Blue Chip Issue 85

Blue Chip Journal 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. Visit Blue Chip Digital: https://bluechipdigital.co.za/

Blue Chip Journal 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. Visit Blue Chip Digital: https://bluechipdigital.co.za/


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Issue 85 • Oct/Nov/Dec 2022























Lelané Bezuidenhout, CFP®, CEO of FPI

Hendrik Spies, CFP® Palesa Dube, CFP® Tom Brukman, CFP®


The value of a

financial planner

Lelané Bezuidenhout, CFP®, CEO of the Financial Planning Institute of Southern

Africa (FPI), tells us that the value of a financial planner is crystalised in how

a CFP® professional assists clients in developing strategies to help them

manage their finances and to meet their life goals (page 20).

The role of a financial planner is so much more than writing a prescription for

investments or any other financial product. It is about helping clients achieve

holistic financial health. The two most important professions of the 21st century

are, undoubtedly, the medical profession and the financial planning profession, Rob

Macdonald tells us on page 66. People are going to live longer and they are going

to need their money to last longer. Nobody would entrust their physical health to a

distributor of pharmaceutical products rather than a doctor. Nor should they entrust

their financial health to a distributor of financial products, but to a professional

financial planner who prescribes products rather than sells them.

It can be daunting for a graduate to step into their first workplace and be

expected to learn the ropes of a professional business in a short time span. The

successful learnership programmes focusing on developing talent in our industry

take a minimum of three to four years for candidates who have already completed

a post-graduate qualification. The FPI offers a structured mentorship programme,

designed to run over a minimum period of 12 months to assist in training a new

industry entrant in all aspects required to become a fully-fledged financial planner.

Read more on page 30.

On 19 October 2022, FPI will be hosting the prestigious awards ceremony where

excellence in the financial planning profession is recognised. This event endeavours

to acknowledge extraordinary CFPs® from across Southern Africa that demonstrate

innovation, professionalism and commitment to both their clients and the financial

planning profession. Meet the finalists of the Financial Planner of the Year Award 2022

on page 26. We wish you all the best.

South Africa has one of the most regulated investment industries, which means

advisors are spending more time on compliance and less on doing what matters

most – giving advice and spending time with their clients. By recognising that their

value rests in evaluating clients’ personal circumstances and determining their unique

needs, advisors are increasingly partnering with investment experts to ensure that their

clients’ investment needs are consistently met. The partnership with a DFM not only

saves the advisor an enormous amount of time, but also ensures that all investment

considerations are met. Read more in Choosing a Discretionary Fund Manager (and

platform) by Florbela Yates on page 40.

Enjoy this issue!

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 7 500 copies of the publication are distributed directly to every CERTIFIED FINANCIAL PLANNER® (CFP®)

in the country, while the monthly 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 85 |




Publisher: Chris Whales

Editor: Alexis Knipe

Online editor: Christoff Scholtz

Digital Manager: Charl Daniels

Designer: Tyra Martin

Production: Yonella Ngaba

Ad sales:

Sam Oliver

Gavin van der Merwe

Bayanda Sikiti

Venesia Fowler

Vanessa Wallace

Managing director: Clive During

Administration & accounts:

Charlene Steynberg

Kathy Wootton

Distribution and circulation manager:

Edward MacDonald

Printing: FA Print


Global Africa Network Media (Pty) Ltd

Company Registration No:


Directors: Clive During, Chris Whales

Physical address: 28 Main Road,

Rondebosch 7700

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Newlands 7701


Tel: +27 21 657 6200

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No portion of this book may be reproduced without written consent

of the copyright owner. The opinions expressed are not necessarily

those of Blue Chip, nor the publisher, none of whom accept liability

of any nature arising out of, or in connection with, the contents of

this book. The publishers would like to express thanks to those who

support this publication by their submission of articles and with their

advertising. All rights reserved.










By Alexis Knipe


Message from FPI CEO


Milestones, news and snippets


Column by Rob Macdonald, Head

of Strategic Advisory Services, Fundhouse




Column by Kobus Kleyn, Tax and Fiduciary

Planner, Kainos Wealth




Blue Chip interviews Lelané Bezuidenhout, CFP®,




Meet the top three finalists of the

Financial Planner of the Year Award 2022








By Warren Ingram, winner of the

Financial Planner of the Year Award 2011



Peter Foster, Chief Investment Officer,

Fundhouse, speaks about investment risk





Florbela Yates, Head of Equilibrium, tells us why

financial advisors partner with DFMs



Matrix Fund Managers says that it is the

sequence of returns that is important



Kickstarting investment and growth, by

Petroleum Agency South Africa

2 www.bluechipdigital.co.za







By Ben Arnold, Investment Director,





Bateleur Capital tells you why

financial planners should be interested

in them





For those who do not, none will suffice, says

Protea Capital Management


Mike Adsetts, Deputy Chief Investment

Officer, Momentum Investments, says that

the investment industry is one that we can

be proud of




By Fränzo Friedrich, Head of Marketing,

Momentum Investments





By Kobus Wentzel, Head of Distribution, 1Life





By SA Gold Coin Shop



Michelle Noth tells you why

and how



How much of a recession is needed to

tame inflation?




By Rob Macdonald, Head of Strategic Advisory

Services, Fundhouse



Fairbairn Consult says that customer

experience is of utmost importance



Why do we wait for a crisis before we

act? By Hannes Viljoen




By Dieter Schmikl, Financial Advisor, NMG





Cancer is one of the leading deaths globally, by

Liberty Corporate

4 www.bluechipdigital.co.za




We ask ourselves about managing your investments, so you

don’t have to.

While investing is certainly rewarding, it can be complex. You will have questions along the way and we’re here

to help you find the answers. Our answers are based on an in-depth understanding of the local and global

economy, financial markets, and the driving forces that will shape tomorrow.

Find out how you can take your wealth further. Scan the QR code or visit www.oldmutual.co.za/wealth

or email us at hardquestions@omwealth.co.za



Old Mutual Wealth is an elite service offering brought to you by several licensed FSPs in the Old Mutual Group.







What the recent judgement means

for you. By Bianca Maritz, Wills and Estates

Sentinel International Advisory Services




By Andrew Ratcliffe, CFP®, Director, Private

Client Holdings





Jen McKay tells us its by design



The University of Free State

explains when to apply Section 2C

of the Wills Act 7 of 1953




By Adv. Beverly Jubane, Specialist

Customer Service, Liberty Consultants

and Actuaries




By Jean Archery

Warren Ingram, CFP®, Co-founder,

Galileo Capital

Peter Foster, Chief Investment

Officer, Fundhouse

Jean-Pierre Matthews, Head of

Product, Matrix Fund Managers

Jen McKay, Director,


We look forward to seeing you at the

2023 Financial Planning Institute

of Southern Africa, Professional's






The CEO of the Financial Planning Institute

shares the FPI’s latest news.

Lelané Bezuidenhout, CFP®

CEO, Financial Planning

Institute of Southern Africa

Spring is in the air and so is a lot of excitement

around what is happening at the Financial

Planning Institute of Southern Africa (FPI) and the

financial service industry at large. Some reflection

on what has taken place before we jump into what is

coming for the rest of the year:

Retirement Conference

CPD hours: 5.5 (4 technical and 1.5 ethics)

The FPI hosted a successful Retirement Conference in

partnership with the Actuarial Society of South Africa

(ASSA) and the Institute of Retirement Funds Africa

(IRFA). The conference reflected on over a decade of

regulatory changes due to the retirement reforms

that started back in +-2012. Members and speakers

from the FPI, ASSA and IRFA also reflected on what to

expect from the Financial Sector Conduct Authority’s

(FSCA) harmonisation project (harmonising all sectorial

laws into the Conduct of Financial Institutions (COFI)

environment), especially in the retirement space.

Key Individual Workshop

CPD hours: 4 (ethics and practice standards)

For some time, the FPI has recognised that the world of

the Key Individual (KI) has evolved drastically since FAIS

came into effect. Under the COFI matrix a KI’s role and

responsibilities will expand even further as they are a

key person as defined in the Financial Sector Regulation

Act 9 of 2017 (FSR Act). The KI Workshop took place in

partnership with the Compliance Institute Southern

Africa (CISA) and the Institute of Risk Management

South Africa (IRMSA). Both speakers, Hildegard Lombard

and Christopher Palm, left some great insights for the KIs

that joined us online for the workshop.

If you missed the Retirement Conference and/or the Key

Individual Workshop, you can still register for the events via


FPI networking sessions

During August and September, the FPI hosted a series of

in-person member networking sessions that focused on

the 2023-2025 strategy planning and a general update

from the Institute. A massive thank you to the professional

members who attended the sessions – Team FPI gained a

lot of insights into what members need in the profession

over the next three years.

Professional Competency Examinations

Well done to all the candidates who passed the March, June

and September Professional Competency Examinations

(PCE). It is a massive achievement and great recognition of

years of hard work. For those who missed the PCE this year,

the first PCE sitting for 2023 will be in March.

Membership renewal 2023

Membership renewal is opening on 1 November 2022.

Be sure to renew your membership before 31 December

2022 to qualify for the early bird discount. You need to

complete your CPD upload by 31 May 2023 – all you need

to do between 1 November and 31 March 2023 is to renew

your membership (ie complete your declaration and pay

the required membership fee).

8 www.bluechipdigital.co.za

A massive thank you to all our attendees,

sponsors, speakers and the FPI

team for making this year’s convention

yet another roaring success.

Annual refresher 2023

Good news! The annual refresher will be in-person in

February 2023. It is time for FPI professional members

to enjoy the benefit of peer-to-peer collaboration over a

cup of coffee and catch up on the latest technical content

when it comes to professional financial planning. The

in-person events will be followed by an online event for

those members who could not make it across the country.

Registrations will open in November 2022.

Financial Planning Week and WFPD

A big thank you to all who celebrated the sixth annual

World Financial Planning Day (WFPD) on 5 October

with us! The theme this year was Live your Today – Plan

your Tomorrow.

The FPI celebrated Financial Planning Week in

South Africa (3-7 October) that focused on topics such

as children and money; managing risk in your life;

managing your finances in tough times and the benefits

of working with a financial professional. Thank you to all

who contributed to making WFPD and Financial Planning

Week a success.

Convention 2022

The theme for this year’s Professional Convention is The

Time is Now. Thank you to all our local and international

speakers for sharing relevant content with our professional

community. Topics covered at this year’s convention include,

but are not limited to:

• Understanding the psychology of money

• Helping clients through transitions

• FPSB global update

• The need for regulators to understand the value of CFP®

professionals and title protection

• The fight for talent

• Global standards update

• Client engagement via the use of video and other client


• Resilience and reinvention

• Leadership, mentorship and coaching

• Electronic wills and digital assets

• Ethical investment and the climate emergency

• Investing for impact

• The new world of work and the impact on client engagement

• Start giving back (consumer education)

• FSCA regulatory update

• Motivational talks

A massive thank you to all our attendees, sponsors, speakers

and the FPI team for making this year’s convention yet another

roaring success.

In closing

2022 flew by and so will the last quarter of the year. All the best for

the rest of 2022 and may 2023 be a fantastic year where we all reach

new heights and discover more innovative ways of serving the

profession as well as the communities that the profession serves.

Until next time,

Lelané Bezuidenhout, CFP®

CEO, Financial Planning Institute of Southern Africa







On the money

Making waves this quarter

Retirement, reporting tools and US government bonds


NMG Benefits has launched SmartAid, a retirement annuity dedicated

to help retirees save towards medical costs during retirement.

SmartAid offers the following unique benefits:

• Assesses each member’s circumstance in determining if members are

on track to meet their specific retirement financial needs.

• Focus is on the member’s need based on their unique circumstances

rather than on the investment return.

• Members who are not on track to meeting

their needs are guided on actions to take

using the projection tool. This is a simple, easyto-use

calculator that translates a member’s

personalised information into a member

specific goalsetting.



ProfileData has launched Share Stats and Insights (SSI), an easy-to-use

add-on reporting tool, which provides real-time information for listed

users. “Knowledge of who owns your share, who is buying and who is

selling is strategic to managing value for one’s shareholders,” says Ernie

Alexander, chairman of the Profile Group.

SSI is modelled on the share statistic information requirements of

formal financial reports, including those typically included in board

information packs. It offers tables and charts on two databases:

• Share price movements, market values, liquidity, trade statistics, price/

earnings ratios and dividend yields.

• Institutional holdings, sales and purchases as represented by portfolio

reports from collective investment schemes.

Key features of SSI include:

• User-defined date controls, making it possible to instantly obtain share

statistic data for any calendar range.

• Customisable peer comparisons, making it possible to instantly

compare a company’s share statistics with up to four peers.

• Downloadable bar charts suitable for inclusion in board information

packs or other reports.

• Exportable data tables.

• Detailed quarterly views on asset manager activities.

• Quarterly analysis by fund on share movement and holdings, both for

previous institutional shareholders and new buyers.

• Aggregated analysis across funds by asset manager.

• Institutional trading pattern comparisons with up to four peers.

Analysis of investor classification, location and share allocation as

well as shareholder buying and selling trends, is easily analysed and

condensed into a reporting tool customised to the issuer’s investor

relations needs, saving both time and costs.

ProfileData is a subsidiary of information publisher, Profile Group,

the leading South African supplier of data feeds and customised data

solutions for financial markets clients.


Shares in the 1nvest ICE US Treasury Short Bond Index Feeder ETF have

begun trading on the JSE, giving South African investors exposure

to liquid, short-term US government bonds. According to 1nvest, a

specialist index fund manager, the ETFUSD tracks the performance of

the ICE US Treasury Short Bond Index which measures the performance

of US dollar-denominated short-term government bonds issued by

the US Treasury.

The index is market value-weighted and is designed to include US

dollar-denominated, fixed-rate securities with a minimum term to

maturity greater than one month and less than or equal to one year.

Through this ETF (JSE code ETFUSD), South African investors can

invest with rands in the US dollar-based product as an alternative

to USD-denominated money market funds, without affecting their

exchange control limit or going through an externalisation process.

The listing of ETFUSD brings the number of ETF listings on the JSE

to 93 with a total ETF market capitalisation of R114-billion.

Connect with a Momentum

Financial Adviser Today!







On the money

Making waves this quarter

Leaders with a clean slate


The Financial Planning Institute of Southern Africa (FPI) was proud

to be among 300 of the country’s top thought leaders at Leaderex

2022, South Africa’s premier business event which took place in

September at the Sandton Convention Centre in Gauteng.

Designed to provide attendees with insights into industry trends,

Leaderex included 20 conferences and over 100 masterclasses. The

programme was highly relevant to leaders in today’s fractured and

complex socio-political world. The current uncertainty dominating

South Africa across loadshedding, politics and corruption formed part

of the discussions, allowing leaders to connect on real issues.

The event had an impressive list of sponsors that included the

JSE as the primary sponsor, the South African Institute of Chartered

Accountants (SAICA), the Institute of Directors South Africa (IoDSA) and

the FPI.

“At the JSE, educating South Africans about financial markets is a

key focus for us as this creates ownership of one’s financial journey.

The JSE working with platforms such as Leaderex opens doors for

us to educate more South Africans about investing on the stock

exchange and taking the first steps in your investment journey,” says

Vuyo Lee, director of marketing and corporate affairs at the JSE.

Financial planning was an aligned theme. As David Kop, CFP®, HOD:

Policy and Engagement at FPI, says, “FPI has been part of Leaderex since

2016. It is a fantastic platform for us to engage with industry leaders

and for us to showcase what financial planning is. The attendees are

engaging and appreciative of both the talks and the complimentary

financial planning sessions on offer.”


We have recently come across “Slate”, an exciting new Wealth Tech

platform in the advice software market in South Africa. Slate expertly

addresses the concern that planners have been falling short of delivery

expectations in exactly the areas of the advice value chain that clients

have explicitly prioritised as the most important areas to them.

Slate provides a way for the planner to reinvent the first meeting that

a planner has with a client, to accurately capture the information about

the client’s hopes and dreams.

It kicks off with the planner and client playing the digital equivalent

of a board game where each card in the deck is a different potential

life priority.

Cards that are important and relevant to the client are force-ranked

by placing them in areas of the board based on relative importance and

timing. Using the intel provided by the Slate system, it is easy for the

planner and client to then transform each priority into a very visual and

understandable SMART financial goal.

Slate plugs seamlessly into the first part of any planner’s advice

process and can be integrated into existing CRM, compliance and

planning systems. Slate also plays a very strong role in strengthening

the value provided by planners in the ongoing post-sale servicing of

clients. The monitoring module of Slate, powered by Yodlee, allows

planner and client to keep abreast of performance against financial

goals and to act where it is necessary.

The co-creation methodology provided by Slate, underpinned by

its goals-based philosophy and its total focus on customer centricity

and “doing things right”, is what sets it apart from other technology.

After 18 months of testing, Slate launched in Q2 2022 for use by a

limited set of money mentors and is now ready for adoption by the

wider market. Planners should visit www.slateadvisor.com to read

more about Slate, see a short video and register interest for a demo.

Alternatively planners should contact the founder, Andrew Broadley,

on andrew.broadley@slateadvisor.com.



Built for better





On the money

Making waves this quarter

Discover the lite side


Managing revenue and remuneration is an essential part of every

financial advisory practice. Iress understands this and is releasing

CommPay Lite, the latest offering in the Xplan product suite.

Based on the same technology as its enterprise counterpart

CommPay, CommPay Lite is designed for independent financial advice

businesses to streamline revenue reconciliation and reporting.

CommPay Lite provides advisor-specific reports, policy and transaction

searches, revenue tracking and forecasting, allowing financial advisors

to spend more time with their clients.

Iress Head of Commercial and Client Solutions Shaun Nicholson says,

“CommPay Lite is both versatile and functional. The integration with

Xplan allows for comprehensive client revenue and business reporting

for independent financial advisors and their back-office teams.

“It is challenging running a financial services business. Every day, there

are more demands on time and money – more data, additional compliance

and extra reporting. CommPay Lite is designed to

help smaller practices get the most out of their

day and their existing Iress software, Xplan,

to maximise their business.”

CommPay Lite enables advisors to

wrap up commission payments

quickly and manage revenue

easily, buying time to do

the things that matter most.

For further details, please contact

the Iress team:


Telephone: +27 10 492 1110



Discovery Group recently announced the launch of Cogence, a

discretionary fund manager (DFM) seeking to significantly enhance

the business of wealth creation in South Africa. Cogence will bring

asset allocation views from BlackRock, one of the world’s leading asset

managers, together with personalised insights from Vitality to provide

investment solutions including model portfolios. This new investment

solutions offering will be enhanced by Aladdin Wealth technology,

an industry-leading platform from BlackRock which provides portfolio

analytics and risk analysis.

Adrian Gore, Discovery Group Chief Executive, says the impetus

behind entering the DFM space is based on two distinct areas

that have been disrupted: “Firstly, investment markets are more

sophisticated and complex than ever. At the same time, we’re seeing

local investors increasingly looking to invest more globally. For

South Africans it’s been hard to do so but with the recent regulatory

changes, pension funds and mutual funds are now able to invest up

to 45% in offshore assets. This means we can invest nearly half of our

retirement savings in offshore assets – that’s powerful. Research and

understanding of risks and the opportunities that global markets

present is crucial.

“Secondly, more than 90% of people in South Africa can’t afford

retirement, relying on their family or state and often the elasticity

of savings behaviours is more important than investment returns.

Cogence is built upon BlackRock’s asset allocation views and has been

designed to pair Aladdin Wealth technology with Vitality’s data and

analytics to incorporate personalised health and longevity metrics,

which essentially maps out every aspect of a financial plan.”

Cogence combines Discovery’s investment expertise with

BlackRock’s deep knowledge of asset management to help financial

advisors try to realise improved investment outcomes for their

clients. Through Cogence, financial advisors will also have access to

proprietary Aladdin Wealth technology.

Gore concludes, “Our combined behavioural science and global

investment expertise will support local financial advisors to deliver

more timely information, deeper insights and superior service to

clients that can ultimately result in an optimal retirement outcome.

With lifespans extending, clients need the financial means to retire

comfortably and drawdown at a sustainable income level; and most

importantly, also the good health to ensure they can enjoy it.”



of balance

Equilibrium is a discretionary fund

manager that brings balance into

your financial advice practice.

We enable you to do what really

matters - spending more time with

your clients and building your business.


Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07) is an authorised

financial services provider (FSP 32726) and part of Momentum Metropolitan Holdings Limited, rated B-BBEE level 1.




How flexible are you?

And going forward, will you remain flexible?

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.

In a recent LinkedIn post, Martin Lindstrom,

a global leader on organisational and brand

transformation, poses the following conundrum

about two hypothetical companies:

One company says, “Everyone is back in

the office all the time – five days a week. I

expect you to show up at 8am and stay for

the day.” Another company says, “You know

what? We’re going to provide flexibility to

our workforce. There might be certain days

when we decide that we’re all going to come

together because we want to collaborate in

person, but other days, you can work from

wherever you want. You can work from home.

If you want to come into the office, you can,

but you’re not required to. You’re going to

have flexibility.” Now, which company do you

think is a more attractive place to work? My

guess is that the answer is fairly obvious.

Think of your financial planning business.

Which company are you? How much flexibility

do you offer your employees? And very

importantly, how much flexibility do your

employees want? Since the start of the

pandemic, different companies globally

have had different approaches to workplace

flexibility, and of course the nature of the

business has an influence on how much

flexibility is possible.

In the technology sector, Twitter and

Facebook implemented policies at the start of

the pandemic that allowed employees to opt

to work from home permanently. Apple, in

contrast, has been pushing for a return to the

workplace for all employees. Its initial return

to office policy for employees was that they

all had to be back in the office on Mondays,

Tuesdays and Thursdays. Now Apple has

softened this position, requiring employees

to be at the office on Tuesdays and Thursdays

and giving them the flexibility to choose their

third day back in the office.

Apple’s softened stance on flexibility

was still not enough for many employees.

In an open letter, 1 400 of Apple’s 165 000

workers objected to the policy, saying,

“Stop treating us like school kids who need

to be told when to be where, and what

homework to do.” One employee who felt

this way was Director of Machine Learning,

Ian Goodfellow, who resigned in protest at

the return-to-work policy, stating: “I believe

strongly that more flexibility would have

been the best policy for my team.” (Quoted

by Zoe Schiffler on Twitter.)

Goodfellow was no ordinary employee.

He previously worked for Google where

he developed a system enabling Google

Maps to automatically transcribe addresses

from photos taken by street view cars. His

work in artificial neural networks and deep

learning have won him many accolades. In

2017, he was one of MIT Technology Review’s

35 Innovators under 35 and in 2019 he was

included in Foreign Policy publication’s list

of 100 Global Thinkers. After only two years

at Apple, it’s no surprise that he has joined

a company that offers greater flexibility, his

former employer, Google.

