paris at COP 212.

Applying a hard screen to

the JSE on primary producers

of fossil fuels would exclude

some 12% of the market cap.

The sixth assessment report provides new estimates of the

chances of crossing the global warming level of 1.5°C in the next

decades, and finds that unless there are immediate, rapid and largescale

reductions in greenhouse gas emissions, limiting warming to

close to 1.5°C or even 2°C will be beyond reach.

The constraints on the management of climate change are not

technological, they are mostly seen as political and social. The main

technological challenge is well understood ie, “Change the way we

generate energy.” Already there are a growing cohort of commercially

viable renewable alternatives at scale. Smart grids, battery technology

and the hydrogen economy all further

extend decarbonisation into energyintensive

sectors such as mining, heavy

transport, rail, cement and steel.

Glasgow will host COP26 in

November and will provide a sobering

lens on government appetite to act

on climate change. Countries such as

the US, Canada, Japan and China have all pledged to reduce their

carbon emissions substantially over the next 10 years.

For investors, climate risk or transition risk is visible at a portfolio

level by way of the percentage exposure to primary producers

of fossil fuels as well as through the weighted average carbon

intensity of earnings and “green revenues” exposure. Alongside

this, understanding the relative sector strengths and the quality of

strategic management response provides investors with a picture

of a fund’s climate-risk positioning. It is of course important to

note that simply shifting investments away from climate-exposed



counters is not the panacea to managing long-run climate risk.

Notwithstanding this, investors can make a strategic call on how

to manage climate-risk exposure across their portfolios.

As the depth of climate metrics grows, there is also a

corresponding growth in the development and application

of climate-aware benchmarks. Most traditional performance

benchmarks were not designed with carbon constraints in mind

and so it’s no surprise that many of the existing benchmarks have

carbon intensity levels that put the world on a pathway to a greater

than a 2°C outcome, closer to 3°C or 4°C.

The EU, for example, has published benchmarks for funds that

are either 1.5 or two degrees aligned, with specifications for issues

such as percentage holdings of primary producers of fossil fuels,

carbon intensity level relative to a benchmark and rate of carbon

intensity decline on a year-on-year basis. We see growing appetite

in the institutional space for such benchmarks and so expect longterm

capital to flow toward these climate-aware benchmarks.

Alongside this, there is also the growing array of thematic-styled

funds that aim to capture the opportunity set associated with

green economy transition. These thematic funds have gathered

a lot of support in the retail environment of late, and while good

opportunities exist, buyers of such funds must be mindful of green

washing and green bubble risk.

For domestic investors looking to manage their climate

exposure, it makes sense to use differing approaches across asset

classes and geographies, ie:

• Global Equity. Given the depth of the market, investors could

take a hard exclusionary approach or make use of Climate Smart

Index products and/or carbon-constrained smart beta products.

Lastly, global thematic-styled active products that target

beneficiaries of the transition are available. Presently, there’s a

growing array of products across the risk-reward continuum.

Green-washing risk exists and so it will be important for advisors

to keep an eye on the emergence of fund sustainability reporting

regulations such as the EU Sustainable Finance Disclosure

Regulation (EU SFDR).

• Local Equity. The South African economy is carbon intensive,

principally driven by the emissions released through industrial/

chemical process (ie Sasol/ smelters) and emissions associated

with the generation of electricity (Eskom). Applying a hard

screen to the JSE on primary producers of fossil fuels would

exclude some 12% of the market cap. Further to this, over 80%

of the annual emission from JSE comes from 20% of the market

cap. Simply put, the carbon intensity of the JSE means there

are material constraints on the design of 100% decarbonised

investments products for the South African market. Investors can

presently select from a limited number of local equity products

that have hard-coded carbon and climate-risk attributes. Aside

from targeted low-carbon products, at a minimum, investors

should demand that their asset managers are proactively

engaged with climate-change risk.

• Alternatives. This is the most direct way to get exposure to the

renewable theme in the South African economy, an area that

is set to expand as set out in the Integrated Resources Plan.

Access to these investments has traditionally been limited to

institutional investors: however, retail investors could potentially

obtain exposure via Reg 28 compliant balanced funds with

“green” alternatives exposure. An important item to keep an

eye on here is the National Treasury Green Economy Taxonomy

work that is underway. South Africa’s work here is consistent

with what is happening globally. A taxonomy of this nature will

better help policy, and capital and projects to align.

• Fixed Income. Climate bonds are the most direct way to play

the decarbonisation theme in the fixed-income asset class.

The growth in climate bonds globally has meant that there are

now several climate and green bond index products that are

available. Locally, the issuance of green bonds is still nascent,

consequently there is not sufficient depth to support locally

focused green bond investment products.

Most industry trade bodies in South Africa are pushing government

to accelerate climate action. The Presidential Climate Change

Coordinating Commission is playing an active role across business,

government departments and Eskom. There is growing awareness

of the potential for Eskom to access green climate finance as well a

growing appreciation of the nascent opportunity associated with our

world-class solar and wind resources. South Africa’s climate transition

is underway and tracking the intersection of science, policy and capital

flows will be important for investors in the coming years.

What is certain is that the race to decarbonise is on and we

should anticipate enhanced policy support, shifts in capital flows,

and technological disruption. This will have implications for

investors over the coming decade and beyond.

1Established in 1988, the IPCC is a 195-country strong intergovernmental body,

that is self-mandated to provide objective scientific information relevant to

understanding human-induced climate change. The work of the IPCC covers the

natural, political and economic impacts and risks associated with long-range

climate change. The IPCC produced its first assessment report in 1990 and has

released updated summary reports every six to seven years. The 6th assessment

report comprises three volumes – the first is on the physical science aspects and

contains over 14 000 citations and presents the collective work of 234 authors

from 66 countries. A total of 78 007 expert and government comments were

received. Now in its 33rd year, the work of the IPCC is a multidecade human

endeavour that presents the most comprehensive summary of the understanding

of climate science.

2COP – Conference of the Parties to the UN FCCC –


Jon Duncan, Old Mutual

Investment Group

Gontse Tsatsi, Old Mutual

Investment Group



ESG investing:

Taking the passive versus

active debate to a new arena

Investment strategies focused on environmental, social and corporate governance

(ESG) metrics have risen to prominence over the past decade.

Globally, investors are aligning their portfolios with their

ESG beliefs. While South Africa has lagged this trend to

some extent, ESG investing is taking hold as investors

look to bolster their risk analysis processes and generate

more sustainable returns over the long term.

Unsurprisingly, this has reignited the “active versus passive”

debate in the investment community, with some arguing that active

fund managers are better placed to address ESG issues. Regrettably,

these debates tend to miss the mark, most notably when they are

focused on new, complex and nuanced ESG considerations.

At the end of the day, clients need clarity, and not emotive

debates, to navigate the already-complex, terminology-heavy

investing world.


The concept of ESG investing is often misunderstood – some investors

view it simply as a means to enhance returns, while others believe it

is an opportunity to “do good” while sacrificing returns. On the other

hand, some fund managers and their smart marketing teams see ESG

investing as an opportunity to accumulate more assets by offering

exciting new funds.

Meanwhile, greenwashing – the practice of punting a product

as environmentally conscious but in an insincere manner, often

through naming conventions – continues to make headlines as

fund managers seek to amass assets.

And so, while the intention behind ESG investing is noble,

many investment strategies are not aligned to the bigger picture.



Clients need clarity, and not

emotive debates, to navigate the

already-complex, terminologyheavy

investing world.

Active shareholders can influence company behavior through

two primary mechanisms:

• Exercising voting rights: Formally voicing their views by voting

on behalf of clients, usually in line with a well-considered proxy

voting policy. By voting in favour of or against ESG-sensitive

topics, one is automatically an active shareholder.

• Company engagement: Actively engaging companies, either

individually or as a collective, on ESG best practices, thereby

influencing management behaviour.

What is often cause for confusion is that there is no link between being

an active shareholder and an active or passive investor. Importantly,

both passive and active investors can be active shareholders.

Ironically, passive investors are often unable to divest of a

specific company from a portfolio, meaning they are further

incentivised to take on the role of the active shareholder to

influence positive change. This incentive to take action has played

out across the globe, with large passive investment houses such

as BlackRock taking the lead on active shareholder endeavours.

Incorporating ESG

There are a range of approaches to ESG investing, from “benchmark

cognisant” ESG tilts to impact investing in private markets. In our view,

these are the most prominent approaches in the listed equities space:

• Screening: Avoiding certain companies based on undesirable

ESG characteristics. Typical examples include screening for

thermal coal use, or companies that focus on the production of

alcohol, tobacco or weapons.

• Integration: Scoring or ranking companies based on their ESG

metrics, and then allocating the largest weightings to the best

performers in this space.

• Thematic: Investing in companies that are well placed to benefit

from the long-term structural shift towards ESG (a portfolio of

green energy stocks, for instance).

In our assessments of ESG investing, we have drawn a

distinction between the engaged, active shareholder and the

construction of ESG-aligned products.

The engaged and active shareholder

As a starting point, one needs to consider the difference between

an investor and a shareholder.

We believe that as stewards of clients’ capital, irrespective of

whether a strategy is rules-based (passive) or focused on stock

selection (active), one needs to integrate ESG into the entire

investment process. To do so, an asset manager must be an

engaged and active shareholder of all assets within a portfolio, or

all of the companies within a fund.

These approaches can be implemented on their own or

in combination.

Further, the incorporation of ESG factors can be implemented

actively (via stock selection) or passively (rules-based investing).

While the two strategies may have similar

objectives, they may end up with very

different portfolios, regardless of whether

they are constructed actively or passively.

This once again highlights the importance of

researching and understanding the portfolio

and investment approach. As they say, “It does

what is says on the tin.”

At CoreShares, we advocate for a low-cost,

efficient and transparent approach to ESG

investing, underpinned by index tracking and

data. But we are cognisant of the need to be

active stewards on behalf of our clients to

ensure that the companies we invest in are

playing their part.

Chris Rule, CFA, CAIA,

Head of Head of Products

and Client Soloutions at




Superior strategy

Blue Chip speaks to Brendan de Jongh, Head of Research at PortfolioMetrix,

about their Sustainable World Equity Fund of Funds launching in South Africa

Please tell us about the global groundswell to ESG.

Let’s step away from ESG investing as a topic and ignore the

warm, fuzzy feeling one gets from “doing the right thing”. For

some perspective, it is proposed that a new epoch in geological

time is created called the Anthropocene, meaning a period where

changes to the earth’s climate, geological processes, biodiversity

and species extinction are primarily driven through activities

of humans. This impact will ultimately, if unchecked, have a

devastating, interconnected impact on human society. Civilisation

as we know it today is significantly more fragile than our current

response to global challenges suggest.

If we consider sustainability through the lens of how much

one earth can provide, we are currently consuming 1.5 earths,

meaning we are not heading into enemy territory, but are

already far behind enemy lines. We have no time left to dither

in our response. What you are seeing with the ESG groundswell

is simply a rapid catch-up on the realisation that market forces

have failed to factor in the “external costs” of our industrialised

society. We need to be far more assertively pro-active in

our response and, as allocators of capital and overseers of

governance, investors can be a powerful force for change.

What is PortfolioMetrix’s investment proposition?

PortfolioMetrix (PMX) is a specialist investment manager that builds

portfolios around needs, not wealth. We question the suitability

of one-size-fits-all solutions and believe the best client outcome

requires the investment management process to be closely aligned

with the adviser’s process, using well-constructed, precision

engineered portfolios. Our investment proposition is driven by the

understanding that the return path matters and so we focus strongly

on a risk-based approach that emphasises portfolio efficiency.

Brendan, please give an overview of the PortfolioMetrix BCI

Sustainable World Equity Fund of Funds due to be launched

in South Africa.

The fund is designed for clients who wish to generate a positive

social and environmental impact alongside financial returns. It is a

South African Collective Investment Scheme that invests in global

equity markets by selecting underlying managers that specialise

in sustainable equity investing.

What is the fund’s strategy, investment philosophy and process?

The fund follows the same investment philosophy and process as

all portfolios at PMX. This starts with asset allocation and then fund

selection and portfolio construction. However, this strategy only

selects underlying funds that embrace sustainability and positive

change. This means underlying funds only invest in companies

delivering a clear, positive benefit to society and the environment

through their products, services and business practices. This

typically leads to funds that adopt a multi-thematic approach,

often aligned to the UN’s Sustainable Development Goals.

Do ESG influences offer investors long-term performance

advantages when factored into portfolio construction?

There is a lot of evidence that individual companies benefit

from having a higher ESG rating. Numerous studies have found

a higher ESG rating was strongly correlated with a lower cost of

capital (the company could raise both debt and equity on easier

terms) as well as outperformance in a business sense (higher

accounting profits). However, this is not the same as saying that

ESG strategies tend to or will outperform over long periods at a

portfolio level. This holds more mixed results. What we do know

is that, typically, thematic approaches will have biases to certain

sectors and may exclude or have very little of other sectors. This

will produce variability of returns relative to the broader market.

Please tell us about the fund managers selected for the fund.

We have populated the fund with underlying managers that

specialise in sustainability and impact investing within either

developed/emerging markets, listed infrastructure or property.

