Blue Chip Issue 90

BLUE
CHIP
0.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
THE OFFICIAL PUBLICATION OF THE FPI
Issue 90 • Feb/Mar/Apr 2024
www.bluechipdigital.co.za
0.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
01 CONTINUOUS
PROFESSIONAL DEVELOPMENT
01 CONTINUOUS
PROFESSIONAL DEVELOPMENT
1.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
1.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
02 CONTINUOUS
PROFESSIONAL DEVELOPMENT
02 CONTINUOUS
PROFESSIONAL DEVELOPMENT
The growing threat of
CYBERCRIME
ETFs, ETNs & AMCs
The future of investing?
MEET LARA WARBURTON
2023 Financial Planner of the Year
GLOBAL INVESTMENT
STRATEGY
Ferdi van Heerden, CEO for Momentum Investments

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Professional Financial Planning and Advice for all
NextGen
FPI is excited to introduce the Next Generation Certification Standards for the
CERTIFIED FINANCIAL PLANNER ® (CFP ® ) designation. The assessment process to
become a CFP ® professional member of FPI will be amended from 1 January 2025 to
align closely with the current international requirements for CFP ® certification.
For more information visit: www.fpi.co.za or email: certification@fpi.co.za

A LEAP FORWARD
INTO THE FUTURE
In 2023, the FPI celebrated looking back to where we have been while moving forward
into a future where change is a constant evolution of innovation and progress. And
with 2024 just a month old, it certainly feels like we have made a collective leap
forward into the future.
In today’s fast-paced era, financial advisors require tools that seamlessly adapt to their
evolving needs. Ferdi van Heerden, Momentum Investments’ new CEO, cautions that the
investment industry can no longer ignore technological innovation and to do so would be at
its peril. Van Heerden firmly believes that an AI-driven tech revolution will reset the rules for
investment managers (page 20).
To deal with this AI wave, you need to be strategic. It’s important to organise and optimise
data so that AI can use it. Prepare your data by identifying the 20% that is important for 80%
of the services and tasks you perform and focus on that. And then you need to ensure that
you implement security measures and protocols (page 64).
South Africa has been identified as the fifth-most affected country globally in terms
of cybercrime. Reports indicate a concerning 356% increase in impersonation fraud
between 2022 and 2023. In addition, a cybercrime report by Interpol discovered that
more than 230-million cyber threats were detected in South Africa in 2021. Cybercrime
is more profitable than the global drug trade and costs more per year than all natural
disasters combined (page 50).
Linktank concurs and goes on to say that 95% of the 230-million cyber threats
were email-based attacks. South Africa has had a 100% increase in mobile banking
application fraud and experiences on average 577 malware attacks every hour (page 58).
Trust is the cornerstone of the financial services profession, and social media can
be a powerful tool in building and maintaining this trust. Consistent, transparent
communication that reflects professional ethics and values goes a long way in solidifying
client trust. It’s about creating a digital presence that clients can rely on for accurate, helpful
information (page 18).
Blogs are conduits for conversation and driving connection with your community. They
have the power to elevate your client engagement strategy to new heights, to initiate
dialogues that build trust and foster lasting relationships. If you want to put people first and
bring out the human element in your online communication, blogs can be a powerful way to
achieve this through a scalable, sustainable strategy (page 62).
Back to celebrating Back to the Future, which was the theme of the 2023 FPI Professional’s
Convention. Turn to page 34 for a roundup of the winners from the prestigious FPI gala
awards that recognise excellence in the industry and meet Lara Warburton, 2023 FPI
Financial Planner of the Year (page 30).
May 2024 be a winning year for you!
All the best
Alexis Knipe, Editor
Blue Chip Journal – The official publication of FPI
blue-chip-journal
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contributions from FPI and other leading industry figures, covering all aspects of the financial planning
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ISSUE 90 |
FEB/MAR/APR 2024
BLUE
CHIP
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CONTENTS
ISSUE
90
FEB/MAR/APR 2024
04
10
12
16
EDITOR’S NOTE
By Alexis Knipe
LOOKING AHEAD TO 2024
Message from FPI CEO
ON THE MONEY
Milestones, news and snippets
HOW TO GET THE YEAR OFF TO
A GOOD START
Column by Florbela Yates, Head of Equilibrium
17
THE POWER OF INCENTIVES
Column by Rob Macdonald, Head
of Strategic Advisory Services, Fundhouse
18
SOCIAL MEDIA IN FINANCIAL
PLANNING
Column by Kobus Kleyn, Tax and
Fiduciary, Kainos Wealth
20
A UNIVERSAL PERSPECTIVE
Blue Chip speaks to Ferdi van
Heerden, CEO of Momentum Investments
24
THE MOMENTUM
INVESTMENTS AND ROBECO
PARTNERSHIP
Mike Adsetts, CIO, Momentum Investments,
uncovers the strategic partnership that
deepens portfolio integration
25
A GLIMPSE INTO 2024
The top 10 trends shaping
tomorrow
26
SHAPING THE FUTURE OF
INVESTMENT MANAGEMENT
AND ADVICE, TODAY
Eugene Botha, Deputy Chief Investment
Officer, Momentum Investments, on the
Research Hive, a purposefully created
hub of research and innovation activity at
Momentum Investments
28
A LEAP FORWARD INTO THE
NEW DIGITAL ERA
By Fränzo Friedrich, Head of Marketing,
Momentum Investments
30
34
THE ULTIMATE ACCOLADE
Meet Lara Warburton, CFP®, 2023
FPI Financial Planner of the Year
TOP HONOURS AT THE FPI
2023 GALA AWARDS
A roundup of the winners from the
prestigious event recognising excellence in
the industry
38
CONSIDER THE PROS AND CONS
OF LIFE AND LIVING ANNUITIES
There are several instruments that you can
use to provide an income
41
ELIMINATING THE ROLE OF
LUCK IN RETIREMENT INCOME
PLANNING
By Bjorn Ladewig, Head of Distribution,
Just SA
42
ETFS, ETNS AND AMCS: IS THIS
THE FUTURE OF INVESTING?
Recent developments in the market for
exchange-traded products are providing
access to a whole new world of investment
opportunities for financial advisors
46
WORTH ITS WEIGHT IN GOLD
Blue Chip sits down with Michael
Mgwaba, Head of ETP Business at Absa
Corporate and Investment Banking
48
THE ARITHMETIC IS NOT IN
ACTIVE FUNDS’ FAVOUR
By Kingsley Williams, Chief Investment
Officer, Satrix
50
THE GROWING THREAT OF
CYBERCRIME
Greig Phillips, Investment Specialist,
Fundhouse, delves into the intricate world
of cybercrime
6 www.bluechipdigital.co.za

CONTENTS
ISSUE
90
FEB/MAR/APR 2024
54
COULD SMALLER COMPANIES
HAVE A BRIGHT SPOT DESPITE
A GLOOMY ENVIRONMENT
By Robert Starkey, Portfolio Manager,
Schroders
56
USING HEDGE FUNDS TO
HARNESS THE POWER OF
COMPOUNDING
James Corkin, Portfolio Manager, Steyn
Capital Management, attests that the magic
of compounding long-term investment
returns cannot be overstated
58
CYBERSECURITY: BUILDING
RESILIENCE IN AN EVER
MORE COMPLEX TECHNOLOGY
LANDSCAPE
Advice on solutions to assist in the
mitigation of cybersecurity risks
60
MAXIMISING EFFICIENCY IN
BOARD MANAGEMENT
A guide for employee benefit consultants
using cloud computing and AI, by
AgendaWorx
62
FINDING THE BALANCE
BETWEEN DIGITALISATION
AND PERSONAL TOUCH
Digitalising client engagement and
communication strategies for financial
planners
64
GET READY FOR THE
GREATEST WAVE OF
TECHNOLOGICAL INNOVATION
Francois du Toit, CFP®, founder of
PROpulsion on what AI brings to the table
for financial advisors
66
THE FINANCIAL PLANNER AS
THINKING PLANNER
Thinking with clients or for clients by Rob
Macdonald, Head of Strategic Advisory
Services, Fundhouse
68
UNLEASHING CLIENT SUCCESS
The power of value-based
conversations, by Kim Potgieter
70
CLOSING THE CIRCLE: THE
IMPORTANCE OF CLOSING THE
WEALTH MANAGEMENT LOOP
By Sarah Love, CFP®, Fiduciary Practitioner,
Private Client Trust
72
IMPORTANT CHANGES IN THE
WORLD OF DIVORCE LAW
Hannah Wilson, Director, Simplifi Law
outlines the recent changes in divorce law,
74
TRANSFORMATION THROUGH
INCLUSIVE APPROACHES TO
INTERNSHIPS
Alicia Davids, CEO, Asisa Academy, tells us
about the great work that the academy is
doing for IFA graduates
76
CORPORATE GOVERNANCE:
A COMPLIANCE OR BUSINESS
ISSUE?
Asks Anton Swanepoel, founder, Trusted
Advisor
79
WANT TO BECOME A CERTIFIED
FINANCIAL PLANNER®?
The FPI introduces the Next Generation
Certification Standards
8 www.bluechipdigital.co.za

Who should apply?
For Financial Advisors who have two (2) years or
more relevant financial services experience. FPI
offers the FINANCIAL SERVICES ADVISOR TM
Designation so that you can differentiate yourself
through the FPI Code of Ethics and Professional
Standards.
The Criteria
This membership type is for a person who
has:
Completed a level NQF6 (old) or NQF7 (new)
qualification;
Has two or more years financial services
experience;
Has completed the professional competency
examination (written or exempt*); and
Has agreed to abide by the FPI Code of
Ethics and Professional Standards.
Exemption* :Honours/ Post Graduate Diploma In Financial Planning ;BCom in Financial Planning; BCom Finance; Certificates in
financial planning & Wealth Management obtained from Milpark Education; Moonstone (MBSE); SANLAM Connect Academy;
Universities- Academia, Free State, Johannesburg, Kwa-Zulu Natal, Stellenbosch, Johannesburg, NNMU.
businessdevelopment@fpi.co.za | +27 11 470 6000 | www.fpi.co.za