And this is not an isolated incident. The

recent 2022 PWC Global Workplace Hopes

and Fears Survey indicates that the Big

Resignation is a reality. In the next 12 months,

PWC predicts that one in five employees will

switch to a new employer and that almost

50% of employees want to be able to choose

where they work.

During the Covid pandemic, professional

financial planning businesses successfully

delivered their services to clients despite

at times extreme lockdowns. Employees

worked remotely, flexibly and most

importantly productively. While there may

be a yearning for more in-person interaction

from many clients and employees, a desire

for greater workplace flexibility is also real.

The dilemma going forward is whether to

remain flexible or not. The answer may lie

with the employees you don’t want to lose,

as Apple found out.

16 www.bluechipdigital.co.za






We are a profession and not a so-called industry.

Kobus Kleyn, CFP®, Tax

and Fiduciary Practitioner,

Kainos Wealth

Kobus Kleyn has published

over 200 articles and authored

three books. He is a multiple

award-winning professional

and holds eight memberships

with professional associations.

His most recent awards were

lifetime achievements awards

from the FPI (Harry Brews), The

Million Dollar Round Table (Top

of the Table Life Membership)

and Liberty Group (Life

Membership) in 2021/22.

With October month bringing to life

our Financial Planning Institute

conference and associated

professional awards for 2022, it

would be apt for me to touch on my passion

for our profession and drive awareness of our

professionalism. It would be appropriate to start

with a better understanding of an industry and

profession. I hope that at the end of this article,

my fellow financial professionals and all financial

stakeholders will increasingly refer to us as a

profession and not a so-called industry. Let’s review

the definitions of both.

“An industry is an economic activity concerned

with the processing of raw materials and the

manufacture of goods in factories.”

If we consider the creation and selling of financial

products without advice, we may see ourselves as

an industry.

“A profession is a vocation founded upon

specialised educational training, the purpose of

which is to supply objective counsel and service

to others, for direct and definite compensation,

wholly apart from expectation of another

business gain. A profession arises when any trade

or occupation transforms itself through the

development of formal qualifications based upon

education, apprenticeship and examinations,

the emergence of regulatory bodies with powers

to admit and discipline members according to a

code of conduct and ethics.”

As financial professionals in South Africa,

under the FSCA and FAIS Act regulations, we all

must meet minimum requirements after a twoyear

supervision period. We have a professional

body in the Financial Planning Institute of

Southern Africa, that endorses professionals who

want to go well above the minimum standards

and be certified as fully-fledged professionals.

Unfortunately, we do not have as many FPI

members at this time as we should. Still, I am sure

over time, with awareness with publications like

Blue Chip and the FPI, as well as organisations

like the Financial Intermediaries Association

and Insurance Institute of South Africa, we are

transforming into a fully-fledged profession like

the medical profession.

I attend many webinars, seminars, conferences

and financial events, and I have to admit it feels

like a stab in the back when many still refer to

us as an industry. If you, in your mind, believe

we are an industry, how would we uplift the

status and respect we deserve for changing

people’s lives daily, as we have observed even

more so over the once-in-a-lifetime pandemic?

If anything, the pandemic has confirmed our

status as a noble profession.

Perceptions always tend to become a reality,

and what we do as financial professionals

will define our destiny as a profession and

professionals. Maybe there are sections of our

financial services that would always stay an

industry, but financial planning is not one, and

we need to raise the bar across the board to meet

the requirements set out above in the definition

of a profession.

Sometimes it is all in words,

and words do matter.

As financial professionals, no matter the

advisor category you operate under, it should

always start with financial advice and guidance

long before products. A consequence of

solid advice may lead to selling products or

investments. We need to create an advice

experience for the public and our clients with

the appreciation that we are in a vocation, not

a job. We must make clients’ dreams come true

by considering their long-term needs and advice

with due ethics and conduct.

Sometimes it is all in words, and words do

matter. Allow your passion to become your

purpose, and it will one day become your

profession. Next time you use the word “industry”,

think about it, and update your vocabulary to

include profession.

18 www.bluechipdigital.co.za

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Lelané Bezuidenhout, CFP®, has been the chief executive officer of Financial Planning

Institute of Southern Africa for three-and-a-half years. Blue Chip, the official

publication of the Institute, speaks to her about the financial planning profession.

Lelané Bezuidenhout, CFP®, CEO of FPI.




Lelané Bezuidenhout has a passion for developing people,

processes and systems. She is a strong believer in turning

stumbling blocks into stepping stones and finds a silver

lining in every situation. Lelané has a positive mindset

and is focused on reaching her goals through careful planning

and aligning with strategic goals and commitments. She

values the standards and principles implemented by bodies

like Financial Planning Institute of Southern Africa (FPI) as

well as the FPI Code of Ethics and Practice Standards as they

guide her in treating customers fairly. She is a proud CERTIFIED

FINANCIAL PLANNER® (CFP®) professional member of FPI.

Lelané, please talk to us about the importance of consumer

education in South Africa.

Consumer education is extremely important as it enables

consumers to make informed decisions around their finances.

Consumer education focuses on financial management (like

budgeting), investing and borrowing, risk

management (insurance and medical aid)

as well as addressing South Africa’s poor

savings culture. There is a massive need for

financial literacy training in South Africa.

Reflecting on the findings of the

Financial Sector Conduct Authority’s

(FSCA) Financial Literacy Baseline Survey,

especially the financial literacy index,

the overall current state of financial literacy in South Africa is

lower than what was found in 2015 – young people seem to have

been negatively affected. We need to introduce more financial

literacy programmes for the youth of South Africa.

As a community of financial institutions, non-profit and

business process outsourcing companies as well as associations,

we need to do more in a collective manner to increase the

overall financial literacy levels in South Africa via robust

consumer education programmes. We already have a few good

programmes like:

• FSCA’s Money Smart Week South Africa

• FSCA’s consumer education website

• FPIMyMoney123 (www.fpimymoney123.co.za)

• Financial Planning Standards Board (FPSB) World Financial

Planning Day

• FPI’s Financial Planning Week

• Association for Savings and Investments South Africa (ASISA)

Consumer Financial Education Practitioner Sprints

There are quite a few financial institutions that, in terms of their

Prudential Authority and Financial Sector Code compliance

requirements, are running consumer education programmes too.

Please speak to us about the value of and need to use the services

of a financial planner.

We need to understand the services of a financial planner first. A

CFP® professional financial planner works in the areas of:

• Financial management (like budgeting, ratio analysis, etc)

• Investment planning

• Retirement planning

• Tax planning

• Risk planning (short-term, long-term, medical and business risk

planning, etc)

• Estate planning

The value and need of a financial planner are crystallised by

how a CFP® professional assists clients in developing strategies

to help them manage their finances and to meet their life goals.

CFP® professionals do all the above within the framework and

ambit of a professional Code of Ethics and Financial Planning

Practice Standards.

A financial planner is a professional that guides you over a

period of years to realise your financial goals and is there when

life happens (birth, death, marriage, divorce).

The financial services industry

must focus on the value of

professional financial advice

and not on selling policies.

One of the big issues facing financial advisors is clients

focusing on their fees and advisors

having to justify their value to

clients. What is FPI doing to support

advisors to transition to a fee-based

model for advice?

This is a real issue and comes from the

stigma that financial advisors are policy

peddlers that just chase commission.

To change this perception, the financial

services industry must focus on the value of professional financial

advice and not on selling policies.

We have seen quite a few Retail Distribution Review (RDR)

proposals implemented via the General Code of Conduct,

specifically the June 2020 amendments. These amendments,

focusing just on fees, changed Section 3A (financial interest and

conflict of interest management policy) quite significantly. It

clarifies that either commission or fees can be charged, and that

the provider/representative cannot be remunerated more than

once for performing a similar service.

Some professionals have moved to a fee-based-only model

for professional advice (ie they do not take any commissions but

only charge fees). FPI has designed a tool that assists members

in charging a fee and taking into consideration the nature of the

service and the resources, skills and competencies reasonably

required to perform the service/s1. This tool is available in the

membership community under member resources (practice

management). Non-members cannot access this tool.

FPI hosts peer collaboration sessions where professional

members of FPI can participate in best practice sharing sessions.

Transformation of the profession is an imperative of FPI. What

does FPI mean when it refers to “transformation” and what is

FPI doing to support its mission of “facilitating transformation

within the profession”?

One of FPI’s business objectives is to participate in the creation

and revision of programmes in support of transformation in

the industry. If the industry lacks diversity and inclusion, so will

1. 3A (d) (i) BN 80 of 2003 as amended in June 2020






FPI as our members are mainly from the financial services

industry. Transformation at FPI refers to the inclusion of a

diverse group of people – including but not limited to people

from various demographic backgrounds, identities, race, age,

beliefs, values, skills and different ways of thinking. This group

of people participates in and forms part of our governance

and committee structures as well as

our staff and membership base.

FPI supports and works with

other associations, networks and

bodies such as the Women in Finance

Network, LeanIn Circle, Association

of Black Securities and Investment

Professionals – ABSIP (MOU in draft

stage) as well as the Insurance Sector

Education and Training Authority

(INSETA) to support individuals with either mentorship or

funding to become members of FPI. Via these programmes,

we aim to transform the profession to a more diverse one.

One challenge the financial planning profession faces

relative to other professions is an inconsistency in the

professional qualification required to give advice. FPI is

the “guardian” of the CFP® professional qualification, and

yet most financial advisors operating in South Africa do not

have this qualification. What is FPI doing to change this?

This question confuses the profession and the industry. There is

consistency with regards to qualifications obtained to become

a professional member of FPI. Our qualifications are aligned

to clear learning outcomes codified in defined curriculums

that are updated every three to five years depending on

the results of the job analysis surveys conducted locally and

internationally. It is rather a CFP® designation2. To become a

CFP® professional, candidates must meet all four points below:

1. An underlying South African Qualifications Authority (SAQA)

registered qualification (eg a Postgraduate Diploma in

Financial Planning — NQF 8)

2. Three years of relevant financial planning experience or a

one-year mentorship programme completed

3. All candidates must write the professional competency

examination (PCE) commonly known as a “board exam” in

other professions

4. Meet the Code of Ethics and Practice Standards on an

annual basis.

Once a CFP® professional, your membership needs to

be renewed on an annual basis by completing an ethics

declaration, paying the required membership fee and

completing 35 Continuous Professional Development (CPD)

hours per annum (20 technical, 10 general as well as five ethics

and practice standards CPD hours).

To give financial advice as defined in the Financial

Advisory and Intermediary Services (FAIS) Act, BN 194 of 2017

(fit and proper requirements), financial services providers

FPI has a fully developed

mentorship programme,

Mentoring the Professional

of Tomorrow, that is free

for anyone to use.

(FSPs), Key Individuals and representatives must have a

relevant underlying qualification. The onus is on the FSP to

ensure that the qualification is relevant.

FPI commented in the Retail Distribution Review (RDR)

Advisor Categorisation Paper3 and confirmed that regulatory

protection of the title, Financial Planner, is desperately needed

as currently anyone can call themselves

a financial planner. This creates massive

consumer confusion.

When it comes to the qualifications

required to be licensed under the FAIS

Act (BN 194) we are working with the

FSCA and INSETA to ensure that, like

other professions, we have qualifications

that are fit for purpose. We acknowledge

that this is not a quick fix, and we should

not forget the history that got us to the point that we are at now.

Given the history of the country and the industry, it seems

that black financial advisors face three key challenges: access

to markets, access to funding and access to skills. It seems

that many industry players focus much energy and resources

on skills training, but the other two challenges seem to

receive less attention. What role can FPI play in helping shift

this dynamic when it comes to access to markets and access

to funding for black financial advisors?

This is a great question. FPI works closely with INSETA to

obtain funding that assists black (as defined in the B-BBEE

Act) financial advisors to gain access to the market, but also

funding needed to pay for their studies and a stipend while

completing a learnership and/or mentorship programme at an

FSP or financial planning practice.

FPI has a fully developed mentorship programme,

Mentoring the Professional of Tomorrow, that is free for anyone

to use. It is important that the mentee finds a mentor that

matches themselves as they must have a good working

relationship that is beneficial to both parties.

We are currently registering an education and training trust.

Delays at the Johannesburg Master’s Office have hampered

the process. The sooner we get the trust off the ground, the

sooner we can help more upcoming, young, unemployed

people to become qualified financial advisors and planners.

FPI states that its mission is “to advance and promote the

pre-eminence and status of financial planning professionals”.

What do you believe still needs to happen in the financial

planning profession for it to achieve the same level of

recognition and respect as other professions such as law,

medicine, accountancy, engineering, etc?

Financial planning is a relatively young profession in

comparison to law and medicine. The profession was only

born in 1969 at an airport in San Francisco when a group

of talented, like-minded people recognised the need to

professionalise financial planning.

22 www.bluechipdigital.co.za

2The FPSB owns the CFP® mark outside of the US. CFP® is also a SAQA registered designation.

3Referring to specifically Proposal T.




Other professions like law, medicine and engineering

are all statutory professions (established by an act

of parliament) or enjoy some form of regulatory title

protection (like in the accountancy profession). We do not

have this for financial planning yet – well, in South Africa at

least. Regulatory protection of the title Financial Planner is

in draft stage currently and we can only hope, for the sake of

consumer protection, that regulatory title protection comes

in sooner rather than later.

What are the biggest challenges that FPI faces in delivering

its vision of “professional financial planning for all”?

Reflecting on our top two challenges:

• Our biggest difficulty remains growing our numbers

sufficiently across all demographics to provide professional

financial planning and advice for all. We need a more

diverse membership base to serve all South Africans better.

Some of the issues have already been highlighted in this

interview (awareness of the profession, recognition of our

professional members by employers, funding for students

to study and join the profession, to name but a few).

• In most professions, completing the required CPD hours to

remain competent and in good standing within a profession

seems to be problematic. This is because it is seen as a

compliance burden rather than a strategic advantage.

Mindsets around CPD must change: it should not be a

tick-box approach, but an opportunity to set yourself apart

from the rest by ensuring that your personal development

plan speaks to the areas that you need to grow in. CPD should

be strategically aligned to what your financial institution or

practice is trying to achieve.

In achieving its mission, FPI has identified six actions that

it seeks to undertake. We have questions specific to each of

these actions:

1. Improving the quality and accessibility of professional

financial planning for all in Southern Africa. How do you

see people who can’t afford to pay for financial planning

getting access to professional advice for free rather than

becoming victims of “financial advisors” who are just

salespeople wanting to sell products to them?

Financial inclusion and access to quality advice is a global

problem. What we must appreciate is that there will

always be some form of fee that a client will have to pay

to access financial services (products, advice, etc). These

fees present themselves in many shapes and forms – from

regulated commissions to fees for advice to fees for assets

under management (AUM). As per the discussion above, the

regulatory environment has been enhanced to make it clear

what a provider or representative may charge for advice and

related services.

We must look at national models where access to

advice and paying an advice fee could be an allowable tax

deduction, for instance. Another way is to allocate more






B-BBEE points to consumer education via the Financial Sector

Charter and relevant B-BBEE scorecards.

FPI members provide pro bono advice from time

to time, especially during Financial Planning week (in

October) and on World Financial Planning Day. FPI was at

Leaderex 2022 where a few of our professional members

assisted the public with pro bono financial advice. These

volunteers are all licenced to provide financial advice as

per prevailing FSCA regulations.

Consumers can visit www.letsplan.co.za for financial

education and literacy to assist them with basic financial

decisions – from budgeting to understanding what saving

and retirement planning are about.

Consumers can also locate FPI professional members here

and also verify FPI memberships.

2. Acting as advocate for professional financial planning,

building a recognition of the importance and need for

such planning by the public. What are your key initiatives

in this regard?

FPI has a set advocacy and public policy strategy where

we actively take part in relevant regulatory discussions to

create awareness of the importance of financial planning and

professional financial advice to the public.

We add well-considered public comment into draft

regulations, with the active support from our highly

competent members, especially our various competency

committees and Advocacy Committee.

In terms of the public recognising the importance of

financial planning and professional financial advice, we offer

our FPIMyMoney123 programme.

The FPI network, which consists of FPI volunteers and

ambassadors, undertakes quite a few media interventions

and writes in a number of publications to assist with financial

planning awareness. We provide a quarterly newsletter that

updates consumers on relevant financial matters.

These are a few of the key initiatives in this space.

3. Providing a framework within which members can achieve

qualifications and maintain competence to create greater

value for their clients, practices and employers. Will

financial planning ever be on the same footing as other

professions if there is no single professional qualification

standard required of anyone giving financial advice?

The above FPI mission statement is with specific reference to

the profession and not the industry at large. The framework

that is referred to here is for anyone that wants to become

a professional member of FPI. The framework consists

of proper qualifications from NQF5 to NQF8 at FPI and

recognised educational providers based on our published

financial planner and financial advisor curriculums. Visit


24 www.bluechipdigital.co.za




We should not confuse what a financial

planner does with what someone who is not a

member of FPI does. This is the precise reason

FPI is seeking regulatory protection of the

term Financial Planner. Not everyone can call

themselves a financial planner, especially if they

do not meet the stringent global certification

standards that are based on the Financial

Planning Standard Board (FPSB).

It is also important to note Proposal T in the

RDR as well as FSCA’s Advisor Categorisation

paper (Section 5). A financial advisor who is not

a professional member of FPI must be licensed

with FSCA in terms of the FAIS Act. There are

clear competency requirements for someone

who is licenced with the FSCA via BN 194 of

2017. I feel that the regulator has done a lot in

this space, from the days when a mere “30/60

FAIS credits” were needed to currently where

a full relevant qualification is required. We

also need to appreciate the direction that the

Conduct of Financial Institutions (COFI) under

the twin peaks model is moving to. It is about

moving to a more principle-based environment

as COFI is built on the eight Treating Customers

Fairly (TCF) principles.

A financial planner is a

professional that guides you

over a period of years to realise

your financial goals and is

there when life happens.

We are sitting with a legacy problem where there was no

firm framework to ensure that financial advisors obtained

qualifications that were relevant to what a financial advisor

does. The FSCA is revising the competency framework

as part of their harmonisation project that is currently

underway. An interesting study to read is the one FPI did

with SAQA in 2016 around the need for FPI’s financial advice

designations. Since then, FPI has set specific codified

education standards for financial advisors that want to

become members of FPI via our REGISTERED FINANCIAL


(FSA) SAQA registered designations.

The second part of the above mission statement refers

to CPD. FPI provides more than 35 hours of complimentary

CPD webinars to FPI professional members to enable them to

remain technically strong in the various fields of financial

planning. We also provide online courses, conferences

and technical workshops to ensure that robust peer

collaboration also takes place.

4. Ensuring that members maintain the highest ethical

standards in the pursuance of their profession –

education is often seen as the way to ensure ethical

standards but the reality is that product providers often

provide incentives (intentional or otherwise) which can

compromise the ethics of financial advisors. What is FPI

doing about this?

I will first focus on a broader industry response, then

an FPI-specific one: Here we need to take note of the

regulatory journey that started with the publication

of 55 RDR proposals that came out in November 2014.

In keeping to the point, Section 3A of the General

Code of Conduct (BN 80 of 2003) was updated quite

significantly in June 2020 to address this behaviour

within the financial service industry.

FPI can only address the behaviour of our professional

members via the FPI Code of Ethics and Practice Standards

as well as our published disciplinary regulations.

Professional members of FPI have a specific duty to ensure

that they always act in the best interest of their client and

do not serve any other ulterior motives such as a cheap

boat cruise to the Bahamas or a free plane ticket.

FPI sits on the market conduct committee at the FSCA

and a few other relevant regulatory committees where

we actively participate in discussions that move the

financial services sector forward and address risks that

face the financial advice sector.

5. Providing a leadership role within financial services by

providing balanced, credible input and commentary to

government and the public. How do you achieve this?

FPI has a specific public policy strategy as well as

advocacy goals that we are driving. We provide wellconsidered

public comment into regulations published

by National Treasury, FSCA, Financial Intelligence Centre

and Council for Medical Schemes, to mention a few. We

do this with the exceptional support of our competency

and advocacy committees.

6. Facilitating transformation within the profession. We have

already asked a question on this. Do you have anything

to add?

FPI facilitates diversity and inclusion in the profession via

the mechanisms mentioned above. It is important that

we focus not just on race, but on male vs female, various

mindsets and different competencies and skills that people

bring to the table for the greater good of all.







The Financial Planner of the Year Award was launched in 2000 and is the most

prestigious award in the industry. It recognises the country’s top CERTIFIED

FINANCIAL PLANNER® – a stellar professional who exhibits revolutionary ideas,

consummate skill and unimpeachable ethics when dealing with clients.

On 19 October 2022, the Financial Planning

Institute of Southern Africa (FPI) will be hosting

the prestigious awards ceremony where excellence

in the financial planning profession is recognised.

This event endeavours to acknowledge extraordinary CFPs®

from across Southern Africa that demonstrate innovation,

professionalism and commitment to both their clients and

the financial planning profession.

Meet the finalists of the Financial Planner of the Year

Award 2022.


Director and Wealth Manager, Wealth Creed

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?

The application process was a wonderful opportunity

to assess our financial planning approach as well as our

internal processes. It was also a great affirmation that we

are certainly on the right track and that our client centricity

is key.

It did, however, also highlight the extent to which our

industry remains fragmented, resulting in clients typically

having to consult several professionals to address all aspects

of their financial and risk management. To tackle this, our

approach is to collaborate with other professionals in aspects

we are not licensed to give advice on or if another skill set

is required. This is an area we will be

focusing on so that clients receive a

more seamless value proposition.

Do you believe that the FPI can improve

the selection process in any way?

For practicing financial planners, it is

always a challenge to strike a balance

between the information that the

regulations require us to disclose to

clients in the advice proposal document

versus what clients can meaningfully

grasp. A key take-away for me was to

find a good balance between the two

and importantly still use a format and

language that clients can understand.

Palesa Dube, CFP®, Director

and Wealth Manager,

Wealth Creed

26 www.bluechipdigital.co.za




it was to use my expertise for the benefit of the community from

which I emanate. With this mission, our goal is to continue to grow

our practice and ultimately have a presence nationally.

I also believe that one of the most important contributions we

can make as professionals is to place people in a position to make

informed financial decisions for themselves. It’s vital therefore

that we contribute our time and efforts to financial literacy and

inclusion initiates, which is an area our practice and I, personally,

are passionate about.

One of the most important contributions

we can make as professionals is to place

people in a position to make informed

financial decisions for themselves.

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

planning industry?