The fund managers have gone through a rigorous due diligence

process carried out by us and in our view have a superior

investment product within this space. Each fund manager has a

unique philosophy and process and will implement their strategy

differently. This diversity in implementation creates a product that

we believe is uniquely attractive.

Why does PortfolioMetrix prefer active

funds as opposed to passive funds for its

sustainable funds?

We believe that sustainable investing is an

active management process and the use of

passive funds, while cheaper, is less impactful.

This is because applying a comprehensive and

truly impactful solution requires an in-depth

knowledge of a company’s products, services

and business operations to understand

how the company impacts society and the

environment. This process is qualitative as

the data provided by companies is never

comprehensive and often difficult to interpret.

Unfortunately, passive funds are reliant on this

data and therefore are not able to implement

the strategy effectively in our view.

Brendan de Jongh, Head of

Research at PortfolioMetrix


PortfolioMetrix Asset Management SA (Pty) Ltd is an Authorised Financial Services Provider.

Investment Management by Design

PortfolioMetrix Sustainable World

Our Sustainable World portfolios in the United Kingdom

will soon have a five year track record.

We’re excited to be bringing our global expertise in

sustainable investing to South Africa.

Watch this space.

PortfolioMetrix Asset Management SA (Pty) Ltd is authorised and regulated

financial services provider operating in South Africa, regulated under the Financial

Advisory and Intermediary Services Act 37 of 2002 (FSP No: 42383).


Regulation 38:

creating a silent majority

in umbrella funds?

Regulation 38 effectively required pension

and provident funds to amend their Fund

Rules by no later than 1 March 2019, to

provide that members who terminate

service before retirement become paid up in the

fund, until the fund is instructed by the member

in writing to make payment of or transfer his/

her benefit.

A ”paid-up” member can retain their retirement

savings assets in the fund but will no longer make

monthly contributions to the fund. Normal benefits

in terms of withdrawal, death and retirement would

apply to such paid up members.

It will be interesting to see how Regulation 38

will impact the profile of umbrella funds.

With the new regulations, we

will see an increase in “paid up”

members in these Funds, but even

more than two years later the extent

to which this will happen is unclear.

Historically, most umbrella funds have only had

members who are associated with a participating

employer. With the new regulations, we will see an

increase in “paid up” members in these Funds, but

even more than two years later the extent to which

this will happen is unclear.

There are two categories of members who

will become paid-up members. There are the

genuine defaulters, who exit their employment

and fail to provide an instruction regarding their

retirement savings. Often these are members with

small balances and often with tax issues. They are

probably unaware of the existence of their benefit

and unless they change their approach soon the

umbrella fund will lose contact with them. The



second are members who consciously decide to leave their

savings in the fund.

The second group are interesting as possibly they appreciate

that the assets are invested in a lower fee class than is

applicable to retail solutions such as many preservation funds.

The regulations are clear that the paid-up members cannot be

charged a different investment

It will be interesting to see how

quickly the paid-up members

increase as a percentage of the total

members of an umbrella fund.

fee to the contributing members.

Advisors are persuading members

to transfer to preservation funds

presumably because the higher

asset-based fees are offset by the

access to a much wider range of

investment portfolios.

I am not convinced that the umbrella funds are doing

much to make the option of remaining as a paid-up member

an attractive option. Few make provision for the member

to appoint an advisor and remunerate them via an assetbased

fee deduction. Some umbrella funds seem to default

the investor into Trustee default portfolios, which tend to be

the sponsored linked portfolios.

What appears to be happening is that many umbrella funds

remain focused on the participating employers and the consultants

to these participating employers. However, the paid-up members

tend to be “de-linked’ from the participating employer.

They will not receive any communication, which is distributed

via participating employers and their consultants. I question who

is considering the needs of these paid-up members? Is enough

effort going into tracing these members, especially the genuine

defaulters, and proper communication with them once they have

been traced?

It will be interesting to see how quickly the paid-up

members increase as a percentage of the total members of

an umbrella fund. The rate of increase will be much quicker

once National Treasury implements the two-buckets approach

that it recently raised as its vision. The one bucket will have

compulsory preservation and will result in a sharp rise in

paid-up membership. It is only a matter of time before an

umbrella fund could have more paid-up members than active

contributing members. Surely, umbrella funds cannot afford to

keep ignoring the needs of this silent majority.

I would like to see an umbrella fund embrace their paid-up

members, allow them to appoint

financial planners and create an

offering that competes with the

preservation funds and other retail

solutions. It should be easier for

financial planners to include such

paid-up benefits in their total

financial planning exercise.

In the meantime, we can expect to see most employeebenefits

consultants recommending umbrella funds based on the

outcome for active employees. The decision by an employer in

selecting an umbrella fund is probably not going to factor in the

approach the fund has to paid-up members. We can also expect

that financial planners will continue to encourage members to

transfer to preservation funds even if the fees are higher.

Does this defeat the aim of the regulator? Probably not. The

regulator seeks increased preservation of benefits and to ensure

that members’ interests are foremost when trustees make decisions

related to fund governance. I am not sure the regulator is too

concerned as to whether the preservation is in the umbrella fund

or a preservation fund.

For decades, we have had individual life arrangements and

employee benefits/group arrangements. In such a historic

structure, paid-up members are individuals. But surely, we

are in an age when group arrangements can accommodate

individuals’ requirements. Flexible risk benefits and member

investment choice are examples of this. Surely umbrella funds

can adjust to improve their focus on their paid-up members.

Before they do become the silent majority, By Dave Johnson,

Independent Consultant.


Hollard Life Solutions launches Life Select –

offering value for money with no bells

and whistles

Hollard Life Solutions has just launched its

Life Select product, a value-for-money, no-frills

product offering life cover, disability, critical

illness and income protection.“Our research

found that both intermediaries and clients want

more simplicity and transparency from their

insurers. In response, we streamlined our

offering, simplified our insurance language,

removed jargon, and created product benefits

that consumers will fully understand and buy

into,” says Willem Smith, Executive Head of

Distribution at Hollard Life Solutions.

In designing Life Select, Hollard Life Solutions

has removed benefits that are hardly used by

clients or sold from the product set and

created a simple product that fits diverse

client profiles. Life Select seeks to solve

the day-to-day insurance challenges that

clients face.

The product is rated according to specific

client variables like income, education and

health, and priced according to each individual

client’s profile and ability to meet their specific

financial requirements and enable access to

financial services.

Some of the product benefits include:

• Life Select offers a client the ability to

customise cover based on their individual


• Life Select provides the best value for money,

as the cover is structured according to

according to each client’s affordability.

• With Life Select, your client only pays for

what they need.

• The product application process has been

simplified to remove the complexities that

restrict clients in buying insurance products.

“In designing Life Select, we have focused on

three main benefits that appeal to consumer

needs and empower advisors to present the

product to market. These are simplification,

value for money and ease of doing business,”

said Smith.


By simplifying the policy language, marketing

material and technical specifications, the

Hollard Life Select product is easily understood,

and there is clarity on the promise and

obligations. The product is easily explained to

the customer by advisors, eliminating complex

benefit interactions and conditional benefit

features, with fewer exclusionary clauses than

most competitors. Additionally, regulatory,

compliance and complaint risks are all


Value for money

Other factors taken into consideration in the

design and development of the Hollard Life S

elect offering was to maintain our competitive

pricing. We have put together many more

benefits for less.

No bells and whistles

“No bells and whistles means your client gets

what they see and only pay for what they

really need. This was our focus throughout

the development phase, because we know

that bells and whistles have imposed undue

complexity on the industry and are very seldom

used, so the customer does not really benefit.”

Even with the introduction of new FICA and

POPIA requirements, Hollard Life Select has

one of the shortest application forms in the

market. Customers as well as advisors will

spend the least time completing application

forms. This is designed to minimise the amount

of time spent on complex application forms

and to reduce the risk of error in the

application process.

Hollard Life Select is simply what your

clients need.

studio. 0709/2469

life • disability • critical illness • impairment

Hollard Life Assurance Company Limited (Reg. No. 1993/001405/06) is a Licensed Life Insurer and an authorised Financial Services Provider,

FSP No. 17697


The South

African outlook

Making sense of today’s retirement landscape. Part 3

In this series, we have explored how two rapidly advancing

phenomena, longevity and the Fourth Industrial Revolution,

are colliding with an age-old retirement savings conundrum.

As this global metamorphosis occurs it is compelling a radical

paradigm shift when it comes to achieving financial freedom,

throughout one’s life.

Firstly, machines are becoming very smart. As they quickly

take over many of the tasks previously performed by people, the

unfolding workplace revolution is creating incredible efficiencies.

But it is also threatening to worsen

inequality as the work that provides

for the incomes generated by large

parts of society becomes less secure.

For many, it is becoming essential to

continually reskill and relearn.

Secondly, people the world over

are living much longer. Catalysed

by the near exponential advance of medical technologies and

the science of wellness, the ageing revolution is undoubtedly a

cause for celebration. But it also creating immense challenges for

societies and individuals, who need to support the many more

years they have “after work”, as compared to the years spent

working. For most of us alive today, it is becoming essential to

save significantly more.

Whatever you don’t save

for retirement will cost your

children 6.7 times more

once you are in retirement.

These trends clearly create an urgent need for new solutions

from the global retirement savings industry. In South Africa, they

are interweaving with a complex, continually evolving socioeconomic

dynamic, with various idiosyncrasies that create unique

local challenges.

When global trends meet a local dilemma

South Africa’s retirement savings shortfall is both well-documented,

and alarming. The average replacement ratio for South Africa’s

retirement industry is estimated at

just 25% to 30%. This implies that,

on average, people with some form

of retirement savings can expect to

receive the equivalent of just over a

quarter of their income at retirement as

a post-retirement income. People tend

to seriously underestimate the impact

that this implies in terms of their quality of life after work.

Reducing this shortfall is not only essential to alleviate the

burden experienced by state and society – which need to step

in to support those who do not have enough savings to support

themselves in retirement – but it is essential to grow the economy.

However, as machines disrupt our workplaces, this problem is

clearly not going to resolve itself.



And while the challenges

that face our society are

unquestionably vast, this shortfall

is, at a fundamental level, heavily

impacted by behaviours –

notably that South Africans are

big borrowers, which is quite the

opposite from being big savers.

So severe is South Africa’s

borrowing rate, that half the

population is shown to have a

net-negative financial position,

with debt acting as a driver of

inequality, according to a recent

comprehensive study on wealth

inequality in South Africa .

As our colleagues at Discovery

Bank have pointed out, a lack

of propensity for savings leaves

individuals significantly exposed

in both the short and long term.

Reducing indebtedness and

creating a savings culture in South

Africa are major socio-economic

challenges facing both individuals

and society.

Although these financial

behaviours are fuelled by the

current economic environment and rising living costs, it is low

levels of awareness that entrenches them.

Then comes the ageing phenomenon.

“Globally, the share of the population aged 65 years or over is

expected to increase from 9.3% in 2020 to around 16.0% in 2050,”

according to the UN’s 2020 World Population Ageing report.

By comparison, South Africa has a relatively young population.

Only 5.4% of South Africans were aged over 65 in 2019, as

compared to a global average of 9.1%. Yet, as all regions in the

world will follow the “unprecedented and sustained change in

the age structure of the global population”, this proportion will

undoubtedly increase markedly in the years to come.

This ageing revolution, abroad and at home, will have a “profound

effect” on what the UN terms the support ratio – the number of

people of working age, as compared to those aged 65 years or older.

In a country such as South Africa, which has one of the highest

levels of unemployment in the world, especially among the youth,

as well as one of, if not the, highest levels of inequality in the world,

this growing support ratio, layered as it is on top of an already

concerning replacement ratio, has profound implications.

The plight of the sandwich generation

At least once a year, when we do inductions of our new staff, we

present to them on the need to start saving for their retirements,

and to start saving early. Invariably, however, we are met with

the response from many of our new recruits that they simply

do not have the extra money available to put away. Aside from

the rising costs of living, one reason often put forward for this is

the pressures faced by those who need to support their families

and communities in retirement. In South Africa, at least 28% of

employed people face this pressure.

Analysis from Discovery Invest Technical Marketing reveals

that whatever you don’t save for retirement will cost your children

6.7 times more once you are in retirement. In other words, for

every rand you don’t save for retirement now, your children may

have to pay up to R6.70 later, in real terms, to cover the financial

shortfall. This is due to the impact of missing out on investment

growth in the years leading to retirement.

Clearly, this creates a knock-on effect: when people don’t save

enough, their families take a massively disproportionate toll in

the long term, and the cycle not only repeats but it exacerbates.

Old problems colliding with modern trends need new solutions

The stubbornness of South Africa’s retirement savings

conundrum – which has remained unchanged for over a

decade – is clear evidence that the solutions provided by

our retirement savings industry aren’t solving the problem.

As the rapid global metamorphosis occurring in the wake of

the ageing, and workplace revolutions collide with a complex

and unique local context, South Africa’s retirement savings

conundrum is set to worsen.

But because it comes down to individuals’ choices,

there’s hope. A powerful behavioural insight reveals that by

rewarding positive savings behaviour, people can change.

The somewhat bleak outlook of the average employee can

be transformed.