BLUE
CHIP
FPI UPDATES | CEO message
Lelané Bezuidenhout, CFP®,
CEO, Financial Planning
Institute of Southern Africa
Looking ahead
to 2024
The CEO of Financial Planning Institute of
Southern Africa shares FPI’s latest news.
Greetings and a warm welcome to this edition of Blue
Chip magazine! We are grateful to have the support
of an established publication like Blue Chip dedicated
to supporting the financial planning profession and
delivering the latest insights from the industry. Thank you for being
part of this exciting journey with us!
Global update
It is with gratitude that I reflect on the achievements and
significant moments that shaped the Financial Planning Institute
(FPI) in Q4 of 2023.
In October, FPI chairperson, Kirsty Scully, CFP®, and I had
the honour of representing the FPI on the international stage,
joining over 20 Financial Planning Standard Board (FPSB)
affiliates in Singapore. This marked a key moment as we
immersed ourselves in the global financial planning community
at the Financial Planning Association of Singapore (FPAS) global
conference. It was a joyous occasion as we celebrated the 25th
anniversary of CFP certification in Singapore, mirroring FPI’s
own milestone in South Africa.
During this international gathering, FPSB introduced the
Outstanding Contribution to the Profession Award, a global
accolade recognising those who have made indelible contributions
to the financial planning profession. We are delighted to announce
that the inaugural recipient of this prestigious award is the former
FPSB CEO, Noel Maye. We extend our heartfelt congratulations to
Noel on this well-deserved recognition.
In the spirit of global collaboration, we extend a warm welcome
to FPSB Italia as an Associate of our global network. Our time in
Singapore also provided a platform for engaging in discussions on
crucial global matters such as digital assets, ESG and AI, signalling
the evolution and adaptability of our profession.
Local update
Shifting our focus back to South Africa, the #2023 FPI Professional’s
Convention, Back to the Future, took centre stage. With close to 800
online attendees and approximately 400 in-person participants,
the convention was a testament to the unwavering support of
our community of expert financial planning professionals. We
express our sincere gratitude for your commitment and active
participation, making it a humbling and gratifying experience.
Special thanks to the exhibitors, especially Blue Chip, who joined
us in making this year’s convention a success. Visit our website to
see some of the highlights of this year’s convention.
An unforgettable moment during the convention was the
presence of Dante de Gori, CFP® and CEO of the Financial Planning
Standards Board (FPSB). During Dante’s visit, we were fortunate
enough to interview him about the FPSB's identity and his vision
for the financial planning profession, the recording of this interview
is available on FPI’s YouTube channel.
Then, the 2024 FPI Professional’s Convention will be in August
in Cape Town! We cannot wait to connect with you in the Mother
City. More details to follow soon.
2023 Award winners
The highlight of the 2023 FPI Professional’s Convention was the
truly classical gala awards evening, where we celebrated excellence
in the financial planning profession.
On 14 November 2023, Lara Warburton, CFP®, was announced
as the distinguished recipient of the FPI Financial Planner of the
Year Award.
In addition to Lara’s achievement, the evening celebrated other
noteworthy winners:
• FPI Approved Professional Practice of the Year: Crue Invest
• Diversity and Inclusion Award: Olwethu Masanabo, CFP®
10 www.bluechipdigital.co.za

FPI UPDATES | CEO message
BLUE
CHIP
• Harry Brews Award: Robert Macdonald, CFP®
• It Starts with Me Award: Kim Potgieter, CFP®
• Top Candidate Award: Stephan Lombard
• Top Student Financial Plan winners: University of Johannesburg
(MSK Financial Services)
• FPSB 25 Year Award: The FPI for celebrating 25 years of
CFP certification
2024 will bring challenges,
but it is also packed with
growth opportunities.
Membership Renewal
As we start the new year, we extend our gratitude to the more than
2 500 members who renewed their memberships by 15 December
2023. Membership renewal is open until 31 March 2024 and CPD
compliance is due by 31 May 2024.
Annual Refresher
Looking ahead to 2024, we invite you to join us for the Annual
Refresher (AR2024). Scheduled from the end of February to mid-
March across various regions (Cape Town, Johannesburg and
KwaZulu-Natal) this event features a stellar lineup of speakers,
including Andrew Bradley, Errol Meyer, Wessel Oosthuizen, Lelane
Bezuidenhout and the 2023 Financial Planner of the Year, Lara
Warburton. See our website for more information.
Professional Competency Examination
We extend our heartfelt congratulations to the 76 candidates who
demonstrated competence in the September 2023 examination
sitting. Your success is a testament to your commitment to
excellence, and we eagerly anticipate welcoming you as official
FPI professional members in the near future.
Welcome Q1 2024!
The FPI is gearing up for an exciting start, featuring the online
Budget Speech event on 21 February and the Annual Refresher, both
not to be missed.
But that’s not all. We have got big plans for the year ahead. Four PCEs
are lined up to ensure that as many candidates as possible get the
chance to take FPI’s PCE exam in the “old” format before the transition
to the NextGen Certification Standards in 2025. For more details, dive
into Nici Macdonald’s article in this publication or visit our website.
Our commitment doesn’t stop there. We’re on a mission to localise
the latest global financial planning standards during 2024 as released
by the FPSB in April 2023.
Consumer education takes centre stage, especially with the
anticipated two-component (pot) system, whether it rolls out in
September or March 2024. We believe education is key to steering
consumers away from potential financial pitfalls.
As we navigate through 2024, keep these key areas in mind:
• Two-Component (Pot) System. Be prepared to manage client
expectations and communicate potential delays. Adaptability is
the name of the game.
• Compliance Documentation and Risk Management. Prioritise
compliance documentation, adopt a meticulous approach to risk
management and align with the looming COFI horizon. It’s a crucial
aspect of the journey.
• Continued Professional Development. It is imperative! Focus on
personal development plans, align CPD hours with defined learning
outcomes and stay informed. As financial professionals, take
responsibility for your role as the primary “product” clients invest in.
Yes, 2024 will bring challenges, but it is also packed with growth
opportunities. Let’s embrace the year, tackle the challenges
head-on and make the most of every opportunity – especially in
this election year.
Wishing you all the best until next time,
Lelané Bezuidenhout, CFP®, CEO, Financial Planning Institute
of Southern Africa
www.bluechipdigital.co.za
11

BLUE
CHIP
On the money
Making waves this quarter
New appointment and the paradox of choice
ALEXFORBES APPOINTS MPHO MOLOPYANE AS CHIEF ECONOMIST
Alexforbes is pleased to announce the
appointment of Mpho Molopyane as chief
economist, effective from December 2023.
Molopyane is responsible for formulating
the macroeconomic strategy for the business.
Molopyane also has a pivotal role in
executing strategic objectives that align with
the group’s vision.
Molopyane brings with her a wealth
of experience and expertise acquired
through her extensive career in both
the finance and public sectors. She joins
Alexforbes from Absa, where she held the
position of senior economist, overseeing
economic research for multiple African
economies. Prior to her tenure at Absa,
Molopyane served as an economist at Rand
Merchant Bank, with a specific focus on the
South African market.
Her professional background also
includes previous positions at National
Treasury and Standard Bank.
REGULATION 28 AND THE PARADOX OF CHOICE
In 2022, Finance Minister Enoch Godongwana amended the maximum
offshore investment limit for Regulation 28 retirement funds from
30% of assets to 45%. However, data shows that most funds haven’t
maximised their exposure to the new limit.
Currently, there is more value to be extracted in the local market: local
equities are trading on a very cheap forward price-to-earnings multiple of
9x (compared to 17x for developed markets) and underpinned by strong
one-year expected consensus earnings growth of 14% (compared to
7% for developed markets); the local long bond market offers enticing
value, with a more predictable nominal long-term expected yield of 12%
against inflation nudging at 5% and the rand offers a 20% discount to
the fair value range against the US dollar. Conversely, if Regulation 28
funds use their rand income to increase US dollar-denominated assets,
they’re currently paying 20% above the currency’s fair value range.
How do financial advisors prudently assist their clients to navigate
the new Regulation 28 changes? Decision-makers are grappling with
the paradox of choice: the breadth of options increases flexibility, but
it’s more difficult to choose high-quality, consistent winners and blend
them in their appropriate proportions.
It’s most important for managers to have an investment philosophy,
objectives and investment process that are clearly defined. The
investment philosophy should articulate core investment beliefs and
principles of how investment value is extracted and risk-managed,
expected patterns of returns, inputs required and evidence of
repeatable outcomes. Tactical asset allocation and risk management
are key in exploiting short- to medium-term opportunities, as well as
unintended risks.
Managers need to have a solid grasp of their portfolio risk management
on a look-through basis: this allows them to understand exposure from
various perspectives, be more responsive and continually reinvent
themselves as they align portfolios with changing times. Portfolio risk
management can identify and de-risk outsized risk contributions from
geographical and sector exposures. Good managers reduce foreign
currency volatility. Investment firms need to aspire to be great stewards
and fiduciaries with the highest ethics, have an enabling culture and
be aligned with their clients’ interests.
For financial advisors looking to prudently exploit the changes to
Regulation 28, the point of departure is always going to be choosing the
appropriate investment manager(s) who will in turn make appropriate
choices on their behalf.
By Conlias Mancuveni, Hollard Investment Managers

BLUE
CHIP
On the money
Making waves this quarter
AI strengthens investments and Ashburton fortifies team
ASHBURTON BOLSTERS TEAM IN SA ASSET MANAGEMENT
Ashburton Investments, the FirstRand group’s trusted asset manager,
is bolstering its team of investment professionals in the South African
asset management industry, with key new hires under its CEO, Duzi
Ndlovu, who joined in 2022 and CIO, Patrice Rassou, who joined in 2020.
Ashburton currently has R140-billion of Assets Under Management
(AUM) and plans to grow exponentially in the next three years by
scaling its equity, multi-asset, fixed-income and global capabilities,
while widening its distribution footprint.
“The first step in achieving our growth goal was to cement the
investment team under Rassou’s leadership. This included the key
appointment of Charl de Villiers as Head of Equities in 2021. De Villiers
has a stellar portfolio management track record, and his addition has
added significant industry experience to the team,” says Ndlovu.
Vanessa Pillay was appointed as Ashburton Investments’ head of
corporate and commercial distribution in October 2023. She has more
than 25 years of financial markets and asset management experience.
PSYCHOLOGY AND AI IN INVESTMENTS
AI has emerged as a game-changer in the realm of investments, but its
relationship with psychology is equally intriguing. Psychology and AI share
a crucial commonality: their reliance on data collection and analysis to
predict outcomes. The interplay between human behaviour and financial
markets underscores the significance of this convergence. The psychology
of money delves into how our attitudes, beliefs and emotions surrounding
money shape our financial behaviours. As AI algorithms sift through vast
datasets, they identify patterns that provide profound insights into investor
sentiment and behaviour.
When it comes to investments, AI transcends the boundaries of
conventional methods. The capacity to classify underlying emotions, such
as fear or enthusiasm, and predicting investor behaviour is where AI excels.
The psychology of money unearths the intricacies of our relationship
with finances. Deep-seated beliefs, past experiences and societal
influences mould our financial behaviours, impacting investment choices.
Understanding these psychological underpinnings is instrumental in
devising effective investment strategies. Investors are a diverse group, each
with their unique tendencies that influence their decisions. Using AI and
psychology can lead to understanding the below investor types:
Market timers. This archetype succumbs to herd mentality, acting
based on prevailing market trends. They often fall prey to emotional
surges during market crashes.
Assertive investors. These individuals thrive on identifying the next
Vuyo Mvulane was appointed as the head of institutional distribution
eight months ago. His experience spans manager research, portfolio
management, business development and client service.
These appointments follow the appointment of Kashif Noor to the
position of head of retail distribution at Ashburton a year ago. Noor was
previously Nedbank’s head of wealth management for the Cape and
coastal regions. He also previously worked for ABSA Wealth, Coronation
and Lloyds TSB.
Focusing on financial intermediaries, specifically independent
financial advisors, LISP platforms as well as DFMs, Steven Amey was
appointed as the head of intermediated distribution at the start of
2023. He gained his asset management, asset consulting, short-term
insurance, healthcare and financial planning expertise fulfilling senior
roles at Discovery Invest, Sasfin, Ninety-One and Glacier. With more
than 22 years of distribution experience, Amey holds an MCom in Tax
and is a CFP®.
big investment trend. They exhibit a proactive approach and aren’t afraid
to take calculated risks to secure substantial gains.
Anxious investors. Anxious investors are cautious and risk-averse,
particularly in volatile markets.
Avoider investors. This group prefers conservative, low-risk
investments. They might be open to risk-taking in non-financial aspects
of their lives.
Number of Funds Portfolio Value Age
$
Size of Switch Number of Switches 12m Switch History
Perfomance
vs Peers
Why do investors switch?
Machine learning using over 12 million observations tells us
2 1 3 2 1 3
12m Perfomance
$
6m Perfomance
Loss system
Belief system
Win-Stay
Lose-Move
Risk perception

