Blue Chip Issue 86
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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THE OFFICIAL PUBLICATION OF THE FPI
Issue 86 • January/February/March 2023
Bridging the gap
Meet the 2022 Financial
Planner of the Year
ahead for 2023?
THE FUTURE OF INVESTING
Jeanette Marais, CEO, Momentum Investments
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Blue Chip 2023
In A focus on the future of investing, Jeanette Marais, CEO of Momentum Investments,
discusses the complexity and rapid change that shapes the sector (page 26). She
questions whether we understand how to disrupt our own value propositions. The
volatility in today’s world ensures that none of us truly knows what our future has in
store for us, so Marais advises that we disrupt ourselves rather than be disrupted. “With
increasing complexity, we need to focus on our speciality and niche and find the right
partners to journey towards success with,” she says.
Is a discretionary fund manager the right partner for success? Bennie Crous from
Equilibrium says that partnering with a DFM will ensure that an investor’s distinctive
financial needs are met. South Africa has world-class investment managers who are
specialists that rarely speak to an investor’s unique financial requirements (page 48). A
DFM, however, understands the intricacies thereof. Marais concurs: “Partnering with a
DFM frees up your capacity to focus on your value adds.”
In 2022, Discovery Group announced the launch of South Africa’s first “truly global”
DFM with the ambition of significantly enhancing the business of wealth creation in the
country. Speaking at the launch, Discovery CEO Adrian Gore contextualised the rationale
for the new business by describing two trends transforming the global and local investment
industries. Find out more on page 19.
The disruptive ideas and societal changes in our world today create opportunities
alongside them. Eugene Botha from Momentum Investments says, “Technological
innovations, demographic and social trends, urbanisation and environmental challenges
are here to stay, and the importance thereof is continuously being forced into the
spotlight.” These developments converge into larger themes that endure over the longer
term and create investment opportunities that will persist as disruptive ideas and
technological advancements reshape our environment. Uncover the art of identifying
these opportunities, called thematic investing, on page 31. Rob Macdonald speaks about
technology being the lifeblood of the new world of work. He asks that if financial advisors
still have a role to play in people’s lives, what is that role and how will it impact on client
engagement in the context of rising dependence on technology? (Page 50)
Well, turn to page 56 for insights into financial advisors’ relationships with tech from the
Linktank technology survey. According to the survey, financial advisors’ greatest challenges
are “still topped by integration options, the industry remains frustratingly paper-based,
and there’s an unbudging gap in the perception of value vs cost of technology”. Kobus
Kleyn says that as financial professionals in a noble profession, we must change people’s
lives for the better (page 18). And one person who will be changing people’s lives for
the better is Palesa Dube, CFP®, director at Wealth Creed, and the current FPI Financial
Planner of the Year. Dube believes that finances are a very personal matter and with the
inclusion of female professionals in the financial services industry, diversity and inclusion
will help the profession develop products and solutions that truly speak to the needs of
the growing segment of females in the profession in a manner they want to be addressed.
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 86 |
Publisher: Chris Whales
Editor: Alexis Knipe
Online editor: Christoff Scholtz
Digital Manager: Charl Daniels
Designer: Tyra Martin
Production: Yonella Ngaba
Gavin van der Merwe
Managing director: Clive During
Administration & accounts:
Distribution and circulation manager:
Printing: FA Print
Global Africa Network Media (Pty) Ltd
Company Registration No:
Directors: Clive During, Chris Whales
Physical address: 28 Main Road,
Postal address: PO Box 292,
Tel: +27 21 657 6200
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.
INVESTMENT | Offshore
Glacier International: moving towards a
seamless global investment portfolio
By Andrew Brotchie, Managing Director of Glacier International
The case for offshore investing has been increasing over
many years, as local investors look for diversification, an
increased opportunity set, as well as hedging against
political and economic risk.
Exchange control relaxation
The reasons for offshore investing have traditionally been facilitated
by increases in the discretionary allowances. Currently, South African
investors can take out R11-million per year per person. We believe that
regulatory relaxation in the institutional space locally will drive the next
wave of offshore inclusion for South African investors. A big change
announced in February 2022, in the institutional space, is that pension
fund investors can now have up to 45% invested offshore with no
minimum or maximum allocation to Africa. Another point to note is that
there is no longer a 5% to 10% difference (which there was previously)
between what local collective investment schemes (CIS) could invest
offshore versus what was allowed for retirement funds. This has now
been harmonised and is significant for the reasons discussed below.
Significant impact on the wealth advice landscape
1. A management company (or CIS) will, at certain times, use the
full 45% offshore allowance in its retirement funds, which would
then leave it no capacity to offer feeder funds. This will lead to a
gradual decline in the availability of feeder funds in the South
African market, and an additional R400-billion to R600-billion
offshore investment flows from South Africa.
2. Traditionally, local and offshore investment portfolios have
been quite separate. Going forward, we expect clients to start
looking at their investment portfolio holistically. Previously,
an offshore allocation in pension funds of 30% was typically
allocated to global equities. Now that the offshore allocation is
at 45% – almost half of the portfolio – the guidance will be more
nuanced. The emphasis going forward will be on looking at the
local and international portfolios as one whole, to see how they’ll
complement each other. This will, in turn, see the investment
process and portfolio construction process change in future.
Glacier International’s solution set
Investment platforms will also need to adapt to these changes.
Glacier International’s solution set has been steadily evolving and
offers a diverse range of options.
Uncertainty in the markets is expected to prevail for the
foreseeable future. A well-diversified, long-term investment
strategy remains key.
Glacier International is a division of Sanlam Life Insurance Limited, a Licensed Life Insurer, Financial Services, and Registered Credit Provider (NCRCP43).
That’s what a single access point
to the widest range of investment
funds feels like.
Glacier by Sanlam’s investment platform offers you the
widest choice of local and global funds, from different fund
managers, that you can mix and match, all in one place.
With Glacier, you are at the centre of all investment
recommendations. Your adviser will work with you to
customise your selection for the ultimate personalisation
IMAGINE THIS IS YOUR
AND YOU CAN EXPLORE AS
FAR AS YOU WISH
Ours is an ocean of limitless possibility.
What could be better than that?
Ask your financial adviser why you’re not with Glacier.
Visit www.glacierinsights.co.za for more information
THINK WORLD CLASS
Glacier Financial Solutions (Pty) Ltd is a licensed financial services provider.
By Alexis Knipe
TIME LINKED WITH FINANCIAL
PLANNING, DONE RIGHT
Message from FPI CEO
ON THE MONEY
Milestones, news and snippets
COMBAT FINANCIAL CRIME
Advice to combat money laundering
BEWARE THE TWIT
Column by Rob Macdonald, Head of
Strategic Advisory Services, Fundhouse
IT’S A CRUEL, CRAZY, BEAUTIFUL
Column by Florbela Yates, Head of Equilibrium
A NOBLE PROFESSION
By Kobus Kleyn, CFP®, Tax and
Fiduciary Practitioner, Kainos Wealth
THE LOCAL NEED FOR TRULY
Discovery Invest says that there is a need for global
investment expertise for the local advice industry
MEET THE 2022 FPI FINANCIAL
PLANNER OF THE YEAR
Blue Chip speaks to Palesa Dube, CFP®
A FOCUS ON THE FUTURE
By Jeanette Marais, CEO, Momentum
Investments, and Deputy CEO,
Momentum Metropolitan Holdings
ESG: HYPE OR PATHWAY
TO A BETTER FUTURE?
By Mike Adsetts, Acting Chief Investment
Officer, Momentum Investments
WHY OPTIMISING TAX
INCENTIVES IS A GREAT
WAY TO CREATE WEALTH
Almost every financial decision your
clients make has a tax implication
THE DAWN OF THEMATIC
Eugene Botha, Deputy Chief Investment Officer,
Momentum Investments, tells us about the
increasing popularity of thematic investing
CRYPTOCURRENCIES AS AN
Cryptocurrencies are sweeping the world in
terms of news headlines
WHY DO PEOPLE INVEST?
WHY DO PEOPLE SAVE?
Kapil Joshi, Head of Momentum Collective
Investments, writes on consumerism and investing
THE GALE OF CREATIVE
Was 2022 the birth of the next phase of wealth
creation? By Ian Jones, CEO, Fundhouse
HOW SUPPORTING WORKERS
BRINGS BUSINESS AND
By Andy Howard, Schroders
THE IMPACT OF COFI ON FSPS
Preparing for the “Mother” of all market
conduct legislation. By Anton Swanepoel
KEEP IT SIMPLE
One thing we can always be sure of is
change, says Visio
GAS CAN STABILISE THE NATIONAL
By the Petroleum Agency South Africa
LOWER-INCOME CLIENTS AND
WHY YOUR PRACTICE NEEDS THEM
How to get servicing your clients right. By
Andies de Jongh, Seed Analytics
HOW WE APPROACH
And the rationale for using a DFM.
By Dez Tswaile
WHAT DOES THE CRYSTAL
BALL SHOW FOR 2023?
By Bennie Crous, Senior Portfolio Manager,
THE CHANGING WORLD
OF WORK AND ITS IMPACT
ON CLIENT ENGAGEMENT
Technology is the lifeblood of the new
world of work. By Rob Macdonald
THE IMPACT OF MENTAL HEALTH
ON FINANCIAL PLANNING
By Roland Cox, Executive Coach, Aspiral
Coaching and Leadership
PERSONALITIES AND TRIGGERS
How adapting the way you
communicate with your clients can improve
STATE OF THE ADVICE TECH
Insights into financial advisors’ relationships
with tech from the 2022 Linktank Advice
Technology survey. By Jen McKay
CANDIDATES RANK TOP FIVE
The top five CFP® Professional Competency
Examination candidates are alumini at the
University of the Free State
CONVERSATIONS ABOUT LIFE
Lessons we’ve learned. By Johannes Landman,
CONVERSATIONS IN ISIXHOSA:
Babalwa Nonkenge speaks about her podcast,
Epokothweni with Babalwa Nonkenge
How can you identify it and help your
clients deal with it? By Louis van der Merwe
Profile of an FPI Approved Practice:
Integral Wealth Management
WHILE KEEPING UP WITH
By Andrew Ratcliffe, Director, Private
THE VALUE OF A DESIGNATION
THEIR TIME IS NOW
The FPI Financial Planner of the Year
FPI UPDATES | CEO message
Lelané Bezuidenhout, CFP®,
CEO, Financial Planning
Institute of Southern Africa
Time linked with
The CEO of Financial Planning Institute of Southern Africa
shares FPI’s latest news.
Is the earth spinning faster and how can we link this to
The world is moving at a pace unknown to the ’80s, ’90s
and early 2000s. It prompted me to google: “Is time running
faster than before?”
Google’s answer: “It’s part of the nature of life for time
to accelerate as we age.” Did Google just tell me that I am
I googled again as I did not like the first answer, and this
time it shot out: “The earth is spinning faster and recently
recorded its shortest day ever. June 29, 2022, was 1.59 milliseconds
less than one average day.” Now that’s less of a
personal disaster for me, but not necessarily for the worldat-large.
This made me think, and appreciate, that the most
valuable commodity we have is time.
Time linked with financial planning, done right
It is well known that the basic elements and economic
principles of investments are reward (return), risk and time.
Far too many consumers leave retirement planning for their
mid-40s to early 50s. This is too late. Investment, as we know,
is not a short-term thing; it is long-term in its nature. The
time-value-of-money should never be underestimated.
But how do we get consumers to realise this? It does not
help that pending legislative changes will make it possible
for consumers to make withdrawals from their retirement
savings before retirement. But in this lies the opportunity
for financial planning and professional financial advice as
it presents an opportunity to help consumers with, not just
retirement planning, but holistic financial planning. More than
eight out of 10 CFP® professionals responding to the Financial
Planning Standard Board’s (FPSB) Future of Financial Planning
Practice survey agree that consumer demand for financial
planning will increase in the next five years.
We also see the demand for FPI professional members
growing as an increasing number of financial institutions,
especially in the banking sector who are starting to employ
only CERTIFIED FINANCIAL PLANNERS® or designated financial
advisors. We encourage financial advisors who are not
professional members of FPI yet to contact us and establish how
close they are to being awarded a professional designation.
Some updates from FPI
I just returned from the FPSB Chief Executive Committee
meetings held in Washington DC. I am humbled to act as chair
of these meetings and confirm that the discussions focused
on the future of financial planning, especially as it relates to
generational financial planning and the ever-changing global
financial landscape. Great discussions were held around crypto
assets and decentralised finance (DeFi) and how they fit into
financial planning. The FPSB also confirmed that the new
financial planning competency framework, which includes the
psychology of financial planning, will come into effect on 1 April
2023. FPI will subsequently align and localise its curriculum and
If you have not yet registered for the 2023 Annual Refresher
Workshop, please do so – spots are limited and selling out
fast. This is the masterclass of the year with great insights from
We encourage financial advisors who are not
professional members of FPI yet to contact
us and establish how close they are to being
awarded a professional designation.
speakers such as Wessel Oosthuizen, CFP®, Errol Meyer, CFP®,
the 2022 FPI Financial Planner of the Year, Palesa Dube, CFP®,
and FPI’s former head of policy and engagement David Kop,
CFP®. I will also be giving an update on Ombudsman cases.
Visit www.fpi.co.za to register for this event.
As we enter 2023, I want
to sincerely thank you for
your support during 2022.
Please be on the lookout for a consumer survey, to be run
by +-15 FPSB affiliates globally, that will come out in 2023.
The main purpose of the survey is to establish the value of
financial advice and to gain insights into consumer awareness
of who and what a CFP® professional is.
As we enter 2023, I want to sincerely thank you for your
support during 2022. As alluded to earlier, 2022 flew by in
May 2023 be a bit of a slower year, with more time for us to
collectively reach new heights as a profession.
Until next time,
Lelané Bezuidenhout, CFP®, CEO,
Financial Planning Institute of Southern Africa
On the money
Making waves this quarter
Glacier investments and illiquid assets
GLACIER INTERNATIONAL MAKES OFFSHORE INVESTING EVEN EASIER
Investors can now make an investment using foreign currency – and
there’s no need to have an offshore bank account or complete copious
amounts of paperwork. This is made possible by Shyft, a forex payment
app that makes offshore investing so much easier.
Now, investors simply need to transfer their investment in rands
from their South African bank account onto Shyft, convert it to the
required currency (US dollars, Australian dollars, euros or pound
sterling) and make the forex payment into the
offshore investment. Shyft is free to use with no
monthly fees. The app also offers some of the
best and cheapest foreign exchange rates in the
market, with low transaction fees.
Contact your Glacier International representative
for more information.
Glacier International is a division of Sanlam Life Insurance Limited, a Licensed Life Insurer, Financial Services and Registered Credit Provider (NCRCP43).
SA’S LEADING INVESTMENT CONFERENCE
The Investment Forum is South Africa’s premier gathering of investment
managers, discretionary fund managers, multi-managers and financial
advisors/wealth managers. Now in its 13th year, it continues to focus on
thought leadership content spanning the world of investing. There is no
“product push” at the conference, thus allowing delegates to glean insights
impacting investment themes across the world.
The world continues to be at strife with itself and wherever you look,
uncertainty prevails on all fronts. Navigating this uncertain world, trying
to ensure that investors remain invested throughout this cycle, is virtually
impossible with distractions from all directions.
The brightest minds from the investment management industry
will offer their insights on the global macro-economics at play – where
inflation is public enemy number one, the geopolitical landscape that
DEMAND FOR ILLIQUID ASSETS SURGES
is tense and fragile, anticipated company earnings results and where
these are headed across all sectors, as well as insights into where these
investment managers are unlocking valuable investment opportunities
across currencies, geographies and asset classes.
Register for the Investment Forum 2023 where the conference will
unpack “The Butterfly Effect – When nothing is certain, anything is possible!”.
Seats sell out quickly, so go to www.theinvestmentforum.co.za and
Professional investors and family offices are increasingly turning to illiquid
assets, including private debt, in response to the combination of ongoing
volatility and rising interest rates and inflation, new research shows. The
study from Aeon Investments with family offices, controlling more than
$98.4-billion assets under management, found 90% expect increased
demand from investors for illiquid assets over the next two years. Around
12% predict demand will increase dramatically.
The research found that the key reason is their need to protect from
macro uncertainty with private debt investments often offering strategies
providing a floating rate coupon which has the potential to be a natural
hedge against inflation.
Family offices also highlighted the fact that private debt offers new
investment opportunities and a growing array of assets as well as its role
in the diversification of portfolios and access to ESG benefits in sub-asset
classes in private debt. Aeon’s study found widespread agreement that the
highest quality private debt instruments provide safety. Almost all (99%)
questioned pointed to the combination of attractive yields and structural
protections such as debt covenants and credit enhancement as offering a
high degree of safety.
That is being bolstered by the expectation of improved regulation in
the sector – more than a quarter (26%) expect dramatic improvements in
regulation for private debt over the next two years while 52% expect slight
improvements in regulation. Evgeny van der Geest, managing director,
Aeon Investments says: “Ongoing volatility coupled with rising interest
rates and inflation has highlighted the attraction of illiquid assets including
private debt, and investors expect demand to grow. There is growing
recognition that private debt can deliver attractive yields and high levels
of protection which are very valuable in the current macro conditions.”
and at a
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OUTvest is an authorised FSP. Ts and Cs apply. OV22/0426/E
On the money
Making waves this quarter
The future of the local DFM sector and a motivational read
NEW REPORT SHINES LIGHT INTO THE FUTURE OF SOUTH AFRICA’S DFM SECTOR
South Africa’s Discretionary Fund Managers (DFMs) will play a vital role
to financial advisors and wealth managers as they face a barrage of
complex investment decisions, a new report reveals. The report, created
by The Collaborative Exchange and sponsored by financial technology
provider Bravura, pinpoints the growing prominence of global passive
investments and ESG filters in portfolio construction, combined with
the rise of alternative strategies as a driving force of change across the
market. This leaves a large proportion of financial advisors and wealth
managers now sub-delegating their selection of investment managers
and asset allocation to DFMs, particularly to those who underpin their
offering with technology to aid investment decisions. While this is good
news for DFMs, the report identifies various longer-term challenges for
the sector that has mushroomed over the past two years. These include
potential regulation from industry bodies including the Association
of Savings of South Africa, which could place DFMs under further
scrutiny, and may include more onerous barriers to entry and the
standardisation of investment performance analysis.
However, larger DFMs with access to scale, market-proven
technology and extensive research capabilities will be able to weather
these challenges and are set to increasingly dominate, according to
the research. The report also predicts there may be several corporate
actions and mergers in the pipeline, such as Glacier’s recent acquisition
of Absa, to help with further market consolidation. Kevin Hinton, CEO
of The Collaborative Exchange, said: “While this research paints a mixed
picture, ultimately it highlights the crucial role DFMs play for wealth
managers and financial advisors. DFMs have shown good growth in
assets under management or administration since 2019, although we
expect a combination of regulation and
market saturation to put a dampener on
this in the future.”
Carolyn Erasmus, Country Head South
Africa at Bravura, added: “Across the board,
the current backdrop of a worldwide
downturn and inflation is causing huge
pressure in the sector. With regulation
expected to arrive shortly, we’re seeing elements of this report mirrored
in real life conversations, as DFMs look to cement their position in the
market with industry-leading technology that helps make sense of
complexity and create value right through the industry chain.”
According to The Collaborative Exchange’s data, the larger DFMs have
been growing their ZAR assets by more than 15% Compound Growth
Annual Rate (CGAR) over the past three years ended 31 December
2021. There are, however, several outliers that have underperformed
while exposing investors to higher volatility. Moreover, there has been a
plethora of new entrants, since The Collaborative Exchange’s last report
The research was conducted as part of The Collaborative Exchange’s
South African Discretionary Fund Manager Survey which aims to create
a single reference and guide capturing the breadth of information
regarding DFM service models in South Africa. In total, 26 DFM businesses
were surveyed, including 11 larger DFMs with AUM greater than R2.5-
billion were surveyed in 2021.