I think we need to take pride in the strides we have made in the

industry over the years. When I started my career 18 years ago, the

conversation was around moving from a product-led to a clientcentric

industry with professionals that adhere to high ethical

standards and use their technical skills to positively impact the

lives of the clients we serve. The CFP® designation as well as the

more recent RFP TM and FSA TM designations are a clear indication

of our commitment to further professionalising the industry. The

ball is now in our court as practising members to increase the

prominence of these designations by proudly associating with

them and living up to the high standards required of us by our

peers and importantly the broader community we serve.

What are your long-term objectives – including those on

diversity and inclusion?

One of the pivotal reasons for us starting an independent wealth

management firm was so that we would be able to provide holistic

financial planning services of a high standard to a broader base of

the community, where our eye would remain solely on improving

the lives of our clients. More importantly, for me as a black female,


Retiremeant Specialist and Director, Chartered 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?

The process of applying for the Financial Planner of the Year Award

has benefitted my business immensely. It has really allowed me

to see “the wood from the trees” in that you start to view every

aspect of your business with a different lens.

One of the most significant changes I have made in my business,

during the application stage, has been to really define what

my succession planning strategy entails. Not only has this been

important to detail in writing but it is important to communicate it

(once defined) to staff and clients. The clarity on continuation and the

growth of the business, for both staff and clients, has been hugely


Do you believe that the FPI can

improve the selection process in

any way?

I do think there are benefits to holding

panel interviews in person. I know

this comes with a cost, but I think

a deeper understanding of who the

candidate is and what they stand for

can come across more authentically

in person. The FPI could potentially

work on turnaround times to help

the candidates plan ahead if they do

make it further into the competition.

Tom Brukman, CFP®,

Retiremeant Specialist and

Director, Chartered Wealth

What are the changes you would


like to see in the financial planning industry?

I would like to see a more legal definition for a financial

planner that incorporates the CFP® designation. This will






help the consumer-at-large understand the difference in

professionalism and quality that is available to them in the

advice space. I also think that the role of a financial planner

is extremely diverse, and it is important that this gets more

defined for both financial planners and clients. Financial

planners and clients need to know where to draw the line

from an advice perspective.

What are your long-term objectives – including those on

diversity and inclusion?

My long-term objectives are to continue building a financial

planning practice that always puts the client first. To do

this, I am driven to build an inclusive and diverse team of

passionate colleagues who learn that the role we hold in

someone’s life is so valuable and important.

I believe that I need to set our business clear and

achievable diversity and inclusive goals from a staff,

provider and client perspective, if we want to see this

business grow and flourish in the long term. Upskilling,

mentoring and sponsoring will always be a cornerstone of

how we manage all staff that join my business.

I am driven to build an inclusive

and diverse team of passionate

colleagues who learn that the

role we hold in someone’s life is

so valuable and important.


Chartered Accountant (SA), Principal of Spies & Associates,

Old Mutual PFA

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?

Applying for the award has given me an opportunity to

step back and reflect on how far I have come as a CFP®

professional. At the same time, it has also given me an

opportunity to envision an even brighter future for my

practice. The application process has once again made

me appreciate the importance of the CFP® professional

credentials. It has also inspired my three partners to enrol

for the qualification next year.

Do you believe that the FPI can improve the selection process

in any way?

I believe that all CFP® professionals should automatically be

included in the selection process. I am convinced that there

are many more amazing CFP® professionals out there with

strong practices from whom we can learn a great deal. If the

FPI can visit some of these practices in person and spend time

with them, I believe it would further enhance the prestige

Ours is not simply an industry; it is a

profession which can and should be

ranked amongst the best of professions.

that is already connected to this fantastic award. It will be my

absolute privilege to be part of such a process in future.

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

planning industry?

For me, it all comes down to education. One obviously

needs an education to become a CERTIFIED FINANCIAL

PLANNER®, but I believe education is much more than that.

As CFP® professionals, we have a duty to educate the public

on why it is so important to use a CERTIFIED FINANCIAL

PLANNER®. We also have a duty to show the wider financial

planning industry that ours is not simply an industry; it is a

profession which can and should be ranked among the best

of professions. In 2018, I joined two clients to start a school in

my area. Today our school educates more than 150 learners.

My dream is to see CFP® professionals rise from the ranks of

these learners in 20 years from now.

What are your long-term objectives – including those on

diversity and inclusion?

My team and I are on a drive to grow our practice over the next

two years by employing young planners and assisting them on

their journey to qualify as CERTIFIED FINANCIAL PLANNERS®. I

know there are many young planners out there who, with the

right guidance, can become successful


my team and I see it as our responsibility

to assist this next generation of CFP®

professionals. Our goal is to help these

young planners build their own practices

– an initiative which obviously benefits the

younger planners, but more than that: it

also paves the way to a future where more

clients can be reached and given access to

quality financial advice.

This is especially important in a country

like South Africa where we have a very

diverse population, both economically and Hendrik Spies, CFP®,

socially. To ensure that every South African Chartered Accountant

has access to quality financial advice, it is (SA), Principal of Spies &

our responsibility to help create a diverse Associates, Old Mutual PFA


At the end of the day, this is what financial planning is

all about – changing people’s lives. How fortunate are we

to be in a position where we can make a real difference. My

dream is for more people to understand this and make it

their daily goal.

28 www.bluechipdigital.co.za


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What does the future of financial planning look like? If you ignore all the noise, the changes,

the regulations and the economic environment, one thing becomes very clear: the upcoming

generation of financial planners is passionate about the industry, clients and the profession.

By Nici Macdonald, CFP®, HOD: Certifications and Standards, Financial Planning Institute of Southern Africa

We are, however, finding that not enough

young planners are entering the industry

and some of those who do come through

the pipeline get lost to other industries.

This means that diversity, in terms of age and race, of the

financial planning community is suffering. If you consider

that only 30% of professional FPI members are under 40

years old, and only 6% of those are younger than 30, this

fact is clearly illustrated.

I was told a story the other day of a bright young

financial planning student at one of our local universities

who graduated with honours and started his career with

enthusiasm. His lecturers had high hopes that he would

be wildly successful and make a big impact in the industry.

A year later, his lecturer bumped into him at a club where he

was a DJ.

It turned out that his first job in financial advice was a

horrible experience. He was given very little training, high

targets and no support. This student, now completely

disillusioned, will never practice financial planning again.

What a loss for our industry.

Two of the main reasons why these young planners do

not stay in the industry is lack of support and opportunity.

To successfully start a financial planning or financial advisor

practice, you need to either have a solid client base or

a network to build one from. Alternatively, you need the

capital to buy into an existing practice or succeed a retiring

financial planner. In many cases, these young planners

30 www.bluechipdigital.co.za

There are very few things more rewarding

than seeing someone grow and

knowing that you had a part in it.

are first-generation graduates without

many of the resources needed to build a

business in this manner.

Support for a young financial planner

should not just be financial, but also

professional and emotional. It can be

quite daunting for a graduate to step into

their first workplace and be expected to

learn the ropes of a professional business

in a very short time span. The successful

learnership programmes focusing on

developing talent in our industry take

a minimum of three to four years for

candidates who have already completed

a post-graduate qualification. This is a

long time.

How can the FPI assist in addressing this


We are passionate about mentorship. We

need to use the existing skills, knowledge

and abilities in the industry to help build

the next generation of financial planners,

via knowledge transfer.

The FPI has a fully developed and

structured mentorship programme,

designed to run over a minimum period

of 12 months to assist in training a new

industry entrant in all aspects required to become a fullyfledged

financial planner. This programme is based on the

FPI Practice Standards (the six steps of financial planning),

combined with the six areas of financial planning (financial

management as well as estate, tax, retirement, investment and

risk planning).

The programme is available to our CERTIFIED FINANCIAL

PLANNER® (CFP) professionals free of charge. The FPI assists

in implementing the programme into your practice and

guides you on the process to be followed. Completing

the mentorship programme can be instrumental in

ensuring that a young entrant in your practice attains all

the knowledge, skills and abilities needed to become a

successful financial planner.

Another benefit of this programme is that a young entrant

who does not yet qualify to apply for the CFP® professional

designation due to not meeting the experience requirement

(three years) can overcome this by formally completing the

mentorship process. This is attained through structured

feedback to the FPI at regular intervals and submitting a

portfolio of evidence to be assessed by the FPI (at a fixed cost)

on completion of the programme. Should this assessment

show that the candidate is competent in the tasks assigned in

the programme, he or she will be deemed to have attained the

experience needed to become a CFP® professional.

What is expected from a mentor?

The process takes time and commitment from both the mentor

and mentee. The words “deliberate mentorship” come to mind. A

plan must be put in place, goals need to be set and progress has

to be tracked.

In your practice, the mentorship can form part of the office

structure. Leverage the knowledge your assistants, practice

manager or other financial planners have. Harness the time of

your product provider consultants and specialist consultants.

Use Continuous Professional Development (CPD) opportunities

to instill learning. Spend time with your mentee to teach them

the soft skills that you have learnt over the years.

Why do I do this?

There are very few things more rewarding than seeing

someone grow and knowing that you had a part in it. Not

only will you be transferring the knowledge, skills and abilities

you have acquired, but you will also strengthen your own

skills and maybe learn some new ones through the process.

Should you mentor a new entrant into your practice, you

will obtain a valuable resource to help your own business

grow and have more efficient and productive employees. The

mentees can also continue the mentorship process, which will

exponentially increase the benefit to the industry and to the

clients we serve.

I want to encourage everyone to start today to make

this industry better by practicing deliberate mentorship.

Ask yourself what you can share, put a plan together and

set the time aside to make sure it happens. By doing this,

we will consciously and intentionally grow the financial

planning industry.

Contact us today at certification@fpi.co.za or 011 470 6000

to find out how you can get involved.



Tax Planning


For more information call us on +27 (11) 470-6000 or email: events@fpi.co.za






A reflection on winning the FPI Financial Planner of the Year Award.

Winning the FPI’s Financial Planner of the Year in 2011

was one of the best experiences I have ever had.

The award profoundly changed my personal and

professional life. It remains a mystery to me that we

don’t see many more CFPs® entering the competition every year

– my experience is that if you put in the work, you stand an equal

chance of winning. Even if you don’t succeed in your first year, you

learn so much about yourself, your practice and your professional

abilities that the effort is worthwhile.


In the years before I entered, most of the winners had come

from large practices or had links to a particular product provider

that greatly assisted them in preparing for the competition. The

cynic in me made me feel that the competition was a bit of a

closed shop to financial planners who were not part of the “club”.

In addition, our business was relatively small, quite new and we

were not heavily involved in the financial planning community –

we were outsiders in every sense.

John Campbell of Chartered Wealth, who won the competition

before me, told me I was being silly not to enter because I stood

a good chance of winning if I prepared adequately, so I finally

took the leap in 2011. This gave me the push I needed and I was

thrilled to win on my first attempt. The format of the competition

has changed over the years, but one fundamental principle has not

changed: anyone can win if they do the work.


I realised that our financial planning practice would be a significant

component of the competition once I started investigating what

was required of me to enter the contest. Every aspect of our

business needed to be competition-ready as the judges were not

solely focused on me but also our practice. It took a lot of hard work

to prepare our practice to be battle-ready.

I had many doubts because we were not a big business and I was

not sure we would be able to compete with the more prominent

players in the industry. However, I had great faith in my colleagues,

our clients and the high-quality financial planning processes we

had built since we started the business. Fortunately, the judges

were extremely fair, and our size was no disadvantage.


There were some surprising benefits to winning. Our existing

clients seemed to delight in the award because they felt party to

the success. The increased confidence instilled in my colleagues

was also surprising; they realised we could compete with the “big

boys” on an equal footing. Media houses started calling to ask for

interviews and I was even profiled in You magazine. This turned out

to be vital because it impressed my mother-in-law’s friends, winning

me many brownie points at home. Our business flourished; a more

prominent media profile and greater self-confidence in our planners

was a dream combination. We were able to convince many new

clients to partner with us on their financial journeys.


We must be proud of our profession and Financial Planner of

the Year shines a spotlight on the best professionals in our

country. I firmly believe we compete with the best financial

planners in the world. While awards are not a destination, they

are a valuable way of benchmarking yourself and your practice.

Knowing if you run a great business without opening yourself

up to external scrutiny is impossible. I can think of no better

benchmark than Financial Planner of the Year. I encourage anyone

who aspires to be a high-quality professional to enter. There are

so many benefits and so few downsides that the time spent on

preparation is rewarded many times over. It is essential to know

that this competition is a group effort; you cannot win without a

brilliant team to support you.


People ask if there are downsides to being the Financial Planner

of the Year. I cannot think of any. You need to budget some extra

time for public talks to raise the public profile of our profession.

This helps you, our profession

and the public to know more

about us. In the years since I

won, my only disappointment

is watching some winners use

the award to find themselves a

better job or build their business

without taking the time to give

back. If you win this, please

allocate some time to talk to

other financial planners about

our profession and encourage

more people to become CFPs®

so we can continue building our

great profession.

Warren Ingram CFP®, Co-founder,

Galileo Capital

34 www.bluechipdigital.co.za






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Shopping for a new car, iPhone or laptop is a relatively

straightforward affair. You generally know what you are

looking for, you have a budget in mind, and you can set

off on your search and narrow down the options quite

quickly. Upon selecting the desired product of choice, you would

have clear expectations around performance and function, which

are captured in a product warranty.

Should any feature of your recent purchase fail to meet

expectations there is a clear path to evaluate where your

product has failed to deliver. In this case, the provider

should hopefully back up their product with a remedy or a

replacement. It’s not always as simple a process as this, but

for the most part, consumers are empowered to make choices,

to evaluate performance and have recourse should things not

turn out as expected.

The investment industry does not work like this. The

key distinction is that while the industry offers “investment

products” such as unit trusts, retirement funds and the like, it

is in fact a service and not a product which investors receive.

The main implication which we are focusing on here is that the

investor assumes the risk of success, rather than the product

provider. There is no recourse should a particular fund or

product fail to meet expectations over time.

This highlights the topic of “investment risk”. Where the

investor is taking on the burden of putting their own capital at risk

to meet their objectives, guided and serviced by the industry,

the concept of risk can be a vague and mis-used term which can

serve to undermine good investment outcomes. In the absence

of a sound understanding of risk, it is likely that investors will

be more conservatively invested than they otherwise should

be. In the short term, it may seem like this is a small trade-off;

however, it is only over extended horizons that this cost can be

fully observed.


To help ground this concept of risk, it is helpful to start by

clearing up the use of the term “risk”. For different participants,

risk can mean:

• The potential to lose money permanently. An example here would

be through insolvency (African Bank) or even fraud (Steinhoff or

Ponzi schemes such as Sharemax). This is contrasted with losing

money temporarily – a very normal occurrence in investing

where share prices move up and down on a continuous basis.

• A length of time, where “low risk” is often linked to short time

periods such as 12 months and “high risk” is linked to long time

periods such as five years.

36 www.bluechipdigital.co.za




• The variability of returns. How much portfolio values change each

day, month or year. Shares on the JSE for example fluctuate wildly

compared with the return earned on a bank deposit.

The term “risk” is often used as a catchall. Yet, the three

examples above have materially different interpretations and

understanding the implications for each is critical to maintaining

a proper investment plan.


When we consider portfolio construction, we are assessing the

potential to lose capital permanently. In a perfect world, capital

loss would be avoided in its entirety, yet this is probably an

unrealistic expectation. With thousands of listed companies,

debt instruments, property REITs and the like, there is always

the potential for a company to face severe financial pressures

that can result in capital loss. So how can we mitigate this? There

are several ways, the most effective of which is diversification.

Spreading your capital over an extended range of assets, so that

if any individual breaks rank it does not have an oversized impact

on the total portfolio.

The second way we can mitigate this is by using strong

investment managers who have robust research and due diligence

processes to mitigate or avoid any of these financial failures. With

a properly diversified portfolio, the potential for small capital

losses can be tolerated and offset with a much broader set of

instruments which add value. And this is the key point: you

need to be able to stomach some permanent losses to be able

to access the types of investments which ultimately do the job

of building wealth. Over a 10-, 20- or 30-year investment horizon

it is likely you will experience some permanent capital loss. It is

worth pointing out though, that by far the biggest “loss” would

be an approach to investing which tries to avoid any form or loss

whatsoever, and where the investor is underinvested in higher

return assets such as shares for long periods of time.


Extended investment time horizons are the primary fallback for any

investment portfolio. The ability to let investment returns average

out over long periods of time means that you increase your odds

of success just by remaining invested, as any short-term anomalies

(eg Russia/Ukraine conflict, Nenegate, rising inflation) are overrun

in time by the return generators underpinning a portfolio: earnings,

dividends and income yield.

As an industry though we don’t do ourselves any favours here.

“Long term” is often perceived as five years, for instance. This is not

a long period of time: five years ago, we were uncovering the Gupta

leaks, Jacob Zuma was still president and Steinhoff was about to

make the headlines. Tested properly, “long term” should rather be

defined as 30 years. This is a period which allows the short- and

medium-term dynamics which shift portfolio values to average

out to a more “reliable” outcome – something closer to what a

product provider offers with their warranty system. The trouble

is most investors are not aligned to this period in holding their

financial service provider accountable.

When we consider portfolio

construction, we are assessing the

potential to lose capital permanently.

More often it is short-term, recent events which raise questions

around performance. This can induce investment decisions

without fully considering the real long-term implications.

It is easy to agree that longer-term horizons are safer or

lower risk, than shorter-term horizons, particularly when

considering investments such as shares. The difficult part is

acknowledging as such, and factoring this in when evaluating

portfolio returns.

For instruments such as bank deposits or money market

funds, there is relative certainty in terms of investment outcome

over short horizons such as six or twelve months, which is

distinct from the capital risk within (these assets are tied to just

a handful of banks for example – a poorly diversified portfolio

structure which would be higher risk in that sense).


A particularly cryptic investment term is that of “volatility”. Risk

is often equated with this term to demonstrate how unreliable

returns are. This is not really an accurate way to define risk either.

Given two options, which is the higher risk portfolio?

1. A portfolio consisting exclusively of rand-based loans

to Eskom which only require paying back in a decade’s

time, or

2. A portfolio consisting of 2 000 global shares ranging

from Microsoft to Apple to Alibaba?

Eskom bonds run at around half of the volatility of the global

equity portfolio. Does this mean they are half as risky? No, it

doesn’t. The diversification of a wide range of equities, held

across different geographies and industries provides substantial

risk management benefits, provided you have the longer-term

perspective to recognise as such. Relying on a single issuer, such

as Eskom, can spell disaster for an investment portfolio.

There are numerous other examples here as well: investors

looking for low risk often end up invested in local income funds,

where the return profile is consistent and appears to provide

stability; ultimately the underlying assets rely on South Africa

trading as a going concern, the rand maintaining a decent level

of value, and the economy continuing at a sufficient pace to






Upside without the

downside is the perfect

sales pitch for any

investor, but rarely

does this ring true.

allow debt issuers to repay their loans. This is quite a narrow set

of major events which all need to remain intact, unlike the global

equity portfolio which can weather many a storm and still retain

value for investors.

It is not the short- or medium-term variability of portfolio

values which characterises risk, but rather the likelihood that

you, as an investor, get to earn the return you seek. The higher

that likelihood, the lower the risk.


Unfortunately, while the industry does not offer warrantees

as standard fare on its investment services, it does tend to

create attractive products which rely on the risk aversion/

wealth-seeking investor desires. Upside without the downside

is the perfect sales pitch for any investor, but rarely does this

ring true. Products such as hedge funds and many structured

products can sound attractive at first, by promising positive

returns without the downside. If this were the case, wouldn’t

all investor assets have migrated there by now? Most often

the risks are just a little opaquer, and the costs higher, often

offsetting what benefit there may be.


Back to our service versus product conundrum. The investment

industry offers a long-term service, best measured over three

decades to provide a warranty-level of comfort to investors.

Investors are hoping for shorter-term certainty and are often

poorly communicated to by the industry. This conflict is the

source of enormous amounts of industry effort to help align

expectations, but “never the twain” shall meet.

As service providers to investors, we can start by

communicating better and the topic of “risk” is one such

example of a potentially damaging concept which, when used

without due regard for its impact, can cause harm to portfolios.

As a financial planner, asking yourself and your client simple

questions can help mitigate the real risk in investing:

• Is your client’s portfolio adequately


• Do you and your client recognise

the potential cost of being too


• Are you and your client being

objective about your client’s

portfolio when markets are behaving


• Does your client fully understand the

implications of changes they or you

wish to make to their portfolio?

Better awareness of, and co-existence

with, investment risk will result in better

investment outcomes. Guaranteed.

Peter Foster, Chief Investment

Officer, Fundhouse

38 www.bluechipdigital.co.za


Your company’s

biggest asset is

its people.

At Liberty Corporate, we are in the business of caring for people.

That’s why our team of highly skilled business development

managers and specialist advisers will consult with key people in your

organisation to ensure that the solution we design for your company

will benefit the people who work there. Because people are the heart

of our business and yours.

Speak to a Liberty Accredited Financial Adviser or

Employee Benefits


Liberty Group Limited (Reg. no. 1957/002788/06) is a licensed Life Insurer and an Authorised Financial Services Provider (FAIS no.2409). Terms and Conditions, risks and limitations

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or visit our website.




Choosing a


Fund Manager

(and platform)

Florbela Yates, Head of Equilibrium

Advisors are continuously partnering

with discretionary fund managers

(DFMs) for a variety of reasons. The

main reason cited by advisors being

the lack of time. South Africa has one of the

most regulated investment industries, which

means advisors are spending more time on

compliance and less on doing what matters

most – giving advice and spending time

with their clients. By recognising that their

value rests in evaluating clients’ personal

circumstances and determining their unique

needs, advisors are increasingly partnering

with investment experts to ensure that their

clients’ investment needs are consistently

met. The partnership with a DFM not only

saves the advisor an enormous amount of

time, but also ensures that all the investment

considerations are met.

At Equilibrium, our range of services

includes strategic and tactical asset allocation,

strategy optimisation, risk management,

manager research, fund and mandate design,

portfolio optimisation, as well as consolidated

reporting. We take care of everything to do with

investments for our advisor partners. By using




our consolidated monthly fact sheets and quarterly investment

reports advisors can speak with conviction about the performance

and expected returns from the various portfolios. Essentially, we

become an extension of their advice practice.