BLUE
CHIP
On the money
Making waves this quarter
JSE de-listings
PORTFOLIO IMPLICATIONS OF JSE DE-LISTINGS
The increased number of companies de-listing from the JSE has elevated
investor concerns about the investment outlook for SA Equities. The
shortage of new listings, the relatively weak performance of local shares
and depressed levels of business confidence have further exacerbated
fears among market participants. While the de-listing trend is concerning,
the debate is less about the number of de-listings and more about the
level of market concentration and its impact on investment portfolios.
De-listings have had minimal impact on JSE trading and liquidity
given the high levels of index concentration and size of the main index
constituents. The direct impact of smaller companies exiting the market is
also less meaningful when viewed through the lens of how equity funds
are currently constructed.
Most of the companies that have de-listed were not core holdings in
benchmark cognisant domestic equity portfolios. Approximately 70% of
de-listings over the last five years would be categorised as small-cap or
fledgling companies with market caps of less than R300-million, placing
them outside the investable universe of fund managers tracking the
index. There are exceptions but, on average, domestic equity funds
holding the majority of pension and retirement assets have remained
unaffected by the shrinking opportunity set. In aggregate, investors
have already been allocating capital as if the market is narrower than
it is.
By Sean Neethling, Head of Investments at Morningstar South Africa
. .,,01,.\W of Cope
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(U)ucr Law@work
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UCT Law@work is a self-funded unit within UCT’s Faculty of Law, offering short courses,
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online courses, which allows you to register and study at your own pace. No deadlines!
The following self-paced courses are on offer:
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BLUE
CHIP
COLUMN
How to get the year off to a good start.
The start of a new year is a great time to reflect on what worked and what didn’t in the past.
Florbela Yates,
Head of Equilibrium
Florbela Yates is the head of
Equilibrium in the Momentum
Metropolitan group.
Equilibrium is an independent
discretionary fund manager
that partners with financial
advisors to help them enable
their advice outcomes.
Equilibrium brings balance to
an advice practice by delivering
services and investment
solutions to help clients achieve
their defined investment goals.
It’s also a great opportunity to declutter and set
clear plans to get you to where you want to be.
I usually start by listing things that I was happy
with and those that I would like to improve on.
Putting this down on paper makes it real and makes
the objectives clear. Having too many goals is a
non-starter.
I usually start with a big list, let them rest
for a day or two and then settle on a maximum
of 10 goals that I filter into what is realistic and
measurable. I also split them into short, medium
and long-term goals so they are easier to manage.
Then lastly, I allocate “accountable buddies” to
help me stay on track.
From an investment perspective, when I set
goals, I always begin with a budget. That way, I
know exactly what my income and expenses are.
I believe that everyone can save, even if it begins
with small amounts. But if you’re someone who
isn’t very disciplined then I’d recommend putting
measures in place to help you stick to the savings
goal. People who are tempted to spend whenever
they have money in their account may do well to
set up a monthly debit order to set aside a specific
amount in a savings or investment account. Or they
may call on someone whom they trust to act as their
accountable buddy. This person is responsible for
asking whether you need that item and reminding
you of the goal that you set for yourself. The way
I think about it is, that you’re avoiding short-term
pitfalls in return for a focus on a longer-term goal.
If building long-term wealth is a goal, here is a
simple step-by-step guide that has helped me and
many of my clients stay focused:
1. Set a clear goal.
2. Ask yourself if it’s achievable and how you will
measure success.
3. Identify what is working to get you to your goal.
4. Identify what has held you back from reaching
this goal. Is it that you aren’t saving? Or not
saving enough? Is it your habits or lack of
disposable income or the fact that the goal
is too long-term?
5. Put down strategies to help you achieve the
goal. For example, if it’s a lack of disposable
income, go back to the budget and see
what unnecessary expenditure you can
cut. If it’s a habit of grabbing coffee every
time you walk past the coffee shop, try to
take a different path to your desk. And if it’s
just that you can’t avoid temptation, find an
accountable buddy.
6. The road to building financial wealth is a
long one but if you break the goal down
into sub-goals with different time horizons,
it makes it easier to measure, such as:
a) Saving for retirement – this is a longterm
goal and can be dealt with by ensuring
that you make monthly contributions to a
retirement annuity or retirement fund.
b) Setting aside a monthly amount for a
car or house deposit – this could be a
medium-term goal that forces you to plan
years ahead.
c) Shorter-term goals, which may require
some sacrifice to set aside a larger portion
of income each month.
7. Lastly, it’s important to measure how you
are going. Ask yourself continuously if the
goal is realistic and then adjust. This could
include changing the investment horizon,
the capital that you are investing, or both.
8. When in doubt, find a financial coach or
advisor to help you.
16 www.bluechipdigital.co.za

COLUMN
BLUE
CHIP
The power of incentives
The human side of investing.
Rob Macdonald, Head of Strategic
Advisory Services, Fundhouse
Rob Macdonald has held
several senior positions in
the investment industry.
At Fundhouse, he acts as
a consultant and coach
to financial advisors and
develops and facilitates training
programmes in behavioural
coaching and practice
management. Before joining
the financial services industry,
Macdonald was MBA director
at the UCT Graduate School
of Business. Business. He has
written the book The 7 Pillars
of Financial Health and is coauthor
of the book Rethinking
Leadership and has consulted,
written and spoken widely on a
range of topics. Macdonald has a
Master’s degree in Management
Studies from Oxford University
and is a CFP® Professional.
Late last year, the world lost one of its great
investment brains with the passing of
Charlie Munger, Warren Buffett’s long-time
investment partner. Perhaps distinctive to
Munger was his interest in the human side of
investing, the essence of which he first captured
in a speech entitled “The Psychology of Human
Misjudgement” in 1995 at Harvard University.
Central to this misjudgement are 25 cognitive
biases that he believed lead to poor decisions,
and consequently poor outcomes.
Neither Munger nor Buffett has ever shied
away from observing when investors are
exercising poor judgement. Most recently, Buffett
referred to Bitcoin as “rat poison squared” and at
the Berkshire Hathaway AGM in 2000, Munger
said of the late-1990 dot.com bubble that “if you
mix raisins with turds, they’re still turds”. Even
though two of the smartest investors ever offer
such insights, many investors don’t take note.
In March 2000, the dot.com bubble burst,
while investors still pursue Bitcoin with vigour,
some luckier than others.
South African investors recently suffered the
collapse of the BHI Trust run by Craig Warriner in
which up to R2.7-billion of investors’ money may
be lost. Despite being an unregulated investment,
licensed financial advisor Global & Local put
clients’ money into it. Ironically, the name “BHI”
refers to “Berkshire Hathaway Investments”,
Warriner clearly leveraging credibility off Buffett
and Munger’s legendary listed investment vehicle.
The first of Munger’s 25 biases is the “Reward/
Punishment Super Response Tendency”. Munger
believed that the power that incentives and
disincentives have on the actions of others cannot
be overstated. One assumes that there was an
incentive for Global & Local to put clients’ funds
into an unlicensed investment vehicle. And clients
were undoubtedly incentivised by the promise of
high returns.
The dust is yet to settle on the BHI debacle and
yet another one is already playing itself out. No
surprise it’s in the form of an unlicensed investment
vehicle. GSPartners promotes and distributes an
investment product called “MetaCertificates”
which promises returns to international investors
ranging from 2.5% to 4.15% per week, [1] while in
South Africa the promised returns are as high as
22% per week. [2]
To put that into perspective, the long-term
real return on South African equities is 7% per
year, significantly less than the weekly return
promised by GSPartners! The FSCA issued a
warning late last year for investors to be wary of
GSPartners, while cease and desist orders have
been issued against it by several jurisdictions in
the US and Canada.
Munger’s first bias suggests that these
schemes will repeatedly rear their ugly head;
after all, they always have incentives, both for
promoters and investors. Believing in unrealistic
returns is a cognitive error – not understanding
what’s realistic, and an emotional one – greed.
Both are great incentives, nevertheless. But
there is also the social incentive. GSPartners
has been actively promoted in South Africa by
well-known sports personalities such as Victor
Matfield, Herschelle Gibbs, Lucas Radebe and
Toks van der Linde. It’s not just about the money,
it’s about being part of this celebrity group.
When making decisions, investors repeatedly
fall foul of the three elements of what I call the
Bermuda Triangle of Investing: cognitive errors:
emotional responses and social influences. All
three play a role in Munger’s Reward/Punishment
Super Response Tendency. Central to a financial
planner’s value is helping clients to navigate these
three elements on an ongoing basis. Making this
job easier would be that whenever you get a sniff
of an investment that looks like “rat poison” or a
“turd”, don’t only keep your clients’ noses out of
it, alert the public and the regulator too. I believe
professional financial planners have a collective
incentive and responsibility in this regard. And no
doubt, Charlie Munger would approve.
[1]
BC Securities Commission, Temporary Order, 11/16/2023, Peter J. Brady,
Executive Director.
[2]
“Red flags over GSPartners highlight spread of dodgy crypto providers”
by Neesa Moodley, Daily Maverick, 3 December 2023.
www.bluechipdigital.co.za
17