Our analysis at Discovery Invest and Discovery Bank shows

that small behaviour changes not only improve a client’s

retirement outcome, but also have the potential to erase the

inter-generational debt cycle.

These behavioural insights lie

at the heart of our shared-value

investments model, deployed

by our teams at Discovery

Invest and Employee Benefits,

who are working to encourage

the good long-term investing

behaviours that a healthy bank

balance affords.

Through shared value, which

creates a positive, economically

expansive, feedback loop between

our clients, our businesses and

our society, Discovery is actively

challenging a defunct status

quo as it seeks to tackle some

of our society’s most pressing,

behaviourally driven, challenges.

Kenny Rabson,

CEO of Discovery Invest




The latest draft of the Upstream Petroleum Resources Development Bill has been under scrutiny since its

publication in June 2021. The bill comes as South Africa’s upstream oil and gas industry shows some promise.

The Brulpadda and Luiperd

discoveries of gas and condensate,

the largest hydrocarbon discoveries

made locally to date, have opened

a world-class exploration play. These two

discoveries are for only two drilled prospects

in the Paddavissie feature where three further

prospects remain to be drilled. There could be

sufficient gas to feed the Mossel Bay plant at

full capacity for more than 40 years.

The Paddavissie feature is only a fraction

of the Block 11B/12B, therefore these two

gas finds do not even begin to represent the

full potential of the licence block. Further

seismic data to the east has confirmed the

existence of another geological feature,

named Kloofpadda, which consists of several

large and encouraging leads. There are also

prospects identified in the north of the block.


Oil and gas exploration and production is

currently regulated under the Mineral and

Petroleum Resources Development Act, 2002

(MPRDA). The Upstream Petroleum Resources

Development Bill (UPRDB) will repeal and

replace the relevant sections pertaining to

upstream petroleum activities in the MPRDA.

The Draft Bill provides greater policy certainty

and a stable environment for investment in

the South African oil and gas sector. The Bill

offers security of tenure by combining the

rights for the exploration, development and

production phase under one permit.

The aims of the UPRDB are to expand

meaningful black participation; promote

local employment and skills development

as well as to create an enabling environment

for the acceleration of exploration and

production of the nation’s petroleum

resources. The Bill’s key features include

mandated state participation of 20%, 10%

participation by black persons, and the

empowerment of the Petroleum Agency of

SA (PASA) to administer the development of

the upstream petroleum industry.

“The upstream oil and gas exploration

industry requires technological capacity

and is extremely high risk in terms of capital

investment and needs long-term investment

before a return is shown. Because of this,

many countries choose to share with private

companies, and South Africa follows this

model,” says Dr Phindile Masangane, CEO of

PASA. “Government has designated PASA

as the custodian of South Africa’s oil and

gas resources. Its role is to attract these

companies to our investment opportunities

and facilitate their entry into and operations

in the upstream industry.

“All investors want to see a return on their

investment and a reward for taking on risk.

PASA’s approach is to facilitate their activities

and guide them through compliance and

regulatory requirements to achieve the

best outcome for both government and the

investing companies. Advocacy plays an

important role and PASA is concentrating on

communicating the role that the upstream

industry can play in reconstruction and

development of our economy to government,”

adds Dr Masangane.


South Africa has a history of political stability,

the new administration is widely regarded

as business friendly, and the new Upstream

Petroleum Resources Development Bill will



assist the Agency in expediting exploration

through close management of acreage

allocation and work programmes. The Bill

also empowers the Agency to commission

multi-client or speculative surveys enabling

the acquisition of data to attract investment.

South Africa currently offers an attractive

fiscal framework. These positive factors create

a conducive environment for the Agency to

pursue its mandate of attracting investment

into the upstream petroleum industry.

In terms of the UPRDB, every petroleum

right must have a minimum of 10% undivided

participating interest by black persons. The

BEE participation is on full commercial terms,

and BEE partners will be expected to fully fund

their involvement at both the exploration and

production phase, which is welcome news for

investors. In recognition of funding challenges,

the bill permits the dilution of the BEE interest

to no less than 5% to raise capital. This dilution

will not trigger any requirements to top up the

BEE participation to 10%.

Applicants must demonstrate that they

have the technical capability and financial

resources to carry out the work programmes

agreed, as well as any future development

that may ensue. A track record of experience, a

good health and safety record, environmental

compliance record and adherence to oilfield

practice is essential. Having said that, PASA is

determined to increase involvement of local

companies in our upstream industry and

develop local capacity. One way of achieving

this is through partnerships between

international and local companies.

A further change proposed by the UPRDB

includes giving the state an active role through

joint operating agreements (JOAs) that must be

entered into with the state. The state is entitled

to voting rights corresponding to their 20%

participation. For current rightsholders whose

rights do not provide for state participation,

these state participation provisions will only

kick in when the company applies for approval

to progress to the production phase in terms

of the new bill.


Simultaneously, the role of fossil fuels in the

future of energy is under question considering

the global aspiration of net-zero carbon

emissions by 2050. Notwithstanding the

mounting pressure to reduce reliance on fossil

fuels, the upstream oil and gas sector still plays

a vital role in South Africa’s energy policy.

The transition to cleaner fuels and

renewables is inevitable if the world is to reduce

the negative impact of climate change. South

Africa is a signatory of the Paris Agreement and

has committed to a “Peak-Plateau-Decline”

carbon emission trajectory. The government

policy is to diversify the country’s energy mix,

which is currently coal-dominated, to a lower

carbon future by introducing proportionately

higher renewable energy resources such as

wind and solar, into the energy mix as well as


“Gas burns with less than half the CO2

emissions from coal and additionally has no

sulphur oxide emissions. It is thus a suitable

transition fuel towards a lower carbon economy

for South Africa especially since gas-to-power

technologies are flexible and would complement

the intermittent renewable energy being added

to the national grid,” explains Dr Masangane.

The National Environmental Management

Laws Amendment Bill, which was revived in

June 2020, proposes various amendments to

the National Environmental Management Act,

1998. Proposals that may positively impact

upstream petroleum operations include

the provisions empowering the Minister

responsible for mineral resources to delegate

a function entrusted to him in terms of the

Act to any organ of state and designate, as

an environmental petroleum inspector, any

staff member of any other organ of state that

executes a regulatory function.

The Minister in this regard may delegate

certain competent authority functions to the

Petroleum Agency SA, which may improve the

turn-around timelines for making decisions on the

Environmental Authorisation (EA) applications.

Furthermore, designating staff members of the

Agency as environmental petroleum inspectors

means that all compliance monitoring and

enforcement functions prescribed in the Act, as

far as upstream petroleum operations, would be

efficiently executed.

Currently, natural gas supplies just 3% of

South Africa’s primary energy. A significant

challenge facing the development of a

major gas market is the dominance of coal.

Opportunities for gas lie in the realisation of

South Africa’s National Development Plan

(NDP) and the Integrated Resource Plan (IRP).

Held in high regard by the local and

international oil and gas industry that it serves,

PASA plays an important role in developing

South Africa’s gas market by attracting

qualified and competent companies to

explore for gas. 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.

Government has designated PASA as the custodian of

South Africa’s oil and gas resources. Its role is to attract

these companies to our investment opportunities.


How difficult is the South

African equity index decision?

Wehmeyer Ferreira

1nvest Executive Director

We have seen a massive global evolution in the index

landscape and a concurrent growth in index tracking

(“passive”) products and its share in AUM. In South Africa,

we have seen a similar evolution, albeit at a slower pace

– proliferation and product rollout have been less pronounced given

our limited asset class and sub-asset class universe, plus liquidity.

South Africa does have a relatively sophisticated and deep equity

market compared to other emerging market peers. Over the last 20

years, the equity index’s popularity has moved from market capped

weighted, to shareholder weighted (SWIX), and to capped. Since all

three versions are still relevant, the South African equity benchmark

decision is an important one, but by no means an easy one.

There are 239 funds (passive, benchmark-cognisant, and active) in the

ASISA South African General Equity Category. All the funds in the category

track against an index that is based on the universe of shares listed on the

JSE. How does one then decide in which index to invest? Understanding

the actual differences between indices is important. Names of, or

terminology around, indices are not straightforward to understand.

share of each firm competing in the market and then summing the

resulting numbers. Lower numbers imply more concentration.

One can easily deduce that Top 40 is more concentrated than Capped

Swix All Shares, but we need to dig deeper into the Top 40 versus Capped

All Share. It has the most significant contrast – market cap-weighted vs

shareholder weighted; large cap vs total market; and uncapped vs capped.

If we purely look at past performance to decide, then it is a more

obvious decision. The Top 40 outperformed the Capped Swix All

Share by 3.7% per annum over the last five years to the end of August

2021. However, in our mind that would be misguided. It is essential

to understand what is driving the difference between the indices.

At a high level, the sector difference between Top 40 and Capped

All Share is an overweight exposure to Basic Materials and Consumer

Discretionary vs Financials and Consumer Staples. Given the resource

overweight, the Top 40’s outperformance should be no surprise.



(Source: FTSE/JSE, Bloomberg)

(Source: FTSE/JSE, Bloomberg)


Free Float Market Cap. Float adjusting an index means that only

readily available shares to the public are represented in the index.

For example, if companies have shares that are not fully available

for trade on the open market, such as government-held shares or

significant privately controlled holdings, they will be excluded.

Shareholder Weighted (SWIX). The SWIX free float represents the

proportion of a company's share capital held in the South African

share register, maintained by Strate. Basically, it down-weights the

dual-listed shares.

HII. Herfindahl-Hirschman Index, a commonly accepted measure of

market concentration. The HHI is calculated by squaring the market


Another stat used in discerning just how different these two

indices are, is the active share between the indices, which is a

standard measure used by active funds to show “how far” away their

portfolio is from the benchmark. On 31 August 2021, the active share

between the indices is 34%, which is relatively high.

South African equity indices are distinguished, which exacerbates

their importance in the decision-making process. At 1nvest, we

believe that although there is no one-size-fits-all solution since

investor circumstances and views differ, it is essential to know how

to differentiate indices. For this reason, 1nvest provides a variety of

local and global index tracking funds against major assets classes to

complement most portfolios.

1NVEST Fund Managers (Pty) Ltd is an authorised Financial Services Provider

authorised financial services (FSP6406) and registered credit (NCRCP173) provider.

we do the

same thing

for investing.

1nvest offers award-winning ETFs and Unit Trusts that

will help your money work harder for you. It’s that simple.

And so is finding out how to invest with us.

Just visit

1nvest Fund Managers (Pty) Ltd, an authorised financial services provider. FSP No. 49955.


A differentiated approach to

investment management

A business born out of a recognition that a distinct gap exists between retail clients’ needs and fund

managers’ investment philosophies, New Road Capital offers a truly compelling investment option

for financial advisors looking to provide the most effective investment solutions to their clients.

Garth Nash, Managing Director (left) and Paul Fouché, Chief Investment Officer (right), New Road Capital

Founded by partners Paul Fouché, Chief Investment Officer

and portfolio manager, and Garth Nash, Managing Director,

New Road’s investment philosophy is practical in nature,

acknowledging that retail clients’ emotions often cloud their

judgement when excessive volatility materialises in their investments.

Both Fouché and Nash have a deep understanding of what is

important to financial advisors and their clients when it comes to

constructing investment portfolios.

Fouché initially started his working career as a chemical engineer

after obtaining his Honours degree in Chemical

Engineering from the University of Pretoria.

After a few years of practicing as an engineer,

his entrepreneurial flair and passion for

investments led to him becoming a financial

advisor. He built up a large investment book,

and met his business partner Nash who also

has an advice background and an MBA from

Wits Business School with specialisation in venture capital and business

dynamics from Duke University.

After obtaining his CFA charter, Fouché subsequently moved into

wealth management where he managed personal share portfolios

and model portfolios for clients. He has built up extensive experience

in the realms of both financial advice and investment management

by holding various management roles throughout his career.

Their investment philosophy is built on the fact that clients value

certainty over outsized returns and always weigh downside volatility

more than upside volatility in their decision-making. Hence, clients

tend to become risk averse at the precise moment when a higher risk

appetite is what’s warranted. The result is that clients down-weight

their risk profiles at the wrong times, as evidenced by the recent rush

to income and money market funds just before the strong equity rally

Their investment

philosophy is built on

the fact that clients

value certainty over

outsized returns.

over the last year. Consequently, many clients have missed a strong

period of returns, and are more than likely behind on their specific

investment goals.

New Road Capital deeply understands this dynamic and offers

a range of cost-effective fund of funds (FoFs) schemes designed to

achieve inflation-plus outcomes while minimising volatility. They realise

that clients are sensitive towards their investments and aim to make

conversations among advisors and their clients easier during times of

downward and volatile markets by providing a smoother investment

journey. This minimises the negative impact of

emotional switching and results in clients achieving

their investment goals in the end.

New Road Capital currently offers five solutions

which cater to the full range of client objectives, from CPI

+ 1.5% to CPI + 5%, as well as a global flexible offering.

With clever portfolio construction techniques,

as well as leveraging off the many skilled singlestrategy

managers in the industry, their portfolios have significantly

lower volatility and drawdowns than most of their peers, while still

being able to achieve desired performance during market strength.