The report can be accessed via this link (note subscription required)
PEACE OF MIND
MitonOptimal provides advisers with peace of mind by offering
established investment expertise, dedicated support and long-term
partnership in managing their clients’ investment affairs.
George Dell | Executive Director, Discretionary Fund Management | E: firstname.lastname@example.org | T: 021 689 3579 | www.mitonoptimal.co.za
Issued by MitonOptimal Southern Africa Group (MitonOptimal). MitonOptimal South Africa (Pty) Ltd, registration no. 2005/032750/07, an authorised Financial Services Provider (“FSP”) with
license no. 28160. MitonOptimal South Africa (Pty) Ltd complies with all the requirements of the Financial Advisory and Intermediary Services (FAIS) Act (Act 37 of 2002).
South Africa’s Premier Investment
Conference is now open for registration
CAPE TOWN: 8 & 9 MARCH 2023
JOHANNESBURG: 13 & 14 MARCH 2023
Access to the latest
Local and international
SCAN THE QR CODE
TO REGISTER NOW
On the money
Making waves this quarter
Regulations and a new range of model portfolios
RESTRAIN OR REACT: GREYLISTING IN SOUTH AFRICA
By Webber Wentzel
In 2019, the Financial Action Task Force (FATF) red-flagged South
Africa for high levels of corruption. That means South Africa must
address its partial compliance or non-compliance with 20 of the
FATF’s “40 recommendations” by February 2023.
South Africa has taken various steps to tackle corruption. The
National Prosecuting Authority has enrolled cases, the Asset
Forfeiture Unit has frozen or granted preservation orders, the Special
Investigating Unit has instituted High Court cases and SARS has
launched investigations. South African banking institutions have
sound policies in place to combat terrorist financing. However,
many loopholes remain, and this
makes it urgent to enact the necessary
regulations in place and ensure
institutions have appropriate systems
Webber Wentzel will be conducting
sessions on the implications of
greylisting by the FATF for South Africa
with our financial and corporate clients
to address these issues.
MITONOPTIMAL LAUNCHES HEDGE FUND MODEL PORTFOLIOS
We are extremely excited to launch our much-awaited ASTUTE range
of model portfolios, containing only absolute return funds and hedge
funds. We saw a gap in the market for these types of investments due to
their ability to limit the downside in market drawdowns, but still benefit
from risk asset exposure. Our range includes:
• MitonOptimal ASTUTE Guarded Model. Focused on capital
preservation while targeting a total return of CPI +4% after all fees. This
model was created with the living annuity market in mind, especially
those clients in the early years of retirement, where “sequence-ofreturns”
risk is at its highest.
• MitonOptimal ASTUTE Bold Model. Focused on
capital appreciation and looking to benefit from the
underlying managers’ best ideas. This model will
target all-out risk and is not for the faint-hearted.
Due to Reg 28 restrictions, these products will only
be available in discretionary products, endowments
and living annuities.
For more information on the range, please contact
MitonOptimal South Africa (Pty) Limited is an Authorised Financial Services Provider License No. 28160 regulated by the Financial Sector Conduct Authority (FSCA). Registration No. 2005/032750/07.
Jacques de Kock,
and Portfolio Manager,
IT TAKES A TSUNAMI
As a child, an intense interest in property meant that Rael Levitt
was early in the game. A chance encounter as a teenager led
him to his first auction that ignited a fervent passion. By 17, he
regularly attended property auctions and at 20, he had bought
and sold 20 bank-foreclosed houses. While studying law at
UCT, Levitt launched an auction company from the canteen,
which changed the face of auctioneering in South Africa. His
company, Auction Alliance, transformed the industry, bringing
glamourised high-profile sales to the public eye.
In 2004, Levitt was caught in the historic tsunami that claimed so many
lives in Thailand. Seven years later, he faced a different kind of tsunami that
destroyed his reputation. The Quoin Rock Wine Estate auction was the
last time Levitt ascended the auction podium. The wine estate, belonging
to billionaire Dave King, was being bid on by Wendy Applebaum,
the country’s wealthiest woman. The series of mistakes Levitt made
following the auction would herald Auction Alliance’s rapid demise.
Levitt became a subject of “trial by media” in the court of public opinion
– later cleared of wrongdoing by the country’s courts. A decade later,
Levitt reflects on the lessons he has learnt. In the wake of his last-ever
auction, he built a successful new property business, Inospace, which
has become the largest owner and operator of logistics parks in South
Africa, having grown into a R3-billion company.
It takes a tsunami is a riveting read that incorporates the story of one
of the biggest property scandals of recent times into a deep reflection
on failure and fallibility – and what it takes to survive and bounce back.
Available at bookstores nationwide or www.ittakesatsunami.com.
PRACTICE MANAGEMENT | Compliance
COMBAT FINANCIAL CRIME
Financial service providers must apply a risk-based approach
to assist in combating money laundering.
The products and services that financial service providers
(FSPs) offer can be abused by criminals for money
laundering, the financing of terrorist activities and
proliferation of weapons of mass destruction activities.
It is important that FSPs implement a risk-based approach to
combating money laundering, terrorist financing and proliferation
financing. Comprehensive guidance on implementing a risk-based
approach is available in Financial Intelligence Centre (FIC) Guidance
Note 7 and FIC public compliance communication 53 (which are
both found on www.fic.gov.za).
In 2019, the Financial Action Task Force (FATF) assessed South
Africa’s capability and capacity for combating money laundering,
terrorist financing and proliferation financing and identified
certain weaknesses, including the inadequate adoption of a riskbased
approach among designated non-financial businesses
and professions. “South Africa should ensure that accountable
institutions adequately implement a risk-based approach, including
through better assessing and understanding their inherent risks
as well as refining and implementing their risk management and
compliance programmes to mitigate their risks,” FATF highlighted
in its assessment report published in October 2021.
Implementing a risk-based approach
As part of the risk-based approach, an FSP must conduct businesslevel
assessments, new product and process-risk assessments as well
as client-level assessments. The controls the FSP implements must
be in proportion to the level of inherent risk identified. Where there
is a heightened risk of money laundering and terrorist financing, the
FSP must have more stringent controls in place such as enhanced
due diligence and monitoring. Various factors may impact the level of
money laundering, terrorist financing and proliferation financing risk
the accountable institution may face. These factors include the client,
product or service type, the delivery channel, the geographic area as
well as any other factor the accountable institution deems relevant.
Practically speaking, different client types pose different levels
of risk; for example, it is widely accepted that foreign prominent
public officials and certain domestic prominent influential persons
pose a heightened risk. See Public Compliance Communication
(PCC) 51 for additional information.
There are various other client types that may be deemed as high
risk. Where a client’s beneficial owners pose a heightened risk, this
should be considered as part of the client-level risk assessment.
The different delivery channels or way the client is onboarded
presents different risk levels. For example, where a client is
onboarded face-to-face there is less risk of client identification
misrepresentation, whereas non-face-to-face scenarios where a
client is onboarded digitally could present a heightened risk.
FSPs must understand the vulnerabilities of the different
type of products and services that they offer, for example a
product that allows for third-party payments to high-risk
countries would potentially pose a heightened risk. PCC 49
and PCC 54 set out additional guidance on geographic area
risk factors that should be considered.
In addition to the factors highlighted above, the FSP may
take into account any other relevant factors when conducting
the risk assessment. Risk factors must be assessed holistically
to determine an overall risk that the particular business
relationship or single transaction with a client may pose.
Risk management compliance programme
The manner in which the FSP implements a risk-based approach
and the controls implemented in accordance with section 42
of the FIC Act must be set out in the risk management and
For more compliance information and guidance offered to FSPs,
refer to the FIC website (www.fic.gov.za). For further information
contact the FIC’s compliance contact centre on +27 12 641 6000
or log an online compliance query on the FIC website.
Beware the Twit
Giving voice to the people: your new reality.
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.
Early in his tenure at Twitter, self-titled
Chief Twit Elon Musk tweeted, “I’m not
saying we should downplay journalists.
I’m simply saying we should give voice/
elevate the people. Vox populi.” Whatever Musk
does either to build or destroy Twitter, voice has
already been given to the people. Journalists are
no longer the guardians of our news flow.
Cape Talk, the first talk show radio station
in Cape Town, recently celebrated its 25th
birthday. John Maytham hosted the station’s
first show 25 years ago and now hosts the
Afternoon Drive show. Reflecting on the past
25 years, Maytham shared his perspective as a
journalist in a pre-cellphone, pre-social media
world where he would observe the story he was
tasked to report on, write it up and then find a
way to phone that story into the radio station,
either using a public payphone or knocking on
the door of a local household and asking to use
When phoning the story in, Maytham
explained that it was communicated unfiltered
through his eyes. Journalists had autonomy over
what to observe, how to interpret whatever they
saw, and then of course total freedom in how
they wrote and reported on the story. In today’s
world of social media and mobile phones, the
journalist is no longer the sole arbiter of news
information. Anyone anywhere can share news
on their platform of choice, whether that news
is true or not.
The implication of this is that journalists
must reinvent themselves to remain relevant.
They cannot simply be a source of information
but must play the role of analysts, helping us
make sense of the news that is out there. Their
role as watchdogs for society is being taken to
a new level through investigative journalism
which, as we have seen in South Africa, is
key to uncovering the ills of society across all
sectors. Journalists are also having to redefine
their economic model. With the surplus of
information in the metaverse, the public is
more discerning about what they will pay for.
And as Musk is discovering with the exodus
of advertisers from Twitter, advertisers have
multiple channels to access “the people”.
The parallel between the worlds of financial
planning and journalism is striking. Only
25 years ago, financial planners were the
guardians of all financial information. Today,
my 92-year-old mother laments the fact that if
radio journalist Bruce Whitfield was hosting The
Money Show when she was earning money, she
and my father would have been so much better
informed about their financial decisions. As my
mother is now blind, listening to the radio is
her main window on the world. My guess is she
would be complaining even more about not
being informed if she could access the swathe
of real-time digital information, available from
literally hundreds of thousands of sources, at
the click of a button.
It’s not ideal for long-term
investors to be accessing
their investment values daily.
Recently I asked several groups of financial
planners about the biggest challenges they
face. Controlling the frequency of clients’
access to information came up repeatedly as
a concern. This is understandable. For example,
it’s not ideal for long-term investors to be
accessing their investment values daily, a
recipe for self-sabotaging investor behaviour.
But in the same way that journalists can no
longer control access to information, nor can
financial planners. Journalists have had to
redefine their value offer and their economic
models; financial planners are now being
challenged to do the same. It is imperative
that financial planners take up this challenge
to ensure that clients don’t fall foul of the
suggestion, that at least one Twit is likely to
make, that in this digital age people have the
power to do it for themselves.
It’s a Cruel, Crazy, Beautiful World
And it was a cruel, crazy 2022.
Head of Equilibrium
Florbela Yates is the head of
Equilibrium in the Momentum
Equilibrium is an independent
discretionary fund manager
that partners with financial
advisors to help them enable
their advice outcomes.
Equilibrium brings balance to
an advice practice by delivering
services and investment
solutions to help clients achieve
their defined investment goals.
Johnny Clegg was one of my favourite
South African artists, and as I sat down to
write this month’s column, his song “Cruel,
Crazy, Beautiful World” came to mind. The
song depicts how I felt about investment markets
I started the year faced with hope for what
lay ahead, Covid was behind us and the future
seemed bright. South African equities and bonds
were well priced and there seemed to be some
renewed optimism from both investors and asset
On 25 February 2022, it all changed when
Russia invaded Ukraine. More broadly, we started
to see signs of rising global inflation and the
potential for a recession in the US. Suddenly our
beautiful world morphed into a crazy one, filled
with increased volatility, lost hope and pessimism.
Locally, this was exacerbated by Eskom’s issues
and another period of rand weakness.
Uncertainty nearly always results in investors
unable to make any new investment decisions.
For some, it could even lead to disinvesting or
de-risking by moving to perceived risk-free
assets. This time was no different. As volatility
increased, South African investor flows moved
out of balanced funds into fixed income and
money market solutions. This trend continued
for most of 2022. We also saw a decrease in the
demand for offshore investments.
History has taught us that investors wishing
to meet their investment objectives should be
more concerned about “time in the market”
than “timing the market”. By disinvesting when
markets are down, investors lock in those
negative returns. And then they miss out on
the upside when markets once again begin
to perform. In a world where people are living
longer and saving too little, seeing this erosion
of wealth is heartbreaking for financial advisors
and asset managers alike, who are both set on
helping clients to achieve their financial goals.
Despite all the evidence and conversations
pointing to the need to remain invested, many
clients would have ended the year with reduced
investment amounts – ignoring the advice of
their trusted financial advisors and destroying
their personal wealth.
Looking back, it is sad to see clients who chose
to disinvest who are now faced with insufficient
capital for their needs. However, we can help
them by continuing to manage portfolios that
cater for those outcomes. I cannot predict when
the market will turn, but I do know that only
those who stay invested will reap the rewards of
market performance. It is reasonable to say that
the current market offers value, so now might
be the time for clients waiting on the sidelines
to start considering getting back in. For clients
who continue to be cautious, it’s not necessary
to invest everything at once – you could consider
a phasing-in approach.
At Equilibrium, we make it easy for you to
help your clients achieve their goals and stay
invested. We are here to help you get your clients
to their goals with more certainty and less anxiety,
keeping them on their journey to achieving their
investment outcomes. Our purpose is to create
a sustainable investment proposition built with
your clients’ objectives in mind. We know you and
your clients are unique, and investing is personal.
That’s why we offer purposefully built solutions
capable of achieving particular and defined
We really do live in a world that is, at times,
crazy or chaotic (2022 is a prime example of this),
it can be cruel (especially to those whose capital
has been eroded or who haven’t saved enough)
but most of the time, it’s beautiful.
At the beginning of a new year, I am filled
with optimism and excitement. Most of all, I am
confident that our partnership with our advisors
will continue to help us get their clients to their
financial goals. I am grateful for the opportunity
to make a difference in people’s journey to
financial freedom and I am blessed to work with a
team of investment professionals who truly care
about making a difference in their clients’ lives.
The best that I can hope for is that logic
prevails, clients stay invested (or start investing if
they haven’t yet) and that together we can build
a better financial future for all.
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.
Improving the lives of others.
Kobus Kleyn, CFP®, Tax
and Fiduciary Practitioner,
Kobus Kleyn has published
over 200 articles and authored
three books. He is a multiple
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.
As financial professionals in a noble
profession, we must change people’s lives
for the better while we, consequently,
improve our lives too.
In the process, we take care of clients and their
families. Taking care of families through their life
cycles and during life-changing events can be
emotional for us as professionals and our staff.
Financial advisors are, in most cases, significantly
more stressed than their clients. According to a
study by the Financial Planning Association, 63%
of clients experience high or moderate stress, while
71% of advisors admit to being stressed.
Stress levels year on year are increasing, with
28% of advisors having more stress than a year ago
and 44% having more than five years ago. The same
questions indicate lower stress levels for clients. The
pandemic has played a significant role in advisor
stress levels, and there is no doubt that advisors’
health was impacted. Issues like global inflation,
market volatility, the new digital virtual world and
the cost of running a practice are not helpful.
When clients or family members pass away or
have a disability or critical illness, it can bring raw
emotions to the front and we, as advisors, have
to take it all in while staying calm and focused on
ensuring we take care of our fiduciary duties in
support of the family when most needed. In the
last 30 months many of us lost more clients, than
during our whole time in our profession.
A close bond will form if you have been a
custodian of a client’s financial plan and servant
for 20 years. If something were to happen to the
client or family, you cannot avoid being impacted
by the emotions. That conversation during an ugly
divorce, a chat about teenage children involved
with drugs or the loss of a family member or job will
bring emotions and stress to you, your client and
your staff. The question that comes to mind is, while
you take care of your clients, who is taking care of
you? What can you do to ensure self-care? If you do
not take care of yourself, you may not be there long
enough to keep taking care of your clients!
Apart from the emotional part of our profession,
many professionals work very long hours in a most
challenging profession to build a sustainable
practice while achieving minimum qualification
and experience, with the most severe financial
constraints and income restrictions. If the stress
and emotional aspects are not controlled, it can be
a disaster waiting to happen with our health and
practice survival. We have to mitigate these danger
areas by working towards a balanced lifestyle.
Fortunately, the pandemic had some silver
linings as well and the major one to me is that it
pulled the digital virtual world forward by five
to 10 years. It did the same with technology and
allowed us to create hybrid practices. Concepts
like #workingfromhome, #workingfromanywhere
and even #workingfromtravel became the new
buzzwords. It is now in our hands as entrepreneurs
to embrace these concepts where possible to
mitigate stress levels by removing some negative
stress items (office politics and traffic) and replacing
them with positives like a tranquil scenery, more
family time, better working hours and efficiency
to name but a few, while reducing overheads and
financial stress on the practice and family.
Find ways and means to take care of yourself
through ongoing initiatives to allow you to keep
taking care of your clients and our profession. It
is important to identify stress issues, control what
can be controlled and do not stress about matters
outside of your control. Once you have recognised
these stresses, you can manage, plan and organise
around them in your practice. It is critical to work
on the whole person concept and always embrace a
balanced lifestyle with a positive attitude. It is about
mindset, mindfulness and the pursuit of happiness
in your and your family’s lives. “If you don’t make
time for your wellness, you will be forced to make
time for your illness” - anonymous.
The local need for
truly global advice
The need for truly global investment expertise to support the
local advice industry is more pressing than ever, but why?
In August 2022, Discovery Group announced the launch of
Cogence, South Africa’s first “truly global” discretionary fund
manager (DFM) with the ambition of significantly enhancing
the business of wealth creation in the country. Speaking at the
launch, Discovery CEO Adrian Gore contextualised the rationale for
the new business by describing two trends that are fundamentally
transforming the global and local investment industry.
Firstly, investors need – and have been afforded – greater
global reach. However, the global investment landscape is
becoming even more vast, complex, sophisticated and volatile.
Secondly, the global shift to defined-contribution retirement
schemes means that the investment, as well as behavioural and
longevity risk associated with long-term investing has been
transferred almost entirely to the individual.
“Together, these trends create gaps in the local DFM market,
necessitating a ‘step up’ in the burgeoning advice industry,” says
Gore. To best equip financial advisers and their clients to take
advantage of the immense world of opportunity that comes with
offshore investing, the local savings industry stands to benefit
from truly global asset management expertise.
What’s all this global investment interest, anyway?
While there are numerous reasons why individual investors might
want to gain access to global markets, it ultimately boils down
to diversification. By diversifying a portfolio with an appropriate
mix of assets, it is possible to maximise expected returns for
a given level of risk. Naturally, the wider the choice of assets,
funds, management styles, markets, geographies, sectors and
so forth available to construct a diversified portfolio, the better
the theoretical risk/return balance. With South Africa’s market
representing only 1% of the global equity market, it’s easy to see
that constructing a portfolio of purely local assets bucks the logic
of diversification by limiting choice. In fact, the logic for global
diversification holds true, no matter where in the world you might
call home. Beyond optimising for risk and return, investing globally
further provides investors with access to promising industries and
themes that have little or no representation in the local market.
Think big tech, healthcare or automobiles.
With the offshore limit under Regulation 28 of the Pensions
Fund Act having been relaxed to 45%, local investors are afforded
an unprecedented opportunity to take advantage of all the world
has to offer. Says Gore, “No matter how you look at it, a rational
investor would want exposure to global markets.”
Why the need for a “truly global” DFM?
DFMs assist financial advisers in enhancing the investment
outcomes for their clients. In part, they achieve this by performing,
or advising, on the strategic and tactical asset allocation required
to construct diversified portfolios tailored to the individual risk
tolerance and circumstance of the investor. Gore says that while
the rapidly growing DFM industry offers some investment choice,
control, local advice, reporting and modern technology – there is
a “need for change”. The sheer scale of global markets suggests
that for any local business to keep fully abreast of the fund
and asset choices available abroad would be a daunting, if not
impossible, task. While it is possible for a local firm to monitor local
opportunities – the local partner to Cogence, RisCura, conducts
research on every asset manager in the country to inform its
local manager allocations in the Cogence model portfolios – this
scale explodes by orders of magnitude when looking abroad.
