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Blue Chip Issue 88

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.

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.

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BLUE<br />

CHIP<br />

0.5 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

THE OFFICIAL PUBLICATION OF THE FPI<br />

<strong>Issue</strong> <strong>88</strong> • Aug/Sept/Oct 2023<br />

www.bluechipdigital.co.za<br />

0.5 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

01 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

01 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

1.5 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

1.5 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

02 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

02 CONTINUOUS<br />

PROFESSIONAL DEVELOPMENT<br />

GETTING IT RIGHT<br />

Offshore investment<br />

RETIREMENT PLANNING<br />

Clients’ financial independence<br />

How big is your shield<br />

against AI?<br />

The ABCs of COFI for FSPs<br />

Anton Swanepoel explains the implications


BACK TO<br />

THE FUTURE!<br />

The 2023 FPI Professional's Convention will signify how far we have come in<br />

a handful of years. Three years ago, there was a shared conviction that life’s<br />

beacons had been snuffed and we were wrapped up in a world of uncertainty,<br />

disbelief and a deep sense of underlying fear. We were amid the Covid lockdown,<br />

our awareness dawning on the significance and consequence of connection.<br />

The theme of this year’s FPI Professional's Convention is Back to the Future to remind<br />

us of the importance of looking back to where we were before the crisis, while moving<br />

forward into a future where change is a constant evolution of innovation and progress.<br />

Our view of the future has transformed. We have witnessed the emergence of a digital<br />

reality – a simulated experience that became real.<br />

Andy Hart, founder of HUM, attests that the purpose of increasing the use of<br />

technology is to free us up to devote more of our time to the real but difficult work our<br />

clients require from us. By freeing up resources, we can become more human. He sees<br />

our future as one in which we entrust technology with predictable tasks, allowing us to<br />

maintain our focus on fostering human connections. He says that the need for genuine<br />

human connection will always persist, and client-focused behavioural advisors are<br />

ideally positioned to prosper in this next phase of the industry’s evolution (page 64).<br />

Kim Potgieter refers to a Harvard study on happiness, in her article on page 62.<br />

The research found that people more socially connected to family, friends and their<br />

communities are happier, physically healthier and live longer than less well-connected<br />

people. Fulfilling relationships protect our bodies and minds and positively impact our<br />

wellbeing. On page 66, Paul Nixon, Momentum Investments, explains that while the<br />

world is embroiled in technological progress, it is also shifting towards an “empathy<br />

economy”. He says that the jobs that remain after machines have taken all the processdriven<br />

tasks are likely to be the ones rooted in the humanities. The world is perhaps<br />

looking towards psychology to solve the world’s problems. The value proposition<br />

seems to be rooted in psychology. We understand that to affect behaviour change,<br />

more information is not the answer because we have the knowledge. Changing<br />

behaviour requires something deeper.<br />

Anton Swanepoel, Trusted Advisors, says that nurturing certain habits can lay<br />

the foundation of success and that according to Jack Canfield, American author,<br />

“Successful people face facts squarely. They do the uncomfortable and take steps to<br />

create their desired outcomes” (page 20).<br />

On page 58, Rob Macdonald, Fundhouse, tells us about Don Phillips from Morningstar<br />

who after 25 years in the investment industry, said he had learned that the “finance<br />

business” is not about “money management” but rather “behaviour modification”.<br />

Macdonald believes that acting as a client’s choice architect and behavioural coach<br />

gives financial planners the best chance of becoming an effective investor manager.<br />

People often fail to prioritise the human connections that contribute to happiness.<br />

Helping clients invest in time, relationships and control impacts their financial health<br />

and overall wellbeing.<br />

It is time to go Back to the Future. Save the date: 14-15 November!<br />

All the best<br />

Alexis Knipe, Editor<br />

blue-chip-journal<br />

<strong>Blue</strong> <strong>Chip</strong> Journal – The official publication of FPI<br />

<strong>Blue</strong> <strong>Chip</strong> is a quarterly journal for the financial planning industry and is the official publication of the Financial<br />

Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. <strong>Blue</strong> <strong>Chip</strong> publishes<br />

contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.<br />

A total of 7 500 copies of the publication are distributed directly to every CERTIFIED FINANCIAL PLANNER®<br />

(CFP®) in the country, while the monthly <strong>Blue</strong> <strong>Chip</strong> Digital e-newsletter reaches the full FPI membership base. FPI<br />

members are able to earn three verifiable Continuous Professional Development (CPD) points<br />

per edition of the print journal (four per year) under the category of Professional Reading.<br />

Special advertising packages in <strong>Blue</strong> <strong>Chip</strong> are available to FPI Corporate Partners,<br />

FPI Recognised Education Providers and FPI Approved Professional Practices.<br />

ISSUE <strong>88</strong> |<br />

AUG/SEP/OCT 2023<br />

BLUE<br />

CHIP<br />

Publisher: Chris Whales<br />

Editor: Alexis Knipe<br />

Online editor: Christoff Scholtz<br />

Digital Manager: Charl Daniels<br />

Designer: Tyra Martin<br />

Production: Yonella Ngaba<br />

Ad sales:<br />

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Managing director: Clive During<br />

Administration & accounts:<br />

Charlene Steynberg<br />

Kathy Wootton<br />

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Distribution and circulation manager:<br />

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Cover and main feature images:<br />

Detoi Photography<br />

PUBLISHED BY<br />

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Directors: Clive During, Chris Whales<br />

Physical address: 28 Main Road,<br />

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www.bluechipdigital.co.za<br />

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No portion of this book may be reproduced without written consent<br />

of the copyright owner. The opinions expressed are not necessarily<br />

those of <strong>Blue</strong> <strong>Chip</strong>, nor the publisher, none of whom accept liability<br />

of any nature arising out of, or in connection with, the contents of<br />

this book. The publishers would like to express thanks to those who<br />

support this publication by their submission of articles and with their<br />

advertising. All rights reserved.


CONTENTS<br />

ISSUE<br />

<strong>88</strong><br />

AUG/SEPT/OCT 2023<br />

02<br />

08<br />

EDITOR’S NOTE<br />

By Alexis Knipe<br />

FPI KEEPS BUSY OVER WINTER<br />

MONTHS<br />

Message from FPI CEO<br />

10<br />

FPI UPDATE<br />

The FPI Professional's Convention 2023<br />

looks Back to the Future<br />

12<br />

16<br />

ON THE MONEY<br />

Milestones, news and snippets<br />

TAKING THE PATH TO FINANCIAL<br />

HEALTH<br />

Column by Rob Macdonald, Head of Strategic<br />

Advisory Services, Fundhouse<br />

17<br />

THE COMPLEXITIES FACING<br />

INVESTORS (AND ASSET<br />

MANAGERS)<br />

Column by Florbela Yates, Head of Equilibrium<br />

18<br />

A COMPREHENSIVE GUIDE TO<br />

RETIREMENT PLANNING IN<br />

SOUTH AFRICA<br />

Column by Kobus Kleyn, Tax and Fiduciary<br />

Practitioner, Kainos Wealth<br />

20<br />

ESSENTIAL HABITS OF<br />

HIGHLY SUCCESSFUL FSPS<br />

UNDER COFI<br />

By Anton Swanepoel, Founder, Trusted Advisor<br />

23<br />

INTRODUCING PURPOSE-DRIVEN<br />

FINANCIAL COACHING<br />

UFS School of Financial Law says that it’s time to<br />

embrace a human approach to financial planning<br />

24<br />

THE A.R.T. OF SAVING WITH<br />

MOMENTUM MONEY<br />

Gone are the days when businesses could<br />

create products and expect clients to mould<br />

their lifestyles to them<br />

26<br />

LOOK BOTH WAYS BEFORE YOU<br />

CROSS THE BRICS ROAD<br />

By Fundhouse investment analyst, Stuart Copely<br />

30<br />

BIG TECH TURNAROUND:<br />

WHAT’S BEHIND THE RECOVERY?<br />

Kondi Nkosi, Country Head, Schroders, writes<br />

about big tech’s resurgence<br />

32<br />

TOP FIVE INVESTMENT<br />

MIGRATION PROGRAMMES<br />

By Sarah Young, Investment Migration Manager,<br />

Sable International<br />

34<br />

36<br />

ROUND TABLE SERIES<br />

Offshore investment<br />

WHERE DO WE STAND NOW?<br />

Hannes Viljoen, CEO, Kudala Wealth,<br />

says we should not be surprised when<br />

something unprecedented happens<br />

38<br />

ADDING VALUE, TIME<br />

AND MONEY<br />

Bovest Wealth Management speaks to<br />

<strong>Blue</strong> <strong>Chip</strong> about the values that built<br />

its success<br />

40<br />

42<br />

YOUR WEALTH, OUR PRIORITY<br />

By Bovest Wealth Management<br />

A DFM CAN’T HELP WITH<br />

YOUR HAIR BUT CAN HELP<br />

WITH INVESTING<br />

By Florbela Yates, Head of Equilibrium<br />

43<br />

HARNESSING THE POWER<br />

OF DIGITAL SOLUTIONS IN<br />

WEALTH MANAGEMENT<br />

Hymne Landman, Head of Momentum<br />

Wealth, says that SA’s financial<br />

service industry is experiencing a<br />

digital transformation<br />

4 www.bluechipdigital.co.za


SAIPATM<br />

Y OUR WEA L T H<br />

Professional Accountant (SA) is not<br />

just a professional designation.<br />

IT’S A SEAL OF TRUST.<br />

SAIPA members aim to<br />

provide the highest level<br />

of expertise and service<br />

to clients and are bound by<br />

the Institute’s Professional<br />

Conduct Standards and Ethical<br />

Pledge. They also act as trusted<br />

business advisors, assisting and<br />

driving businesses to not only<br />

survive but thrive.<br />

SAIPA – DEVELOPING FUTURE-READY PROFESSIONALS<br />

www.saipa.co.za<br />

info@saipa.co.za


CONTENTS<br />

ISSUE<br />

<strong>88</strong><br />

AUG/SEPT/OCT 2023<br />

44<br />

TAKING THE NEXT LOGICAL STEP –<br />

INVESTING YOUR SAVINGS MONEY<br />

Pierre Jean Marais, Retail Marketing,<br />

Momentum Investments, tells you how to<br />

invest your money smartly<br />

45<br />

ADD SOME “BMT” TO YOUR<br />

CLIENTS’ RETIREMENT<br />

PORTFOLIOS<br />

Momentum Investments is making<br />

investment personal<br />

46<br />

50<br />

ROUND TABLE SERIES<br />

Retirement planning<br />

A CATALYST FOR POSITIVE<br />

CHANGE<br />

<strong>Blue</strong> <strong>Chip</strong> speaks to Institute of Retirement<br />

Funds Africa chairperson, Geraldine Fowler<br />

52<br />

THE FUNDAMENTAL NEED<br />

FOR HEALTH AND BEHAVIOUR<br />

MODELLING IN RETIREMENT PLANNING<br />

Cogence is a DFM seeking to enhance the<br />

business of wealth creation in SA<br />

54<br />

TIME FOR SA CONSUMERS TO<br />

TIGHTEN BELTS AND AVOID DEBT<br />

NMG Benefits warns of a torrid time ahead for<br />

SA consumers<br />

55<br />

MEDICAL AID 101<br />

Gary Feldman, Executive Head of<br />

Healthcare Consulting, NMG Benefits, says don’t<br />

let the rising healthcare costs hold you back<br />

56<br />

RETIREMENT COACHING: ADDING<br />

VALUE TO YOUR BUSINESS<br />

Stephan le Roux, Financial Planning Coach, Old<br />

Mutual Wealth, advises on how to bring your<br />

clients’ desires into the light<br />

58<br />

THE REAL SIGNIFICANCE OF THE<br />

NUMBER “93.6%” FOR FINANCIAL<br />

PLANNERS<br />

Rob Macdonald, Head of Strategic Advisory<br />

Services, Fundhouse, asks if asset allocation is<br />

the key determinant of investment returns<br />

62<br />

PRACTICAL CONVERSATIONS<br />

FOR FINANCIAL HEALTH AND<br />

WELLBEING<br />

How to help your clients prioritise<br />

purpose, connectedness and relationships,<br />

by Kim Potgieter<br />

64<br />

THINK HARD<br />

Andy Hart, Founder, HUM, speaks<br />

about embracing technology and the<br />

human connection<br />

66<br />

HOW BIG IS YOUR SHIELD<br />

AGAINST AI?<br />

Can AI help us to save in a way that a financial<br />

advisor cannot? By Paul Nixon<br />

68<br />

LESSONS FROM COMRADES<br />

MARATHON<br />

Kathryn van Dongen, SA Managing Director,<br />

PorfolioMetrix, compares the world of<br />

financial advice to the marathon<br />

70<br />

THE BIG RISK THAT COULD PUT<br />

INVESTMENT AND WEALTH<br />

ADVISORS OUT OF BUSINESS<br />

James Downie, Director of Due Diligence SA,<br />

warns of the huge risky elephant in the room for<br />

CAT I advisors<br />

72<br />

THE CASE FOR STRATEGIC<br />

CORPORATE OUTSOURCING<br />

Outsourcing is more of a strategic tool<br />

than a cost-saving exercise, says Private<br />

Client Holdings<br />

74<br />

HOW TO USE FINANCIAL<br />

PRODUCTS TO ENHANCE<br />

ESTATE PLANNING<br />

Felicia Hlophe, legal advisor at Allan<br />

Gray, summarises four key estate<br />

planning principles<br />

76<br />

MEET THE MANAGERS<br />

Event review<br />

6 www.bluechipdigital.co.za


Back to The Future<br />

Back to The Future<br />

Sandton Convention Centre<br />

14th & 15th


BLUE<br />

CHIP<br />

FPI UPDATES | CEO message<br />

FPI keeps busy<br />

over winter<br />

months<br />

Lelané Bezuidenhout, CFP®,<br />

CEO, Financial Planning<br />

Institute of Southern Africa<br />

The CEO of Financial Planning Institute of<br />

Southern Africa shares FPI’s latest news.<br />

June, Youth Month, served to remind us of our<br />

responsibility to support and nurture South Africa’s<br />

youth. In 2021, the Financial Planning Institute<br />

of Southern Africa officially launched the Young<br />

Financial Planners Organisation (YFPO), a network of<br />

younger members who not only learn from each other,<br />

but also promote financial planning in their communities<br />

and provide support and mentorship to young people<br />

entering the financial planning profession.<br />

Our special thanks to outgoing chair of the YFPO, Luke<br />

Martins, and congratulations to incoming chairperson,<br />

Gugu Sidaki, who is becoming widely known publicly as<br />

a writer and broadcaster on personal finance matters.<br />

For more information on the YFPO’s activities go to<br />

https://fpi.co.za/membership/yfpo.<br />

Gugu’s appointment brings us in a roundabout way<br />

to August, Women’s Month. Here’s wishing all women in<br />

financial planning a wonderful Women’s Month – let’s<br />

continue to support, uplift and empower each other<br />

in our personal and professional journeys through<br />

wonderful initiatives such as the Women in Finance<br />

Network and the LeanIn Circle.<br />

Special congratulations, therefore, to three women<br />

who have taken up non-executive directorships on the<br />

FPI National Board: Olwethu Masanabo (re-elected), Jean<br />

Cooper (newly elected) and Vuledzani Gloria Dangale<br />

(appointed by the board).<br />

We also congratulate Ronald Matande, who has been<br />

confirmed as executive director focusing on operations.<br />

Ronald has admirably filled the position held by David Kop,<br />

who left the FPI at the end of last year, and the board had<br />

no hesitation in making his position permanent.<br />

To Sherwin Govender, the FPI’s retiring non-executive<br />

director, we thank you for your dedication and commitment<br />

to the FPI over the past four years.<br />

Congratulations also goes to Johan Cloete and his team at<br />

the Integrity Academy in Pretoria, which has been approved<br />

as a recognised education provider. The Academy offers the<br />

National Certificate: Wealth Management (NQF level 5) and<br />

the Occupational Certificate: Financial Advisor (NQF level 6).<br />

Candidates successfully completing these online courses are<br />

exempted from having to write the Professional Competency<br />

Examinations for the Registered Financial Practitioner<br />

(RFP) and Financial Services Advisor (FSA) designations<br />

8 www.bluechipdigital.co.za


From an FPI point of view, one<br />

must remember that retirement<br />

savings are there for a reason.<br />

respectively. This brings our list of approved education<br />

institutions meeting the FPI’s standards to 10.<br />

The new Continuing Professional Development (CPD) cycle<br />

began in June, with the following changes to our CPD policy:<br />

CFP members’ requirements remain at 35 CPD hours<br />

per cycle, but FSA members’ requirements have been<br />

reduced to 25 hours and RFP members to 20 hours.<br />

The requirement for members whose retirement status<br />

has been approved by the FPI has been reduced to 15<br />

hours. Of these, 10 hours can be claimed for mentoring<br />

upcoming professionals.<br />

In July, the FPI focused on producing a coordinated<br />

response to National Treasury’s proposed two-pot retirement<br />

fund draft regulations, which involved the Competency<br />

Committee and its Advocacy Committee. In May, Treasury<br />

and the South African Revenue Service released the revised<br />

2023 Draft Revenue Laws Amendment Bill and 2023 Draft<br />

Revenue Administration and Pension Laws Amendment Bill<br />

for public comment. These bills aim to implement the first<br />

phase of the two-pot retirement system – to be officially<br />

known as the “component retirement system”. The deadline<br />

for comment on the draft bills was 15 July.<br />

The response involved a strategic Memorandum of<br />

Understanding and partnership with the Institute of Retirement<br />

Funds Africa (IRFA), whose member funds will be hard-pressed<br />

to begin implementing the new system, especially if there is<br />

no reprieve from Treasury on the implementation date of 1<br />

March 2024. It’s important for the IRFA principal officers and<br />

fund trustees to know that the members of their funds can<br />

make use of the FPI network when it comes to advice on<br />

the choices offered by the new two-pot system – for many<br />

members, benefits counselling will not be enough.<br />

From an FPI point of view, one must remember that<br />

retirement savings are there for a reason. Fund members must<br />

be aware that when part of their savings becomes available to<br />

them under the new system, it doesn’t mean they have to take<br />

it. We believe that consumers must obtain professional financial<br />

advice because the decision they make will impact their longterm<br />

investment strategy. Thank you for taking the time to read<br />

this foreword. Until next time.<br />

Blessings,<br />

Lelané Bezuidenhout, CFP®, CEO,<br />

Financial Planning Institute of Southern Africa<br />

www.bluechipdigital.co.za<br />

9


FPI Professional's Convention 2023 looks<br />

Back to the Future<br />

The FPI Professional's Convention this year will highlight<br />

the importance of looking back at where we were<br />

before the global lockdown in 2020, while moving<br />

forward into a future filled with change, innovation<br />

and growth – hence aptly themed BACK TO THE FUTURE.<br />

The way we view the future has changed since we have been<br />

experiencing a post-lockdown world. Things have become<br />

fundamentally different as we have witnessed the birth of<br />

a virtual world filled with automation, open AI and digital<br />

evolution in the financial planning space.<br />

Liberty, 2022’s headline sponsor of the event, will be<br />

back again this year as the headline sponsor to bring you a<br />

memorable Professional's Convention.<br />

This 34th instalment of the Convention will be presented<br />

both virtually and face-to-face at the Sandton Convention<br />

Centre, Johannesburg on 14 and 15 November – giving the<br />

face-to-face delegates the opportunity to network and catch<br />

up on all the latest trends, while visiting the exhibitions and<br />

gaining insight into collaboration breakaway events. Those<br />

delegates who cannot be present in person will benefit from<br />

the innovation of a virtual walk-through environment while<br />

ensuring gamification lends to an entertaining experience.<br />

The FPI’s impressive growth and undoubted relevance over<br />

the years as well as the quality of our certification and practice<br />

standards has ensured that the profession occupies its rightful<br />

place in a world where financial wellness has never been more<br />

important. As innovation in the space occurs, the latest global<br />

trends will be highlighted as international speakers, who will be<br />

presenting in-person, drive home topics of adaptation to ensure all<br />

convention goers gain insight into must-have adoption practices.<br />

The speaker programme will delve into relevant topics aimed<br />

at empowering a forward-looking audience of dedicated financial<br />

professionals, including:<br />

• The new knowledge domain regarding the psychology of<br />

financial planning<br />

• How the future outlook of practice management and<br />

technology has changed<br />

• “People” aspects such as succession planning and<br />

remuneration structures<br />

• Cyber-security risks and social media strategies needed to<br />

grow a financial planning business<br />

In keeping with the tradition of hosting the best local and<br />

international speakers on topics that add value to South Africa’s<br />

financial planners sector, the 2023 speaker lineup includes:<br />

Dante De Gori, CFP® is the CEO of the Financial Planning Standards<br />

Board Ltd (FPSB). Prior to this, he served as CEO of the Financial<br />

Planning Association of Australia (FPA). He is passionate about<br />

advancing the profession of financial planning and supporting<br />

CFP® professionals globally and will be sharing his thoughts on<br />

the Future of Financial Planning.<br />

10 www.bluechipdigital.co.za


Mandy Wiener is a prominent South African journalist and writer<br />

who will be addressing the topic of hope and prosperity for South<br />

Africa. She is the host of the Midday Report on Radio 702 and Cape<br />

Talk and is a regular columnist for News24.<br />

Dr Charles Chaffin covers a broad range of fields, from<br />

educational and cognitive psychology to financial planning.<br />

He is the author and lead editor of seven books on topics of<br />

financial planning and cognitive psychology. Chaffin has been<br />

developing and presenting new research that has direct impact<br />

on the practice of financial planning.<br />

within a financial services provider, specifically the operational<br />

support needed and procedures underpinning the financial<br />

planning advice process. Academically, Macdonald was<br />

involved with the University of the Free State in drafting<br />

material, setting examinations and lecturing for the Advanced<br />

Diploma in Estate and Trust Administration.<br />

At Convention 2023, members will also be able to attend<br />

the FPI Awards Ceremony Gala Dinner on 15 November where<br />

the 2023 FPI Financial Planner of the Year Award winner will<br />

be crowned, as well as other awards such as Top Candidate of<br />

the Year, FPI Professional Practice of the Year and It Starts with<br />

Me awards.<br />

The 2023 FPI Professionals Convention will be sponsored by:<br />

Emma Sadleir is South Africa’s leading expert on social media<br />

law. Her company, The Digital Law Company, specialises The FPI Professional's Convention is regarded as the most relevant and<br />

in educating and advising corporates, employees, schools, biggest event in the calendar for financial professionals, considering its<br />

parents, teachers and universities on the legal, disciplinary and hybrid nature that allows for both face-to-face and virtual attendance<br />

reputational risks of social media. Sadlier and her team have for those who are not based in Gauteng to still be informed, gain insight<br />

collectively addressed hundreds of blue-chip corporate clients and obtain Continuous Professional Development (CPD) hours, which<br />

and over 200 000 learners across Africa and the UK through will amount to 12 CPD hours. The costs for The attending 2023 FPI Convention Professionals 2023 Conven<br />

educational talks and presentations. She also teaches media law are R3 000 for members (virtual) and R3 773 for non-members (virtual),<br />

to journalists and lawyers and lectures on personal reputation or R5 850 for members (face-to-face) and R7 000 for non-members<br />

The 2023 FPI Professionals Convention will be sponsored by:<br />

management on various MBA programmes.<br />

(face-to-face).<br />

For more information on the 2023 FPI Professional's Convention, email<br />

Brent Lindeque is a South African entrepreneur, motivational us at events@fpi.co.za or call us on +27 (0)11 470 6000.<br />

speaker and social media influencer. He gained international www.fpi.co.za<br />

attention in 2014 when he posted a video online of himself The 2023 FPI Professionals Convention will be sponsored by:<br />

taking part in the “NekNomination” drinking game,<br />

The<br />

but<br />

2023<br />

instead<br />

FPI Professionals The Convention 2023 FPI will Professionals be sponsored Convention by: will be sponsored by:<br />

of drinking alcohol, he did a good deed for someone in need. 2023 PROFESSIONAL CONVENTION SPONSORS<br />

The video went viral and Lindeque used the attention to<br />

launch the #ChangeOneThing movement, which encourages<br />

people to make small positive changes in their lives that can<br />

have a big impact on their communities and the world. The<br />

success of #ChangeOneThing led to media attention from CNN,<br />

BBC and Oprah magazine. In 2018, he was named one of the<br />

top 100 most influential young South Africans by the Mail &<br />

Guardian newspaper and in 2022 his platform was featured on<br />

a list of world’s top 100 innovation success stories.<br />

Lelané Bezuidenhout, CFP®, is the CEO of the FPI. She has<br />

been involved in the financial services industry since 1999 and<br />

started at a large life insurer. It is in her dealings with compliance<br />

matters and consumer complaints that she took an interest in<br />

financial planning from a standard setting point of view. Over<br />

the years she studied as a working mom to become a CERTIFIED<br />

FINANCIAL PLANNER®. Bezuidenhout joined the FPI in 2014.<br />

In her current role as CEO, she continues to impact positively<br />

on the lives of all in serving the FPI’s vision of “professional<br />

financial planning and advice for all”.<br />

BLUE<br />

CHIP<br />

The FPI Professionals Convention is regarded as the most relevant and biggest event in<br />

Nici Macdonald, CFP® is the Head of Department: Certification<br />

at the FPI. She has a strong legal background and is passionate<br />

about the future of financial planning in South Africa.<br />

Macdonald has extensive experience in practice management<br />

for financial professionals, considering its hybrid nature that allows for both face-to-fa<br />

11<br />

attendance for those who are not based in Gauteng to still be informed, gain insight an<br />

www.bluechipdigital.co.za<br />

The FPI Professionals Convention is regarded as the The most FPI relevant Professionals and biggest Convention event in th<br />

Continuous Professional Development (CPD) hours, which will amount to 12 CPD Hour<br />

The FPI Professionals Convention for financial professionals, conside<br />

The FPI Professionals<br />

for<br />

Convention<br />

financial is regarded professionals, as the<br />

is regarded<br />

considering most relevant<br />

as the most<br />

its<br />

relevant<br />

hybrid and<br />

and<br />

nature biggest<br />

biggest<br />

that<br />

event<br />

allows event<br />

in<br />

for in<br />

the<br />

both the calendar<br />

calendar<br />

face-to-face a


BLUE<br />

CHIP<br />

BLUE<br />

CHIP<br />

On the money<br />

Making waves this quarter<br />

A legend leaves, operations expand and become rich<br />

A LEGEND LEAVES CAPITAL LEGACY<br />

Capital Legacy COO, Brandon Garbutt,<br />

has announced that he will be leaving<br />

Capital Legacy at the end of the year.<br />

Garbutt made the announcement to<br />

Capital Legacy staff and management<br />

in June, where the news was met with<br />

much surprise and sadness.<br />

On explaining his decision, Garbutt<br />

said that it had not been an easy one<br />

to make. “It’s been an unbelievable<br />

journey of extremely hard work, late<br />

nights, lots of travel, stresses, unmistakable successes and, of course,<br />

fun,” he said. “At this time of my life, however, I feel that I have done<br />

what I set out to do here and now it’s time for me to reassess my direction<br />

and to focus on my family.” Speaking on the announcement, Capital Legacy<br />

founder and CEO, Alex Simeonides, said that although the news had come<br />

as a surprise to many, he and Brandon have been in discussions for some<br />

time now.<br />

“It takes a true leader to understand when it’s a good time to leave<br />

a business,” said Simeonides. “In the eight years of working side-byside<br />

with Brandon, we have both grown and learnt so much from each<br />

other. It has been the most memorable era of my corporate life. He will<br />

be truly missed.”<br />

Garbutt has been instrumental in orchestrating a business engine<br />

for the company, bringing new products to market and building great<br />

management teams.<br />

NMG expands operations in Namibian market<br />

Advisory and intermediary firm NMG Consultants and Actuaries t/a<br />

NMG Benefits has opened an office in Windhoek as it looks to offer a<br />

range of retirement fund, investment and actuarial consulting services<br />

to Namibian businesses, pension funds and medical aid funds.<br />

The new office will allow NMG to enhance its service levels to its<br />

existing Namibian clients, while actively looking to grow its client base<br />

in the country, said Ernestu Augustus MD of NMG Consultants and<br />

Actuaries Namibia.<br />

“This expansion is a clear indication of<br />

our growth trajectory as a business. We<br />

expect it to open up several opportunities<br />

for skilled people in the local market, as<br />

we aim to provide high-quality strategic<br />

advice around retirement, investments and<br />

healthcare, with excellent service to back it<br />

up,” said Augustus.<br />

Ernestu Augustus, MD, NMG<br />

Consultants and Actuaries<br />

Namibia Fundhouse<br />

BECOME RICH, STAY RICH<br />

PJ and Geo Botha, financial experts and co-hosts of the popular kykNET<br />

series, Welvaartskeppers, have just released their first book, Word Ryk, Bly<br />

Ryk, which is now available online and in all major bookstores nationwide.<br />

In this insightful book, they teach ordinary South Africans how to<br />

make money in a challenging environment and make it grow. The<br />

authors’ sound expert financial advice, aimed at cultivating good habits,<br />

directs the reader’s focus on their journey to wealth.<br />

Every household should invest in a book like this, which reinforces<br />

that your self-esteem, humility and faith in yourself play a huge role in<br />

your finances.<br />

The Bothas believe that one of the biggest mistakes families make<br />

regarding money is not talking about it. “By involving children in<br />

financial matters from a young age and explaining to them how a<br />

budget works, they learn how to deal with finances,” says PJ.<br />

Geo agrees: “My dad involved us in conversations about money<br />

from a young age, and it definitely had a huge impact on our lives.”<br />

Topics like successful retirement, pensions, investments, trusts,<br />

wills and determining the legacy you want to leave are also addressed<br />

in this excellent publication.<br />

Take control of your financial future and get yourself a copy of<br />

Word Ryk, Bly Ryk.


