Issue 81 • Oct/Nov/Dec 2021
The Official Publication of the FPI
AND THEN THERE
Meet the Financial Planner
of the Year finalists
THE FPI: CELEBRATING 40 YEARS OF
FINANCIAL PLANNING EXCELLENCE
SPECIAL FPI 40TH ANNIVERSARY
EDITION BROUGHT TO YOU BY
work hard for
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young professionals achieve their goals by providing the flexibility and pricing they can afford.
PROTECT their lifestyle
Clients with established careers are focused on improving their earning potential in order to secure their
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no matter what, as well as to provide a good education for their children.
MAXIMISE their wealth
Mature professionals are at a stage in their lives where they have accomplished their career goals despite
possible setbacks, like the loss of a partner or the loss of income. They are looking for value and want to
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but for their loved ones as well.
As accredited Liberty Financial Advisers, we can help you GROW your clients’ hard-earned money with
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To help your clients grow, protect and maximise their wealth on their journey to financial freedom,
visit www.liberty.co.za today.
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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
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,
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
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
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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
CELEBRATING 20 YEARS
University of the Free State SFPL
ON THE MONEY
Milestones, news and snippets
HOW DO WE BUILD YOUR
Column by Florbela Yates, Head of
Momentum Investment Consulting
PLANNING FOR ALL
Column by Rob Macdonald, Head of Strategic
Advisory Services, Fundhouse
LIFE BEGINS AT 40
The FPI celebrates its 40th year
anniversary this year
MAKING A DIFFERENCE IN THE
LIVES OF OTHERS
Blue Chip speaks to Lelané Bezuidenhout,
CEO of the FPI
AND THEN THERE WERE THREE
Meet the three Financial Planner of
the Year finalists
IT TRULY STARTS WITH YOU
Francois du Toit, Director, PROpulsion
Podcast on winning an FPI award last year
A WHIRLWIND OF WINNERS
A look at why awards matter
Companies are the latest frenzy, by Fundhouse
WHAT ARE THE SUSTAINABLE
By Mike Adsetts, Deputy Chief Investment
Officer, Momentum Investments
MY TAKE ON RESPONSIBLE
By Sonja Saunderson, CIO, Momentum
INVESTING WITH PURPOSE: GOING
BEYOND FINANCIAL RETURNS
By Motlatsi Mutlanyane, Head of Alternative
Investments, Momentum Investments
STRONGER THAN EVER
Blue Chip speaks to Hymne Landman,
Head of Momentum Wealth and Momentum
Wealth International at Momentum Investments
FINDING SPECIALIST GLOBAL
By Natalie Harrison, Global Fund Specialist,
Momentum Collective Investments
MERGING WITH MOMENTUM
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
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. By Schroders
TALKING GLOBAL EQUITY
Blue Chip speaks to Andreea Bunea, Head
of Global Equity at Old Mutual Multi-Managers
YOUR CLIENTS’ WEALTH
DESERVES THE WORLD
The online investment platform powered by
OUTsurance, now allows financial advisors to offer
uncapped global equity exposure to their clients
GLOBAL MULTI-ASSET FUNDS:
A MUST-HAVE MOVING INTO A
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
WRAPPED IN GOLD
Glacier International offers access to
international investment opportunities.
misinformation can harm
your health and financial
FRANKLIN TEMPLETON IS
Climate science and
why it’s important for long-run
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
REGULATION 38: CREATING
A SILENT MAJORITY IN
HOLLARD LIFE SELECT
No smoke or mirrors
THE SOUTH AFRICAN OUTLOOK
Discovery Invest making sense of the
retirement landscape. Part 3
EXPLORING THE UPSTREAM
PASA discusses the latest draft
of the Upstream Petroleum Resources
HOW DIFFICULT IS THE
SOUTH AFRICAN EQUITY
1nvest speaks about the evolution in
the index landscape
TAKING THE NEW ROAD
Blue Chip speaks to Paul Fouché,
Chief Investment Officer from New Road
PERHAPS THE GREATEST VALUE
YOU CAN OFFER YOUR CLIENTS?
By Rob Macdonald, Head of Strategic Advisory
HELPING YOU TAKE YOUR
By Old Mutual Wealth
A SAFE PLACE
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
THE PERILS OF RISK
Where you (the financial planner)
can bridge the gap
HELPING CLIENTS THROUGH
By Kim Potgieter
The new book by Matthew
Blackman and Nick Dall
HEALTH: A NATIONAL PRIORITY
Momentum Financial Planning tells
us that Covid-19 vaccine misinformation can
harm your wellbeing
IN CHOOSING BETWEEN FLAT
FEES OR AUM, CLIENT CARE HAS
HOW SHARED VALUE CAN
SOLVE RETIREMENT PROBLEMS
Discovery Invest making sense of the
retirement landscape. Part 4
TECH REVOLUTION: TIME TO
Blue Chip sat down with atWORK’s chief
technology officer, Werner Koekemoer, to
discuss the biggest IT challenges facing
THE FUTURE OF CLIENT
We caught up with atWORK’s business
development executive, Trevor Stacey
WOMEN IN FINANCE
Breaking the barriers
TRANSFERS AND POPIA
Ancillary Financial Services informs us on
compliance under POPIA
CONSUMER EDUCATION: OUR
WHY THE MULTI-
We’re No. 1
Thanks to our incredible staff.
And we will do
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
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
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
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
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
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
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.
FPI PROFESSIONAL CONVENTION 2021
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 FUTURE IS HUMAN
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.