Advisors often cite the fact that we save them time as one

of the key advantages of using a DFM. This is because we

essentially become their personal investment team – taking

on all the investment functions, from constructing portfolios,

getting them loaded on their preferred platforms, managing

both the rebalancing and compliance, as well as running the

investment committees. The industry has a huge shortage of

key individuals (KIs), and this is one of the biggest challenges

that the regulator is facing with the proposed licensing

requirements under the Retail Distribution Review (RDR). To

have full oversight, KIs cannot be “rented” out. They need to

have sufficient time to ensure that they really can provide

oversight. Therefore, the days of a KI on multiple licences will

soon be over. At Equilibrium, we are delighted to be able to

contribute to the industry as a whole by offering supervision

for other Category II businesses who want to get their own

licences. Does this mean we are growing

competitors? Yes, it does. But in our

experience, these Category II advisors

do not always have the full set of

capabilities necessary to cater for their

client needs. They benefit from being

able to use their own Category II licence

to create certain efficiencies (for example moving from model

portfolios to funds, or fund of funds, to specifically address their

CGT issues) and other investment needs.

One of the most pleasing trends that we have seen, is how our

clients have remained invested and have not de-risked despite

the volatility in markets. But still a concern is that advisors in

general are using too many LISP platforms. Partnering with a

DFM may simplify their practices to a certain extent, but unless

they consolidate the number of platforms on which they load

their solutions, they will battle to harness the benefits that come

from partnerships. The two key issues being advisors’ ability to

access better platform pricing and to ensure that the platforms

they use deliver on their clients’ objectives.

As an independent DFM, we are available on nine platforms

– Glacier, Allan Gray, Momentum Wealth, Ninety One, Stanlib,

INN8, Old Mutual, PPS and AIMS. There are others on our watch

list, and we would consider adding them provided they meet

two main criteria: the first is our ability to execute effectively and

the second is the demand for that platform from independent

financial advisors.

The open architecture platforms (like Glacier, Stanlib and

Momentum Wealth) give us access to a larger range of funds,

We take care of everything

to do with investments

for our advisor partners.

making it easier to add additional funds that we want to use,

which is essential to our function as a DFM. Being part of a

larger group allows us to approach Momentum Collective

Investments (the group MANCO) to package solutions for us

that are not available to the average retail investor. Having

said this, we have great relationships with some of the more

closed platforms, like Allan Gray and Ninety One, who load our

preferred funds.

But from an advisor perspective, it makes sense to partner

with one or two platforms. Advisors are then in a position to

negotiate better fees and limit the complexity that comes with

different constructs and fee classes across platforms. We have

recently seen another bout of consolidation across the advisor

industry both locally and globally, especially in the UK. Advisors

who use fewer platforms are getting higher multiples on the sale

of their practices. I believe that using more than three platforms

is a disadvantage. For advisors with smaller assets, it makes

sense to limit to one or a maximum of two platforms.

It is also important to ensure that the platform strategy

aligns with the advisor’s strategy. Succession planning is

important not only for the advisor’s

practice but for future generations of

investors. How is your chosen platform

positioned for the future, and to be

future-proof? Is their technology built

in-house or have they partnered with

external technology experts, and can

the technology cater for your needs and future scalability?

Ninety One and Allan Gray are examples of platforms

building technology themselves, whereas Momentum Wealth

have partnered with a leading global wealth management

provider, FNZ.

I recently asked Hymne Landman, head of Momentum

Wealth and Momentum Wealth International, why they

chose to partner with FNZ. The main reason is to leave the

commoditised functions of a platform to the experts like FNZ,

and rather focus on the additional value that Momentum

Wealth can add to the lives of our advisors and DFMs, now

and in the future. This allows us to focus on understanding

and meeting the ever-changing needs of advisors and their

practices, and doing this exceptionally well, says Landman.

Combine this with international best practice and you have a

winning formula.

Regardless of which platform or DFM you choose, as an

advisor it is important that you truly buy into the partnership

and that it is going to be sustainable. Make sure that your

partners have the tools available to help you keep your clients

invested, offer competitive pricing and the level of reporting

that meets your needs.

Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg no 2007/018275/07) is an authorised financial services provider (FSP32726)

and part of Momentum Metropolitan Holdings Limited, rated B-BBEE level 1.




Imagine the future

Albert Einstein famously once said, “Imagination is

more important than knowledge.” He emphasised

the fact that great physicists often had to draw on

their imagination, in addition to knowledge, to help

make sense of the world.

This holds true in the world of investing as well. We live in

a world where an over-abundance of knowledge is available

at our fingertips. We spend an inordinate amount of effort

analysing past and current market information to make

sense of what is going on in the world around us. But it is the

application of our knowledge to manage risk and return in an

uncertain future that really matters most.

It’s the future which is key to everything concerning our

investments. How that future plays out will determine whether

we will have adequate savings when we retire… or not. Moreover,

the future path of investment returns will also determine the

longer-term income prospects of many retirees such as owners

of Investment Linked Living Annuities (ILLAs).

We might not be able to foretell the future, but we can

imagine it. In doing so, we need to build retiree portfolios that

aim to protect their hard-earned savings as far as possible and

provide investment returns that beat inflation over the short to

medium term. Consistent real returns (above inflation) at lower

levels of volatility are important for most retirees, especially in

the early years of retirement.

Not all investors have the luxury of taking a long-term view

We all agree that, over time, one would expect more volatile asset

classes (such as equities) to provide higher real returns than less

volatile asset classes (such as bonds or money market deposits).

When we are young and in the early stages of our retirementsaving

careers, market volatility can mean buying assets such

as shares at lower prices whenever the market takes a dip, so

early-stage savers can afford a long-term view to help accumulate

retirement savings.

However, things change as we approach or enter retirement

and become net sellers of assets. During a market downturn,

many ILLA owners may need to sell some of their investments

at lower-than-expected prices to maintain a desired level of

income. Selling more assets than expected leaves one with less

capital to fund future income. Even if markets rebound, you

may still experience a lasting negative impact on the ability to

maintain your planned levels of income.

It is the sequence of returns that is important. By this, we

mean that the order of up markets and downturns matters when

you are in the early stages of retirement.

Let’s look at the example of two hypothetical ILLAs that are

invested in two investment portfolios with the same average

performance and standard deviation over a 15-year period, but

with a different sequence of returns.

In both examples we assume an initial 100 lump-sum

investment, with the following additional assumptions:

• Investment portfolios. 5% per annum inflation (CPI), 9% per

annum return (ie CPI+4% per annum), 9% per annum standard


• ILLAs. 7% income draw in year one, increasing by CPI+1% every

year thereafter.

Chart 1: Portfolio A

Chart 1: Porolio A










Portfolio A has better returns in the early years followed

by a patch of mediocre returns. This means that the income

drawdowns in the ILLA are initially able to be funded by selling

Portfolio A assets at higher prices, resulting in a higher-thanexpected

ILLA balance after 15 years.

Chart 2: 2: Porolio Portfolio B B








































































By contrast, in spite of the same risk and return over the

15-year period, Portfolio B has weak returns in the early years

followed by more robust returns. In this instance, the ILLA

income was generated by selling Portfolio B assets at lower

prices in the early years, resulting in a much lower-thanexpected

ILLA balance after 15 years. Once again, please note

that these are two hypothetical examples to help illustrate

the potential impact of sequence risk. To manage this

sequence risk, the underlying investment portfolio should

aim to achieve consistent inflation-beating returns. One way









CPI+4 : Portfolio




B : Portfolio


CPI+4 : Portfolio




B : Portfolio


42 www.bluechipdigital.co.za




to achieve this is through a lower-risk multi-asset portfolio

with active asset allocation. When we have an inflation-plus

targeted return over a shorter term, such as three years, we

need to look beyond strategic asset allocation models that

are typically based on long-term return expectations. With

active asset allocation we adopt a dynamic, shorter-term

and forward-looking process. Ranges of expected asset class

returns are considered, based on current market knowledge

and projections into the foreseeable future. Asset class

exposure is then composed in such a way that we believe

we have the best likelihood of meeting our near-term real

return targets, while best avoiding potential downside risks.

Expected asset class return ranges and asset allocation are

consistently reassessed and adjusted as our knowledge of

the markets change.

How to imagine the future

Unfortunately, we are not clairvoyant and, on top of that, we are

all prone to the usual human behavioural biases that tend to

push us all towards herd mentality. When considering the future,

it therefore becomes highly important to follow a rigorous and

unbiased process. Scenario analysis is a great way to imagine

the future.

When implementing a scenario analysis framework for asset

allocation, you would typically start off by identifying the

primary drivers of return for any particular asset class. Based

on your knowledge of these drivers, you can then formulate a

positive, negative and base case scenario for changes in these

drivers and asset classes over the foreseeable future.

It is important to keep your scenarios within the realm

of reasonability and to consider both positive and negative

outcomes. Scenario analysis is a robust and elegant way to

formulate and stress test your

expectations of the future.

It is difficult to make your money

grow under all market circumstances,

but we believe that the ability to

understand sequencing risk combined

with regular stress testing of asset

allocation can assist in producing

consistent real returns over time.

Matrix manages a range of

multi-asset funds with real return

targets. Please consult your

financial advisor to evaluate their

suitability for your portfolio.

Jean-Pierre Matthews, Head of

Product, Matrix Fund Managers

Our comments are of a general nature and cannot consider your specific risk profile or your legal, tax or investment requirements.




Good news

for the

South African


Petroleum Agency South

Africa is enabling oil and

gas discoveries to kickstart

investment and growth.

Massive new gas finds off the coast of South Africa

and the positive interest shown by international

investors in the oil and gas sector have brought

good news for country’s citizens.

In the shadow of loadshedding and global energy price

spikes brought on by domestic state capture and Russia’s war

on Ukraine respectively, South Africans can be pleased that

new resources are being found nearby and there is a plan to

use them effectively.

The economic effect of the most recent finds off the coast

of Mossel Bay alone will be significant if they are marshalled

in a coordinated manner (see box).

New certainty in the regulatory environment and hard work

by Petroleum Agency South Africa (PASA), the agency which

evaluates, promotes and regulates oil and gas production

in the country, has seen increased interest in South Africa’s

potential as a destination for investment dollars.

The fact that TotalEnergies was willing to bring an expensive

oil exploration rig all the way to Mossel Bay from Norway more

than once is an indicator of the seriousness with which this

oil major is treating the South African project. TotalEnergies

is a 45% shareholder alongside Qatar Petroleum (25%),

CNR international (20%) and Main Street, a South African

consortium (10%).

Actually drilling the gas and delivering it via a pipeline to

PetroSA (the national oil company which runs Mossgas) and

Eskom (the national utility) will cost a lot more money, and

that is where several subsectors within the national economy

will benefit the most. In effect, the decision to go ahead and

commercialise the gas find will create a new market for gas in

South Africa.

The massive resources of natural gas that Renergen has been

working on for the last few years reached commercial production

in October 2022 in the northern Free State. Renergen, through

its subsidiary Tetra4, is the only holder of an onshore petroleum

production licence issued by the Department of Mineral Resources

and Energy through the PASA. The production rights area covers

187 000 hectares around the towns of Welkom, Virginia and


Liquid natural gas for the domestic market and helium

for export from this project will create an entirely

new stream of energy options.

Most offshore exploration interest tends to

come from foreign investors because of the high

costs but within South Africa, there is a growing

number of local participants.

A women- and black-owned company,

Imbokodo, is making a name for itself as a

participant as a shareholder in a number

of licensing rounds.

False narrative

“I wish that as South Africans we can have a

holistic debate around our energy mix,” says Dr

Phindile Masangane, CEO of Petroleum Agency






n and right and environmental authorisation

in Mossel Bay to full production and

t jobs. applications when the exploration

n and right and environmental authorisation profitability, saving about 1 200 direct jobs.

ment right expires, or earlier. The agency

t jobs. applications when the exploration A complete shutdown and abandonment

ad to expects the licensee to use worldclass

technologies and standards to

ment right expires, or earlier. The agency of this refinery would not only lead to


ad to expects the licensee to use worldclass

technologies and standards would to reverberate throughout the town of

job losses at the refinery, but the effects

wn of minimise the effects of the gas and


egion, gas condensate production on the

wn of minimise the effects of the gas Mossel and Bay and the Southern Cape region,

ut R2- environment, while maximising the incountry

benefit or local content from

egion, gas condensate production on since the the refinery contributes about R2-

el Bay

ut R2- environment, while maximising the billion incountry

benefit or local content economy, from and 6% to the Southern Cape

a year, or 26% of the Mossel Bay

Cape this development to support South

el Bay

acity. Africa’s economic recovery.

Cape this development to support South economy when producing at full capacity.

Africa These discoveries could indeed support

acity. Africa’s economic recovery. The Petroleum Agency South Africa

gas both the country’s economic recovery and

Africa These discoveries could indeed support awaits the licensee of these gas

ction its transition to a clean energy future.

gas both the country’s economic recovery discoveries and submitting its production

ction its transition to a clean energy future.




right and environmental authorisation

applications when the exploration

right expires, or earlier. The agency

expects the licensee to use worldclass

technologies and standards to

minimise the effects of the gas and

gas condensate production on the

environment, while maximising the incountry

benefit or local content from

this development to support South

Africa’s economic recovery.

These discoveries could indeed support

both the country’s economic recovery and

its transition to a clean energy future.

International investors


South Africa, of the heated debate about sources of energy


supply. “We do need to OIL diversify AND GAS our energy mix.”

A binary choice is often presented between renewable

energy technologies and fossil fuels. A recent report published

by the International Energy Association (IEA) argues against

framing the debate in that way.

Both can and should be used, according to Africa Energy

Outlook 2022. A key factor in allowing Africa to continue to

industrialise will be an uptick in the discovery and use of gas.

If all the gas so far discovered in and off Africa was used, the

continent’s share of global emissions would rise by 0.5% to 3.5%.

“We should not be brought into a false narrative and a

false choice,” says Dr Masangane, in agreeing with the report’s

conclusions. “It can be both and that is what this report is

in Mossel Bay to


full production


and right and environmental authorisation

profitability, saving about


1 200


direct jobs. applications



out that

the exploration

Mossel Bay to full with production South and Africa’s excellent

A complete shutdown and abandonment right expires, or earlier. The agency

profitability, saving about 1 200 direct jobs.

of this refinery would solar not resources only lead to expects it makes the licensee sense to use localise worldclass

technologies and standards to

the solar value chain

A complete shutdown and abandonment

job losses at the refinery, but the effects

to boost manufacturing, of this refinery but would the not country only lead to

would reverberate throughout the town of minimise the effects of the gas and

should not ignore

job losses at the refinery, but the effects

Mossel Bay and the Southern what Cape it has. region, “At gas the condensate same time, production we on know the

would reverberate throughout the town that of the gas value

since the refinery contributes about R2- environment, while maximising the incountry

benefit in or local country, content from so let’s also capitalise

Mossel Bay and the Southern Cape region,

billion a year, or 26% chain of the is Mossel well Bay established

since the refinery contributes about R2-

economy, and 6% to the Southern Cape this development to support South

on that.”

billion a year, or 26% of the Mossel Bay

economy when producing at full capacity. Africa’s economic recovery.

economy, and 6% to the Southern Cape

The Petroleum Agency The South multiple Africa uses These discoveries of gas could indeed play support

economy when producing at full a capacity. major role in helping

awaits the licensee of these gas both the country’s economic recovery and

The Petroleum Agency South Africa

discoveries submitting South its production Africa its transition to a away clean energy from future. fossil fuels while at the

awaits the licensee of these gas

same time boosting discoveries economic submitting growth. its production “We need gas not

just in electricity and transport,” noted Dr Masangane, “but

International investors

importantly for South Africa, which is in desperate need

International investors

of an economic turnaround, is for us to use this gas for our

manufacturing industry.”

right and environmental authorisation

applications when the exploration

right expires, or earlier. The agency

expects the licensee to use worldclass

technologies and standards to

minimise the effects of the gas and

gas condensate production on the

environment, while maximising the incountry

benefit or local content from

this development to support South

Africa’s economic recovery.

These discoveries could indeed support

both the country’s economic recovery and

its transition to a clean energy future.


The gas discoveries that have been made off the coast of South Africa (near Mossel Bay), when linked with the massive finds off

the coast of Mozambique and the enormous potential that exists in fields off the Namibian coast, amount to what could become

a seachange in the regional economy. TotalEnergies and its partners have deployed the Deepsea Stavanger offshore drilling rig,

pictured passing Table Mountain on its way to work off the coast of Mossel Bay, and they have achieved significant successes. The

two fields where finds have been made are called Luiperd (where 2.1-trillion feet of contingent gas resources has been found,

enough to power a medium-sized city for five years) and Brulpadda (1.3 Tef), which are part of Block 11B/12B.

If this gas were to be piped to the existing gas-to-liquid plant at Mossel Bay, Mossgas, then instead of spending about

R12-billion on decommissioning the plant, the facility could instead start generating R22-billion in taxes and royalties and

save South African taxpayers R26.5-billion through not having to import oil and refined products.

PASA estimates that the gas found in these blocks could produce 560-million cubic feet per day of gas for more than 15

years. TotalEnergies’ expenditure on stream phase one could amount to $3-billion in 2027 and create 1 500 direct jobs, 5 000

indirect jobs and increase the country’s gross domestic production by R22-billion.

The plan is to run the gas via a pipeline to a new fixed steel platform, and from there to use the existing pipeline to get

the gas to Mossgas. Up to 18 000 barrels per day of condensate and 210-million cubic feet per day (MMcfd) are expected to

be pumped to the facility. Gas condensate is a hydrocarbon liquid stream separated from natural gas and is used for making

petrol, diesel and heating oil.

Credit: Anton Swanepoel

petroleumagencysa.com Petroleum Agency SA @sa_petroleum Petroleum Agency of South Africa @petroleumagency







Why bargain hunters should be

shopping in Europe, not the US.

Value stocks in Europe are the “unloved of the unloved”,

but they have offered more growth than growth

stocks. Here, three charts tell the story.

The value investor has become something of an

endangered species over the last decade, pushed to the sidelines

of a market fixated on seeking never-ending growth in areas

such as technology.

The underperformance of the value investment style has been

much discussed, and – barring a relatively short rally this year –

mostly painful for deep value investors such as us on the value

investment team at Schroders.

The result is a wide chasm in the valuations of the cheapest

shares and the most expensive. This has not gone unnoticed.

Indeed, one of our favourite columnists in the FT recently,

Robert Armstrong, said, “Value stocks look like a heck of a value

right now!” He pointed out that the ratio of the price/earnings

(P/E) multiples of growth and value stocks in the US was now

at a 20-year low. This is true and compelling. But there is a place

where the differential is even more pronounced: Europe. And

what’s most surprising of all, is that – counterintuitively – Europe’s

cheapest companies have been delivering higher profit growth

than Europe’s most expensive companies.

Three charts that tell the story

The first chart looks at the valuation dispersion between growth

and value in Europe, using data from Morgan Stanley that combines

three valuation measures: price/earnings, price/book (P/BV) and price/

dividend (P/Div).

While the similar value spread in the US is undoubtedly cheap,

the data in Europe is eye-wateringly so. Europe has gone lower

than the dotcom nadir around the turn of the century and the

recent bounce still leaves a very long way to go.




Valuations of value vs growth are still near all-time lows

The two points above show that there are similar broad

themes in the US and Europe, but that they’re more extreme in

the latter. However, the chart below is what makes the first two

points seem completely crazy. It shows the earnings-per-share

growth of Eurostoxx value and growth indices.

Value shares have outgrown growth

Source: Morgan Stanley. 21 June 2022.

While this makes the relative case for value in Europe, let’s not

forget the absolute one. Taking the MSCI Europe indices as a blunt

proxy for European value and growth, we see that the broad MSCI

Europe index is trading on 12-month forward P/E ratio of 15.4,

MSCI Europe Growth is on 20.1 and MSCI Europe Value is on just

10.8 (according to data from Bloomberg).

A forward P/E ratio is a company’s share price divided by its

expected earnings per share over the next 12 months. Using

slightly different data from Eurostoxx, we see value shares in

Europe are currently trading on lower PEs than they were five years

ago (see below).

Source: Schroders

It has been a brutal few years for cheap stocks in Europe.

There are very few, if any, parts of developed market equities

that the market is so pessimistic about that they’ve de-rated

over the last five years – whether in absolute or relative terms.

(A derating is when the P/E ratio of a stock contracts due to a

bleak or uncertain outlook.)

Just to really put the boot in, the US’s Russell 1 000 value index

is on a 12-month forward P/E of 16.5, while the equivalent in

Europe is on around 11. This enormous differential shows that

a cheap stock in the US is held in much higher regard than a

cheap stock in Europe; value stocks in Europe are the unloved

of the unloved.

Source: Bloomberg. Schroders as at 13 January 2022.

Over the last five years, Europe’s cheapest companies have

delivered more profit growth than their growth counterparts.

This is a distinctly European phenomenon and isn’t what you

see in other developed markets such as the US, where you have

some premium profit growth from growth stocks.

Cynics could say that this is down to the effect of starting from

a low base, as the chart starts in 2017 just as the mining cycle

turned positive. But we’ve ran this over multiple time periods,

and you get the same result.

It is also worth noting that the favourable earnings profile

for value was in place before the Covid-19 pandemic.

It’s not all driven by the profit rebound, commodity inflation

and interest rate benefits that have boosted value following

the pandemic.

So over that five-year period the real growth stocks in Europe, in

terms of fundamentals at least,

have been the value stocks.

Bring this all together and

there’s a compelling reason

to believe value in Europe

is looking attractive, almost

through absolute valuations,

record levels of relative

valuation discount to growth

and positive relative earnings

momentum. This isn’t really a

widely shared view, however.

Indeed, looking at investor

flows and allocations, Europe

is one of the most overlooked

equity markets in the world.

Perhaps not for long.

Ben Arnold, Investment Director,


For professional investors and advisors only. The material is not suitable for retail clients. We define “professional investors” as those who have the appropriate expertise and knowledge eg asset managers, distributors and

financial intermediaries. Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.

Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The

value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise.

The views and opinions contained herein are those of the individuals to whom they are attributed and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.

in England and Wales) which is authorised and regulated in the UK by the Financial Conduct Authority and an authorised financial services provider in South Africa FSP No: 48998




Is there still a

place for Hedge

Funds and

why should FPs

be interested

in them?

Bateleur Capital1 was founded 18 years ago

in 2004 as a fund management company. In

January 2005 we launched our first hedge

fund with R11-million in invested capital.

The reason we opted for a hedge fund as our initial

investment offering was twofold – firstly, the

overriding objective was to protect investor capital

and the hedge fund structure was the most suitable

vehicle to achieve this; and secondly, the flexibility afforded by

a hedge fund meant we were largely unconstrained in terms

of our investment opportunity set.

Since inception in January 2005, the Bateleur Long Short

Fund2 has exceeded its investment objectives. The fund has

compounded at 14.6%3 per annum net of all fees, well ahead

of the JSE All Share Index total return of 13.3% before fees. To

put this into context, R1-million invested in the Bateleur Long

Short Fund in 2005 is worth R11.1-million today.