BLUE<br />

CHIP<br />

On the money<br />

Making waves this quarter<br />

New Group CEO with investment qualities<br />

NEW GROUP CEO FOR MOMENTUM METROPOLITAN<br />

Momentum Metropolitan has appointed Jeanette Marais as Group CEO<br />

effective 1 August 2023, making her the first female CEO of a large, listed<br />

life insurance and asset management group in South Africa.<br />

Marais joined Momentum Metropolitan as Deputy Group CEO in 2018,<br />

and currently has executive oversight over a portfolio of businesses,<br />

including Momentum Investments, Momentum Distribution Services,<br />

Consult by Momentum and Momentum Money. Under her leadership,<br />

Momentum Investments has grown its normalised headline earnings<br />

from R271-million in the 2018 financial year (FY2018) to R940-million in<br />

FY2022. Value of new business increased from R80-million to R346-million<br />

over the last five years.<br />

Marais says she considers it a privilege to be trusted by the Board and<br />

the company’s senior leadership to take the reins: “This is full circle for<br />

me. It was Momentum that provided the very first growth and leadership<br />

opportunities in my career. I am honoured that I get the chance to give<br />

back and lead this company that is so close to my heart.<br />

“I am excited to work with the leadership team to further harness<br />

the company’s strong brands and talented people, and to successfully<br />

execute our growth plans,” she concludes.<br />

INVESTMENT QUALITIES FOR TOUGH TIMES<br />

With interest rates continuing to rise, persistent inflation and the<br />

collapse of several mainstream financial institutions, it’s unsurprising<br />

that negative economic sentiment has prevailed in 2023. Companies<br />

that can grow their earnings regardless of the prevailing economic<br />

conditions and exhibit a range of characteristics including:<br />

Robust balance sheets. Although interest rates are now at their<br />

highest level since 2007, companies with appropriate leverage and<br />

strong balance sheets have been able to navigate the rising interest<br />

rate environment and take advantage of market opportunities with<br />

bolt-on acquisitions, further strengthening their earnings profiles.<br />

Market leadership. In an inflationary environment, market<br />

leaders are more easily able to pass on input cost increases to their<br />

customers thereby maintaining profit margins.<br />

Innovation. To survive, and indeed thrive over multiple decades<br />

companies must innovate, particularly in times of change.<br />

Strong track records. A company’s ability to reliably grow<br />

dividends over time is a strong indicator of their ability to generate<br />

cash flow and earnings through the economic cycle.<br />

Diversification. The prospects of well-diversified companies are<br />

not tied to the fortunes of a particular economy or dependent on<br />

the success of one specific product.


BLUE<br />

CHIP<br />

On the money<br />

Making waves this quarter<br />

Advice for the young and for advisors<br />

ADVICE FOR ADVISORS<br />

In what is a first for the financial services industry in South Africa, a unique and innovative new independent consulting<br />

firm has been launched which offers expert business guidance to financial institutions and advisors.<br />

FI Consult assists businesses within the financial services sector to<br />

unlock potential, pursue growth, streamline operations, identify<br />

and pursue effective strategies, understand compliance, embrace<br />

technological advancements, engage effectively with clients,<br />

develop new business relationships as well as overcome challenges<br />

and plateaus. This is according to co-founder Jason Bernic, CFP®,<br />

executive coach and former international wealth manager with over<br />

20 years of experience in the financial planning profession.<br />

How FI Consult partners with financial advisors<br />

Bernic explains that FI Consult partners with their clients within the<br />

financial sector to identify issues and barriers to ongoing growth and<br />

success, and then helps them to establish effective mechanisms and<br />

strategies to overcome these and evolve the businesses.<br />

“We work on and in our client’s business in a partnership role<br />

that allows us to take them from where they are now to where they<br />

want, and need, to be. Our process entails asking the right questions<br />

to develop a blueprint of where a business currently is and then<br />

understanding where the business wants to go. From there FI Consult<br />

identifies the gaps within the organisation that are preventing it<br />

from achieving its goals and provides a strategy on how to close<br />

these gaps, overcome the barriers and move the business forward.”<br />

Challenges and opportunities<br />

David Kop, FI Consult co-founder, CFP® former director of the FPI<br />

as well as a former para-planner with 25 years of experience in the<br />

financial planning profession, explains that every business owner or<br />

management team comes to an inflexion point where they need to<br />

make decisions about that business’ future.<br />

“The route can either be to grow, stagnate or become obsolete.<br />

Many times, business owners and managers get overwhelmed at this<br />

point as they are too immersed in daily operations. It helps to have<br />

someone who can look from the outside and work on the business<br />

from the inside. FI Consult helps business owners and management<br />

remove any blind spots that may be stopping them from evolving<br />

the business to where it needs to go,” says Kop.<br />

Why FI Consult has been founded<br />

“FI Consult is the only end-to-end consulting partner for financial<br />

advisory businesses. We believe in an authentic approach to<br />

supporting advice businesses to protect what they have built, while<br />

at the same time, creating the next version of themselves.<br />

No-one else in South Africa is supporting financial advisors in quite<br />

the same way and we saw a definite need. Our approach is unique<br />

and real, and we offer proven solutions and actual strategies that are<br />

relevant, practical and executable.”<br />

FI Consult’s services are retained on a month-to-month basis with<br />

no contracts as well as no terms and conditions.<br />

For more information on FI Consult and the services offered visit<br />

www.ficonsult.co.za or email jason@ficonsult.co.za or<br />

david@ficonsult.co.za.<br />

Younger clients take a subscription-based approach<br />

Clients in the wealth-building phase of their life (the 20s, 30s and 40s) are rejecting the traditional models,<br />

wary of receiving conflicted advice and being sold unsuitable financial products. This new generation expects<br />

and demands objective, all-inclusive expertise when it comes to financial advice and is increasingly looking to<br />

subscription-based advisors to deliver on that.<br />

An advisor, free of the need to push products, is better positioned to guide clients more holistically across<br />

all life’s financial decisions, including goal setting and tracking, budgeting, managing debt, buying property,<br />

starting a family, investing in education, planning for travel and retirement and, if needed, financial products.<br />

The subscription-based approach is relatively new globally but has gained strong traction in markets like<br />

the US and UK. In South Africa, adoption is also at an early stage but it is seeing strong growth due to interest<br />

from younger clients and a small innovative community of financial advisors that have embraced the model.


BLUE<br />

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COLUMN<br />

Taking the path to financial health<br />

Better done in partnership with a professional*.<br />

Rob Macdonald, Head of<br />

Strategic Advisory Services,<br />

Fundhouse<br />

Rob Macdonald has held<br />

several senior positions in<br />

the investment industry.<br />

At Fundhouse, he acts as<br />

a consultant and coach<br />

to financial advisors and<br />

develops and facilitates<br />

training programmes in<br />

behavioural coaching and<br />

practice management. Before<br />

joining the financial services<br />

industry, Macdonald was<br />

MBA director at the UCT<br />

Graduate School of Business.<br />

He is co-author of the book<br />

Rethinking Leadership and has<br />

consulted, written and spoken<br />

widely on a range of topics.<br />

Macdonald has a Master’s<br />

degree in Management<br />

Studies from Oxford University<br />

and is a CFP® Professional.<br />

I<br />

had a meeting recently with an extremely<br />

capable and experienced schoolteacher.<br />

Inevitably our conversation turned to<br />

matters financial, not always an easy topic<br />

for schoolteachers, a notoriously underpaid<br />

profession. This teacher said that he didn’t<br />

know if he would have enough money by the<br />

time he retired. I asked him if he knew how<br />

much money he had in his retirement fund<br />

at that point. He didn’t. He was living in hope<br />

that he would have enough by the time his<br />

days of earning a salary ended. But in case<br />

he didn’t have enough, he was too scared to<br />

look. After all, if he did look, it might require<br />

him to take action. It might even require<br />

change. A different job? A second career? A<br />

side hustle? Much easier not to go there. No<br />

surprise that he turned down my suggestion<br />

to consult a financial planner.<br />

But he is not alone. I have friends in betterpaying<br />

professions than teaching, who after<br />

30-year careers have not consulted a financial<br />

planner. As a result, they have had varying<br />

degrees of success in both life and money.<br />

What is it that stops a person from consulting<br />

a professional financial planner? Is it simply a<br />

case of putting one’s head in the sand, or is<br />

there something more? After all, if we look<br />

at any successful sportsperson, they have<br />

invariably not achieved their success on their<br />

own, but with the help of a coach.<br />

I don’t think I need to convince financial<br />

planners that our money and our lives are<br />

too important for us to try to go it alone.<br />

Yes, there is much that people need to take<br />

ownership of in both, but if you are wanting to<br />

encourage clients to work with you, I believe<br />

there is a a free lesson from the sports arena<br />

which you could share with clients.<br />

Nick Kyrgios, widely regarded as the most<br />

talented male tennis player in the world,<br />

has yet to win a Grand Slam. His best effort<br />

has been playing against Novak Djokovic<br />

in a Wimbledon final. The challenge that<br />

Kyrgios faces is that he refuses to work with<br />

a coach. He believes he knows better. And I’m<br />

comfortable predicting that without a coach<br />

he’ll never win a Grand Slam. None of us know<br />

what we don’t know.<br />

When talking with a client about their life<br />

and money, I believe it’s critical to explore<br />

with them their perspective on working with<br />

a professional like yourself. There is no point<br />

in continuing to invest in a client who will not<br />

or cannot see the value of a financial advisor.<br />

However, even if you start with the right level<br />

of mutual understanding, you cannot take it<br />

for granted.<br />

Our money and our lives<br />

are too important for us<br />

to try to go it alone.<br />

I believe it is the job of financial planning<br />

professionals to build and continually<br />

reinforce the client’s trust in them and the<br />

process. This involves key personal skills:<br />

being clear and confident in the value you<br />

offer; recognising that sound advice lands<br />

best on the back of connecting emotionally<br />

with clients; being curious about their<br />

lives; collaborating with them as they make<br />

decisions; communicating consistently and<br />

being courageous at critical times. It’s not just<br />

the schoolteacher with his head in the sand<br />

who needs a professional partner with these<br />

skills. We all do.<br />

*The ideas in this article are explored<br />

more fully in my forthcoming book: The 7<br />

Pillars of Financial Health – Partnering with<br />

a Professional to Thrive, to be published this<br />

September by Vindigo Press. <br />

16 www.bluechipdigital.co.za


The complexities facing<br />

investors (and asset managers)<br />

Long gone are the days when asset managers became famous for managing<br />

balanced funds comprising 60% equities and 40% fixed income.<br />

Florbela Yates,<br />

Head of Equilibrium<br />

Florbela Yates is the head of<br />

Equilibrium in the Momentum<br />

Metropolitan group.<br />

Equilibrium is an independent<br />

discretionary fund manager<br />

that partners with financial<br />

advisors to help them enable<br />

their advice outcomes.<br />

Equilibrium brings balance to<br />

an advice practice by delivering<br />

services and investment<br />

solutions to help clients achieve<br />

their defined investment goals.<br />

Nowadays asset managers managing<br />

balanced funds need to have asset<br />

allocation skills across multiple asset<br />

classes, and both local and offshore.<br />

Beating the peer-group over any period<br />

requires an understanding of the peer-group<br />

holdings, which can now range from 0% to 45%<br />

outside of South Africa, include components of<br />

passive investments as well as active, and even<br />

have instances where the local asset manager<br />

outsources components to other teams.<br />

So how exactly do investors pick the most<br />

suitable investment for their need? I believe that<br />

there are three factors that investors and their<br />

financial advisors need to consider.<br />

The first is their investment time horizon.<br />

If they are investing for a particular event (for<br />

example to buy a house, pay for school fees or<br />

to provide an income in retirement) then the<br />

time horizon helps to determine how long<br />

they have and how much they need to save<br />

to get there. The second factor to consider is<br />

risk. This is a complicated topic in that risk can<br />

be broken down further into the ability to take<br />

risk and the willingness to do so. An investor<br />

who is worried about market volatility may be<br />

defined as an investor with a low risk tolerance<br />

(or willingness) but if he has insufficient capital<br />

and a short time horizon, he may need to take<br />

a bigger risk to grow his investment capital. In<br />

defining risk, the investor and their financial<br />

advisor needs to define what he sees as risk. Is<br />

risk the ability to not fund a specific event or<br />

is risk to that investor the possibility of losing<br />

capital over a particular period?<br />

The third factor is the actual benchmark or<br />

outcome. Investors who can determine their<br />

unique outcomes will be better placed to choose<br />

an investment that specifically aims to achieve<br />

those goals. For example, an investor drawing<br />

an income, might want to ensure that they<br />

don’t lose any capital over a rolling 12-month<br />

period and that they are able to draw down 5%<br />

of capital every year. And an investor investing<br />

towards retirement may want maximum capital<br />

growth and benchmark their investment against<br />

inflation (CPI) to ensure that their capital is<br />

growing in real terms. One of the main reasons<br />

COLUMN<br />

BLUE<br />

CHIP<br />

that Discretionary Fund Managers (DFMs) have<br />

gained traction both locally and internationally<br />

is their ability to understand the need for a<br />

greater link between investor needs and asset<br />

manager outcomes.<br />

By appointing a DFM to build portfolios<br />

that are linked to an investor outcome rather<br />

than some arbitrary index or peer benchmark,<br />

a DFM can better track how an investor’s<br />

portfolio is performing to get them to their<br />

desired outcome. This allows DFMs to construct<br />

portfolios differently. They are not restrained to<br />

selecting asset managers across the entire asset<br />

class portfolio but can rather find specialists in<br />

different asset classes. The DFM now becomes<br />

responsible for determining the appropriate asset<br />

class combination based on the particular investor<br />

needs and can appoint underlying fund managers<br />

who specialise in a particular asset class.<br />

The DFM therefore requires the skill to evaluate<br />

whether or not an asset manager has asset<br />

allocation skills (and is able to take on a broader<br />

investment horizon) or single asset class skills<br />

as well as their ability to manage an asset class<br />

holistically (locally and offshore). And it goes<br />

further, to sourcing different investment strategies<br />

from different domiciles around the world. This<br />

evolution in portfolio management has led to<br />

much greater complexity in portfolio construction<br />

and management.<br />

Some considerations include which asset<br />

classes to source locally or offshore, which<br />

should be actively managed or sourced passively<br />

and which strategies (eg value, earnings<br />

momentum, quality) should be sourced. In<br />

addition, they need to determine the breadth<br />

of the mandates to allocate to underlying<br />

asset managers. While this trend has led to<br />

portfolio benchmarks becoming much more<br />

closely aligned to investor needs it’s a lot more<br />

complex and requires investors and financial<br />

advisors to select a partner that understands<br />

the complexities and can help navigate both<br />

risks and outcomes over the relevant time<br />

horizons. Equilibrium has a proven track record<br />

in running advice-led, investor-linked portfolios<br />

for investors. For more information, please visit<br />

www.eqinvest.co.za. <br />

Equilibrium Investment Management (Pty) Ltd (Equilibrium) is an authorised financial services provider (FSP32726) and part of Momentum Metropolitan Holdings Limited and rated B-BBEE level 1.


BLUE<br />

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COLUMN<br />

A comprehensive guide to<br />

retirement planning in South Africa<br />

Let’s delve into the key components of retirement planning.<br />

Kobus Kleyn, CFP®, Tax<br />

and Fiduciary Practitioner,<br />

Kainos Wealth<br />

Kobus Kleyn has published<br />

over 200 articles and authored<br />

three books. He is a multiple<br />

award-winning professional<br />

and holds eight memberships<br />

with professional associations.<br />

His most recent awards were<br />

lifetime achievements awards<br />

from the FPI (Harry Brews), The<br />

Million Dollar Round Table (Top<br />

of the Table Life Membership)<br />

and Liberty Group (Life<br />

Membership) in 2021/22.<br />

The concept of retirement has evolved<br />

dramatically over the past few decades.<br />

Traditionally, it signified the end of an<br />

individual’s professional journey. However,<br />

in today’s dynamic economic climate, retirement<br />

is considered a new beginning – a golden period<br />

to pursue new interests, travel or engage in social<br />

activities. But to fully enjoy this period of life,<br />

meticulous planning is vital. This is particularly true<br />

in South Africa, where the financial landscape is as<br />

diverse as the nation itself.<br />

The importance of advisors’ diligence<br />

When it comes to retirement planning, the role<br />

of financial advisors is pivotal. Advisors with an<br />

in-depth understanding of South Africa’s financial<br />

market can provide personalised advice based on<br />

an individual’s financial goals, risk tolerance and<br />

investment horizon. However, their roles extend<br />

beyond that – they need to conduct rigorous due<br />

diligence on fund managers and fund selections<br />

to ensure long-term growth efficiency. Advisors<br />

must critically analyse the fund manager’s<br />

experience, track record, investment philosophy,<br />

risk management strategies and more. Moreover,<br />

they should regularly review and rebalance the fund<br />

selection to align with the investor’s changing needs<br />

and market conditions.<br />

The due diligence process is often complex and<br />

time-consuming. An alternative to this is utilising<br />

the expertise of Discretionary Fund Managers<br />

(DFMs). DFMs not only help reduce the burden<br />

of due diligence but also provide a more efficient<br />

and focused investment management approach,<br />

tailored to meet the specific needs and objectives<br />

of each client.<br />

Fund management<br />

A well-diversified and balanced portfolio is the<br />

cornerstone of successful retirement planning. This<br />

means investing in a broad array of assets such as<br />

equities, bonds, property and cash. A well-balanced<br />

fund structure helps mitigate risk, smoothens<br />

returns over time and allows portfolios to adjust<br />

according to market volatility.<br />

But here’s the catch: South African investors<br />

must also consider investing within their mandate<br />

limits. These mandates, set by the investor, limit the<br />

fund manager’s ability to take undue risk and help<br />

keep the portfolio aligned with the investor’s risk<br />

tolerance and investment objectives.<br />

Wills, estates and asset protection<br />

Estate planning in South Africa includes the<br />

creation of wills and the selection of assets that<br />

fall outside the estate. This approach can result in<br />

significant savings on estate duty and executor’s<br />

fees and provides protection against creditors. Life<br />

insurance policies and retirement annuities are two<br />

such products that offer these benefits, ensuring<br />

that your hard-earned wealth is protected and<br />

passed on to your loved ones in the most efficient<br />

manner possible.<br />

Political analysis of South Africa<br />

A sound understanding of the current political<br />

situation in South Africa is crucial for retirement risk<br />

planning. Political stability, regulatory frameworks,<br />

economic potential political risks can greatly impact<br />

your retirement savings and investment returns.<br />

Offshore investment and tax considerations<br />

Offshore investing, especially with the rise<br />

of Regulation 28, which allows for up to 45%<br />

offshore exposure, has become a key strategy for<br />

South African investors. It provides diversification<br />

benefits, potential for higher returns as well as<br />

protection against local market volatility and<br />

currency depreciation.<br />

In addition to these benefits, the South African<br />

Revenue Service (SARS) offers several tax deductions<br />

that can help subsidise your retirement plans. For<br />

instance, contributions to a retirement annuity are<br />

tax-deductible within limits, providing an excellent<br />

opportunity to grow your retirement savings while<br />

saving on tax. Therefore, retirement planning is<br />

a multifaceted process that requires a strategic<br />

approach, extensive knowledge and regular review.<br />

Leveraging the expertise of DFMs can streamline<br />

the due diligence process and provide a tailored<br />

investment management approach. Whether<br />

it’s selecting the right fund manager, creating<br />

a diversified portfolio, planning your estate, or<br />

considering alternative residency and citizenship<br />

programmes – every step demands due diligence.<br />

Above all, understanding the political landscape<br />

and making the most of offshore investment<br />

opportunities and tax deductions can ensure a<br />

secure and fulfilling retirement.