“We close the gap between what fund managers are trying to

achieve within their specific funds and what clients and advisors are

expecting from their investments,” says Fouché.

Founded in 2019, the business currently manages assets of just

over R1.7-billion. A tribute to both their differentiated approach as

well as to the strength of the relationships that they have with the

financial advisors who believe in their added value.



Phone: 012 880 2773





Blue Chip speaks to Paul Fouché, Chief

Investment Officer at New Road Capital.

Paul Fouché, Chief Investment Officer, New Road Capital

Why should investors include Fund of Funds (FoFs) in their portfolio?

Most single strategy funds are designed with a specific investment

philosophy in mind, for use in a broader portfolio. They tend to focus

on a theoretical investment philosophy rather than considering

behavioural factors that occur in practice. Hence many of them

have significant tracking errors with higher volatility than their

benchmarks and take on unnecessary risk to provide a small amount

of alpha over time, often unsuccessfully.

FoFs are designed as holistic portfolio solutions rather than

specific portfolio subcomponents. Financial advisors can use

FoFs to ensure that their clients are treated in a uniform and

consistent way across their books and within their risk profiles and

targeted outcomes. While Model Portfolios can do the same, they

generally include an added layer of fees and trigger capital gains

tax (CGT) within client portfolios if underlying funds are switched.

Additionally, their underlying fund allocations are limited by the

specific LISP platform the model portfolio operates on, which

results in a smaller investment universe when compared to a

FoF that has access to any fund if it is regulated. It is for these

reasons that we believe the FoF structure is superior to a Model

Portfolio structure.

The more sophisticated client might also use a FoF as a core

component to their portfolio which provides the basis of the

portfolio and then add some satellite funds around this core for

some additional exposure to a specific theme or sector for example.

And specifically, why include your FoFs?

We differentiate ourselves in two ways:

Firstly, we use a building block approach to portfolio construction,

meaning that we use single asset class funds as underlying

components in our FoFs. This allows us to strictly control our asset

allocations to achieve our second differentiator, which is focusing

on inflation plus outcomes. We structure our asset allocations to

achieve these outcomes while minimising volatility. Hence, we focus

on maximising portfolio efficiency from a risk-return perspective,

and not solely from a return perspective.

We believe this type of strategy is desirable in practice because

it increases the likelihood that clients will remain invested through

volatile market conditions where historically those are the times

that they make the emotional and wrong decisions of switching

out of their long-term asset allocations. This usually happens if

the investor’s volatility is larger than they are willing to endure. By

managing the volatility, we believe the investor will have a better

chance of staying the course.

Many FoFs and discretionary fund managers will use multi-asset

funds as underlying components which we believe waters down

any underlying asset allocation strategy. We don’t believe that this

provides a coherent risk management value add to clients.

You offer FoFs across five risk profiles. Why are these a good

option for the average investor?

Our solutions are designed for advisors to use throughout their

client base and cater for conservative to aggressive clients. The

underlying holdings across our solutions are similar but the

weightings differ depending on risk profile. We have taken both

financial advisors’ and clients’ needs into account and have tied

our return targets to what we believe are realistically achievable

over the medium to long term for a specific risk profile. These are

similar targets that advisors use when conducting financial needs

analyses on clients.

Aren’t FoFs quite expensive?

Traditionally FoFs have been expensive; however, with the

advent of ETFs and other passive strategies it is possible to

reduce costs significantly. We use a combination of passive

and active strategies to achieve our targeted outcomes. We

will generally only use active strategies where the risk-reward

profile is favourable. We are very proud that we have been able

to offer FoF solutions with substantially lower fees than most of

our peers. Our total investment charges (TICs) are in line with

most single strategy funds on offer. So, the investor benefits

from an added layer of governance and risk management

without paying more than by just holding a selection of single

strategy funds.



Difficult conversations.

Perhaps the greatest value

you can offer your clients?

Seth Godin observed in a recent blog that, “In medical

school, they spend days teaching people to operate on

lungs, and no time whatsoever helping young doctors

learn how to get their patients to stop smoking and

get vaccinated.” This is a comment that could be applied to

financial planners.

For a financial planner, the equivalent of learning to operate

on lungs is like learning how to do an estate plan, calculate a tax

liability or construct a diversified portfolio. These are important

technical aspects of financial planning.

The ability to do these are key for a sound

financial plan. But just like being able to

operate on a lung is very important to

physical health, no matter how skilful the

doctor, his or her intervention is likely to

be in vain if the patient continues to smoke, or doesn’t want to

get vaccinated.

Yet, as Godin points out, young doctors do not spend any

time learning how to get their patients to stop smoking or

get vaccinated. Why? One possible answer is because it is

too difficult. Having a conversation with someone about

stopping smoking is not easy. It’s a grey matter (excuse the

pun), whereas when you operate on a lung it is the world of

black or white – cut out the growth if it is there. Learning how

to cut something out that you can see is relatively easier than

learning how to have a conversation that shifts behaviour, in

this case smoking.

The same applies to financial advice. Estate plans and tax

calculations are largely black and white. Rules determine

their outcome. Portfolio construction has clear principles:

the higher the expected return of an asset, the higher the

expected volatility. But as with lungs, money is not only black

and white. Smoking is like spending too much, saving too

little or making irrational choices at

Shifting money

behaviour does not

have clear-cut rules.

bad times. Shifting money behaviour

does not have clear-cut rules.

Each person’s motivation for their

behaviour is unique.

One client may spend too much

money because they want to express who they are with

expensive clothes. Another person may spend too much money

on exciting experiences because they don’t attach value to money

or possessions. Constructing a portfolio can have a predictable

recipe. Use historical returns, risks and correlations, add a dash

of expected returns, throw them into the mixer, in this case an

optimiser, and voila you have a portfolio for whatever occasion

you deem fit. Getting someone to stop spending too much does

not have a predictable recipe.



We all face the continual tension between choices that

give us an immediate reward, versus choices that reward us in

the future. Our susceptibility to the present bias means that

eating chocolate cake today is easier than eating broccoli

– at least for most of us. Saving money is like broccoli.

Not much appeal for now, but lots of benefit in the future.

Having a conversation with your client about this is difficult.

As UK financial planner Andy Hart said at the recent HUM

SA Conference, “Financial advisors are paid to have difficult

conversations with their clients.”

David Kreuger suggests that, “The most important thing

we can do to achieve success is to manage our emotions and

regulate our states of mind.” When it comes to investing, Kreuger

draws on Benjamin Graham’s insight into successful investing:

“People don’t need extraordinary insight or intelligence.

What they need most is the character to adopt simple rules

and stick to them.” How can you help clients do this? Having a

documented financial plan is an important start. A financial plan

is a way of providing a client with rules for decision-making.

But because we are human, this is not enough to make good

decisions. We still have to manage that tension between present

pleasure and future fit.

Managing that tension means having difficult conversations

with your clients. Conversations in which you can challenge your

clients not to eat the chocolate cake, and help your clients to

behave themselves to better financial health. This is hard work.

These are hard skills to learn. The temptation is to stick to the

technical. It is easier. But clients need more than this. Operating on

a lung is useful, but only if a doctor can help the patient to stop

smoking. Developing a financial plan is useful, but only if you can

help a client, “manage their emotions and regulate their state of

mind”. The starting point? Recognise that developing the skills

for difficult conversations is as important, if not more important,

than knowing how to do the technical work.


Andy Hart, “The Story behind

the Story,” Humans Under

Management SA 2021 Virtual

Conference, 15 September 2021

David Kreuger, “Your New

Money Story: The Beliefs,

Behaviours and Brain Science to

Rewire for Wealth,” Rowman and

Littlefield, 2019

Seth Godin, “Seth’s Blog: Gift

cards, serial numbers and hard

technology,” 19 September 2021

Rob Macdonald, Head of Strategic

Advisory Services, Fundhouse



Helping you take your

business further

Financial planning requires you to have meaningful conversations with your

clients to get to know them, and to understand their financial goals.

Through personal interaction, you’ll be able to determine

the investment strategy that’s right for them – and

one that has the flexibility to change, just as clients’

needs change. Incorporating an approach that involves

coaching will enable you to ask the right questions to help clients

identify solutions that underpin their investment objectives.

The essence of coaching

As financial planning specialists, we take a very different approach

to dealing with our clients to influence their financial futures. At

Old Mutual Wealth, we have a team of financial planning coaches

that train financial planners to carry out coaching conversations

with their clients. This helps planners to engage in a way that

enables the client to clearly articulate the life they want to plan

for, as well as to contemplate how their money can best support

their plans.

Planners who understand their role as financial coaches allow

clients to independently consider financial planning questions

without influencing them in a particular direction. Coaching is

about asking a correctly structured question to assist clients in

finding their own solutions to the financial situations they are

trying to solve. Questioning has its own benefits and should be

considered a useful alternative to the advice or guidance of a

mentor/consultant role.

What is coaching?

Coaching is not psychotherapy or counselling, as these focus on

resolving deep psychological and emotional issues. Coaching is

also distinct from mentorship. Financial planners often confuse

mentoring with coaching, and this comes as no surprise, as most

planners are comfortable to impart their technical skills in the

form of knowledge, advice and teachings to their clients.

Planners then recommend solutions and outcomes that are

based on their own interpretation of the facts and figures that are

collected, analysed and presented to clients. Coaching moves into

the realm of interpersonal and relationship-building capabilities.

Here, facilitating and demonstrating empathy, good listening and

questioning skills, emotional intelligence and building rapport



with clients are key. Quite simply:

coaching is a conversation. It is a

conversation that has an impact

on the individual and it engages

with the client directly.

It helps clients to think through

situations, gain clarity and insights

around these situations, and

to ultimately move forward to

achieve a specific outcome or

goal. Coaching is, therefore, the

best method of taking a client

on a journey from where they are

now to where they want to be. The

coach is merely the facilitator, the

guide, the custodian, the steward

and often the partner of the

client who is visually guided on

this journey. Good coaches make

clients the drivers, allowing them

to navigate a clear path to reaching

their ultimate destinations.

Why coaching?

When it comes to talking about

money, we often feel strong

emotions, even stress. When we

feel stress, our limbic system

takes over and we are unable to

think rationally. This can happen to all of us, no matter how selfaware

we are. We ask ourselves, “Should I go offshore? Should I

save more money? Or should I cash in my pension fund?” All too

often these questions come from things we’ve read or maybe

heard other people talking about. A planner’s role is to help

clients through this; to hold up a mirror so that clients observe

what’s really happening.

By asking questions that make sense in the moment,

clients strip out the emotion and talk to the facts rather than

assumptions. In short, coaching helps to bring clients back to

a place where they can make good decisions and manage their

behaviour around money.

Coaching as part of the advice framework

At Old Mutual Wealth, we have entrenched coaching into the

advice process, including the tools and solutions that planners

deliver to their clients. We have developed a client engagement

process that makes up part of the advice-led integrated wealth

planning proposition. We have made our advice framework

available as part of the value proposition we offer to financial

planners. This proposition is successfully in use by accredited

financial planners.

The concepts developed are based on robust, tested and

proven international best practice standards that are continually

reviewed to stay current and relevant. We enable planners to

overlay the advice framework with the “softer skills” of coaching

that will automatically assist them in engaging with clients on

a much deeper level. This means that planners will be able to

differentiate themselves effectively as part of the value they offer

to their clients.

Our coaching programmes

At Old Mutual Wealth, our focus is to help you capitalise on

opportunities and, ultimately, build a profitable practice that is

sustainable over the long term. We offer courses, modules and

workshops designed to incorporate coaching methodologies

and best practices that help to develop and enhance your client

relationships. Our team of qualified financial planning coaches

is professionalising the industry by assisting planners with their

client conversations and processes, and by supporting them in

delivering a unique client experience.

The coaching specialists at Old Mutual Wealth believe that

coach-led financial planning is a life-changing philosophy that

generates passion for possibility, rather than living a life of fear

or limitation. Their approach to lifestyle financial planning is to

champion positive futures every day. They coach, mentor, train

and inspire financial planners to leverage the philosophy of

integrated wealth planning and to give clarity to clients about

their lives and how their finances fit into them. The guiding

principles of the coaching team are to understand, disrupt and

inspire with every opportunity.

By engaging with you to develop client conversations, models,

processes and services that are unique to you and your role as

an advisor/planner, our coaching specialists are able to present

a client experience that is authentic to you, and profitable and

attractive for your business.

Partnering with an Old Mutual financial planning coach will:

• Enable you to recognise your clients’ individuality by focusing

on realising their goals and aspirations over time.

• Allow you to coach, educate and empower your clients to make

informed decisions and keep track of their plans.

• Ensure that you are delivering on promises by providing a plan

and solutions that are directly aligned with your clients’ goals, as

you manage expectations and deliver reliable outcomes.

Contact us to find out more about coaching and how it can benefit

you and your clients by emailing us at





Blue Chip chats to Rory Brachner from DoshGuide, a site to connect people that need

personal finance advice with a passionate community of flat-fee financial advisors, who

operate in a fundamentally different way to traditional financial advisors.

What is DoshGuide about and what are you trying to achieve

with it?