Moreover, global markets are volatile and growing increasingly
complex due to the rise of alternative asset classes such as private
credit and equity and hedge funds.
There are few companies in the world that have the analytic
capabilities and global presence required to carry out the
research to develop a comprehensive understanding of the risks
and opportunities that exist in such a sophisticated investment
universe. While some local DFMs have a global footprint, none
previously have had a full global reach.
It is for this reason that Cogence brought the global model
portfolio asset allocation advice of BlackRock, one of the world’s
leading asset managers, along with its leading investment and
risk management technology platform, Aladdin Wealth, to the
service of local advisers. As a truly global asset manager, BlackRock
in September 2022 counted the expertise of over 2 600 investment
professionals focused on research, portfolio management and
trading from its offices in more than 35 countries to administer
more than USD8.5-trillion in assets. That is over 45 times the assets
under administration of the entire South African unit trust industry.
“Cogence will leverage off the full scale of BlackRock’s
investment research and global expertise, which is essential in
such a complex world,” says Kenny Rabson, Discovery Invest CEO.
“BlackRock is uniquely positioned to help clients navigate this
complex global environment and evolve client portfolios to aim
to maximise the success of future outcomes,” believes Rabson.
FPI | Financial Planner of the Year
Meet the 2022 FPI
Financial Planner of the Year
Blue Chip speaks to Palesa Dube, CFP®, the 2022 winner
of the Financial Planner of the Year Award.
Palesa Dube, CFP®, Director and Wealth Manager, Wealth Creed
FPI | Financial Planner of the Year
The Financial Planner of the Year Award, launched in 2000, is
the most prestigious award in the industry. It recognises South
Africa’s top CERTIFIED FINANCIAL PLANNER® – a first-class
financial planner who demonstrates exceptional service and
impeccable ethics in client service and who brings innovation, flawless
skill as well as all-round excellence to the profession.
Palesa Dube, CFP®, director at Wealth Creed, is a seasoned
professional and practising member of the FPI with 18 years of
industry-related experience. She exudes a passion for wealth
management and has expertise in investment and retirement
planning, estate as well as legacy planning for high-net-worth
individuals and corporate clients.
When Dube looks back to the beginning of her career in the
early 2000s, she realises how limited a horizon her younger eyes
could see. Her ambition was to build something that had value. She
believes that the profession allows her to do just that as it offers the
opportunity to help individuals and families fulfil their financial and
Palesa, well done! After a gruelling competition, you have been
named the FPI Financial Planner of the Year for 2022. What does
winning the award mean to you?
Thank you very much. Stepping out of the corporate environment
to start an independent advisory firm with little to no backing was
a massive leap of faith. And to keep going despite the challenges
the environment posed, especially in the last two to three years,
truly was an ask. This award makes the journey so far entirely worth
it. It is testament firstly that there is a place and need for our clientcentric
approach to wealth management. Secondly, it gives us great
confidence that we are building a formidable practice [Wealth
Creed] that firmly holds its ground in the market and which our
current and prospective clients can be proud to be associated with.
What was your motivation for entering the Financial Planner of
the Year Award?
I saw the competition as an ideal platform to showcase the
experience and expertise that exist in our profession, more
especially of black and female financial planning professionals. The
profession thankfully looks much more diverse now than what it was
when I began my career, but there’s still a long way to go. It was an
opportune time to shine a spotlight on the strides we’ve been able
to achieve so far. My hope is that my journey and success so far will
encourage others to pursue a career in financial planning.
Besides winning the FPI award, what has been the highlight of
I am especially proud of the business we are building. One of the
pivotal reasons for us starting an independent wealth management
firm was so that we would be in a position 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. It has been truly gratifying to see that vision
take shape and grow in the way that it is.
Our profession affords us the
opportunity to help clients achieve
their highest and most important
financial and life aspirations.
What do you consider to be the most important trait of an
accomplished financial advisor?
You must be able to put the client first in all that you do. Our
profession affords us the opportunity to help clients achieve their
highest and most important financial and life aspirations. In my
experience, clients want the assurance and comfort that their
advisor is attuned to their goals and always has their best interests
at heart. In return they will stay committed to the solutions you
advise, and, in the process, all our interests can be met without
conflict. It is also important that the advisor is a professional
member of FPI. As we know, FPI is the standard setter for financial
planning and professional financial advice in South Africa.
What changes would you like to see in the profession?
I believe that there is an important role that independent financial
advisory firms can play in the market, but they need to be better
supported by the various industry bodies through measures such
as development programmes that cater for the progressive life
stages of these enterprises. Often the need for growing financial
service providers (FSPs) is working capital or funding to assist in
scaling the business. The funding models available need to speak
to this and be flexible.
As a profession, 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 client-centric 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 REGISTERED
FINANCIAL PRACTITIONER and FINANCIAL SERVICES ADVISOR
designations are a clear indication of our commitment to further
professionalising financial planning. The ball is now in our court
as practising members, tied and independent, 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. It is also
not who you work for (tied or independent) but about adhering
to the professional standard and always putting your clients’
As this year’s FPI ambassador, how will you use this platform to
Part of FPI’s strategic objectives for the coming year include driving
growth in the number of new graduate entrants into the financial
planning profession and seeing them pursuing the three South
FPI | Financial Planner of the Year
African Qualifications Authority (SAQA) registered designations
it offers. They are also focused on encouraging more experienced
members to reinstate their membership.
My efforts therefore will be in support of these objectives
through mentoring and other activities so that the next
generation see financial planning as a profession of choice. We
also need to place emphasis on the challenges that cause more
experienced planners to leave the profession which among
others is an environment that doesn’t adequately support
entrepreneurship in the sector.
You feel strongly about making financial planning more
accessible to a broader spectrum of the community. Please
share your thoughts on this. How should the profession go
about doing this?
Financial inclusion, consumer protection and financial education
are some of the imperatives that the Financial Sector Conduct
Authority and National Treasury are tasked with, which they
address through initiatives such as Money Smart Week SA’s annual
campaigns. Furthermore, the Financial Sector Codes and current
retirement fund legislation also place responsibility on those
FPI | Financial Planner of the Year
industry players to educate and empower the markets they serve
so that consumers can make more informed financial decisions for
themselves. Being in the advisory space, we know that there is a gap
between consumers understanding the theoretical aspects of finances
and implementing the knowledge in a manner that best serves them.
This gap can be neatly bridged by incorporating an advice process and
will ultimately improve consumer outcomes. I believe our profession
is well positioned to support such initiatives in a manner that ensures
that all interests are appropriately aligned.
More than anything, it has given our practice the
confidence to continue on our growth journey with the
assurance that our value proposition and approach to
financial planning is sound.
As a profession, I think we need to
take pride in the strides we have
made in the industry over the years.
Please speak to us about the importance of representation in the
financial planning profession, particularly that of females and those
The importance of diversity and inclusion for the sustainability of any
industry is well established. Companies thrive when they embrace
different races, cultures and backgrounds because this better
positions them to respond to the needs of their clients. Ethically and
morally, it is simply the right thing to do. Finances are a very personal
matter and inclusion of female professionals in the room can help
the financial services industrydevelop products and solutions that
truly speak to the needs of this growing segment in a manner they
want to be addressed.
This award makes the journey
so far entirely worth it.
How should the profession improve clients’ experience of financial
planning and ultimately their financial planning outcomes?
I believe we do well if we consistently try to improve our clients’
experience and remove the proverbial “rubs” when it comes to
managing wealth. Our profession remains fragmented, resulting in
clients typically having to consult a number of professionals in order
to address all aspects of their financial and risk management.
To address this, we need to collaborate with other professionals
in aspects we are not licensed to give advice or if another skill set
is required. I like to use the example of a conductor in an orchestra.
We increase our value in the client’s life if we view ourselves as a
conductor in managing wealth and demonstrate to them how all these
aspects from financial, legal, risk and tax come together in harmony to
solve their most pressing issues.
Please share a message of motivation for those that have considered
competing for the FPI Financial Planner of the Year Award.
I certainly encourage you to enter the competition because if
anything it gives you the opportunity to revisit your financial
planning process and assess it against the benchmark set by FPI.
We have incorporated those learnings in our processes, reporting
and documentation and can attest to how this has further elevated
the standard of our work.
2019 – Present: Director and Wealth Manager | Wealth Creed
2015-2018: Wealth Manager | Absa Wealth
2005-2014: Advisory Partner | Citadel
2004-2005: Graduate Financial Planner | Absa PFS
2022: Advanced Diploma in Trust and Estate Administration
[University of the Free State]
2007: CERTIFIED FINANCIAL PLANNER® [FPI]
2007: Post Graduate Diploma in Financial Planning [University
of the Free State]
2003: BCom (Investment Management) [University
INVESTMENT | DFM
A focus on the future
If we had a time machine, we could go back in time and once
again experience what the investment industry was like just
a few years ago to realise how things have changed.
Jeanette Marais, CEO, Momentum Investments and Deputy CEO, Momentum Metropolitan Holdings
INVESTMENT | DFM
In 1995, there were less than 40 unit trusts (collective
investment schemes) in South Africa when we launched
Momentum Wealth, South Africa’s first insurer-owned Linked
Investment Service Provider (LISP). Today, there are over 2 000
unit trusts in South Africa.
The industry is characterised by immense complexity and
rapid change. The number and sophistication of industry players
has increased, we are bombarded by product choice and digital
transformation is shaping how we need to think about the future.
When we speak about investing of the future, words like
“megatrends” and “digital disruption” come to mind. We can
analyse how these trends are disrupting the industry, but do we
understand how to disrupt our own value propositions?
Niels Bohr, the Nobel laureate in Physics and father of the
atomic model, once said: “Prediction is very difficult, especially if
it’s about the future!”
None of us has a crystal ball, making the future a mysterious
but exciting destination. What we can do, is position ourselves
according to what we know and disrupt ourselves, rather than
In my opinion, the key lies in partnerships. With increasing
complexity, we need to focus on our speciality and niche and find
the right partners to journey towards success with.
CLIENT OF THE FUTURE
A natural place to begin is with the client of the future.
I often quote a study done by Morningstar in 2019, where
researchers gave investors a list of 15 attributes and asked them
to rank them according to what was most important for them in
their financial advisor. They also gave the same list to financial
advisors and asked them to rank the attributes according to what
they thought investors valued.
The first disconnect was with the attribute of “help me reach
my financial goals”. Investors ranked this as their top priority, while
financial advisors thought that “understand me and my unique
needs” would have been their top priority. Investors ranked “help
me maximise my returns” as the fourth-most important, while
financial advisors ranked this only 14th. Clearly, there is some work
to be done to understand the client of the future before we can
position ourselves to meet them.
The client of the future also wants to be met in a different way.
According to the Millennial Disruption Index (MDI), over 70% of
millennials said they would be more excited about a new offering
in financial services from the likes of Google, Amazon, Apple and
PayPal than from their own bank.
Changing demands of clients, the rise of the self-help investor
and advanced digital capabilities are pointing to a future where
our engagement with our clients will be very different. We need to
give clients what they want, not what we think they want.
KEY TO SUCCESS
Rising complexity means that success in the future will not be a
one-man game. The financial advisor, investment manager and
With increasing complexity, we
need to focus on our speciality and
niche and find the right partners
to journey towards success with.
investment platform of the future must partner with each other
and disrupt their value propositions to meet the needs of our
clients. In my mind, I see this partnership as a triangle between
financial advisors, investment managers and investment platforms,
with the client at the centre.
Financial advisors need to partner with other industry players
to give their clients the best outcomes. One such benefit can be
seen in partnering with a discretionary fund manager (DFM), such
as Equilibrium by Momentum.
According to a study conducted by Rathbones in the United
Kingdom in 2019, advisors who partnered with a DFM experienced
several benefits. For example, more than 70% of advisors saw
an increase in client portfolio performance and 66% quoted
improvements in their clients’ risk/return profile. On top of
this, about 60% saw an increase in revenues from their existing
clients because they could devote their energy to building those
relationships and delivering financial advice. Partnering with a
DFM frees up your capacity to focus on your value adds.
On our own investment platform, Momentum Wealth, we
analysed to determine the internal rate of return (IRR) that advisors
achieved for our joint clients over the last 10 years, ending in
December 2021. Over the period, the average yearly inflation rate
(CPI) was 5.03%. A shocking 14% of financial advisors returned
less than CPI over the period, while 61% returned CPI+2% or less.
The worrying factor is what happens to clients who need to draw
5% of their income from their living annuities, while protecting
their capital. Only 12% of advisors would have had clients who
could achieve this.
Partnering with a DFM such as Equilibrium, which specialises
in bringing balance into an advisor’s practice, can greatly enhance
a client’s outcomes with access to diversified portfolios and
professional investment management, while also serving as a
business partner, so that advisors can spend more time with their
clients and grow their practices.
There is also a strong case to adopt digital. The 2019 US Advisor
Metrics report from Cerulli Associates showed that “heavy
technology” advisory firms spend 34% less time resolving client
service issues and have 24% more time for practice management
activities, highlighting the effectiveness of technology for
increasing advisors’ ability to focus on the most important parts
of growing their business. Heavy technology-using advisory firms
also report an average of double the assets under management
of their “light” technology-using counterparts.
INVESTMENT | DFM
Do we understand how to disrupt
our own value propositions?
Clients are demanding this digital world. In fact, a report by
McKinsey issued in June 2015 already showed that at the time of the
report, 40-45% of affluent consumers who switched their primary
wealth management firm in the past 24 months moved to a direct,
digitally led firm.
We believe in the value of financial advice and a financial
advisor who digitally transforms their practice and partners with
an investment platform to integrate into their back office not only
frees up their time to spend time with clients, but also provides a
more seamless and superior personal service to clients. With us,
investing is personal and our investment platform (Momentum
Wealth) is embarking on a digital transformation journey so that
we can empower financial advisors with the tools and solutions
to help meet their clients’ financial needs and help them achieve
their goals effectively.
If you ask the question of what the future of investing looks like,
you will likely get many different answers.
What we do know is that clients are changing and digital
transformation is non-negotiable. The way to navigate this
changing world is to partner with specialists in those things
that we are not. Warren Buffet said it perfectly: “Should you
find yourself in a chronically leaking boat, energy devoted to
changing vessels is likely to be more productive than energy
devoted to patching leaks.”
Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider and part of Momentum Metropolitan Life Limited. 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. Momentum Investments is part of Momentum
Metropolitan Life Limited, an authorised financial services (FSP 6406) and registered credit (NCRCP173) provider.
INVESTMENT | Responsible investing
ESG: hype or pathway
to a better future?
There is hardly a conference or investment discussion lately
that does not put environmental, social and governance
(ESG) factors front and centre. There is a myriad of good
reasons why this is the case, although I do sometimes
share the view that the ESG discussion is driven more by the
marketing agenda than from an investment perspective.
As a broad basket of principles, I am totally on board with the
intent of ESG. Environmental issues are real, and we need to address
them or we will gift our children a future of turbulent weather and
a planet that is more uncomfortable to live on than it is today.
Looking at social factors, we cannot have a stable society if there
are glaring inequalities between people.
One of the future challenges will be intergenerational wealth
transfer as the younger generation will have fewer opportunities
compared to their parents in a more competitive and winnertakes-all
environment. Governance and the proper functioning of
business and ultimately markets is a key factor for the accumulation
and growth of wealth.
How should investors think about
ESG and differentiate between the
hype and real-world impacts?
All participants need to get their fair share and bad governance
allows different sets of stakeholders to get a disproportionate share
of economic benefits, either through preference mechanisms or,
in the worst-case scenario, through corruption.
One of the challenges of ESG is that the three different
components sometimes do not align and in other cases pull in
opposite directions. As an example, addressing environmental
concerns can have detrimental effects on the social factor. The
transitioning away from coal can lead to job losses in areas that
are dependent on the business and power stations that rely on
coal as an energy source.
How should investors think about ESG and differentiate between
the hype and real-world impacts? To me, the obvious test is whether
there is evident intent and transparency. A credible approach to
ESG needs to be deliberate with a clear-cut approach and palpable
outcomes. These outcomes and evidence should be shared openly
and transparently. It is also important to recognise that there are
many trade-offs involved and when evaluating whether the ESG
approach undertaken by an investment manager is credible, it
must be apparent that these trade-offs and conflicts need to be
At Momentum Investments, we follow an integrated approach
and consider how best and practically to apply ESG in different
asset classes and investment vehicles. We have a climate change
policy that incorporates a just transition, which recognises that
action on environmental issues needs to consider the social
impact, as well as incorporate the concept of fair share, meaning
the main contributors to carbon emissions – the developed world
– need to take the brunt of actions to address climate change.
Fair share is not only a philosophical approach but also a practical
one – the developed world has financial resources that are just
not available in the emerging world.
We therefore believe the right approach is a nuanced
approach. We invest in renewable energy projects to address
environmental issues but also recognise that we need to invest
in Eskom bonds (government guaranteed of course), because
energy security is important and currently one of the biggest
threats to economic growth.
Can adoption of ESG drive positive
change and shape our future world? In
my view undoubtedly so, but it needs
to be a considered approach.
At Momentum Investments, we drive
both intentionality and transparency
and openly share the progress
(and pitfalls) that we have made in
integrating ESG. For more information,
visit our Responsible Investing page on
At Momentum Investments, we take
our role of managing clients’ money
very seriously. We continuously assess
what the best approaches and practices
are to prudently manage clients’ capital.
Through sustainable investment
practices we can deliver real results
for clients that ultimately benefit all
stakeholders, because with us, investing
Mike Adsetts, Acting
Chief Investment Officer,
Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
FINANCIAL PLANNING | Tax
Why optimising tax incentives
is a great way to create wealth
Almost every financial decision your clients make has a tax implication.
Just as fuel efficiency is one of the important aspects to
consider when buying a car, so should tax be an important
consideration for any financial plan and investment strategy.
With the smart use of tax-incentivised investment products,
your clients can create significant wealth with help from the taxman.
Tax can be complicated and confusing and for most people
it is a sensitive and personal subject they choose to avoid. But
with a few smart moves, especially when planning for financial
independence or retirement, they can benefit significantly from
tax incentives and increase the probability of them achieving their
They can use two tax-efficient ways to create wealth over time:
a retirement annuity and a tax-free investment (also known as a
tax-free savings account). If they are already using one or both,
they can invest more into them, within the limits, to make full use
of the available tax opportunities.
Every tax year a person can claim a tax deduction for the money
invested in a retirement fund. The tax deduction is limited to 27.5%
of their taxable income or remuneration before any deductions
are made, whichever is higher, subject to a maximum of R350 000.
They can do this whether they are self-employed or earning
a salary but not contributing the full amount to their employer’s
If clients have not yet used the full tax deduction available
to them for the tax year, they can make an additional lump sum
payment to their retirement annuity before the tax year ends on
28 February 2023.
In addition to the tax break clients get on the money they invest,
they also enjoy tax-free growth in their retirement annuity – they
don’t pay income tax, dividends tax or capital gains tax while the
money is growing.
But, some people say, when you retire you will pay tax on the
income. This is true, but after the age of 65 clients could pay less
tax because of lower income levels in retirement, higher rebates
and higher deductions for medical expenses.
Although clients don’t get a tax deduction for money they invest
in a tax-free investment, they still enjoy tax-free growth. And they
won’t pay any tax on the proceeds when they decide to take money
out of the investment.
Since the 2021 tax year, clients can invest up to R36 000 every
tax year (R3 000 per month) in a tax-free investment, limited
to R500 000 over their lifetime. Before this, the yearly limit was
R33 000. Government may adjust these limits from time to time.
The illustration (above) shows the significant effect that tax-free
growth, coupled with the wonder of compounding, could have
on an investment over the longer term. Although a tax-free
investment gives clients the opportunity to withdraw money at
any time, the benefit of leaving the money to grow for as long as
possible should outweigh the urge to withdraw money unless it
is for an extreme financial emergency.