BLUE<br />

CHIP<br />

FINANCIAL PLANNING | Legislation<br />

Essential habits of highly<br />

successful FSPs under COFI<br />

This article was inspired by legendary author, the late<br />

Stephen R Covey, whose bestselling book, The Seven<br />

Habits of Highly Effective People, impacted millions of<br />

people around the world. Business owners, managers,<br />

key individuals, compliance officers and supervisors will do<br />

very well to consider the habits highlighted here. As a quick<br />

reminder, Covey asserted that the following personal habits<br />

would lay the foundation of success:<br />

1. Be Proactive<br />

2. Begin with the End in Mind<br />

3. Put First Things First<br />

4. Think Win-Win<br />

5. Seek First to Understand, Then to Be Understood<br />

6. Synergise<br />

7. Sharpen the Saw<br />

When I pondered on the impact that the Conduct of Financial<br />

Institutions (COFI) Act, when promulgated, will have on financial<br />

service providers (FSPs), I was reminded of the time when<br />

the Financial Advisory and Intermediary Services Act (FAIS)<br />

became effective on 30 September 2004.<br />

I remembered that, as an industry, we were not fully<br />

prepared for the impact that market conduct legislation<br />

would have on FSPs. Some people may disagree with my<br />

assessment, but even after almost 19 years, I have witnessed<br />

how many FSPs, if not most, are still struggling to fully comply<br />

with FAIS and its subordinate legislation.<br />

Over the last few months, I have conducted a few informal<br />

and even some formal surveys and found that more than<br />

90% of leading firms in South Africa have not had the time<br />

or capacity to read the FSR Act and the COFI Bill. If that is<br />

any indication of leading FSPs in South Africa, I believe that<br />

the figure will be much higher for average firms. I highlight<br />

this statistic, not to judge, but to create awareness that the<br />

majority of FSPs are still unaware of how COFI will affect their<br />

businesses soon.<br />

20 www.bluechipdigital.co.za


Diffusion of innovation theory (1962). Credit: EM Rogers<br />

There are many valid mitigating factors that contribute<br />

to the current level of unawareness, but with these statistics,<br />

it seems that we are heading for a FAIS déjà vu. As the<br />

promulgation of the COFI Act draws near and evaluating<br />

how many FSPs will be ready for the implementation of the<br />

COFI Act, I believe that we will see a similar curve to the one<br />

above, with some minor adjustments.<br />

For those who pride themselves on always being ahead<br />

of the curve, I am confident that the following habits, in a<br />

slightly different order than those proposed by Covey and<br />

adding a few, will inspire you to stay at the cutting edge of<br />

the industry under COFI:<br />

1. Define reality and be proactive<br />

The reality is that we are living in a world where legislation<br />

is here to stay. As hard as it may seem, and I do not mean<br />

any disrespect, either make peace with legislation and seek<br />

proactive and innovative ways to incorporate it into your<br />

business or I am afraid that the financial services industry<br />

will no longer be for you.<br />

In previous articles I have highlighted that FSPs find<br />

themselves in extreme conditions, but in the words of<br />

Epictetus, the Greek Stoic philosopher, “It’s not what<br />

happens to you, but how you react to it that matters.”<br />

According to Jack Canfield, American author, corporate<br />

trainer and entrepreneur, “Successful people face facts<br />

squarely. They do the uncomfortable and take steps to<br />

create their desired outcomes”. The reality is that COFI is<br />

upon us, and it will impact your business. Best be proactive<br />

and start preparing for the next wave of regulatory reform.<br />

2. Seek first to understand, then to be understood<br />

Our industry is full of opinionated individuals, including<br />

me. Looking back, I am often ashamed of how many times I<br />

have been quick to express an opinion on a subject before<br />

fully understanding the context and its fundamentals. For<br />

any one of us to assume that COFI will simply be a “cut and<br />

paste” of FAIS will be a “mother of a mistake”.<br />

A word of caution: assumptions about COFI based on<br />

uninformed opinions, regardless of decades of experience, may<br />

be the downfall of many FSPs. One thing is for sure – it is simply<br />

not going to be business as usual under COFI. Yes, there are<br />

many principles in FAIS that will be incorporated in COFI, but it<br />

will be necessary to reassess and stress-test your business and<br />

your client engagement process before conducting business<br />

under the new Act. My advice: seek first to truly understand the<br />

fundamentals of COFI before expressing an uninformed opinion<br />

and potentially leading your team in the wrong direction.<br />

3. Begin with the end in mind<br />

In my view, to establish and maintain a growing, profitable<br />

and sustainable business must be the ultimate goal of any FSP.<br />

Not only is financial soundness a regulatory requirement; your<br />

clients, your staff, the South African economy and your family<br />

depend on it. However, there are different ways to go about<br />

it. If money, and not clients, is your primary focus, I am afraid<br />

that your success may be short-lived.<br />

According to business management gurus Peter F Drucker<br />

and Brian Tracey, the purpose of a business is to create and keep<br />

a customer. Therefore, all business activities should be centered<br />

around this central purpose. On the positive side, COFI contains<br />

multiple client-centred, best-practice business principles that<br />

will help you to attract and retain clients, which have always<br />

been fundamental to business success. If you begin with that<br />

in mind, you will be off to a great start.<br />

4. Create order in the chaos and cement the fundamentals<br />

With all the political agendas, economic instability,<br />

loadshedding and the ripple effects of Covid, only to name a<br />

few disruptions that we must deal with daily, and with more<br />

than 1 000 pages of legislation that FSPs will have to comply<br />

with, it is easy to think that we are living in a very demanding<br />

and even chaotic world. At least, this is how I feel many times. If<br />

you can in any way relate, it will be extremely important for you<br />

to create order in the chaos and to cement the fundamentals<br />

of your business.<br />

www.bluechipdigital.co.za<br />

21


BLUE<br />

CHIP<br />

FINANCIAL PLANNING | Legislation<br />

COFI will be implemented in different parts over the next<br />

six to seven years, but like any building project that may take<br />

months or even years to complete, a sound foundation is<br />

essential. You can never build a great FSP business on a weak<br />

foundation. For those who are interested in pursuing this habit<br />

further, I published a free e-book titled, The fundamentals of<br />

practice management for representatives on LinkedIn earlier<br />

this year, which will provide you with more detail. These<br />

fundamentals will be essential for your business success under<br />

COFI and many of them can be implemented proactively, even<br />

before the implementation of the new Act.<br />

5. Put first things first (prioritise)<br />

I passionately believe in the Pareto (80/20) principle, which<br />

states that, for many outcomes, roughly 80% of consequences<br />

come from 20% of causes (the “vital few”). After two decades of<br />

studying market conduct legislation, at the risk of frustrating<br />

the Regulator and some of the compliance officers, I have<br />

concluded that not all regulations are equally important.<br />

There are some provisions that are essential (the vital 20%)<br />

that will meet the objectives of the legislation 90% of the time.<br />

If ever there was a time for FSPs to identify the vital 20%<br />

of COFI and to build a strategy around it, it is now. Practically,<br />

COFI, read with the FSR Act and the conduct standards that<br />

will follow, the volumes of legislation, FICA and POPIA are so<br />

overwhelming, that FSPs will be left with no choice but to<br />

prioritise the key provisions in COFI that will establish a sound<br />

foundation for success in the future.<br />

6. Synergise<br />

Roughly 99% of advisors I speak to admit that the compliance<br />

process and packs of documents that must be completed,<br />

discussed, signed and uploaded for record-keeping purposes<br />

lead to negative advisor and client experiences. There are<br />

two vital components for creating a better advisor and client<br />

experience, namely innovation and technology. A new way of<br />

approaching compliance documentation with the vital 20% of<br />

content that will ensure 90% of achieving the outcomes of COFI,<br />

supported by technology, will enhance business efficiencies<br />

and ultimately improve the advisor and client experience.<br />

customer and marketplace change and that they know what<br />

is expected of them.<br />

The success of your business over the next few years will<br />

depend on your representatives’ and employees’ ability to<br />

adapt. In these challenging conditions it must be remembered<br />

that overworked, anxious people have limited capacity to<br />

absorb information about change, much less adapt to it or<br />

implement it effectively.<br />

I would be surprised if your workforce does not experience<br />

high levels of stress, worry and possible burnout. Therefore,<br />

your approach to COFI and your change management strategy<br />

will be of fundamental importance in preparation for your FAIS<br />

to COFI journey. Your approach and communication strategy<br />

will offer a unique opportunity for you to establish new levels<br />

of trust in your leadership with your team.<br />

8. Implement<br />

One does not need a Gallup survey to know that 100% of<br />

businesses that fail to implement good strategies will not<br />

prosper. If you know that you need to start preparing for COFI,<br />

act on it. Be proactive. If you know that you need to seek to<br />

understand more – start. Begin with the end in mind. The late<br />

David Viscott, American psychiatrist, author, businessman and<br />

media personality, asserted that, “If you have the courage to<br />

begin, you have the courage to succeed.”<br />

9. Sharpen the saw<br />

As I mentioned before, COFI will be implemented in different<br />

parts over the next six to seven years, which means that you will<br />

have to stay on top of every change as and when they come.<br />

The good news is that, if you proactively created order in the<br />

chaos and laid a sound foundation for your business at the<br />

outset, the phases that will follow will be easier to implement<br />

to ensure a seamless transition from FAIS to COFI.<br />

10. Create a culture of Kaizen<br />

Kaizen is the Japanese word that means continual improvement.<br />

The habit of creating and maintaining the culture of Kaizen<br />

will ensure that you will continue to grow and increase the<br />

profitability of your FSP. <br />

7. Consider your approach to change management<br />

With new legislation approaching, the first adjustment that<br />

you will have to make is a personal mental one. As one of the<br />

leaders in the business, you will have to guard your heart and<br />

your mind, because the last thing that your representatives<br />

and workforce need is a leader that communicates negativity.<br />

Change management will once again be a core leadership<br />

demand, and with COFI an increasingly vital one. A recent<br />

Gallup Work Experience Communication Survey found that<br />

employees who strongly agree that their leaders help them<br />

see how changes made today will affect their organisation<br />

in the future are significantly more likely to also strongly<br />

agree that their company has the speed and agility to meet<br />

22 www.bluechipdigital.co.za<br />

Anton Swanepoel,<br />

Founder, Trusted Advisors


CLIENT ENGAGEMENT | Coaching<br />

BLUE<br />

CHIP<br />

Introducing<br />

purpose-driven financial<br />

coaching: embrace a<br />

human approach to<br />

financial planning<br />

Are you ready to revolutionise your approach to financial planning? The world of finance has evolved, and it’s time<br />

to shift from a numbers-focused and legal-centric mindset to a more comprehensive and sustainable approach.<br />

At the UFS School of Financial Planning Law, we’ve<br />

developed the Purpose-driven Financial Coaching and<br />

Planning model, which integrates proven principles<br />

from ontological coaching, the psychology of financial<br />

planning and financial planning.<br />

Our financial coaching and planning model considers the<br />

unique individuals behind the numbers. We believe that to truly<br />

support our clients, we need to first understand their personal<br />

psychology – their values, fears, strengths and struggles. By<br />

delving into the depths of who they are, we can create financial<br />

plans that align with their aspirations, allowing them to live<br />

meaningful lives throughout their journey.<br />

Financial planning shouldn’t be a one-time event. It’s<br />

an ongoing process that requires continuous support and<br />

guidance. With our integrated approach, we help clients navigate<br />

life’s challenges, make wise financial decisions and adapt to<br />

unexpected life transitions. By treating financial planning as<br />

a holistic journey, we ensure sustainable outcomes for our<br />

clients and their loved ones, spanning multiple generations.<br />

When you join our Purpose-driven Financial Coaching and<br />

Planning programme, you’ll gain access to a comprehensive<br />

framework that encompasses understanding clients, their<br />

culture and the impact of their plans on others. We believe in<br />

effective client engagement, considering their communication<br />

preferences, knowledge, biases and tendencies towards specific<br />

products and solutions. We aim to empower you as a financial<br />

planner to become a thinking partner, guiding your clients<br />

towards developing life plans that align with their financial<br />

resources and personal values.<br />

We go beyond compliance requirements to integrate the<br />

psychology of financial planning into practice. The “know your<br />

client” principle becomes a journey of exploration, understanding<br />

who your clients are as human beings. By delving into these<br />

details, you will be equipped to create tailored financial plans<br />

that genuinely resonate with your clients’ unique needs. You<br />

will learn how to take your discovery meeting to the next<br />

level of client experience. Financial planning will become a<br />

co-planning process that excites and engages your clients and<br />

review meetings will become engaging future planning sessions<br />

that excite both you and your clients, exploring and achieving<br />

the aspirations they care about while providing peace of mind.<br />

At the School of Financial Planning Law, we believe that<br />

the quality of financial planning conversations is critical. As a<br />

financial planner, you will be trained to become aware of the<br />

psychological factors at play, supporting your clients in exploring<br />

possibilities, prioritising goals and taking meaningful action.<br />

By understanding their money persona, narrative and values,<br />

you will be able to provide a holistic and tailored approach<br />

beyond mere numbers.<br />

Join us on this transformative journey towards Purposedriven<br />

Financial Coaching and Planning. We offer a 12-week<br />

online programme for an introduction to Financial Coaching<br />

and an 11-month Advanced Financial Coaching short learning<br />

programme. Our programmes are designed to equip you<br />

with the skills and knowledge to adopt a human approach<br />

to financial planning. In addition, they are credentialed as<br />

learning programmes with Coaching and Mentors of South<br />

Africa (COMENSA), ensuring the highest standard of education<br />

and professional development.<br />

It is time to embrace a more holistic and sustainable approach<br />

to financial planning. Join us at the School of Financial Planning<br />

Law and become a Purpose-driven Financial Coach. Together,<br />

let’s empower individuals to live their best possible lives,<br />

supported by a solid financial foundation. <br />

www.bluechipdigital.co.za<br />

23


BLUE<br />

CHIP<br />

FINANCIAL PLANNING | Saving<br />

The A.R.T of saving with<br />

Momentum Money<br />

Gone are the days when businesses could<br />

create products and expect clients to<br />

mould their lifestyles to them.<br />

Returns<br />

Of course! We appreciate that access is not the only<br />

factor that makes saving hard for many South Africans.<br />

Penalizing clients for needing to access their money seemed<br />

counterproductive. However, it is also essential to offer our<br />

clients compelling returns on their savings without having<br />

to do backflips. What if you could earn a high interest rate<br />

no matter how much you choose to save? Giving clients the<br />

freedom to save what they can, when they want to and spend<br />

what they need, when needed.<br />

Kapil Joshi, CEO, Momentum Money<br />

Kapil Joshi, CEO, Momentum Money<br />

We reflected on one of South Africa’s most significant<br />

challenges and developed a solution inspired by<br />

human insight. We refused to accept the notion<br />

that saving is hard. So, we took a deep dive to<br />

understand the factors that made saving hard and built an<br />

innovative product that removes all the friction.<br />

We remain committed to remove challenges hindering<br />

financial inclusion through technological innovation coupled<br />

with strategic collaborations to unleash the value of banking<br />

and savings for everyone. Digital solutions such as Momentum<br />

Money provide easy access to saving with banking capability<br />

and potential to earn compelling interest rates. Our solution<br />

is driven by three key motivators.<br />

Access<br />

After speaking to many of our clients, one of the leading frictions<br />

to saving is access to their money. Nobody can anticipate what<br />

tomorrow holds. Emergencies tend to arise when you least<br />

expect them. Many savings products have notice periods and<br />

penalize clients that want to access their money immediately.<br />

What would stop you from saving if you had instant access to<br />

your money?<br />

Time<br />

Firstly, time is your best friend when it comes to saving.<br />

Momentum Money strips away all the admin, allowing you<br />

to get started in a few simple steps, saving our clients time.<br />

Time is money. Secondly, prime-linked interest rates are more<br />

volatile over time. Our most significant innovation is providing<br />

returns that stand the test of time by investing our clients’<br />

funds in the Momentum Money Market Fund. One of South<br />

Africa’s best-performing money market funds. This provides<br />

more stability for our clients as they are not subjected to the<br />

ebbs and flows of the ever-changing prime interest rate.<br />

Lastly, knowing how fees eat away at returns over time, we<br />

deliver compelling returns at the lowest cost. With Momentum<br />

Money, you do not need to worry about paying monthly<br />

account fees. We charge a minimal admin fee of between<br />

1% and 1.4%. The higher your balance, the lower the fee.<br />

As we continue to innovate, our greatest motivation is to<br />

make saving easier for South Africans. Our vision is to become<br />

our clients’ number one enabler of success. No matter what<br />

success means to you. Whether it is being able to pay for your<br />

kid’s tuition, a deposit towards your dream car, a weekend<br />

getaway or simply having a few extra bucks for emergencies,<br />

we aim to make that possible by removing the friction that<br />

stands in the way.<br />

To us, it is not just saving. It is an A.R.T. We look forward<br />

to continuing painting the masterpiece that is Momentum<br />

Money with you.<br />

24 94 www.bluechipdigital.co.za


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BLUE<br />

CHIP<br />

INVESTMENT | Economy<br />

Look both ways before you<br />

cross the BRICS Road<br />

The ongoing shift in economic and political influence from<br />

the West, represented by the United States and the G7,<br />

to the East, represented by China and the BRICS bloc<br />

of nations, has been grabbing headlines over the past<br />

few years. While this East versus West divide has seen periodic<br />

flare-ups, such as the Trump-inspired trade wars in 2018, South<br />

Africa has managed to stay out of the spotlight. Unfortunately,<br />

this is no longer the case, with South Africa increasingly in global<br />

news headlines due to its stance regarding the ongoing Russian<br />

invasion of Ukraine.<br />

In this commentary, we will evaluate why South Africa<br />

increasingly finds itself in a compromised position, why it<br />

matters, and what the consequences would be for investors of<br />

a clear shift towards either the East or the West.<br />

Setting the scene<br />

To understand South Africa’s position in the current global<br />

economy, it is important to identify the key players in this arena.<br />

There are two primary groups, referred to as the “West” and<br />

the “East”. The West typically includes countries with a history<br />

of Western European cultural and political influence, such as<br />

the United States, Canada, Australia, Western Europe and other<br />

countries with similar worldviews and political systems. On the<br />

other hand, the term East, as it is used today, refers to countries<br />

with a history of influence from Eastern cultures, such as China,<br />

India, Russia and Korea. These countries often have different<br />

worldviews and political systems (capitalism vs communism).<br />

Although the West has long operated collectively through<br />

organisations like the G7 and NATO [1] , the East, under<br />

China’s leadership, has gradually embraced a more cohesive<br />

approach and established a distinct trade group in the past<br />

decade. This cohesive entity, commonly referred to as BRICS,<br />

is an abbreviation for Brazil, Russia, India, China and South<br />

Africa. BRICS represents a formal alliance of four significant<br />

emerging economies worldwide, in addition to South Africa,<br />

encompassing nearly half of the global population and<br />

approximately 30% of the global GDP. It is important to note<br />

that BRICS does not imply an equivalence between the East<br />

and the entire region, but rather reflects a specific grouping<br />

within the East.<br />

The origins of BRICs can be traced back to 2001 when the<br />

acronym BRIC was first coined by Jim O’Neill, who was then<br />

the chairman of Goldman Sachs Asset Management. The<br />

BRIC countries recognised the need for a formal platform<br />

to enhance their cooperation and coordination on issues of<br />

mutual interest. As a result, the formalisation of BRIC took<br />

26 www.bluechipdigital.co.za


INVESTMENT | Economy<br />

BLUE<br />

CHIP<br />

the Cold War. This could potentially strain South Africa’s ability<br />

to trade from this point forward.<br />

South Africa is considered a small open economy, which<br />

means that it relies heavily on international trade to support its<br />

economy, rather than having a large enough internal market to be<br />

self-sustaining. For comparison, only three regional economies,<br />

namely the US, Europe and China, would meet the self-sustaining<br />

criteria. Given South Africa’s reliance on trade, any restrictions<br />

on it would have a severe impact on the economy. Fears about<br />

potential sanctions are not unfounded, as recent cases involving<br />

Russia, Turkey and Iran have seen their ability to trade curtailed<br />

by the West through economic sanctions.<br />

place on 16 June 2009, when the first BRIC summit was<br />

held in Russia. South Africa is aligned to the East, having<br />

formally joined BRIC (to make it BRICS) on 24 December<br />

2010, becoming the fifth member of the association. The<br />

decision to include South Africa was based on the country’s<br />

strategic importance in Africa and its potential to contribute<br />

to the growth and development of the BRIC economies.<br />

Importantly, being part of BRICS does not preclude South<br />

Africa from interacting with Western nations. During the<br />

3rd BRICS Summit in 2011, the countries agreed to create<br />

a new global governance model that reflects the changing<br />

economic landscape of the world. They also agreed to<br />

cooperate on a wide range of issues, including trade, finance,<br />

energy and climate change. The 15th BRICS Summit is set to<br />

take place in South Africa in August 2023.<br />

Why does this all matter for South Africa?<br />

While South Africa has been a member of BRICS since 2010, it<br />

has so far been able to trade relatively freely, facing only two<br />

minor disagreements with the US over agricultural exports in<br />

2015 and aluminium tariffs in 2020. However, as the conflict<br />

between China and the US has intensified, so the divide<br />

between East and West has reached levels last seen during<br />

Which trade agreements are at risk?<br />

South Africa has several trade agreements, with the majority<br />

being within Africa. However, there are a few that may be at<br />

risk if South Africa takes an opposing stance to the West. These<br />

agreements include the African Growth and Opportunity Act<br />

(AGOA), which is a trade agreement between Sub-Saharan<br />

countries and the US that allows for duty-free exports from<br />

Africa to the US. South Africa exported roughly R41-billion<br />

worth of goods to the US under this agreement in 2019 (this<br />

represents around 20% of total US/South Africa trade volumes).<br />

Additionally, there are three free trade agreements, between<br />

South Africa and the European Union, Canada and Japan<br />

respectively. Another agreement that could be affected is the<br />

Trade and Investment Framework Agreements (TIFA), which is<br />

a platform that facilitates bilateral trade discussions rather than<br />

covering any actual trade.<br />

It is important to note that there are no formal, binding free<br />

trade agreements directly between the US and South Africa. The<br />

primary risk from the US would therefore be sanctions, which<br />

would restrict the flow of goods and reduce employment. Over<br />

600 American businesses operate in South Africa, and many of<br />

them use South Africa as a regional headquarters.<br />

Who do we trade with?<br />

South Africa’s largest bilateral trade [2] partner is China, with<br />

over R555-billion of goods traded between the two countries<br />

in 2022. This is almost double the size of the next largest<br />

country, being the US. If we look at this information on a<br />

broader regional level and focus on exports only, then Africa<br />

accounts for around 25% of total exports. This, somewhat<br />

surprisingly, makes them the largest single group destination<br />

for our exports. Chart 1 shows the breakdown of trade for<br />

some key partners (BRICS represented by China and India, G7<br />

represented by the US, UK and EU) in 2022. While these pointin-time<br />

values are interesting, the trend in trade values is far<br />

more interesting as presented in Chart 2.<br />

www.bluechipdigital.co.za<br />

27


BLUE<br />

CHIP<br />

INVESTMENT | Economy<br />

Chart R550 1: 000 Export 000 000 Values to Key Partners in 2022<br />

2022 Exports to Key Partners<br />

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Mineral R0Products Products Iron & Steel Precious Metal Vehicles aircraft & vessels Vegetables Chemicals Other<br />

China India US UK EU Africa<br />

Mineral Products Products Iron & Steel Precious Metal Vehicles aircraft & vessels Vegetables Chemicals Other<br />

Source: https://www.sars.gov.za/customs-and-excise/trade-statistics/reports/<br />

Chart<br />

Chart<br />

2:<br />

2:<br />

Annual<br />

Annual<br />

Export<br />

Export<br />

Values<br />

Values<br />

for<br />

for<br />

Key<br />

Key<br />

Groups<br />

Groups<br />

Chart 2: Annual Export Values for Key Groups<br />

Source: https://www.sars.gov.za/customs-and-excise/trade-statistics/reports/<br />

South Africa Annual Export Values in Rand<br />

South Africa Annual Export Values in Rand<br />

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021<br />

G7 BRICS Africa<br />

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021<br />

G7 BRICS Africa<br />

2022<br />

2022<br />

700 000 000 000<br />

600 000 000 000<br />

700 000 000 000<br />

500 000 000 000<br />

600 000 000 000<br />

400 000 000 000<br />

500 000 000 000<br />

300 000 000 000<br />

400 000 000 000<br />

200 000 000 000<br />

300 000 000 000<br />

100 000 000 000<br />

200 000 000 000<br />

-<br />

100 000 000 000<br />

-<br />

Chart 2 provides total export values in rand to G7 nations as well<br />

as Africa and the BRICS nations. We focus on exports as these<br />

are at higher risk than imports if sanctions are implemented.<br />

The trend is surprising with G7 growth far outstripping BRICS<br />

growth despite the stronger ties engendered by the BRICS<br />

collective. If we dig deeper, we find that much of the rise in<br />

G7 export value has come from rising precious metals [3] prices<br />

from 2019 to present rather than growth in volumes of exports.<br />

With these rising prices precious metals now constitutes close<br />

to 50% of export value to G7 nations, up from roughly 30% in<br />

28 www.bluechipdigital.co.za


INVESTMENT | Economy<br />

BLUE<br />

CHIP<br />

In this increasingly polarised<br />

world, we face headwinds<br />

from both sides.<br />

2010. The world is currently reliant on South Africa’s platinum<br />

group metals production to supply them, especially given that<br />

the other large global supplier is Russia. This reliance is not<br />

necessarily enduring given the current drive to move towards<br />

electric vehicles.<br />

The trend demonstrated in Chart 2 suggests that a pro-<br />

BRICS stance from South Africa is risky. If South Africa lost its<br />

ability to export to G7 nations, it would require exports to<br />

BRICS nations to more than double from their current levels<br />

to retain the status quo level of total exports. The wild card in<br />

this equation is Africa – if South Africa could improve its ability<br />

to export into Africa, then this reduces reliance on both the<br />

G7 and BRICS.<br />

The wild card in this<br />

equation is Africa.<br />

How would a clear shift in alignment impact investors?<br />

Currently South Africa sits in a proverbial “sweet spot”, with<br />

both the Chinese-led BRICS grouping and the US-led G7 happy<br />

to engage and trade with us as a strategic partner and potential<br />

gateway to Africa. This position is becoming increasingly<br />

tenuous, with Western leaders speaking out against South<br />

Africa’s actions, with a particular focus on our interactions with,<br />

and support of, Russia.<br />

In this increasingly polarised world, we face headwinds<br />

from both sides. On the one hand, to continue to align more<br />

closely with BRICS, the country risks the cancellation of free<br />

trade agreements and sanctions being employed. In 2016<br />

Madagascar was suspended from AGOA; following this it is<br />

estimated that its exports to the US declined by 42% and that<br />

20 000 jobs were lost. If we simplistically apply this scenario to<br />

South Africa, then this represents closer to R16-billion in lost<br />

exports from this trade agreement alone. The number of lost<br />

jobs would be far greater than 20 000 for South Africa.<br />

If this was taken a step further and sanctions were put<br />

in place, there is evidence from both Russia (in 2018 and<br />

2022) and Iran (in 2019) that this would have far-reaching<br />

consequences. This would have a negative impact on all asset<br />

classes, particularly our government bonds and the rand.<br />

The impact would not be felt equally, with those companies<br />

whose revenue is more exposed to Western nations (car<br />

exporters, precious metals miners) being heavily impacted<br />

in the short term, while those with strong links to China<br />

(processed steel and base metals producers) would likely be<br />

better off. Ultimately, the hope would be that the demand for<br />

products from Western nations would eventually be replaced<br />

by that from the fast-growing East. This will take time to<br />

manifest, and as we have seen with Russian oil, we would likely<br />

have to sell goods below general market prices.<br />

On the other hand, to stray too far from the prevailing BRICS<br />

“kraal” could result in unilateral decisions by China and its<br />

allies to alienate South Africa. This was done to Australia in the<br />

mid-2010s during a trade dispute between the two nations.<br />

This resulted in an estimated 40% decline in Australian exports<br />

to China and an estimated R790-billion cost to the Australian<br />

economy over a period of three years.<br />

Given that China is currently our largest single-country<br />

trade partner (comprising 65% of all exports to BRICS nations)<br />

and that BRICS is expected to comprise more than 50% of<br />

global GDP in the coming years, this severely curtails South<br />

Africa’s future growth potential.<br />

Neither of these outcomes is ideal, with severe impacts<br />

on both the real and financial economy being potential<br />

consequences. It is not out of the realm of possibilities for<br />

South Africa to be replaced by Mexico as the supplier of cars<br />

to Europe, or by Brazil as the supplier to China for its iron<br />

ore needs. Therefore, it is concerning<br />

that South Africa increasingly finds<br />

itself in a conflicted position between<br />

East and West. Changes in foreign<br />

policy can have an outsized impact<br />

on investment markets. South Africa<br />

experienced the positive impact of this<br />

post-apartheid when its investment<br />

markets were essentially reopened to<br />

the world.<br />

Ultimately, South Africa’s relatively<br />

narrow drivers of export trade leave<br />

us vulnerable to global turf wars.<br />

There is significant opportunity within<br />

developing economies such as Africa and<br />

China, and they are already among our<br />

largest customers. However, the relative<br />

stability and financial clout offered by<br />

the G7 means they are a stable partner<br />

we need to keep on side to ensure that<br />

our economic growth path delivers on<br />

its potential.<br />

Stuart Copley, Investment<br />

Analyst, Fundhouse<br />

[1] The North Atlantic Treaty Organisation is a political and military alliance formed by North American and European countries to promote collective defense and security.<br />

[2] Bilateral Trade is the sum of exports and imports.<br />

[3] Gold and platinum group metals.<br />

29


BLUE<br />

CHIP<br />

INVESTMENT | Technology<br />

Big tech turnaround:<br />

what’s behind the recovery?<br />

After dominating stock market returns amid the Covid pandemic, the<br />

household names of the US tech sector endured a miserable 2022.<br />

In recent months the tables have turned once again – we look at why.<br />

Big tech has enjoyed a resurgence this year. Seven large<br />

US companies (Apple, Microsoft, Alphabet, Amazon,<br />

Tesla, Netflix and Nvidia) have collectively returned<br />

34% in the four months to 30 April 2023. Excluding<br />

these stocks, the remainder of the MSCI USA index has<br />

returned just 3%.<br />

The big tech stocks were “pandemic winners” in 2020 and 2021<br />

amid strong demand for their products. They then experienced<br />

a difficult 2022 amid concerns over rising inflation and higher<br />

interest rates. That’s because higher rates mean their future profits<br />

and cash flows are worth less today.<br />

Inflation is still elevated though, and rates have been rising so far<br />

this year, so what’s behind the renewed rally for US big tech?<br />

The better performance can to some extent be explained<br />

by improving fundamentals, although it is a complex picture.<br />

Companies like Microsoft and Nvidia are enjoying very strong<br />

business trends. Those two companies are also thought likely to<br />

be clear winners of the generative AI revolution. Apple has also<br />

30 www.bluechipdigital.co.za


INVESTMENT | Technology<br />

BLUE<br />

CHIP<br />

recently reported very resilient quarterly earnings, showing it is<br />

proving more robust than other more commoditised companies<br />

in the consumer electronics sector.<br />

What’s more, following the pressures experienced last year,<br />

some of the other members of this group – Amazon, Alphabet,<br />

Meta and Netflix – have now discovered the merits of cost-cutting.<br />

There is lot of potential to take out costs in those companies<br />

following the huge hiring spree of the previous three years. This<br />

could be either through headcount reductions or in some cases<br />

by reducing the compensation paid to some of the expensive<br />

talent they have as the labour market softens.<br />

So, we can say that fundamentals have been improving with<br />

regards to either the top line (ie sales/revenue) or bottom line<br />

(ie improving operating efficiency/cost-cutting to enhance<br />

profitability) for members of this big tech cohort. However, that’s<br />

not necessarily the whole story.<br />

Part of what’s going on in markets is a<br />

growth rotation. The banking sector stress<br />

we have seen this year has been a catalyst<br />

for a rotation away from value parts of the<br />

market and back into growth stocks.<br />

That is because the bank stress<br />

is contributing to tighter lending<br />

conditions, alongside interest rate rises.<br />

If the Federal Reserve were to pause its<br />

rate hikes, that would reduce a headwind<br />

for growth stocks like technology.<br />

This rotation has been a lot more<br />

pronounced in the US, which reinforces<br />

the view that it may well be to do with<br />

concerns over the economy and more<br />

cyclical parts of the market. <br />

Kondi Nkosi,<br />

Country Head, Schroders<br />

Important Information<br />

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,<br />

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<br />

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<br />

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<br />

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<br />

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. <strong>Issue</strong>d in May<br />