Importantly, these returns were generated at significantly

lower levels of volatility than the overall equity market. The

Bateleur Long Short Fund‘s volatility has averaged 7.8%4 since

inception compared to 17.7% for the JSE All Share Index. The

fund’s worst single calendar year was during the financial crisis

in 2008 when it declined 4.8%. In the same year, the JSE All

Share Index fell 23.2%. Although Bateleur Capital has over time

expanded its product offering beyond hedge funds and now

directly manages more than R9-billion of assets across flexible,

long only and global mandates, the attractiveness of hedge

funds as an investment vehicle is more relevant and compelling

today than back in 2005. Some of these reasons include:

Capital preservation

If managed according to their strict definition, hedge funds

are designed to protect capital. This can be achieved in many

ways, but the most common approach for equity hedge funds

48 www.bluechipdigital.co.za




is through managing the net equity exposure so that the

hedge fund’s returns are not overly correlated to the equity

market. The net exposure is managed via the use of shorting

individual equities, shorting indices or by using a wide range

of derivative structures. Shorting individual equities is not

readily available to most conventional long only equity funds

and is a key competitive advantage for hedge funds. Our

experience is that capital preservation in periods of market

stress leads to outperformance over the long term.


Depending on their approved mandates, hedge funds offer the

investment manager an unconstrained opportunity set. For

example, if the manager was optimistic on the South African

equity market, the hedge fund might have more than 100% of

the fund’s NAV invested in local equities (by using leverage).

Conversely, if the manager was negative on South African

equities as an asset class, the fund may be net short local

equities. These are extreme examples but highlight the flexibility

available to hedge funds.

Of course, it is critical that this flexibility does not jeopardise

the overriding capital preservation objective of the hedge

fund. The two objectives should be managed symbiotically

and not individually.


Advisors can access a multitude of hedge funds across several

asset classes such as equities, fixed income and commodities.

Each fund offers unique risk, return and capital preservation

profiles which in many instances have low correlation to

traditional long only funds. Having access to funds with low

correlated returns will help advisors build portfolios for all

market conditions.

Established industry with full regulatory oversight

The industry has grown up. There are several funds, like ours, that

have been around for 15 to 20 years which allows investors to

evaluate performance through numerous macro events such as

the global financial crisis and the Covid pandemic. These funds

are run by established and respected investment managers

backed by sizeable teams and significant infrastructure. In

addition, since 2015, hedge funds have been regulated under

the Collective Investment Schemes Control Act. Investors should

accordingly have as much confidence in the oversight and

protection of assets as they do any traditional unit trust.

Liquidity and platform availability

Another key difference between 2005 and now is that hedge

funds are becoming more readily available on LISP platforms

with daily pricing and liquidity. Back in 2005 they were not

available on any platforms and there was only monthly pricing

and liquidity available. In addition to accessibility, the LISPs

also provide an additional filter/due diligence on the broader

funds in the market.

If managed according to their

strict definition, hedge funds are

designed to protect capital.


In 2005, hedge funds were renowned globally for charging

high management and performance fees. The key allocators to

the industry in South Africa were the hedge fund of funds, who

charged additional fees. The net result was the underlying investor

was incurring sizable annual management and performance fees

when expressed as a percentage of the fund’s total return. This

practice has changed materially led by the shift away from the

hedge fund of funds industry. Presently, many South African

hedge funds can be accessed at management fees like traditional

unit trust funds. While performance fees are still common, they are

often only generated after surpassing far stiffer hurdle rates than

historically, with a high-water mark principle applied.

Caveat emptor

Despite the positive points highlighted above, it is important

to emphasise that not all hedge funds are created equal. It

is crucial for advisors to do their homework on the different

range of hedge funds available, their approved mandates, their

appointed fund managers and their long-term track record. It

is especially key to understand how the historical hedge fund

returns have been generated – was it through fund manager skill

or leverage? If it was through high or excessive leverage, then it

could indicate that the fund may suffer significant drawdowns

in a challenging market environment.


At Bateleur Capital, we are firm supporters and proponents of

hedge funds. Almost 18 years of history operating in this space

supports our positive stance. We are currently appointed as the

fund manager for three different regulated hedge funds: the

Bateleur Long Short Fund referred to earlier, the Bateleur Market

Neutral Fund5 and the Bateleur Special

Opportunities Fund6. While all three

of these hedge funds have different

mandates and risk/return profiles, they

all have an overriding objective of

protecting investor capital.

From inception to the date of writing,

all three funds have generated strong

absolute net returns in excess of the JSE

All Share Index at substantially lower

volatility. This clearly advocates our longheld

view that the right hedge fund has a

relevant role to play for financial advisors,

especially in the current uncertain

investment environment.

Kevin Williams, CEO and

CIO, Bateleur Capital

1. Bateleur Capital (Pty) Ltd is an authorised financial services provider, FSP No. 18123 2. Bateleur Long Short Prescient RI Hedge Fund 3. Returns have been calculated using the

published fee class from January 2005 to August 2022. The growth of R1m invested in 2005 is based on the published fee class with distributions reinvested. Past performance is not

necessarily a guide to future performance. 4. 30-Day rolling volatility as calculated by Bateleur. 5. Bateleur Market Neutral Prescient QI Hedge Fund 6. Bateleur Special Opportunities

Prescient QI Hedge Fund




For those who

believe, no


is necessary

For those who do not, none will suffice.


significant amount of progress has been made since

hedge funds first became regulated under CISCA in

2015. The regulatory overhaul did not bring about an

immediate increase in the popularity of hedge funds,

however, especially considering the benefits they can offer

investors. At first it was mostly due to their inaccessibility, but

nowadays one can choose between a list of leading hedge funds

on LISP platforms.

Scepticism among financial advisors remains, with fees

and complexity at the top of the list of concerns for those

advisors who haven’t made an allocation to hedge funds yet.

The mere fact that these concerns have been voiced, means

that we are at least having the dialogues necessary to get to

the next step – debunking the myths and misconceptions

regarding hedge funds.

Deciding which hedge fund to invest in is similar to choosing

what type of car to buy. Just like you get sedans, SUVs,

hatchbacks, trucks, etc., there are many different hedge fund

strategies to choose from. Some of the different hedge fund

strategies include fixed income arbitrage, macro, event-driven,

commodity trading, market neutral and long/short equity. The

latter strategy makes up the lion’s share of hedge funds, both in

South Africa and globally. It is also the most “vanilla” of all hedge

fund strategies – long/short equity funds buy the shares they

expect to go up in price (like traditional equity funds), and, in

addition, short the shares they expect to fall in price.

One misconception that still exists, is that all hedge funds

following the same broad strategy are comparable. In practice,

even if two funds both follow a long/short equity strategy,

there might still be a difference in terms of their risk profile.

Some hedge funds will rise more than the market during a

bull market cycle but might have deeper drawdowns during

a bear market. Others attempt to deliver equity-like returns

with lower volatility, participating in most (but not all) of the

upside during a bull market, while limiting deep drawdowns

in a bear market. In other words, some hedge funds are return

enhancers, while others are risk diversifiers. It is therefore

imperative to understand what the specific hedge fund’s

objective and risk profile is before investing, to avoid an

expectation gap.

South African hedge funds are arguably the most

regulated in the world, which means information regarding

FSCA-approved hedge funds is readily available. Minimum

disclosure documents for hedge funds are generally

available on the hedge fund manager’s website and include

transparency on fees and performance. Another benefit to

financial advisors who want to include hedge funds in their

client solutions or model portfolios, is that a LISP platform

would have performed additional due

diligence on those hedge funds available

on the platform.

The South African hedge fund industry

passed the R100-billion mark in June

2022, but it is still only a fraction of the

size of the traditional unit trust industry.

Nonetheless, broader adoption of hedge

funds is growing, as investors become

more comfortable with the nuances of the

industry. By educating themselves about

the benefits hedge funds can offer, financial

advisors are solidifying the key role they

play in ensuring better client outcomes.

If you aren’t a believer yet, now’s the time

to take another look at hedge funds – feel

free to contact Protea Capital Management

if we can assist in this regard.

Edrich Jansen, Head:

Business Development,

Protea Capital Management

50 www.bluechipdigital.co.za





The South African investment industry is a dynamic and world-class

industry that we as South Africans can rightly be proud of.

Over the years, it has evolved and adapted to be the

custodian of the savings and investments of a broad array

of citizens and businesses and as such plays a critical role

in shaping the South African economy and landscape.

As part of the broader world of global investments, the local

industry has evolved in consequence to global developments but

also importantly in service of our homegrown needs.

Over the last few decades, we have seen the rise of boutique

and specialist asset managers, and tracking and index funds

have taken off. Over the last few years there has also been

an increase in smart beta funds, which are funds that are

managed passively but are based on algorithms to pick stocks

and investments that have specific characteristics, including

value, growth and momentum.

During this period, we have also seen the systematic relaxation

of exchange control and as a result different approaches have

developed to manage the offshore portion of South Africanbased


The announcement by the finance minister in the February

2022 budget speech, further relaxing exchange controls

whereby up to 45% of retirement funds can be invested in

offshore assets, is both a continuation of a longer-term trend

but also now makes offshore assets one of the most material

exposures within a portfolio.

As a result of the changes to exchange control over the

years, we have seen asset managers adopting and evolving

their models of managing their offshore assets, from a

simple allocation to an offshore mandate and manager,

to setting up offices overseas and partnering with global

investment managers.

I fully expect that, with the current levels of permissible

global exposure, the need for offshore partnerships will increase

materially as the global investment landscape dwarfs the local

investment arena. It is unlikely that a local asset manager

can realistically manage the offshore component of their

assets without setting up substantial offshore operations and

52 www.bluechipdigital.co.za




partnering with a global player that has the requisite strength

and resources to create a credible offshore offering.

At Momentum Investments, we have done both. Our

global operations are based in London under the brand

Momentum Global Investment Management (MGIM) and we

have partnered with Robeco, based in Amsterdam, to give us

access to their well-known and regarded financial engineering

and smart beta skillsets.

We will see the details of how the South African investment

industry adapts to the relaxation of exchange control, which

poses both an opportunity and a threat to the local industry.

At the moment, based purely on geopolitical risk and slightly

better valuations in the South

African market, there has not yet

been a large-scale movement of

assets offshore. Over time as global

geopolitics stabilises or achieves

some form of new normal and the

current inflationary and growth

risks subside, I expect that asset

managers will start to allocate

more capital offshore.

This will reduce the size of the pool of domestic-based

investable assets in the South African markets, which are

likely to impact how our local markets operate. Over the

years we have seen a significant uptick in the ownership of

local assets by foreign investors and their continued support

and investment in our markets will be a critical factor to the

continued health of our markets. As such, maintaining the

highest standards and reputation of the local financial industry

is critical as we navigate through the implications of this.

In this process there will be winners and losers. As an

investor, it will be important to keep an eye on the sustainability

of the asset managers that are used.

Sustainability is the other trend that has gripped the global

and local industry. I prefer to use the word sustainability as it

encapsulates the environmental, social, and governance (ESG)

trend that is currently all the rage. Just reading or watching

the news gives an insight into why ESG is so important.

The floods in the US and droughts in Europe are placing

a key focus on the challenge of climate change. The term

sustainability captures the broader scope of what we

need to balance when considering ESG factors. The real

impact of ESG is to balance the various facets in a way

that considers the practical realities of what we need to

prioritise and achieve.

We are the custodians of our clients’ money first and

foremost and need to deliver returns. To do this responsibly,

we need to make sure that our business is sound and in good

financial health and also take into account the sometimesconflicting

aspects of ESG. For example, a singular focus on

one factor, the environment, can have social impacts over the

As an investor, it will be

important to keep an eye on

the sustainability of the asset

managers that are used.

short term on communities that depend on traditional power

production methods for their livelihoods. This is why we

support the Just Transition, which means that as we consider

climate action, we also need to take into account the social and

people implications of the needed energy transition.

Clearly not addressing climate change has significantly

longer-term social implications, that absolutely do need to be

addressed. Europe was at the forefront of climate action until

the roll-over effects of the Russia/Ukraine war posed risks to

European energy security. As a result the role of nuclear and

coal is being reconsidered, at least in the short term, which risks

undoing the progress made. Hence the need for a sustainable

and considered approach to

addressing ESG.

Another area that is a focus for

the asset management industry is

that of infrastructure investment.

There is a dire need for significant

investment in infrastructure in our

local economy. The government

does not have sufficient resources

to realise the scale of development required and as such needs

to crowd in the private sector.

There are many considerations that must be taken into

account when we invest in infrastructure. Our investors need

an appropriate return on investment, there is a trust deficit with

government and a new compact and way of work needs to be

established, and with the relaxation of exchange control a big

chunk of South African-based assets is going to be invested

offshore, thereby reducing the available capital.

Another consideration is liquidity – infrastructure investments

are illiquid. This means that the level of exposure that we invest

in our portfolios needs to be carefully calibrated taking into

account a wide variety of portfolio management considerations.

We need to invest in accordance with our mandates that

reflect the needs and desires of our clients. This requires a

spread of asset classes and appropriate diversification within

asset classes to achieve a prudent spread

of desired risks and sufficient levels of

liquidity. The consequence is that the

level of infrastructure investments in

portfolios will likely be conservative.

The South African asset management

industry is an exciting, dynamic and everevolving

industry. There are a myriad of

challenges and opportunities that we

need to consider when investing our

clients’ money with the due care and

skill that has been entrusted to us. This

is a charge that the industry, Momentum

Investments and myself take very seriously,

because with us, investing is personal.

Mike Adsetts, Deputy

Chief Investment Officer,

Momentum Investments

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




Retirement income

planning reimagined

The biggest financial decision that many people face when they retire is how best to use their accumulated

retirement savings from approved retirement funds to provide them with a sustainable income in retirement.

Traditionally, the choice was between a life annuity and

a living annuity, each with its own unique features

and rules. Even if people decide to use some of their

retirement savings to purchase a life annuity and some

to invest in a living annuity, they may end up with two separate

retirement income products that can make it difficult to manage

their income during retirement. There is a better way for financial

advisors to help their clients plan and structure their finances

when they retire to solve the need for certainty and flexibility.


We have enhanced our living annuity product, the Retirement

Income Option on the Momentum Wealth platform, to help clients

structure their retirement income plan better. They no longer

have to choose between the certainty of a life annuity and the

flexibility of a living annuity – clients can have the best of both in

one retirement income solution.


This hybrid structure introduces richer advice opportunities for

financial advisors. With traditional solutions, the relationship

between the advisor and client in many cases reaches the

end phase once the client chooses the life annuity. There is

therefore a single point in time where advice is required.

Contrast this with a world where clients’ needs can be better

met by blending a life annuity with a living annuity. In this structure

the life annuity becomes one of many components that a client

can choose from within a living annuity. Financial advisors can

continue to be involved in advising clients during their retirement

years – for example about how to manage expenses in the context

of returns, when to protect income and how much to protect. By

allocating a portion of their retirement savings to a life annuity

component within their living annuity, financial advisors can help

their clients personalise their income plan by helping them decide:

• How much of their retirement savings they want to use to cover

their essential “life expenses”.

• How much they want to use for flexible “living expenses”.

This product enhancement will help financial advisors and

their clients make more informed decisions about their retirement

income planning.

Clients can choose to allocate a portion of their retirement

savings to the new Guaranteed Annuity Portfolio that will pay a

guaranteed income for as long as they live. At the same time, they

have the investment flexibility to benefit from potential growth

from investment markets and the possibility to leave a legacy, all

in one living annuity.

The Guaranteed Annuity Portfolio is a life annuity, which is

available as an optional investment component to clients starting a

new Retirement Income Option or who already have a Retirement

Income Option.


We understand that a client’s investment is not just another

investment – it’s something personal – and 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.

By blending the best of both worlds

– the income certainty of a life annuity

and the investment flexibility of a living

annuity – we are partnering with financial

advisors to help clients:

• Structure and implement suitable

income solutions when they retire.

• Optimally manage their income during

retirement to cater for changing

income needs.


Our blended product solution gives

people the best of two worlds: the

flexibility of a living annuity that can

give clients investment growth and

the certainty of a life annuity that pays

them a guaranteed income for life.

With our new Guaranteed Annuity

Portfolio financial advisors can help their

clients make the rest of their life, the best

of their life.

It’s retirement reimagined.

Fränzo Friedrich, Head of Marketing,

Momentum Investments

Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider. Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered

credit provider (FSP 6406). The Retirement Income Option and the Guaranteed Annuity Portfolio are life insurance products, underwritten by Momentum Metropolitan Life Limited, a licensed life insurer

under the Insurance Act and administered by Momentum Wealth (Pty) Ltd. The information in this article is for general information purposes and not intended to be an invitation to invest, professional advice

or financial services under the Financial Advisory and Intermediary Services Act, 2002. Momentum Investments does not make any express or implied warranty about the accuracy of the information herein.




Do you have the Will

to secure your client’s

financial future?

There is much talk about building generational wealth

as a society, yet very little guidance on how to do

so. As a wealth manager and life insurer, we have a

dire responsibility towards providing these guiding

principles and ensuring that consumers have access to the right

tools, products and services to enable such wealth and that they

are given the right advice to build their wealth.

More so, we are intrinsically “liable” to ensure that the

wealth we are helping create for our clients can be passed

on responsibly to their future generations. Traditionally, this

has meant providing the right products – whether that’s

investment, long-term insurances or the like. However, we

must think deeper – clients have worked hard for their wealth

so how do we ensure that we help them decide now, what will

happen to it later?

Estate planning is a crucial consideration in the wealth mix

and is often overlooked by consumers.

It is our responsibility to enforce good estate planning

principles, such as ensuring clients have a valued, signed and

securely stored will. Not only does this guide loved ones on

how assets should be distributed, avoiding a stressful process

for the family, but also ensures that they can avoid wealth

leakage through exorbitant inheritance taxes. The updating

of their will at key life stages is crucial, ensuring it is valid and

correct so that assets are split according to their wishes and

that the document is safely stored and accessible for when

the family needs it. Too often, wills are tucked away but today

technology offers us the opportunity to digitally store it with

other important documents and to provide access for the

family to these documents.

It is not just about the paper though – when it comes to estate

planning, the costs of winding up an estate and the immediate

costs that are associated with death are often overlooked. For

example, the average cost of winding up an estate is around

3.5% plus VAT of the gross value of the assets. This type of cost

needs to be worked into the investment planning to ensure that

the money a consumer thinks their family is getting is realistic.

Furthermore, with death comes funeral costs and today these

start at around R15 000 and go all the way up to R100 000 or

more. Even if you are at the upper end of the earning spectrum,

let’s be honest… a R100 000 funeral can set most people back.

Therefore, we need to encourage consumers to ensure

that they are planning properly for the unforeseen – that

they have life and funeral cover in place to protect their

family’s financial future. This aids with not only living costs

and obligations but with creating a buffer for the wealth one

has created.

We are now seeing growth in products that offer a “bit of

both” ie life and funeral insurance together in one product

(Pure Life Plus), with this combination in the more affluent

market witnessing a higher sum assured. We have also

identified the need for more tailored products specific to

certain diseases – ensuring that customers are paying for

something that is more likely to happen instead of paying a

premium for products that are unlikely to result in claims. This

will significantly change the status quo in certain product

lines and those insurers who get it right will then have very

unique and competitive products to offer the market – based

on actual needs.

As consumers are pressed to conserve their budgets

while still delivering on their families’ financial futures

– a combination product such as 1Life’s Pure Life Plus is

creating a more cost-effective yet suitable way to manage

their wealth. Some policies that allow

for multiple covers and benefits may

also offer savings on premiums for

additional covers. For example, in our

environment, consumers can save up

to 28% on their premium compared to

taking multiple stand-alone policies.

Today, estate planning is not a nice

to have, it is fundamental if we hope to

preserve wealth for future generations.

As a financial advisor and life insurer, we

can play an active role in ensuring that

we are a) providing the right products

to meet changing budgets b) providing

the right advice and c) creating access

to technology and tools that enable

effective and sound financial planning

and that future-proofs their families’

generational wealth.

Kobus Wentzel, Head of

Distribution, 1Life Insurance



When it Comes to Conviction

Investment, “Quality Will Out”

Attractive returns with risk control can be a reality.

But it requires conviction investing, bottom-up analysis

for quality and a rigorous discipline in valuation.

Global Equity investing is about setting the widest possible horizons,

freeing yourself from artificial boundaries and following your strategies

wherever they lead.

Nomura Asset Management (NAM) is a leading global investment

manager and, with $463 billion¹ assets under management, we take

a truly global view – a vision which lies at the heart of our flagship equity

fund – the Global High Conviction Strategy (GHC).

The fund is managed on a day-to-day basis by the London-based investment

team. The team manages $4.5 billion 2 in global equities.

We define our Nomura Global High Conviction Fund as a ‘Quality-Core’ strategy,

with a bottom-up approach. This is to say the investment style is agnostic and

not restricted or defined by sectors or geographies; nor is it distracted by short-term

market trends or fluctuations. The team is driven by one thing only, to seek out Quality

companies trading below their intrinsic values.

Our Philosophy of Conviction

The GHC philosophy of quality investment is underpinned by four key criteria – companies

must meet all these metrics to be considered for the GHC portfolio:

• Competitive advantage

• Consistent cash returns

‘Companies that meet these criteria can sustain strong returns over long time periods and they are far less likely to suffer

irreversible declines in profitability. We use a proprietary model to identify stocks with strong and robust cash flow. This

quality is often missed by the wider market and this creates the opportunity for our philosophy,’ says Francis Paxton, who

oversees distribution of GHC into the South African market.

The quality philosophy means GHC looks across the global universe of stocks, applying a ‘core’ approach, and

unconstrained by any growth vs value overlay. ESG (Environmental, Social and Governance) factors are embedded in

the selection process and unsustainable investments are screened out entirely. Quality, as an investment philosophy, is

distinct from Growth and Value approaches, and allows GHC to function as a ‘Core’ style, combining both Value and

Growth stances.

Refining for Quality

• Skilled management

• A history of attractive returns on capital

These filters narrow down the global equities markets to about 250 stocks that are in the NAM investment list. GHC then

goes a step further and identifies only those stocks with significant upside to fair value. The team discusses in detail the

profile of every potential investment and pinpoints a highly concentrated portfolio of about twenty stocks selected as

high conviction quality investments.

GHC buys into these equities at discount valuations – when prices are below long-term fair value. The

strategy then realises profits as the equities return to exceed that fair value, generating cash to reinvest in

the next quality opportunity. The aim is to be fully equity invested, but GHC does not shy away from

temporarily holding cash when necessary – the philosophy is to buy quality stocks when

they are under-priced, not to buy for the sake of buying.