BLUE
CHIP
COLUMN
Social media in financial planning
A practical guide for professionals.
Kobus Kleyn, CFP®, Tax
and Fiduciary Practitioner,
Kainos Wealth
Kobus Kleyn has published
over 200 articles and authored
four books. He is a multiple
award-winning professional
and holds eight memberships
with professional associations.
His most recent awards were
lifetime achievements awards
from the FPI (Harry Brews),
The Million Dollar Round
Table (Top of the Table Life
Membership) and Liberty Group
(Life Membership) in 2021/22.
As a Senior Certified Financial Planner
and an author well-versed in personal
branding, I have come to appreciate
the significant role social media plays
in our profession. My experiences and insights,
particularly those shared in Accelerate Your Brand,
have underscored the value of these platforms in
enhancing client relationships and professional
growth. Let me share some practical perspectives
on harnessing social media effectively in our field.
The balanced approach to social media
Social media offers us an unparalleled platform for
sharing our expertise and insights. However, it’s
crucial to navigate this space with a sense of balance.
While we strive to be informative and engaging,
we must always remain within the bounds of
professional conduct and regulatory compliance.
Every shared insight must align with the high
standards of our profession.
Education via digital channels
The most rewarding aspect of social media is the
opportunity to educate. By simplifying complex
financial concepts and sharing informed insights,
we significantly contribute to enhancing financial
literacy. This effort cements our reputation as
knowledgeable advisors and fosters a deeper
understanding among our clients, which is
essential for building long-lasting relationships.
Crafting a professional online presence
In our profession, a strong personal brand is
essential. Social media is a tool that, when used
wisely, can enhance our professional visibility.
The key is to engage with our audience in a way
that reflects our commitment to our profession.
Every post and interaction should add tangible
value, strengthening our professional standing
and providing genuine benefit to our audience.
Keeping up with changes and innovations
Our profession is constantly adapting to new
technologies, regulatory changes and market
shifts. Social media often serves as the frontline
for such developments. Active participation in
these digital conversations keeps us informed
and prepared, allowing us to adapt our
strategies and advice to reflect the latest trends
and regulations.
Utilising social media for client engagement
Engaging with clients on social media goes
beyond posting regular updates; it involves
active listening and interaction. Responding to
comments, addressing concerns and participating
in relevant discussions can significantly enhance
client engagement. This approach not only
demonstrates our commitment to our clients but
also helps in understanding their evolving needs
and expectations.
Transparency and consistency
Trust is the cornerstone of our profession,
and social media can be a powerful tool in
building and maintaining this trust. Consistent,
transparent communication that reflects our
professional ethics and values can go a long
way in solidifying client trust. It’s about creating
a digital presence that clients can rely on for
accurate, helpful information.
Challenges and responsibilities
While social media offers numerous advantages,
it also poses certain challenges, particularly
regarding information accuracy and privacy
concerns. As professionals, it is our responsibility
to ensure that the information we share
is accurate, and up-to-date and in no way
compromises client confidentiality or privacy.
Conclusion
In conclusion, social media, when navigated with
care and professionalism, can be a potent tool
for financial planners. It offers us a platform to
educate, engage and evolve with the changing
landscape of our profession.
As we harness its potential, let us remain
committed to the principles of integrity and
excellence that define our work. By embracing
social media thoughtfully, we can enhance our
client relationships and professional growth
and also contribute positively to the broader
financial community.
18
www.bluechipdigital.co.za

BLUE
CHIP
INVESTMENT | Leadership
A UNIVERSAL PERSPECTIVE
Ferdi van Heerden took over the reins at Momentum Investments in September 2023.
He has filled a range of executive positions in the Group, culminating in more than a
decade of leadership in the international investment industry as head of Momentum
Global Investment Management in the UK. Blue Chip caught up with him.
20 www.bluechipdigital.co.za

INVESTMENT | Leadership
BLUE
CHIP
Congratulations on your appointment as CEO of Momentum
Investments. How do you feel about this opportunity?
I have been privileged to spend 30 years in various roles at the
Momentum Metropolitan Group, with three years in Zurich and the
last 13 years in London. It has given me a wealth of experience in and
exposure to the investment industries both locally and internationally.
This new role will be an opportunity for me to plough back
some of the experience I have built up courtesy of the Group, and
to use the exposure I have had to guide our business during its
next growth phase and take it forward. There’s much that we can
do and should do in a fast-paced, changing world.
I look forward to leading the Momentum Investments team
on this journey and helping build collective dreams into reality.
What is your objective in your new role?
We are a people’s business. We have an excellent team of people
in the various Momentum Investments businesses in the Group,
both in South Africa and the UK.
My immediate objective will be to solidify the foundation that
was laid under Jeanette Marais’s leadership over the last five
years and to build on this to set ourselves up for a sustainable
global future.
One of my key objectives is to develop a truly global perspective
in our business so that we deliver an international set of capabilities
to our clients and advisor base.
Our clients increasingly invest offshore and when they trust
us with investing their money, we must do so in a well-balanced
manner in opportunities across the world to ensure the best riskadjusted
outcomes for them. To do so, we need to have global reach
and capabilities. Given my tenure in London for the past decade, I
can help focus our business to truly have a global mindset.
Career history
Ferdi van Heerden joined Momentum Global Investment
Management (MGIM) in 2010 after serving three years as CEO
of a start-up insurance venture in Switzerland. He has held
several senior executive positions in Momentum Metropolitan
Holdings Limited (MMH) and the FirstRand Group, both listed
companies on the JSE. During his career of circa 30 years
with these Groups, his responsibilities included heading up
Momentum’s individual life operation, the private pension
fund administration business, as well as FirstRand’s consumer
banking division.
Ferdi has 35+ years of experience in the life insurance and
investment industries in South Africa, the UK and Europe.
What is Momentum Investments’ unique selling proposition?
For us, it is always about people which is captured in our tagline:
“With us, investing is personal”. It is as much about the customer
journey as it is about the customer’s investment outcome.
Therefore, we make it our business to understand the individual
needs of our advisor partners and clients so that we can help them
achieve what they set out to do.
As a Group, our stated objective is to help individuals and
businesses achieve their financial objectives. We try to make it
easier for them to invest with confidence and secondly to stay
invested. Our unique selling proposition in a nutshell is our people,
our culture as well as our attitude to partnerships and business.
In my view, a challenge equals an
opportunity if you are proactive.
Please outline Momentum Investments’ investor capabilities
locally and offshore.
Given the breadth of our capabilities, this could be a conversation
on its own. But let me summarise it in three buckets. First, in
www.bluechipdigital.co.za
21

BLUE
CHIP
INVESTMENT | Leadership
terms of our investment capabilities, we have a wide range of
local and offshore fund solutions, with various risk profiles. We
consider ourselves a specialist multi-asset investment manager,
with solutions in multiple jurisdictions. In South Africa, we
have locally authorised unit trusts, in the global space we have
UK-domiciled unit trusts, Luxembourg-domiciled funds and
Guernsey solutions; so quite a wide range that speaks to our global
clients’ requirements.
While multi-asset is a key focus area for us, we also have a range
of single-asset class solutions, both locally and internationally,
and specialised skills. In South Africa, these include systematic
strategies, fixed income, as well as alternative solutions, including
thematic investments. In the UK, we’ve got great global fixed
income and direct real assets investment capabilities. For other
asset classes, we choose to execute via our select global and local
range of asset management partners, which includes Robeco.
In the wealth management (retail) space, we are and have
been one of the leading investment platform providers, both
with our local Momentum Wealth platform, as well as our offshore
Momentum Wealth International platform in Guernsey. We were
one of the first linked investment service providers (LISP) in South
Africa offering local and global solutions to our South African
clients, as well as to expat investors in various jurisdictions
around the world. We have a wide range of retirement solutions
in our retail business which are well set up to look after the
retirement needs of clients, including our life, living and hybrid
annuity solutions.
To service our advisor partners well, we have a strong
discretionary fund manager capability under the Equilibrium
brand that speaks to an advisor’s need for managed portfolios.
Lastly, our Momentum Securities business initiates access to
bespoke wealth management needs of high-net-worth clients as
well as institutional stock-broking needs.
As an investment company operating in multiple spaces,
how do you deal with the different sustainability taxonomies
across markets?
As an investment business, we have a key role to play in terms
of ensuring that we help create a sustainable future world for
our clients and the next generations. We follow an integrated
investment approach towards environmental, social and
governance (ESG) factors and responsible investing to help
enable this. Given the multiple jurisdictions in which we operate,
this also means that we are subject to different regulatory
taxonomies regarding ESG.
Global investment managers would prefer one common taxonomy
that applies to all sustainable investments and jurisdictions, but
this isn’t likely to happen soon given different local government
We've always been an adviceled
investment manager.
and regulatory priorities. We are already subject to the Sustainable
Finance Disclosure Regulation (SFDR) in Luxembourg given our
global fund range.
Recently, the Financial Conduct Authority (FCA) in the UK
announced its sustainability disclosure requirements (SDR), which
is different to the SFDR. This introduces complexity and additional
costs in terms of the disclosure requirements when we distribute
funds in multiple markets.
Quite a few fintech AI-type solutions are becoming available
that will help with the reporting requirements for the different
taxonomies and will save a lot of effort and costs but will also
assist in ensuring fair reporting and address concerns with
regards to greenwashing.
Please discuss the role of technology, and specifically AI, for
the future of the investment industry.
I firmly believe an AI-driven technology revolution is underway
that will reset the rules of financial services and the future of
investment managers. The investment industry is not known for
leading technology innovation, and a mindset shift is now required
in this regard. Ignoring this will be at our peril.
The use of new technologies will be imperative to manage
margins in our business as they bring efficiencies to regulatory
and commercial pressures on fees. Our operating models will have
to adapt to ensure they are resilient and future fit.
Also, technology is changing how clients wish to deal with
investment management firms and how they access investments
in the future. We must make sure that we keep pace with that as an
industry. However, any technology solution is as good as the data
that the technology is using. Hence, a big focus for Momentum
Investments is data integrity that would enable and support
various forms of AI-enabled solutions.
Over the years, our Group has invested in several fintechs and
insure-techs through our Exponential venture funds in the UK
and South Africa, which gives us access to new thinking and an
opportunity to see “the Art of Possibility”.
Our FNZ partnership in the wealth management space will
bring a lot of digital capabilities to our LISP platforms in South
Africa and Guernsey.
About 18 months ago, we embarked on a project to explore the
potential use of AI in our investment processes in our UK business.
The intent will be to use this to provide market and asset class
analysis at scale, and to use this as an enabler to assist our portfolio
managers with their tactical investment decisions. While still early
days, we can certainly see the benefit of AI and how this can inform
decision-making of our investment team.
We are a people’s business first and foremost, and we see
technology (and therefore AI) as an enabler for how we do
business and analyse data. Our intent is not to replace our
people with technology. We use technology to provide scale
and capacity and to enhance our decision-making across the
business. If anything, we need to do more and experiment more
and be brave in that space.
22 www.bluechipdigital.co.za