2023 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<br />

authorised financial services.<br />

www.bluechipdigital.co.za<br />

31


BLUE<br />

CHIP<br />

INVESTMENT | Offshore<br />

Top five investment<br />

migration programmes<br />

You’ve likely heard of “golden visas” – government<br />

programmes that enable individuals to acquire<br />

residency and/or citizenship of a country by making a<br />

significant financial investment in that country. These<br />

programmes are often sought after by South African High<br />

Net Worths because they can lead to strong passports that<br />

enable visa-free travel to many countries the “Green Mamba”<br />

does not. This opens the world for both business and leisure.<br />

However, different programmes offer different benefits.<br />

Increasingly, we’re finding that many clients are no longer<br />

seeking a Plan B that offers enhanced mobility, but<br />

programmes that offer a secure future for their children, even<br />

if that means relocation.<br />

When considering which programme is best for your client,<br />

the most important things to clarify up front are if they are<br />

willing to relocate and if they’d like to include children in<br />

their application. The age of the children is also important to<br />

consider, as some programmes allow adult children so long as<br />

they are still dependent on the main applicant, while others<br />

would require an alternative plan for children.<br />

We always do thorough due diligence before we present a<br />

programme to a client, and these are some of the programmes<br />

we’d currently recommend.<br />

Ireland<br />

Ireland is a fully committed member of the EU and boasts<br />

the fastest-growing economy in the Eurozone. While the<br />

Ireland Immigrant Investor Programme (IIP) has officially<br />

closed, there is a narrow window to invest in an Approved<br />

Fund until Q4 2023.<br />

Through the IIP, Irish residency can be maintained<br />

indefinitely, provided you visit Ireland once a year for at least<br />

a day. If you wish to relocate to Ireland, you can gain citizenship<br />

through naturalisation within five years. You can include your<br />

spouse/civil partner and children under the age of 18 on your<br />

application. Unmarried, dependent children between 18<br />

and 24, who are enrolled in tertiary education, may also be<br />

considered. They only have to prove dependency at the time<br />

of submission of the application, so if your child is 23, about<br />

to turn 24, you’ll still be able to include them.<br />

32 www.bluechipdigital.co.za


INVESTMENT | Offshore<br />

BLUE<br />

CHIP<br />

Greece<br />

Greece’s Golden Visa grants a long-term residence permit<br />

that will remain valid as long as you maintain ownership<br />

of a qualifying property in Greece. There’s no requirement<br />

to relocate and no annual minimum stay for the residence<br />

permit. There is a route to citizenship through naturalisation,<br />

but it does require a full relocation and a minimum of seven<br />

years of residence in the country.<br />

You can include children under the age of 21 on your<br />

application, but they can only remain on the programme until<br />

the age of 24. However, Greece is one of the few programmes<br />

where you can include parents onto your application, with no<br />

proof that they are financially dependent on you. So, if you<br />

have older children, you can apply in their name and include<br />

yourself as a dependent.<br />

The Irish passport is the only passport that gives full access<br />

to the EU and, with a common travel agreement, allows for<br />

permanent residency in the UK.<br />

Malta<br />

Also in the EU, the Mediterranean island of Malta offers two<br />

separate programmes – the Exceptional Services by Direct<br />

Investment (ESDI) programme, for citizenship, and the Malta<br />

Permanent Residence Programme (MPRP), for permanent<br />

residency. Neither programme requires you to relocate.<br />

For the citizenship programme, children must be under 29<br />

at the time of application and be financially dependent on the<br />

main applicant. With the residency programme, there is no age<br />

cap on financially dependent, unmarried children. However, the<br />

older the child gets, the more complicated proving financial<br />

dependency becomes, so we recommend that all adult<br />

dependents enrol in full-time education.<br />

With both Maltese programmes, you can also include parents<br />

and grandparents who are fully financially dependent on the<br />

main applicant.<br />

United States<br />

The EB-5 is an immigrant visa and currently the quickest way<br />

to obtain a US green card – applications take 24-36 months.<br />

Permanent green card holders are allowed to live and work in<br />

the US and have access to almost all the same benefits as US<br />

citizens. You are not restricted to the state where you invest,<br />

which opens up many opportunities.<br />

You may include dependent children enrolled in full-time<br />

education on your application. However, this is a better option<br />

for young families as, once your child is 21, they are considered<br />

adult and cannot be included.<br />

Grenada<br />

The Caribbean Island of Grenada<br />

offers citizenship in just nine months<br />

and applicants are not required to<br />

relocate. In fact, they need not even<br />

visit Grenada to obtain the passport<br />

– which offers visa-free entry to over<br />

140 countries, including the Schengen<br />

area, the United Kingdom, Hong Kong,<br />

Singapore, China and Russia.<br />

Financially dependent children<br />

under the age of 28 can be included<br />

on the application, as can parents, and<br />

grandparents so long as you can prove<br />

they are financially dependent on the<br />

main applicant. Single siblings with no<br />

children may also be included.<br />

Sarah Young, Investment<br />

Migration Manager,<br />

Sable International<br />

www.bluechipdigital.co.za<br />

33


BLUE<br />

CHIP<br />

ROUND TABLE SERIES | Offshore investing<br />

Offshore investing:<br />

getting it right<br />

In an exclusive <strong>Blue</strong> <strong>Chip</strong> discussion, three of South Africa’s top investment professionals focus<br />

on offshore investing and why it is important to engage with a financial advisor.<br />

Part One deals with diversification and currency protection.<br />

MODERATOR<br />

EXPERT PANEL<br />

Philip Robotham, Head of<br />

Intermediary for SA, Schroders<br />

Simon Adler, Fund Manager,<br />

Schroders<br />

Andrew Finlayson, Co-Founder,<br />

Maven Wealth<br />

DIVERSIFICATION<br />

Philip Robotham (PR): How do you construct a portfolio<br />

which is sufficiently diversified?<br />

Simon Adler (SA): Diversification is the free lunch in investment<br />

markets. It is critical because none of us know what the future<br />

holds and so having a variety of assets is absolutely the way<br />

to go. I co-manage two funds that are available in South Africa,<br />

one of which is the Global Recovery Fund which is what’s called a<br />

value fund. We invest on a long-term basis, and we try to buy the<br />

lowest-priced assets available in the world. We spend our days<br />

looking at the cheapest companies and determining whether<br />

they are the right ones for portfolios. The long-term growth by<br />

doing this is almost unparalleled. Value investing is a way of<br />

growing your assets.<br />

If you invested $10 000 in value shares in 1926, today<br />

it would be worth over a billion dollars – unbelievable<br />

long-term returns. What we offer our clients are value portfolios.<br />

Notwithstanding difficult periods, over the long term they<br />

generate great returns.<br />

PR: Is there a demand from your clients asking specifically for<br />

certain types of themes? Or is part of the role educating your<br />

clients into what else is available offshore?<br />

Andrew Finlayson (AF): I think it is the latter. There are a<br />

lot of strong companies with very good management in<br />

South Africa, but there are several spaces that are underrepresented.<br />

An example is listed opportunities in the<br />

technology space, and biotech is another. Even in banking,<br />

which has very good management teams, there are only five<br />

investable stocks across banking. Internationally there are<br />

hundreds of opportunities to get into either in themes or<br />

different sectors.<br />

34 www.bluechipdigital.co.za


ROUND TABLE SERIES | Offshore investing<br />

BLUE<br />

CHIP<br />

If you invested $10 000 in value<br />

shares in 1926, today it would be<br />

worth over a billion dollars.<br />

In asset management, there are a limited number of<br />

investable asset management sectors in South Africa where it’s<br />

a much bigger theme internationally. South Africa has a very<br />

strong mining sector and that’s where you deploy assets and<br />

there are several other themes that you can invest in here, but<br />

it’s just the breadth of opportunity that sits outside of South<br />

Africa that one would want to access and then some specialist<br />

themes within those.<br />

PROTECTION AGAINST CURRENCY DEVALUATION<br />

PR: To what extent is protection against currency devaluation<br />

client-led?<br />

AF: We, from a South African investor perspective investing<br />

offshore, must consider two things: one is effectively the price<br />

that you pay for the dollars or pounds that you buy when you<br />

take those funds overseas and the second part is what you’re<br />

buying on the other side.<br />

And it is not necessarily a straightforward or linear relationship<br />

because you do have times when the currency could be either<br />

weaker or stronger and the asset prices or the assets that you<br />

are buying internationally are either weaker or stronger. We find<br />

that we have to have a filtered process that we consider a client’s<br />

affairs through when we are making those decisions and again<br />

it is nuanced.<br />

You could have a client who has a one-off event who has<br />

benefitted from a big transaction for say the sale of a business<br />

in South Africa. They’ve gone ahead and got special permission<br />

today for funds overseas over and above their annual amount<br />

and that is a transaction that you’re looking to take funds<br />

overseas and lock in, and there we would be looking to target<br />

different rand/dollar exchange rates for example and trade at<br />

those various levels as opposed to trying to take everything<br />

out at once.<br />

If you look at the rand/dollar on a purchasing power of parity<br />

basis going back to, I think 1997, where inflation targeting was<br />

introduced into South Africa for the first time, the rand/dollar is<br />

currently at an extreme and probably two standard deviations<br />

away from a long-term average. We’re not going to try to drop<br />

the currency or time the market today versus tomorrow, but it<br />

does give us an indication that at 18/50 where it’s been, it does<br />

feel like the rand is a little bit too weak to be taking a whole<br />

bunch of money overseas.<br />

Similarly though, when you take the markets overseas<br />

they’re now suddenly starting to represent better value. If you<br />

think that the markets are down 10% and that presents a good<br />

opportunity to enter the market, you may be happy to pay a<br />

slightly higher price for dollars effectively to be able to access<br />

those markets, but it is something where there is quite a lot of<br />

nuance and where you have to take into account the price that<br />

you’re paying on both assets effectively, the currency and the<br />

asset that you’re buying.<br />

PR: Simon, how much of the currency talk comes into your<br />

conversations when you’re meeting these businesses and<br />

putting reflective valuations on them?<br />

SA: It varies. It depends on what type of business one is looking<br />

at. If one is looking at a Japanese business that produces its own<br />

goods, sells it domestically, the yen isn’t going to be a huge<br />

influencer on its profits whereas if you’re looking at a business that<br />

imports goods from China and sells them to America what the yen<br />

is doing is critical to what profits that business is going to make.<br />

Our view is that we must have a systematic but pragmatic<br />

approach. We must understand the currency exposures of a<br />

business, we must understand the balance sheet aspect so<br />

if they’ve got profits in one currency and there are debts in<br />

another currency, we need to understand the risks there. But I<br />

totally agree with Andrew that the best way to think about it is<br />

to consider the purchasing power of parity over long periods of<br />

times – where are you versus those long-term averages.<br />

Our view is to buy companies<br />

with more than enough upside so<br />

that if we get the currency right or<br />

wrong it doesn’t really influence<br />

the return we give to our clients.<br />

We’re looking for substantial<br />

upside in shares so if we’re saying<br />

80/90% upside in a currency<br />

reaches 5% or 10% against us<br />

that’s unfortunate but it doesn’t<br />

undermine the return we can get<br />

from the investment materially.<br />

That’s how we try and normalise<br />

it but you have to understand that<br />

on a case-by-case basis. <br />

To watch the round table series in<br />

full, visit www.bluechipdigital or<br />

scan the QR code.<br />

www.bluechipdigital.co.za<br />

35


BLUE<br />

CHIP<br />

INVESTMENT | Economy<br />

Where do we stand now?<br />

Words like “unprecedented” seem to surface on a regular basis nowadays. The word “unprecedented”<br />

means “never done or known before”. We do however know that things that never happened before<br />

happen all the time. So, we should not be surprised when something unprecedented happens.<br />

One aspect in financial markets that has never happened<br />

before, that has just happened and is still in the process<br />

of process of happening, is the pace of increase in the<br />

United States Federal Funds Rate. The current pace at<br />

which the Federal Reserve has increased rates is the fastest it has<br />

been in history.<br />

In March 2022, the Federal Funds Rate range was 0% to 0.25%.<br />

In the first half of March, the first increase of 0.25% took place,<br />

increasing the rate range to 0.25% and 0.50%. From here another<br />

nine rate increases took place in rapid succession lifting the rate<br />

range to its current level of 5% and 5.25%. We are standing at a<br />

point in time where no-one has been ever before, and now we wait.<br />

We now wait for how the economies and markets of the<br />

world will react to the consequences of these rate hikes. But<br />

why the wait?<br />

Depending on the models referenced, it takes roughly<br />

between 12 and 18 months for monetary policy decisions to<br />

work their way through the economy. As an example of the<br />

aftereffects, if you owe the bank money and rates start to<br />

increase, the amount of money you must repay the bank also<br />

increases. A small increase will infer that your household or<br />

business will have to spend more to service the debt than the<br />

month before, hence less will be available to save or spend. If<br />

the increase in payment is relatively small the household or<br />

business should be able to absorb this.<br />

However, increase the rates and the cost of servicing the debt<br />

at a pace never seen before and the possibility of not being able<br />

to service the debt increases in line. Fourteen odd months ago<br />

the bottom end of the Fed Funds Rate was 0.25%; today it is<br />

standing at 5%, theoretically speaking a 2 000% increase.<br />

As the saying goes, “What can go wrong?”<br />

Quite a lot.<br />

In the US, once again depending on the source referenced,<br />

most home loans have a fixed rate with a period ranging up to 30<br />

years. There is a high probability that if you took out a fixed-rate<br />

loan, your monthly payments have stayed the same as rates have<br />

increased over a relatively short period of time. Good for you. But<br />

what happens when your fixed-rate period ends and the rate<br />

on your home adjusts? For the sake of the thought experiment,<br />

imagine your down payment on your home loan increases from<br />

one month to the next by 2 000%! An instant increase, not a<br />

gradual one.<br />

As a caveat, we do not know what the home loan contracts<br />

and terms and conditions look like for the 4 200 commercial<br />

banks in the US. But the principle still holds: if one of your<br />

biggest payments out of your monthly budget increases by a<br />

considerable amount, you could be in trouble if you need to<br />

refinance. (And if you are a home buyer for the first time, it is<br />

now considerably more difficult to afford a home.) A Bankrate<br />

Emergency Fund report, published in February this year, reported<br />

that 57% of US adults are currently not able to afford a $1 000<br />

emergency expense.<br />

The consequences of the truly unprecedented interest rate<br />

increases seen over the past 17 odd months are impossible<br />

to predict, consequences which could be unprecedented.<br />

But truly no-one knows. On the Federal Reserve website, the<br />

organisation states, “The Federal Reserve Board employs just<br />

over 400 PhD economists, who represent an exceptionally<br />

diverse range of interests and specific areas of expertise.”<br />

Last update: 10 August, 2022. If you consider that the Federal<br />

36 www.bluechipdigital.co.za


BLUE<br />

CHIP<br />

INVESTMENT PORTFOLIO | Economy CONSTRUCTION<br />

Can we once again invite<br />

Goldilocks in for some<br />

porridge after she has<br />

wandered off for a while?<br />

things like iPhones and increasing production capacity. If less<br />

is spent, less is consumed and this is not advantageous for the<br />

economy, in the US or anywhere else.<br />

So, should we pack our bags and run for the proverbial hills?<br />

In short, no. Because we do not know how this will play out. But<br />

to construct a resilient portfolio we need to practice caution.<br />

“You want to be structured to participate in the march of<br />

mankind but to survive the dips along the way.”<br />

– Matthew McLennan<br />

What Mr McLennan is referring to is a general investment<br />

and portfolio management principle that we all should adhere<br />

to, always, not only when there are dark clouds on the horizon<br />

that might, or might not, bring a heavy storm.<br />

To just invest and forget is a beautiful, mathematically<br />

proven strategy, taught in Investment Management 101, but<br />

often ignored in Human Management 301. Homo sapiens<br />

Reserve, on a regular So, will basis, the US misinterprets still be the largest the economy and over the the are next risk few averse I believe and if the answer probability is yes. of sticking to a longterm<br />

wake investment up A unit plan trust is portfolio reduced has to the the obligation point of to failure provide by liquidity to un<br />

future consequences decades? of Will their China actions, take their predictions crown? Will should Europe rather or Japan<br />

be ignored. again? And will their respective markets follow? No-one knows, unexpected even holders market whenever conditions required. you If need I want to to re-think withdraw your my funds, I put in<br />

The 2010s though were a many great has period an opinion. for stocks. Either Put way, another buy a low-cost way, index portfolio. that You redemption need to construct request and a have portfolio access that to my can funds survive a few days later (<br />

Goldilocks was references in the House. the major There stock were markets low and interest economies rates and of the world. the dips An along most the cases). way. Hence, management of these funds needs to be don<br />

low inflation. example, Money was the cheap, Vanguard basically Total World free. Index And with since a fee returns of only 0.08% Bond per giant in such Pimco a way has that an idea liquidity called is “strategic readily available. mediocrity”: An individual on th<br />

on bonds and annum. income-based Buy and hold investments for as long as were possible. low, investors “You’re never other hand best has, in the with short the right run, financial but you coach, stick around the ability to take o<br />

turned to the stock The market. overall asset Those allocation were the days and in it particular now seems. the allocation long enough illiquid to outlive positions. the competition and come out on top.”<br />

Will we return to bonds to those is a bit days? trickier. Will inflation The average roll over, US 10-year interest bond While yield in Pimco is Structured referring notes to competition, that are designed you can to provide substitute a high probabili<br />

rates be cut as 1980 we was come 11.43%, in for versus a soft the landing average on the yield Hudson in 2020 of this 0.89%. with the of objective coupon payments of your portfolio (quarterly, or that semi-annual of the client, or annual) an<br />

River? Can we Remember once again if invite yields Goldilocks decrease, bond in for prices some porridge increase, so company this was or provide pension some fund downside you are managing. protection can be a great alternative<br />

after she has a wandered phenomenal off for bond a while? bull market. I do not Could know, rates no-one go lower Never still? invest traditional in such bonds. a way Individuals that you have are carried the option out to when take advantage<br />

does, but this Possibly. is not a portfolio Are rates management going to go consistently strategy. lower for those the next clouds the bring illiquidity a hailstorm! premium that most retail portfolio managers canno<br />

The probability few decades? of Goldilocks Probably returning not. and staying for lunch Many a market Constructing commentator the is<br />

and dinner after The breakfast allocation is low. to bonds Here is and why… bond alternatives versus professing equity that core we of should any strategy be ready is as<br />

If you have depend given out on two free aspects money that for are a decade, intertwined. ie it Firstly, cost your investment there will be literally volatility the over centre the short of<br />

very little to service period and your secondly, debt, and your possibly ability you to stomach have increased volatility. The term. longer They the are investment however stating process. the<br />

your debt as it your didn’t time cost horizon, you much, the lower it would your be allocation foolish to think bonds should obvious be as The there next is always steps are volatility the<br />

a 2 000% increase and the in lower the interest your volatility rate will absorption not affect threshold, you. When the higher over your the short satellites term. that This can is the provide nature<br />

money is free, allocation people do to bonds foolish should things. be. A quality financial advisor should of markets. be exposure Client portfolios to some should totally be<br />

It took the able Federal to assist Reserve here 17 with months ease. to hike the rate to the “ready” in that unique short-term assets. liabilities Think<br />

current range of There 5% and are 5.25%. alternatives If we assume to traditional the Fed sovereign panics after bonds should in high-byield and corporate the rate retreats bonds. in Although let’s assume the eight probability months of default risk, cash is and economy, income innovation like investments and<br />

infrastructure, able to be met the with green low<br />

a hard landing<br />

to 2.50% and higher 2.75%, than that their will still sovereign infer that counterparts, the rate is so higher too is by the expected that are little disruption rattled and by stock health market and<br />

roughly 1 000% return. than If, what however, it was offshore almost two bonds years are ago, not expected and you to movements. provide wellness This will to help name your a few. clients<br />

have much more an inflation-beating debt. Salaries have return increased, the medium absolutely, to perhaps but even to survive the a possible With the dip right along advice, the way.<br />

not by the same long measure term, are as there interest other tools rate. a private investor can Long-term access investments you can build in something turn should Hannes Viljoen, CFA, CFP®,<br />

In addition, that if provide individuals some and sort companies of downside need protection to spend with still a higher be invested truly special to participate and unique in the Hannes CEO and Viljoen, Head CFA, of Investments,<br />

CFP®, CEO and<br />

more on servicing probability their debt, than bonds they have to deliver less to inflation-beating spend other returns? march of mankind. to your personality. Head Kudala of Investments, Wealth Kudala Wealth<br />

www.bluechipdigital.co.za www.bluechipdigital.co.za 37 35


BLUE<br />

CHIP<br />

PRACTICE MANAGEMENT | Wealth management<br />

Adding value,<br />

time and money<br />

Integrity, knowledge, service and teamwork are the values that Bovest Wealth Management<br />

stands for and on which its success is built. <strong>Blue</strong> <strong>Chip</strong> caught up with the company’s wealth<br />

managers, PJ and Geo Botha.<br />

Please provide a brief history of Bovest. How did it<br />

come about?<br />

Our father, Dr Riaan Botha, started the company back in<br />

2008. He has got a Doctoral Degree in Political Science<br />

but always had a keen interest in investments and after<br />

upskilling himself with some JSE courses, he started<br />

Bovest Wealth Management. The year 2008 was a very<br />

challenging year on the markets following the financial<br />

crisis in the US, but it’s through times like this that trust<br />

and the correct advice really play a vital role in personal<br />

financial planning.<br />

Both of us first applied our trade outside of Bovest:<br />

PJ completed his BCom Accounting Degree and after<br />

obtaining his CA(SA) designation, he joined Bovest. Geo<br />

completed his BCom and Honours in Internal Auditing<br />

and obtained his CFP® designation while working in the<br />

corporate world before joining Bovest in 2014.<br />

Why would a client choose Bovest? What sets you apart?<br />

For us, it’s personal: we started as a family company and<br />

therefore Bovest will always be based on family values.<br />

We treat our clients like family. Trust and transparency<br />

are of the utmost importance and if it’s not in the best<br />

interest of the client, we simply won’t do it. We are not<br />

owned by outside shareholders who need to see a<br />

certain increase in revenue and share price and while<br />

doing so place aggressive sales targets on advisors.<br />

PJ and Geo Botha, both directors and wealth managers at Bovest Wealth<br />

Management, recently released their first book Word Ryk, Bly Ryk, which<br />

is now available at all major bookstores and online.<br />

What is Bovest’s financial planning philosophy?<br />

Education and giving back to not only our clients, but<br />

other South Africans too, is of utmost importance to<br />

us. We want to educate our clients on the significance<br />

of the choices they make and the reasons that we are<br />

advising on the products we select. We also have an<br />

entire “giving back” division in our company where we<br />

assist those less fortunate.<br />

38 www.bluechipdigital.co.za


PRACTICE MANAGEMENT | Wealth management<br />

BLUE<br />

CHIP<br />

Our mission is to positively add value<br />

to every single client we manage.<br />

What services does Bovest offer?<br />

Through the years we have compiled a team of specialists to<br />

look after the holistic financial needs of our clients. We realise<br />

that time is a very scarce commodity and we can save our<br />

clients time by looking after their entire portfolio, including:<br />

investment and tax planning, short-term insurance, risk cover<br />

as well as medical aid and estate planning.<br />

Even though we have contracts with all the main service<br />

providers, we are proudly independent.<br />

What is the practice’s vision and mission?<br />

Our vision is to financially educate as many South Africans<br />

as possible: we realise that not all people can become clients<br />

and therefore embark on projects like our television show<br />

on KykNet called Welvaartskeppers, our published books,<br />

Welvaartskeppers and Word Ryk, Bly Ryk and our podcast, The<br />

F word – Finance.<br />

Our mission is to positively add value to every single client we<br />

manage – not only in a financial sense, but life as a whole.<br />

How have you integrated the FPI’s Code of Conduct into your<br />

own practice?<br />

Delivering advice of the highest standards is of utmost<br />

importance to us and therefore compliance and adhering to the<br />

FPI Code of Conduct is an integral part of our company. We have<br />

appointed a quality control manager who scrutinises every<br />

client portfolio and validates advice given by each advisor.<br />

To what extent do you use technology in your practice?<br />

We are a proudly completely paperless firm. We also welcome<br />

virtual meetings and electronic signatures to be able to serve<br />

clients all over the world.<br />

Through social and mainstream media, we educate and<br />

inform on a regular basis.<br />

What do you think are the keys to being a successful financial<br />

planning practice?<br />

If your aim is to really act in the best interest of the client, you<br />

are three quarters of the way there. You might give up some<br />

revenue in the short term, but in the long term your reputation<br />

and referrals will be what sets you apart.<br />

Please tell us about South Africa’s equity market.<br />

The South African equity markets is often misunderstood,<br />

and people don’t realise that almost 60% of the JSE-listed<br />

companies’ revenue is earned offshore. We make it our aim<br />

to inform our clients of the global earners and duly-listed<br />

companies on the JSE and how South African equity still has a<br />

vital role to play in their portfolios.<br />

Would you like to add anything?<br />

Market returns are not in our control, but there are so many<br />

other aspects that are, and we realise that if we foster the right<br />

behaviour and decision-making while sticking to our long-term<br />

objective, we will create long-term wealth for our clients. <br />

www.bovest.co.za<br />

www.bluechipdigital.co.za<br />

39


BLUE<br />

CHIP<br />

PRACTICE MANAGEMENT | Profile<br />

YOUR WEALTH:<br />

OUR PRIORITY<br />

No two people are the same, we all have different goals,<br />

ideas and dreams. At Bovest, we believe that each<br />

individual deserves a tailormade plan to assist them<br />

on their road to financial freedom.<br />

We want our clients to obtain true wealth. True wealth is<br />

more than just money. It’s being able to live the life you want.<br />

It’s making sure your next generation will have a legacy. It’s time<br />

spent well. It’s confidence in your future.<br />

Our vision is to ensure that we have a long-lasting relationship<br />

with each of our clients and that they receive service, knowledge<br />

and care of the highest standards. To not only impact their<br />

financial situation but also their lives.<br />

Bovest was founded on the principle to improve people’s<br />

lives. We know that there is more to life than taking one rand<br />

and growing it into two.<br />

Time – the one commodity that is worth more than money.<br />

We can always make more money, but time that has gone by, is<br />

lost forever. At Bovest, we don’t only strive to manage and grow<br />

your wealth in the best and most professional way, but we also<br />

want to give you more time to pursue what you value most.<br />

To achieve these objectives, we have built a team of specialists,<br />

each with a dedicated field of expertise to give each client access<br />

to a wealth of knowledge and to provide a single destination<br />

to cater for our clients’ complete financial needs.<br />

The wealth management industry has changed drastically in<br />

recent years: information is abundantly available, technology<br />

continues to evolve rapidly, governing regulations are getting<br />

stricter and with the increased complexity of ever-expanding<br />

investment and insurance products you need a team you can trust.<br />

Integrity, knowledge, service and teamwork: these are the<br />

values we stand for and on which Bovest and its success are built.<br />

We know that these values are also important to our clients – to<br />

secure their wealth and free up the scarce commodity of time.<br />

PERSONAL EXPERIENCE<br />

No two people are the same, we all have different goals, id<br />

No two clients are the same. We believe in a tailormade financial<br />

deserves a tailor made plan to assist them on their road to fin<br />

plan for every client.<br />

We want our clients to obtain true wealth. True wealth is mo<br />

LONG-TERM APPROACH<br />

sure your next generation will have a legacy. It’s time spent w<br />

We strive to maintain long-term relationships with every client<br />

and we know it can only exist when there is mutual respect<br />

Our Vision is to ensure a long lasting relationship with every c<br />

and trust.<br />

standards. To not only contribute have an impact their financi<br />

291 Sprite Avenue, Faerie Glen, Pretoria<br />

43 Andringa Street, Eikestad Mall, Stellenbosch<br />

+27 12 998 6428<br />

admin@bovest.co.za<br />

www.bovest.co.za<br />

WHY: OUR STOR<br />

INTEGRATED PLANNING<br />

We have a team of highly qualified individuals, each with his<br />

own area of expertise to provide a holistic service for our clients.<br />

YOUR WEALTH : OUR PRIORITY<br />

PROFESSIONAL PRACTICE<br />

We strive to improve our service to ensure that we adhere to<br />

the highest standards and the best practice in our industry. <br />

40 www.bluechipdigital.co.za


Back to The Future<br />

FPI Presents The 2023<br />

Convention<br />

Y<br />

eas and dreams. At Bovest we therefore believe that each individual<br />

ancial freedom.<br />

re than just money. It’s being able to live the life you want. It’s making<br />

ell. It’s confidence in your future.<br />

lient and that they receive service, knowledge and care of the highest<br />

al situation, but also to their lives as a whole.<br />

Join the 2023 FPI Professional’s Convention, Back to The Future.<br />

The FPI 2023 Convention will be hosted as a live face-to-face and a virtual event.<br />

To register for the event, visit the FPI-Portal via the website. For any assistance, call us on<br />

+27 (11) 470-6000, e-mail events@fpi.co.za or visit www.fpi.co.za<br />

To obtain the 2023 FPI Professional’s Convention Sponsorship Prospectus visit the website<br />

for more information.