Beating the Benchmark

The outperformance of quality stocks has been a feature of global markets for decades.

The MSCI’s Quality Index has outperformed the MSCI World Index by 2.5x over the last 40 years 3 .

Market prices have regularly under-valued quality stocks in periods of turbulence.

Performance of MSCI World Quality relative to MSCI World

















































Source: Bloomberg and Nomura Asset Management. This chart shows MSCI world Quality total return index divided by MSC World total return index

rebased to 100.

‘It is this market inefficiency that gives us the opportunity to buy at a discount valuation for all of the $5bn our team

manages. We invest at below the intrinsic value of companies and the result is attractive alpha with strong risk controls,’

says Francis Paxton. The team has a quality bias, and they never move away from that. Clients know what they have

invested in, which Nomura believes is very important.

The team’s shared philosophy, underpinned by a rigorous analysis and valuation discipline, allows GHC to target threeyear

rolling average returns of 3-5% (gross of fees) above the benchmark MSCI All Country World Index.

‘Our team never lose sight of the core quality factor, because behind the markets’ fluctuations and the trends for sectors

and geographies it is quality that counts in the end,’ says Francis Paxton.


1) As at end of June 2022, Nomura Asset Management.

2) As at end of July 2022.

3) Source: Bloomberg, Nomura Asset Management.


This document was issued and distributed by Prime from sources it reasonably believes to be accurate.

The information in this report is not intended in any way to indicate or guarantee future investment results as the value of investments may go down as well as up. Values may also be affected

by exchange rate movements and investors may not get back the full amount originally invested. Before purchasing any investment product, you should read the related risk documentation in

order to form your own assessment and judgement and, to make an investment decision.

The fund is a sub-fund of Nomura Funds Ireland plc, which is authorised by the Central Bank of Ireland as an open-ended umbrella investment company with variable capital and segregated

liability between its sub-funds, established as an undertaking for Collective Investment in Transferable Securities under the European Communities (Undertakings for Collective Investment in

Transferable Securities) Regulations 2011. The UCITS fund is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be

contrary to law or regulation.

This is a marketing communication. Please refer to the prospectus and to the KIID before making any final investment decisions.

The prospectus, key investor information document (KIID) and other fund related materials are available in English and, for the KIID, in the official language of the countries in which the fund is

available for distribution on the Nomura Asset Management U.K. Ltd. website at https://www.nomura-asset.co.uk/fund-documents/

Nomura Asset Management U.K. Ltd. is authorised and regulated by the Financial Conduct Authority.

A summary of investor rights in English and information on collective redress mechanisms are available at https://www.nomura-asset.co.uk/download/funds/how-to-invest/Summary_of_

investor_rights.pdf. Nomura Asset Management U.K. Limited may at any time decide to terminate arrangements it may have made for the marketing of units of a fund in a state other than its

home member state.

The sub fund has been approved by the Financial Services Conduct Authority (FSCA) as a section 65 fund. Prime Collective Investment Schemes Management Company (RF) (Pty) Ltd (“Prime CIS”)

is a registered Collective Investment Schemes Manager in terms of Section 5 of the Collective Investment Schemes Control Act (CISCA) and the South African representative office for this fund.

Please refer to the MDD of the fund on the Prime Website (www.primeinvestments.co.za) for more information about the fund and a full disclaimer specifically related to South African investors.

SFDR Disclosure

The EU Sustainable Finance Disclosure Regulation (“SFDR”) requires investment firms to formalise how sustainability is integrated into their business and processes, and to make new public

and client-facing disclosures on sustainability matters. The aforementioned disclosures relating to Nomura Asset Management U.K. Limited are published on our website at https://www.

nomura-asset.co.uk/responsible-investment/esg-sustainable-investment/. Product related disclosures regarding Nomura Funds Ireland Plc and its sub-funds can be found in the prospectus.

Nomura Funds Ireland – Global High Conviction Fund is an Art. 8 fund according to SFDR.




A partnership worth its weight in gold

Welcome to a world of complete financial flexibility. Bringing back the gold standard,

with state-of-the-art technology taking gold out of the dark and into the light.

For over 50 years, we have brought the most popular gold

bullion and numismatic (collection of coins) products

to South Africa, and we are constantly evolving to

find a future that redefines gold ownership for all. In

2021, we recognised the innovation of Troygold’s Fractional

Ownership Technology, which allowed clients to access their

gold holdings on an app and save and spend with a single tap.

As a result, we have continued to build our relationship with

Troygold, the non-bank for gold believers.

This collaboration was motivated by Troygold aligning with

our belief that gold is for everyone. Troygold is building financial

tools for gold owners, allowing customers to save, spend and now

access liquidity. Co-founders, Dane and Bastiat Viljoen, saw a gap

for a technology-led solution that would extend financial services

to physical gold owners.

Troygold is shaking up the gold value chain by introducing the

Troygold Loan Facility. Holders of physical gold can now transact

and borrow within the secure ecosphere of the Troygold app and

accompanying Mastercard. Today, Troygold is bringing back the

gold standard, with the client in control.

How does this work? Troygold clients will be able to access cash

instantly – have immediate cash liquidity on hand, secured by your

gold holdings as collateral (up to 75% credit to holdings value

ratio and interest-only monthly repayments). In addition, a bank

cheque account is also included – a world-first gold monetisation

Gold has a 6 000-year track record as a

safe store of value and is the only money

that carries no counterparty risk.

and payment platform. This cheque account is sponsored by

AccessBank SA and allows spending at 40-million-plus locations

with no monthly bank account fee.

What does this mean for The South African Gold Coin Exchange

& The Scoin Shop? This exciting product from Troygold and our

continued teamwork allows us to offer new and meaningful

benefits to our clientele with whom we have built trusted

relationships for over half a century. Our collaboration created an

instant retail store network of physical on-ramps into the digital

Troygold platform. The Troygold loan facility means we can offer

new solutions to our clients who have become accustomed to

gold coin collecting, introducing continued innovation to reshape

the industry and advance the relevance of gold in the digital age.

Gold has a 6 000-year track record as a safe store of value

and is the only money that carries no

counterparty risk. In a volatile world,

gold offers a haven asset that always

maintains value. However, most gold sits

in the dark in vaults and in safety deposit

boxes. Troygold has engineered a way to

“light up” that gold with utility and turn

it into something gold owners can use

for day-to-day transactions and finance.

This agreement will enable a broader

market to save and transact in fractions

of gold. This is particularly appealing,

especially since gold is a finite resource

that has stood the test of time and is free

from the uncertainty and volatility of fiat

currency and cryptocurrency.

Rael Demby, CEO, The South

African Gold Coin Exchange &

The Scoin Shop

58 www.bluechipdigital.co.za



We buy, sell, store and appraise.

Our team of experts will assist with the insurance and logistics

of collections and deceased estates.

Trust the market leaders with 50 years of experience.





ETF investing:

why and how?

The Johannesburg Stock Exchange (JSE) announced

in early September that actively managed exchangetraded

funds (ETFs) will be allowed to list from October

2022. This is a notable milestone for the ETF industry in

South Africa. ETFs are an efficient wrapper that can make a wide

range of investments easily accessible to all types of investors.

This news once again reminds us why we describe the rise of

ETFs as “the democratisation of investing”.

The market for ETFs has exploded in recent years as

institutional and retail investors seek to diversify their

portfolios while keeping costs in check. However, given the

wide range of funds available, many investors are apprehensive

about how these funds work and where to start.

In this article, we’ll unpack some of the ways that wealth

managers use ETFs in their clients’ portfolios.

For example, an investor may choose to have a core exposure

to South African equities while boosting yield income by adding

South African property and bonds as satellite investments.

They can then enhance diversification by including satellite

investments into global equities, global property and global

bonds. This example is illustrated below, however there are

many more possible iterations. For example, an investor may

want to have meaningful allocations towards Asian equities, the

US tech sector or a theme such as electric vehicles.

CoreShares Investment Managers

CoreShares Investment Managers

ETFs are generally liquid funds, which means that multi-asset strategists

can tilt their portfolios to express tactical views cheaply and easily. Broad

market exposures can also be upweighted or replaced by sector-specific

views and/or thematic ETFs as needed.

ETFs are simple, accessible and appropriate for all types of

investors and can play a number of important roles in all

portfolio types.


When constructing a portfolio with financial goals in mind,

the first place to start is asset allocation – deciding how

much to allocate towards different types of assets. In this case,

ETFs focused specifically on the individual exposures can be

used as building blocks to create a bespoke portfolio. These

products offer a simple, efficient and cost-effective way to gain

exposure to entire asset classes, sectors, themes or regions.


Passive ETF in the core

Another common approach to using passive ETFs in a portfolio

is the “core-satellite” model. By using ETFs in the “core” of their

portfolio, an investor instantly achieves low-cost, broad-market

exposure and diversification. This is a cost-effective and simple way

to accurately implement asset allocation decisions, while avoiding

any style drift that might creep in when using an active manager.

Once the core investment – or building block – is in place,

the investor may seek outperformance by adding satellite

investments – for example, high-conviction stock picks or even

actively managed funds.

60 www.bluechipdigital.co.za




CoreShares Investment Managers


In addition to forming long-term holdings in the core, the

satellite or as building blocks in a multi-asset global strategy

(as seen in the use cases 1 to 3 in this series), ETFs can also be

used very effectively as portfolio management tools for other

purposes. For example:

• Tactical tilting

• Short-term equitisation of smaller cash flows

• Transition management

• Liquidity sleeve

• Immediate and/or short-term access to theme or geography

while completing the research to make high-conviction single

stock or active manager selections

• And many more…

Under this approach, the investor blends both active (stock

picking) and passive investment strategies (ETFs) to build a lowercost

portfolio that can deliver outperformance (alpha) relative to

pure market returns.


Passive ETF in the satellite

By contrast, many portfolio managers find themselves

managing a long-term basket of high-conviction stock picks for

an investor; however, for a variety of reasons, the portfolio may

not be entirely suitable for current market conditions or the

immediate needs of the investor. In these situations, ETFs form

handy satellite investments which are built around the longterm

share portfolio in the core, to tweak the overall portfolio

for the desired purpose. For example, an investor may require

a higher yield than that currently offered by the long-term

share portfolio, in which case the portfolio manager can add

higher yielding asset classes such as bonds or property ETFs

for example. Alternatively, the portfolio manager might have

a high-conviction tactical market view on a particular asset

class, sector or theme, which can easily be accessed via an

ETF and added to portfolio as a satellite investment.

The market for ETFs has exploded in

recent years as institutional and retail

investors seek to diversify their portfolios

while keeping costs in check.

Credit: CoreShares Investment Managers

CoreShares Investment Managers

In summary, ETFs are used by

a wide variety of investors in

many ways. Research shows

that investors who start to

use ETFs will, in almost all

cases, go on to use them more

extensively, in larger sizes and

in more ways than one. They are

efficient and cost-effective tools

that “do what they say on the

tin” and we will continue to see

widespread adoption in South

Africa, as we have globally.

Michelle Noth, CFA, Client

Coverage Executive, CoreShares

Investment Managers







How much of a recession is needed to tame inflation? We look back at how inflation

responded in previous downturns to help gauge the scale of the adjustment

in growth and unemployment needed to tame it this time around.

Since the last interest rate move by the Federal Reserve

(Fed) on 27 July, investors have taken a more optimistic

view of when the central bank can bring monetary

tightening to a close. Markets are now pricing in a “Fed

pivot” in late 2023, when the central bank is expected to cut

interest rates. Two factors have supported the move.

First, Jerome Powell, chair of Federal Reserve of the United

States (US), has said that US interest rates are now neutral,

indicating that the initial adjustment from the ultra-easy

pandemic policy is over and that future rate decisions will be

taken on a meeting-by-meeting basis depending on the data.

Second, that data shows the economy cooling as retail

spending and housing slow. The latest GDP figures showed the

US economy contracted in the first two quarters of the year and

although they overstate the weakness of the economy, final

demand clearly softened.

However, despite signs of slowdown the likelihood of a more

pessimistic outcome on policy, where interest rates must remain

higher for longer, has significantly increased in our view. The

obstacle to a Fed pivot is the high level of underlying inflation

and the strength of the labour market, as evidenced by the

latest employment report which showed a significant increase

in payrolls and a further fall in unemployment.

An analysis of past cycles shows that it would be a rare

achievement for an economy which is so late in its cycle to bring

inflation back to target without a fall in activity, or an outright

recession. In our view, it would be better if the Fed took a leaf

out of the Bank of England’s playbook and acknowledged this,

rather than projecting soft landings.


The rapid rebound in the US since the economy reopened from

Covid restrictions last year has taken activity above its long-run

trend, as evidenced by a tight labour market and high-capacity

utilisation rates in industry. At 3.5% the unemployment rate is

well below estimates of equilibrium, or the Non-Accelerating

Inflation Rate of Unemployment (NAIRU) (the lowest level of

unemployment that can occur in the economy before inflation

starts to rise). The Congressional Budget Office (CBO) put this at

4.4% in the second quarter. Meanwhile, CPI inflation has risen

to 9.1%, its highest level for 40 years. Relative to previous peaks

since 1960, the current position compares with an average CPI

inflation rate of 6.1% and an unemployment rate 0.5% below the

NAIRU (Chart 1).

Chart 1: US inflation and unemployment – today versus previous cycles

Source: Refinitiv, NBER, Schroders, 1 August 2022. 605742

62 www.bluechipdigital.co.za




Chart 2: Growth – inflation trade-offs during recessions

Source: Refinitiv, NBER, Schroders, 1 August 2022. 605742

The US is clearly late in its cycle and as signs of slower growth

come through, we would argue that the economy probably

reached a peak relative to trend in the current quarter.

How much of a slowdown in activity is needed to bring the

inflation down?

To help answer this we have looked back at previous peaks in

the cycle to gauge the effect of the subsequent contraction in

output on unemployment and inflation.

According to the NBER, there have been nine previous

occasions since 1960 where the economy has been at a peak.

In each case the economy then went into recession, before

troughing out several months later. The last such contraction took

place between February and April 2020 – the shortest recession

on record.

Prior contractions in the US since 1960 have lasted between

six and 18 months and are more typical of what we might expect

going forward. Looking at those eight cycles, the average fall

in GDP was 1.6% from peak to trough and the unemployment

rate rose by 2.5 percentage points (pp), moving from below to

above the NAIRU. On the CPI measure, inflation fell by 1.5 pp

on average.

There was a wide range of experience, with inflation falling

by more than average during the “Great Recession” of 2007-09

and the second “Volcker” recession of 1981-82, when GDP fell

3.8% and 2.5% and inflation by 5.5 and 6.2 pp respectively. The

worst outcome in terms of the growth-inflation trade-off was

1973-75 when, despite a contraction of 3.1% in GDP, inflation

rose 2%, a severe case of stagflation (see Chart 2).

So how does this relate to the current position? So far, we

have seen that a significant fall in GDP has been needed to bring

a major fall in inflation. For example, a six pp fall in CPI inflation

from current levels to 3% would require a decline in GDP of just

over three pp based on the two major recessions mentioned

above. In terms of the impact on jobs, the unemployment rate

would rise by around four pp to 7½%.

From this perspective, the Fed’s projected soft landing

where growth slows to just below 2% and inflation falls below

3% in 2023 looks like wishful thinking. However, before we

dismiss the Fed’s forecasts completely, we need to dig deeper

into the current high CPI inflation rate. Are there reasons to

believe that inflation may come down more easily, ie with less

output loss or a smaller increase in unemployment?

To start, commodity prices have played a significant role in

boosting inflation. If we strip these out, then inflation on the

Fed’s preferred measure (the core PCE deflator) is running at

5.2%. A fall in inflation back to 2% from here would be less

onerous. However, the sensitivity of core PCE inflation to changes

in GDP is also lower. For example, in the two major recessions

cited earlier the impact of GDP on inflation is more than halved,

so we would still need a three pp fall in GDP to generate a fall in

core inflation of just over 2%.

Nonetheless, that would still bring inflation closer to target.

Would such a downturn in the US also lead to lower commodity

prices, helping to drive headline inflation down further? In the

past a US recession could be expected to trigger just such a

fall as global demand weakens, but today the outcome would

be very dependent on how the world economy adjusts to the

www.bluechipdigital.co.za 63




potential loss of Russian supply. It is possible that shortages

keep oil (and commodity prices in general) elevated, even

with a US recession.

So far it looks as though a significant slowdown

in GDP will be needed to hit the Fed’s inflation goals.

However, our historical comparison does not capture the

structural changes in the world economy over the past

60 years. The success in keeping inflation low and stable

for a considerable period of time means that inflation

expectations remain well anchored.

One of the reasons inflation proved so stubborn during

the 1970s and early ’80s was the pick-up in wages which

followed the initial spike in inflation. Subsequent secondround

effects kept inflation high as wages and costs rose.

To a large extent this reflected a lack of belief in the ability

of the authorities to bring inflation down.

Chart 3 shows that inflation expectations (both short

and medium term) were elevated in the late 1970s

and when combined with strong trade unions and

labour bargaining power, it was not surprising that pay

accelerated and the economy entered a wage price spiral.

Consequently, unemployment had to rise significantly to

bring wage growth down.

Chart 3: Faith in the Fed? Inflation expectations rise short term but not further out

Source: Refinitiv, University of Michigan, Schroders, 2 August 2022. 605742

Today the picture is different, although short-run

inflation expectations and wage growth have picked

up with the tight labour market, medium-term price

expectations remain stable. Short-run expectations,

which tend to be sensitive to the price of gasoline, have

risen, but over five years households expect inflation to

be close to target. If sustained, this bodes well for the

labour market adjustment; unemployment need not rise

as much if wage growth is contained.

Greater central bank credibility

and possibly lower commodity

prices could help bring inflation

down faster than in the past and

at less cost in terms of output

and employment. However, the

fundamental problem remains:

the US economy and much

of the world is late cycle and


Monetary policy is a blunt

instrument in these circumstances,

with central banks being forced to

tighten until unemployment rises

and sufficient slack is created. In

our view, this would point to a fall

in GDP of around 2% from peak

to trough, less than in the Great

Recession or Volcker era, but still

significant and more than the

current consensus of economists.

Keith Wade, Chief Economist and

Strategist, Schroders


To achieve this the Fed will have to tighten further and take

interest rates above their current view of neutral. Rates will be

higher for longer, but that does

not mean tightening relentlessly

until unemployment is 6% or 7%,

for example. The lags from higher

rates to the economy mean that the

Fed should proceed cautiously as

the full impact is not felt for many

months later. In this respect there

is scope for a Fed pivot toward the

end of next year, with rates likely

to be easing as the economy falls

into recession.

Although the Fed’s options

are limited, it could take a leaf

out of the Bank of England’s

(BoE) book. The BoE has taken

considerable flack for forecasting

a significant recession in the UK

with inflation only moving slowly

towards target. However, no-one could argue that they have

not warned people, giving households and businesses a signal

to what is ahead.

In this respect it would be helpful if chair Powell and the Fed

stopped projecting a US soft landing. A look back at history shows

that such forecasts only give false hope and create a further

misallocation of resources. Politically this is difficult, but the earlier

households and firms can start to make the inevitable adjustments

the better.

64 www.bluechipdigital.co.za



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www.bluechipdigital.co.za 65




Will financial planners

ever be professionals?

In a recent article in Citywire, Stephen Cranston states that

“Financial advisors are not, and never will be, professionals

like doctors, lawyers and accountants.” He suggests that

financial planners don’t “go through years of university

training and articles” and that most financial planners join the

industry from one of the large agency forces where they have

received “great training” from the life offices in “sales and client

service skills”.

As a CFP® professional, I am disappointed by Cranston’s

comments. I work closely with many financial planners who

were lawyers or accountants in a previous career or have

completed their MBA, CFA or other postgraduate qualifications

and are CFP® professionals. Furthermore, universities now

offer degrees in financial planning and the CFP® professional

designation requires post-graduate study and work experience

akin to articles. But we only have around 3 500 practicing

CFP® professionals in South Africa, whereas according to

PI Financial Intelligence Services there are 11 750 financial

service providers (FSPs) and 197 000 representatives in South

Africa. Clearly there are many salespeople out there peddling

financial products under the guise of financial advice, which

provides some rationale for Cranston’s comments.

His comments are made in the broader context of an

article which considers the merits of financial advisors using

discretionary fund managers (DFMs). Cranston does suggest

that “realistically it makes sense for financial advisors to

outsource fund selection and asset allocation – unless they

belong to larger integrated practices which have a strong

investment management competence in their own right”.

However, for those financial planners who do use a DFM, he

questions their professionalism.

As Cranston says, “Financial advisors love to use the

analogy of the family doctor or GP. Following that logic, GPs

can write a script prescribing the medicine patients need

when they have flu, so equally advisors should be able to

take out their pad and ‘prescribe’ the medicines, or funds,

their clients need.” He goes on to say, “You would be puzzled

if you arrived at the GP’s office and he or she said: ‘We don’t

66 www.bluechipdigital.co.za




The two most important professions of the

21st century are, undoubtedly, the medical

profession and the financial planning profession.

believe in this practice that we have the competence to pick

prescription drugs, so I have hired a third party to do that

for us.’”

The analogy of the GP is wholly appropriate. Financial

planners require knowledge and skills to advise clients not

just on investments, but a range of matters from budgeting,

tax and estate planning, to long- and short-term risk

planning and healthcare. And these are just the technical

aspects of a financial planner’s job. The important human

aspect of financial advice, where a financial advisor helps

a client integrate their life and money decisions, is gaining

recognition with the inclusion of Financial Psychology in

CFP® curriculums around the world.

When a financial planner uses a DFM, it’s not like a

GP saying they don’t have “the competence to pick

prescription drugs”. Rather it’s like a GP using a specialist,

be it a cardiologist, physician or nutritionist. The financial

planner will determine what is needed from a client’s

investment and what would be an appropriate portfolio

to invest in, but it will be structured and implemented

using a specialist. In the same way, a GP may pick up

an anomaly in their client’s heartbeat, but they won’t

intervene in an area where a cardiologist is the specialist.

As most financial planners are GPs, they may use

specialists in other areas beyond investments, such as

tax consultants or fiduciary specialists. Importantly, in

the same way that a GP will collaborate with a medical

specialist about a patient’s condition, much collaborative

work happens between the financial planners and the

specialists they use. After all, the financial planner remains

the guardian of the client’s financial health.

As a follow-up to his Citywire article, Cranston tweeted, “I

hear the core job of the financial advisor is to talk you off the

ledge for 100 basis points a year. My psychologist can do the

same job for the equivalent of 0.05 basis points a year.” There

are many potential ledges that a client can find themselves

on, but I am assuming in this instance talking a client “off

the ledge” means preventing a client from capitulating when

markets are down, rather than doing something stupid with

their money like buying a fancy car they can’t afford.