INVESTMENT | Leadership
BLUE
CHIP
For us, it is as much about the
customer journey as it is about
the customer outcome.
What do you deem to be the most critical component of
financial success for investors?
Two key factors that I would highlight are the need for advice, and
time. We’ve always been an advice-led investment manager. We
believe in the need for advice. Investments have a profound impact
on your future and in retirement. The outcome that you achieve in
years to come depends very much on the advice you receive now.
Many people forget the importance of time in investment
outcomes. The earlier you start the better. Often advice is not
available to young people at the early stages of their professional
lives, and it is critical that this changes.
Also, staying invested over time is paramount. Too often,
decisions to disinvest and reinvest are made at the wrong times.
Consistency of staying the course and investing over long periods
is important. Partnering with a financial advisor will help enable
investors to choose the suitable options for them and take any
changing circumstances into account along the journey.
What are the opportunities and challenges for Momentum
Investments as a group in 2024?
Whether it’s 2024 or beyond, there are many challenges. In my
view, a challenge equals an opportunity if you are proactive and
you have a positive attitude. The world has many challenges
geographically, socially, environmentally, economically and
technologically. It’s how we deal and interact with these challenges
that will determine our future success.
Globally, a major challenge that we are all facing in investment
management is the lack of enough investing by consumers. People
disinvest and then remain disinvested, or they use the money to
maintain a lifestyle in the short term. It has to do with affordability
(cost of living pressures), but it is often also a mindset. It has
become too easy to spend money as opposed to investing it.
As an industry, we need to educate and engage consumers
and make sure that investing is exciting for them, that it is easy
to access investment products and that we provide appropriate
information to enable them to stay invested. Consumers need to
understand what they are investing in, and the future value that
they are creating for themselves in doing so.
We’re passionate about the effect that investments can have on
people’s lives. Investing and saving more must become a nationalfocused
drive in South Africa because it impacts materially on
people’s long-term futures, specifically in retirement and their
ability to achieve their life goals.
With digitalisation, we can hopefully enable that a bit more. It
needs an ongoing collective effort from the industry to make sure
that we fly the flag of the need for people to invest and save more.
How does Momentum Investments drive wealth management
value chain alignment?
The whole future in financial services is about how we participate
and engage in various ecosystems and value chains.
We value advisors in our industry, acknowledge their importance,
and take time to understand their needs. In the front office where
the client connection is key, our products and investment platform
can easily integrate and support the requirements of our advisor
and institutional partners.
In our middle and back office, we use a variety of global
and local partnerships. We align ourselves and integrate with
global fund administrators and custodians in all the jurisdictions
where our funds are domiciled to ensure seamless execution of
investments on behalf of our clients.
Hence, digitalisation is a key focus area for us to ensure that our
operating models are fit for purpose and can easily become part of
various vertically integrated networks. FNZ as a global technology
partner on our funds’ platforms is part of this.
Our DNA has always been focused on advisors. We know how
to work closely with advisors so that when they need us to align
our investment propositions with their advice philosophy, we can
do so. For us, it is about the ecosystems that we participate in.
Professional qualifications
BSc Honours in Mathematical Statistics, Advanced
Management Programme (AMP) from INSEAD (France).
Diploma in General Management from Reading University
(Henley Business School/UK). Member of the Chartered
Institute for Securities and Investments (MCSI).
www.bluechipdigital.co.za
23

BLUE
CHIP INVESTMENT | Offshore
Momentum Investments and
Robeco launch partnership
in Southern Africa
Strategic partnership deepens portfolio integration in quantitative equity products and research.
Momentum Investments and Robeco have entered
a strategic partnership, affording Momentum
Investments access and exclusive distribution rights
to Robeco’s quantitative equity portfolios and
research support for the Southern Africa Development Community
region. The partnership also provides Momentum Investments
with broad access to Robeco’s best practices and insights.
As allocators of capital across the investment team in London
and South Africa, we identified Robeco as a core partner to deepen
integration between the local and global portfolio allocations,
deemed as a crucial investment success factor.
Robeco is an international asset manager founded in 1929 and
a global leader in quantitative and sustainable investing since
1995. Quantitative or “quant” investing is an investing strategy that
uses mathematical models and data analysis to make investment
decisions and manage portfolios more systematically.
The partnership follows five years of collaboration between
Momentum Investments and Robeco. With this partnership, we
can achieve more holistic integration and alignment of local and
global allocations by using Robeco quants as a core provider in
Mike Adsetts, Chief Investment Officer, Momentum Investments
global equity funds. This integration has been created through the
alignment and harmonisation of investment style factors between
South Africa and offshore equity allocations, as well as portfolio
construction that accounts for the complementary characteristics
of various equity markets.
Sustainability and responsible investing resonate deeply
with us and Robeco, and the partnership will enable Momentum
Investments to further improve the environmental, social and
governance (ESG) profile and carbon footprint of its global
portfolios. We continue to progress on our sustainability journey
and integrate the principles encapsulated in our policies on
responsible investment, climate change, engagement and
proxy voting.
The continued relaxation of exchange controls has increasingly
required assets managed in South Africa to have strong alignment and
integration between the local and global components of portfolios,
which also ensures the consistency and integrity of the investment
philosophy and risk management. The strategic partnership with
Robeco, together with our London office, Momentum Global
Investment Management, as well as South African-based teams, will
ensure that we can continue to provide investors with world-leading
insights and access to global investment opportunities.
“The synergy between Momentum and Robeco empowers us
to deliver our clients unmatched, integrated portfolios spanning
both local and global assets. In the dynamic South African
investment landscape, change is upon us. As the need for offshore
assets surges, our powerful partnership merges Robeco’s global
knowledge with our South African expertise. Together, we are
shaping the future of world-class investing,” says Jeanette Marais,
chief executive officer of Momentum Metropolitan.
We are excited by the prospects afforded by the partnership and
look forward to the ability to leverage the complementary skills of
Momentum and Robeco to the benefit of all our sstakeholders,” says
Mike Adsetts, Chief Investment Officer of Momentum Investments.
For more information, speak to your Momentum consultant or go
to momentum.co.za.
24 www.bluechipdigital.co.za

INVESTMENT | Economy
BLUE
CHIP
Top 10 trends shaping tomorrow
Investors, envisioning a route away from a deeper or more
prolonged recession, are nevertheless still likely to grapple with
a moderation in global economic activity in 2024, driven by the
ongoing repercussions of tight monetary policies, constrained
government coffers, lingering inflation and unpredictable
geopolitical events. Amid these challenges, we are closely
monitoring 10 key trends on our macro radar for the year ahead:
Trend #1: The inevitable gravitational pull of economic forces
Around the world, inflation is receding and unemployment rates
have largely stabilised as major central banks have hit the pause
button on their monetary tightening measures. Moreover, despite
China grappling with a property crisis, signs of potential benefits
from backend-loaded stimuli are likely to emerge more strongly in
the months to come. Nonetheless, the underpinnings of economic
growth resilience in 2023 seem fragile. High interest rates are likely
to start biting and economic hardship could ensue if high rates
persist.
Trend #2: Varied growth paths
The global economy, emerging from differing regional postpandemic
output losses, faces divergent growth prospects. While
robust consumer spending in the United States is expected
to slow as excess savings dry up, Europe is contending
with economic pressures and calls for fiscal austerity
will likely limit recovery. China, on the other hand,
is anticipated to benefit from meaningful policy
announcements made late in 2023, following a
disappointing response from authorities earlier
in the year.
Trend #3: A more gradual ebbing of inflation
The challenge of reducing excess inflation proves
more difficult later in the cycle. Despite global
inflation having more than halved, the
International Monetary Fund warns that
inflation in 90% of inflation-targeting
countries will likely still exceed central
bank targets in 2024.
Trend #4: The interplay between
monetary and fiscal policies
The pandemic-induced recession
demanded closer coordination
of fiscal and monetary policies.
Calls for fiscal responsibility
and more targeted fiscal frameworks are likely to sound louder to
address pressures on debt sustainability.
Trend #5: An unsettling geopolitical backdrop
Navigating global complexities has become even more challenging
with the unfolding Middle East events. Moreover, The Economist
notes that elections in 2024 for over half of the world’s population
will further contribute to an uncertain geopolitical landscape.
Trend #6: South Africa’s coalition complexities
Substantial advances in support for fringe parties can signal
South Africa’s evolving democracy, yet it can also foreshadow a
more divided society. The ruling party faces challenges ahead
as we approach the 2024 elections given its inability to resolve
shortcomings in energy and logistics, alongside insufficient
progress made in curbing corruption.
Trend #7: South Africa’s ongoing logistical hurdles
Despite progress in Eskom’s turnaround plan and private
sector investment in renewable energy, escalating logistical
challenges are affecting rail and port efficiency and dampening
growth prospects.
Trend #8: South Africa’s fiscal tightrope
South Africa faces worsening fiscal challenges, with the latest
budget forecasts indicating increased government debt. The
interest burden and social demands remain high, hindering a swift
stabilisation in the country’s debt ratio.
Trend #9: A respite from inflation
Though renewed risks to the South African inflation forecast
exist, demand-led pressures and wage inflation are expected
to remain contained.
Trend #10: Hawkish echoes to persist
Major global central banks have paused their rate hiking cycles
but have hinted they remain ready to act in case disinflation
trends reverse. The South African Reserve Bank is expected to
continue talking tough on inflation even though the next move
in interest rates is likely lower from here, most likely by the
middle of 2024.
As investors navigate the nuances of moderating growth and
geopolitical uncertainties in 2024, these 10 trends are likely to
shape the trajectory of global politics, economics and financial
markets in the months to come.
Sanisha Packirisamy, Economist, Momentum Investments
www.bluechipdigital.co.za
25