BLUE<br />

CHIP<br />

INVESTMENT | DFM<br />

A DFM can’t help you with your hair<br />

but can help with investing<br />

How many people do you know who cut their own<br />

hair or service their own car? Very few people that I<br />

know do this themselves. Instead, they tend to go to<br />

a professional. But, for some reason many people still<br />

believe that they are better at running their own investment<br />

portfolios than a portfolio manager is.<br />

I am always amazed to hear discussions about what<br />

someone’s financial advisor suggested but how they chose<br />

to put their investments elsewhere. The choice is often made<br />

either due to the chosen fund having a well-known brand or<br />

because someone else (ie not the professional advisor that they<br />

have appointed) suggested it.<br />

The other area of general confusion among investors is<br />

where their money is invested. I often find myself explaining the<br />

difference between an investment platform (more commonly<br />

known as Linked Investment Service Providers or LISPs) and<br />

an asset manager. The platform performs all the administrative<br />

functions, including receiving the investment amounts, paying<br />

them into the underlying unit trusts, tracking cashflows in and<br />

out of the portfolios, calculating returns and providing quarterly<br />

statements. Whereas the chosen portfolio or unit trust into<br />

which the investor’s money is invested is the vehicle into which<br />

their investment is held.<br />

However, there is often confusion as to what the investor is<br />

invested with. For example, if they have chosen the Momentum<br />

Wealth platform as their “administrator” but invested in<br />

the ABC Balanced Fund, then they are invested in the ABC<br />

Balanced Fund and not a Momentum fund. Momentum Wealth<br />

is the platform that facilitates their transactions and supplies<br />

the investment statements. To say they are invested with<br />

Momentum is a misnomer.<br />

Momentum Wealth facilitates the investment, tracks<br />

its performance and reports back to clients. But since the<br />

statements are issued by the Momentum Wealth platform,<br />

clients often perceive this to be their asset manager. To avoid<br />

confusion, one would need to read through the investment<br />

statement to see what underlying investments are and then<br />

determine who the asset manager or managers are that you<br />

are invested in.<br />

When choosing a LISP platform, investors will be faced<br />

with the decision around an open-architecture platform (ie an<br />

independent platform that offers a wide range of underlying<br />

funds) or a more closed-architecture platform (that restricts<br />

the number of underlying funds you can invest in). The latter is<br />

often associated with its own asset management business and<br />

may provide better fees for access to its own group-managed<br />

funds or place restrictions on which funds you can invest in.<br />

For example, they may force you to use a money market unit<br />

trust that is managed by an asset manager which forms part<br />

of the same group.<br />

While the open-architecture platforms are more flexible<br />

and typically don’t have different fees just because they have<br />

an asset manager in the group, investors should ultimately<br />

ensure that the platform they chose is able to facilitate<br />

investments into the most suitable funds for them and that<br />

the platform has invested in technology that assists them<br />

to provide accurate and regular information about their<br />

underlying portfolios. Some of the criteria to consider in<br />

selecting a platform are efficiency, service, pricing, reporting<br />

and compliance monitoring.<br />

On the other hand, when selecting an asset manager,<br />

you may want to focus on a consistent performance track<br />

record, what is the link between their benchmark and your<br />

investment needs, as well as evidence of how the fund<br />

performs in different markets.<br />

With the increase in the number of unit trusts available and<br />

the recent changes to Regulation 28 allowing asset managers<br />

to invest 45% of their portfolio outside of South Africa, it’s<br />

important that investors understand how this affects their<br />

investment journey.<br />

So, while it makes sense for you<br />

to cut your hair at a hair salon or<br />

barber and get your car serviced at<br />

a mechanic, it also makes sense to<br />

employ the services of a discretionary<br />

fund manager (DFM).<br />

A DFM has a good understanding<br />

of the investment market and can<br />

help investors and financial advisors to<br />

navigate the level of complexity.<br />

They can assist in deciphering risk,<br />

investment time horizons and the<br />

appropriate benchmark to help you<br />

help your clients meet their individual<br />

investment objectives.<br />

A DFM can also help you navigate<br />

the complexities around the local<br />

and offshore investing options,<br />

the differences between funds in a<br />

particular peer group and show you<br />

what to expect from different funds. <br />

Visit eqinvest.co.za to find out how a<br />

DFM can help your advice practice.<br />

Florbela Yates, Head<br />

of Equilibrium<br />

Equilibrium Investment Management (Pty) Ltd (Equilibrium) is an authorised financial services provider (FSP32726) and part of Momentum<br />

Metropolitan Holdings Limited and rated B-BBEE level 1.


FINANCIAL PLANNING | Retirement<br />

BLUE<br />

CHIP<br />

Add some “BMT” to your clients’<br />

retirement portfolios<br />

In sport, certain players are described as individuals with big<br />

match temperament or “BMT”. Players with BMT just seem to<br />

have the ability to perform well in high-pressure situations,<br />

when it is needed most, and their trophy rooms are stacked<br />

with the evidence.<br />

But when your clients are on the big stage, in this case<br />

retirement, how does their living annuity perform when they<br />

need it most?<br />

In general, clients invested with an investment manager will<br />

have exposure to asset classes such as cash, bonds, property and<br />

equities, both locally and abroad. These asset classes create their<br />

performance through beta (B), which is the return generated by<br />

the market and sometimes through alpha (A), the performance<br />

though superior stock selection.<br />

Yet, these drivers of return, being alpha and beta, come<br />

and go as no investment manager can always outperform or<br />

guarantee to do it when clients need it most. So, if A and B can’t<br />

always do it, what about using C?<br />

Here, C refers to credits. And more specifically, to mortality<br />

credits. A mortality credit is the benefit clients can get from a<br />

life annuity because thousands of annuitants invest with the<br />

same life insurer and their mortality risk is pooled.<br />

This pooling is the foundation of how a life annuity is priced<br />

so that the exact rand amount of income your client will receive<br />

is quoted. It is because not all clients will get the same value<br />

for money as they won’t all live to the same age. Some clients<br />

live longer than expected and receive an income stream that,<br />

when added together, could be six times or more than what<br />

they originally invested. In these instances, the income can have<br />

an implicit return or internal rate of return (IRR) of more than<br />

14% (an IRR is the annual rate of growth that an investment is<br />

expected to generate). On the other end, clients may receive<br />

less than what was invested.<br />

The reality is that life annuities will give a different return to<br />

different people, but the return is the highest when it is needed<br />

most, irrespective of how the future returns from markets turn<br />

out to be.<br />

The reason why I say, “when it is needed most,” is because<br />

clients who live a prolonged life need a higher return on their<br />

assets. A client that needs 9.6% to maintain their increasing<br />

income need for 15 years will need 12.6% to maintain it for<br />

35 years.<br />

Clients who live longer in retirement are the ones who need<br />

the high returns the most. This is exactly what a life annuity<br />

offers. It offers a higher return the longer a client remains alive.<br />

Calculations based on a R1-million life annuity for a male aged 65,<br />

which pays an income of R8 005 every month escalating at 5% every<br />

year. The return for periods shorter than 74 years are negative.<br />

Source: Momentum Investments, date of quote June 2023.<br />

This rate of return will vary on a case-to-case basis, but longterm<br />

returns approaching 14% and even 14.5% are not out of<br />

the ordinary when clients get the full benefit of mortality credits<br />

by living to an advanced age.<br />

Momentum Wealth has recently expanded the choice of<br />

components that can be selected in our living annuity. We<br />

now offer a Guaranteed Annuity Portfolio – a life annuity as a<br />

component within our living annuity.<br />

By using Momentum Wealth’s Guaranteed Annuity Portfolio<br />

within a client’s living annuity, you can<br />

provide a market-linked return as well<br />

as a return that increases with the<br />

client’s lifespan, thereby improving<br />

their chances of a successful retirement<br />

when they live to an advanced age.<br />

Now, you don’t have to rely only<br />

on alpha (A) or beta (B) any more, you<br />

can trust that through C, ie mortality<br />

credits, your clients who need it most<br />

can have a successful retirement.<br />

This is how Momentum Investments<br />

is making investing personal: with us,<br />

you can add some BMT to your clients’<br />

retirement portfolios. <br />

Martiens Barnard,<br />

Marketing Actuary,<br />

Momentum Investments<br />

Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider. Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services<br />

and registered credit provider (FSP 6406). The Retirement Income Option and the Guaranteed Annuity Portfolio are life insurance products, underwritten by Momentum Metropolitan Life<br />

Limited, a licensed life insurer under the Insurance Act and administered by Momentum Wealth (Pty) Ltd. The information in this article is for general information purposes and not intended<br />

to be an invitation to invest, professional advice or financial services under the Financial Advisory and Intermediary Services Act, 2002. Momentum Investments does not make any express or<br />

implied warranty about the accuracy of the information herein.


BLUE<br />

CHIP<br />

FINANCIAL PLANNING | Savings<br />

Taking the logical next step –<br />

invest your savings money<br />

During these unpredictable times, it is now more vital than ever for people to take the first step in<br />

changing their spending habits, and the next step to investing their money smartly.<br />

There are still people who continue to embrace remote<br />

work, which has led to decreased expenses on fuel,<br />

takeaway coffee and meals at the office. Channelling<br />

these modest amounts into investments for a variety<br />

of needs, forming a habit of spending less and investing the<br />

money not spent can gradually become an integral part of one’s<br />

financial journey to success. Unfortunately, it seems as though<br />

the skill of proper budgeting has been largely forgotten in<br />

South Africa, with many opting for short-term credit instead of<br />

stashing away money for the future.<br />

Financial advisors have a significant role in guiding clients<br />

who might be wary of saving and investing due to apprehensions<br />

about schemes gone wrong they saw in the media or simply<br />

because they do not know where to start. Financial advisors can<br />

support clients in crafting a budget, making smarter financial<br />

choices and efficiently allocating any newfound savings that<br />

could be channelled towards suitable investments. Solid financial<br />

advice is invaluable, as only a handful of individuals can express<br />

their investment goals in monetary terms or determine how<br />

much money they will need and by when.<br />

Advisors can help clients put together plans for short-term<br />

necessities such as emergency funds, medium-term needs like<br />

buying a vehicle or securing a home deposit and long-term<br />

objectives such as paying for their children’s tertiary education.<br />

The most crucial long-term goal for most people is to provide<br />

for financial independence which many people still refer to as<br />

retirement. Even though it is possible for anyone to reach a<br />

point of financial independence by properly planning for it, it<br />

is disheartening that so few people can maintain their standard<br />

of living once they stop working either by choice or because<br />

of circumstances.<br />

To guide clients on their financial journey, financial advisors<br />

should discuss the different investment options, from starting<br />

a basic investment through unit trusts to using products or<br />

tax wrappers such as an endowment or a retirement annuity<br />

to optimise the tax efficiency of their plan. Out of a diverse<br />

range of investment choices, advisors can help clients choose<br />

the most suitable strategies that align with their individual<br />

needs and circumstances.<br />

A popular choice for long-term investing remains a retirement<br />

annuity because of its tax efficiency. For younger clients, this<br />

approach fosters the habit of regularly investing money and<br />

offers a tax-savvy way to do it. Every tax year a person can claim<br />

a tax deduction for the money invested in a retirement fund.<br />

To make the most of this deduction, clients can invest up to<br />

27.5% of their taxable income or remuneration, whichever is<br />

The deduction is limited to 27.5% of the greater of the amount<br />

of remuneration for PAYE purposes or taxable income (both<br />

excluding retirement fund lump sums and severance benefits).<br />

The deduction is further limited to the lower of R350 000 or<br />

27.5% of taxable income, before the inclusion of a taxable<br />

capital gain.<br />

higher, in a retirement fund. The maximum deduction a person can<br />

claim in a tax year is R350 000.<br />

An increasing number of people are also exploring tax-free investment<br />

products, which present an excellent opportunity to supplement their<br />

provision for future financial independence. Although clients don’t<br />

get a tax deduction for money they invest in a tax-free investment,<br />

they still enjoy tax-free growth. And they won’t pay any tax on the<br />

proceeds when they decide to take money out of the investment.<br />

Since the 2021 tax year, clients can invest up to R36 000 every tax<br />

year in a tax-free investment, limited to R500 000 over their lifetime.<br />

Before this change, the yearly limit was R33 000. Government may<br />

adjust these limits from time to time.<br />

It is essential for financial advisors<br />

to assist clients in maximising their tax<br />

incentives and consistently leveraging<br />

them over time while also optimising<br />

the tax efficiency of their overall<br />

investment portfolio by blending<br />

the use of the available investment<br />

products or tax wrappers.<br />

This tactic minimises the impact of<br />

tax on financial plans and boosts the<br />

growth potential of investments. By<br />

providing personalised financial plans<br />

and investment strategies, financial<br />

advisors can enhance their clients’<br />

chances of achieving their financial<br />

goals on the journey to success.<br />

Momentum Wealth offers a<br />

comprehensive range of tax wrappers<br />

that financial advisors can use to<br />

help clients structure their personal<br />

investment portfolios for optimal tax<br />

efficiency and craft them to suit their<br />

unique circumstances and goals. For<br />

more on Momentum Wealth, visit<br />

our website momentum.co.za. <br />

Pierre Jean Marais, Retail Marketing,<br />

Momentum Investments<br />

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<br />

Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.


Harnessing the power<br />

of digital solutions in<br />

wealth management<br />

Hymne Landman,<br />

Head of Momentum Wealth<br />

The financial services industry in South Africa is<br />

experiencing a remarkable digital transformation,<br />

with significant improvements in efficiency, client<br />

engagement and service delivery. As a financial<br />

advisor, it is imperative to stay ahead of the curve, leveraging<br />

technology to provide personalised support to help clients<br />

achieve their financial goals.<br />

The integration of digital solutions in wealth and investment<br />

management has emerged in response to heightened client<br />

expectations, requirements of financial advisors, the need for<br />

streamlined operations and the desire to remain competitive.<br />

By adopting cutting-edge tools and online processes, financial<br />

advisors can elevate their game, offering tailored services to<br />

clients while adhering to industry regulations.<br />

The adoption of digital solutions when engaging with<br />

investment platforms also reduces the occurrence of human<br />

errors, enhancing client experience and ensuring up-to-date<br />

information. This not only saves time and effort but also<br />

improves the overall quality of the services provided.<br />

Digital solutions are increasingly transforming the way<br />

investment platforms, together with financial advisors, interact<br />

with clients. Transacting directly on investment platform systems<br />

gives advisors and clients more control, faster processing<br />

timelines and a more personalised experience so that financial<br />

advisors can focus on what matters most: giving good financial<br />

advice and creating value for their clients.<br />

By using digital tools, financial advisors can also expand<br />

their reach beyond geographic boundaries, attracting clients<br />

from across South Africa and beyond. By leveraging technology,<br />

advisors can better address the evolving needs of their clients,<br />

building stronger relationships and driving client satisfaction.<br />

The advent of big data is also affecting the financial<br />

services industry, providing financial advisors with access to a<br />

wealth of data that can be utilised to gain insights into client<br />

behaviour, preferences and investing patterns. By leveraging<br />

data analytics tools and Artificial Intelligence (AI), advisors can<br />

identify trends and make data-driven decisions that benefit<br />

their clients.<br />

Predictive analytics enables financial advisors to anticipate<br />

potential risks and opportunities, so that they can make<br />

proactive recommendations that can improve clients’ financial<br />

outcomes. This data-driven approach to wealth and investment<br />

management empowers advisors to provide tailored advice<br />

and personalised coaching, helping clients on their journey<br />

to success.<br />

Both psychology, or our inherent personality traits, and<br />

technology (machine learning) can provide guardrails for<br />

clients when they need them most as well as in-the-moment<br />

financial education to help them bridge their intention (staying<br />

invested) with their actions (avoiding regular switching in and<br />

out of funds), for example. This is one example of how predictive<br />

analytics is critical in managing or eliminating the investor<br />

behaviour tax for both the advisors as well as their clients.<br />

The integration of technology and digital solutions in<br />

financial advisory and wealth management practices is vital<br />

to providing personalised client engagement. By embracing<br />

these advancements, financial advisors can streamline their<br />

operations, enhance client engagement, and harness the<br />

power of data analytics to create tailored solutions that can<br />

help clients achieve their financial goals.<br />

An example of the quick uptake of online engagement is<br />

the functionality to do fee and benefit proposals (quotes)<br />

for our annuity products and the Linked Endowment Growth<br />

Option that we made available on our online quote, called<br />

Wealth Quote. Within the first week of us communicating with<br />

financial advisors, more than 1 500 quotes for annuity products<br />

were generated online.<br />

We also saw a significant increase in the number of transactions<br />

on the Momentum Wealth platform being done digitally where<br />

financial advisors use the various digital solutions which we<br />

made available rather than using paper and email processes.<br />

We processed a total of 73 810 digital transactions in the last<br />

year with minimal manual intervention required.<br />

As the financial services industry continues to evolve, it is<br />

crucial to remain agile and adaptable, embracing new tools<br />

and online solutions, and developing the skills and expertise<br />

needed to maximise the benefits of technology. By staying<br />

ahead of the curve, financial advisors, financial planners and<br />

wealth managers will be well-positioned to lead their clients<br />

on a successful journey to a secure financial future. <br />

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<br />

Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.<br />

www.bluechipdigital.co.za<br />

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ROUND TABLE SERIES | Retirement Planning<br />

RETIREMENT PLANNING:<br />

GUIDING CLIENTS TO<br />

FINANCIAL INDEPENDENCE<br />

An exclusive <strong>Blue</strong> <strong>Chip</strong> discussion with three of South Africa’s top investment professionals<br />

focused on retirement planning and guiding clients to financial independence. Part one.<br />

EXPERT PANEL<br />

Fareeya Adam, Head of Product<br />

Solutions, Momentum Investments<br />

Fareeya Adam has been with Momentum<br />

Investments for more than 16 years.<br />

She started at Momentum straight after<br />

university and has spent most of her time<br />

in product development roles, with a<br />

stint in the valuations team. Adam’s team<br />

is responsible for product development<br />

and management for discretionary<br />

and retirement solutions, traditional<br />

life annuities as well as structured and<br />

international products. Adam has a BCom<br />

Honours in actuarial science (University<br />

of Pretoria) and is a qualified actuary<br />

through the Institute of Actuaries (UK).<br />

46 www.bluechipdigital.co.za<br />

Tom Brukman, CFP®, Director,<br />

Chartered Wealth Solutions<br />

Western Cape<br />

Tom Brukman is a financial planning<br />

specialist and director of Chartered<br />

Wealth Solutions Western Cape. Brukman<br />

believes that helping his clients plan for<br />

their futures plays a valuable role in their<br />

lives. He focuses on consistently trying<br />

to balance “return of investment” with<br />

“return on life”. Brukman says that he<br />

feels fortunate for the years that he has<br />

specialised in dealing with families who<br />

face major transitions such as retirement.<br />

Wouter Fourie, CFP®, CEO, Ascor®<br />

Independent Wealth Managers<br />

Wouter Fourie is an Advanced<br />

Postgraduate Qualified Financial<br />

Planner and a Professional Accountant<br />

(SA) with postgraduate qualifications<br />

in advanced taxation. Fourie won the<br />

2015/16 FPI Financial Planner of the<br />

Year and was named by International<br />

Adviser as one of the 100 most<br />

influential individuals in the financial<br />

planning industry globally. In 2018,<br />

he co-authored The Ultimate Guide to<br />

Retirement in South Africa with Bruce<br />

Cameron and Secure your Retirement<br />

in 2020. The third edition of The<br />

Ultimate Guide to Retirement in South<br />

Africa, sponsored by Alexforbes and<br />

recognised by the FPI for verifiable<br />

CPD points, has just been published.


ROUND TABLE SERIES | Retirement Planning<br />

BLUE<br />

CHIP<br />

You need to<br />

understand<br />

what your own<br />

basket is and how<br />

inflation is going<br />

to link to that.<br />

MODERATOR<br />

IAN JONES (IJ): When a client asks you how much is enough, where do you start?<br />

WOUTER FOURIE (WF): There is a simple answer to the question and that is as<br />

much as possible. Retirement planning is different for everyone depending on<br />

their age of retirement, whether they have dependants and their lifestyle. It’s<br />

a very personal question and it is always difficult to give a simple answer to it.<br />

That’s why clients need the assistance of a financial planner to sit with them and<br />

work out their budget.<br />

Each one of us has different lifestyle needs and important information like<br />

inflation and expected lifetime need to be factored into your budget numbers.<br />

So the easy answer is as much as possible and the difficult answer is that you<br />

need to sit down with the client and work through their personal budgets to<br />

understand exactly what their needs are and how escalations would influence<br />

the drawdown on their portfolios.<br />

To give guidance in terms of planning, you need about R1-million to provide you<br />

with R4 000 per month income. This is not a calculated amount but at least it gives<br />

you a guidance number to work from.<br />

IJ: And Tom, your thoughts on the same question but if you could also touch on<br />

the 4% rule. (South Africans seem more conservative – we look at the 5% rule as<br />

the maximum amount of potted retirement to withdraw.) Is this a concept that<br />

you consider when dealing with your clients?<br />

TOM BRUKMAN (TB): I agree with Wouter. It is a very individual question and it is<br />

difficult to give a blanket answer. The 4% or 5% rule has been thrown around for<br />

decades and is interesting because it is so blanket and covers many factors.<br />

The factors around the growth in an investment do not really, in my view and<br />

where I sit as financial planner, get to the core of giving the person the confidence<br />

and security they are looking for in knowing that they can retire successfully or the<br />

way they want to.<br />

Spend time to look at the picture of what that retirement looks like. I think that’s<br />

important. That picture then helps you advise on the factors most important to the<br />

person – what’s going to make a difference and how they’re going to plan to get<br />

to that successful retirement.<br />

The maths is there but as we have seen in the last few years, the maths gets<br />

skewed in extreme times and so if you can just keep people focused on the picture<br />

and the context around that picture, I think they have a far more secure and better<br />

chance of reaching that successful retirement period in their life.<br />

Ian Jones, CEO, Fundhouse<br />

Ian Jones has been with Fundhouse for<br />

10 years. He is a qualified actuary who<br />

started in the investment industry in<br />

2001. Jones has extensive experience in<br />

fund research, portfolio construction as<br />

well as the broader asset management<br />

and financial advisory industries, globally.<br />

IJ: Fareeya, what factors do you consider when you propose a retirement solution<br />

to your clients?<br />

FAREEYA ADAM (FA): We have started to think more practically around how clients<br />

can approach retirement and then we apply rules of thumb. One concept gaining<br />

traction over time is to start by having a reasonable estimation of what you think<br />

your living and your life expenses in retirement are going to be.<br />

We think of life expenses as those expenses that you must cover; these<br />

expenses are for the things that you cannot do without; your medical aid, place<br />

to live, grocery and electricity bills every month. Then there’s the living expenses<br />

where you have a little bit more flexibility. This will start to give people a range<br />

of what their expenses are likely to look like in retirement and then you can more<br />

easily apply the rules.<br />

Another rule of thumb that floats around is the rule of 300 that says if you have<br />

your monthly expenses, you can multiply the total figure by 300 and that should<br />

give you enough to cover 25 years’ worth of expenses.<br />

www.bluechipdigital.co.za<br />

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ROUND TABLE SERIES | Retirement Planning<br />