OPTIMISE AVAILABLE TAX INCENTIVES
Investing is personal and each client’s
circumstances unique. The secret is to make
sure that clients use these tax incentives
optimally according to their specific situation
every year and consistently over time. By
doing this they can reduce the effect of tax
on their investments and increase the growth
potential on their journey to success. Using the
Retirement Annuity Option and the Flexible
Tax-free Option on the Momentum Wealth local
platform can help you implement tax-efficient
investment solutions for your clients so that
they can reap the full benefits of tax incentives
available to all taxpayers every year.
Pierre Jean Marais,
Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider and part of Momentum Metropolitan Life Limited. Momentum Investments is part of Momentum Metropolitan Life
Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
INVESTMENT | Thematic investing
The dawn of
We live in an increasingly complex, connected and
ever-changing world, where unprecedented digital
innovations are disrupting entire industries and at a
time when we are facing major human and climate
challenges to build the world of tomorrow for future generations.
It is also changing the way we look at investing. Thematic
investing has become progressively more popular and focuses on
the future investment landscape, targeting economic development
and trends that will shape the future. It is a holistic solution that
will not only focus on a single event or area of development but
will capture a wide variety of themes that may affect the world.
Disruptive innovations, ideas and societal changes are embraced
in today’s world, and this is creating opportunities alongside
it. Technological innovations, demographic and social trends,
urbanisation and environmental challenges are here to stay, and
the importance thereof is continuously being forced into the
spotlight. These developments converge into larger themes that
will endure over the longer term.
All these themes create unique investment opportunities that
will persist as disruptive ideas and technological advancements
are rapidly reshaping the world we live in. However, not all themes
are created equal. Some are structural and long term in nature
and some are short-term anomalies but every change represents
an investment opportunity.
Thematic investing encapsulates the art of identifying these
opportunities, based on personal experiences and aligning
investments with beliefs and ideas. The Momentum Future
Trends Fund is premised on a top-down investment approach
that helps investors gain exposure to trends and ideas through
a portfolio of companies expected to benefit most from such
transformative and structural changes.
Our unique and innovative investment approach favours themes
where the fundamentals are not only about one specific sector.
We believe six mega-trends will shape the future:
• Climate change
• Technological innovation
• Demographic change
• Space exploration
• Shifting economic power
Diversification is important, thereby reducing the risk should a
certain trend fail to materialise.
We believe that an active strategy is the way to implement
and manage the Momentum Future Trends Fund. The underlying
themes will be executed through specialist mutual funds or
exchange traded funds (ETFs). This ensures that we have control
over the risk and allocation to themes.
The Momentum Future Trends Fund is suited for investors
with a long-term investment horizon and consenting to a high
level of risk, while seeking to diversify
their portfolios. The fund provides
compelling investment opportunities
for those willing to take a different
perspective and concentrate on the
big picture. In a broader multi-asset
investment portfolio, this fund will
give investors access to future trends
that will shape the future of the world
we live in, giving them access to
higher-yielding growth asset classes
that focus on future innovation.
With us, investing is personal.
With the Momentum Future Trends
Fund, clients not only can grow their
capital over the long term, but it also
gives them the opportunity to help
fund the way the future will shape
For more information go to
momentum.co.za/MCI or speak to
your financial advisor.
Eugene Botha, Deputy Chief
Investment Officer, Momentum
Momentum Collective Investments (RF) (Pty) Ltd (the “Manager”), registration number 1987/004287/07, is authorised in terms of the Collective Investment Schemes Control Act, No 45 of 2002 to administer
Collective Investment Schemes (CIS) in Securities. The Manager is the manager of the Momentum Collective Investments Scheme. Standard Bank of South Africa Limited, registration number 1962/000738/06,
is the trustee of the scheme. CISs are generally medium to long-term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the
future. The terms and conditions, a schedule of fees, charges and maximum commissions and additional risks are available on the minimum disclosure document (MDD) and quarterly investor report
(QIR) for each portfolio which is available on www.momentum.co.za/mci. All performance figures are net of fees and represents the A class in each portfolio. Momentum Investments is part of Momentum
Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
INVESTMENT | Cryptocurrency
as an investment
Cryptocurrencies are sweeping the world in terms of news headlines, but the question
remains in terms of the suitability of the asset class other than pure speculation.
There are two key questions that investors face to determine the
suitability of including crypto assets in an investment portfolio:
1. What are the requirements in terms of credit intermediation,
regulation and infrastructure as well as cost?
2. More importantly, what should the role be of crypto assets
within a portfolio?
These questions are addressed by looking at a couple of specific
investment factors, risks and market dynamics.
The investment case can simplistically be broken down into
relevance and risks on the one side and then return expectations
and diversification on the other.
Rates of return are measured by an increase in the asset
price and the interest paid or the dividend stream on a specific
investment. The only source of return for a crypto asset is to
increase in price. Given the nature of the change in price over
time, driven by pure supply and demand and perhaps other
speculative views, crypto assets do have the ability to behave
very differently to traditional asset classes and perhaps provide
a hedge against the volatility of global monetary systems and
therefore a source of diversification.
Although cryptocurrencies are permitted in most of the
world’s major economies, there are still a range of risks, in
addition to volatile market price movements, that should raise
concerns for inclusion in an investment portfolio. These risks
include security risks, valuation risk and uncertainty around the
Besides these risks, there needs to be an internationally trusted
marketplace for institutional-only cryptocurrency trading.
However, the most interesting development in cryptocurrencies
is in the world of investment fund management. Specialist
cryptocurrency funds have been created which seek to buy and sell
in the same way one might with equities or other securities. The
expectation for this market is to grow quickly as people seek noncorrelated
There are several possibilities to explore over time as risks
subside and more visibility around regulations transpires:
• Direct investments: these can be risky, however, especially
when investing in larger amounts, given storage and
• Futures: available if one has the expertise to trade them.
• Passive crypto funds: through exchange-traded products, for
example. These offer capacity but are a blunt instrument. They
have concentration risk (because of the dominance, for the
time being, of Bitcoin).
• Active hedge funds: exploitation of the inefficiencies
presented by the market.
• Venture capital funds: these can offer purer forms of Digital
Ledger Technology (DLT) exposure, but often have long lockups.
Cryptocurrency as an investment option would greatly increase
fiduciary risk and liability. Traditional valuation methods for
determining what a stock is worth do not necessarily work when
evaluating crypto assets. Crypto volatility requires investors to be
patient over the long term and during significant up and down
swings, which could result in poor investment outcomes if you
were to exit the sector too quickly.
An improved infrastructure is needed to accommodate
investments and encourage more widespread acceptance of
cryptocurrency. Besides that, potential regulatory and legal
hurdles create market hesitation to use cryptocurrency. Until
a properly regulated and accountable fund exists, based in a
respectable financial territory and with strong custodianship
arrangements in place, we must tread with caution.
At Momentum Investments, we relentlessly pursue and
interrogate ideas and opportunities to best deliver on our
outcome-based investing philosophy. With
us, investing is personal, and we seek those
investment ideas and opportunities that will
allow our portfolios to meet clients’ long-term
expectations and objectives as prudently and
robustly as possible.
While the simple yet profound wisdom
of Warren Buffett – “If you don’t understand
it, don’t invest in it” – provides the answer,
some investors may still feel compelled. It
is important to remember that the crypto
space can be highly volatile. Even though
cryptocurrencies have been declared as a
financial product under the Financial Advisory
and Intermediary Services Act of 2002 there
is still a lot of uncertainty regarding the
regulation of these instruments and therefore
makes investing in them a risky proposition.
Eugene Botha, Deputy
Chief Investment Officer,
Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).
INVESTMENT | Collectables
Why do people invest?
Why do they save?
Many people invest to fulfill their wants and desires.
Every single person on the planet, no matter their
background, race or circumstances, has dreams. And
a dream is often molded by the tangible (somewhat
materialistic) items money can buy.
Consumerism is a term that came about in the early 1900s and
today it is defined as the protection or promotion of the interests
of consumers. I would change this definition and rather say, it
is people that buy products and services that are created for
people. And today we live in a world dominated by consumerism.
The largest companies in the world like Apple, Amazon and Tesla
all provide products to consumers like you and me. And if their
size is anything to go by it tells us that the dominant theme is that
people like us are buying items that fulfill our desires. It’s no longer
just an iPhone but a watch and an iPad in one. It’s no longer just a
car but one that drives itself and is focused on the sustainability of
our planet. This is the essence of consumerism today.
The next logical question is: can some companies be perceived
as more desirable than others? The simple answer is, yes. Take the
wonderful world of luxury watches. Recently Swatch partnered with
Omega for a collaboration that celebrated Omega’s Speedmaster.
Swatch has always been recognised as a hip and happening brand.
Through a smart marketing brand-play it had people queuing for
hours trying to get their hands on this piece. On the resale market,
some of them were even going for quadruple the original sales
price. This is a prime example of our world of consumerism.
People save for months and years to buy an IWC or Jaeger-
LeCoultre (both super-luxurious watch brands) and luxury
sportscars like Ferrari or Lamborghini. These individuals have an
acute understanding of how to get there to realise the dream.
The recipe for success begins with having a financial plan and
then finding a place to invest or save. For clients to realise their
dreams, the gap to earning capacity and the price of the item is
often too wide to save the cash under the mattress and hope for
the best. There are two very important contributors to investing.
Firstly, the return earned on a fund and secondly, having these
returns reinvested month after month to build on the money
already invested. This is how investors can make the eighth
wonder of the world – compound growth – work for them.
So how does the magic of compounding work? Using a
simple example: if your client put R100 000 under their mattress
five years ago they would still have the same amount today,
but thanks to inflation that money is
worth less. But if they invested in an
established equity fund five years ago
and this fund delivered a yearly return
of 7% then the client would have R141
477.82 or just over 41% growth based
on quarterly compounding. If you
chose not to reinvest and take your
growth out every year your client would
have received R35 000 – the magic of
compounding allowed the investment
to grow by an extra R6 477.82. Thanks to
compounding, you get an 6.48% growth
on your investment and bringing those
dreams a little closer. With us, investing is
personal. We understand that individuals
are unique and have different needs
(and dreams) and why it is important to
partner with the right people to achieve
your investment goals.
For more information go to
Kapil Joshi, Head of
The calculation above is intended only as guideline, always speak to a financial advisor for financial advice. Momentum Collective Investments (RF) (Pty) Ltd (the “Manager”), registration number
1987/004287/07, is authorised in terms of the Collective Investment Schemes Control Act, No 45 of 2002 to administer Collective Investment Schemes (CIS) in Securities. The Manager is the manager
of the Momentum Collective Investments Scheme. Standard Bank of South Africa Limited, registration number 1962/000738/06, is the trustee of the scheme. CISs are generally medium to longterm
investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. The terms and conditions, a schedule of fees, charges
and maximum commissions as well as additional risks are available on the minimum disclosure document (MDD) and quarterly investor report (QIR) for each portfolio which is available on www.
momentum.co.za/mci. All performance figures are net of fees and represents the A class in each portfolio.
INVESTMENT | Trends
The Gale of
We may look back on the year 2022 as the formative
period for what drives investment returns over the
next decade and longer. While it may feel like a period
of wealth destruction, in fact it may be the birth of the
next phase of wealth creation.
This concept of “creative destruction” is not new. In Hindu
mythology, the three Gods Brahma the Creator, Vishnu the Preserver
and Shiva the Destroyer (below left) work in a perpetual cycle with
the belief that they need to coexist so that balance is maintained
between old and new.
Similarly, Joseph Schumpeter (below centre) spoke about this
concept as a natural process of evolution, where old systems need
to die to be replaced with new ones.
Karl Marx (below right) applied it to finance and investments,
however: “The idea of creative destruction or annihilation implies
not only that capitalism destroys and reconfigures previous
economic orders, but also that it must ceaselessly devalue existing
wealth (whether through war, dereliction, or regular and periodic
economic crises) in order to clear the ground for the creation
of new wealth.” It feels a little like Marx was on the money in
2022. We had all the features of his theory present in war (Russia/
Ukraine), dereliction (cryptocurrencies) and economic crisis
(inflation driving economic recession).
Was wealth really being destroyed? In some cases, yes. The FTX/
cryptocurrency failure destroyed wealth. Arguably an investor
holding global government bonds also lost a substantial portion
of their capital last year.
But we are talking about larger events here. The Global Financial
Crisis in 2008/09 was a period of wealth destruction which gave
birth to a period of wealth creation. But this came with new rules:
higher regulation on banks and the capital they hold; a new era
of support and bailouts by governments; and suppressed interest
rates which would continue for the next 14 years. These actions
and others underpinned a massive period of wealth creation.
The consequences of this phase started to be felt in 2022. Are we
entering the next phase of creative destruction?
INVESTMENT | Trends
Are we entering the next
phase of creative destruction?
There are numerous examples of this theme playing out in
• The rise of sustainable investing, or “ESG” investing driving the
destruction of industries such as fossil fuels and the creation of
industries such as electric-powered transport.
• Chinese regulation on how companies can profit from
the population, while simultaneously creating “common
prosperity” is another example of creative destruction at
work. Many Chinese technology-oriented companies suffered
in 2021/22. What may we see a decade from now? Economic
aspirations and human ingenuity will create a new opportunity
• Global political tensions have started to break down the
globalisation trend we have seen for several decades.
“De-globalisation” is real and the destruction of the default
outsourcing to the East approach is creating new investment
opportunities for providers in other countries.
• Higher interest rates (important: they are not yet high! Just
getting back to normal) have wreaked havoc on assets which
have not factored in the potential that financial support from
governments may wane. Does this drive the reallocation of
investment capital away from longer-term, higher-growth
industries with big payoffs, but big uncertainties, towards
industries which are more visible, more tangible and where
investment returns are more likely to be lower but positive?
• What to make of cryptocurrency? The destruction of value in this
asset class we saw in 2022 may well lead to its viability in future.
While it is built on the premise of “DeFi” , the likely regulation
to come – which is what happens when the man on the street
loses their money due to mismanagement or dereliction – may
well underpin a more viable approach to using this technology
The current period of creative destruction is necessary, for without
this release valve dampening financial excesses the problem may
have become too big to fix.
The GFC was a great example of this, born out of the Tech
Bubble (1999/2000) and left to its own devices until it imploded
in 2008. Recall also that Amazon and Google were born out of
this tech bubble.
As investors, we can’t change the course of history, nor can we
change the mega-trends such as these highlighted above. But
we can consider how to navigate these trends when looking to
preserve and grow wealth.
Rule number one is don’t lose capital permanently. FTX is
a perfect example of what to avoid here, as it fails not only an
investment merit case, but also a financial due diligence case
(the assets were not held in any form of safe custody, and the
business was established outside the ambit of strong oversight,
transparency and regulation). We can mitigate this risk in wealth
management by acting prudently with regard to what investments
may be worth and ensuring that there is good governance in the
At times avoiding these risks or the pressures to invest
where capital may be lost is harder than it appears. Two
fundamental ways to protect investors are: diversification (ie
spread your investments across assets, regions, sectors and
currencies) and position sizing (the amount of capital invested
in any particular asset).
Rule number two is to be humble. Acknowledge that you don’t
have all the answers, that the world is too complex to forecast and
that more things can happen than what you can consider may
happen. Being humble does not necessarily mean you can’t make
sensible investment decisions; in fact, it can help promote more
sensible decisions as your typical behavioural biases and errors
are less exposed.
Context is important here. Most often clients are investors with
multi-decade timeframes which
means they will be caught up
in both the excess of creation,
as well as the devastation of
destruction. But importantly, the
trend is upwards. If you can help
clients to hold on, the repeating
cycles of creative destruction
work in your and their favour to
Moods change quickly; just
12 months ago investors were
positive and returns were good.
Where will we be in this creativedestruction
cycle 12 months
Ian Jones, CEO, Fundhouse
PRACTICE MANAGEMENT | Employees
workers brings business
and investment benefits
Companies increasingly recognise the importance of
supporting employees through difficult times. Many have
taken a long-term view by investing in their people.
The world had barely begun its recovery from the
devastating human and economic effects of Covid-19
before the conflict in Ukraine triggered a spike in
commodity, fuel and food costs. More than 70-million
people around the world could be pushed back into poverty as a
result, the UN has estimated. Inflation in major economies is at the
highest levels in three decades, which is putting disproportionate
pressure on the poorest in society.
This is reflected in markets, with investors recognising that
governments have little fiscal room to manoeuvre. Against this
backdrop, the pressure on companies to support vulnerable or
lower-paid workers has intensified. At the same time, their financial
flexibility to do so has shrunk. However, companies increasingly
recognise the importance of supporting their key assets –
employees – through these difficult times. Many have chosen to
take a long-term view of their business by investing in their people.
To better understand the challenges facing businesses and
the choices they face, we have recently engaged with leading
organisations in the field, with some of those conversations
preserved through podcasts.
Through those engagements and the weight of academic
research, it’s clear that investing in workers’ wages can bring
material business benefits. Lower staff turnover and more
productive workers both make for more profitable and durable
businesses. Companies must be sensitive to the competitive
pressures of their industries, and blanket demands or
approaches can be counter-productive if they result in
reductions in workforce or increased costs of products, for
example. But we consider the long-run benefits an important
goal all companies should work towards. The investment
benefits of paying a living wage are also clear. The chart on the
right plots the returns of UK-listed companies, separated into
PRACTICE MANAGEMENT | Employees
Andy Howard, Global Head of
Sustainable Investment, Schroders
Source: Refinitiv, Schroder calculations
those that have paid higher wages than the average
of their sector peers over the last five years and those
which have paid less. Higher-paying companies have
outperformed lower-paying competitors by over 3%
annually over the past five years.
More and more companies seem to agree. In the UK,
our analysis shows that more companies have become
accredited Living Wage employers over the last year than
over the previous five years combined.
We have engaged with portfolio companies to
encourage fair wages for many years. Our Engagement
Blueprint, published in 2022 laid out that expectation in
detail. We will continue to use our voice and influence to
encourage companies to continue to invest in their most
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. Information herein is believed to be
reliable but Schroders does not warrant its completeness or accuracy. Issued in November 2022 by Schroders Investment Management Ltd registration number: 01893220 (Incorporated 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.
FINANCIAL PLANNING | Legislation
The impact of
COFI on FSPs
Preparing for the “Mother” of all
market conduct legislation
Anton Swanepoel, Founder, Trusted Advisors
FINANCIAL PLANNING | Legislation
At the time of drafting this article, it is industry’s
understanding that National Treasury is intending to
submit the Conduct of Financial Institutions (COFI) Bill
to Cabinet in the first half of 2023. When promulgated,
COFI will replace the Financial Advisory and Intermediary Services
(FAIS) Act and many other pieces of financial services legislation.
The purpose of this article is firstly to create awareness, so that
financial services providers (FSPs) will know what is coming in
2023, and secondly, to provide some perspective on what the
impact is going to be on FSPs. Lastly, to assist Key Individuals and
representatives to prepare mentally for the transition from FAIS to
COFI, which will happen in various stages over the next few years.
To say that the capacity of financial
services providers has already
been stretched beyond the limit
would be an understatement.
Recognising the frustration
Amid all the challenges and changes that financial advisors
and intermediaries have had to endure over the years since
the implementation of the Financial Intelligence Centre Act
in 2001, the FAIS Act in 2004, Retail Distribution Review (still
ongoing) and the more recent implementation of the Protection
of Personal Information Act, I think it is fair to say that most
advisors and intermediaries are “legislatively exhausted”. If we
add the ripple effects of Covid, the crippling effect on businesses
due to loadshedding, the ongoing political chaos, corruption,
general lawlessness, and how all these factors impact the South
African economy negatively, I for one do not blame advisors and
intermediaries who find it hard to be filled with enthusiasm for
COFI to be introduced.