The idea behind DoshGuide is that many people need help with

their personal finances; they’ve never really been taught how to

manage their money. Unfortunately, it’s difficult to figure out where

to get help and who to trust. DoshGuide is aiming to solve that by

providing a safe place for people to connect with a community of

vetted, rated and reviewed financial advisors.

We believe that flat-fee advice is the best opportunity for nextgeneration

clients to get the help they need. Our goal is to make

it as simple as possible for them to find their ideal flat-fee advisor.

We’re excited for more people

to experience what it feels like

to work with an advisor who is

working for you, and only you.

Equally we’re excited to

provide a platform for advisors

looking to grow a flat-fee business or those looking to diversify

their existing business to include a fee-based model. We focus

on facilitating mutually beneficial longer-term client/advisor

relationships, rather than once-off interactions.

You are not a financial planner, so what is the story that lies

behind you developing this website?

Correct, I’m not a financial planner and quite new to the financial

services industry. Prior to launching DoshGuide I worked at

Google for nine years, so my background is in web and digital

marketing. I quit Google in 2019 and took some time off to

Getting paid less for helping

people be better with their

money doesn’t make sense.

consider potential paths. I loved the idea of going back into the

start-up space and wanted to look at solving problems that were

tangible and meaningful to me, ideally something that could also

benefit from my digital expertise.

In the middle of 2020, I found myself sitting on a video

call with five close friends. We’d all signed up for the same

retirement annuity, which we were realising was a big mistake!

Collectively, we arrived at the painful conclusion that it would

be better to exit the annuity early and lose 25% of the money

paid in, rather than stay in a product with extortionately high

fees, till retirement. It was a painful decision, but it became

clear we needed to pull the

plug. I’d been paying a large

monthly contribution into that

fund for five years. It was a huge

setback. I was angry at myself for

not knowing better and at the

trusted financial advisor who had sold me the annuity.

This and other prior experiences really got me thinking more

deeply about the financial services space. How did five of the

smartest middle-aged people I know get pulled into investing

in a product like this? How is it even possible that a product like

this is available on the market? How many other people in similar

predicaments haven’t realised it or will never realise it? Why would

a financial advisor, in good conscience, be pushing such obviously

flawed products?

I become obsessed with these questions and figuring out how

it could be better. I quickly realised my experience was not unique:



unfortunately, there is a growing dissatisfaction and distrust in the

financial services industry. I also realised it didn’t have to be this way

– a solution already existed in the market, especially for younger

clients, but not enough of them knew about it. I started to connect

with a small passionate community of flat-fee financial advisors,

and this is where the idea of DoshGuide took hold.

We’re seeing strong

indications in the market

that the flat-fee model

is growing faster than

AUM-or commissionbased


What is your definition of a

“flat fee”?

Where the advisor is paid

by the client directly on an

hourly, project or retainer

basis. There is no third

party or product involved in

advisor remuneration, and

fees are expressed in rands,

not as a percentage of assets.

Many very good and ethical

financial planners charge AUM-based fees. Would they be excluded

from being listed on DoshGuide?

There are plenty of advisors doing a great job on an AUM basis

and there are many platforms and large, established companies

supporting that model. Currently it’s quite easy for people to find

advisors operating on an AUM basis. However, it’s difficult to find

flat-fee advisors; we want to make that simple – that’s our focus.

It’s important to understand that planners who join our platform

can have an existing AUM business, in fact many of them do. We

have no issue with advisors on our platform growing their existing

AUM business in parallel. However, we require that any clients you

gain through our platform are engaged with on a pure flat-fee

basis, so no commission and no percentage of assets. This approach

gives advisors an opportunity to test out a new model without any

impact on their existing AUM business.

What for you is so important about financial planners charging

flat fees?

Ideally, there should be more financial advisors operating like any

other professional service and they should be rewarded appropriately

for their time and expertise without the burden of having to sell

products. Suggesting options like investing in property, paying off

debt, making gifts to children, increasing your cash buffer can lead to

a reduction in an advisor’s fees. Getting paid less for helping people

be better with their money doesn’t make sense.

Flat-fee advisors are disproportionately represented in the

industry, but more people, especially a younger demographic, are

organically seeking out this service. We’re seeing strong indications

in the market that the flat-fee model is growing faster than AUM-or

commission-based approaches. We’re excited to support and

increase that growth while helping more advisors build sustainable

flat-fee businesses.

You seem to be promoting a model where financial planners

only give advice, and that clients are then left to implement

that advice directly with product providers themselves. Is this

correct? What about the many clients who don’t have the time,

energy, experience or expertise to do this themselves and just

want to delegate their affairs to a financial professional?

No, most of our clients need help with implementation, and our

advisors do a great job with that, the only difference is now they

are getting paid on a project or retainer basis to do so. Since

advisors are no longer drawing fees from the product, they are

free to consider all options in the market for their clients, even

self-service providers, where it makes sense. For advisors to be

successful with flat-fee clients, they’ll need to suggest product

providers that keep costs down to a minimum, and help with

implementation, regardless of what providers are selected.

We’re starting to introduce client ratings and reviews for

individual advisors; this rewards those delivering true value,

resulting in more exposure and more clients. In the future, we’ll

also share learnings from the best-performing advisors on the

platform so that everyone can understand how to deliver the best

possible flat-fee client experience. Part of the value DoshGuide

provides is sharing best practice around building this type of

client base.

There is no such thing as a free lunch. How does DoshGuide

make money?

We launched in July, and currently are giving away free lunches!

While we’re in beta for the next several months, advisors who

join can use the platform free of charge. Once we get beyond

beta, our fees will be charged as a percentage of an advisor’s

earnings on the platform. We’re still finalising our fee structure

but we’re aiming at averaging around 10% to 15%, with longer

client engagements dropping to below 10%.

How do people get in touch with you?

I’d love to hear people’s thoughts on what we’ve built, how we

can do better and any questions they may have. Feel free to get

in touch on LinkedIn or email

If you are interested in becoming an advisor, visit

Prior to this, Brachner worked at

Google for nine years, gaining

extensive global experience as a senior

sales and business development

leader, having lived and worked in

London, Singapore and San Francisco.

This included eight years focused

on growing Google's advertising

technology business (DoubleClick,

Google Marketing Platform, Google

Analytics) in various markets and one

year building partnerships for the

Chrome product team.

Rory Brachner, founder

and MD at DoshGuide



The perils of risk

tolerance questionnaires

Where you (the financial planner) can bridge the gap

Understanding your client’s capacity for risk is key to

advising them on a sound investment strategy. Failure

to do this correctly may result in an excessively risky

portfolio requiring more frequent rebalancing, or

too conservative a portfolio which doesn’t achieve the client’s

investment objectives.

There are a variety of methods to assess risk tolerance, but

questionnaires remain the simplest and most common. Because

of that, they need to be psychometrically sound. They need to

assess cognitive (thinking) and affective (emotional) elements, and

they also need to be valid, reliable and consistent.

This last point is something that piqued my interest a while

back. Risk tolerance differs from one individual to another and is a

function of socio-economic and other personal factors. Thus, surely

a risk tolerance outcome should be unique to the individual, not

dependent on the type of assessment tool?

So, my team did a little study. We sourced several risk tolerance

questionnaires and created four hypothetical individuals: we

needed someone who was very risk-averse and another person

who was very risk-tolerant, and two others somewhere in between.

To do this, we assigned different characteristics to these individuals

that are predictive of risk tolerance, such as level of financial literacy

and age (to name a few). Then, we completed each questionnaire

four times – once for each individual. We wanted to see whether

the results were in line with the expected outcome for each of the

individuals and whether they were consistent among the different

questionnaires. The results were as follows:



You would expect the individual to get the outcome that

matches their colour, ie the the low-risk tolerant individual (top

row) should get all (or mostly) dark blue outcomes. But we don’t see

the colours matching. Our low-to-medium risk tolerant individual

(second row) had a high-risk tolerance outcome (turquoise). And

our high-risk tolerant individual (bottom row) only had 25% of its

outcomes matching that risk tolerance.

The questionnaires tended to underweight a person’s risk

tolerance. And there was no consistency.

We also picked up some other problems in the questionnaires:

a lot of redundancy and self-assessment. Self-assessments are

not ideal. No-one knows how they are going to feel about losing

money – until they lose money! Furthermore, there weren’t any

questions that assessed personality type or financial literacy.

Pause for a second here – think about the questionnaires or

tools you are using. Do you think they are appropriate? Are they

getting it right? Think critically about what you are trying to assess

and why.

Risk tolerance questionnaires are flawed. Thus, there is a vital

role to be played by the financial planner. To do that, you need to

read your client’s behaviour, ask the right questions, and manage

your own biases.

And while we are talking about risk tolerance, that doesn’t

necessarily mean it should be the starting point. Let me explain.

If you start with assessing risk tolerance, the next natural step

is to advise an asset allocation based on that. That asset allocation

will then determine the client's return, which dictates their lifestyle.

Let’s switch that around.

What lifestyle does your client want? What returns do they

need to earn to live that lifestyle? What assets do they need to

invest in to earn those returns? And finally, what associated risk

is then required?

surgery, you will push through the pain. Likewise, risk is inevitable.

You need to tolerate it to achieve the returns you want.

This speaks to client education. Running the numbers on what

returns are needed is the easy part. Your value-add to your client

is relational.

3. Don’t give them too many options.

As humans, we struggle with information overload. And when

that information is difficult to understand, it is even more perilous.

Value your expertise! Believe in your ability to advise appropriately.

You know the answer… but your role is to manage your client’s

behaviour and mindset… and that will only come with time (if

you are understanding them properly). But it is well worth the


Make sure you are

speaking about risk from

the client’s perspective.

This is where it starts to get interesting. If your client’s

risk tolerance matches the risk that is required – there is

no problem. But if that is not the case, how do you manage

that misalignment?

Here are some key things to consider in your client interactions:

1. How do they define risk?

I am generalising, but in most instances, when I talk to someone

about risk, they immediately say things like, “I can’t afford to lose

my money.” That is not risk aversion, right? That is loss aversion. It

is different. It speaks to the client’s capacity to handle a loss.

Make sure you are speaking about risk from the client’s perspective.

Use terms and examples that they understand.

2. Do they realise that risk is inevitable?

If you ask someone if they want to experience pain after surgery,

they will obviously say, “No.” But pain is inevitable. If you need the

Dr Gizelle Willows is an Associate

Professor at the University of Cape

Town and Managing Director of

Nudging Financial Behaviour



Helping clients

through unexpected


Kim Potgieter CFP®, Director at Chartered Wealth Solutions,

ICF Professional Certified Coach, New Money Story® Mentor

Coach, Certified Dare to Lead Facilitator



As the guardians of our client’s life dreams, goals, fears and finances, we are accustomed

to challenging conversations. But 18 months into the Covid pandemic, our conversations

have become more challenging and difficult conversations – more frequently.

We may be accustomed to helping our clients

through transitions, retirement being one of

them. But as we all face new and demanding

challenges because of Covid, we are increasingly

asked to guide clients through arduous, and often unexpected

life-changing transitions. These stand out for me: death, divorce

and broken careers.

The landscape of our clients’ visions and dreams – and their

money – has changed, and I believe that the test of living with

vulnerability has never been more acute. We are all navigating life

– not sure what tomorrow will bring, and our clients are left feeling

vulnerable and anxious. Now more than ever, our role as planners

is to facilitate difficult conversations, guide our clients through lifechanging

transitions, offer support and provide objective advice.

This is where we add value.

Skills to facilitate difficult conversations

I have found value in Brené Brown’s work on self-awareness and

believe that being comfortable with vulnerability and practicing

empathy are core skills that planners need to

guide clients through difficult times.

Being comfortable with vulnerability is the

first step to being brave. It is difficult listening

to clients going through pain and not be

able to take it away. It helps me to name the

emotion that I am feeling, live into it, and at

the same time, guide my clients to recognise

what they are feeling and move through it.

Empathy is one of the bravest ways to ease someone’s pain

and suffering, and practicing empathy, helps you respond to

clients and feel comfortable knowing that it is okay to not have

all the answers.

“Empathy has no script. There is no right or wrong way to do

it. It’s simply listening, holding space, withholding judgement,

emotionally connecting, and communicating that incredibly

healing message of ‘You’re not alone’” - Brené Brown.

I am adding a third skill to the mix – coaching. I have found that

coaching is often what clients need most when going through

transitions. It helps to know how to ask exploratory questions,

listen attentively and be at ease with long silences and tears.

Conversations about death

Sarah, a 44-year-old client with two small children – age two

and four – came to see me. Her husband was diagnosed with

Covid, had to be ventilated in hospital and was recovering until a

bacterial infection took his life. Sarah and Mark had their second

chapter all planned out. Now, her life plan is destroyed, and she

is left picking up all the pieces alone.

Sarah needed help with winding up the estate and her

financial plan (which now only consisted of one salary and

disrupted dreams.) This is what we, as planners do. And it is

not always easy. How can anyone going through such pain

know exactly what they want or even concentrate on making

decisions? I believe empathetic and patient planners are

better equipped to guide themselves and their clients through

this transition.