The higher income earners may be experiencing something<br />

similar. There are certain things like insurance that increase at<br />

a lower rate. At the same time, medical inflation is expected<br />

to be 2% to 3% higher than inflation.<br />

Everyone needs to understand what their own basket<br />

is and how inflation is going to affect it. This need must<br />

then translate into a retirement solution and an investment<br />

strategy that gives a client the best chance of achieving<br />

their preferred lifestyle.<br />

As Tom and Wouter mentioned, it is very personal because you<br />

don’t know how long you’re going to live, and you don’t know what<br />

the effects of inflation are, but this at least starts to give you some<br />

guidelines around what you should be targeting.<br />

IJ: When people look at inflation, they consider the CPI basket<br />

which sits on average at 5.5%. How do you think about inflation<br />

when you are talking to clients approaching or in retirement?<br />

FA: CPI rates are based on a basket that is not necessarily relevant;<br />

if you look at the cost of food, for example, it is much higher than<br />

that. What we see is that lower income earners feel a much higher<br />

level of inflation because their basket is made up of more of those<br />

items that are inflating higher.<br />

IJ: Wouter, Fareeya raised an interesting point in that we<br />

have seen, with rates going up, life annuities becoming a<br />

more popular option for certain clients and advisors. What<br />

are your thoughts on using life annuities or blending them<br />

with living annuities?<br />

WF: It is important to understand where annuities fit in<br />

financial planning: the two-thirds that is withdrawn from a<br />

pension at retirement is used to buy a compulsory annuity.<br />

The compulsory annuity gives you the option of two types of<br />

annuities, the one is what we call a life annuity and the other<br />

is a living annuity.<br />

Over the past few years, the industry has used living<br />

annuities on a huge scale. I think it is because the rates that<br />

were offered by life annuities were never very competitive but<br />

over the last year, we have seen a change in the environment<br />

where bond rates started spiking and inflation rates have<br />

picked up, so life annuity rates are becoming very attractive.<br />

In our own business, we converted a large portion of our<br />

living annuities into life annuities and new hybrid annuities<br />

are available where you can have a combination of the two in<br />

your portfolio.<br />

This provides a client with certainty. It provides a client with<br />

certainty of income, certainty of escalation rates and it also<br />

addresses that important aspect called longevity. It provides<br />

an income for life as none of us have the benefit of predicting<br />

our own life or date of death. The life and hybrid products<br />

are a good way of combining certainty into portfolios now<br />

especially with the higher rates that are available.<br />

TB: The advent of the hybrid model has really been huge and<br />

we look at it very closely for our clients because our clients<br />

convert their whole living annuity, or at retirement stage,<br />

their compulsory annuity, into a life annuity. It may give them<br />

certainty, but a lot of them want a legacy and for their living<br />

annuity to be passed on to their children.<br />

The hybrid annuity addresses concerns around certainty,<br />

longevity and legacy. They are a great addition to the<br />

48 www.bluechipdigital.co.za


ROUND TABLE SERIES | Retirement Planning<br />

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The hybrid annuity addresses concerns<br />

around certainty, longevity and legacy.<br />

industry, solving the issue around taking risk and spreading<br />

it between the client, us and the life company doing the life<br />

annuity side.<br />

IJ: Are hybrids being used more broadly in your business?<br />

FA: At the start of Covid-19, guaranteed life annuities really<br />

started to pick up. As an industry, we saw that the amount of<br />

money flowing into life annuities doubled and year-on-year that<br />

trend continues to increase.<br />

People are starting to appreciate their guaranteed nature and<br />

the passing-off of inflation, investment and longevity risk to an<br />

insurer rather than keeping all the risk themselves.<br />

Wouter mentioned the returns on life annuities. In the<br />

current environment, you can lock into between 9% and 12%<br />

per year at the level of income that you are guaranteed to receive<br />

depending on your type of income.<br />

There are lots of options in terms of ensuring that you<br />

get an income for yourself or your partner and locking into<br />

increases talks quite nicely to the CPI risk we mentioned<br />

previously. CPI annuities tend to be a little more expensive<br />

but fixed increases, where you lock into an income that<br />

increases by for example, 5% every year, can provide<br />

valuable security.<br />

And I agree 100% with Tom and Wouter that the advent<br />

of the hybrid annuity is special because previously we saw a<br />

situation in the market where the choice was between a living<br />

annuity and taking on all the risk or a life annuity where clients<br />

did not keep any of the upside potential.<br />

Now we are starting to blend these in a way that makes<br />

sense for each individual client, and I think it is quite powerful.<br />

The hybrid annuities are being offered now at Momentum<br />

Investments – including to existing living annuity clients.<br />

IJ: Fareeya, please discuss the use of retirement annuities,<br />

tax-free investments and endowments and how they can<br />

benefit an individual. Let’s use a high-net-worth individual<br />

who is saving towards retirement and has a higher tax rate<br />

as an example.<br />

FA: Retirement annuities are a good tax-efficient vehicle<br />

for all tax brackets because there is a tax deductibility on<br />

contributions. All the growth inside of the retirement annuity<br />

is tax free.<br />

If you consider that you invest for about 20 to 30 years in both<br />

the pre-retirement and the post-retirement periods, the benefit<br />

can be substantial. When you convert the money to an income<br />

at retirement, you pay tax at your marginal tax rate.<br />

Another one that I think is very interesting is the tax-free<br />

investment, also referred to as the tax-free savings account. It<br />

is limited, so the total yearly contribution in a tax year may not<br />

exceed R36 000, while the total lifetime contribution may not<br />

exceed R500 000. However, the tax-free nature of the investment<br />

growth is not limited in total. The longer you stay invested, the<br />

more you can benefit.<br />

This makes it very suitable for retirement provision. If you<br />

withdraw from a tax-free investment, you cannot put that money<br />

back in to the investment. Once you have used your R36 000 per<br />

year it is gone so ideally you shouldn’t be withdrawing from it.<br />

You should deposit it into a tax-free investment and leave it for<br />

the longer term.<br />

The tax rate for endowments is 30% but here is where it is<br />

suitable for a high-net-worth individual because the maximum<br />

tax rate on individuals is 45%, which is quite a big saving that<br />

you make.<br />

The first five years of an endowment are restricted but thereafter<br />

there is flexibility in accessing the money or adding more money<br />

when you need to and so definitely for high-net-worth individuals,<br />

the endowment should be considered as an opportunity.<br />

IJ: If a 35-year-old family member approached you for your<br />

pearl of wisdom regarding retirement, what would you advise<br />

them in terms of the next 30 years as they approach retirement?<br />

WF: Number one, start with the end in mind. I would also add that<br />

steady plodding not hasty speculation brings prosperity.<br />

TB: Empower yourself now, empower yourself and be proactive.<br />

No-one is going to hand you a detailed, bespoke financial life<br />

plan without you taking the steps to understand what the plan<br />

means for yourself. Speak to people, read and engage with<br />

a professional that makes you feel comfortable that they are<br />

going to help you.<br />

If you empower yourself, you<br />

become aware. You can make<br />

the decisions now and over time<br />

they will provide the life, the<br />

independence or whatever your<br />

objective is. So, start now and<br />

empower yourself.<br />

FA: There will come a point<br />

in your life where you will be<br />

responsible for paying yourself<br />

a salary so start to plan for that<br />

today and plan consistently until<br />

the day comes. <br />

Scan the QR code to watch the<br />

full Retirement Planning Round<br />

Table online.<br />

www.bluechipdigital.co.za<br />

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FINANCIAL PLANNING | Retirement<br />

A CATALYST FOR POSITIVE CHANGE<br />

The Institute of Retirement Funds Africa is an association that represents and promotes the<br />

interests of the retirement industry in South Africa and across the continent to the ultimate<br />

benefit of the members of retirement funds. <strong>Blue</strong> <strong>Chip</strong> spoke to chairperson, Geraldine Fowler.<br />

Geraldine, please tell us about your career trajectory.<br />

Having been involved in the retirement sector for over 28 years,<br />

I have always been aware of the role the sector plays in societal<br />

prosperity and transformation. I am passionate about gender<br />

equity, impact investment and socio-economic contribution;<br />

all areas where active involvement by the sector make a huge<br />

difference. Thus the privilege of leading the country’s foremost<br />

industry body is a role I accepted with gratitude and pride.<br />

Please provide a brief history of the Institute of Retirement<br />

Funds Africa (IRFA).<br />

IRFA was established in 1987, succeeding its predecessor, the<br />

Association of Pension and Provident Funds, which was founded<br />

in 1947. As such, and in terms of its governing statement, it has<br />

a long history of “protecting, promoting and advancing the<br />

interests of pension, provident, retirement annuity and similar<br />

funds, their trustees, members and persons associated with such<br />

funds in Southern Africa”.<br />

IRFA’s activities are undertaken by a number of standing<br />

committees who meet on a regular basis to find innovative<br />

ways of overcoming problems in our industry, to promote<br />

communication and provide ongoing advocacy for the sector.<br />

Both committee and board members serve on a voluntary<br />

basis and are drawn from leading thought leaders and subject<br />

matter experts in the industry.<br />

What is IRFA’s vision and mission?<br />

Our vision is to be the leading catalyst for positive change in the<br />

retirement sector across Africa, fostering a future where every<br />

individual enjoys a secure and prosperous retirement.<br />

Our mission is to represent and promote the interests of the<br />

retirement industry in South Africa and the African continent,<br />

advocating for favourable policies, providing comprehensive<br />

training programmes, fostering collaboration among industry<br />

professionals and championing sustainable development goals<br />

(SDGs) for a better world through the retirement sector.<br />

What are IRFA’s objectives?<br />

The essential mandate of any industry body is to provide its<br />

members and the sector it serves with the knowledge and<br />

resources needed to make informed decisions for the benefit of<br />

all constituents. Nowhere is this as important as in the financial and<br />

retirement sector where these decisions impact on society at large.<br />

Our broad-based goals include:<br />

• Making a positive impact on fund governance<br />

• Enhancing fiduciary responsibility and board accountability<br />

• Promoting the best practices in member service, education,<br />

benchmarking and compliance<br />

• Ensuring investment in our future<br />

• Vigorous engagement<br />

• Building a sustainable social legacy<br />

• To become “the” voice in the industry<br />

• Championing equity and respect for diversity<br />

• Staff, member and association growth<br />

• Supporting ESG<br />

• Focused and measurable action<br />

IRFA has developed its organisational profile and chosen specific<br />

SDGs to create a compelling narrative that elicits connection<br />

and collaboration with and from its stakeholders. These SDGs<br />

have been chosen to:<br />

• Create a compelling narrative<br />

• IRFA aims to communicate its purpose, values and impact in<br />

an engaging manner, enabling the audience to understand the<br />

significance of IRFA’s work and motivate it to become part of<br />

our mission<br />

• Evoke an emotional response and connection<br />

• Address key challenges<br />

The selected SDGs reflect the critical challenges faced by the<br />

retirement sector and society as a whole. By championing<br />

these goals, IRFA acknowledges the importance of addressing<br />

issues such as poverty in old age, gender inequality in pension<br />

systems, access to quality education for sector professionals<br />

and the overall wellbeing of retirees. This demonstrates<br />

IRFA’s understanding of the complex issues at hand and its<br />

determination to make a tangible difference. As a responsible<br />

and forward-thinking entity and by aligning with globally<br />

recognised goals, IRFA will showcase its commitment to<br />

contributing to broader sustainable development efforts.<br />

Would you like to add anything?<br />

I certainly would, an invitation to both individuals and organisations<br />

to join IRFA's community and become part of a collective effort to<br />

shape a better future for retirement funds, members and society at<br />

large, thereby harnessing the power of unity,<br />

collaboration and collective impact. <br />

BIOGRAPHY<br />

Geraldine Fowler is also the<br />

founding Director and CEO of GQM<br />

Fund Administrators. She has held<br />

senior positions with Private Fund<br />

Administration and Consulting Houses.<br />

She holds academic qualifications in<br />

insurance, business studies, financial<br />

planning and writing.<br />

Geraldine Fowler,<br />

President and Executive<br />

Board Member, IRFA


BLUE<br />

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FINANCIAL PLANNING | Retirement<br />

The fundamental need for<br />

health and behaviour modelling<br />

in retirement planning<br />

In 2022, Discovery Group announced the launch of Cogence, a discretionary fund manager<br />

seeking to significantly enhance the business of wealth creation in South Africa.<br />

Uniquely, Cogence combines the investment<br />

expertise of BlackRock, one of the world’s leading<br />

asset managers, with personalised health data<br />

from Discovery, which operates the world’s largest<br />

behavioural change programme.<br />

It offers model portfolio solutions built upon BlackRock’s<br />

asset allocation views and integrates Vitality’s data and analytics,<br />

all supported by industry-leading portfolio analytics and risk<br />

management technology, Aladdin Wealth.<br />

Through this merging of technology and investment<br />

expertise, Cogence is not only the first truly global<br />

discretionary fund manager (DFM) in South Africa, but the<br />

first DFM globally to add a layer of personalised health and<br />

longevity insight to essentially map out every aspect of an<br />

individual’s financial plan. These metrics consider how long<br />

you will live, how healthy you will be, how much money you<br />

need and, importantly, they support financial advisors in<br />

making recommendations to their clients.<br />

It’s an innovative solution designed to help tackle one of<br />

the greatest socio-economic challenges in our society. It is well<br />

known that South Africa has a well-documented and alarming<br />

retirement savings shortfall. More than 90% of people are<br />

unable to afford retirement, meaning that they rely on their<br />

families, communities or the state to survive.<br />

With this gap having remained stubbornly persistent, it is<br />

evident that change is required to help people achieve financial<br />

health during their life after work. But, what does physical<br />

health have to do with financial wellbeing in retirement?<br />

Adrian Gore, CEO, Discovery<br />

A multi-dimensional approach to retirement<br />

It goes without saying that the better the growth of an<br />

investment portfolio, the better the financial outcome for the<br />

individual investor at retirement. But returns are less than half<br />

the picture. “Simply put, the fact is we try to save money to make<br />

sure that at retirement, we have enough compared to our preretirement<br />

savings,” says Discovery CEO Adrian Gore.<br />

52 www.bluechipdigital.co.za


www.cogence.co.za<br />

“In calculating the replacement ratio, we need to consider<br />

the amount of money you have saved, its investment growth,<br />

divided by life expectancy. That determines what you have per<br />

year or per month to live on,” he explains. Gore illustrates this<br />

point by describing how a mere 1% retardation of expected<br />

investment returns reduced a 40-year-old saver’s replacement<br />

ratio at a retirement age of 65 years from roughly 80% to 60%.<br />

A replacement ratio is a basic measure of retirement-income<br />

adequacy equivalent to the ratio of pension entitlement to<br />

lifetime gross earnings.<br />

A 2020 study1 reported the replacement ratio in South Africa<br />

for individuals with “average” earnings to be just 19% – well<br />

below the mean of 59% for OECD countries. In its calculation,<br />

the same study considered pension income to last earnings for<br />

full career workers and assuming individual earnings grow in<br />

line with average earnings but did note considerable differences<br />

between pension systems globally.<br />

This dramatic swing in the adequacy of retirement savings<br />

due to a small change in expected returns, demonstrates a<br />

high degree of elasticity – the extent to which changes in one<br />

Source: Discovery internal analysis (June 2022).<br />

It’s an innovative solution<br />

designed to help tackle one of<br />

the greatest socio-economic<br />

challenges in our society.<br />

variable will cause changes in another. However, “the real<br />

point here is that replacement ratios are often more elastic<br />

to these behavioural and longevity risks, than investment<br />

returns,” says Gore.<br />

By the same analysis of elasticity, a 20% reduction of a<br />

40-year-old’s contribution rate could see her replacement<br />

ratio drop from 70% to around 50% at retirement, while living<br />

beyond 75 can dramatically reduce the amount of money<br />

available for each extra year. (See the illustration on the left.)<br />

Gore contends that in traditional models for retirement<br />

advice, what is often underappreciated are these behavioural<br />

risks – how much you save – and longevity risks – how your<br />

physical condition and behaviours impact how long you will<br />

live, and how much of that time you are expected to be healthy.<br />

With this in mind, “Guiding people, nudging them and<br />

incentivising them to make sure that they understand these<br />

aspects is just as important as chasing investment returns,”<br />

says Gore. A multi-dimensional approach to retirement<br />

savings extends beyond concerns about costs and returns to<br />

consider behavioural and demographic factors that are critical<br />

in achieving an optimal retirement outcome.<br />

These might include failing to anticipate the impact of<br />

living for longer, and the associated medical costs, as well<br />

as behavioural issues such as saving too little and too late,<br />

withdrawing from those savings early or withdrawing too<br />

much in retirement.<br />

The first DFM offering holistic health and behavioural insights<br />

Supported by Aladdin Wealth, BlackRock’s industry-leading<br />

investment and risk technology platform, and Vitality<br />

insights and data, Cogence is the world’s first discretionary<br />

fund manager that fully models retirement solutions, taking<br />

health experience into account. In so doing, Cogence moves<br />

beyond the conventional approach of considering primarily<br />

investment outcomes – finding the best returns – to factor for<br />

issues relating to behaviour and longevity.<br />

“With lifespans extending, clients need the financial means<br />

to retire comfortably and withdraw income at a sustainable<br />

income level; and most importantly, also the good health to<br />

ensure they can enjoy it,” Gore concludes. <br />

Cogence (Pty) Ltd - Registration 2009/011658/07. An authorised financial services provider.<br />

[1] Credit Suisse Research Institute, “Rethinking Retirement.” Davos Edition (2020).<br />

www.bluechipdigital.co.za<br />

53


BLUE<br />

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INVESTMENT | Economy<br />

Time for SA consumers to<br />

tighten belts and avoid debt<br />

The recent increase in the repo rate, combined with steep increases in fuel and energy prices, points to a torrid<br />

ime ahead for South African consumers – but the short-term discomfort should pay off in the long term,<br />

says employee benefits advisor firm NMG Benefits.<br />

It sounds counter-intuitive to ordinary<br />

consumers struggling to balance<br />

their budgets, but the recent series<br />

of increases in the repo rate are<br />

designed to keep inflation at bay in the<br />

broader economy, says NMG’s Head of<br />

Investments, Raazia Ganie.<br />

While consumers will be constrained<br />

for now, the longer-term effect is that<br />

they end up spending less. In theory,<br />

this means demand for goods goes<br />

down and prices are brought back in<br />

line in response to supply and demand<br />

principles. Now, however, external<br />

Raazia Ganie, Head of factors like the Russia/Ukraine war mean<br />

Investments, NMG Benefits the normal tools that the central bank<br />

uses to manage inflation – in the form of<br />

monetary policies – may not be as effective.<br />

One of the immediate effects of the cycle of increasing<br />

interest rates is that households that have debt will now have<br />

higher debt repayments to make. This raises the risk that highly<br />

indebted consumers will start defaulting on their debts. The<br />

flip side is that those who have excess funds will save more, as<br />

they will earn more interest on their savings.<br />

“Right now, our advice to all consumers is that they<br />

should aim to pay off their debts as quickly as possible – and<br />

where they are in difficulty, they should seek help and debt<br />

counselling immediately. They should also avoid taking on new<br />

debt, or even worse, taking on additional debt to pay off debt,<br />

as this will lead to a slippery slope which will be hard to recover<br />

from,” says Ganie.<br />

The current economic climate is particularly worrying for<br />

those nearing retirement. The five years before and after<br />

retirement are often referred to as the “fragile decade”, as<br />

any economic setbacks could have a significant impact on<br />

a consumer’s retirement funds and their ability to make up<br />

for any market losses in their portfolios. If they have already<br />

started drawing on their retirement funds, the withdrawals<br />

and the tough market could deplete their funds account faster<br />

than planned.<br />

“If you are approaching or already in retirement, this may<br />

be a good time to reach out to your financial advisor to revisit<br />

and reassess your retirement plan,” advised Ganie. “Those<br />

who are five years or more from retirement should remain<br />

invested but consult their advisors to get a holistic view of<br />

their commitments and assets and work out the best strategy<br />

for their circumstances. This is not the time for hasty decisions:<br />

knee-jerk reactions during times of market turmoil usually lead<br />

to sub-optimal outcomes.”<br />

One bright spot in the turmoil is that retirement funds<br />

are now compelled to allow members to leave their assets in<br />

the fund after they retire or resign. This offers members who<br />

have the means to do so the opportunity to benefit from the<br />

lower institutional fees offered by retirement funds while their<br />

investments recover from the current volatility.<br />

The increased interest rates will also hit local businesses<br />

hard, as they could find it harder to obtain or service loans,<br />

which could limit their growth. As is the case with consumers,<br />

though, businesses with excess cash will benefit from putting<br />

their money in higher yielding investments.<br />

For investors, the effects of the interest rate hikes vary.<br />

Most investors will have diversified holdings of instruments<br />

across multiple asset classes such as equities, bonds cash and<br />

property – all of which would react differently to the interest<br />

rate changes.<br />

“Markets are volatile now, with the Ukraine conflict, global<br />

interest rate hikes and higher inflation causing uncertainty.<br />

During times of market turbulence, it is best to stay the course<br />

and not make any impulsive changes due to market movements.<br />

Your professional portfolio managers will continue to evaluate<br />

the opportunities on your behalf and make changes as these<br />

become available,” says Ganie.<br />

Banks are generally among the businesses which benefit<br />

the most from higher interest rates, while companies investing<br />

in luxury goods may struggle as consumers cut back on<br />

discretionary spending. Goods with inelastic demand, usually<br />

staples, will continue to see regular demand levels, says Ganie.<br />

“However, this is under normal circumstances. Right now,<br />

the world is essentially being held to ransom for food and<br />

energy. Essential inputs into many staple foods have seen<br />

significant price increases, which are being passed on to<br />

consumers. This becomes a vicious cycle as consumers are<br />

already highly indebted and struggling to keep their heads<br />

above water,” concludes Ganie. “Hopefully, as the situation in<br />

Ukraine normalises, we will see relief for consumers, but when<br />

this may occur remains highly uncertain.” <br />

54 www.bluechipdigital.co.za


FINANCIAL PLANNING | Benefits<br />

BLUE<br />

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Medical aid 101: don’t let the rising<br />

healthcare costs hold you back<br />

If you’re one of the 16 out of 100 South Africans who have medical aid, you’ll know that the cost of private healthcare<br />

is rising fast. That’s why it is critical to understand the benefits you are entitled to, says Gary Feldman,<br />

Executive Head of Healthcare Consulting at NMG Benefits.<br />

Here are the 11 essential factors that every member of a medical<br />

aid should know:<br />

Benefits are reviewed and updated annually<br />

Find out when your medical aid updates its benefits and revises<br />

its premiums and review them to ensure that you’re not caught<br />

off-guard when it comes to claiming. Your medical scheme<br />

should send you an updated benefit schedule as soon as changes<br />

are implemented.<br />

Know how above-threshold benefits work<br />

An above-threshold benefit is like a safety net. Once you deplete<br />

your medical savings account, you enter the self-payment gap,<br />

where you are liable for the costs of medical care out of your own<br />

pocket. Once you have reached the end of the self-payment gap,<br />

your above-threshold benefit kicks in. “You must submit every<br />

healthcare invoice to your medical scheme so they can keep track<br />

of when you reach the above-threshold benefit,” says Feldman.<br />

Key things to look out for that differ between medical schemes<br />

and plans: doctors and providers may only be paid at medical aid<br />

rates; medication may only be covered if you opt for generics<br />

and medication on the medical aid’s formulary; there may be<br />

sub-limits on benefits like optometry or dentistry; there may be<br />

co-payments that cannot be claimed from the above-threshold<br />

benefit and be aware of the services, treatments and medicines<br />

that are commonly excluded.<br />

Know the late-joiner penalties and waiting periods<br />

Medical schemes can apply late-joiner penalties if the member joins<br />

after the age of 35 or if they haven’t belonged to a medical aid for a<br />

specified period of time. There are also waiting periods for existing<br />

conditions. These penalties and waiting periods are not standard,<br />

so talk to a broker to see which medical scheme will best suit your<br />

and your family’s needs.<br />

If you’re healthy, look at a medical savings account<br />

In a scheme with a medical savings account, any remaining funds<br />

must be carried over into the new year. This means you can build<br />

your up medical savings account if you are in good health and don’t<br />

claim often. If you have a traditional medical aid, nothing is carried<br />

over. So, choose carefully between a traditional medical aid or a<br />

new-generation product that includes a savings account.<br />

Your savings account money belongs to you<br />

Wherever possible, the money in your savings account must<br />

be transferred to your new medical aid. If you move from a<br />

new-generation product to a hospital, traditional or network plan,<br />

the balance in your savings account must be paid out to you.<br />

Know the difference between medical aid and health insurance<br />

With medical aids getting increasingly more expensive, many<br />

people are opting for health insurance instead. These two<br />

products are not the same. The benefits you get from a medical<br />

scheme are more comprehensive, as they must cover a specified<br />

list of prescribed minimum benefits. Medical aid contributions<br />

qualify for a tax credit, while health insurance premiums don’t<br />

qualify for a tax credit, says Feldman.<br />

Know your prescribed minimum benefits<br />

Take the time to study your benefit schedule if you have a condition<br />

that is covered by the prescribed minimum benefits. You may find<br />

that certain blood tests or consultations, for example, are covered.<br />

Many people under-utilise these important benefits, says Feldman.<br />

Know your scheme’s exclusions and limits<br />

An exclusion is a medical procedure that is not covered by medical<br />

aid, such as self-inflicted injuries or cosmetic surgery. Limits are also<br />

applied to benefits such as dentistry and optometry. Review your<br />

exclusions and limits in against your own overall personal health<br />

status and needs.<br />

Network plans offer cost-effective options<br />

Some of the more cost-effective medical schemes have a predefined<br />

list of doctors and hospitals that members must use. If you use a<br />

provider outside of this list, you will be liable for the costs. Find out<br />

when you are allowed to go outside the network, so that you don’t<br />

incur unnecessary costs.<br />

Gap cover protects your cashflow<br />

Medical aid rates can be lower than the rates<br />

that specialists charge. Gap cover is a short-term<br />

insurance product that covers the costs of certain<br />

unforeseen hospital procedures. “It is a real value-add<br />

and is cost-effective – especially considering the<br />

peace of mind you it will give you,” says Feldman.<br />

Get free advice from medical aid brokers<br />

If you join a broker-recommended medical aid, you<br />

won’t pay for advice. This is because the medical aid<br />

pays the broker a regulated commission. Brokers<br />

know the products well and can help you choose the<br />

best plan for your unique health needs.<br />

Gary Feldman,<br />

Executive Head of<br />

Healthcare Consulting,<br />

NMG Benefits


BLUE<br />

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CLIENT ENGAGEMENT | Coaching<br />

Retirement coaching:<br />

adding value to your practice<br />

When the prospect of full-time retirement looms, your clients will suddenly have many<br />

hours of free time to do all those things that they dreamed of during their working life.<br />

For some the abrupt transition from a fast-paced life<br />

to retirement can be very overwhelming. Although<br />

they can plan for a specific retirement date, it’s not<br />

always in your clients’ control when they must leave<br />

the workforce. Most people plan to relax more and spend<br />

more time on things they truly want to do. Unfortunately,<br />

for many retirees, this turns out to be a daunting and even<br />

frightening transition.<br />

We are often so focused on the financial aspect of retirement<br />

that we neglect the numerous other effects and stresses, both<br />

emotional and psychological, as well as the health challenges<br />

of this new chapter. Financial security does not necessarily lead<br />

to happiness in retirement, as money does not always give<br />

meaning to clients’ lives. It is important to assist them to live<br />

their best possible lives in retirement. This can only be done<br />

by changing the way they think and prepare for retirement.<br />

Many retirees without a clear plan for retirement feel depressed<br />

because they are losing their identity and sense of purpose. A<br />

retirement coach can help them find a new identity and navigate<br />

their golden years. People are often defined by what they do and<br />

when that is no longer there, they suddenly experience a lack of<br />

purpose. There are also relationship shifts at home and social<br />

structure changes. Therefore, they often feel a sense of mortality<br />

and lack clarity and focus.<br />

So, how can we help our clients manage their retirement as well<br />

as other life transitions with ease?<br />

• Help clients map their money to their goals.<br />

• Distinguish between expenses and goals.<br />

• Clients can relate more to the life they want during retirement<br />

than to the actual amount they need. Their dreams, goals and<br />

aspirations give meaning to their lives and a sense of purpose.<br />

We need to help clients unpack them in detail.<br />

56 www.bluechipdigital.co.za


CLIENT ENGAGEMENT | Coaching<br />

BLUE<br />

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A retirement coach can help<br />

them find a new identity and<br />

navigate their golden years.<br />

Stephan le Roux, CFP®,<br />

Financial Planning Coach,<br />

Old Mutual Wealth<br />

• Through coaching, we can help clients explore and bring<br />

their desires into the light. Plan for the person and not just the<br />

financial aspect.<br />

• Understand the client’s values and guiding principles and<br />

what drives them. Help them reconnect with their core<br />

values and develop an action plan to foster behaviour that<br />

supports them.<br />

• Retirement often magnifies problems we already face, like an<br />

unhealthy lifestyle or bad habits. Help your clients to facilitate<br />

lifestyle changes and habits.<br />

People do not normally find happiness in material things.<br />

We find happiness in close relationships, engaging work and<br />

meaningful experiences. Coaching can help clients explore<br />

these different elements in their lives and help them find<br />

clarity and focus.<br />

Coaching will show your clients how to embrace this next<br />

stage of life. With your guidance, they can achieve their full<br />

potential and find fulfilment. Retirement coaching focuses on<br />

the challenges and opportunities of retirement. It helps clients to<br />

find a sense of purpose and identify what is important to them.<br />

It also helps them to understand the importance of planning for<br />

the mental, social, physical and spiritual aspects of retirement<br />

and how each area is integrated into the financial aspects. With<br />

a sense of purpose in retirement, people can live longer, happier<br />

and more enjoyable lives. By having meaningful conversations<br />

with your clients, you can add even greater value and shift the<br />

focus from just the financial aspect of retirement to unlocking<br />

their full potential. Partner with a qualified coach to help in your<br />

practice or choose to add coaching to the services you offer your<br />

clients. The coaching journey will give your clients direction and<br />

help them in finding their vision and purpose in retirement. <br />

www.bluechipdigital.co.za<br />

57


BLUE<br />

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INVESTMENT | Behavioural finance<br />