Time: 08h00 – 17h00
CPD: 12.5 verifiable hours
FPI member: R2 500
Non-member: R3 000
MIDLIFE MONEY MAKEOVER
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 www.bluechipdigital.co.za
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 www.kimpotgieter.com, in all
good bookstores and e-tailer websites.
On the money
Making waves this quarter
EVALUATING UMBRELLA FUNDS
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
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.”
DIRECTORS MORE BULLISH ABOUT FUTURE BUSINESS CONDITIONS
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
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,
PARTNERING WITH YOU ON
YOUR FINANCIAL PLANNING
Choose Milpark Education’s School of Financial Planning & Insurance as
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Certified Financial Planner ® Professional.
Our Postgraduate Diploma in Financial Planning offers:
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Licensed Financial Services Provider
How do we build
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.
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
• 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
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 firstname.lastname@example.org
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.
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 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
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
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
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
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
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
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 Southern Africa.
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
of financial success.
What are the defining highlights of
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
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
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
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
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
• 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
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
• 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
What is your strategy in terms of
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
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
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
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
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
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 www.fpi.co.za 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
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 www.letsplan.co.za 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
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.
LELANÉ AT LEISURE
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.
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
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!
FINANCIAL PLANNER OF THE YEAR
AND THEN THERE
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.
HENDRIK SPIES CA (SA) CFP®,
SPIES 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
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
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
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
FINANCIAL PLANNER OF THE YEAR
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
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
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
HENRI LE GRANGE CFP®, LE GRANGE
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
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
Le Grange and Associates
FINANCIAL PLANNER OF THE YEAR
RYAN MCCAUGHEY CFP®, HEWETT WEALTH
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
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
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
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
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
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
• 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
• 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
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
Lo and behold, in 2007 I made it to the top 10. I had achieved
my goal. My award and recognition were imminent.
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.
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
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
Francois du Toit, Director,
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
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
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
WHY AWARDS MATTER
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
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  . 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
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  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 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
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,
FOREX RESPONSIBLE CONTROL INVESTMENT
What are the Sustainable
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
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
• 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
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
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 https://www.momentum.co.za/momentum/invest-and-save/responsible-investing or watch our roundtable where we
discussed how we make responsible investing real: https://www.momentum.co.za/momentum/invest-and-save/events/media-roundtables. Momentum Investments is part of
Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).
My take on
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) https://earth.org/greenwashing-companies-corporations/
Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).
FOREX RESPONSIBLE CONTROL INVESTMENT
Investing with purpose:
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
• 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
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
Motlatsi Mutlanyane, Head
of Alternative 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
(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
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.
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
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
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
• 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
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.co.za
Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
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
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
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 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
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: email@example.com. 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,
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
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
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
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
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
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
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.
GETTING TO KNOW FERDI VAN HEERDEN
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.
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
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
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
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
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,
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,
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
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
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.
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
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
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
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 dot.com 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
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
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
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
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
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
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
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
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
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 outvest.co.za, with a
demonstration of the OUTvest for advisors’ platform available
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.
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.co.za
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
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:
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).
SOPHISTICATED THINKING GOING INTO HOW WE INVEST BEYOND EQUITIES
as at 31 July 2021
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
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.
High-yield fixed income
Coronation is an authorised financial services provider.
AN OPPORTUNITY WRAPPED IN GOLD
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
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
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
Andrew Brotchie, MD,
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.
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
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
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 – https://unfccc.int/process/
Jon Duncan, Old Mutual
Gontse Tsatsi, Old Mutual
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
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
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.
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
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
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
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).
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/
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
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
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,
Hollard Life Solutions launches Life Select –
offering value for money with no bells
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
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
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,”
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
Hollard Life Select is simply what your
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
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
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
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
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
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.
CEO of Discovery Invest
OIL & GAS
EXPLORING THE UPSTREAM
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
OIL & GAS
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
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?
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.
FIVE OF THE MOST-USED BROAD EQUITY INDICES IN SA
(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
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
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.co.za
1nvest Fund Managers (Pty) Ltd, an authorised financial services provider. FSP No. 49955.
FUND OF FUNDS
A differentiated approach to
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
philosophy is built on
the fact that clients
value certainty over
over the last year. Consequently, many clients have missed a strong
period of returns, and are more than likely behind on their specific
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
FUNDS OF FUNDS
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
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
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
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
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
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
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
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
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
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.
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
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 firstname.lastname@example.org
A SAFE PLACE TO
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
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
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
What is your definition of a
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
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
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
There is no such thing as a free lunch. How does DoshGuide
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 email@example.com.
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
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
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
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
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
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
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
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
is the first step to
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
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
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.
and the ANC
make a perfect
art of it.
Matthew Blackman (left) and Nick Dall, authors
of Rogues’ Gallery
A NATIONAL PRIORITY
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,”
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’
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 CHOOSING BETWEEN
FLAT FEES OR AUM,
CLIENT CARE HAS
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.
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
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
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
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.
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.
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 www.metropolitan.co.za.
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 www.metropolitan.co.za
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
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
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
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.
Chief Technology Officer, atWORK
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Visit atwork.co.za or contact 0861 ATWORK (289 675)
The future of
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.
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
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
Trevor Stacey, Business
Development Executive, atWORK
Women in Finance:
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
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
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
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
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
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
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.
Ancillary Financial Services (Pty) Ltd, Registration Number: 2019/066660/07
We understand your intention.
www.ancillaryfs.co.za | firstname.lastname@example.org | 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
Jo-Anne Bailey, CEO,
Ancillary Financial Services
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
• Low levels of financial literacy around
• Numeracy and inflation are the most
• Risk diversification is the least understood
• Women’s financial literacy levels are lower
• 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
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
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.
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
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 www.novare.com.