If a financial planner can prevent a client from cashing in

their investments to lock in losses, then they are likely to be

saving a client a lot more than 100 basis points a year. Since

1984, independent investment research firm Dalbar Inc. has

published its annual Quantitative Analysis of Investor Behavior

report, which studies the returns that investors get versus

the returns of their investments. The study consistently finds

investor returns are materially lower than their investments.

The gap between the two is often referred to as the “behaviour

penalty” which according to the 2022 Dalbar study, was 3.5%

per annum over the last 30 years. In the short term, the gap

can be higher, as in 2021 when the number was closer to 10%.

No surprise given the uncertainty and stress that many clients

experienced during the Covid pandemic.

The 2022 edition of the Dalbar report concludes that

investment results are more dependent on investor behaviour

than fund performance. It seems there is some value to talking

clients off the ledge. I believe influencing a client’s behaviour

is a key part of a financial planner’s role but is most effective

once a long-term financial plan funded by a sound longterm

investment portfolio is in place. How much value does

influencing behaviour add? Vanguard estimates that a financial

planner adds about 3% per annum to a client’s portfolio, half

of which is through behavioural coaching while a 2021 paper

by Russell Investments puts the number at 2.02% per annum.

Ironically, the World Economic Forum (WEF), in its 2018

Future of Jobs Report, predicts that technology will make

accountants and lawyers redundant, as well as sales agents

and brokers. Financial and investment advisors on the other

hand are predicted by the WEF to be stable professions. This

is of course only if a key part of their role is “talking their

clients off the ledge”. Technology after all will do much of the

technical work for financial planners. In fact, Michael Kitces,

a leading US financial planner and commentator, has stated:

“The future of financial planning is not about dispensing

expert financial advice, but helping clients engage in financial

behaviour change.”

The role of a financial planner is so much more than writing

a prescription for investments or any other financial product.

It is about helping clients achieve holistic financial health

and this is where the analogy with the GP comes full circle.

The two most important professions of the 21st century are,

undoubtedly, the medical profession and

the financial planning profession. People

are going to live longer and they are going

to need their money to last longer. Nobody

would entrust their physical health to a

distributor of pharmaceutical products rather

than a doctor. Nor should they entrust their

financial health to a distributor of financial

products, but to a professional financial

planner who prescribes products rather than Rob Macdonald, Head of

sells them. That’s of course when they are not Strategic Advisory Services,

talking their clients off the ledge!



Dalbar Inc, Quantitative Analysis of Investor Behavior, 28th Edition

Stephen Cranston, “Investor Notes: How I’ve come around on DFMs”, Citywire, 9 September 2022

World Economic Forum, “The Future of Jobs Report”, 2018




CX changes everything

Unless you have a monopoly, customer experience, or

CX as it is sometimes referred to, is the single most

important thing that you need to get right for your

business to thrive. The difficulty is that it is pervasive

to your business and covers everything from your first contact

with the client to the last.

Think about your own experiences as a customer. Start

with companies where you had a poor experience. There are

many things that drive poor experience, but they are usually

tangible like bad products or shoddy service. Because of your

bad experience, you probably have not gone back to those

companies and, more importantly, you may have told your

friends and family about the poor experience.

By contrast, think of companies where you had a fantastic

customer experience. In these instances, it is possible that

it was something tangible that made it exceptional, but it is

equally likely that it was the way that you felt that made all

the difference. And I’m pretty sure that you returned to those

companies and referred some of your friends.

If you want to create great experiences for your customers,

all you need to do is think about your business from their

perspective. There isn’t sufficient space in this article to cover

all aspects of your CX, but let’s make this real by considering the

example of the first meeting with a potential new client who

has been referred by an existing client.

Are your offices easy to find? Is there parking nearby? Did

someone offer them tea, coffee or water? Was it good tea or

coffee? You don’t want their first experience to be awful coffee

– remember, your goal is for the client to want to return to your

office. Did you explain all the services that you offer?

By far the most important thing in a first meeting is whether

the client felt that you made an effort to understand their context

and the problems that they are trying to solve. Did you listen

or were you merely waiting to continue talking about yourself?

You need to apply the same logic when looking at every

touchpoint with the client. In some instances, your CX needs

to be very good, while in others it merely mustn’t be bad. That

If you want to create great

experiences for your customers, all

you need to do is think about your

business from their perspective.

might sound strange, but you must remember that this all

comes down to a return on investment, and you’ll find that the

return on a very expensive carpet is poor.

Even if you work through your entire business, you may

have blind spots that are important to your clients. Just think

of the famous example of the advisor who unexpectedly lost a

few older clients because they found his sofa too soft and were

too embarrassed to say that they couldn’t stand up. Therefore,

it is always a good idea to ask your clients for feedback on what

they do/don’t like about your practice.

A final thought is that you do not have enough time or

money to give all your clients the same fantastic experience.

This means that you need to segment your clients and ensure

that your C and D clients get a good

experience, your B clients get a

better (more expensive and timeconsuming)

experience, and your A

clients get the best experience.

In conclusion, great CX improves

client retention, increases referrals,

grows profit and enhances the

value of your business. In some

cases, you’ll need to implement the

right technology to do things like

communicating effectively with all

your clients. But the biggest changes

will come when you implement

new processes, upskill your staff and

change some of your habits.

Guy Holwill, Chief Executive

Officer, Fairbairn Consult

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In need of a crisis

Why do we so often wait for a crisis before we act?




Why do we wait for the day we get a health scare

like a heart attack or cancer before we decide to

change our lifestyle? Why do we push to the point

of burnout before we scale back a bit? Why do we

wait until our 60th birthday before we decide to start planning

for retirement?

When the oil magnate John D Rockefeller’s doctor was asked

to comment on how he lived to the age of 97 he revealed a skill

many of us can envy: “[he] gets up from the table while still a

little hungry”.

There is more than one reason why we don’t act. The

procrastination tendency is one for sure. What are the reasons

we procrastinate? Might it be because we do not know when

an event will happen?

If you knew without doubt that the next unhealthy meal

would be the last before a heart attack struck, would you

consume it? If an F1 driver knows that if he keeps on pushing,

his tyres will fail and he will be out of the race during the next

lap, will he keep on pushing? If we know that markets will

come crashing down after a big rally, would we leverage up

and buy more?

Deep down inside I would desperately like to think that all

of us would answer a resounding “no” to the questions posed,

I am not sure that will always be the case.

Even if we know something will happen, if we have not

experienced So, it before, will the even US still if we be have the largest read it, economy it is the exceptional over the next few

self-disciplined decades? that Will will China act take rather their than crown? react Will and Europe reach or for Japan more. wake up

Another again? reason And will why their we respective do not act markets when follow? it is so No-one clear knows, we even

need to, though doesn’t many come has down an opinion. to, “I just Either didn’t way, have buy a time low-cost to get index that

to it today.” references It simply the comes major stock down markets to priorities. and economies of the world. An

In essence, example, what the you Vanguard are saying Total World when Index you with are “so a fee busy, of only that 0.08% per

I just do annum. not have Buy the and time,” hold is for “this as long is not as possible. a priority at this point

of my day or The life, overall I will asset get to allocation it later when and in it particular is”. But, alas, the we allocation

rarely do. to bonds is a bit trickier. The average US 10-year bond yield in

If we 1980 redefine was 11.43%, the consequences versus the average of not prioritising, yield in 2020 we of 0.89%.

might be Remember able to change if yields the decrease, way we think bond about prices the increase, future and so this was

hopefully a aid phenomenal us in our decision-making bond bull market. process Could of rates when go to lower act. still?

Grant Possibly. Statham Are is an rates avalanche going forecaster to go consistently at Parks Canada. lower for His the next

title is descriptive few decades? in that Probably his job not. is to try to predict when, and

the severity The of, avalanches allocation to in bonds the park. and Statham bond alternatives has a definition versus equity

of risk that depend is worth on two contemplating. aspects that are intertwined. He describes Firstly, risk your as “the investment

likelihood period of something and secondly, happening your ability times to stomach the consequence volatility. The of longer

that event”. your He time goes horizon, on to ask, the “Are lower you your skiing allocation a large, to open bonds slope should be

or a short, and narrow the lower one? your Are volatility you skiing absorption in the trees threshold, or out the in higher the your

open? How allocation exposed to bonds are you should if an be. avalanche A quality occurs?” financial advisor should be

able to assist here with ease.

What are the There avalanches are alternatives you or your to traditional clients should sovereign heed bonds more in highyield

to? corporate bonds. Although the probability of default is


Will the higher avalanche than of their having sovereign no life counterparts, insurance cause so too a is family the expected

to be in return. enormous If, however, financial offshore difficulty bonds if it does are not happen? expected Small to provide

likelihood an on inflation-beating any given day, return but large in the consequence.

medium to perhaps even the

Will you long be term, in trouble are there at age other 60 tools if you a private have not investor spent any can access

time, up that until provide then, on some planning sort of for downside the future? protection High likelihood, with a higher

large consequence.

probability than bonds to deliver inflation-beating returns?

Will your investment portfolio suffer destructive consequences

if it is well diversified, and another Enron or Steinhoff event

happens? Low likelihood, low consequence.

One of the world organisations (not named here out of the

respect of the great work they do we), has a “top priority list” of

more than 100 priorities it aims to focus on. Having 100 focus

points is not a priority list, it is not even a shopping list, it is

more like a wish list.

Incrementalism is a philosophy

we should all have as

part of our arsenal.

What if we started to focus, but really focus our priorities

when it comes to dealing with clients?

What if we focus a particular year on just making sure the family

will be looked after if something happens with the primary

breadwinner? A laser focus. Will the probability that this task is

completed at the end of the year increase or decrease?

What if we make sure, this year, that our primary focus is

on making sure that the asset allocation of our investments

reflects our objective and ability to tolerate volatility? If that

is our primary focus, how likely is it to be “sorted” at the end

of the year? I believe the answer is yes.

Incrementalism A unit trust is portfolio a philosophy has the we obligation should to all provide have as liquidity part to unit

of our arsenal. holders whenever required. If I want to withdraw my funds, I put in a

The basis redemption of incrementalism request and have is to access improve, to my even funds if a it few is only days later (in

by a small most measure, cases). Hence, during management a particular of period, these funds and needs that this to be done

small improvement in such a way that will liquidity lead to big is readily changes available. over An time. individual What on the

would your other outcome hand has, be with if you the could right financial increase coach, returns, the through ability to take on

cost savings illiquid or positions. a better return, by something small as 5bps a

year, that is Structured 0.05%? notes that are designed to provide a high probability

If you of invest coupon R100 payments at 8% per year (quarterly, for 40 years, semi-annual your investment or annual) and

would be provide worth some R2 172.45 downside at the protection end of the can period. be a If, great however, alternative to

you earned traditional 8% in bonds. the first Individuals year, 8.05% have in the the option second, to take 8.1% advantage in of

the third, the etc, illiquidity your premium investment that would most retail be portfolio worth R3 managers 110.51 cannot.

at the end Constructing

of the investment the

horizon. core A 43% of any higher strategy outcome is

by improving literally net the returns centre by of a

minute the 5bps investment each year. process. (Given,

nothing The goes next up in steps a straight are the line,

except Bernie satellites Madoff’s that can fund, provide this

is however exposure to prove to some a point.) totally

The five-basis unique assets. point analogy Think is

not restricted infrastructure, to investments the green and

can be applied economy, to innovation various aspects and

of life. If disruption you sharpen and health your focus, and

concentrate wellness on to the name top a priority few.

for today perhaps With the even right this advice, year,

you will you not can need build a crisis something before Hannes Viljoen, CFA, CFP®,

starting truly to improve. special and Even unique if it is Hannes CEO and Viljoen, Head of CFA, Investments, CFP®, CEO and

only 0.05% to your this personality. year. Head Kudala of Wealth Investments, Kudala Wealth








Five steps to a



According to the South African Treasury, only six out of

every 100 South Africans will be able to retire comfortably.

And a recent BusinessTech poll shows more than a

third of middle-class South Africans aren’t putting any

money at all away for their retirement.

As a result, growing numbers of consumers are turning to

direct investments on online trading platforms to try to boost

their retirement savings – but it’s a high-risk strategy that

ignores the fundamentals of proper retirement planning, says

Dieter Schmikl, a financial advisor at employee benefits firm,

NMG Benefits.

“As more consumers get educated and digital, we hear many

stories of people making quick money trading forex or shares

online. But that’s not how you plan for retirement. The fact is

that if something sounds too good to be true, it probably is,”

says Schmikl.

So how do you get yourself on the road to good financial

health and a comfortable retirement? It’s a smart, measured

five-step process that looks after your priorities.

Step 1: Spend less than you earn

“Find a lifestyle that gives you the capacity to breathe financially,

and to enjoy the quality of life that you’re looking for, with

some money left over every month to save or put away for your

retirement,” says Schmikl.

Step 2: Take care of risk

If you can’t earn an income because of injury or illness, who’s

going to pay your bills and monthly obligations? Before you

save for anything else, make sure you have income protection

in place. It’s a critical part of any balanced financial plan, with a

long-term view to a secure retirement.

Step 3: Make provision for retirement

The biggest reasons that most South Africans can’t retire

comfortably is that they start putting away money too late

for their retirement, or they don’t put the right amounts away.

“Retirement funding is a numbers game. It’s critical to sit down

with an advisor and work out how much money you’ll need in

your retirement, how much you’ve got, and what the difference

is,” says Schmikl.

The rule of thumb is that of you start putting away 15%

of your earnings at the age of 28, you’ll be able to retire

comfortably at 65, with 75% of your earnings. The later you

start, the higher this percentage becomes.

If you don’t have enough retirement savings, crunch the

numbers. For every million rand you have in retirement savings,

you’ll get around R4 000 a month at sustainable draw-down

levels, increasing with inflation. “Ask yourself how much you

will you draw down per month to support your lifestyle. Can

you put away more every month? Or do you need to carry on

working for a few extra years? If your house and car are paid off,

you probably need less than you think,” says Schmikl.

Step 4: Look at short-term investments

“When, and only when, you have taken care of your risk and

your retirement, you’ll be able to start looking at short-term

investments, like unit trusts. But be focused on which investments

you want to invest in and try to diversify your portfolio to smooth

out the bumps along the road,” explains Schmikl.

Step 5: If you still have money left, go high risk

We’re bombarded daily with advertisements that promise

exponential returns through trading forex, cryptocurrency or

equities. If you have some spare

cash, feel free to dabble. But where

many of these platforms offer high

rewards, but they generally come

with high risks too, warns Schmikl.

“You’re not going to turn R10 000

into millions in the space of three

years. That’s not how it works.”

“Ultimately, retirement is all

about diversification, spreading

your risk and beating inflation on an

annual basis. If you get that right,

you’ll be able to retire comfortably

at the age you choose.”

Dieter Schmikl, Financial Advisor,

NMG Benefits

72 www.bluechipdigital.co.za

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The importance of nominating

your beneficiaries

Retirement fund members who are entitled to death benefits

must keep their nomination of beneficiary forms up to

date to ensure their beneficiaries receive these benefits

timeously in the event of a member’s death.

A valid nomination of beneficiary form completed by

a member plays a critical role in facilitating the speedy

payment of the death benefit to the ultimate beneficiaries.

Without a valid, up-to-date form, investigating who is entitled

to the benefits could take much longer and some potential

beneficiaries might even end up being excluded.

Members of retirement funds are typically covered for death

benefits through a group life assurance policy that is either

owned by a retirement fund (“approved”) or by an employer

(“unapproved”). The terms “approved” or “unapproved” refer to

the vehicle (retirement fund or insurance policy) which pays the

death benefit out to beneficiaries and its tax treatment.

An “approved” benefit is recognised by the Registrar of Pension

Funds and approved by the South African Revenue Service for tax

deduction purposes. An “unapproved” benefit is not offered under

a tax approved retirement fund in terms of the Pension Funds

Act. Instead, unapproved benefits are offered through a separate

insurance policy. Whether you are dealing with an approved or

unapproved policy, a valid nomination of beneficiary form helps

to ensure dependants are not excluded from the distribution of

death benefits in the event of a member’s death.

Death benefits under approved policies

In the event of death of a member under an approved policy, the

deceased member’s savings accumulated in the fund plus the

death benefit are paid to the member’s beneficiaries as a fund death

benefit. Fund death benefits are subject to Section 37C of the

Pension Funds Act, which means that the fund trustees need to

investigate to determine who the beneficiaries are and distribute

the benefit to those beneficiaries in an equitable manner, based

on among other factors their extent of dependency on the

deceased member. A completed nomination of beneficiary form

guides the fund trustees in their investigation to determine

the member’s beneficiaries. The ultimate decision on who to

distribute the death benefit to, and in what proportions, lies

with the trustees, with the nomination of beneficiary form






savings accumulated in the fund are paid as a death benefit from

the fund and Section 37C applies to this portion. Therefore, in the

case of an unapproved policy, the death benefit due from the

policy is dealt with slightly differently to the death benefit due

from the fund itself.

With unapproved benefits such as a benefit payable under

an employer-owned group life policy, a member may nominate

anyone who they wish to receive the benefit, including nondependants

and payment will be made accordingly. There is

no Section 37C investigation which takes place and payment

is strictly made according to the completed nomination of

beneficiary form.

What happens to unapproved policy benefits if there is no valid

nomination form in place?

In the absence of a signed, valid nomination of beneficiary form,

the insurer is required, in terms of policy terms and conditions

as well as legislation, to pay the benefit to the deceased's estate

(or according to a written instruction by an authorised person

confirmed by a letter of authority issued by the Master of the High

Court where applicable).

Having a valid nomination of beneficiary form in place,

particularly in the case of benefits from an unapproved

policy, makes it easier for death benefits to paid timeously

to beneficiaries.

serving as a good guide in identifying beneficiaries. It is also

important to note that financial dependency on the member is

one of the key elements considered by the trustees during the

Section 37 investigation and distribution of the death benefit.

What happens to approved policy benefits/fund death benefits

if there is no valid nomination form in place?

If the fund has not been given a completed nomination

of beneficiary form, the trustees will have to conduct their

investigation without an expression of the deceased member’s

wishes. This could delay the investigation process and so delay

the ultimate payment of the benefit to beneficiaries who may

be in desperate need of financial support. It could also result in

other dependants being omitted from the distribution of the

death benefit (eg a child born out of wedlock and not known to

the deceased’s family).

Death benefits under unapproved policies

Section 37C of the Pension Funds Act does not apply to

unapproved policy benefits, although the deceased member’s

Nomination of beneficiaries and funeral policies

Nomination of beneficiary forms are also required for the

payment of benefits from employer-owned funeral policies.

When the main member of a funeral benefit policy passes away,

the benefit will be paid out in terms of the signed nomination

of beneficiary form.

If the nomination of beneficiary form has not been

completed, the payment will be made to the deceased’s estate.

Payment of the benefit cannot

be made to the employer or any

other person with control over the

deceased’s affairs. This could result

in hardship as the funeral policy is

meant to assist with the cost of the

funeral and the money to cover the

costs is normally required urgently.

When preparing for the future and

for unforeseen circumstances such

as death, the main priority is that

members can care for their families

and ease the burden on them. Ensuring

that members have completed the

necessary nomination of beneficiary

forms and keeping them up to date is

the best way to ensure members are

able to care for their loved ones.

Adv. Beverly Jubane, Specialist

Customer Service, Liberty

Consultants and Actuaries






Divorce Act:

what the recent


means for you

On 11 May 2022, the Pretoria High

Court made a revolutionary judgement

declaring section 7(3) of the Divorce Act

to be inconsistent with the Constitution.

But what does this mean for you? Bianca

Maritz, Wills and Estates Specialist

at Sentinel, has all the answers.

Section 7(3) currently provides that spouses

married out of community of property before

1984, may apply to the court for a redistribution

of assets, despite their marital regime being

out of community of property.

What’s so special about 1984?

It’s the year in which the Matrimonial Property Act

introduced the accrual system for marriages out

of community of property. Couples married out of

community of property before 1984 didn’t have the

option of accrual so it’s not applicable to their marriage

– unless they subsequently applied to change their

marital regime.

The public are generally familiar with accrual being

the ability to have the best of both worlds. It allows you

to retain separate property and act independently of

your spouse, while still enjoying a form of joint estate

whereby anything accrued during the marriage is shared

between the spouses. We commonly hear of there

being an “accrual claim” (meaning a claim to split assets

acquired during the marriage) by one of the spouses,

either on death or divorce.

Now that’s settled, let’s return to the judgement

at hand

First things first, it’s important to bear in mind that

this judgement doesn’t deal with the question of

spousal maintenance, but rather with overriding the

76 www.bluechipdigital.co.za




If you fail to plan, you plan to fail.

provisions of an antenuptial contract in order to allow a

spouse to share in their spouse’s actual assets. There will,

accordingly, be a plethora of influential factors in each

spouse’s attempt to make their claim.

In the case at hand, the estranged wife of a wealthy

farmer sought the court’s assistance in declaring section

7(3) unconstitutional as it didn’t allow for a redistribution of

assets in her circumstances. The parties were married in 1988

out of community of property, without accrual. One would

be inclined to argue that the wife had a choice of accrual at

the time.

However, she claims she was forced into signing an

antenuptial contract, without accrual and now has no

claim to the empire her husband built with her help.

(And what an empire. You can read all about it in the

bestselling book Fortunes – The Rise and Rise of the

Afrikaner Tycoons where he is described as a “megafarmer


Core to her argument was that the provision only

allowed spouses married out of community of property

to seek a redistribution order if their marriage was entered

into prior to 1984. This, coupled with a very convincing

argument centred around the wife’s contribution to the

marriage, the household, working on the farm and raising

the children, is what led the court to take exception with

the words “prior to 1984” used in section 7(3).

The court declared this phrase to be inconsistent with

the Constitution as it afforded the option only to those

married out of community of property prior to 1984, while

excluding those married out of community of property

after 1984. It’s this imbalance in equal opportunity that

the court took issue with.

The fight is not yet won

All eyes will now turn to the Constitutional Court to see if

the highest court in the land agrees with the Pretoria High

Court. If they do, this will then pave the way for all spouses

married out of community of property without accrual

to seek some form of relief when they’ve contributed to

a marriage in non-financial ways. Alternative means of

contribution to a marriage have long been recognised

during South African divorce proceedings. This, coupled

with the fact that the core objective of our Constitution

is equality before the law, is why legal professionals are

largely anticipating that our Constitutional Court will

agree with the Pretoria High Court’s views.

What does this mean for me?

Generally, if you’re married out of community of property,

your estate planner will note it and move on. If you’re

married subject to the accrual system, further discussions

with your estate planner and/or financial advisor might

centre around who has a potential claim – and attempting

to try to plan for that by providing for some liquidity.