The real significance of the number<br />

“93.6%” for financial planners<br />

Asset allocation – the key determinant of investment returns?<br />

In 1986 Brinson, Hood and Beebower (BHB) shook the<br />

financial advice and investment industries to their roots<br />

with its finding that a portfolio’s asset allocation had the<br />

greatest impact on the variability of returns of a portfolio.<br />

BHB studied the performance of 91 large US pension plans over<br />

the 1974-1983 period and concluded that “investment policy<br />

dominates investment strategy (market timing and security<br />

selection), explaining an average 93.6% of the variation in<br />

total plan returns”. Suddenly the notion of a great “stock pick”<br />

was questioned. If true, all the talking heads on Bloomberg TV<br />

and CNBC would have less to talk about. After all, does it really<br />

matter what happened to Apple’s share price yesterday when<br />

all you should worry about is whether you have an appropriate<br />

exposure to equities?<br />

The controversial nature of the findings of the BHB research<br />

led to Brinson, Singer and Beebower (BSB) redoing the study<br />

in 1991 to test the veracity of their initial findings. With the<br />

wisdom of hindsight, we may not be surprised that the 1991<br />

study reaffirmed the 1986 study, although this time the number<br />

was down to 91%. Still a hefty indicator of what’s important<br />

when putting a client’s investment portfolio together. This<br />

did not appease critics of the 93.6% thesis. In 1997, William W<br />

Jahnke wrote what the Journal of Financial Planning described<br />

on the 25th anniversary of the publication as “without question,<br />

the most controversial article ever to appear in the journal”.<br />

In the article entitled, “The Asset Allocation Hoax”, Jahnke<br />

raised concerns that the BHB study focused only on the<br />

variability of returns, and measured quarterly returns, rather<br />

58 www.bluechipdigital.co.za


INVESTMENT | Behavioural finance<br />

BLUE<br />

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Some biases which may seem negative,<br />

can have positive influences.<br />

than focusing on full-term actual returns. He also raised other<br />

methodological issues, such as the sample was only institutional<br />

investors and they measured variability rather than standard<br />

deviation and did not take costs into account. But arguably<br />

his biggest gripe was that the study undermined the value of<br />

tactical asset allocation and implied a fixed asset allocation<br />

would see investors through to their goals.<br />

Despite Jahnke’s concerns, he concludes his article by<br />

saying: “There is little doubt that asset allocation is an<br />

important determinant of portfolio performance. However,<br />

such agreement does not settle the issue of how to do it. What<br />

are the appropriate asset classes? Should asset class weights be<br />

fixed or dynamic? How should asset allocation be determined?<br />

What about the cost of implementation?” Some might say his<br />

response is a storm in a teacup because these are obviously key<br />

questions to consider when putting client portfolios together.<br />

The more important question to consider for financial planners,<br />

is what is the real significance of the 93.6% thesis? The answer<br />

to this question may not be what you think, but first a little<br />

more context.<br />

Investment returns – more dependent on investor behaviour?<br />

Since 1984, independent investment research firm Dalbar<br />

Inc. has published its annual Quantitative Analysis of Investor<br />

Behaviour report, which studies the returns that investors get<br />

versus the returns of their investments. The study consistently<br />

finds investor returns are materially lower than their investments.<br />

The gap between the two is often referred to as the investor<br />

“behaviour penalty” which according to the 2022 Dalbar study,<br />

was 3.5% per annum over the last 30 years. In the short term,<br />

the gap can be higher, as in 2021 when the number was closer<br />

to 10%. No surprise given the uncertainty and stress that many<br />

clients experienced during the Covid pandemic.<br />

The 2022 edition of the Dalbar report concludes that<br />

investment results are more dependent on investor behaviour<br />

than fund performance. This is not a new conclusion. The 2015<br />

report made the same point and observed that this is the case<br />

“no matter what the state of the mutual fund industry, boom or<br />

bust”. It went on to note that: “After decades of analysing investor<br />

behaviour in good times and in bad times and after enormous<br />

efforts by thousands of industry experts to educate millions of<br />

investors… imprudent action continues to be widespread.”<br />

Investor education – what stops it from working?<br />

This begs the question, why does behaviour not improve with<br />

financial education? One reason behaviour doesn’t improve<br />

is because the focus of the education is so often on the<br />

investments, not on the investor. Unfortunately, learning about<br />

how an equity is valued or what a unit trust is, or telling us that<br />

we should buy low and sell high doesn’t influence behaviour.<br />

It assumes that as human beings we make decisions with our<br />

heads. That we are cognitive and rational beings. This is not the<br />

case. We do have cognitive influences on our decision-making,<br />

but not always in the way that one would expect. Daniel<br />

Kahneman highlights in his book Thinking Fast and Slow that<br />

even cognitive-based decisions can be flawed. We also have<br />

emotional influences on our decision-making; the impact of<br />

greed and fear on investor behaviour is well documented. The<br />

cognitive and emotional mistakes we make are compounded<br />

by the fact that we are social beings, and as a result are<br />

unduly influenced by those around us. Hence, the widespread<br />

phenomenon of herding in investment markets.<br />

The industry has spent a vast amount of money and time<br />

trying to educate clients both locally and globally; we now<br />

have insights into human behaviour to the extent that we<br />

can discern the minutiae between the hundreds of cognitive,<br />

emotional and social biases we all fall foul of. In addition,<br />

two Nobel Prizes for Economics have been awarded in the<br />

first 20 years of the 21st century for the advanced work done<br />

by specialists in Behavioural Economics. Despite all this, the<br />

Dalbar study repeatedly shows how investors make the same<br />

mistakes repeatedly, and in so doing, undermine their longterm<br />

financial outcomes.<br />

Investor behaviour – what does influence it?<br />

Given the multiple influences on our behaviour when it comes<br />

to investments, simply being educated about investments,<br />

and asking us to behave well doesn’t work. The key is to find<br />

ways to influence the person and their relationship with their<br />

investments. A classic behavioural example of what it means<br />

to not rely on education to shift behaviour, but to focus on the<br />

relationship a person has with a problem was highlighted by<br />

the story of Schiphol Airport in Amsterdam and its attempts<br />

to solve the problem of too much spillage at the urinals in the<br />

men’s toilets. Initially, attempts were made to solve this problem<br />

through the display of posters requesting users of the urinals<br />

to be aware of the problem, asking them not to perpetuate it,<br />

given the health risks it posed. These attempts at education<br />

failed. Cognitively the users of the toilets understood the<br />

problem, but this understanding did not lead to a behaviour shift.<br />

The problem was eventually solved when a real-life image of a fly<br />

was painted onto each urinal bowl. The men now had a target to<br />

aim at which nudged their behaviour into the right direction. The<br />

spillage problem was solved virtually overnight. The men did not<br />

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INVESTMENT | Behavioural finance<br />

have to think about the education they had received about the<br />

problem, they had been nudged into an instinctive action which<br />

solved the problem.<br />

In a sense the investment industry has faced the Schiphol<br />

problem for some time. It has tried to use education without<br />

great success but has also used nudges that have proven more<br />

effective. One of the most effective nudges that is used to<br />

influence investor behaviour is automatic contributions to a<br />

savings or investment vehicle, like a retirement fund. Investors<br />

don’t have to consciously think about investing, or consider<br />

the merits of doing it, it happens automatically once they are<br />

enrolled in such a savings or investment programme.<br />

This brings us back to asset allocation. A client’s strategic<br />

asset allocation is a nudge. It’s the fly in the client’s investment<br />

strategy if you will. But nudges are not failsafe. In the past I have<br />

worked with colleagues who resigned to enable them to access<br />

a portion of their company retirement fund savings. Human<br />

beings are resourceful. They will find ways to do things even if<br />

they are not in their own best interests. So, it’s not always easy<br />

to implement a nudge with clients. Sometimes you must accept<br />

that they will be at the vagaries of the cognitive, emotional and<br />

social forces at play which impact their financial and investment<br />

decision-making. The reality is that there are literally hundreds<br />

of human biases that emerge from these forces, and they don’t<br />

only influence our decision-making around money, but in all<br />

spheres of life.<br />

As a result, we have seen a proliferation of tools and<br />

techniques to help financial planners identify client biases and<br />

counteract them in some way. There may be some merit to this<br />

but given the number of biases we can fall foul of it is risky<br />

to think that you as a financial planner will be able to analyse<br />

whatever biases clients present to you and find ways to shift<br />

their behaviour through this knowledge. It is also important<br />

to say that some biases which may seem negative can have<br />

positive influences. For example, the status quo bias explains<br />

why human beings struggle so much with change because we<br />

tend to prefer to keep things the way they are. This bias has a<br />

positive spinoff, as it enables automatic enrolment in savings<br />

plans to work, because once enrolled, thanks to the status quo<br />

bias, we stay enrolled.<br />

The 93.6% thesis – how can it help us solve the problem of<br />

investor behaviour?<br />

Behavourial economist Meir Statman commented on the BHB<br />

findings by saying, “Good strategic asset allocation is like<br />

tailoring a well-fitting suit. Good tactical asset allocation and<br />

security selection is like weaving the suit’s fabric at a low cost.<br />

Both are important but they are distinct. High-quality fabric<br />

woven at a low cost provides little comfort when it drapes a size<br />

40 body in a size 46 suit.”<br />

If you have ever had a suit or any outfit made, you will know<br />

that after the initial measurements, style and fabric selection,<br />

a few more visits to the tailor are likely before you are happy<br />

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with the fit. Seldom does an off-the-shelf suit fit without<br />

alteration, and even one made from bespoke measurements<br />

requires the same.<br />

During my one and only experience of this process, I was<br />

not interested in how the alterations were being made, what<br />

stitches or cuts were being done, I just wanted a suit that<br />

was comfortable to wear. When we were doing the fitting, the<br />

tailor’s focus was always on me, getting me to look into the<br />

mirror as well as repeatedly asking me how the suit fit “feels”.<br />

Statman observes from the BHB research that, “Financial<br />

advisors are tailors more than they are weavers; they are<br />

investor managers more than they are investment managers.”<br />

If a financial planner is a client’s tailor, then the strategic<br />

asset allocation and by extension the client’s full financial plan<br />

needs to fit not only the client’s wallet but their life as well.<br />

Holding up a mirror for a client and helping them determine<br />

how they feel about the fit of their life and money is, as<br />

Statman says, the work of the investor manager. The skillset<br />

of such a professional is different from, and dare I say, far<br />

more complicated than the work of the investment manager.<br />

Cutting, trimming and sewing an inanimate object is far easier<br />

than trying to help someone make decisions who can’t simply<br />

look into the mirror and know the answer, but still has to deal<br />

with the cognitive, emotional and social influences that come<br />

with being human.<br />

The challenge, Statman points out, is that “investors see<br />

more value in weaving than in tailoring. They are more willing<br />

to pay for investment management, with its focus on beating<br />

the market, than for investor management, with its focus on<br />

the examination of financial resources and goals, diagnosis of<br />

deficiencies, and financial education and care.” A challenge<br />

that many financial planners face is themselves believing in the<br />

value of investor management. To this end, I think Statman’s<br />

analogy of the tailor and weaver does not do justice to the<br />

complexity and value of the role of the financial planner.<br />

Being an investor manager – what does it involve?<br />

The tailor role mirrors the non-negotiable technical role that<br />

every financial planner must play. Nobody wants to visit a<br />

doctor who is not clinically qualified. But in addition to the<br />

mantle of the tailor, I believe the financial planner plays three<br />

critical roles. As a client’s thinking partner, you help them to<br />

decide what outfit they actually want or need. The client may<br />

arrive thinking they need a suit but after working with you as<br />

their thinking partner they may realise they need a shirt and<br />

a pair of trousers instead.<br />

The second role of the financial planner is as choice<br />

architect, helping the client decide what type of shirt, what<br />

type of trousers? And once that decision is made, the outfit can<br />

be tailored and fitted. But it is in this process that the financial<br />

planner plays the third role of behavioural coach, ensuring that<br />

once the client agrees that the outfit fits, that they continue to<br />

wear it and don’t discard it without good cause.<br />

The third role ensures that clients don’t change their suits<br />

for the wrong reason. The suit might not feel like it fits as well<br />

because the client has put on weight, not because there is a<br />

problem with the suit, which may be what the client thinks.<br />

Here the work of the financial planner is far more challenging,<br />

as to appease a client it would be much easier to just change<br />

their suit. But this would not be fulfilling one’s duties as an<br />

investor manager and would not be helping us to break the<br />

pattern of behaviour that the Dalbar research consistently<br />

reveals. Vanguard estimates behavourial coaching is worth<br />

1.5% pa of alpha to a client’s portfolio. Arguably the value-add<br />

of behavioural coaching is wherever the Dalbar investor<br />

“behaviour penalty” sits; currently the long-term average is<br />

at 3.5% pa.<br />

Acting as a client’s thinking partner, choice architect and<br />

behavioural coach, and developing the skills to play these<br />

roles effectively, I believe gives financial planners the best<br />

chance of fulfilling the 93.6% mandate, which is to be an<br />

effective investor manager. Tailors just want their clients to<br />

look good, sometimes for just<br />

one occasion. Financial planners<br />

have a far more important and far<br />

more difficult role to perform;<br />

their clients need outfits that fit<br />

them for life.<br />

After 25 years in the investment<br />

industry, Don Phillips, director of<br />

fund research at Morningstar,<br />

said the number one lesson<br />

he had learned was that the<br />

“finance business” is not about<br />

“money management” but rather<br />

“behaviour modification”. It’s no<br />

surprise then, that Meir Statman<br />

suggests the real significance of<br />

the BHB research is that it clarifies<br />

for us that 93.6% of financial<br />

planning is about the behavioural Rob Macdonald, Head of Strategic<br />

management of clients. <br />

Advisory Services, Fundhouse<br />

References<br />

Brinson, Gary, Hood, Randolph and Beebower, Gilbert; “The Determinants of Portfolio Performance”; Financial Analysts Journal, July-August 1986, pp. 39-44.<br />

Brinson, Gary, Singer, Brian and Beebower, Gilbert; “The Determinants of Portfolio Performance II: An Update”; Financial Analysts Journal, 47, 3 (1991), pp. 40-48.<br />

Dalbar’s 21st Annual Quantitative Analysis of Investor Behaviour 2015 Advisor Edition.<br />

Dalbar’s 28th Annual Quantitative Analysis of Investor Behaviour 2022 Report.<br />

Don Phillips, Reflections on Fund Management: “Five Lessons from 25 Years”, Presentation at the Business & Wealth Management Forum, Chicago, 15 October 2011.<br />

Jahnke, William; “The Asset Allocation Hoax”; Journal of Financial Planning, February 1997, pp. 109-113.<br />

Statman, Meir; “The 93.6% Question of Financial Advisors”; The Journal of Investing, 2000 pp. 16-20.<br />

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CLIENT ENGAGEMENT | Behavioural finance<br />

Practical conversations for<br />

financial health and wellbeing<br />

How to help your clients prioritise purpose, connectedness and relationships.<br />

A<br />

client recently shared with me that his 80-year-old<br />

parents have decided to separate. They moved to<br />

a new country away from their children 10 years<br />

ago and have not built meaningful relationships or<br />

integrated into social circles. While this decision will strain<br />

their finances, the emotional trauma and lack of support are<br />

exceptionally challenging. Being deprived of meaningful<br />

relationships, along with the possibility of losing your home,<br />

can significantly impact your wellbeing and longevity.<br />

In the 14 years I have helped clients approaching or in<br />

retirement, I have seen many people retiring from who they<br />

were instead of to a life filled with connection, engagement and<br />

purpose. Retirement should be a time of fulfilment and joy, yet<br />

many people struggle through this transition. Partly because<br />

retirement marks a major life adjustment, but also because<br />

people often fail to prioritise the relationships and connections<br />

that contribute to happiness.<br />

In Rob Macdonald’s article in the previous edition of <strong>Blue</strong> <strong>Chip</strong>,<br />

he explains why helping our clients invest in time, relationships<br />

and control can impact their financial health and overall wellbeing.<br />

The reference to the Harvard Study of Adult Development, one<br />

of the most comprehensive longitudinal studies in history on<br />

happiness, is noteworthy. The message is clear: good relationships<br />

keep us happier and healthier. People more socially connected<br />

to family, friends and their communities are happier, physically<br />

healthier and live longer than less well-connected people. Close<br />

and fulfilling relationships protect our bodies and minds and<br />

positively impact our health and happiness.<br />

The study also notes that doing work that brings meaning<br />

and purpose (doing something you love) drives wellbeing and<br />

joy. Often, the most rewarding part is the connections and<br />

friendships people find at work. It’s about feeling in control<br />

and doing something you care about with people you feel<br />

connected to.<br />

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The message is clear: good relationships<br />

keep us happier and healthier.<br />

Circumstances change as people get older. Our clients<br />

may lose some of their connections and people they love;<br />

children may leave home to pursue their dreams; clients may<br />

downscale and move home, cities or countries; and what-ifs<br />

and unexpected events may create curveballs in their planning.<br />

The key is to help clients focus on things they can control and<br />

prioritise their happiness index.<br />

Conversations to guide your clients<br />

Building on Rob Macdonald’s suggestions to help clients gain<br />

clarity on their future lives and invest in social connections<br />

and relationships, these practical conversation topics<br />

may facilitate these discussions and guide clients to live<br />

connected, purposeful and fulfilling lives with relationships<br />

at the core.<br />

The Midlife Couples Check-in Questionnaire<br />

Encourage clients in partnerships to think and talk about the<br />

health status of their relationship. These questions can easily<br />

be adapted for singles:<br />

Do you still want to be together?<br />

Do you still have anything in common?<br />

How can you ensure that you have a healthy and fulfilling<br />

relationship in your next chapter?<br />

Do you have the same goals?<br />

Do you both want to stop working at the same time?<br />

What are your priorities for the next 50 years?<br />

Where will you live?<br />

Do you both have the same view on looking after your elderly parents?<br />

How important is it to each of you to leave money in your will for<br />

your children? Would you rather spend it while you’re still alive?<br />

Are there any items on your wish list? How will you navigate if your<br />

dreams are different?<br />

Write down your ideal day. Compare yours with your partner’s.<br />

One of my clients was blindsided by her husband asking for<br />

a divorce after 30 years of marriage. She suddenly found<br />

herself single in her late 50s and facing an uncertain future.<br />

Fortunately, her finances were sound, but throughout her<br />

married life she spent all her time nurturing others and<br />

forgot what brought her joy. Her priority now is resetting and<br />

restarting to build new friendships and social connections<br />

and find a renewed purpose.<br />

What are you retiring to?<br />

Encourage clients to find significance in how they will spend<br />

their time in retirement. Having a sense of purpose and<br />

being equipped emotionally is one step closer to wellbeing<br />

and happiness. The concept of retiring “to” and not “from” is<br />

fundamental to how I approach retirement conversations with<br />

my clients. Often, if people operate from a push-factor position<br />

rather than a pull-factor, their actions are generally reactive and<br />

they don’t find happiness easily.<br />

Just recently, I worked with a client who hastily took early<br />

retirement when the opportunity arose. After the initial<br />

excitement wore off, she experienced overwhelming regret<br />

and loss. She never considered or planned what she would do<br />

with her time now.<br />

Challenge clients to reflect and visualise what would<br />

motivate them and bring them joy before retiring. Then guide<br />

them to plan purposefully towards a significant life.<br />

Staying connected and engaged<br />

One exercise we use to prepare clients for the emotional impact<br />

of ageing is the Wheel of Balance®. This exercise asks clients to<br />

evaluate their satisfaction in different areas of life, including<br />

health, family, work, personal growth, relationships, giving<br />

back, purpose and money. By identifying areas that may need<br />

attention, clients can take proactive steps to maintain balance<br />

and fulfilment in retirement.<br />

Where will you live?<br />

Many clients are tempted to move from their current cities, often<br />

to smaller towns or coastal destinations. Unless they know the<br />

area extremely well, they could be setting themselves up to<br />

spend their second chapter in a<br />

place without social connectivity.<br />

Caution your clients when<br />

it comes to abandoning their<br />

social networks for a view of the<br />

sea or moving countries to be<br />

with their children. Guide them<br />

on the advantages of staying<br />

connected to people they love<br />

and the pitfalls of choosing<br />

social isolation and loneliness.<br />

Retirement can be a time of<br />

fulfilment and joy, but it requires<br />

careful planning.<br />

Guiding your clients through<br />

these conversations can assist<br />

them transition with a sense of<br />

contribution, meaning, significance<br />

and connectedness. <br />

Kim Potgieter CFP®, Director,<br />

Chartered Wealth Solutions, ICF<br />

Professional Certified Coach, New<br />

Money Story® Mentor Coach,<br />

Certified Dare to Lead Facilitator<br />

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PRACTICE MANAGEMENT | Technology<br />

Think hard<br />

Embracing technology and the human connection in the financial advising landscape.<br />

Andy Hart, Founder, HUM<br />

As financial advisors, we find ourselves in the unenviable<br />

position of selling the invisible. This concept is not<br />

exclusive to our esteemed profession but is a common<br />

thread in today’s service economy in which professionals<br />

earn their livelihoods through providing intangible services.<br />

I often jest with my fellow financial advisors that we don’t<br />

“work hard”, but rather we “think hard”. We don’t work with our<br />

hands but deal in information, which is virtual and intangible.<br />

Given this reality, it becomes crucial for us to maximise our<br />

effectiveness and efficiency through systemisation, automation<br />

and outsourcing to technology and to humans. While others<br />

may attempt to succeed through brute force, the adage “work<br />

smart, not hard” is a mindset that will need to be adopted in<br />

the next wave of technological advancement, which is already<br />

upon us.<br />

More tools, more time<br />

As the chief puppet masters of our lives and businesses, we are<br />

responsible for making strategic decisions and orchestrating<br />

the harmonious collaboration of our teams. In the current<br />

environment, this team includes both human and tech elements.<br />

Throughout my career, I have always embraced technological<br />

advancements and sought out best-of-breed solutions.<br />

Given recent developments, our tech teams have gained<br />

unprecedented strength and power thanks to the advent of<br />

Artificial Intelligence (AI). Once the domain of only the most<br />

tech-savvy, AI has become more accessible and is finding<br />

fascinating applications across various industries, including<br />

ours. Indeed, it’s likely already being incorporated into many<br />

of the tech tools you already use and pay for.<br />

The rise of AI represents a significant leap forward in the<br />

world of technology. Even if you haven't given AI much thought,<br />

rest assured that this technology is contemplating how it can<br />

perform tasks better than you, replace you or collaborate with<br />

you. The way I see it, you use it or get left behind.<br />

As advisors, we have an opportunity to explore the various<br />

features and capabilities of AI that can enhance our clients’<br />

experience, increase our firm’s efficiency and streamline our<br />

processes. It is up to us to determine how this technological<br />

advancement will either aid or hinder our progress, and to truly<br />

benefit from AI, we must strive to maintain control over the<br />

technology rather than allow it to control us.<br />

More time, more human<br />

While many speculate that ours is one of the professions that<br />

will become redundant, I firmly believe that human connection<br />

will remain an integral aspect of our profession.<br />

As my own life becomes increasingly hectic, I am reminded<br />

of how fortunate my clients are to have someone in their corner<br />

who will immediately immerse themselves in their lives as soon<br />

as they contact me.<br />

The need for genuine human connection will always persist,<br />

and client-focused behavioural advisors are ideally positioned<br />

to thrive in this next phase of our industry’s evolution.<br />

The aim of increasing the use of technology in our<br />

businesses, therefore, is not to work less. On the contrary, it is<br />

to free us up to devote more of our time to the real but difficult<br />

work our clients require from us. By freeing up resources, we<br />

can become more human, not less.<br />

More human, more impact<br />

I see our future as one in which we entrust technology with<br />

repetitive, mundane and predictable tasks, allowing us to<br />

maintain our focus on fostering human connections. While<br />

technology has been around us for a long time, it’s paramount<br />

that we wrestle and engage with the new generation of<br />

generative AI now available to us. Technological advancements<br />

are not new; they have been a constant in our world. However,<br />

those who adapt to and embrace these changes, as always, will<br />

be the ultimate victors.<br />

By freeing ourselves up to have more time to devote to<br />

being human, we create the opportunity to create more impact<br />

in more lives. It’s clear to me that the best way to create more<br />

impact is to focus on “thinking hard” and becoming better at<br />

modifying client behaviour. This is my North Star, and if this<br />

doesn’t excite you, I can’t relate to you.<br />

And so, I encourage you to harness the power of technology<br />

to work diligently in the background while we devote ourselves<br />

to thinking hard and piecing it all together, always driven by<br />

the desire to secure the best outcomes for our clients. By<br />

combining the strengths of technology and the power of<br />

human connection, we can continue to thrive in the everevolving<br />

landscape of financial advising. <br />

Andy Hart, a UK-based financial advisor is founder of Humans<br />

Under Management, a conference that focuses on the human<br />

side of financial advice. Andy will be speaking at the Humans<br />

Under Management South Africa conference on 19 September<br />

2023 in Cape Town. You can get more information about the<br />

event and buy tickets at:<br />

www.humansundermanagement.com/southafrica2023<br />

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PRACTICE MANAGEMENT | Technology<br />

How big is your<br />

shield against AI?<br />

On a CNBC Africa “Power Lunch” discussion earlier<br />

this year my fellow panelists were not convinced<br />

when I made a statement that financial advice is<br />

a profession that offers a natural shield against<br />

Artificial Intelligence (AI). The reason I made the statement is<br />

that while the world is embroiled in technological progress,<br />

it is simultaneously shifting towards an “empathy economy”.<br />

In his book, The Behavioural Business, Richard Chataway talks<br />

about the scars left by the industrial revolution. The five-day<br />

workweek and concept of “time poverty” for example. What<br />

use is earning a massive paycheck if it deprives us of memory<br />

dividends or experiences with friends and loved ones? Recent<br />

experiments trialing a four-day workweek are testament to<br />

this migration in mindset. The jobs that remain after machines<br />

have taken all the process-driven jobs are likely to be the ones<br />

rooted in the humanities. The world is perhaps simultaneously<br />

looking towards psychology to solve the world’s problems and<br />

away from economics.<br />

More evidence here was provided by a colleague recently<br />

who visited the dietician with his wife. The first consult had little<br />

to do with blood types or calorie counting. The value proposition<br />

was rooted in psychology. What is your relationship with food?<br />

When and why do you eat what you do? We’re understanding<br />

more and more that to affect behaviour change, more<br />

information is not the answer because we have the knowledge.<br />

Changing behaviour requires something deeper.<br />

The question perhaps is not whether AI can replace financial<br />

advisors, but will it or in what circumstances will it? This was<br />

perhaps the disconnect between me and the panelists in the<br />

AI discussion. AI can indeed already provide financial advice<br />

that is alarmingly technically sound at a fraction of the cost.<br />

First mover JP Morgan has already invested here by filing for a<br />

patent on “IndexGPT” using the same generative pre-trained<br />

transformer (GPT) technology from ChatGPT (the chatbot<br />

equivalent). IndexGPT will pick suitable securities for client<br />

needs without paying any advice fee.<br />

One of the obvious issues is whether we will trust what AI<br />

recommends. A recent video gone viral of a “reckless robotaxi”<br />

shows that the Gell-Mann Amnesia Effect is likely at play.<br />

This term was coined by author Michael Crichton to describe<br />

how we are sceptical about the news when we understand<br />

the subject but trust the information source blindly when we<br />

do not. In an AI context, we appear to instinctively distrust AI<br />

that drives because most of the working population drive. A<br />

few AI malfunctions make headline news. Over a million cases<br />

of human driver errors don’t. If we’re overconfident about<br />

investing we’re likely to ignore the AI just as we might ignore<br />

an advisor, but for those who don’t understand investments we<br />

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Can AI help us save in a way<br />

that a financial advisor cannot?<br />

may be more likely to adopt AI-generated investment advice,<br />

initially. Our inherent negativity bias will likely continue to pose<br />

a challenge in sticking to the AI-based advice after a negative<br />

experience in the same way thousands of clients called their<br />

advisors to change their investment plan when markets crashed<br />

during Covid-19. Behaviour once invested is unlikely to change.<br />

The second issue circles us back neatly to the empathy<br />

economy. Imagine it’s 5am on a cold winter’s morning. Your<br />

alarm goes off that signals it’s time to hit the road for a 10km<br />

run. Is AI going to get you to the road? Unlikely. Now assume<br />

that your best mate will be waiting for you at the starting line.<br />

You’ve both committed to the run. Not pitching up is letting<br />

someone down. Using these tips and tricks in psychology will be<br />

far more useful in getting you to the road. Behavioural scientist<br />

Katy Milkman recommends this as one technique to change<br />

behaviour in creating and maintaining better healthy habits.<br />

Other techniques like making the behaviour very convenient<br />

(putting your running clothes out the night before) and<br />

temptation bundling like allowing yourself your favourite<br />

podcast only while on the treadmill are other examples. Once<br />

you’re there, your devices, apps and badges are going to<br />

do wonders in keeping you committed and tracking your<br />

progress, but getting you to the road is a different story.<br />

Can AI help us save in a way that a financial advisor cannot?<br />

Undoubtedly. AI can learn from our financial behaviour,<br />

identify our blind spots and, most importantly, provide just-intime<br />

financial education to help change that behaviour. When<br />

that impulse purchase is in our shopping carts we can get<br />

an accurate trade-off in the moment<br />

of what the purchase is costing our<br />

future selves. But it isn’t nearly as good<br />

at getting us to the road as a human<br />

being can be.<br />

In this way the financial advisor<br />

becomes more important in the<br />

empathy economy to use principles of<br />

psychology that will help us bridge the<br />

intention-action gap. To delve deeper<br />

into our relationship with money<br />

in much the same way the modern<br />

dietician explores our relationship with<br />

food. These are the shields that the<br />

modern financial advisor is building<br />

against AI.<br />

Paul Nixon, Head of<br />

Behavioural Finance,<br />

Momentum Investments<br />

www.bluechipdigital.co.za<br />

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INVESTMENT | Fund management<br />