BLUE
CHIP
INVESTMENT | Innovation
Shaping the future of investment
management and advice, today
Momentum Investments’ Research Hive is a purposefully created hub of research and innovation activity
dedicated to advancing the worlds of effective investment management and advice for both the business
and our clients.
Inside the Hive, we’re committed to a clear purpose: drive
the evolution of our investment management and advice
propositions by blending innovative quantitative investment
research, technology and data science, market insight, and
a profound understanding of human behaviour through the
behavioural finance lens. We aim to enhance our investment
management business, technology and client insights to not only
meet but exceed the expectations of our clients in an ever-evolving
financial landscape.
To develop our internal research capabilities, we have
collaborated extensively in the industry to ensure that we remain
relevant in the market. Our close connection with research
brokers and academia (through our university relationships and
sponsored research projects), as well as with global research
providers and asset managers, ensures that we are at the forefront
of research and trends in the industry from technical, academic
and practical perspectives.
Academic research with machine learning
An example of our close relationship with universities can be seen
in our collaboration with Stellenbosch University in the context of
machine learning. Machine learning is a rapidly growing field that
offers many potential applications in investment management
and related fields in financial services. Stellenbosch University has
committed to developing its capabilities in this field of study through
its creation of the School for Data Science and Computational
Thinking. It is also an important focus for Momentum Investments
as it offers many potential applications for us in investment
management, behavioural finance and advice.
Professor Evan Gilbert, a research strategist in the Research Hive,
will be seconded on a part-time basis to the university from 2024
onwards. He will supervise research projects at the Master’s and PhD
levels on machine-learning-based research topics applied to the
financial services context. These projects will provide the basis for
both academic research papers in local and international research
journals, and the insights to drive the impactful application of
machine learning techniques inside Momentum Investments.
Eugene Botha, Deputy Chief Investment Officer,
Momentum Investments
Understanding investors
Understanding the intricate dance of market dynamics and human
behaviour is another focus area for the Research Hive. We delve
26 www.bluechipdigital.co.za

INVESTMENT | Innovation
BLUE
CHIP
deep into the realm of behavioural finance, peeling back the layers
of psychology that influence investment decisions and which
commonly lead to unintended results. Our mission is to decipher
market insights through the lens of human behaviour.
We recently held a ground-breaking conference on the future
of behavioural finance in partnership with the CFA Society of
South Africa and the Global Association of Applied Behavioural
Scientists. Renowned experts in the fields of behavioural
science and finance, investments, psychology and AI shed light
on the ground-breaking possibilities that emerge when these
domains intertwine. This event showed that the world is at an
interesting juncture.
On the one hand, we’re looking towards a human “empathy”
economy where psychology plays a more important role in
solving our problems. On the other hand, the era of artificial
intelligence (AI) and quantum computing beckons, bringing
with it tremendous opportunity and uncertainty. This remains
an important focus area for us. In time, we will be able to make
use of effective technology to nudge investors to make more
informed decisions aligned with their long-term financial goals.
Retirement reimagined
A final example of the application of effective research is how
Momentum Investments has reimagined retirement income
planning with the recent launch of a significant enhancement
to our living annuity. By allowing clients to hold a combination
of a traditional (guaranteed) and living annuity, they must no
longer choose between income protection and the growth of their
retirement assets.
However, determining the optimal balance between certainty and
flexibility in retirement income is a complex problem. The Research
Hive has worked alongside Momentum Wealth to model, build
and introduce its Income Illustrator tool to assist financial advisors
in determining the optimal retirement income solution for their
clients. This tool uses a detailed simulation process developed by the
Research Hive members for investment purposes to project future
income and investment values under different return scenarios and
allocations to the traditional annuity. This ensures that the uncertainty
of future financial markets is considered in this decision.
The examples of the Investment Research Hive output are a
testament to the power of collective vision, relentless innovation
and unyielding commitment to continuous improvement. By
linking original, research-driven client insights, behavioural
finance knowledge and investment management know-how,
we’re creating a continuous loop of learning and improving
inside our business. This is only possible with a dedicated research
capability and a commitment to cross-business collaboration. With
unwavering dedication to this goal and a collaborative spirit, we
believe that we are shaping the future of investment management
and advice today.
www.bluechipdigital.co.za
27

BLUE
CHIP
INVESTMENT | Offshore
A leap forward into
a new digital era
In today’s fast-paced digital age, advisors and wealth managers
require tools that seamlessly adapt to their evolving needs.
The newly redesigned Momentum Wealth International
website ticks this box with style. Its layout – easy to
navigate yet sophisticated – puts a wealth of resources
and information at the fingertips of users, regardless of
the device they choose to use. The website heralds a new era
in how financial advisors, wealth managers and clients in South
Africa and beyond interact with digital platforms that facilitate
offshore investing.
The revamp goes beyond a mere facelift. It is a testament to
countless hours of creative and technical toil by dedicated teams
who envisioned a site that merges visual appeal with practical
usability. The result: a website that not only catches the eye but
also equips the hands of those navigating the complex and everchanging
world of global investing.
In the early 2000s, the Momentum Wealth International platform
was launched in Guernsey as an offshore investment platform for
South African and global clients. Investing through Momentum
Wealth International gives clients a true offshore investment
experience, diversification from local solutions with exposure to
multiple global markets and
solutions that offer estate
planning and tax benefits.
With the features and
capabilities of the website
after logging in, advisors
and wealth managers can
access client investment
information, generate
statements and contract
notes, execute switches
and even make additional
investments – all at the click
of a button. It’s a paradigm
Fränzo Friedrich, Head of Marketing,
Momentum Investments
shift that promises to enhance how financial professionals
manage their workload.
Many users have already started exploring the new website
and the feedback has been overwhelmingly positive. Those yet
to discover the revamped momentum.co.gg can look forward
to an intuitive, user-friendly experience that stands proudly in
the industry.
However, the launch of the redesigned website is not the
finish line. Rather, it is a significant milestone in Momentum
Wealth International’s ongoing journey of evolution. As the
financial landscape continues to change, the commitment
to continually adapt and innovate to meet the needs of the
industry remains unwavering.
The successful transformation of the website would not have
been possible without the invaluable support, feedback and
collaboration from our partners in South Africa and abroad. It
is this spirit of partnership that will continue to fuel the future
of Momentum Wealth International.
The launch of the new look Momentum Wealth International
website is more than a facelift – it’s a leap forward into a new digital
era. It sets the tone for what users can expect from an investment
platform committed to continual evolution and improvement.
Welcome to the future with Momentum Wealth International.
Let’s help you make your clients’ dreams and aspirations come
to life. Because with us, investing is personal.
28 www.bluechipdigital.co.za

Annual Refresher
2024
Cape Town 27 th February 2024
Durban 29 th February 2024
Gauteng 5 th March 2024
Virtual 27 th March 2024
For more information go to www.fpi.co.za or contact +27 (11) 470-6000
6.5
SUMMARY
VERIFIABLE HOURS

BLUE
CHIP
FPI | Financial Planner of the Year
THE ULTIMATE ACCOLADE
The FPI Financial Planner of the Year competition is renowned for its rigorous evaluation process that
showcases the exceptional skills and abilities of the finalists. Lara Warburton, CFP®, stood out among a
group of finalists including Thomas Brukman, CFP®, and Noel de Kock, CFP®, to secure the coveted title.
Congratulations on your achievement, Lara! What does
winning the award mean to you?
The gala awards dinner is such a special occasion. The FPI pulls out
all the stops to make it special, and many industry stalwarts and
previous winners attend each year. It is a celebration of all that is
good in our profession – young achievers excelling in their studies,
meaningful contributors to our profession, practices that excel and
of course, the FPI Financial Planner of the Year, which is the final
award of the evening.
Integral Wealth, the business I manage founded in 2016, was a
finalist in the Professional Practice Award category, so I felt like a
winner already, but nothing could have prepared me for when my
name was announced as the winner. I felt so elated and excited.
I was overwhelmed by all the people who came to personally
congratulate me and the fuss everyone made about me, especially
by many of the previous award winners who were there.
Since then, I have been inundated with flowers, emails, calls
and WhatsApps, I have received hundreds of LinkedIn contact
requests and I can see that many of my clients see me in a different
light. It has been quite overwhelming and incredibly exciting.
I underestimated the warmth and recognition I have received
from financial planners, as well as from industry players like the
product and service providers we work with. Our profession is
kind and gracious.
What was your motivation for entering the award?
When I entered the competition, I knew that winning the award
would be the ultimate accolade for me as a financial planner. I have
always strived to keep informed on changes in our profession and
with best practices in all we do, and being a finalist or winning
would bring a great deal of personal satisfaction. Winning the
award would be an endorsement of excellence and the highest
achievement possible. I know how highly regarded this award is in
our profession, and I know many of the previous winners whom I
respect tremendously. Winning the award also brings professional
recognition – recognition from one’s peers is high praise indeed as
they truly understand all the challenges we face.
What has been the highlight of your career (besides winning
the award)?
There have been many highlights in my career regarding clients’
lives that have changed, and the gratitude I have experienced
Lara Warburton, CFP®, Managing Director, Integral
Wealth Management
30 www.bluechipdigital.co.za

FPI | Financial Planner of the Year
BLUE
CHIP
Lelané Bezuidenhout with Noel de Kock, Lara Warburton and Thomas Brukman.
I knew that winning the award
would be the ultimate accolade
for me as a financial planner.
from them. My career started with me working for two unit trust
companies, first at Investec and then at RMB. I was made a director
of RMB Unit Trusts when I was 29 years old, and that was a career
highlight for me at a young age. I always planned on being a
corporate employee and entrepreneurship was not part of my
plan. Almost eight years ago, circumstances forced me into starting
my own business with some colleagues, and I am immensely proud
of the business we have built, the procedures I have put in place
and our business’ successes as we grow. No-one can prepare you
for the challenges starting a business brings!
What do you consider the most important trait of an
accomplished financial advisor?
It is hard to identify just one character trait as the most important,
so I’ll start with a few. Listening well and hearing what we are
being told is one of the most important. Each client has a different
interpretation of their life events, and we cannot cloud our need
to be objective with our own biases. Wanting to learn more and
being able to admit when we are not experts and need additional
resources is also important – to know what we do not know. I think
humility speaks to both traits – our work is about our clients and
not about us, and we need to remember their importance and not
our own through the service we provide.
What changes would you like to see in the profession?
Our profession is constantly changing and evolving, and it has
come such a long way. The FPI has a long proud history of driving
and recognising professionalism along international standards,
and there are other professional bodies also driving best practices.
It is pleasing to see young people joining the profession who
want to achieve the CFP® designation and recognise the importance
of high standards in our profession.
I have been concerned about some of the products that are
aggressively marketed, especially complicated products with
hidden costs and exit penalties. It is good to note that the new
Conduct of Financial Institutions (COFI) Bill is placing the onus on
product providers to take more responsibility in this regard.
As this year’s FPI ambassador, how will you use the platform
to motivate change?
The financial services industry in South Africa is world-class, and
we rank highly in many areas as confirmed by the World Economic
Forum global competitiveness reports. My biggest concern is
that these services are not the experience of many under-served
members of our communities. Poor financial education at school
and low levels of literacy preclude many people from experiencing
www.bluechipdigital.co.za
31