With this judgement so fresh, it’s too early to issue

general rules of thumb about planning for the possibility of

a redistribution. One can only deal with the possibility on a

case-by-case basis until more generally accepted forms of

guidance are available. After evaluating the case, your estate

planners and financial advisors can determine whether

you’re at lower or higher risk of a redistribution.

What about deceased estates?

Although the Divorce Act is currently the focus, there’s

a possibility that a spouse will see this judgement as an

opportunity to make a claim against a deceased estate.

Death is, after all, an event that annuls a marriage. Allowing

this would surely be seen as providing equal opportunity

– a core objective of our Constitution.

If this were to happen, executors would have to be

guided by the court order that would set out what relief

must be awarded or not awarded. Bear in mind that

litigation in the estate will result in delays in the finalising

of your estate and might even see a rise in executor fees,

or the disallowance of any dispensations previously offered

by the relevant executor on their fees.

The bottom line

It’s never a bad idea to plan ahead. As Benjamin Franklin

said, “If you fail to plan, you plan to fail.” It’s crucial to have

comprehensive estate planning if you

discover that you might be at higher

risk of falling victim to things like a

potential redistribution in terms of

section 7(3). At Sentinel, our estate

planners have hugely symbiotic

relationships with your financial

advisors, making this a dream team

for you and your estate planning

needs. For more information, or to

sit down with a professional, contact

Sentinel International Advisory

Services today.

Bianca Maritz, Wills and

Estates Sentinel International

Advisory Services






Navigate your client’s

complex wealth solutions

with a trusted partner

Total private wealth in Africa is expected to rise by 30%

over the next eight years, reaching $2.6-trillion by 2030

with South Africa home to an estimated 182 000 dollar

millionaires. Given this backdrop, wealth creators, such

as independent financial advisors and CERTIFIED FINANCIAL

PLANNERS®, are increasingly required to draft and implement

complex wealth solutions and integrated wealth management

strategies to grow their clients’ wealth. The recent increase in

people emigrating from South Africa means that advisors must

have a broad knowledge of offshore tax and fiduciary matters in

several jurisdictions or face real risk.

“We regularly partner with independent financial

advisors to manage these complexities, which includes

advice and support around tax and fiduciary matters,

particularly for wealthy clients with multi-jurisdiction assets

and investments,” says Andrew Ratcliffe, a director at Private

Client Holdings (PCH), a multi-family office based in Cape

Town, that has been managing high-net-worth individuals’

(HNWI) wealth for over 30 years.

Ratcliffe cautions that complex wealth management often

results in complex fiduciary requirements despite executorship

and deceased estate administration being highly regulated in

South Africa. “Leaving a legacy is a wonderful gift; however,

poor planning often means this doesn’t happen. Thorough

estate planning is critical as it provides a solid platform for

wealth management and minimises unforeseen risk,” he says.

“Our fiduciary team is very experienced in fiduciary matters

domestically and abroad, which enables us to draft estate

plans and handle deceased estates, no matter how complex,

timeously and with the greatest care and professionalism at a

time when a family needs it the most.” The PCH team also offers

advice and support to independent financial advisors when it

comes to drafting wills, forming trusts and trust administration

for their clients.

Similar complexities arise when it comes to global taxation.

PCH initially started as a tax consultancy in 1990 and tax

planning remains one of its core competencies. “Our goal is

to legitimately minimise tax payments and maximise after-tax

returns by structuring customised solutions for clients,” says

Ratcliffe. The company provides both local and offshore tax

advice regarding dealing with Capital Gains Tax, Provisional

Tax, Employees' Tax, Estate Duty Tax and

Offshore Tax matters. “We strive to support

independent financial advisors who may

not have the capacity in their practices to

navigate the complexities of compliance by

creating a solution that meets their clients’

needs,” adds Ratcliffe.

Ratcliffe firmly believes that “good advice

at the right time can save you money”. If you’re

looking for a partner to navigate your clients’

complex wealth management strategies,

with demanding fiduciary and tax structuring

requirements, contact Andrew Ratcliffe CFP®

on andrew@privateclient.co.za or visit our

website www.privateclient.co.za.

Andrew Ratcliffe CFP®, Director,

Private Client Holdings


Private Client Holdings has taken care to ensure that all the information provided herein is true and accurate. Private Client Holdings will therefore not be held responsible for any inaccuracies

in the information herein. The above article does not constitute advice and the reader should contact the author for any related concerns. Private Client Holdings shall not be responsible and

disclaims all loss, liability or expense of any nature whatsoever which may be attributable (directly, indirectly or consequentially) to the use of the information provided.


The licenses we hold with the Financial Sector Conduct Authority (FSCA) are: Private Client Holdings – FSP 613,

Private Client Portfolios – FSP 399 78 and Private Client Wealth Management – FSP 399 79.





How to build a technology-enabled

practice? By design, that’s how

It’s virtually impossible to run a financial advice business

without technology these days. What might a truly

technology-enabled practice look like? More to the point, is

it possible?

The right tools for the right job at the right time

The most obvious starting point is the toolkit of software and

technology services that a business could use to fulfil its needs,

wants, and obligations. There are more than ever to choose from.

The bottom line is that, despite the breadth of

features offered by any piece of tech, it’s tough

to find an advice business that uses a single

solution for everything.

So, if we accept that most advisors use

multiple systems for distinct purposes, and that

the one-stop-shop model steadily continues

to lose popularity, a business that prioritises

technology-enablement would invest in making

good choices about appropriate combinations

of technology as well as when and how to

implement each component.

Is it possible? Absolutely. With some solid

research, clarity of purpose, sensible planning

and regular review, it’s not that difficult for

even the smallest independent financial advisor

(IFA) practice to come up with a technology

strategy that allows one to make software buying decisions

with the end in mind, enabling the most appropriate selections,

implementing the basics first and growing a complementary

toolkit over time.

Integrated and efficient

The downside of using multiple technology tools is lack of

integration between systems and, by all accounts, it’s an oftnoted

frustration in our industry. Nevertheless, the best-of-breed

• 30+

• 12+








Reporting, MI









• 15+

• 6+

80 www.bluechipdigital.co.za




approach is valuable because it allows advisors greater flexibility

in delivering compelling and differentiated, rather than just

compliant, services. An integrated model improves both the

business and client experience by reducing duplication and

manual data maintenance and by enabling access to pertinent

information via different front-end applications by different

types of users.

74% 89% 58%

Three quarters of financial

advisors in South Africa

use multiple


to serve different needs

across their businesses

Of those, almost all use

overlapping systems

with no


between applications and

data sources

More than half identify

“lack of integration options”

as their single




Is it possible? Definitely. If effort has been applied to

planning and balanced purchasing decisions regarding the

selection of tools, integration options will already have been a

key consideration in designing the most optimally connected

model possible. Many technology providers recognise the

value of seeking standard integrations with complementary

solutions and the options for users are growing. Connectors are

increasingly available to help financial service providers (FSPs)

to connect commonly used applications and data sources more

easily and cost-effectively than via complex in-house custom

integration pursuits.

The limitation? Duplication of effort and information

exchange between advice businesses and product providers

are still a challenge, such as for digital onboarding and straightthrough-processing

purposes, but there’s more action than ever

in the application programming interface (API) space among

forward-thinking institutions.

True client-centricity

This is really the point, isn’t it? All technology considerations

ultimately boil down to being able to offer better financial advice

to more clients.

If the ideal client is connected and engaged, understands

the worth of financial advice and enjoys a trusted relationship

with an advisor, then surely technology should be harnessed

to augment an appropriate level of engagement that suits the

client’s journey, not an arbitrary A/B/C sliding scale of attention.

It may not be in the best interests of an advisor, much less his

or her clients, to blanket offer “high-touch” (which – let’s face it

– typically translates to “manual”) services to high-value clients

and “low-touch” services to less profitable ones. Automation in

servicing is becoming so well-developed in daily online life that

high-tech/low-touch approaches are arguably more effective

in many ways because they are designed to deliver

the right information at the right time and to simplify

complex things, allowing people the opportunity of

self-service in areas where it makes sense.

Client portals have been

a bit of a buzz-thing for

the last few years.

No advisor who has a strong relationship with clients

can easily be “disintermediated”, so it’s somewhat

counter-intuitive for advisors to intentionally disconnect

from the lower 80% of client relationships based only

on perceived profitability. A truly technology-enabled

business, I think, would aim to use technology to best facilitate

the automation of functions that are not primarily valuable to

the relationship, thus being able to spend more time on human

connection and allow clients to have some choice in just how

digital their relationship is. Clients should be able to participate

in the planning process in more meaningful ways than over a

coffee and a pile of papers once a year.

Is it possible? Sure – with a bit of design thinking. Client

portals have been a bit of a buzz-thing for the last few

years, though it’s tricky to get it right without the use of

appropriately selected tools

and, more importantly, access

to aggregated data. Everything

from onboarding to ongoing

financial education to tracking

against financial goals can

be digitised and placed in

clients’ hands in such a way

as to enhance advisor-client

relationships without the need

to intercept every action.

A tech-enabled business

would consider the best ways

to curate its digital customer

journey and empower both the

client and the advisor. Jen McKay, Director, Linktank






2C or not 2C

When to apply Section 2C of the Wills Act 7 of 1953 and when not to.

Uncertainty has always been the pet peeve of any legal

system. This is even more so in the case of an inheritance

or legacy being made in a will to family or friends, where

the will has not provided substitutions and the deceased

testator cannot be called in to clarify.

Let us consider the following scenario for some context.

Christof bequeathed his estate in equal shares to Elsa and Anna.

Elsa repudiated the inheritance. Elsa has two sons.

It must be noted first that in terms of section 24 of the General

Law Amendment Act 32 of 1952, a provision was made for implied

substitution. This had the result that if Elsa was Christof’s daughter

and she passed away, her two sons would have been entitled per

stirpes to their mother’s benefit unless the will stated otherwise.

Section 24 has been repealed by section 1 of the Law of Succession

Amendment Act 43 of 1992. However, the effect of this implied

substitution was adopted by Section 2C of the Wills Act 7 of 1953.

The first subparagraph (1) of the section has the effect that

if the descendant renounced and there is a surviving spouse of

the testator, the renounced benefit will go to the spouse of the

testator. The second subparagraph (2) has the effect that the

legacy or inheritance of a descendant of a testator that is still alive

but had been disqualified or renounced (and there is no surviving

spouse) will go to the descendants of that descendant per stirpes

unless the context of the will indicates otherwise.

In this scenario, Elsa renounced her benefit after her

father’s passing. This would mean that in terms of Section

2C (2), Elsa’s two sons will substitute her per stirpes for the

benefit that she renounced.

How would the outcome differ if Christof was not Elsa and

Anna’s father, but merely a friend that made a bequest to them

in terms of his will? Firstly, it should be noted that Section 2C

only applies to descendants of the testator and consequently,

that Section 2C will not apply in this scenario. If the will is

silent on what should happen to the repudiated benefit, the

person who repudiated shall be deemed to have predeceased

the testator.

This will have the effect that in the case of a legacy, the benefit

will fall into the residue of the estate and devolve however the

residue is bequeathed in the will. In the case of an inheritance, it

will devolve upon the remaining heirs “unless the jus accrescendi

has been excluded so that the testator will have died intestate in

respect of that portion of his estate” (Meyerowitz 2010: para 5.29

and para 18.11).

The benefit of Elsa would consequently

fall into the intestate portion of Christof’s

estate and devolve upon his intestate

heirs. This will also be the case if Elsa was

a descendant of Christof but did not have

any children of her own to substitute her.

In an intestate estate, the person who

renounced their intestate share would

also have been deemed predeceased and

fall back into the intestate estate.

Evidently, the best course of action

is not to leave your will open for other

interpretations that the legal rules will

attempt to clear up after your passing. It is,

therefore, best practice to make provision

for all contingencies in your will to clear up

any possible future confusion.

Dr Rika van Zyl CFP®, FPSA®,

School of Financial Planning

Law, UFS, (member of FPI

and FISA)

82 www.bluechipdigital.co.za

Momentum Financial

Planning is recruiting

for a new future for

the industry and the


outh Africans are in a financial tunnel, and the

only way many of them are going to see the light

is by increasing their level of financial literacy.

The vast majority of the population doesn’t

have medical aid, over 65% of vehicles on our

roads are uninsured and 9 out of 10 retirees

have to continue working just to get by. Add in the reality of a

skyrocketing price of life, and it becomes clear that financial

literacy has never been more important.

This begs the question: How can a new generation rise to meet

the demands of a challenging economy? Who will be there to

guide them on their journey to success?

According to the head of human capital at Momentum

Financial Planning (MFP), Marina Karstel, this duty will fall on

expert financial advisers. However, she says true economic

empowerment requires a drastic reformation of the financial

adviser landscape.

“To relate to most South Africans, we need to empower an

emerging young financial adviser workforce and close the age

gap” says Karstel.

This is exactly what MFP did. In a recent and ongoing

recruitment drive, MFP has been on a mission to fire up

financial planning and make it known to all success seekers,

go-getters and trend-setters to join the financial revolution and

kickstart their careers.

“By embarking on a purposeful and meaningful drive to build

a more inclusive and relatable industry, we are confident that

financial planning as a practice will evolve to meet the needs

and ambitions of younger South Africans,” says Karstel.

To create an accessible mountain of potential, Karstel had to

acknowledge the need to evolve the recruitment process. “It is

well-known that the reliability of an interview as the only medium

of selection is very low. In fact, it is around 12% and a change was

needed to grow our footprint sustainably in the market.”

By adopting digital attraction, screening and assessment

tools, partnering with international thought leaders to develop

customised competency-based assessment specific to the role

of a financial adviser and integrating this in a comprehensive

battery of psychometric assessments, MFP attracted over

22,000 aspirational, young financial advisers. Up to date, just

below 300 have been successfully appointed. The scale of this

process was made possible by partnering with Trending Talent

and Wamly; two forward-thinking digitally-based companies in

the field of HR services.

In the end, Karstel said MFP had identified three overarching

characteristics of a successful young adviser. These included:

• All the competencies of an entrepreneur and self-starter.

• A customer advocate who could align advice with

customer needs.

• A social networker able to build a network of clients

both online and face-to-face.

“The environment is changing, and therefore, so should the

competency requirements of a financial adviser,” says Karstel.

“How can we expect people to seek out advice when they

don’t see themselves in the adviser that they put their trust in?

How can they believe that the adviser knows what they want

out of life? A younger population requires a credible youthful

perspective and drive.

Along with the MFP recruitment drive, the Momentum Institute

of Financial Planning (MIFP) was established in July 2021

and has served to upskill new-to-industry financial advisers,

enabling them to thrive in a competitive environment. The

MIFP is fully virtual, allowing students to engage with content

and study materials online, from anywhere in the world and at

any time. Courses are completed by performing assessments

which require an 80% pass rate, and each course carries a

CPD point rating, allowing existing financial advisers to fulfil

their obligations to develop professionally and improve their

performance in the workplace. The Momentum Institute of

Financial Planning further serves as an educational initiative,

providing planning and advice that is accurate, using

information that is current and most importantly, providing

practical application to further increase the value they offer

to their clients.

According to Karstel, “This is an opportunity for young people

as well as career changers with work experience who are

inclined towards starting their own businesses. We simply

give them a platform to join the market and turn their passion

into power by assisting them with their business needs and

requirements. It’s a win-win for MFP, we get to tap into an

unmet need, and young advisers get to tap into the future of

a nation.”

For Karstel, this new recruitment process is set to make a

vast difference in the South African financial landscape.

“This is our purpose, and it is the north star which guides us.

Financial services have a huge role to play in building a stronger

economic future, and the onus is on us to make it work.”

Momentum, here for your

journey to success.








Cancer is one of the leading causes of death globally, causing one

in six deaths as stated by the World Health Organization.

It has been shown that early diagnosis, treatment and

constant monitoring of cancer patients is crucial in order

to achieve higher survival rates. Hence, cancer is one of

the diseases with high monitoring and awareness across

the globe. However, in the recent years, the world’s attention

was redirected to another deadly threat in the form of the

Covid-19 pandemic. With the numbers of cases and deaths

increasing exponentially from Covid-19 infections, the

pandemic took centre stage, while all other serious illnesses

took a back seat.

Number of cancer cases

A study on the initial impact of the Covid-19 pandemic on the

diagnosis of new cancers at a large pathology laboratory in

Cape Town presented the results below. The changes represent

the number of new diagnoses in the different cancer types,

from 1 April 2020 to 30 June 2020, compared with the prepandemic

period 2019:

• Prostate cancer cases decreased by 58%

• Oesophageal cancer cases decreased by 44%

• Breast cancer cases decreased by 33%

• Gastric cancer cases decreased by 33%

• Colorectal cancer cases decreased by 7%

The number of new cancer cases combined decreased by

36.3% from the year 2019 to 2020. This trend was also seen

in the data collected by Cancer Research UK that showed in

the first year of the pandemic, one-million fewer screening

invitations were sent, 380 000 fewer people saw a specialist

after a suspected cancer referral and 45 000 fewer people

started their cancer treatments.

Reduction in cancer cases

We have seen a similar trend on our group risk critical illness

claims, where claims reduced by 30% from 2019 to 2020.

The level of reduced claims continued into 2021 as well. The

reduction in cancer cases diagnosed during the pandemic, seems

to be prevalent in many countries. However, the decline is not

because of fewer people contracting cancer, but due to delays

in diagnosis and treatment.

There are many factors that resulted from the global response

to the pandemic that may have caused this phenomenon,

including but not limited to:

• The decision to implement national lockdowns in many

countries, which restricted the daily movement of many citizens

• Many people became less likely to visit their physicians for

routine check-ups, out of fear of contracting Covid-19. Fewer

86 www.bluechipdigital.co.za




individuals went for screening and thus, if they had cancer, it

would not have been detected at an early stage

• Hospitals were saturated with Covid-19 patients and there

were not enough resources to be redirected to cancer patients.

As such, individuals that were a high risk could not get the

required treatment in certain instances

employees, if they are diagnosed with a critical condition. There

are a range of products that provide payouts to assist with the

added financial burden, should an individual be diagnosed with

a critical illness.

The long-term implications

As we move out of the pandemic, we expect to see more cancer

diagnoses as more people return to their routine check-ups.

However, the long-term implications resulting from the delay in

diagnosis is a major concern as with cancer treatments, delayed

treatment may likely lead to lowered rates of recovery. The

population, at large, must be encouraged to visit their physicians

for routine check-ups to ensure early diagnosis.

As more and more people go for routine check-ups, there

may be a surge in cancer cases. Being diagnosed with cancer has

a significant financial impact on any family and most individuals

will need financial assistance to deal with the additional costs

associated with treatment.

Critical illness insurance is one of the least taken up-types of

insurance cover for individuals. Group critical illness products

enable employers to provide comprehensive cover for their

Sinethemba Khoabane,

Actuarial Manager: Risk Product

Development, Liberty Corporate

Blessing Soxa, Specialist:

Actuarial Analyst Risk Product,

Liberty Corporate

1 http://www.samj.org.za/index.php/samj/article/view/13301

2 https://www.cancerresearchuk.org/sites/default/files/cancerpathwaykeystats_jan22.pdf






Shifting the way people think,

feel and behave with money

Convincing my 14-year-old to hug me is as frustrating

as getting my name removed from a cold-calling

sales database. I am beginning to wonder if either

is worth fighting for. Raising my teen to become her

own person, and satisfying my own parental needs is a balance

I am yet to master. Everything is a negotiation or requires some

sort of explanation. So, how do I even convince her to give me

a simple hug?

I decided to approach this challenge by reflecting on some

of the lessons I have learnt when trying to shift my own clients

to change their behaviour and thinking.

Persuading others is not as easy as I thought

One thing is clear and that is my passion for what I do. This is

evident when I walked away from a secure income as a single

mom amidst a pandemic to pursue my passion. My naivety

made me realise that not everyone is as enthusiastic about

this topic as I am, people have different priorities and are

motivated by their own agendas. I realise that passion must

be accompanied by persistence and patience.

Authenticity and vulnerability are key to building trust

Strong connections are forged when others can resonate

with you. It took me a long time to embrace being vulnerable

and share my money story openly. As Brené Brown says,

“Imperfections are not inadequacies; they are reminders

that we’re all in this together.” Clients prefer to learn from

someone they can relate to, someone who they share common

experiences with and someone who has erred and overcome.

Real success stories are easier to sell. As I continue to share my

feelings and experiences, I know it gives others the courage

and permission to do the same.

Coaching is by far the most effective tool in shifting behaviour

While my proposition includes a range of solutions to suit client

needs, learning styles and affordability, I am reminded of the

irreplaceable value of human conversation and engagement.

Changing behaviour is reliant on the individual’s level of drive.

Coaching is the most effective approach in yielding results.

However, the limited hours in a day makes coaching difficult

to scale.

Cut-and-paste approaches are ineffective

To change behaviour, we must consider the individual’s

personal circumstances, needs and goals. Cut-and-paste

solutions are tick-box approaches that provide a false sense of

satisfaction that we are performing our fiduciary responsibility

as financial service providers to improve financial wellness, but

are we really? We need to adapt our approach. My approach

initially focused on teaching the technical skills required to

manage money and now includes our emotional relationship

with it. I am now including a third dimension, the spiritual

connection we have with money.

Shifting mindsets is

not an easy task.

Prevention is better than cure, but ignorance is still bliss

We all know that smoking is bad and over-indulging will cause

health problems down the line, yet we still do it. We also know

that not saving adequately will prevent us living our dream

retirement, yet we continue to delay this.

While many are living below the breadline they simply

cannot afford to save for tomorrow when they are struggling

to survive today. But there are also those who can afford to save

but the rewards of instant gratification are far more appealing

than saving for something that will only occur decades down

the line. Shifting mindsets is not an easy task.

Not all clients can be helped, or can they?

The market I deal with is primarily those who do not have

access to financial advice or cannot afford financial advice.

Fortunately for them, my services are funded by their

employers. The toughest part of my day is dealing with those

clients who are doing all they can with the little they have. It

is these clients that need our help the most. While many of

these clients’ situations are dire, they are

not helpless or hopeless and we need to

find creative solutions that will help them.

Changing behaviour requires constant

engagement, persistent action and various

approaches. Each of us are motivated by

different drivers. And while I may never

convince my teen to give me a hug, I know

that I love her enough to continue to meet

her where she is at.

And when it comes to my clients, I pray

that my journey is made sustainable by

those who see value in what I do so that

I can continue to help those that need it

the most.

Jean Archary CFP®, Author,

Speaker, Founder, Financial

Wellness Coach

88 www.bluechipdigital.co.za

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