Divorce conversations

Covid seemed to have widened existing cracks, and

relationships that struggled before the pandemic are severely

challenged now. I have found that more people are taking

stock of their lives and making changes to live more fully, and

unfortunately, divorce is sometimes the outcome. Divorce is

traumatic, and many clients are so emotionally burdened

that they neglect to consider their

Being comfortable

with vulnerability

is the first step to

being brave.

long-term prospects and lives postdivorce.

To help our clients through

this transition, we need to sift past

all the emotions and help them reach

a fair and objective settlement so

that they can live a significant and

purposeful future.

Loss of income conversations

Some of my entrepreneurial clients have lost not only their

income but their entire companies, while other clients have been

retrenched before their planned retirement. Losing your job is

difficult – losing your job in a pandemic is devastating. Given the

current economic situation, there is little hope for many of these

clients to build enough funds for retirement.

In my experience, these clients often (at first) live in denial –

they don’t change spending habits and deplete investments

too quickly, hoping that things will change. They end up feeling

hopeless and insecure. In these cases, I believe the best way to add

value is to coach clients to reinvent themselves and help them to

find new and alternative means of earning.

Transitions are never easy; these conversations are always

hard. As planners, we are adding more value to clients now than

ever before. With insight into their lives and finances, we can

help clients live their best lives – enabled by their money.





If you reckon corruption in South Africa began

with Zuma or even with apartheid, it’s time

to catch a wake-up call. As this new book by

Matthew Blackman and Nick Dall shows.

It is hard not to consider the current state of South African

political and economic affairs as being the worst of times. The

dreadful daily news of corruption is so familiar that most of

us simply shrug and go about our daily deeds. One regularly

hears statements like, “Almost every single Department under

this government is in a state of total incompetence,” and the,

“Audit office is a perfect farce.” And it is certainly not unusual

to find a journalist saying, “I believe great irregularity to have

prevailed in the payment of the expenses.”

What might be a surprise to some is that these are not the

words of a modern journalist or contemporary politician but

rather those from a letter written in 1825. The author of the

letter was the colonial auditor Richard Plasket who had been

sent out to the Cape Colony to try to sort out the corrupt

and dysfunctional mess Lord Charles Somerset had made of

the Cape.

In our research for our book Rogues’ Gallery, we

discovered that there were very few eras in South African

history where our politicians did not have their hands in

the cookie jar. Corruption proper began in South Africa

with Governor Willem Adriaan van der Stel, a man who

used state funds, manpower and raw materials to build his

massive fiefdom at Vergelegen, before selling Vergelegen’s

produce to the company he controlled at vastly inflated

prices. And when the locals complained of his corrupt

acts, he threw them into dingy dungeons and presided

over kangaroo courts which got them to recant their

accusations. Remarkably, justice was done, and he was

booted back to Holland in disgrace.

Perhaps the least well-known of all the British governors

of the Cape was Sir George Yonge, an entitled British buffoon

with a serious spending habit. Yonge, at taxpayers’ expense,

adorned his official residence with Moroccan leather and

doubled the tax on brandy. He also helped to run an illegal

and evil slave-smuggling racket.

But he was certainly not the only British governor to engage

in illegal and corrupt acts. Lord Charles Somerset went about

ruling the colony as if government money was his own. He also

had a habit of imprisoning or banishing whistleblowers. Lord

Charles even had his own Nkandla scandal. A scandal in which

he was told to pay back the money. And his rule came to an end

with an all-too-familiar commission of inquiry.



But the king of the castle of corruption in South Africa

was almost certainly that dirty rascal Cecil John Rhodes.

As the political philosopher Hannah Arendt pointed out,

Rhodes was one of the world’s most malignant political

forces in the 19th century. Rhodes wasn’t just an immensely

powerful businessman; he was also the second-longest

serving prime minister of the Cape Colony. And his terms

of office were riddled with tender fraud, bribery, corruption

and war. He also secretly bought out newspapers to spread

fake news and in 1898 attempted to buy an entire election.

And then of course, there was Oom Paul Kruger. Although he

was perhaps less corrupt than some of the other rogues in the

book, Kruger did preside over a rotten-to-the-core concessions

policy which is sadly familiar. And he would certainly not be

the last Afrikaner politician to engage in corruption. Apartheid

was, arguably, corruption’s finest hour in South Africa. The

Broederbond could certainly rival those other broeders,

the Guptas, in acts of malfeasance. The Broederbond set up

a network of companies that benefited from government

business, handing out Eskom coal-mining contracts to their


But for the whole corrupt structure of apartheid to

be exposed we would have to wait until the 1970s and

the Information Scandal. In the biggest scandal to rock

apartheid, we had all the hallmarks of modernity: fake news,

misappropriation of government funds, commissions of

inquiry and a group of hardnosed muckraking journalists.

The stranger-than-fiction machinations of Eschel Rhoodie’s

Department of Information were finally exposed when a

whistleblower and a judge fought back.

As for the homelands during apartheid, they were simply

awash with corruption, which drew every kind of crook and

chancer to their flame. The Matanzima brothers’ spectacular

pillaging of the Transkei state’s coffers was not unlike what

we see today. Add Sol Kerzner into the mix and you have a

perfect pudding of corruption and bribery. Kerzner was also of

The first executive council of the Broederbond in 1918.

course heavily involved with Lucas Mangope’s long reign in the

“independent” Bophuthatswana. In Bop, bribery, self-enrichment

and state wastage were performed on a truly epic scale.

Corruption in South Africa is certainly nothing new, although

Jacob Zuma and the ANC have certainly attempted to make

a perfect art of it. But still we cling onto some hope. South

Africa has (and always has had) some decent and committed

whistleblowers, judges, journalists and politicians. The last

decade has in many ways been the worst of times with regards

corruption. Could the next decade be the best of times?

Rogues’ Gallery: An Irreverent History of Corruption in South

Africa, from the VOC to the ANC is available in all leading

bookshops and online.

President Kruger shifts his capital.

Corruption in

South Africa

is certainly

nothing new,


Jacob Zuma

and the ANC

have certainly

attempted to

make a perfect

art of it.

Matthew Blackman (left) and Nick Dall, authors

of Rogues’ Gallery





Covid-19 vaccine misinformation can harm your health and financial wellbeing

As the pandemic continues to upend our lives, South

Africans are facing issues they could never have

predicted two years ago. What started as a health threat

across the world quickly morphed into something much

bigger, not just impacting our physical and mental wellbeing – but

also wreaking havoc on our financial health.

Tragically, those who were most vulnerable to begin with

have been hit the hardest. Ernest Zamisa, financial advisor at

Momentum, says, “The country’s lack of financial literacy has

seriously compounded the impact of this crisis – and now, as

so many South Africans face unprecedented financial stress, it

is imperative that we make health a national priority.”

Light at the end of the pandemic tunnel?

As South Africa’s vaccine rollout programme gradually gains

pace, Zamisa says there seems to be a concurrent and growing

trend of opposition against the use of vaccines, primarily based

on false information. The United Nations (UN) has termed this

misinformation an “infodemic”, with fallacies ranging from

the vaccine altering human DNA, to it causing infertility and

even fatality. “The advent of this vaccine hesitancy threatens to

needlessly hamper the country’s efforts to achieve herd immunity,”

says Zamisa.

Not only could this counter-movement have serious public

health implications, but he says there is a strong case to be

made for the fact that it could damage many consumers’

financial wellbeing.

Vaccine hesitancy on the rise

A survey, published by the University of Johannesburg and the

Human Sciences Research Council, suggests that only about 52%

of South Africans would definitely take the vaccine. Among the

group that expressed their doubts over vaccination, 25% raised

concerns over the potential side-effects and 18% did not believe

that the vaccines were effective. Then there is the 11% that cited

conspiracies or occult reasons for their hesitancy.

“What this means is that variants will continue to spread,

and more people will die. Each Covid-19 case requires weeks

of costly rehabilitation. Even after the pandemic fades, millions

of vaccine refusers could turn into hundreds of thousands of

patients who need extra care, should they come down with

the virus,” says Zamisa.

The growing need for sound decision-making

According to Zamisa, these beliefs are even more insidious than

one may think since there is a very real financial side to opting

out of vaccination. “Financial advisors could play an extremely

valuable role in helping people to look at the information

objectively and help them to come to the right decisions.

Momentum, for one, supports the scientific view of the protective

power of vaccines.”

Consider the fact that the cost of illness (such as Covid-19) can

have a massive impact on one’s finances that far outweighs the

risk of possible vaccine side-effects. He says, “Your ability to work,

save and plan for your financial future could also be significantly



impacted if you or a member of your family becomes severely

ill. While there are financial products that cover this risk (and

insurers do not require clients to be vaccinated as a condition

of cover), these products can only do so much. The best way to

ensure your financial wellbeing is to make the right decisions.

This includes having a valid and executable will; dying without

one can have far-reaching consequences.”

People who give into misinformation and refuse to get

the Covid-19 vaccine will have higher healthcare costs, which

means somebody has to pay for that decision: “You’ll pay for

that individual’s decisions in insurance premiums, if he has

a plan with your provider. The vaccine refusers could cost us

billions. Maybe more, over the next few decades, with all the

complications they could develop. And we can’t do anything

about it except hope that more people get their vaccinations

than those who say they will right now.”

Zamisa concludes, “We understand that this is an

unprecedented time and one that can leave you with many

questions unanswered about Covid-19 and its future impact.

For sound and knowledgeable financial advice about how any

eventuality can affect your finances and help or harm you on

your journey to success, it is always good advice to speak to an

accredited financial advisor.”

The latest updates about the Covid-19 vaccine can be found

on the Momentum website.

Preparing your insurance portfolio

At the same time, one should also remember that the country’s

vaccine rollout is still far from complete, so it is crucial to have

financial plans in place with adequate cover to provide for loved

ones, should the unthinkable happen.

This virus is a threat to all people. While the cost of death

is difficult to quantify, Zamisa says significant expenses arise

when someone dies. “There are funeral expenses, estate duty

The vaccine refusers

could cost us billions.

and executors’ fees that simply have to be paid. Then there are

the regular monthly bills and expenses to cover. The list goes

on and on.”

More specialised options address the estate administration

costs and professional fees associated with a loved one passing

away. If that person was also the breadwinner, specialised life

cover options exist to replace that loss of income.

The financial burden of a pandemic

Rising costs and increasing debt have put South Africans under

immense financial pressure, and the onset of Covid-19 has made

this even more acute. More than half of credit-active consumers in

South Africa are in arrears, and many are trapped in a debt spiral.

Struggling with debt means cutting down on expenses, insurance

and savings, and can impact one’s prospects of creating wealth.







In six months’ time, I will have been in the financial

services industry for 30 years. I have lived through all

the change that has happened over that time. I started

my career selling commission-based products as a

23-year-old (with the best intentions). I did not know better

but as I grew in experience, I started to question what I was

doing and how I was or was not adding value to my clients.

Fortunately, I discovered lifestyle financial planning 20

years ago, moved to the assets under management (AUM)

fee model and have continued to learn and question

aspects of what we do, to get better and add more real

value to our clients.

For the past year, I have been thinking about the way

we charge our clients and have been exploring various

remuneration models used by planners around the world. This

has occupied my mind almost daily and consumed a lot of my

headspace – as well as my sleep.

When the model stops making sense

The challenge I see in using the AUM model is that for different

clients, what we earn in relation to the value we add can vary a

lot and, in many ways, does not make sense. Advising a client

with R1-million of investable assets is not necessarily different

to doing the same for a client with R20-million of the same. At

Client Care we have started adopting a sliding scale to the annual

AUM fees we earn.

Portfolio Value


0- R5 000 000 1%

R5 000 000 - R8 000 000 0.75%

R8 000 000 - R11 000 000 0.50%

R11 000 000+ 0.25%



We generally work with people and

families who need to plan properly to

ensure they are financially secure. We

do not have many clients who have

excess funds (more than they need)

so overcharging has not really been a

concern until recently. The few clients

we have who have excess assets are all

paying a lot less than they were with

their previous advisors where in most

cases they were getting no value at all,

so they are happy on all fronts.

Charging a flat fee for a particular

offering or service agreement regardless

of investable assets really sounds like the

fairest way to operate. So, I have been

exploring many models to find what can

work for our business. The transparency

this model provides is clear and it seems

simple both for planner and the client.

Working out how much to charge can

be difficult and then how we collect this

fee can also be a challenge. Yet, there

are many planners out there doing

exactly that. So, it can and is being done


How to find the balance?

I analysed our existing client base to

see who pays us how much in relation

to the amount of work and complexity

those clients require. This exercise was

very interesting, and the simple result

was that we have very few clients who

potentially overpay us (in my opinion)

and many who probably do not pay us

enough for what we do for them – this was not making my job

any easier. In fact, it raised alarm bells around many clients who

we have done and do plenty for, yet on our existing AUM fee

model do not and probably never will earn equal to the value

I believe we provide them with.

So, the question then arose: what do we do with these

clients? I started putting faces to the numbers and reliving our

journey with these people and families – many of whom we have

worked with for years. Some of our most (financially) successful

clients had nothing when they started their journey with Client

Care and have grown their wealth substantially. Others have had

real challenges, personal tragedies and uncontrollable disaster

(like Covid) that has set them back massively and even caused

them to lose everything. Do we fire these people and families

because they cannot pay us enough any more?