To say that the capacity of financial services providers
has already been stretched beyond the limit would be an
understatement. I have yet to find an advisor who does not
believe that we are totally over-regulated as it is. In short, the
world of advisors in South Africa is beyond a perfect storm
already. Unfortunately, we have little choice but to brace
ourselves for the next regulatory wave if we want to transition
from FAIS to COFI effectively. I salute those who have been
resilient enough to keep on going but, as if the recent past
has not been challenging enough, your business will need yet
another facelift as COFI is upon us.
with the FSCA for activities as defined in the COFI Act when it
comes into effect. The second observation is that the current
FAIS Act, the fit and proper requirements, the FAIS General Code
of Conduct, and a few Board Notices consist of approximately
160 pages of legislation. COFI must be read with the provisions
of the Financial Sector Regulation (FSR) Act and the Conduct
Standards that will replace the provisions of the FAIS General
Code of Conduct. When COFI comes into effect financial services
providers will have to deal with over 900 pages of market conduct
legislation, excluding FICA and POPIA. Purely from a volume point
of view COFI is going to be like FAIS on serious steroids.
I would not blame you if you wanted to stop reading at this
point and shout, “When is this going to stop? Enough already!”
but it is important that you read on after taking a moment to
The importance of perspective
Welcome back! Based on my experience in the industry over a
period of more than three decades, some people will react to the
changes, and some are going to respond. Although thesauruses
use these terms interchangeably, in practice a reaction is usually
quick, without taking time to process or considering all the facts,
and it is full of emotion. A response on the other hand is usually
a reply after taking a breath to get past any emotional reactions,
carefully considering the facts and circumstances, and gaining
insight and perspective. It is of vital importance that you resist
the temptation to (over) react.
The impact of COFI on FSPs
The first thing that FSPs will have to consider is that, subject to
transitional arrangements, all FSPs will have to be re-registered
FINANCIAL PLANNING | Legislation
We are hopeful that the Regulator will indeed take the
principles of proportionality into consideration as highlighted
in COFI and the FSR Act to reduce the impact on smaller FSPs.
An informed response to COFI, after processing all the facts and
gaining perspective, will be far more valuable and constructive
than any quick, emotional reaction. Seek first to understand...
Responding to COFI – calling all Key Individuals!
As we get closer to the implementation of COFI, this is an
important message to all Key Individuals (KIs) – those who
are accountable for managing and overseeing the activities
of everyone in the FSP. Don’t react! Respond. Don’t simply
outsource COFI to your compliance officer(s). If you do, COFI
will become yet another compliance conversation when it is a
serious business consideration.
Although I have a deep and authentic respect for the role
of compliance officers and sincere appreciation for how many
competent compliance officers do their best to assist FSPs, if you
(as the KI) do not take extreme ownership of the essence of COFI,
your business will be compliance driven instead of business driven
in a compliant way. There is a significant difference between
the two approaches. In my journey as a practice management
and compliance consultant over the years I have seen countless
businesses that have been crippled by a compliance-driven
approach and with COFI it has the potential to get even worse
due to the volumes and complexity the legislation. If you want
your FSP to be business driven, rather than compliance driven,
you will have to take the lead in the COFI conversation.
By all means take your compliance officer(s) along on the
journey, but you will have to be the leader who creates order in
the regulatory overload, and even “chaos” for some, by breaking
up the components of your FSP into small pieces and prioritising
them. This is going to be a time for you to make sure that your
business is built on a sound foundation.
If you have a solid foundation, you can build or rebuild
anything on it. If you have a weak foundation, I am afraid you
will find yourself in serious trouble at some point. I believe that
COFI will force everyone back to the proverbial drawing board.
The illustration below will provide a helpful point of reference as
it provides an executive summary of all the key building blocks
of your business that are necessary to be successful – under
COFI will force you to take a step back and re-evaluate your
current business philosophy, culture and processes. It is not
simply going to be business as usual. My advice: Prepare to
succeed under COFI.
The fundamentals of practice management for representatives.
Credit: Anton Swanepoel
KEEP IT SIMPLE
“As dealing with change becomes a regular activity, leading it becomes a
skill to hone, an internal capacity to master.” – Arnaud Henneville
INVESTMENT | Multi-asset funds
One thing we can all be certain of is change and
investing is no different. Managing this flux, and
dealing with risk in a portfolio is a differentiating
tactical factor among institutional money managers.
Large, sophisticated, offshore institutional money managers, like
endowment funds, have been using multi-asset or multi-strategy
mandates as the core building blocks in their portfolios to address
these challenges of change.
The three key reasons for this are: firstly, there is better
mandate flexibility across asset classes; secondly, leaving the
asset allocation decisions to professional money managers
operating in the financial markets at the “coalface”; and lastly,
asset allocation switches taking place within a multi-asset fund
also saves clients unnecessary costs which are associated with
their capital being switched from one fund to another when an
asset allocation change is affected.
Adopting this strategy to manage change has seen both
the multi-asset equity and multi-asset income categories grow
to become the largest ASISA product categories in the local
market. These categories are also the most diversified, allowing
a very broad range of instrument exposures, both locally and
offshore. In the multi-asset equity space these include equities,
fixed income, property, commodities, cash and portfolio hedges,
while in multi-asset income it includes a broad range of fixedinterest
instruments with varying interest rate risks.
Visio Fund Management was
founded in 2003 as a multi-asset
fund manager. The team is adept
at handling change and managing
multi-asset funds. Visio’s success
has been recognised by the firm
having been awarded Citywire’s
“Best Mixed-assets Aggressive
Manager” for performance over
the last three years. The team’s
key operating tenets since
inception have been, “Keep it
simple”, “Capital preservation is
key” and “Be good citizens”. These
solid strategies can be applied to
any scenario to bring change.
Speak to us. We love what we do,
and we’d like to do it for you.
Craig French, Product Specialist,
Visio Fund Management
INVESTMENT | Economy
Petroleum Agency South
Africa is granting licences
to explore for gas, a fuel
that can assist the transition
to a net-zero economy.
South Africa is a net importer of fuel and the country’s
refining capacity has been reduced in recent years.
To counter this trend, exploration has been on an
upward trajectory. Partly this is explained by growing
certainty in the regulatory environment and by the good work
done by Petroleum Agency South Africa (PASA), the agency which
evaluates, promotes and regulates oil and gas production in the
country. This has seen increased interest in South Africa’s potential
as a destination for investment dollars.
Underpinning PASA’s strategy is the need to ensure that all
prospecting and mining leases are for the long-term economic
benefit of South Africa. This applies to every kind of licence issued
by the agency, be it in old technologies or new.
Can the economy grow by exploiting the country’s natural
resources while at the same time transitioning to a greener future?
PASA CEO Dr Phindile Masangane insists that it’s an economic
imperative for South Africa to do just that.
Dr Masangane points out that with South Africa’s excellent
solar resources it makes sense to localise the solar value chain to
boost manufacturing but the country should not ignore what it
has. “At the same time, we know that the gas value chain is well
established in the country, so let’s also capitalise on that.”
The multiple uses of gas could play a major role in helping
South Africa transition away from fossil fuels while at the same time
boosting economic growth. “We need gas not just in electricity
and transport,” noted Dr Masangane, “but importantly for South
Africa, which is in desperate need of an economic turnaround, is
for us to use this gas for our manufacturing industry.”
Referencing a section on gas in a report on energy in Africa
by the International Energy Agency, Dr Masangane says, “Most
of what Africa produces is actually exported out of the continent.”
The report notes that Africa accounts for less than 3% of the
world’s energy-related carbon dioxide emissions. Says Dr Masangane,
“This report calls for us as Africa to extract the gas and produce it
and use it not just to power the continent but to reindustrialise the
continent and industrialise in the case of nations that are still to go
through that stage.”
Another benefit of the IEA report is that it demystifies some ideas
about gas that are not based on science. Says Masangane, “I think
there is a misconception – sometimes I think it is deliberate – that the
use of oil and gas is not consistent with the decarbonisation strategy.
The report unpacks that.”
Many of the 600-million African citizens who are without
electricity use distinctly environmentally-unfriendly methods to
cook. Masangane notes, “If they were to use gas, whether it is LPG
or natural gas or another form of gas for cooking, that in itself is
decarbonisation because then you arrest the negative impact of
deforestation.” She describes as a “false
narrative” the idea that the use of oil and
gas cannot be part of a decarbonisation
strategy and is pleased that the IEA report
puts that argument to rest.
National government’s policy is
to diversify the country’s energy mix
which is currently coal-dominated to
a lower-carbon future by introducing
proportionately higher renewable-energy
resources such as wind and solar, into
the energy mix as well as gas-to-power.
Gas burns with less than half the CO2
emissions from coal and additionally has
no SOx emissions.
PASA CEO Dr Phindile Masangane
INVESTMENT | Economy
Gas is therefore a suitable transition fuel towards a lower-carbon
economy for South Africa especially since gas-to-power technologies
are flexible and would therefore complement the intermittent
renewable energy being added to the national grid.
Exploration in South Africa
In 2022 TotalEnergies and its partners submitted a production plan to
PASA for their recent discoveries off the coast of Mossel Bay, an event
which coincided with the beginning of commercial operations of
Tetra4’s natural gas project in the north-eastern Free State. These two
events prove that investors can see that the South African resources
equation adds up to an investable proposition.
Both of these projects came about through the licensing authority
of Petroleum Agency South Africa (PASA), reporting to the Minister of
Mineral Resources and Energy (DMRE). PASA regulates and monitors
exploration and production activities and is the custodian of the
national exploration and production database for petroleum. Its role
was statutorily endorsed in June 2004 in terms of the Mineral and
Petroleum Resources Development Act of 2002.
In terms of strategy, the agency actively seeks out technically
competent and financially sound clients to whom it markets
acreage, while ensuring that all prospecting and mining leases are
for the long-term economic benefit of South Africa. As custodian,
PASA ensures that companies applying for gas rights are vetted to
make sure they are financially qualified and technically capable,
as well having a good track record in terms of environmental
responsibility. Oil and gas exploration requires enormous capital
outlay and can represent a risk to workers, communities and
the environment. Applicants are therefore required to prove
their capabilities and safety record and must carry insurance for
Environmental issues are increasingly playing a big part
in discussions about how best to utilise South Africa’s natural
resources. As part of an attempt to engage in a broader
discussion on policy issues, a joint colloquium was held in
2022 on the subject of how to balance South Africa’s energy
needs with the country’s climate change commitments. The
colloquium, and several online events which prepared for and
anticipated the main event, was jointly hosted by the DMRE, the
Department of Forestry, Fisheries and the Environment (DFFE)
As part of a drive to create certainty for investors, a new bill
has been introduced to replace old legislation. The Upstream
Petroleum Resources Development (UPRD) Bill provides for
greater certainty in terms of security of tenure by combining the
rights for the exploration, development and production phase
under one permit.
The draft bill was first published in June 2021 and discussions
with industry stakeholders are ongoing. Organisations such
as the South African Oil and Gas Alliance (SAOGA) will be
coordinating responses to present to parliament. Objectives of
the bill include:
• expanding black participation
• promoting local employment and skills development
• creating an enabling environment to accelerate exploration
and production of South Africa’s petroleum resources.
Revised draft regulations related to hydraulic fracking in
the gas-rich Karoo region were published by the DFFE in July
2022 for public comment. Fracking is a drilling technique that is
widely used in other jurisdictions such as the United States, but
environmental concerns have been raised. Dr Masangane told
Bloomberg in an interview that groundwater and geological
studies are being conducted in the biodiversity-rich areas of the
Karoo and that once regulations have been finalised, seismic
activity will be undertaken to establish which blocks to license.
petroleumagencysa.com Petroleum Agency SA @sa_petroleum Petroleum Agency of South Africa @petroleumagency
PRACTICE MANAGEMENT | Client services
and why your practice needs them
The risks and opportunity cost of not equally servicing clients across income levels – and how to get it right.
Advisors need many clients to reach their growth and
income goals. But the greater the number of clients
added to your investment book, the harder it is to treat
all clients equally and fairly – and the harder it is to
nurture what may turn into longer-term relationships with smaller
clients whose wealth could grow in future.
The risks of service inequality
For most advisors there simply isn’t enough time and motivation to
treat a low-income client the same way as a high-net-worth client.
And this service imbalance comes at a cost to your business.
If clients are not treated fairly, they may simply up and leave for
another advisory, or worse, take their grievance to the Financial
Advisory and Intermediary Services (FAIS) Act Ombudsman,
appointed by the Financial Sector Conduct Authority (FSCA).
Lodging a complaint with the FAIS Ombudsman is a fast and
simple process for an unhappy client. After attempting to resolve
the complaint directly with the advisor, if the client is still unhappy,
they need only fill out and submit an online form and their
complaint will be lodged for assessment by the FAIS Ombudsman.
If a matter is determined to be valid, an advisor could face
substantial fines or risk their operating licence being revoked.
Even if the case is unsuccessful, there could be significant
brand damage done as claims are posted on the Ombudsman
website and sometimes even picked up by media publications
with a broad reach, further damaging the advisor’s brand and
In addition to client complaints, service and reporting
requirements are increasingly becoming a regulated aspect
of business with the entrenching of Treating Customers Fairly
protocols as well as the long-awaited Retail Distribution Review
(RDR). These current and incoming compliance hurdles will increase
the amount of productive time spent on fulfilling regulatory
requirements in your practice.
Lastly, there is an opportunity cost of not seeking out lowincome
new business or adequately servicing existing lowerincome
clients. Due to time and capacity constraints, advisors
tend to provide better levels of service to higher-income clients.
As most of these wealthier clients are closer to or past retirement,
this concentration creates longevity risk for an advisor’s book.
Making use of third-party systems that enable all clients to receive
the same level of service has an up-scaling effect for advisory
practices. Reporting is a critical client servicing touchpoint for
wealth management practices, and a vast amount of time is
spent collating and creating bespoke reports for clients on a
quarterly or monthly basis. The quality, depth and frequency of
these reports very often differ for lower-income clients and their
Wealth management analytics provider, Seed Analytics,
significantly reduces your time spent on regular client reporting
and communication, which opens capacity for more business. The
system seamlessly aggregates investment data across more than
60 platforms to create monthly or quarterly investment reports for
all your clients on your book – regardless of their level of wealth.
The aggregated information generated in the report is taken
through various validation checks, including fidelity and integrity
checks, which ensures better quality and accuracy. Reports can
be white labelled for your advisory practice to ensure that your
brand is top of mind.
In addition to bridging the gap in terms of the depth or
frequency of reporting across a broad spectrum of clients,
smart tech, such as Seed Analytics, also provides much-needed
business intelligence. Using data to provide a holistic view of your
client base, the technology allows you to identify key risk and
opportunities within the book –
and gives you the power to make
informed decisions around these.
Reaching a larger audience
Big institutions can write large
amounts of business through
extensive, linked brokerages
and advisors. They do this by
using standard systems to reach
their large audience. With the
proper selection of technology,
this is a world any advisor can
build for themselves.
Andries de Jongh, Sales and Key
Account Manager, Seed Analytics
FINANCIAL PLANNING | DFM
How we approach
And the rationale for using a DFM.
Maslow’s hierarchy of needs is a theory of psychology
explaining human motivation based on the pursuit
of different levels of needs. The theory states that
human beings are motivated to fulfil their needs in
a hierarchical order. This order begins with the most basic needs
before moving on to more advanced ones. What this theory omits,
in my personal view, is that each of these physiological needs can
only be satisfied through financial means.
For “wealthy” people, the financial means are readily available
and sustainable (ie wealthy people are not required to perform any
income-generating activity, such as trading their skill, time or both
to have continuous access to financial means beyond productive
years). But for others, in the majority, these financial means are not
available, or where they are, they are not sustainable.
Paying for a sustainable supply of food, rather than taking
the trouble to build the necessary skills and take on the risk of
producing these food items, has its appeal. In the same way,
access to sustainable financial means that would outlive you
without the need to perform any income-generating activity also
has appeal. Investors are required to save and invest to achieve
The point here being that without the financial means, we
cannot pay for these basic needs to be satisfied. For those that
have found a way to generate enough money to pay for these
needs, the solution is often not sustainable.
And in the absence of the required sustainability, investors
should consider efficient solutions to build the required financial
means to be sustainable.
Some have addressed these challenges by getting others to
resolve them on their behalf for a fee. It is this backdrop that
influenced me about being such a person that people would wish
to delegate their problem to, for a fee.
FINANCIAL PLANNING | DFM
When it comes to investing, it is my passion not only to
understand the technical analysis of data and the applied process
of forecasting, but also the odds of positive outcomes or returns
from investing. This led me to broaden my skillset beyond the
classroom setting and to apply it to real live portfolios.
Calculating probability ratios is therefore a skill that I have come
to appreciate and am able to apply. But helping people to identify
the problem of diminishing marginal returns, risk required versus
risk appetite in pursuit of building an asset base (financial means)
that will be used to replace their current efforts of generating
income is the real driver behind my career choice.
My investment philosophy is taking a disciplined methodology
approach across a range of different styles and objectives. As an
advisor, I believe that my role is not to avoid risk, but rather to
understand the relationship between risk and reward and to manage
risk(s) appropriately, relative to the objectives of the portfolio.
I used to personally select investment collective schemes (eg
unit trusts) and construct individual portfolios for each client
with an emphasis on identifying and controlling risk. I avoided
speculation. My investment process involves understanding the
specific objectives and risk aversions of each individual client
(investor risk appetite) and ensures that my client portfolios are
appropriately diversified. Before the use of discretionary fund
managers (DFMs), tailored portfolios of funds were constructed to
meet specific client objectives and then managed on an ongoing
basis. The overall investment and fund selection process was a
top-down approach using tactical asset allocation.
The overriding premise behind this approach was that asset
allocation is of crucial importance if the investment objectives
are to be achieved and that these asset allocation decisions
were determined by the current macro-economic environment
(domestically or offshore). The second-tier fund selection process
focuses on investing in the best-performing qualified funds that
meet the objectives of the asset allocation process. Determining
the best investment selection is based on both qualitative and
All this made implementing my financial advice particularly
onerous, and the requirement to stay abreast of these fund
management options took a lot of my time away from my main
role as an advisor: to provide good, independent financial planning
advice to clients. To solve this problem, we have engaged with a
DFM to assist us in advising on our clients’ investments.
Our DFM is an established industry expert in the field of
fund research and investments and offers a customised service
which allowed us to implement our advice in the most efficient
way possible. This benefits our clients directly and provides an
additional level of comfort with respect
to the quality and suitability of our
To this end, together with our DFM,
we have developed a customised
range of “model portfolios” that
represent the best investment view
and the most appropriate way to
implement our financial planning
advice. These portfolios target a range
of client outcomes and are reviewed
and managed on an ongoing basis
by the DFM and us at Emphasis
Wealth Advisory. The portfolios consist
of a range of leading funds which
collectively deliver our investment
solutions. This is based on the DFM’s
extensive and independent research
process and portfolio construction
expertise, which is matched with our
investment philosophy and compatible
with our investment processes.
Dez Tswaile, Founder and
Managing Director, Emphasis
INVESTMENT | DFM
What does the crystal
ball show for 2023?
At the start of every year, many clients want to know what the future of investing is, where they
should invest, what the best investment opportunities are, and if their capital will be protected.
The first question is easy to answer. The basic definition
of investing is where one party is providing capital
to another in exchange for some sort of return on the
capital provided. Based on this definition, the essence of
investing will be no different in the future than in the past.
However, it would be naive to assume that investment
opportunities and market dynamics will remain the same in
the future. In the last decade, for example, we had growth in
technology shares, growth in infrastructure investing and the
emergence of cryptocurrencies. Certain investment opportunities
may also fall out of favour. A recent example is mortgage-backed
securities, which all but disappeared after the 2008 global
financial crisis. Market conditions will definitely not stay the same
and we can already see the shift from the last decade’s ultraaccommodating
monetary policies toward a normalisation of
global interest rates.
The way we invest will most likely also change. The shift
from the open outcry system on trading floors to electronic
trading to online trading over the last 30 years has not only
drastically impacted the way we invest, but also who can
invest. Today almost anybody can trade from anywhere in
the world, which has drastically changed the demographics
of market participants.