BLUE
CHIP
FPI | Financial Planner of the Year
Winning the award is a
great incentive and the
competition process has
been an incredible gift.
the best of our profession. Low contributions usually have higher
fees as many providers shy away from this sector.
I believe every South African citizen and organisation should
be focused on this transformation issue – for South Africa to
prosper and thrive everyone needs to have access to banking,
investments and life assurance that is appropriate and affordable.
Many financial planners do pro bono work, and I would like to see
this reach extended. Trust is low in this sector of the economy, it’s
not a profitable sector if priced correctly for the consumer, but it is
key to our political and economic stability and the future of South
Africa. I am not sure how much scope I will have to actively drive
this in 2024. It has always been my retirement plan to champion
this cause.
How should the profession improve clients’ experience of financial
planning and ultimately their financial planning outcomes?
We often respond to what clients ask for. We need to remember
that many clients have a limited understanding of the scope of
work we cover. Some still view us as product salespeople or
investment allocators selecting portfolios. Many do not ask for
more service than what they currently receive.
Long-standing clients have annual reviews, but it is a good
idea from time to time to review each client as if they were a
new client. Start from scratch and review where they are now
and if there are any improvements or changes to be made. We
need to keep reminding our clients of the full range of services
we provide, not just the ones they see at present. I have realised
when doing this myself that many clients think our work only
happens when we sit with them for a review. They don’t see what
goes on in the background.
Please share a message of motivation for those who have
considered competing for the FP of the Year Award.
I encourage every financial planning professional to enter this
competition at least once. It has been the most remarkable
opportunity to review how I work, and that has been invaluable.
Enter this competition for yourself and view it as part of your
personal growth as a professional. The process itself is extremely
thorough and helps us to see our shortcomings and gaps. The
panel interview with industry experts provided valuable insights
into what we should be focusing on. Winning the award is a great
incentive and the competition process has been an incredible gift.
Nothing ventured, nothing gained. Step out of your comfort zone
and enter the arena. It’s the only way to grow as a person and as
a professional.
32 www.bluechipdigital.co.za

Young Financial
Planners Organisation
Young Financial Planners Organisation
Advancing Professional
Financial Planning and
Advice for All.
The Young Financial Planners Organisation (YFPO), a member led FPI community,
as part of its vision to make professional financial planning available to all South
Africans.
YFPO, is actively seeking under- 45ʼs who work as – or aspire to work as – financial
planners, is about uniting and inspiring the young generation of CFP ® Professionals
by bringing together FPI Student, Candidate and Professional Members under the
age of 45 in the spirit of collective improvement.
For more information go to www.fpi.co.za or contact +27 (11) 470-6000

BLUE
CHIP
FPI UPDATES | Awards
TOP HONOURS AT THE FPI 2023
GALA AWARDS
The FPI hosted its highly anticipated annual gala awards evening in November 2023, a prestigious event
recognising excellence in the financial planning industry.
The culmination of the evening saw Lara Warburton, CFP®,
emerge as the distinguished recipient of the FPI Financial
Planner of the Year Award.
The announcement took place at a gala dinner attended by
esteemed financial luminaries, adding an element of glitz and
glamour to the event. The Sandton Convention Centre served as
the backdrop for this industry's flagship event.
34
www.bluechipdigital.co.za

FPI UPDATES | Awards
BLUE
CHIP
In addition to Warburton’s triumph, the evening celebrated other
notable achievements within the financial planning community:
Harry Brews’ Award: Robert Macdonald, CFP®, was honoured
for outstanding and dedicated service to both the FPI and the
financial planning profession.
FPI Approved Professional Practice of the Year Award: Crue
Invest stood the test of time and was crowned as the professional
practice of 2023. The finalists were Crue Invest, Veritas Wealth and
Integral Wealth Management.
Diversity and Inclusion Award: Olwethu Masanabo, CFP®,
received this accolade for tireless efforts in fostering diversity
within the financial planning profession.
It Starts with Me Award: Kim Potgieter, CFP®, received recognition
for her unwavering dedication to promoting the CFP® certification
and global standards.
www.bluechipdigital.co.za
35

BLUE
CHIP
FPI UPDATES | Awards
Top Candidate Award: Stephan Lombard earned the prestigious
title for surpassing all others in the FPI’s CFP® Professional
Competency Examination.
FPSB 25-Year Award: Dante de Gori, CEO of the Financial Planning
Standards Board (FPSB), presented the award to FPI chairperson,
Kirsty Scully, CFP®, and Lelané Bezuidenhout, CFP®, CEO, FPI on
behalf of the FPI which is celebrating 25 years of CFP® certification
in South Africa.
The top Student Financial Plan Winners were from the University
of Johannesburg (MSK Financial Services).
36 www.bluechipdigital.co.za

FPI UPDATES | Awards
BLUE
CHIP
The apex of the evening came with Lara Warburton, CFP®, being
announced as the 2023 Financial Planner of the Year. The selection
process involved a comprehensive evaluation, including the
submission of a detailed financial plan based on a given case
study, a thorough FPI Code of Ethics and Practice Standards panel
audit, and a final panel interview assessing expertise on legislation,
industry trends and technical information.
Chris Whales, Sam Oliver and Gavin van der Merwe from Blue
Chip magazine.
Kim Potgieter, Adele Whyte, FPI and Lelané Bezuidenhout.
Left to right: Palesa Dube, 2022 FP of the Year, Lara Warburton and
Lelané Bezuidenhout, FPI CEO.
David Kop, CFP®, former director at FPI.
Lelané Bezuidenhout, CEO of the FPI, commended all participants
for their dedication and hard work, emphasising that success in
the industry is a result of commitment, professionalism and hard
work rather than luck.
FPI chairperson, Kirsty Scully, CFP®.
www.bluechipdigital.co.za
37

BLUE
CHIP
FINANCIAL PLANNING | Retirement
Consider the pros and cons
of life and living annuities
By Kenny Meiring
When you retire, there are several instruments that you
can use to provide an income. Most people use only
a living annuity, but just one of these instruments
rarely meets a person’s needs optimally. The aim
here is to receive a sustainable retirement income, pay as little
income tax as possible and not lose money in the form of estate
duty when you die. Most of my retirement income solutions use
a combination of living annuities, life annuities and drawdowns
from discretionary investments.
Over the past few years, low interest rates and decent bond
yields have resulted in annuity rates being extremely attractive
and offering good value for money. I have used them to secure
decent incomes for pensioners who were drawing down too much
on their living annuities.
Let me give you a sense of the difference in income that you
can get by adding a life annuity into your investment mix. The
recommended drawdown rate for a 76-year-old is 5.5%. Your
Life annuities are designed to
provide you with a pension
for the rest of your life.
38 www.bluechipdigital.co.za

FINANCIAL PLANNING | Retirement
BLUE
CHIP
Converting your retirement
assets into an income should
not be done lightly.
die early. When you have a living annuity, you have to invest
as though you are going to live to 100, as you cannot afford
to run out of money.
• Life insurance companies can afford to be a little more
aggressive about how they invest the money, as they have large
pools to invest. As an individual, you cannot afford to take a
chance with your retirement capital, so you need to invest more
conservatively and give up some potential growth.
Downside of life annuities
Life annuities are designed to provide you with a pension for the
rest of your life. Once they are set up, there is very little flexibility.
You lock yourself into a particular income stream and that will be
paid to you for the rest of your life.
The other weakness of the annuity is that it is not designed to
pay an inheritance. With the living annuity, there will often be an
amount that your children can inherit once you and your spouse
have died.
This is not the case with a life annuity, as your children will stand
a much lower chance of inheriting because your pension will have
dried up.
I like to use a life annuity in conjunction with a living annuity.
The life annuity is used to cover your fixed costs such as your utility
bills and medical aid, and the living annuity covers the rest.
In the example below, if you bought a life annuity of
R3-million and used R7-million to make up the balance of your
income, you could significantly reduce your living annuity
drawdown rate:
Living annuity R46 000
Life annuity with no annual increases R96 000
Life annuity with 5% annual increases R70 000
R10-million living annuity would thus give you a sustainable
income of about R46 000 a month.
A life annuity, on the other hand, would pay out a level amount
of R96 500 a month for the rest of your life and your wife’s life. If
you wanted an annuity that increased by 5% a year, the annuity
would start at R70 000 a month.
To summarise, we have:
As you can see, the life annuity will provide a much higher
income for you. There are a few reasons this is the case:
• As life annuities are provided by life insurance companies,
they make use of life expectancy tables. The people who live
beyond the life expectancy level are subsidised by those who
Having a lower drawdown rate can increase the chances of the
capital value of your living annuity increasing over time. Not
only will this give you greater financial security, but you will
also increase the chances of your children inheriting something
once you and your spouse have died.
Converting your retirement assets into an income should
not be done lightly.
I would recommend that you chat with a financial advisor, who
can advise you on the right combination of life and living annuities.
This story first appeared in Daily Maverick.
www.bluechipdigital.co.za
39

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FINANCIAL PLANNING | Retirement
BLUE
CHIP
Eliminating the role of luck in
retirement income planning
When it comes to retirement income planning, some
people may rely on a little bit of knowledge and a
lot of luck to get them through. This contribution
of luck is not something that is regularly discussed
as, after all, if the ability of a retirement portfolio to produce a
comfortable lifetime income is simply a matter of luck, clients
might be forgiven for questioning the role of a financial advisor.
The truth is that luck can often play a role – but it could be
either positive or negative. The question is, can it be eliminated?
Defining and quantifying luck
Secular market trends (or waves) can set retirees up for a happy
retirement with enough money to last a lifetime, or an unhappy
retirement where their portfolio is depleted prematurely. Secular
The truth is that luck can often
play a role – but it could be
either positive or negative.
should be designed to last as long as the individual client’s life
expectancy (which is unknown), and a life annuity is based on
average life expectancy. And if clients are lucky enough to live
well beyond the average, they continue to receive an income, no
matter how long they live.
Investing solely in a living annuity is only appropriate in some
circumstances. Clients who have not saved enough may hope they
are lucky enough to grow their capital in the decumulation phase
– enough so to last a lifetime. But relying on luck is not a strategy.
In fact, when it comes to retirement income the strategy should
be to eliminate the reliance on luck altogether.
[1]
According to the Financial Sector Conduct Authority’s Draft Conduct Standard for proposed
maximum sustainable drawdown rates for default living annuities, if a 65-year-old male wants a
sustainable income that covers his essential expenses for life, the maximum he should draw from
his capital is 5.5% a year. The figure for a 65-year-old female is 5%, as women tend to live longer.
waves are long-term market trends that can last as long as 20 years
and can be bull, bear or sideways trends.
Due to the sequence of returns risk, the returns experienced
early in retirement have a disproportionate impact on the overall
outcome. If one is lucky, the timing of retirement is at the beginning
of a secular bull run. But if unlucky, it’s likely a retiree could run out
of money. In South Africa, for example, retiring five years ago, but
drawing down too much income, could result in trouble.
Eliminating luck
Even if a client has saved a substantial sum that should be
more than sufficient to fund a comfortable retirement, if their
withdrawal rate rises above a sustainable level [1] , then luck plays
an increasingly important role. Eliminating luck, then, is strongly
related to keeping a tight rein on withdrawals (also referred to
as drawdowns).
Even asset allocation, a main contributor to the success of an
accumulation portfolio (generally the working years), doesn’t
necessarily help, as it starts to play less of a role in decumulation
portfolios (retirement years).
For pooled portfolios like life annuities, the dynamics are different.
The two main reasons for this are, firstly, a living annuity must
include greater assets to offset the luck factor, whereas with a life
annuity, the luck factor is minimised. Secondly, a living annuity
Bjorn Ladewig, Head of Distribution, Just SA
www.bluechipdigital.co.za
41