At Client Care, we have always battled with the concept of

segmenting our clients and even when we have tried to do

so, have placed the largest weighting on the relationship we

share and how well and easily we work together with them.

The challenge that a flat-fee model would bring is that many

of these clients would not be able to afford our services. This is

the simple truth and something that really, really conflicts with

how I have worked all these years.

I have always said, if a potential client will go through our

process, implement the advice we give them and participate in

the relationship we want to have with them, then we have an

obligation to help them. This is a terrible business model, I know,

but it has never been only about the money at Client Care (as

our name indicates).

Heart has always been a big part of the Client Care offering.

We really do care for our clients and all who work with me share

this “care” gene. Moving to a flat-fee model would right now be

at conflict with who we are as people, as a business and how

we work. Yes, Client Care is a business, but it is also so much

more than that.

We owe it to the industry do more

So many people have built extraordinary wealth through this

industry, but how many of us give anything back?

I have a personal passion to make a difference in South Africa

through the promotion of proper lifestyle financial planning,

both to the public and to other financial planners. The reality

is that right now there are people and families we can help,

who cannot afford the flat fee we would charge. But I believe

that over time, with our help, they can become clients who are

profitable for our business while living their best lives.

I believe in the “lifetime value of a relationship” which means

that we will, at times, not earn much for great work but at other

times earn well for what may seem a little work. The real value

is in the ongoing relationship, for us and for our clients.

I believe the world operates on

the circle of life. Others have helped

me to get to where I am in life, it

is only natural and essential that

I must do the same for others. Our

clients who work with us, I believe,

understand this concept so the

cross-subsidisation that our current

model creates is good in that it helps

us serves more families.

If we are going to make South

Africa a better place for all, something

we all need is access to great and fair

financial advice. At Client Care, we will

continue to find ways of helping more

people and families be financially

secure and we will continue to find

new and better ways of adding real

value. I believe we can do this while

earning a good honest living.

Dirk Groeneveld, Certified Financial

Planner®, Client Care



How shared value

can solve retirement


Making sense of today’s retirement landscape. Part 4

In this series we’ve explored how the global retirement

savings landscape is being transformed in the wake of

two rapidly advancing global phenomena: the Workplace

Revolution and the Ageing Revolution. As these unstoppable

trends intersect with our complex local context and the reality

that we are already faced with a retirement savings crisis, it is

abundantly clear that we are going to need new solutions to

tackle an age-old conundrum.

An age-old conundrum meets the

modern revolutions

South Africa’s retirement savings

industry has failed to solve the

problem that motivates for its

existence. According to the National

Treasury, only 6% of South Africans

have enough savings for retirement.

This suggests that most of our people simply do not have enough

money to live out their lives in retirement without having to rely

on their families, communities, the state or, at worst, extractive

debt for survival.

While modern investment strategies and digital efficiencies have

allowed investment managers to lower their fees, this is nowhere

near what is needed to tackle a problem of this magnitude. We

When people invest

earlier, invest more,

and withdraw wisely in

retirement, they do better.

would, therefore, be naive to think that this situation is simply

going to resolve itself.

This age-old conundrum is now colliding with the twin

metamorphoses of population ageing and workplace insecurity.

As people live longer, they are spending substantially less time

earning an income as compared to their time spent in retirement.

As machines disrupt the workplace, those incomes are becoming

less secure.

We would be incredibly naive to think that these global

phenomena will not exacerbate the

local situation. Clearly, we need to shift

paradigms when it comes to helping

people achieve financial freedom.

Shared value is the solution

Shared value is the idea that when

companies align their purpose and

strategy with societal needs, they can become more profitable

while simultaneously unlocking economic value for everyone.

There are, of course, various complex and fluid structural, societal

and economic dynamics at play that inform retirement savings

in South Africa. Yet, when focusing our efforts to solve for the

problem, the key insight we have found is that, in most cases, the

problem is behavioural.



As the Discovery model for shared value works by inspiring

positive behavioural change, there is a solution.

Inspiring healthy financial and physical behaviour through

shared value

Historically, in South Africa, people’s savings behaviours

have been poor. In fact, the primary driver behind the dismal

retirement outcomes is mostly driven by poor investment

behaviours, namely: people are starting to save for retirement

too late and retiring too early; when people start saving they

are not saving nearly enough; when South Africans change jobs

they by and large do not preserve their retirement savings and

finally, when in retirement, South Africans are drawing far too

much out of their savings for income than is sustainable.

Yet, when people invest earlier, invest more, and withdraw

wisely in retirement, they do better, thereby solving for the

problem of inadequate retirement savings.

Through powerful behavioural incentives, that are

layered in addition to a best-of-breed investment offering,

we help inspire these behaviours. These incentives include

substantial investment boosts for clients who engage in

these healthy financial behaviours. The quantum of these

boosts is then amplified when our clients additionally adopt

healthy physical behaviours.

This is because when people are healthy, they not only enjoy,

and are rewarded for enjoying, a better quality of life and improved

economic output pre-retirement, but they live longer, healthier

lives in retirement.

It works

In the few years since introducing

the shared-value investment

model in 2015, our retired clients

who have engaged with the

Vitality programme have received

on average 20% to 46% in boosts

to their retirement income.

Withdrawal rates have dropped

markedly, and our clients are far

more likely to remain invested and

on track for their retirement.

For society, this reduces the

financial burden on families and

the state, thus enabling wealth

creation and much-needed

investment into the economy. In

this way, it helps to break the cycle

of the Sandwich Generation.

Kenny Rabson,

CEO of Discovery Invest


Metropolitan works towards creating agricultural stability with pilot

launch of the Collective Shapers initiative


South Africa is entering an interesting time in its rich historical roadmap and while we

face harsh difficulties, there is hope where innovation and creative solutions lie. The

Metropolitan Collective Shapers, an initiative aimed at accelerating young people’s

passion and skills to the next level, was launched in Polokwane as part of the first leg

of the programme rollout. The aim of the programme is to uplift communities and hone

in on developing existing skills and passions within the agriculture industry and spread

knowledge among the youth.

Many households in Polokwane – 41 867 to be exact – are already involved in agriculture

and this presents an opportunity to build on this skill. Instead of swooping in and changing

the landscape, so to speak, Metropolitan is using this as an opportunity for fun and

interactive ways of sharing knowledge within the community and taking the people’s

lead, formulating solutions from within so that it is sustainable and suitable for the local

environment to flourish.

Through the Collective Shapers initiative, Metropolitan aims to uplift the youth through

knowledge, skills, and enabling a sustainable future for them to reach their goals. Tapping

into already established local practices and introducing a training programme, the

hope is to instil generational knowledge as well as introducing new ways of agricultural

development, farming, and running an agricultural business. By garnering the already

present passion that people in the area have for agriculture, Polokwane is a prime area to

begin this exciting journey.

The initiative in Polokwane, in conjunction with Agri Enterprises, includes post-course

support for when attendees leave the classroom and begin working. The programme runs

over nine weeks and involves nine modules that will enable young people in Polokwane

to better navigate the agricultural industry and boost both farming and the employment

market. The course includes nine modules on the Introduction to Agri-business and a more

in-depth six-module look at vegetable and avocado production, which is a specialisation

for the area specifically. There is sustainability knowledge being introduced in the form of

permaculture and upcycling resources.

Metropolitan wishes to see these communities flourish and hopes to impact job creation,

and better the lives of people in the area through farming and knowledge that can be

passed down generation to generation. The people of Polokwane are already doing so

much in feeding the nation so our wish for them is to see them become farming leaders. In

this way, Metropolitan has said “together we can” in a much bigger way than ever before.

Youth living in the Capricorn District between the ages of 18 to 34 that are already involved

in agricultural businesses are encouraged to apply at

We believe that together we can build a better future. As a brand that is passionate about

community and youth development. While Metropolitan can influence the person, the

person influences the broader community. Our sponsorship of this initiative will hopefully

enable sustainable development and employment for generations to come.

You can support the initiative by sharing the message far and wide because together we can.

For more information check out

or follow the official social media pages:

MetropolitanZA @MetropolitanZA metropolitan_za

Together we can



Metropolitan is part of Momentum Metropolitan Life Limited, a licensed life insurer and

authorised fi nancial services (FSP44673) and registered credit provider (NCRCP173).


Tech revolution: time to take advantage

Blue Chip sat down with atWORK’s chief technology officer, Werner Koekemoer, to

discuss the biggest IT challenges (and solutions) facing financial planners.

What role will technology play in the future of financial planning?

It’s common to hear people saying that the robots are coming to

take our jobs. But nothing could be further from the truth. The

robots – or rather, technological advancements – are going to

make our jobs easier and more profitable.

The theme of this year’s FPI Professional Convention is “The

Future is Human” and you might ask

yourself how that reconciles with

the predictions that tech is replacing

human connections. The simple

answer is that technology should

be seen as an enabler that gives us

more time with clients and to do the

human things that financial advisors

signed up for, like building trust and

giving great advice. We’ve been saying for years that robo advice

will replace humans, but I think we all know how that has worked

out. Robos have largely cost more and failed to deliver the goods

for most planners.

The beauty of open systems architecture is that one software

system can tap into all of the latest developments in fintech

and bring those developments together in a single, easy-to-use

package. Human relationships are at the core of financial planning,

but tech can greatly accelerate success by saving time and

increasing profits.

Can you give an example of how tech can do this?

There are so many examples. Simply using a modern Customer

Relationship Management (CRM) system will slash the time and

money you spend on administering your practice. But if you

want a specific example, look at the people still doing Financial

Needs Analyses (FNAs) on Microsoft Excel – it’s almost medieval.

atWORK has carefully designed South African-specific planning

solutions that are built into our system, and which can save advisors

loads of time and ensure far more accurate results. Doing an FNA

properly ensures that the client is properly covered. It can also

help the advisor to formulate budgeting and tax strategies that

can result in significant long-term savings.

So, it is all about having the right tool for the job?

Yes, that’s half of it. There is so much software available; advisors

have no excuse not to benefit from the latest innovations from

around the world. But the other half is taking advantage of a

nifty thing called an API, to integrate all of these innovations

on one platform. The latest version of atWORK is built using

open systems architecture, which means that integration can

Human relationships are

at the core of financial

planning, but tech can

greatly accelerate success.

happen in both directions: we can add third-party applications

to our system; or your in-house CRM can quickly and easily

pull any aspect of our software (our LISP data, for example)

into that ecosystem.

Using the API platform, we have already incorporated a risk

profiling tool (Finametrica) and an e-signature application

(QuicklySign), to name a few. And

we have our eye on emerging

services like anti-money laundering

software and ID verifiers.

Would you agree that many advisors

understand the benefits, but resist

new software because they are afraid

of change?

Absolutely, and that’s completely normal. Humans are resistant

to change, but a good software provider who really wants your

business will bend over backwards to make the transition as

seamless as possible. No matter how big or small your business,

atWORK will always offer free training (when signing up and on

an ongoing basis) and we will assist with transferring data to the

new system.

What is the one thing you would say to convince an advisor who

is considering new software?

Simple. It’s time to start thinking of

IT as an investment, not a cost. This

is especially true when you consider

the benefits of future-proofing your

system with open architecture.

Finally, what are your thoughts

on cybersecurity? Is it a core

consideration or a side note?

It’s central to everything we do.

Advisors store so much sensitive

personal information that you

have to take security seriously. It’s

a way of respecting your clients.

In my opinion, POPIA is a fantastic

piece of legislation as it protects

each South African’s privacy. Some

advisors think POPIA means more

work, but atWORK is ISO27001

certified so we already had most

POPIA bases covered.

Werner Koekemoer,

Chief Technology Officer, atWORK







Accelerate Success with atWORK

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Take your business to the

next level with open systems

technology that improves

workflow and grows profits.

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Packages and tools to suit

any business, large or small.

Backed up by CPD-accredited

training and unrivalled

customer service.

Start your free 14-day trial today.

Visit or contact 0861 ATWORK (289 675)


The future of

client engagement

We caught up with atWORK’s business development executive, Trevor Stacey,

to find out about Next Practice, the shiny new client engagement hub

they’re about to launch. Spoiler alert: It’ll knock your socks off.

There’s no denying that we are fast moving towards a

virtual world – but the tech revolution is nothing to

worry about. The trick is to harness the many benefits

of operating virtually while still maintaining that vital

human element. To this end, atWORK has developed Next Practice,

an exceedingly clever client engagement hub which gives your

practice a permanent digital presence.

“As more and more engagements take place virtually, all

advisors will need a permanent online presence for client

servicing,” says Stacey.

An advisor in your pocket

In addition to a secure online meeting room where advisors and

clients have a vault to store and access files and documentation,

clients can also view (and download) detailed financial planning

reports, graphs and breakdowns of their investment portfolio

– without their advisor so much as having to click a button,

let alone pick up a calculator. atWORK’s IS27001 certification

means no more fretting about POPIA compliance (no need to

send an encrypted PDF again!) or struggling with cybersecurity

challenges. And because Next Practice is fully integrated with

atWORK, “Everything is always in the right place,” says Stacey,

“so you’ll never lose a document.”