As we move to the more difficult question of where to
invest, we first need to look to the past for some lessons. Going
only a year back and assuming we have no knowledge about
2022, we were all sitting with a Covid hangover, but we were
mostly optimistic about the future given that most lockdowns
were lifted, and global economic activity was almost back at
full capacity. We were told the structural reforms in China were
necessary and most of it was priced in the market. Inflation was
starting to rise, but we were also told not to fear since it should
INVESTMENT | DFM
be temporary given that supply chain disruptions and pent-up
demand would be resolved soon.
How wrong were we?
The first blow to our optimism was the discovery of the new
Omicron variant by South African scientists in November 2021.
We were looking forward to the first festive season with no Covid
restrictions since 2019, but unfortunately global governments
“punished” South Africa by re-enforcing travel restrictions on us.
The year 2022 continued to deliver hits with a dramatic fall
in the “untouchable” global tech share prices in January, the
Russian invasion of Ukraine, exacerbating the already elevated
global inflation risk, the persistent higher than expected
global inflation and commensurate normalisation of global
interest rates. At the time of writing (early November), we saw a
spectacular sell-off in global equities and property. Not even the
traditional safe haven asset classes were spared. US treasuries
saw a record-breaking sell-off on the back of inflation fears and
higher bond yields.
Initially, South African asset classes were spared the brunt of
the global turmoil, with gold and resource shares supporting
our market. South African bonds, already trading at very
attractive yields as we went into 2022, were not spared the
volatility in global fixed interest instruments, but at the time
of writing, were still one of the safer asset classes to invest in.
The strengthening dollar did cushion South African investors
against the worst of the storm raging in the global markets.
Why partner with a DFM?
It is understandable that clients expect some guidance on
which markets, and maybe specific shares, would provide
the best or safest returns for 2023. I always get nervous when
financial advisors ask me what the “best” place to invest their
clients’ money would be. At Equilibrium, we believe that the
“best” investment for a client is the one that best matches
their financial needs and goals, allowing for their unique time
horizon, return requirements and risk objectives.
We recognise that each person’s financial needs are unique.
More importantly, we recognise that most of the time these
financial needs are independent of the performance of markets
and state of the economy.
Partnering with a discretionary fund manager (DFM), like
Equilibrium, will ensure that the appropriate risk/return profile
for an investor’s unique financial needs is achieved on the
underlying investments. Equilibrium does this by blending
different asset classes, investment strategies and fund managers
in proportions that speak to the investors’ unique time horizon
and risk tolerances to achieve the optimal return.
South Africa has world class investment managers who are
specialists. However, this specialisation seldomly speaks to the
investors’ unique financial needs. Certain asset classes and/or
investment strategies perform differently in various market and
economic conditions. Where advisors partner with a DFM, the
DFM bridges the gap between investors’ unique financial needs
and the specialist skills of investment managers.
What lies ahead for 2023?
Many of our clients ask me what my crystal ball shows as the best
place to invest their money. Strange how clear that crystal ball
is when we are optimistic about economic growth and markets,
and how dull and uninspiring it is when there are concerns
about markets. The year 2022 might have been different to what
we expected. And I am sure 2023 will be no different. Global
economic recovery seems to be at risk on the back of interest rate
normalisation, inflation remains stubbornly high and the Russia/
Ukraine conflict is continuing for much longer than expected.
Volatility in global and local markets persists with markets taking
guidance from press releases.
After the significant sell-off in most global asset classes,
these asset classes are starting to look attractive, but the main
drivers behind global markets for the foreseeable future are
going to be whether inflation will be reined in, the interest rate
decisions of central banks and the impact on economic growth.
The rand remains a big risk for foreign investments, particularly
if it strengthens. Most commentators on the local currency are
of the view that it is oversold and strengthening could erode the
potential returns of global asset classes.
On the local side we see value everywhere. Our bonds are
some of the most attractively priced bonds in the world while
our equity market is very profitable at the moment. This makes
these two asset classes very attractive on a relative basis.
Unfortunately, we do foresee economic growth, which typically
supports the equity market, to remain subdued for 2023.
Our economists and strategists believe that global inflation
should start to taper off towards the middle of 2023 with
a commensurate easing of interest
rates. This should support global
economic growth and markets to be
more optimistic. South African markets
(especially bonds) stand to be big
winners when this shift happens and
foreigners return to riskier markets.
This year may bring us as many
surprises as 2022 did. At this stage it
is important to remind your clients to
stick with their financial plan tailored
to their needs. Your clients’ financial
needs are unique and more importantly,
not dependent on the performance of
markets and economies. Changing an
investment strategy based on hope and
fears is very dangerous and may move
your portfolio away from sound financial
planning principles to speculation.
Senior Portfolio Manager,
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.
PRACTICE MANAGEMENT | Technology
The changing world of
work and its impact on
Technology is the lifeblood of the new world of work, affecting how we work and what work we do.
The Covid pandemic has accelerated changes in how we
work in financial planning. Before Covid, meeting clients
on Zoom was the exception. Now many clients (and
financial planners) prefer it. Apps, paperless processes and
automated workflows are here to stay.
In response to the changing world of work and the impact of
technology on our lives, in 2018 the World Economic Forum (WEF)
produced The Future of Jobs report. The report considers what work
roles are likely to become redundant, which would remain stable,
and new roles that will emerge. The WEF believes financial advisors
fulfil stable roles and won’t be consigned to the waste dump. I
am sure this is a relief to many financial planners, given the rise of
automated advice and the role of technology in facilitating financial
If financial advisors still have a role to play in people’s lives, it
begs the question, what is that role and how will it impact on client
engagement in the context of rising dependence on technology?
Our tendency, when trying to understand the impact of change, is
to focus and even try to predict the potential changes that lie ahead.
Founder of Amazon Jeff Bezos says that he often gets asked the
question: “What’s going to change in the next 10 years?” He says this
is the wrong question to ask. If you’re trying to cope with change,
a better question he suggests is: “What’s not going to change in
the next 10 years?” In the case of Amazon, he believes that in 10
years’ time, people will still want good-quality products delivered
to their home or work at reasonable prices. This is not going to
change, no matter what else changes in the world.
As we think of the changing world of work and its impact on
client engagement, the challenge is to think about what is not
going to change in financial planning in the next 10 years.
What’s not going to change?
One thing that won’t change in the future is financial planning
clients will be human. If we take Bezos’ advice, understanding
what won’t change about humans will help us prepare for the
change we face. The 2022 PWC report on global work gives us an
insight into what is important to people in the changing world of
work and shows its impact on employee motivation.
The report predicts that one in five employees are likely to
resign in the next 12 months, the top three drivers of which are:
Pay – “being fairly rewarded financially”; Purpose – “I find my job
fulfilling”; and Authenticity – “I can truly be myself”. The report
also highlights the threat of technology. A staggering 30% of
respondents are concerned that technology will replace their
roles, while 39% feel that they are not getting sufficient training
in digital and technology skills from their employer.
PRACTICE MANAGEMENT | Technology
Daniel H. Pink suggests in his book Drive: The Surprising
Truth About What Motivates Us, that there are three things that
motivate people at work. The first is Autonom: people want to
have a sense that they oversee their own destiny. They want
to believe that they are in control of the work they do. But to
have this autonomy, it’s important that people have the second
element, the necessary Mastery to do their work. Doing work
that one feels ill-equipped to do is a guaranteed demotivator.
The third element, Purpose, feeling your work makes a difference
in the world, Pink argues is a significant motivation to work.
Technological change combined with the Covid pandemic
magnified and legitimised Pink’s three motivational factors.
It seems that where Purpose is clear and Mastery is in place,
greater Autonomy is a boost, not a hindrance to productivity.
During the pandemic, employees around the world, despite
working remotely, still delivered on what was required of them.
A MAP for client engagement
It turns out that the unchanging nature of employee motivation
has parallels with what constitutes financial health. If we accept
that the purpose of financial planning is to help clients achieve
and maintain financial health, arguably this purpose is unlikely
to change any time soon. And what constitutes financial health
is also unlikely to change. People are after all people.
Sarah Newcomb, director of financial psychology at
Morningstar, in an article entitled “Where More is Less:
Rethinking Financial Health”, reports that a Morningstar study
found that there are two key elements to financial health. The
first is economic stability. They found that people with a full
“financial life plan” saved on average 20 times more money than
those with time horizons of less than a year. Even looking ahead
just a few years had a fourfold increase in savings.
The second element is emotional wellbeing. The study found
that across all income groups, “people who feel empowered in
their financial lives experienced more joy, peace, satisfaction
and pride in their financial lives”. They found that the impact on
the emotional wellbeing of clients’ feelings of empowerment
was more than twice the impact of income. The study did not
measure how much control a person had in their financial lives,
but how much control they believed they had. “It is the feeling of
power, not necessarily the exercise of it,” that Morningstar found
was linked to emotional wellbeing.
The research suggests that to help clients achieve financial
health, financial planners ideally will do two things with their
clients. First, get them to look as far as possible into the future,
ideally building a full financial life plan; and second, ensure that
clients have at least the perception that they are in control of
How can we apply Pink’s insights around motivation to
financial health? I believe the three key concepts he has identified
offers a foundation for a financial planner’s approach to client
engagement. A client who is clear on Purpose, why they are
saving money, is likely to be able to articulate their future more
clearly and be motivated to work towards that future. A client
with Autonomy will be motivated to make decisions about their
life and money, and in so doing feel like they have control over
their life and money. This power will be enhanced by Mastery,
developing skill and knowledge when it comes to their life and
money. Juggling the order of the three words, Mastery, Autonomy,
Purpose, offers a MAP to apply to your engagement with clients.
How can you do this practically?
How can financial planners apply the MAP?
Firstly, it’s important to accept that clients are the expert in their
own lives, only they can know what they want their life to look
like. But most clients need help to do this. A prerequisite then
for financial planners in the future will be to develop intra- and
inter-personal skills to help clients articulate a purpose for their
lives and their money.
Secondly, in helping clients articulate their purpose, financial
planners will do well to recognise and facilitate the client’s
need for autonomy. This can be done through self-awareness
(knowing when not to give advice that might undermine the
client’s autonomy); and skillful conversation, enabling clients to
make their own decisions, rather than just taking advice. But it
can also be done through harnessing technology. For example,
automated advice tools are already showing us that there is an
appetite for clients to use technology to work out what they may
need to save or invest for specific goals. Financial planners can
provide clients with such tools that recognise and support this
need for autonomy.
Thirdly, as clients use these tools, whether they be for
budgeting, savings, cashflow forecasts or another purpose,
they will grow their own sense of mastery
over their financial life. They will do this
with the comfort that they still have the
financial planner, the expert, to consult and
ultimately guide and advise them.
Technology and the world of work
continue to change, but applying Pink’s
MAP concepts to client engagement, in
an informed and skillful way, I believe will
help human financial planners remain
relevant and important in helping people
achieve financial health, in the next 10
years and beyond.
Daniel H. Pink, “Drive: The Surprising Truth About What Motivates Us”, Penguin USA, 2009
PWC 2022 Global Workforce Hopes and Fears Survey
Sarah Newcomb, “When More is Less: Rethinking Financial Health”, Morningstar Behavioural Science Research, 2016
World Economic Forum, “The Future of Jobs Report”, 2018
Rob Macdonald, Head of
Strategic Advisory Services,
CLIENT ENGAGEMENT | Behavioural finance
The impact of mental health
on financial planning
How prepared are you to deal with this?
The link between mental health and financial health is increasingly evident.
CLIENT ENGAGEMENT | Behavioural finance
The financial planning profession is evolving. Financial
advice is not what it used to be or no longer sufficient.
Expectations of respected financial planners continue
to rise, beyond the previous shift from selling to
advising in the Sixties, the introduction of the steadfast sixstep
financial planning process in the Nineties, and now
towards an increasingly broader, and client-centred, offering1.
The impact of behavioural finance, over the last 20 years
especially, has meant that financial planners are not only
expected to track and tweak financial behaviour, but to skillfully
shift the client’s relationship with themselves and their money,
to modify behaviour fruitfully. As Michael Kitces reminds us,
“Giving advice to clients is a terrible way to help them change
their behaviour” and that developing “more therapeutic skills”2
may be the antidote to hackneyed advice.
These developments explain the burgeoning influence of
behavioural coaching on the profession, now surely recognised
as fundamental to a financial planner’s value proposition. And
as financial planning practices continue to advance, particularly
post-pandemic, we start to realise the importance of mental
health and wellbeing on clients’ financial health.
The realm of mental health is now a domain that financial
planners require cognisance of, at the very least. Sooner than
one thinks, it will be vital for planners to have a recognised level
of skill in navigating mental health issues.
There may be some disagreement or denialism among
practitioners as to their roles and responsibilities, but the link
between money, emotions and mental health is well known
and more prevalent than ever. So much so that forwardthinking
countries have necessitated institutions dedicated
to understanding and dealing with this challenge, such as
the UK’s Money and Mental Health Policy Institute launched
One undeniable fact, central to financial planning, is the link
between mental health, poor decision-making and financial
difficulties. In short, worrying about money can affect your
mental health and a mental health condition can affect the way
you manage your money. This creates a “vicious cycle”3. More
specifically, “common symptoms of mental health problems,
like increased impulsivity, low motivation, unreliable memory
and difficulties concentrating can make managing money
What could this mean for financial planners today, and their
continued professional development?
Firstly, an awareness of the key themes within mental
health is fundamental.
The stigma of mental health, in all its forms, is a destructive
force, a barrier to the acknowledgement of personal struggle
and therefore a chokepoint to receiving the correct help
timeously. Encouragingly, attitudes towards mental illness are
shifting, again thanks in part to the pandemic. Covid’s silver
lining is surely that society has been forced to acknowledge
its humanity, its vulnerabilities, and this has counterbalanced
the stigma of having and talking about mental health concerns.
Planners who are aware of the damaging effects of discrimination
and judgement can show compassion and make a significant
difference in the lives of their clients.
As financial planners are on the frontline, at times being
the first person a client confides in, they play a part in making
mental health services accessible, another current theme. Most
people don’t seek help, and advisors can play a “gateway” role,
ideally providing clients with a pathway to support. This includes
having a trusted set of mental health professionals on hand,
acknowledging when the conversation has moved beyond the
scope of one’s expertise or comfort levels and knowing how to
Secondly, advisors will need to build appropriate and advanced
Learning, and especially practising, one’s capacity for deep
listening and generative questioning are fundamental facets of
advancing one’s skills. There are some simple, game-changing
techniques planners could employ immediately, and which also
allow room for continuous improvement. Better use of silence,
being curious, collaborative, authentic and confident are all potent
capabilities. Several good coaching programmes, specifically
geared for financial planners, cover these and other essentials.
Thirdly, for those committed to integrating this approach into their
practices, a level of intrapersonal development will be required.
Intrapersonal development is personal “work” that includes
self-care, maintaining emotional wellbeing and the ability
to self-regulate, to name a few. Self-regulation, the ability
to understand and manage one’s internal states (sensations,
feelings and thoughts), is vital when listening to a client. This
may involve dealing with one’s own frustration or doubt,
common concerns among planners faced with unfamiliar
situations and awkward conversations.
Some planners who fully embrace
and develop inner maturity with this
approach may eventually be confronted
with the most uncomfortable of inner
conversations, ones in which they will
need to demonstrate courage. And that is,
the question of their own mental health
and wellbeing, and how it relates directly
to their ability to serve clients.
In summary, I invite you to be aware of
current mental health matters, continue
to upskill in the service of your clients,
and take great care of yourself and your
own mental wellbeing. I believe that
doing so will put you in a great position
to invest in the wellbeing of others,
particularly your clients.
Roland Cox, Executive
Coach, Aspiral Coaching
1 Lawson, Derek R., and Bradley T. Klontz. 2017. “Integrating Behavioral Finance, Financial Psychology, and Financial Therapy into the 6-Step Financial Planning Process.” Journal of Financial Planning 30 (7): 48-55.
2 Kitces, Nerd’s Eye View https://www.kitces.com/blog/kristy-archuleta-kansas-state-university-of-georgia-podcast-financial-therapy-association-counseling-communication/
4 Money & Mental Health Policy Institute (UK) https://committees.parliament.uk/writtenevidence/5460/pdf/
CLIENT ENGAGEMENT | Behavioural finance
Personality and triggers
How adapting the way you communicate with your clients can improve long-term outcomes.
Being an effective behavioural coach for your clients is not
as simple as following a “one-size-fits-all” approach. People
are different, with different views, ways of thinking and
personal preferences. Therefore, the ability to communicate
effectively requires a deeper understanding of each client’s
personality and triggers.
This is particularly true in volatile markets. Distinguishing
between the lower composure or “jumpy” clients and the higher
composure or calmer clients enables you to identify clients who
are more likely to be emotionally distracted by what is happening
around them (low composure/jumpy group), and those who
are not even noticing the investment opportunities the market
volatility is offering (high composure/calm group).
The Nedgroup Investments behavioural study, which was the
largest survey of its kind ever undertaken in Africa, revealed six
personality archetypes that people tend to cluster around. These
six personality groups can be separated into two broader groups
according to their level of composure – measured as someone’s
tendency to be emotionally engaged with the short term.
These two broad groups have very different needs and
preferences in terms of who is in control of investment decisions.
“Jumpy” clients will need help staying invested during turbulent
times and want to feel that you (their financial planner) are in control
and most importantly, calm and confident. Calm clients can benefit
from rebalancing during market weakness, as they can more easily
stomach buying growth assets in a falling market. They, however,
The six personality archetypes and the two broader groups they are separated into.
want to feel that they are in control of making their own decisions,
using you (the financial planner) as their sounding board.
• Communicate the importance of using an advisor as an expert
“sounding board” and to execute decisions effectively.
The key to communicating with “jumpy” clients
When it comes to engaging with clients who fall into the lowcomposure
group of personalities (sensitive, skittish, stressed),
there are a few practical tools that can make all the difference:
• First of all, it’s crucial as the financial planner or advisor to model
a sense of calm and not feed into the client’s anxiety or unease.
• Keep information presented to them simple and use infographicstyle
material rather than overwhelming graphs and charts. We
use a collection of engaging, simple sketches by Carl Richards
which illustrate the true value an advisor can play here.
• Avoid showing them new graphs and charts at this stage as they
are likely to find it overwhelming. Unless you have shown the
client a particular chart at the inception of your relationship, it is
probably best to wait until markets are more stable to introduce
The key to communicating with “calm” clients
Clients who have the highest composure will likely only feel
comfortable with a decision if they feel that they have done all the
research themselves. If you want to support their decision-making
process, it needs to be done subtly, by improving the decisionmaking
environment, rather than being prescriptive or reducing
their freedom to choose. Anything that feels like intervention or
assistance risks alienating them.
Practically, when communicating with this group of clients the
below guidelines may be useful:
• Empower the client to make informed decisions. Nedgroup
Investments has tools on its website like The Big Picture App to
allow the client to explore all the possible options. For clients at
or close to retirement, platforms such as MRS will also be very
Knowing which personality group your client(s) fall into
Identifying a low-composure client or a high-composure client can
be as simple as asking them how they feel about a story about
a client whose portfolio dropped from R1-million to R600k in
less than three months during the 2020 Covid-19 crisis. A lowcomposure
client will show (extreme) discomfort, while a highcomposure
client will appear relatively unaffected and may simply
respond with a “that’s markets for you!”.
The Nedgroup Investments Financial Personality Survey,
conducted in partnership with Oxford Risk, assessed over 3 000
South African investors and advisors against 12 defined personality
traits that have been known to affect behaviour. One of the key
findings in the South African study was that there are multiple
dimensions to risk attributes when it comes to investing for South
Amy Jansen, Head of Behavioural Solutions, Nedgroup Investments,
and Seugnet de Villiers, Investment Analyst, Nedgroup
PRACTICE MANAGEMENT | Technology
State of the advice
Insights into financial advisors’ relationships with tech from
the 2022 Linktank Advice Technology survey.
According to Linktank’s latest advice technology
survey, financial advisors’ greatest challenges are still
topped by integration options, the industry remains
frustratingly paper-based, and there’s an unbudging
gap in the perception of value vs cost of technology.