Lessons from the<br />

Comrades Marathon<br />

Next year, my father, Barry Holland, is poised to take part<br />

in his 50th consecutive Comrades ultra-marathon. I<br />

am struck by the invaluable lessons in his athletic<br />

achievements and the striking parallels they provide<br />

to the world of financial advice and investing.<br />

Firstly, the spirit of unity is at the core of the Comrades<br />

Marathon, a fitting name for a race renowned for its tales of<br />

camaraderie. Seasoned runners can attest to times when the<br />

motivation from their peers was the driving force that got them<br />

to the finish line. Similarly, in the financial advice profession, a<br />

cohesive community can significantly impact success. The recent<br />

PortfolioMetrix LEAD Symposium for our advisor partners was<br />

an epitome of collaborative power, where top advisors from<br />

South Africa and Ireland converged. They exchanged insights<br />

on various topics including advising global citizens, internal<br />

succession planning, evaluating advice practices and the<br />

application of Artificial Intelligence in financial planning. The<br />

community fostered at this event proved how collaboration,<br />

just like in the Comrades race, provides advisors a platform for<br />

growth, inspiration, and mutual support.<br />

Consistency is another critical lesson from marathon running<br />

that is equally vital in investing. The top Comrades runners<br />

maintain consistent splits (the average time taken to complete<br />

each kilometre of the race) regardless of course undulations,<br />

weather conditions, fatigue and even psychological challenges.<br />

This year’s winner, Tete Dijana, demonstrated this with his<br />

considerably more consistent and less volatile performance<br />

compared to the last finisher.<br />

The graph below provides a compelling representation of<br />

this principle. It depicts the splits for all the finishers – men<br />

represented in blue and women in orange – across the first and<br />

second halves of the race. The most consistent runners, illustrated<br />

by the left-most dots in the circled area, correlate strongly with<br />

those who had the most success.<br />

A similar principle can be observed in South African funds<br />

in the ASISA multi-asset high equity category since 2000.<br />

A hypothetical fund manager that consistently produced<br />

mid-second quartile performance would not only healthily<br />

outperform their peers but would do so in a far more palatable<br />

manner for investors. By avoiding more erratic results (often<br />

Graph: Mark Dowdeswell


INVESTMENT | Fund management<br />

BLUE<br />

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Portfolios, akin to vehicles,<br />

should be built to navigate<br />

any obstacle consistently.<br />

due to taking concentrated bets or outsized portfolio positions<br />

that are not commensurate with the probability of success),<br />

investors are more likely to stay the course and remain invested.<br />

Consistency is therefore pivotal in reducing impulsive investor<br />

decision-making and its adverse effects.<br />

Finally, the ability to prepare for unpredictability is a crucial<br />

takeaway from completing the gruelling 90km Comrades<br />

course. Training regimens that include running on tired legs<br />

Barry Holland completing his 49th consecutive<br />

Comrades Marathon. Photo: Peter De Groot<br />

Average Manager Top of 4th Quartile 1st / 4th Alternating Mid-2nd Quartile<br />

2500<br />

2000<br />

1500<br />

1000<br />

500<br />

0<br />

1999 Dec<br />

2000 Jun<br />

2000 Dec<br />

2001 Jun<br />

2001 Dec<br />

2002 Jun<br />

2002 Dec<br />

2003 Jun<br />

2003 Dec<br />

2004 Jun<br />

2004 Dec<br />

2005 Jun<br />

2005 Dec<br />

2006 Jun<br />

2006 Dec<br />

2007 Jun<br />

2007 Dec<br />

2008 Jun<br />

2008 Dec<br />

2009 Jun<br />

2009 Dec<br />

2010 Jun<br />

2010 Dec<br />

2011 Jun<br />

2011 Dec<br />

2012 Jun<br />

2012 Dec<br />

2013 Jun<br />

2013 Dec<br />

2014 Jun<br />

2014 Dec<br />

2015 Jun<br />

2015 Dec<br />

2016 Jun<br />

2016 Dec<br />

2017 Jun<br />

2017 Dec<br />

2018 Jun<br />

2018 Dec<br />

2019 Jun<br />

2019 Dec<br />

2020 Jun<br />

2020 Dec<br />

2021 Jun<br />

2021 Dec<br />

2022 Jun<br />

2022 Dec<br />

Source: PortfolioMetrix, FinXL. As of 2023/03/31, since 1999/12/31, in ZAR using monthly data.<br />

<br />

<br />

and back-to-back long runs help athletes prepare for the<br />

myriad of conditions they may encounter. This adaptability<br />

is essential in investing, where attempting to predict market<br />

events is an exercise in futility. It’s more effective to construct<br />

portfolios capable of withstanding diverse and unexpected<br />

market conditions. Portfolios, akin to vehicles, should be built<br />

to navigate any obstacle consistently, rather than excelling at<br />

overcoming one specific challenge. Financial advisors have<br />

the difficult task of helping clients to plan for and deal with<br />

the unexpected, and client portfolios should be constructed<br />

to handle circumstances that may be foreseeable but can’t be<br />

reliably predicted. The Comrades ultra-marathon offers lessons<br />

applicable to wealth management and investing. By fostering a<br />

sense of community, prioritising<br />

consistent portfolio performance<br />

and preparing for unpredictable<br />

markets, financial advisors can lead<br />

the profession in delivering more<br />

reliable outcomes for their clients.<br />

As I gear up to join my father<br />

in his 50th Comrades Marathon, I<br />

invite you to join us on the road,<br />

and in exploring the parallels<br />

between the Ultimate Human<br />

Race and the pursuit of wealth<br />

management excellence. <br />

Kathryn van Dongen,<br />

SA Managing Director,<br />

PortfolioMetrix<br />

www.bluechipdigital.co.za<br />

69


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INVESTMENT | Due diligence<br />

The big risk that could put investment<br />

and wealth advisors out of business<br />

There is a huge risky elephant in the room that South African Category I investment advisors and<br />

wealth managers may not even know is there!<br />

FAIS Category I advisors are recommending that their<br />

clients invest in asset managers’ portfolios at every<br />

meeting, but how much do they really know about those<br />

portfolios and the people and companies managing<br />

them? Have they built a comprehensive due diligence library,<br />

at least of the managers they favour, if not of the whole industry?<br />

Why should advisors go to the trouble and expense of<br />

demonstrating they have researched their proposed asset<br />

managers thoroughly? Because it exemplifies their standards<br />

of stewardship over their clients’ capital and sets them apart<br />

from their competition.<br />

Many advisors assume that the presence of a manager’s<br />

portfolio on a particular investment platform ensures that the<br />

platform has conducted a full due diligence on that portfolio.<br />

This is fundamentally not so. Platforms may ask for far less<br />

than a complete due diligence questionnaire. Often, too,<br />

the platforms are ensuring they do not offer too many of the<br />

same sort of portfolio. And few platforms conduct ongoing<br />

due diligence to ensure the Category II fund manager is<br />

adhering to basic compliance. The collapse of Third Circle in<br />

2015 was witness to how a co-brander had failed to monitor<br />

the compliance of a Category II manager under its auspices.<br />

If anything goes wrong with a portfolio recommended<br />

by a Category I advisor, it will be no defence at all to say the<br />

portfolio was deemed sound because it was on any platform or<br />

co-branded by another Category II manager. The Durr vs ABSA<br />

case is a must-read for any advisor as it drew the line where<br />

the level of knowledge should be when advising someone on<br />

their investments.<br />

The first question to ask is, “What level of skill and knowledge<br />

should an advisor demonstrate?” If the advisor holds himself or<br />

herself out to be able to advise a client on their investments, he or<br />

70 www.bluechipdigital.co.za


INVESTMENT | Due diligence<br />

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James Downie, Director, Due Diligence SA<br />

she should possess and exhibit skill and knowledge according to<br />

the standard of expert they hold themselves out to be or that the<br />

client expects, regardless of whether the advisor does possess the<br />

skill and knowledge. The second question is, “What is the standard<br />

for judging the advisor?”<br />

The Durr case concluded that an advisor offering expertise is<br />

held to a higher standard.<br />

Durr came before FAIS which codified many of the<br />

requirements of advisors. The FAIS Act, in the General Code<br />

of Conduct, demands that advisors “must at all times render<br />

financial services honestly, fairly, with due skill, care and<br />

diligence, and in the interests of clients and the integrity of the<br />

financial services industry” [emphasis added]. The due skill and<br />

diligence expected of an investment advisor is surely greater<br />

than what the investor could expect to glean from a factsheet.<br />

These days, the Internet can readily provide factsheets and<br />

lists of managers on platforms so what else are the advisors<br />

offering? They should be familiar with the portfolio managers,<br />

their philosophies and processes, their succession plans, their<br />

research capabilities, their variable pricing structures, their<br />

professional indemnity and fidelity insurances, their dealing<br />

policies not to mention FIC compliance and many other facets.<br />

Typically, though, advisors may rely on backward-looking<br />

factsheets (now called minimum disclosure documents<br />

or MDDs) and a brochure from the platform they use for<br />

investment administration. This is woefully inadequate, and it<br />

is only a matter of time before advisors join the lengthening<br />

list of those who did not act “with due skill, care and diligence”.<br />

The higher standard expected, thanks to Durr, requires that<br />

the advisor can point to substantial research performed on the<br />

asset managers recommended with a library of information to<br />

back it up.<br />

www.bluechipdigital.co.za<br />

71


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PRACTICE MANAGEMENT | Outsourcing<br />

The case for strategic<br />

corporate outsourcing<br />

The 1990s saw organisations starting to outsource business activities,<br />

such as accounting, HR, data processing, security and maintenance<br />

to cut costs. Today, outsourcing is seen as a far more strategic<br />

tool than merely a cost-saving exercise. By Sue Beaumont<br />

Andrew Ratcliffe CFP®,<br />

Director,<br />

Private Client Holdings<br />

According to Globe [1] Newswire, the global business<br />

process outsourcing market is currently valued at<br />

USD245.9-billion and is expected to further grow to<br />

USD544.8-billion by 2032.<br />

Today, it is common practice for companies, regardless of<br />

their size or the industry in which they operate, to outsource<br />

non-core functions, allowing them to focus on their niche areas<br />

to deliver better results for their clients. While outsourcing can<br />

result in improved productivity, cost savings, time savings and<br />

better use of resources, it also provides companies with the<br />

opportunity to tap into vast wells of expertise outside of their<br />

industry. According to Forbes magazine [2] , one of the most<br />

powerful business tools and operational strategies that can<br />

help leaders focus their time, resources and manpower on the<br />

valuable tasks that hold up the core of the business and drive<br />

profits, is outsourcing.<br />

Private Client Holdings, a multi-family office based in Cape<br />

Town, recently launched their Corporate Stewardship offering to<br />

support organisations across their wealth management needs,<br />

from long-term planning to routine transactions, administration<br />

and reporting. While the company has offered employee benefit,<br />

healthcare and integrated payroll services for more than two<br />

decades, their new Corporate Stewardship offering incorporates<br />

a more strategic wealth management capability to enable clients<br />

to achieve positive cash flow management and efficient working<br />

capital to drive continued growth and their bottom line.<br />

“One of our objectives is to strategically allocate an<br />

organisation’s financial resources to maximise value and take<br />

ownership of non-core functions so they can pursue their<br />

business goals,” says Andrew Ratcliffe, a director at Private<br />

Client Holdings and part of the team spearheading their new<br />

offering. A key element of their suite of solutions is outsourced<br />

treasury.“We develop a comprehensive cash management<br />

solution for an organisation and deliver superior returns by<br />

effectively managing their available cash, using it as an asset<br />

to generate additional income,” says Ratcliffe. The company<br />

partners with private banks to invest and transact on behalf<br />

of their clients.<br />

“We ensure that working capital is available for the company’s<br />

immediate needs without compromising the organisation’s<br />

financial strength or efficiency,” adds Ratcliffe. The company’s Forex<br />

capability enables organisations to conduct foreign exchange<br />

transactions easily, quickly and at highly competitive rates.<br />

The Corporate Stewardship solution also includes a corporate<br />

business advisory where, together with business partners,<br />

Private Client provides funding for growth by unlocking working<br />

capital tied up in stock and debtors to provide asset finance for<br />

productive, income-generating assets. Its corporate goals-based<br />

asset management capability offers a bespoke wealth planning<br />

and investment management service to ensure an organisation<br />

reaches its long-term financial objectives.<br />

Ratcliffe believes that choosing the right outsource partner<br />

is vital. “When outsourcing any business function, the quality of<br />

the partner you choose is paramount to a successful relationship<br />

and outsourcing experience. An outsource partner must have<br />

the appropriate expertise, experience, track record and security<br />

integrity to deliver on their promise,” says Ratcliffe. Today,<br />

partnering with a reliable outsource service provider has the<br />

potential to transform the way you do business, enabling you to<br />

adapt faster, manage resources more efficiently and maximise<br />

productivity. It also, importantly, enables you to identify<br />

opportunities and possibilities and avoid the pitfalls and hidden<br />

risks that lie on the road to maximising revenue.<br />

“With the PCH Corporate Stewardship offering, you can<br />

consider us your personal Chief Financial Officer, a trusted<br />

partner nurturing your organisation so it can thrive and prosper,”<br />

says Ratcliffe.<br />

Contact Andrew Ratcliffe, andrew@privateclient.co.za, to see<br />

how Private Client Holdings’ innovative approach to Corporate<br />

Stewardship can help grow your organisation’s long-term wealth. <br />

[1] Business Process Outsourcing Market is Slated to be Worth (globenewswire.com)<br />

[2] The Future of Outsourcing—And How To Outsource The Right Way (forbes.com)<br />

72 www.bluechipdigital.co.za


GOALS<br />

BASED ASSET<br />

MANAGEMENT<br />

HEALTHCARE<br />

SERVICES


BLUE<br />

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FINANCIAL PLANNING | Estate planning<br />

How to use financial products<br />

to enhance estate planning<br />

Felicia Hlophe, legal advisor at Allan Gray, summarises four key estate planning principles and<br />

explains how some financial products can be used to provide a better outcome for beneficiaries.<br />

An estate consists of the assets and liabilities that<br />

an individual accumulates during their lifetime and<br />

leaves behind at death. An individual should create<br />

and manage an estate plan to preserve, grow and<br />

protect their assets during their lifetime and ensure that those<br />

assets are transferred to successive generations. An estate<br />

plan should be structured according to each person’s unique<br />

circumstances, goals and wishes and should be reviewed<br />

regularly to take personal and legislative changes into account.<br />

Principle 1. It is recommended that every individual has a last<br />

will and testament<br />

As with an estate plan, a will should be reviewed and updated to<br />

take account of any life changes. Individuals with foreign assets<br />

should also consider a foreign will. As each country has its own<br />

set of laws regarding succession and the drafting of wills, it is<br />

recommended that assistance be obtained from a professional<br />

in the foreign jurisdiction, such as a lawyer, to ensure that the<br />

foreign will is legally compliant. Where there is no valid last<br />

will and testament, the estate is dealt with in accordance with<br />

the Intestate Succession Act. When this occurs, the deceased’s<br />

assets may accordingly be dealt with in a manner that is not in<br />

accordance with their intentions.<br />

In terms of the Intestate Succession Act, the estate must be<br />

divided between the deceased’s spouse and direct descendants,<br />

whereby the surviving spouse inherits the greater of R250 000<br />

or a child’s share. A child’s share is determined by dividing the<br />

total value of the estate by the number of children plus the<br />

surviving spouse. If the deceased was married in community<br />

of property, one half of the estate goes to the surviving spouse<br />

and the other half devolves according to the rules of intestate<br />

succession. If there is no surviving spouse or descendant,<br />

the estate is divided between the deceased’s parents and/or<br />

siblings. In the absence of parents and siblings, the estate is<br />

divided between their nearest blood relatives.<br />

A will should provide for the nomination of an executor to<br />

prevent a delay in winding up the estate. It is recommended<br />

that the will states that the executor be granted the power of<br />

assumption which will entitle them to appoint another executor<br />

should the need arise. According to the Administration of Estates<br />

Act’s tariff, an executor is entitled to a fee of 3.5% on the gross<br />

value of the assets in the estate and 6% on income accrued and<br />

collected after the death of the deceased. However, executor fees<br />

may be negotiated and set out in the will.<br />

Another consideration is to nominate a legal guardian to<br />

take care of any minor children if both parents pass away and<br />

to provide for a testamentary trust for the administration of<br />

their inheritance. This is important because assets left directly<br />

to minor children who do not have a legal guardian may have to<br />

be transferred to the government’s Guardian’s Fund. The Fund<br />

will administer these assets until those children turn the age<br />

of 18.<br />

74 www.bluechipdigital.co.za


FINANCIAL PLANNING | Estate planning<br />

BLUE<br />

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Principle 2. Think carefully about financial products, estate<br />

duty and executor fees<br />

The Estate Duty Act (“EDA”) provides that if the deceased was<br />

ordinarily resident in South Africa at the time of their death,<br />

their worldwide assets will be included for the purposes of<br />

calculating estate duty. Estate duty is levied at a rate of 20% of<br />

the dutiable amount of an estate up to R30-million and at 25%<br />

of the dutiable amount of the estate above R30-million. The<br />

value of the estate therefore needs to be estimated for estate<br />

duty purposes.<br />

The dutiable value of a deceased estate is calculated by<br />

adding the value of the deceased’s property, deducting<br />

allowable expenses and then deducting the Section 4A rebate.<br />

The Estate Duty Act provides all individuals with an abatement<br />

of R3.5-million which is deducted from the net value of the<br />

estate for estate duty purposes. At this point, the estate is taxed.<br />

However, not all assets are estate dutiable.<br />

The death benefits in a retirement fund are not considered<br />

property in a deceased estate. In addition, unless the death<br />

benefit is paid to the estate, which is not very common,<br />

the executor does not administer these assets, as they are<br />

distributed to the deceased’s financial dependants and/or<br />

nominees in accordance with Section 37C of the Pension<br />

Funds Act. Retirement products, can therefore be used to<br />

reduce estate duty and executor fees. However, any excess<br />

contributions that were made by the deceased to a retirement<br />

annuity fund, that were not deducted at the time of death for<br />

income tax, will be subject to estate duty.<br />

Other financial products also provide some relief from estate<br />

duty. The following products are excluded for the purposes of<br />

calculating estate duty:<br />

• The proceeds of living annuity policies<br />

• Buy and sell policies that would be paid to a business<br />

partner for the purpose of funding the purchase of shares<br />

from the deceased<br />

• Key person policies<br />

• Policies that are ceded to a spouse or child in terms of an<br />

antenuptial contract<br />

To the extent that proceeds are paid to nominated beneficiaries,<br />

no executor fees are payable either.<br />

There are also discretionary investment vehicles known as<br />

“policy wrappers” where no executor fees would be payable<br />

if there are nominated beneficiaries on these investments.<br />

For example, tax-free investments and endowments allow<br />

for beneficiary nominations where proceeds are payable to<br />

beneficiaries. Estate duty would still be payable with respect<br />

to both products; however, in terms of section 4(q) of the EDA,<br />

estate duty would not be payable should the surviving spouse<br />

be the nominated beneficiary. To the extent that estate duty<br />

is payable, the executor may recover such estate duty from<br />

the beneficiaries.<br />

Principle 3. Account for beneficiaries’ liquidity needs<br />

The process of winding up an estate can be lengthy and can put<br />

beneficiaries in a difficult financial situation if they do not have<br />

the means to cover their living expenses. There are various<br />

ways to ensure that cash will be available to beneficiaries while<br />

an estate is being wound up.<br />

Taking out life insurance cover is a good way to provide<br />

loved ones with access to money and ensure that there is<br />

sufficient liquidity in an estate to pay for the estate duty liability<br />

and executor fees, and settle any outstanding mortgage bonds<br />

and other debts.<br />

A living annuity can be used to effectively provide an<br />

income for beneficiaries. On the death of the policyholder,<br />

the proceeds are, at the election of the beneficiaries, paid as<br />

a lump sum and/or as an annuity, if they continue with the<br />

policy in their own names. Although estate duty is not payable<br />

on the value of the living annuity, the beneficiaries may be<br />

liable for income tax on the annuity income should they wish<br />

to continue the policy in their own names.<br />

“Policy wrappers” that allow for beneficiary nominations can<br />

also assist with ensuring that the proceeds are not tied up in<br />

the estate, pending the completion of the winding-up process.<br />

The proceeds are available for payment to beneficiaries at<br />

their election. Some “policy wrappers” allow for a beneficiary<br />

for ownership to be nominated.<br />

In other words, this beneficiary would take ownership of<br />

the policy on death. The beneficiary nominated for ownership<br />

would have the option to continue with the deceased’s policy<br />

in their own name or have the policy proceeds paid out. If the<br />

beneficiary decides to have the policy paid out, the proceeds<br />

will be received net of 12% capital gains tax, which will be<br />

deducted within the policy. Where the beneficiary elects to<br />

continue with the policy in their own name, it will be a capital<br />

gains tax roll-over event.<br />

Principle 4. Ensure that all estate planning documents are<br />

reviewed regularly<br />

It is important to ensure that both the will and the beneficiary<br />

nominations on an individual’s financial<br />

products are up to date to avoid assets and<br />

proceeds being paid to the individual’s<br />

estate instead of the intended beneficiaries.<br />

Many other aspects of a comprehensive<br />

estate plan have been omitted, such as the<br />

use of discretionary unit trust investments<br />

during an individual’s lifetime, trusts,<br />

retirement and disability planning and<br />

offshore planning. Creating an estate plan<br />

can involve a high degree of complexity,<br />

and it is recommended that professional<br />

advice be sought before making any longterm<br />

decisions. <br />

Felicia Hlophe, Legal<br />

Advisor, Allan Gray<br />

www.bluechipdigital.co.za<br />

75


BLUE<br />

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FINANCIAL PLANNING | Event<br />

Meet the Managers<br />

A leading investment industry event for financial advisors.<br />

After an absence of two years, due to Covid restrictions,<br />

the Meet the Managers event returned as an in-person<br />

event in Cape Town and Johannesburg in the middle<br />

of June. During the past two years, the event was<br />

held virtually and had record numbers of advisors attending<br />

to access the latest insights from fund managers on varying<br />

domestic and international strategies across all asset classes.<br />

In 2023, 36 different fund managers, ranging from small<br />

boutiques to global behemoths, all shared their views on the<br />

state of financial markets spanning all jurisdictions and varying<br />

strategies – from hedge funds to fixed income strategies.<br />

Advisors really enjoy the event as they can select various<br />

sessions, covering all relevant strategies and gain a broad<br />

range of insights in one day – and earn CPD points in doing<br />

so. This ensures that they are fully up to date with investment<br />

markets and different investment strategies to advise their<br />

clients appropriately.<br />

With global inflation still a major concern, high interest rates<br />

and geopolitical uncertainties prevailing across many fronts,<br />

the world of investing has become an extremely complex<br />

matter. Investment returns in 2023 have been concentrated<br />

around “the magnificent seven” where names such as Apple,<br />

Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms<br />

have all showed exceptional returns on the back of the Artificial<br />

Intelligence phenomena. Many South African investment<br />

managers have also struggled with the new Regulation 28<br />

rules where up to 45% of the portfolio can now be held in<br />

offshore shares. The South African stock market has been<br />

lacklustre relative to its global peers, but with many fund<br />

managers believing that there is exceptional value to be held<br />

in select local shares.<br />

Fund managers that presented at the event included 1nvest,<br />

10XInvestments, Allan Gray, Amplify, Ashburton Investments,<br />

Camissa Asset Management, Clearance Capital, ClucasGray<br />

Asset Management, Cogence, Flagship Asset Management,<br />

Foord, Glacier Invest, Laurium Capital, Marriott Investment<br />

Managers, Matrix Fund Managers, Melville Douglas, Merchant<br />

West Investments, Mi-Plan Investments, Momentum Investments,<br />

Nedgroup Investments, Old Mutual Investment Group, Peregrine<br />

Capital, PortfolioMetrix, Prescient China, Prescient Investment<br />

Management, PSG Asset Management, Rezco Asset Management,<br />

Sarasin and Partners LLP, Sasfin Asset Managers, Schroders,<br />

Stanlib, Steyn Capital Management, Stonehage Flemming,<br />

Sygnia Limited and Truffle Asset Management.<br />

Over 1 300 financial advisors attended the event in-person<br />

with a further 700 registering to view the digital content as<br />

all speaker presentations were recorded. The Collaborative<br />

Exchange, organisers of the event (as well as many other leading<br />

investment conferences), has been experimenting in 2023 with<br />

running both in-person and digital events to see the trends<br />

after Covid. Research done by Collaborative Exchange suggests<br />

that in-person conferences have made a huge comeback as<br />

digital fatigue has set in among the industry. However, there<br />

are many complexities (and costs) of running events in-person<br />

and digitally and many of the large investment companies are<br />

no longer offering the digital option. <br />

76 www.bluechipdigital.co.za


Independent platform profiling asset<br />

managers, discretionary fund managers<br />

and investment platforms.<br />

FundHub is an independent centralised investment content platform for financial<br />

advisors and fund buyers. A diverse range of useful references and resources – all<br />

within one website. These include:<br />

1. Fund manager content where you can access fund manager videos, fund fact<br />

sheets and investment commentary.<br />

2. A wide range of financial advisor tools and calculators.<br />

3. Fund manager presentations from the various events hosted by The Collaborative<br />

Exchange.<br />

4. A diverse mix of international and local research papers, allowing financial<br />

advisors access to the latest though-leadership content to assist their practice.<br />

5. The latest industry events to keep you appraised of industry developments.<br />

6. Access to a monthly newsletter (FundXchange) that provides powerful insights<br />

into a range of relevant matters.<br />

Scan the below QR code to access this market-leading content or go to<br />

www.fundhub.co.za

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