As if that’s not enough, Next Practice also, “acts as a virtual

shopfront that’s open 24/7 and ensures you’ll always have records

of every query and decision,” he adds. The engagement hub

gives clients many ways to interact with their advisors; from chat

messaging through to a built-in virtual meetings platform. The

best part? All chats and meeting recordings are automatically

stored to the client’s profile and can be easily accessed by both

client and advisor.

Virtual first

Next Practice has been built according to atWORK’s philosophy

of Virtual First, says Stacey, who compares the hub to a digital

banking app that allows clients to complete many processes

virtually 24 hours a day, seven days a week. “When last did you

actually go into a bank?” he asks rhetorically.

In a nutshell, Virtual First means that, whenever they want to

get in touch with their advisor, clients’ first port of call could be

their smartphone or computer. Through Next Practice, clients

can easily submit documentation (seamless integration with

QuicklySign e-signature software makes this an especially

painless procedure), access certificates and get an overview

of their investments. This doesn’t just save you and your staff

loads of time responding to small queries, it actually increases

customer satisfaction

But Stacey stresses, “Virtual First is not the same as virtual

only.” To illustrate this point he extends the internet banking

analogy: “If a client wants to transfer funds or pay a traffic fine,

they can do it at 11 o’clock on a Tuesday night.

“But if they want to apply for a

new home loan, they pick up their

phone to speak to their private

banker. The same goes for financial

advice,” he adds.

Not robo advice

Stacey stresses the fact that Next

Practice is the opposite of a robo

advisor. “Our engagement hub makes

it much easier and safer for clients and

advisors to get the boring stuff done

quickly and efficiently,” he explains.

But the moment an important

decision has to be made, the human

element takes over.

“This might sound weird,” he

concludes, “but with Next Practice

on your side you’ll have far more

time to just talk to your clients than

ever before.”

Trevor Stacey, Business

Development Executive, atWORK


Women in Finance:

Breaking Barriers

If the financial planning industry is to be sustainable, active steps

need to be taken to recruit, mentor and retain young people,

people of colour and more women. While it is encouraging

to see the exponential growth and change, the industry still

faces many challenges, including the average age and gender of

planners and the lack of diversity with regard to race.

To break some of these barriers, Kim Potgieter, director at

Chartered Wealth Solutions, founded the Women in Finance

Network. The platform aimed to connect women in the financial

planning industry through shared experiences, support,

mentoring, learning and networking. This network was a seed

planted in the hopes of attracting and retaining women within

the industry.

At the FPI 2021 Convention, Kim Potgieter will be in

conversation with Gratitude Mahlangu, Esther Mabunda and

Annelise Mti to discuss the challenges of bringing more women,

people of colour and youngsters into the financial planning

industry. The role that Chartered Wealth Solution’s Articled

Planner Programme and the Women in Finance Network played

in their journeys will also be explored.

The programme was designed to produce fully qualified

planners with confidence, soft skills, technical and administrative

knowledge. Providing learning opportunities and a space to ask

questions is key to the Articled Planner Programme. Esther Mabunda

came to appreciate the saying, “Indlela ibuzwa kwabaphambile”,

meaning that so many colleagues (young and old) gladly stepped

up to lend a hand when she asked for their help. Mabunda firmly

believes that to navigate the financial planning landscape, it is

important to remember to ask for help when you need it, as asking

for help takes nothing away from an individual but instead shows

a willingness to learn and grow.

The programme focuses on creating an environment where

people can merge their book knowledge with practical skills. Mona

Manzambi found this aspect of the programme exceptionally

helpful when preparing for her board exam.

Personal development is another focus area of the Articled

Planner Programme, so people are given the opportunity to

attend Dare to Lead workshops and coaching by Colleen Joy

Page and develop other soft skills that enhance relationships.

For Gratitude Mahlangu, this keeps her in the industry. Building

relationships with clients to create a personalised financial plan

has helped her find purpose, which gets her excited about a lifelong

career in financial planning. For Annelise Mti, her motivation

to stay in the industry is through seeing how intentional efforts

can bring growth within the industry, and she is encouraged to

be part of that growth and pave the way for those who come

after her.

Potgieter firmly believes that we have to find the potential in

others and find ways to grow that potential. For this reason, the

Women in Finance Network will be financing one female student’s

Financial Planning Honours/Post-Graduate Diploma in 2022.

Potgieter believes that we each need to find ways to mentor

and encourage others so that the change can become a reality

for our industry.

Written by the Women in Finance Network


We specialise in

customised data solutions


Cross-border data

transfers and POPIA

International data protection laws generally agree that anyone processing personal data may

only transfer it to someone outside of their country under certain circumstances.

Given that POPIA is largely based on the European

General Data Protection Regulations (GDPR), and

that POPIA prescribes that processing conditions

should be established “in harmony with international

standards”, some reliance can be placed on those countries

that the European Commission has declared as having such

adequate safeguards.

Section 72 of Chapter 9: POPIA deals with the “transfer personal

information about a data subject to a third party who is in a foreign

country…” while Chapter 5 of the GDPR deals with cross-border

data transfers.

At face value, the POPI Act prohibits cross-border data

transfers, whereas GDPR provides strict requirements for such a

transfer to take place. This makes sense as the EU consists of many

cooperative countries who are bound to have organisations span

international boundaries.

However, the emphasis in Section 72 of POPIA is not on

prohibiting data flowing out of the country, but rather on

the exceptions themselves. The exceptions are designed to

safeguard data when they flow outside of the country. With this

understanding, the differences between the two laws regarding

cross-border transfers are mostly superficial.

Justice is


Justice if


available to


Ancillary Financial Services (Pty) Ltd, Registration Number: 2019/066660/07

We understand your intention. | | 083 452 0200 | 084 589 6821

To ensure compliance under POPIA, in transferring personal

information outside of South Africa (and particularly to countries

where there is no EU declaration of adequate safeguards and/or

where juristic personal information is processed) it is advisable to:

• Carry out due diligence checks of the data protection laws (if

any) in place in the foreign country that they wish to export the

personal information to:

• Obtain advice on the laws in that foreign country that permit

access to personal information by government agencies; and

• Put in place the appropriate safeguards in

comprehensive data-transfer agreements or

binding corporate rules (which would only

apply to transfers of personal information

within a group of companies).

The emphasis in Section 72

of POPIA is not on prohibiting

data flowing out of the

country, but rather on the

exceptions themselves.

Jo-Anne Bailey, CEO,

Ancillary Financial Services


Consumer education:

our collective responsibility

Many adults are struggling with

financial strain, which has been

compounded by the effects of

Covid in the past year and a bit.

Our business has spent a considerable amount

of time advising individuals adversely affected

by retrenchments and a lack of employment,

which has been a great learning experience. In

the past few months, we have had several clients

sharing that they are struggling with insomnia,

anxiety, relationship difficulties, physical ailments

and unhealthy coping methods. All of these are

symptoms of financial strain.

Financial strain can be largely attributed to

a lack of financial knowledge. A lack of financial

knowledge or low financial literacy rates leads

to high levels of debt, low savings rates and

little to no investments. Financial literacy is

the ability to make sound decisions regarding

how much to save, when to invest and when

(and not) to get into debt. The S&P Global

Financial Literacy Survey had a few findings

worth noting:

• Low levels of financial literacy around

the world

• Numeracy and inflation are the most

understood concepts

• Risk diversification is the least understood


• Women’s financial literacy levels are lower

than men’s

• The young are a vulnerable group and an

important target for financial education


Many people don’t know the difference

between saving and investing, often

confuse the two terms and frequently use

them interchangeably. Many people do not

understand the effects of interest rate changes

on their savings and debt levels. I have met too many individuals

who often got into debt when there was no need, which led to

many financial difficulties.

The effects of financial strain do not only affect the

individual but very often become societal issues. High

divorce rates, substance abuse and violent behaviour – many

of these issues trace their roots back to financial strain. It is

clear that improving financial knowledge among the general

population will serve to alleviate a lot of issues for the country

and should be prioritised. This then begs the question – whose

responsibility is it to educate the average individual about

matters of personal finance?

In 2013, research from behaviour experts David Whitebread

and Sue Bingham of the University of Cambridge found that our



approach to money, much like our personality, is formed by the

time we are seven years old. Concepts such as planning ahead

and delayed gratification are already understood at that age

and should be taught to children as a matter of urgency. These

Times have changed

drastically, and our education

and financial systems

should speak to that.

habits then affect our behaviour with money in adulthood. If

they are negative behaviours, they become detrimental to our,

financial wellbeing, leading to the issues highlighted above. In

practice, it becomes very difficult to then change bad behaviour

making it even more difficult to achieve financial success in the

long term.

We need to be introduced to personal finance concepts from

our first year of school. It is also clear that parents need to be having

constructive conversations with their children about money long

before they even start school as that is where they learn their initial

habits and views regarding money. That means adults need to be

equipped with this information as well.

The lack of financial literacy affects us in different ways, which

means we must combine our efforts to make it accessible to all.

Times have changed drastically, and our education and financial

systems should speak to that. That’s why financial education for

children is so important and must be prioritised throughout the

entire basic education curriculum.

The financial industry also has

a major role to play in creating

financially fit consumers.

Individual financial institutions

will benefit greatly from having

financially astute clients and

should, therefore, increase efforts to

improve financial literacy rates. That

includes advisors, independent

practices, large institutions as well

as professional bodies – we all have

a unique and important role to play

in changing the status quo for all.

It is our individual and collective


Gugu Sidaki, Wealth Creed


Why the multi-management

model works

Even at the best of times, markets can be unpredictable. Sudden shifts and impact events aside, the

entire market cycle passes through different phases that make it virtually impossible for any single

fund to unfailingly outperform in any single class or sector. No matter the individual manager style.

Therefore, a multi-manager or a fund of funds approach,

continues to be one of the most consistently successful

ways to adjust risk and deliver better return on investment.

These are funds that specifically invest in other funds

rather than individual stocks and bonds. This essentially allows

each fund to assemble a team of highly specialised experts to

develop a portfolio of investments across the spectrum of funds

in the marketplace. The multi-manager model works by combining

multiple performing funds into a single, secure offering.

A well-structured, well-resourced and well-researched

investment philosophy applied to a portfolio of funds does more

than look good on paper, it delivers consistently over time in realword


The benefit of diversification

Multi-management funds enable any investor to obtain instant

diversification across multiple variables: market sectors, asset

classes, geographies and even management styles. This minimises

the dependency on any given variable to deliver returns, mitigating

risk by compounding the overall performance of the combined

portfolio. Investors can look forward to protection from severe

downturns while maintaining a stable rate of return.

The benefit of specialisation

Multi-management funds pool the expertise of multiple

investment experts, with each fund manager devoted specifically

to their unique area of expertise while maintaining awareness

of their individual contribution to the overall fund structure.

This encourages each team member within the fund to operate

optimally in their speciality while simultaneously seeking out ways

to complement one another in a holistic approach to delivering

the best results.

It’s also worth noting that the individual funds themselves,

being specialists, have already conducted their own rigorous

processes in researching, selecting and assembling their own

assets and management style. All of which they actively continue

to optimise independently of the multi-management fund.

The result is multiple layers of active management, endlessly

engaged in producing better returns.

The benefit of active management

Multi-management funds reduce the onus on the investor of

having to find, research and invest in individual funds. It’s more

than just that, though, it’s common sense. There is quite simply, no

way any single investor can ever stack up to the total of expertise

and real-world know-how of an entire team. Nor can they ever

respond as quickly or effectively to sudden market shifts or events

as dedicated specialists can.

Overall, it just places less demand, less stress on the investor,

whether they are new to hedge funds or seasoned veterans. It’s

an effortless way to achieve that crucial balance of appropriate

risk and return.

Cost implications

Multi-management fund fees, on average, are nominally higher

than those of a single manager funds due to the multiple layers

of cost attached to multiple layers of management. However, the

decision to invest in a multi-management fund is a value-formoney

proposition. Sure, it may cost a little more, but there is a

lot more to be gained in terms of peace of mind and predictable

returns over the long term.

One should also consider that a multi-manager funds have

substantial buying power, which allows them to negotiate on

fees and access institutional share classes that would otherwise

remain unavailable to smaller investors. This saving is also

passed onto the end client, making the cost of ownership much

less demanding.

Choosing a multi-management portfolio comes down to your

personal appetite for risk. While the function of funds of funds

is to reduce risk, there nevertheless remain varying levels of

risk attached to various portfolios, depending on how they are

constituted and managed.

Look for the right mix of these four key benefits that best suit you:

• Consistent returns: How well has the fund performed? How

predictable is that return? Can the return be associated with a

clear philosophy and process?

• Risk vs return: What diversification and active portfolio

management is in place? How has the fund responded to both

adverse systemic and non-systemic events?

• Access to opportunities: What products does the fund invest in

which would otherwise be unavailable to you?

• Fee structure: Does the fund, for example, utilise lower-fee

institutional share classes to reduce your costs?

At Novare, we offer multi-managed investment solutions in the form

of South African funds of hedge funds, unit trust funds, an offshore

fund of funds and bespoke solutions. Depending on your unique needs,

objectives and risk appetite, trust us to help you select the right fund for

you. For more information, go to

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