The end-2022 edition of the annual survey, which measures
gaps and trends in the technology-enablement space from the
perspective of financial advice businesses, attracted respondents
primarily from the life/risk and wealth management community
but generally spanned the entire advice industry and thus offers
some interesting insights.
Despite the flurry of progress towards greater digitisation
during the Covid years, almost three-quarters of survey respondents
still indicate an intention to revisit their technology strategy as a
key objective over the next one to three years. This is followed by
the closely-related goal of addressing operational inefficiencies.
These objectives significantly outweigh the importance of efforts
like succession planning, which usually tops the list, and points
to the stubborn challenges of appropriate selection, comparison,
implementation as well as adoption of technology solutions.
Defining and executing a forward-thinking technology
strategy that’s aligned with business growth and client servicing
objectives can cost a few cents, though. Yet almost three-quarters
of respondents say they currently invest less than 20% of their
1-3 year strategic objectives
Revisit the business' technology strategy
Address growth vs operational drag issues
Implement succession planning initiatives
Significantly increase or decrease team size
Obtain a business valuation, purchase, or sell a business
One-to-three-year strategic objectives.
revenue into technology (and more than half of those spend less
than 10%). On the other side of the fence, local industry technology
providers estimate an Independent Financial Advisor (IFA)
expenditure tolerance of around 10% to 15% of revenue and those
prepared to voice their thoughts on an appropriate investment
generally peg it at 20% or more.
The desire for personalised service, greater value and more
innovation, particularly regarding integration options, seems to
remain somewhat stymied by the general appetite for outlay and,
PRACTICE MANAGEMENT | Technology
indeed, the continued perception of technology as an expense
rather than an investment.
greatest technology challenges
current investment (% of revenue over 3-5 yrs)
anticipated investment (next 3-5 years)
Lack of int egrat ion opt ions
Balancing cost and value
10 - 20%
20 - 30%
Lack of time or skills to implement
Le ss Sam e Mor e
Finding, compa ring, or se lect ing soft ware
Current and anticipated investment.
Complexity of digitising business processes
Most advice businesses realistically anticipate increasing their
investment over the coming few years, however. The most likely
places for those tech budgets to be utilised are, predictably, wealth
or risk planning tools and, of course, client relationship and practice
management solutions. The emergence of behavioural finance tools
in third place on the “most valuable” list is a bit of a surprise this year,
though, particularly since there hasn’t been evidence of significantly
increased expenditure in this segment of the software market yet.
perception of most valuable tools to invest in
Calc ula tors and tools for advisors
CRM or practice management
Behavioural finance / risk profiling
Docs management / sharing
Client engagem ent / serv ice portals
Aggregation / consolidated reporting
Management info / business intelligence
Quoting / quote comparison
Marketing / social media
Perception of the most valuable tools to invest in.
Other factors are likely to play a big role in value perception, too,
as highlighted by advisors’ greatest challenges with technology.
Entirely consistent with previous years’ survey findings, businesses
of all shapes and sizes still find it immensely difficult to deal with
the user-side complexities of applying technology to their business
needs, much less to a defined strategic growth plan.
Topping the frustration list, as usual, is integration. In practice,
this typically means that businesses are making use of multiple
solutions that overlap in functionality but don’t “talk” to each other,
necessitating the duplicated manual maintenance of similar data
across multiple interfaces. It’s very rare, in fact, for an IFA business
Access to adequate training and support
Cumbersome or inadequate functionality
Staying ahead, or fear of missing out
Transitioning from a paper-based environment
Greatest technology challenges.
to employ the use of a single piece of software to meet the
entirety of its operational, planning and servicing needs, so the
frustration with doubling up on data collection and maintenance
is entirely understandable.
The problem extends beyond the integration of internally
selected systems, though, and into the product provider and
platform space, where data provision for reporting purposes may
have improved significantly over the past decade but further
high-value capabilities, such as straight-through processing,
remain just about impossible for independent practices to
strive towards if they interact with multiple product providers.
The coming years will make for an interesting assessment of
just how much IFAs will re-frame their support of platforms or
product providers in the context of whether they help or hinder
practices’ ability to get ahead from an independent technologybased
The industry application programming interface (API)
landscape has unquestionably improved over the past few
years, as many tech providers have recognised the need to
offer standard, no-code integration options as a matter of
necessity rather than just a competitive edge. More than half
of independent technology providers on the market offer open
APIs and only about 10% say they don’t offer any API, closed
Niche and purpose-specific solution providers are, more than
ever, actively seeking out integration partners to make their
users’ lives easier and to complement their own solutions, while
multi-purpose software providers generally base their response
on user demand.
PRACTICE MANAGEMENT | Technology
tech providers’ approach to integration options
Pref er to encour age e xclusive use of own sol ut ions
Actively seek out and execute integrations valuable to users
Consider inte gr ation opt ions base d on demand
The emergence of behavioural
finance tools in third place
on the “most valuable” list is a
bit of a surprise this year.
Tech providers’ approach to integration options.
In the latter scenario, it’s realistically up to users to initiate
integration discussions and, in many cases, this also equates to
cost and effort commitments that most IFAs simply don’t have the
inclination to get into.
Some unfair expectations of the term “integration” persist,
though, and it sometimes emerges as a bit of a magical catch-all
prospect, making it difficult for tech providers to meet
expectations. Many of the prerequisite issues that need to be
addressed to make integration a successful experience still nag
at our heels. More rudimentary problems, like transition from
paper or manual business processes, are still prevalent as more
than half of advisors indicate a low level of digitisation and
fewer than 15% say they’ve mostly or completely converted
from paper-based environments.
than ever for businesses to map out a durable, adaptable
technology strategy that enhances and supports a client
servicing and operational model.
average user ratings (of multi-function solutions with broad feature ranges vs purpose-specific solutions with narrow feature ranges)
Average user ratings.
Ease of implementation
Return on investment or
val ue f or m oney
Inte gr ation options (data
or other system s)
Support and training
Innova tion and fut ure -
Specif ic f eature r ange 4,1 3,9 4,0 3,3 4,1 4,0
Broad feature range 3,5 3,3 3,3 3,1 3,5 3,3
digitisation (transition from paper)
Process systemisation vs digitisation.
Even against a backdrop of sluggish digitisation, difficulty
in selection and implementation and a value perception gap,
advisors have been generous in their experience ratings of the
tools they’re familiar with. Breaking these solutions into two
rough categories – those that offer broader feature ranges (like
all-in-one CRM and planning tools) and those that offer narrower,
more specific features (like revenue administration or behavioural
finance tools) – it’s clear that purpose-specific solutions still
attract the most love at an average of just under four stars out of
a possible five compared to an average of 3.3 stars for one-stopshop
Never have advisors had so many options to choose from,
within either all-in-one or best-of-breed model approaches.
Therein lies part of the complexity, though, so it’s more important
Jen McKay, Director, Linktank
FINANCIAL PLANNING | Education
candidates rank top five
It was recently announced that the top five CERTIFIED FINANCIAL PLANNER® Professional Competency
Examination candidates (for the June 2022 examinations) are alumni of the School of Financial Planning
Law at the University of the Free State.
By Leonie Bolleurs
To become a CERTIFIED FINANCIAL PLANNER® (CFP), a
candidate with a Postgraduate Diploma in Financial
Planning or a BCom (Honours) in Financial Planning must,
among others, pass the Professional Competency
Examination (PCE) of FPI.
On the right trajectory
According to Henda Kleingeld, Programme Director of the
Postgraduate Diploma in Financial Planning in the Faculty of Law’s
School of Financial Planning Law (SFPL), they are incredibly proud
of the candidates.
“Being rated as the top five PCE candidates indicates that we are
on the right trajectory with the outcomes and assessments for our
diplomas. If the top five PCE candidates are alumni of the SFPL – we
are doing something right. We have made many changes in our
approach to financial education, and it seems like it is paying off.
“We now need to ensure that we provide our students with
the proper academic background and support to continue to
excel. This will seal our status as the oldest and one of the leading
educational providers of financial planning education in the
country,” Kleingeld adds.
Confidence in the qualification
The PCE sets candidates on the path towards becoming CFPs®. The
online exam consists of two case studies that test the candidates’
financial planning skills, knowledge and competent performance
in the defined competency areas for financial professionals.
In its PCE policy, FPI states that there are six financial planning
components: financial management, asset management, risk
management, tax planning, retirement planning and estate
planning. It strives to prepare PCEs that will provide candidates
with the opportunity to demonstrate core or professional
competence at a standard appropriate for entry into the financial
According to FPI, the CFP® designation – an internationally
recognised standard for financial planning professionals – gives
consumers confidence that the financial planner they are dealing
with is suitably qualified to provide advice and information and
gives the assurance that they remain up to date with developments
in the industry.
First academic institution to offer diploma
Kleingeld says the SFPL was the first academic institution in South
Africa to offer the Postgraduate Diploma in Financial Planning
and financial education has been its focus and passion over the
past 20 years. “Keeping up with industry
trends is very important to us. Our team
of academics and industry experts assists
us with maintaining a balance between
the academic requirements and how
they are translated into the workplace,”
Kleingeld is of the opinion that
the graduates who have passed their
qualifications are doing exceptionally
well in the industry, with many prominent
industry leaders being alumni of the UFS
SFPL. “The school has a reputation in the
industry as being forward thinking and
innovative. We keep our fingers on the
pulse of industry developments, which
get incorporated into our curriculum.”
Henda Kleingeld, Programme
Director: Postgraduate Diploma
in Financial Planning, UFS
CLIENT ENGAGEMENT | Communication
life and money
Lessons we’ve learned.
One year while at university my parents planned our
annual trip to the bush. As they drove a sedan and
a hatchback they thought it would be a treat to rent
a high-clearance SUV for the week, making for great
game viewing. I am a “car nerd” while my folks really don’t care
for cars, so they asked me to make the booking. After some
consideration I arranged a Toyota Fortuner. When it arrived, I
wasn’t home, and my mother received the vehicle. She rung me
rather disappointed: the rental wasn’t much higher than their
own cars. Perplexed I rushed home.
Upon arriving home, I found in my parents’ driveway not a
Toyota Fortuner but a Porsche Cayenne. My mother (a capable,
knowledgeable and world-wise woman) had received the keys
and simply not realised the difference. What she saw was a
vehicle that did not match her expectations at all: something
low and sleek without the high-ride height and big, open
windows she wanted.
When clients meet with us they are on a journey. They come to
us because they want advice on the best route(s) to travel and the
best (investment) vehicle(s) for their circumstances. Much as my
parents trusted me as someone who knows cars to select the best
vehicle for their goals and budget.
I would suggest that there are two aspects to a client’s
• The “engine”. This is what happens “under the hood” like process,
blending, research, asset allocation and manager selection.
• The “experience” of driving the vehicle. Tax, liquidity, income,
volatility and returns.
My mother didn’t want to know about the Fortuner’s engine or
how it worked. Her expectation was that it worked: she wanted
– expected really – performance and reliability. She didn’t need
me to unpack with her how that was generated, she just wanted
to trust that I had selected an engine which could deliver it.
Similarly, many of our clients are not particularly interested in
“how the engine works” – they want to know that it works: that
it will perform reliably.
This isn’t true of all clients and for some it adds value to discuss the
investment engine. Those clients are “welcomed into the workshop”
to see our investment process and “get their hands dirty” working
through the mechanics of it. My partners and I enjoy – thrive on – the
technical investment elements (much as, when younger, I thrived on
learning about cars). We enjoy sharing this, but we are cautious to
only get technical to the extent that it adds value for a client.
CLIENT ENGAGEMENT | Communication
What is obvious to us is not necessarily obvious to the client.
When my mother received the Porsche keys, she simply did not
realise they weren’t labelled Toyota. Similarly, we as planners
might think some things are obvious when in fact they are not.
Think of the difference between total investment charge (TIC)
and effective annual cost (EAC); strategic and tactical asset
allocation; passive and active; growth or value style investing.
What is important to us is not necessarily important to the
client. As planners, we may be proud to know that in our client’s
living annuity they own our best offshore equity managers on
asset swap at no extra fee… but the retired couple may simply
want to know that their portfolio will give them a healthy balance
so no single event can jeopardise their retirement income and
that it will grow sufficiently to protect them and their income
from inflation. How we “built the engine” may not be important
As planners, beware of getting in the way. My partners and I
stress that we must be careful not to impose our biases on the
client. When I called Avis to query the Porsche they were puzzled
at our disappointment. They thought the Cayenne was an upgrade:
a better car for the same price. Because they didn’t understand
what we wanted from our journey, they gave us their “best view”,
not something best suited to our goals.
Now here is the interesting part: the above is what we expect
of ourselves as planners and as a firm.
Irrespective of their interest in the engine, all clients will
experience the drive. For example: how and when tax is paid;
liquidity restrictions on the investment; performance, volatility
and so forth. A conversation about the drive which sets the right
expectations is crucial. I will return to this shortly.
How do we tie this metaphor together? At Omega Capital we
call our conversation one about a client’s life and money.
The investment vehicle falls in the “money” side of the conversation.
We would suggest that a range of high-quality investment vehicles
that a client can rely on to perform is… table stakes. It is the minimum
a quality planning firm should bring to the table.
Then there is the “life” side of the conversation: our client’s
journey. What are their goals, fears, aspirations? Who are the
people on this journey with them? What is difficult for them to
action or even to talk about? What compromises are they willing
to make in balancing life and money goals? What are the hard
questions we, as their advice partner, need to ask? Or the tough
things we need to coach them towards?
Who is most competent to speak to that? Our client. So, we
try to “shut up and listen”.
Against that framework, as planners, we feel the following is
important to be aware of:
What about our clients?
Using our metaphor there are a few crucial things. As I mentioned
above, we may not discuss “the engine” but we absolutely discuss
“the experience” of the drive.
A client must know what to expect from their vehicle. What
can the volatility be; what time horizon are they investing for (and
assessing the investment over) and what are realistically possible
returns over shorter and longer periods. If we get the expectation
wrong – the relationship fails and likely also the plan.
A client must know how to “drive” their vehicle(s). What
contributions did we plan for over time? Or,
inversely, how much can a retired client draw
from the portfolio? Critically, will they remain
invested when the journey gets challenging –
as it will at some point(s) along the way.
The best plan can be destroyed by an
investor’s bad behaviour.
In closing, after a conversation with us
about life and money where a client has
made decisions and executed them, what
would we want them to “drive out” with? We
expect that they would know:
• Where they are going: their plan.
• What ride to expect: volatility, time horizon.
• How to “drive” their investment: drawdown,
contribution, staying invested.
• Lastly, to the extent it adds value for them:
how the engine works.
Financial Planner and
Partner, Omega Capital
CLIENT ENGAGEMENT | Financial literacy
isiXhosa: YES PLEASE!
CLIENT ENGAGEMENT | Financial literacy
Ihave had the pleasure of interacting with many people who
do not speak indigenous South African languages socially
throughout my career. What always intrigues me about
these interactions is that topics such as inheritance or the
latest cryptocurrency are often part of the conversations in the
most casual social settings like braais for speakers of English and
Afrikaans. I found this quite fascinating because these kinds of
discussions rarely come up in social settings or media channels
that cater to or appeal to speakers of African languages.
These are some of the realisations that propelled me to create
my podcast, Epokothweni with Babalwa Nonkenge, and to the
best of my knowledge Epokothweni is the first platform of its
kind which produces personal finance content in an indigenous
South African language in podcast format. I believe that the lack
of such content is directly linked to the high rates of financial
illiteracy among South Africans.
The word epokothweni is derived from an expression in
isiXhosa – “ukungena epokothweni” which directly translated
means to “enter into someone’s pocket”. This is a euphemism
for overstepping boundaries; doing or saying something that
is not socially or culturally acceptable. In some African cultural
settings, the pocket has always been a realm of mystery where
no-one else besides the owner purportedly knows what is going
on inside it. Anecdotal evidence suggests that the subject of
money seems to be one that no-one was consciously taught
in homes or schools – meaning that one can surmise that most
adults just wing it and hope for the best.
The taboo regarding money matters creates a secrecy and
fear of saying something as simple as, “I don’t understand, please
help me.” The area of personal finances is one full of English
jargon and terminology which is difficult to understand even
for degreed individuals. The issue is further compounded in the
case of individuals who have little or no schooling and yet they
enter into financial commitments on a daily basis.
Epokothweni bridges this gap in that it gives individuals
access to content for free, in their own time and as they wish.
They interact with the podcast via social media. Since inception
in June 2021, each of our episodes is informed by the north
star which is to give dignity to the speakers of indigenous
languages by producing accessible conversations in the second
most spoken language in South African homes. The podcast is
available via all major podcast platforms and can be accessed
via virtually all smart phones regardless of location.
Epokothweni with Babalwa Nonkenge
Social media handles: @Epokothweni
WhatsApp line: 0726507641
Anecdotal evidence suggests that
the subject of money seems to be
one that no-one was consciously
taught in homes or schools.
The podcast has grown to be a space for conversation and
cocreation, a step taken deliberately – because the style is
conversational and borrows from the storytelling technique which
is quite an entrenched knowledge-sharing education and oral
history method for most African language speakers. Cocreation is
a very important aspect of what we do. We do not merely translate
from English as this would be a limitation because some of the
terminology does not exist in indigenous African languages. We
also use the phrase “financial stewardship” to describe the work
we do via the podcast as this demonstrates the idea that one can
be a good steward of their money whether they make R1 000 per
month or R1 000 000 per month.
In the early days of the podcast, we spent quite a bit of time
educating listeners about what a podcast is and how to subscribe to
one because our audiences simply didn’t know what a podcast was
– historically relying mainly on radio and television for information.
Currently, the podcast enjoys support from Nguni language
speakers as far afield as Germany, UAE, Kenya and the US. In
June 2022, the podcast was awarded the Pan South African
Language Board award for multi-lingualism in the Business and
Technology category. We have been asked by various corporates
to provide financial wellness coaching to individuals and groups
(in English). We have also produced and published some pieces
of commissioned content by two prominent financial services
providers. In future, we hope to build life stage applications and
to design courses that individuals and groups can purchase and
consume in their own time.
The appeal of Epokothweni has
extended beyond those who are mother
tongue speakers of IsiXhosa (our main
language of delivery). The feedback
we are getting points to the fact that
our growth is being spurred on by our
simplicity of delivery and empathy in our
approach to conversations as part of the
success formula for the podcast.
One of our dreams is to offer the
material in more African languages, and
to this end we are always on the lookout
for opportunities to collaborate with likeminded
professionals within the financial
Personal Finance Expert,
CLIENT ENGAGEMENT | Customer care
how can you identify
it and help your
clients deal with it?
Would you know how to spot the signs of financial abuse?
How difficult could it be to identify when a client’s spending
habits change drastically or if there was a fraudulent or unknown
transaction of large value on an investment or savings account? I
thought I would be able to identify the signs… but I was wrong. I
failed to spot the signs that my client was a victim of financial abuse.
I underestimated how easily this can happen. For this client,
her “loving” partner managed to convince her to purchase a
business property in his name. She agreed to withdraw her unit
trust investments to fund this transaction, while he was in the
process of getting together liquid funds to repay her. Ultimately,
he sold the property without her consent and failed to repay
her. As she was also a victim of physical abuse, it became near
impossible for her to recover her funds.
The reality is that a lot of the victims of economic or financial
abuse might not even realise what is happening, until it is too
late. In 2022, I received my Financial Abuse Specialist (FAS)
designation after completing the required course through
UK-based Standards International, to better understand this
world and avoid the scenario I mentioned earlier.
“He was just a bit controlling.” “He took care of all my finances
without me asking.” “I was not allowed to view my own bank and
investment statements.” “He would have inherited the money in any
case.” These are all phrases that I’ve heard in our meeting spaces.
Financial and economic abusers are not always men but in
our unequal society, the reality is that women and elderly people
are softer targets. The statistics are alarmingly high related to
child maintenance defaults and failure to pay even the smallest
amount towards the wellbeing of their children. At the root of
this sits controlling and coercive behaviour, a desperate attempt
to still control your ex-partner through the only mechanism
During a financial planning process with new clients, we talk
about their financial history and what might stand out for them as
memorable moments where money was involved. One new client
shared with me the story of her ex-husband selling her paid-off
car, taking the full proceeds to purchase his own sports car, all
without her consent or knowledge. Only after we discussed what
financial and economic abuse is, could she label these actions and
understand how it impacted not only her relationship with money
but also her future romantic relationships.
How do we define financial abuse and how does it differ from
Financial abuse is the illegal or unauthorised use of a person’s
property, money, pension or other valuables. This includes changing
the person’s will to name the abuser as heir, often fraudulently
obtaining a Power of Attorney, followed by deprivation of money
CLIENT ENGAGEMENT | Customer care
The reality is that a lot of the
victims of economic or financial
abuse might not even realise what
is happening, until it is too late.
or other property or by eviction from their home. It often also
applies in cases of elder abuse or domestic violence.
Economic abuse is slightly wider as it is a form of abuse when
one partner has control over another partner’s access to economic
resources, for example prohibiting one from working or earning
their own income. At the root of this abuse is controlling and
This type of abuse is often the precursor to physical abuse and
should be seen as a major red flag. Amanda Cassar, co-founder of
the Financial Abuse Specialist (FAS) designation together with
Michelle Hoskin, shares as part of the learning material a case study
in which there was even an attempted murder by the abuser.
What can you do to help clients who are victims of abuse?
Now that we know who is at risk, as well as the potential signs of
abuse, it is important to consider what can we do to assist victims
of financial abuse. Here are four basic tips:
1. Make sure that you have a “trusted contact” listed for
your clients. The Security and Exchanges Commission
in America has made it a legal requirement to note an
emergency contact on your investment accounts and I
believe that this would be good practice for all clients.
Make sure that your client agrees to when you might
need to reach out to the trusted contact.
2. If you suspect someone might be suffering from financial
or economic abuse, do not accuse the abuser directly.
This may put the victim at risk unintentionally. Share with
the suspected victim stories and resources that might
motivate them to take action when they are ready.
3. Share an abuse survival kit with them. This includes a tick
box of items that they should get together before they
take action on moving themself and their family to safety.
This includes items like a separate bank account with an
amount of cash, copies of important documents, copies
of prescription scripts and a spare cell
phone with a SIM card.
4. Share contact details of helplines and
institutions like People Opposed to
Woman Abuse (POWA), Halt Elder
Abuse Line (HEAL) or Families South
Africa (FAMSA) who would be able to
assist with the necessary support.
I hope that we will continue to serve our
clients in the best way possible, by listening
to their needs and creating a safe space for
them to share whatever might be happening
in their lives.
Louis van der Merwe,
Certified Financial Planner®
PRACTICE MANAGEMENT | Profile
FPI Approved Professional Practice: Integral Wealth Management
Integral Wealth Management provides financial planning services and offers a full range of
investment products and platforms. Director, Michael Frantzeskou, CFP®, speaks to Blue Chip
about the high standards Integral Wealth upholds as an FPI Approved Professional Practice.
PRACTICE MANAGEMENT | Profile
Please provide a brief history of Integral Wealth Management.
How did it come about?
Providing independent advice and putting our clients first are the
guiding principles that drove us to start Integral Wealth. Three of
us worked together at a listed company and we knew that if we
put our clients first in all that we did, we would have a successful
business. We opened our doors in May 2016, and fortunately our
strategy has worked – we grow through referrals from our existing
clients. We are based in Johannesburg and have clients all over
South Africa and many who have emigrated.
Why would a client choose Integral Wealth Management? What
sets you apart?
We pride ourselves on our culture of transparency and integrity.
We believe that our clients’ financial wellbeing must always come
first. This reputation has stood us in good stead, cementing strong
and trusting relationships which have contributed to our growth.
We do not have minimum client portfolio sizes or any other
strict criteria that determine which new clients we take on. Anyone
who wants to work with a financial planner and who is committed
to their own financial future is welcome to become a client.
We operate as a team, meaning that we are all able to assist each
other with product and market knowledge, providing a think-tank
for complex client solutions and assisting with client servicing in
the event of someone being ill or on leave.
Although small, our robust and skilled team believe strongly in
sharing knowledge and continuous professional development is at
the forefront of our business model. We believe that in upskilling
ourselves and keeping up to date with industry trends, we are best
positioned to provide effective client solutions.
We work hard to retain existing clients through high levels of
service. We conduct annual reviews at minimum as a standard
practice and interact with our clients using a variety of channels
such as email, monthly newsletters, face-to-face or virtual meetings,
telephone and WhatsApp.
We treat our clients the way
we like to be treated.
What is the company’s financial planning philosophy?
We believe that each client deserves a financial plan that is
personalised and actively managed to enable them to live the life
they deserve. We do this through the following:
• Organisation. Bringing order to our client’s financial life.
• Accountability. Helping them follow through with their
• Objectivity. Delivering insight from the outside to avoid
• Proactivity. Anticipating life’s transitions and being prepared
• Education. Exploring and bestowing knowledge to empower
• Partnership. Partnering to achieve the best life possible.
What services does Integral Wealth Management offer? How
do you charge for your services?
We provide financial planning and wealth management services
to individuals and corporates and offer a full range of investment
products and platforms, as well as life assurance and medical
aid. Each plan is tailored to a client’s unique requirements, and
we adhere to the highest level of ethics and integrity in all our
client and product provider relationships.
We pride ourselves on providing independent financial advice
that is client-focused, and appropriate based on each client’s
personal requirements and situation. If we cannot add any value,
we would prefer to steer a client in the right direction rather than
earn fees without adding value.
We have contracts with most investment and life firms in South
Africa, and contracts with a few offshore service providers. We
also provide advice on medical aids, wills and trusts as part of our
service, but we do not establish or manage trusts or draft wills.
Our planners are all salaried employees who do not earn
commission based on sales. Staff are remunerated by way of profit
share annually, encouraging everyone to have a vested interest in
the success of the business.
What is the practice’s vision and mission?
Our ethos as a business is to always put our clients and their best
interests first, and all our planners and assistants have a track
record of delivering on that promise. Part of this ethos is ensuring
that the following criteria are met:
• Value for money
• No client is too small
• Full transparency and disclosure
• Honesty, integrity, ethics and professionalism
• Compliance is embedded in our culture
• Work as a team and value our staff
• Owner-managed and independent
Please detail how you have integrated the FPI’s Code of Conduct
into your practice.
We follow the six-step financial planning process, treating all
clients with the same care and diligence. We do not turn away any
client and do pro bono work for low-income earners introduced
by existing clients.
We have employed interns and trained them in all aspects of
our business, offering them permanent employment at the end
of their internship. We encouraged them to study towards the
Post-Graduate Diploma in Financial Planning and to become
CFPs®. It is our intention that our two current interns will
progress to become independent financial planners with us,
and we plan to repeat this process soon. We require all new
planners to be CERTIFIED FINANCIAL PLANNERS®, or to be
studying towards the designation when they join us. We believe
the biggest contribution we can make to transformation of our
industry is through training and giving people the opportunity
to grow themselves.
PRACTICE MANAGEMENT | Profile
Empathy is critical to success.
Our remuneration model is designed to incentivise the
correct behaviour. We have no cut-off dates to achieve
targets or sell more. We sell advice, not products, and clients
who receive good advice tend to be long-term clients. It is
much cheaper to look after the clients we have than it is to
start working with a new client, so we treasure the clients
We believe that by working as a team we are also putting
clients first – there is always someone to deal with their query,
and the attention they receive is personal as everyone is
trained and willing to assist.
Our MD sits on the FPI Technical Committee and has been
involved in various FPI Committees over the past 20 years.
We have also participated in industry events like Leaderex, at
the FPI stand, and have written commentaries for Blue Chip
in the past.
To what extent do you use technology in your practice?
We have always invested in technology as we believe it
enables our staff and our business to perform optimally and
proficiently. We utilise a Dutch system called iManage for
all storage, which is encrypted cloud-based storage used
mainly by banks and legal firms. Diligent recordkeeping
and protection of data is key to our business processes.
We also subscribe to value-adding services like Asset Map
We have an outsourcing arrangement with an IT firm that
provides live service support and checks the health of our
network and equipment on a regular basis.
Our IT systems enable all staff to work in the same way
whether they are in the office or at home or travelling
anywhere in the world. There was no disruption to business
in 2020 when we were forced into lockdown during the
What do you think are the keys to being a successful financial
We treat our clients the way we like to be treated. Empathy
is critical to success. Behavioural finance has been the fastestgrowing
area of financial planning education and training of
late, and Covid taught us the importance of understanding the
underlying issues that drive financial behaviour. We try to have
the difficult conversations with clients early on and encourage
them to commit to their own plans.
Our business has a combination of structure and flexibility –
structure around our procedures and how we work, and flexibility
around the solutions we can offer clients – tailored to their likes and
dislikes, so no one-size-fits-all.
What are the biggest challenges you currently face as a practice?
We are fortunate in that we have a good spread of clients and are not
dependent on a few to sustain us, and we have committed and loyal
staff. As we are still relatively young (six years old), our biggest challenge
is going to be managing our growth and balancing that with finding the
right staff to look after our client base. Regulation keeps changing which
keeps the industry professional, and offshore investing becomes a larger
part of our focus as the world becomes a smaller place and emigration
increases. There are no givens in our planning for the future.
How has being an FPI Approved Professional Practice benefited you?
The experience of going through the FPI audit highlighted areas
where our business could improve, which was helpful to us and
It has been a difficult period to measure benefits, due to Covid,
but when we applied, we were confident that if we wanted to be
at the top of our field, we wanted to align with the best, and meet
the highest standards, and that drove us to become an approved
What advice would you give another practice considering applying
to be an FPI approved practice?
Don’t hesitate on this. The application and approval process are a great
eye-opener. The designation has significant meaning in the industry
and to our clients.
Would you like to add anything?
We have spoken about the challenges
we face as a business, but not about
the challenges to our industry. It is
widely recognised that transformation
has been slow, and we welcome the
internship programmes run by FPI
and ASISA, which specifically target
our industry. We encourage other
financial planning companies to
appoint newly-qualified graduates –
it is a wonderful way to train young
people and enhance the profession.
The prestigious Approved Professional Practice accreditation is the result of a stringent
audit by FPI to ensure that a business adheres to the highest standards of knowledge,
expertise and ethical conduct.
Michael Frantzeskou, CFP®,
Director and Financial Planner,
Integral Wealth Management
FINANCIAL PLANNING | Estate planning
Preserving wealth while
keeping up with global trends
Andrew Ratcliffe is 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 more than 30 years. “While South Africa has its
challenges and the global and local economic and political woes
of 2022 have certainly kept us on our toes, the country still has
a middle-income class that is steadily moving towards high-networth.
Preserving wealth, not only in South Africa, but across the
continent is key to the growth of our economies, even as times
and trends change,” says Ratcliffe.
PCH continuously follows and embraces emerging trends and
the impact they have on driving wealth creation, investment and
growth. “Immigration and semi-gration are two rapidly growing
trends in South Africa,” says Ratcliffe. “While semi-gration is where
families choose to relocate within a country, such as families
moving down to the Western Cape from Gauteng, many families
are leaving South Africa in search of more tax-friendly jurisdictions,
opportunities as well as popular residency and citizenship
programmes. The money goes where the opportunities are and
the families often follow.” PCH’s tax consulting and fiduciary
arms provide ongoing advice to their clients to ensure that they
understand the complexities of immigration and how to manage
their affairs when moving jurisdictions.
Another emerging trend is that of digital currencies and
alternative asset classes. According to the 2022 UBS Global Family
Office Report1, 28% of family offices are investing in decentralised
payments or technologies by way of private equity, while 26% of
family offices are currently investing or considering investing in
cryptocurrencies. “Embracing technology is just as fundamental
now to our advice,” says Ratcliffe. “There is a myriad of other
options now available, which are becoming more mainstream
however, there must be a good reason to have these as an asset
class in one’s portfolio.”
Ratcliffe is also seeing a demand for doing the right thing.
“Our clients’ values feed into our ethos and advisory process,
with a shift towards ESG and being mindful of issues like climate
change.” To implement ESG strategies, the company works with
the best fund managers in the market, from a global context,
who are skilled in constructing portfolios suited to individual
and family needs.
According to the same UBS survey, family offices think sustainable
investments will continue to at least match broader market returns
over the next five years. A total of 41% said they were actively
allocating more to companies/sectors that are focused on directly
impacting real world issues (e.g. lowering carbon emissions,
renewable energy, etc).
Despite the noise in the system, PCH continues to adhere to
its goals-based approach to wealth management and more than
ever to focus on its responsibility of being
in the “trust” business. “Wealth management
and wealth preservation requires a lot of
attention, focus, empathy, care and listening.
A lot of what we do is like being a counsellor
and a coach, listening carefully to the needs,
wants, fears and dreams of our clients. We’re
in the trust business,” says Ratcliffe. This
trust extends to their relationships with
independent financial advisors who they
partner with to navigate complex wealth
management strategies, with demanding
fiduciary and tax structuring requirements.
If you’re looking for this kind of partnership,
contact Andrew Ratcliffe, CFP® on
email@example.com or visit
Andrew Ratcliffe, CFP®, Director,
Private Client Holdings
1The 2022 UBS Evidence Lab Global Family Office Report includes insights from 221 single family offices that collectively oversee wealth of US$493-billion and have average assets under
management of US$2.2-billion. A total of 16% of the survey sample were from the Middle East and Africa.
PRIVATE CLIENT HOLDINGS IS AN AUTHORISED FINANCIAL SERVICES PROVIDER.
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.
PRIVATE CLIENT TRUST . BLUE CHIP MAGAZINE 2022
The value of
Trust forms the core of the relationship between a
financial professional and their client. The client trusts
the financial professional not only with their finances,
but also with their long-term goals and objectives. There
is a fiduciary duty on the financial professional to always act in
the best interest of the client and put the needs of the client first.
The financial advice industry has suffered from bad press in
the past, due to unscrupulous advisors not acting in the best
interest of the client, but rather acting in their own best interest
to the detriment of the client. Unfortunately, these bad practices
have tainted the view of the industry despite the majority of
financial planners whose businesses revolve around their client,
their needs and objectives.
A professional designation is an indication to clients that the
financial planner or advisor you are dealing with has distinguished
themselves not only in terms of qualifications and experience, but
also holds themselves to a set of ethical standards governed by
a body of their peers.
The Australian Council of Professionals describes a profession
as: “a disciplined group of individuals who adhere to ethical
standards and who hold themselves out, and are accepted
by the public, as possessing special knowledge and skills in a
widely recognised body of learning derived
from research, education and training at a
high level, and who are prepared to apply
this knowledge and exercise these skills
in the interest of others. It is inherent in
the definition of a profession that a code
of ethics governs the activities of each
profession. Such codes require behaviour
and practice beyond the personal moral
obligations of an individual. They define
and demand high standards of behaviour
in respect to the services provided to the
public and in dealing with professional
colleagues. Often these codes are enforced
by the profession and are acknowledged
and accepted by the community.”
How did the financial planning profession
evolve in South Africa? In 1981, a group of
advisors in the life insurance and pension
fund industry founded the Institute of Life
and Pension Advisors (ILPA) to professionalise
the industry which, at that time, did not
have as many regulatory guidelines to
protect consumers as it does today. In 1998,
this Institute became one of the founding
members of the Financial Planning Standards
Board (FPSB), which owns the CERTIFIED
FINANCIAL PLANNER® mark outside of the
US. In 2000, this organisation changed its
name to Financial Planning Institute of
Southern Africa (FPI).
FPI is a professional body recognised by
the South African Qualifications Authority
and has three designations registered with
this Authority. The certification standards that
apply to all three professional designations
are based on four Es: Education, Experience,
Examination and Ethics.
The internationally recognised CERTIFIED FINANCIAL
PLANNER® designation is based on international standards for
financial planning as set by FPSB. These standards are localised
by the FPI to ensure that they cater for the uniquely South African
environment. All prospective CFP® members must meet the
certification requirements before they apply for membership. This
designation is underpinned by a formal qualification in financial
planning, at a postgraduate degree level.
The FINANCIAL SERVICES ADVISOR and REGISTERED
FINANCIAL PRACTITIONER designations are available to those
financial advisors in the industry who have a graduate degree
or diploma in financial planning or related fields and meet the
additional certification requirements as set by FPI.
Why are these designations valuable?
Being a professional member of FPI distinguishes you from
the crowd. It reflects your commitment to becoming and
remaining a professional in the broader financial services
industry. An increasing number of financial institutions are
seeking to employ representatives and key individuals that
are professional members in good standing at FPI. Being an
FPI professional member means that you already meet the
competency (Education and Experience) and CPD standards of
the FSCA. You furthermore adhere to the FPI Code of Ethics and
Practice Standards and are subjected to peer review should you
step over the line in terms of the mentioned code.
Being a professional
member of FPI distinguishes
you from the crowd.
All of this assists the financial institution to continue to comply
with the fit and proper requirements as contained in BN 194 of 2017.
Being a professional member in good standing with FPI means that
you meet our ethical, competency and CPD standards.
Consumer trust is also very important when it comes to business
retention. A happy consumer is someone that stays with you as
they trust you. Having a professional designation showcases that
you are committed to the principles of FPI which are:
• Client first
To circle back to the value of a professional designation
The value can be summarised in a few key words: employability,
competency, professionalism, consumer loyalty and trust.
Consumers trust competent professionals and financial firms
employ competent financial advisors and financial planners that
are going to grow with the practice or corporation.
Still not a member of FPI but really want to become a member?
Visit www.fpi.co.za and apply for membership today. Alternatively
contact us on (011) 470-6000 or firstname.lastname@example.org.
The FPI Financial Planner
of the Year competition
is composed of very
stringent tasks faced by
the finalists in all three
rounds. Only applicants
talents and abilities to
the highest degree made
it through the rounds.
Here is a roundup of
the winners of the FPI
Financial Planner of the
Year 2022 competition.
A huge congratulations to the 2022 Financial Planner of the Year,
Palesa Dube, CFP®.
The FPI Financial Planner of the Year is judged by independent
judges including academics, industry experts, FPI senior
management and board members. Congratulations to the top
three finalists, Philippus Hendrik Spies CFP®, Palesa Dube, CFP®
and Tom Brukman, CFP®.
Lelané Bezuidenhout, CFP®, and Philippus Hendrik Spies, CFP®.
Lelané Bezuidenhout, CFP®, and Palesa Dube, CFP®.
Find out about the
Young Financial Planners
Lelané Bezuidenhout, CFP®, and Tom Brukman, CFP®. Lelané Bezuidenhout, CFP®, with Palesa Dube, CFP®, FPI 2022
Financial Planner of the Year and Ryan McCaughey, CFP®, FPI
2021 Financial Planner of the Year.
The Top Candidate Award, presented by Nici Macdonald, CFP®,
FPI head of department for certification and standards, which
goes to the candidate whose performance surpassed all the
others in the FPI’s CFP® Professional Competency Examination
went to Bryan Nicol, CFP®.
The It Starts With Me Award which recognises a CERTIFIED
FINANCIAL PLANNER® professional for their unyielding dedication
to promoting the CFP® certification, went to Ricardo Teixeira, CFP®.
The Diversity and Inclusion Award, presented by the FPI’s HOD
for policy and engagement, David Kop, CFP®, which speaks to the
efforts of the individual exhibiting tireless endeavour to foster
diversity in the financial planning profession, went to Mona
The Harry Brews Award, presented by the FPI chairperson, Kirsty Scully, which honours an extraordinary individual for undying
and dedicated service to both the FPI and the financial planning profession in general, was awarded to Noel Maye, MBA. Maye is
the outgoing CEO of the Financial Planning Standards Board and is recognised for his unwavering support to the financial planning
profession and his tireless dedication to growing the profession from only a few territories to over 27 today with over 203 000 CFP®
SO YOU KNOW
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