BLUE
CHIP
INVESTMENT | Exchange-traded products
ETFs, ETNs and
AMCs: is this the
future of investing?
Recent developments in the market for exchange-traded products
are providing access to a whole new world of investment opportunities
for financial advisors and their clients.
As these product innovations happen, further innovations
at an advice level will become possible. Effectively
navigating this new order is going to be challenging
for financial advisors.
ETPs: the new order
The Johannesburg Securities Exchange (JSE) has recently allowed
the listing of a range of new exchange-traded products (ETPs).
Individuals can now buy and sell portfolios through a single listed
investment product across multiple asset classes.
This innovation has had two key effects: firstly, investors can
now access via the JSE what used to be only available via mutual
funds accessed through Linked Investment Services Providers
(LISPs). Secondly, the range of investment opportunities available
has also expanded rapidly. You can now get access to previously
unavailable investments such as individual global stocks (eg
Amazon or Alphabet), new indices (such as the Helios Space
Index) and even actively managed diversified commodity funds
(such as the one offered by Coherent Commodities in partnership
with UBS). These choices were not available via the mutual fund
channel, nor is it likely that they would be.
This range of additional choices brings opportunities to lower
costs and increase solution customisation – but also brings
complexity from an advice perspective. For active investors, ETPs
offer the advantage of intra-day pricing and trading vs the daily
price and trade settlement opportunity offered by mutual funds.
Exchange-traded Funds
These securities track the performance of a specified index such as
a portfolio of shares, bonds or single commodities. According to
the JSE, at the end of September, there were 98 exchange-traded
funds (ETFs) worth about R136-billion. Some of the most popular
examples include the NewGold and Top 40 ETFs.
The defining characteristic of an ETF is that the index (and thus
the constituents) is defined in terms of a pre-defined set of rules
reflecting a set of desired characteristics. As these rules are defined
in advance and implemented mechanically, they are well-suited
to investors who want the specific characteristics embodied in the
index design at a cheap total cost.
For example, currently, the largest equity ETF by value tracks
the JSE Top 40 index, which gives an investor access to the returns
of a portfolio of the 40 largest listed companies on the JSE. It is
important to note that these products are not limited to marketcapitalisation-based
indices. You can get access to “active” or
“smart” indices. As these ETFs track the performance of underlying
assets or indices, they follow a passive investment strategy, usually
at a very low cost to investors.
Exchange-traded Notes
Exchange-traded Notes (ETNs) are fundamentally similar to ETFs
but differ in one key dimension: they are notes (or debt obligations)
issued by a regulated party, usually a bank. This means that there is
credit risk – if the bank goes under, the investors must get in line
with other creditors. It also means that they are fixed term – they
expire after a period.
ETNs provide the holder with the returns to the underlying
index which is specified in the ETN itself. This structure gives it
great flexibility – the underlying index can be created from a
combination of literally anything that is listed (and thus can be
objectively valued).
As of the end of September 2023, there were 74 ETNs listed on
the JSE, with the majority providing access to specialised global
42 www.bluechipdigital.co.za

INVESTMENT | Exchange-traded products
BLUE
CHIP
All this opportunity comes with
the cost of more complexity.
equity indices. Like ETFs, the underlying index is predefined and
fixed and thus is a fundamentally passive investment in nature.
Actively Managed ETFs
An Actively Managed ETF (AMETF) is a new ETP that offers
exposure to a Collective Investment Scheme (CIS) portfolio, in
other words, one which is actively managed like a traditional
investment strategy. These provide access to effectively the same
investment solutions that are currently available via LISPs – but are
now available through the JSE. The underlying investment product
must be consistent with existing regulatory requirements of the
Collective Investment Schemes Control Act (CISCA).
The AMETF universe is currently relatively small in South Africa,
but more and more investment companies are planning to list
their current funds via AMETFs. Dimensional Fund Advisors have
recently converted all their mutual funds into ETFs – a value worth
USD44-billion. The primary reason for the change is the improved
access to investors offered by a public exchange.
personalisation of advice and the design of investment solutions.
Roland Rousseau of NeoBeta in a recently published report points
out that these innovations can lead to a completely different
advice environment where the key skills are, firstly, understanding
your client’s personal characteristics; and, secondly, developing an
appropriate solution for their individual needs across this wider and
more accessible investment universe.
All this opportunity comes with the cost of more complexity.
Advisors will, firstly, need to have the skills (or access to the skills) and
technology to manage this new world. For starters, understanding
your client objectively and more accurately will require the use of more
valid and reliable measures of relevant psychological characteristics.
The Money Fingerprint developed by Paul Nixon, head of behavioural
finance at Momentum Investments, in conjunction with the University
of Pretoria, is an excellent example of this type of innovation. Secondly,
the development of individualised investment solutions will require a
significant amount of bespoke modelling and reporting capabilities.
Globally, there are examples of such platforms which allow for such
customisation of investment solutions. Rousseau cites the example of
the Aladdin platform developed by BlackRock. Locally these do not
currently exist but are likely to be offered soon as the benefits of these
ETP innovations are recognised.
In short, the innovations we see in the ETP world are signifiers
of a new, more flexible world of (potentially) cost-efficient, hyperpersonalised
investment solutions. However, access to these
opportunities on its own is not sufficient – you need to know your
client well enough to understand their unique attitudes and needs,
and then have the right technology to design and manage an
increasingly wide range of solutions that are becoming possible now.
Investment advice is going to be a lot more than choosing the right
fund for your client.
Actively Managed Certificates
Actively Managed Certificates (AMCs) have the same legal structure
as ETNs (notes issued by a bank) but do not have a fixed underlying
index. They provide the returns to an actively managed underlying
portfolio. Conceptually they represent a similar alternative to the
AMETF, but do not have the same regulatory restrictions and thus
can offer access to a wider range of underlying portfolios.
What opportunities and challenges does this new world offer
financial advisors?
Clearly, these innovations bring additional investment choices
which need to be managed. They also bring more opportunity for
Evan Gilbert, Research Strategist, Momentum Investments and
Research Professor, Stellenbosch University
www.bluechipdigital.co.za
43

BLUE
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STRAPLINE
44 www.bluechipdigital.co.za

STRAPLINE
BLUE
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www.bluechipdigital.co.za
45

BLUE
CHIP
INVESTMENT | ETPs
Worth its weight in gold
A pioneer in the South African exchange-traded funds industry, Absa Corporate and Investment Bank’s
exchange-traded products business was established in early 2000 to provide investors with passive investment
solutions by using exchange-traded products as tools or building blocks. Blue Chip speaks to Michael Mgwaba,
who heads up the ETP business at Absa.
Please share your career trajectory to your current position.
I have more than 17 years of experience in the exchange-traded
product (ETP) industry, starting in the middle office and working
my way up to head the ETP business and as CEO of one of the
largest exchange-traded fund (ETF) issuers in Africa, the NewGold
Issuer (RF) Limited.
In your role, you are responsible for the development and
origination of innovative funds and solutions for retail and
institutional investors. Are there any new products for 2024
in the pipeline?
Our team is working on a few products/solutions that in our view
can be considered viable investment tools for various investors
in their portfolio construction. We can provide more detailed
information when cleared with the listing authority.
Please tell us about Absa’s ETP business.
The Absa ETP business established itself as the market leader in
precious metals and fixed-income ETFs and has been the largest
issuer of ETPs in the market for the better part of the last two
decades. Some of its flagship products are NewGold which has
multiple listings across Africa and NewPlat which at some point
became the world’s largest platinum ETF. The business has won
many accolades over the years, it has expanded its offering to
include Actively Managed Certificates (AMCs) and today its focus is
on products linked to precious metals, global currencies and more.
NewGold ETF is one of the simplest and most cost-efficient
methods for investors to invest directly in actual gold. How so?
NewGold was one of the first few gold ETFs launched globally in
2004 and the first of its kind in Africa. It started off charging the
same investment fee as some of the large global gold ETFs at 0.40%
annually. To align itself with its mission to provide an effective
way to own gold and democratise its investment, Absa decided
to reduce its cost to investors significantly, ensuring that the man
on the street can also enjoy the investment benefit associated with
investing in gold
Today, NewGold is one of the lowest-cost gold ETFs in the world
at 0.30% annually and currently, there are no similar products in
South Africa whose effective charge is lower than that of NewGold.
The use of NewGold by investors has also evolved over the years,
whereas in the past it was mainly acquired by long-term investors
who wanted to benefit from sustainable returns. Today, we also
see tactical investors who want to
benefit from short-term trends like
changes in interest rates, currency
fluctuations, etc. Other investors
use it to park excess cash while in
search of good opportunities in the
market and sell it later.
Why gold?
Gold has historically demonstrated
the following attributes: a superior
store of value, especially during
times of high inflation and currency
volatility. It has proven to have a low
to negative correlation to most asset
classes, making it one of the most
effective diversifiers in a traditional
60/40 portfolio. Recent analysis done
by the World Gold Council suggests
that adding gold into a diversified
Michael Mgwaba, Head of
ETP Business, Absa
portfolio investing in global assets can improve risk-adjusted
returns. It is rare to find all these attributes in one asset. These
attributes stem from the fact that gold has both industrial and
investment use and its supply and demand is diverse.
Please tell us about the current ETP landscape.
South Africa’s ETP industry has grown tremendously over the
years, especially around the number of products it offers to the
market, diverse asset classes that are offered via ETPs and various
investment strategies that investors today can access by investing
in ETPs. It has moved from an industry associated with passive
investment strategies to one that provides both active and passive
strategies/solutions. Today its offering is used by institutional
investors in portfolio construction and core-satellite strategies
as well as by retail investors as building blocks. The industry has
evolved over the past 22 years and its offerings now include AMCs
and Actively Managed ETFs.
What advice would you give investors in terms of ETPs?
With markets very volatile and geopolitical tension perpetuating
an uncertain future, diversification becomes more important than
ever. ETPs are an efficient and cost-effective way to achieve it. Gold
can act or be considered as insurance in your portfolio.
46 www.bluechipdigital.co.za

Financial Planning Institute of Southern Africa
Become a CERTIFIED
FINANCIAL PLANNER ®
professional
The CERTIFIED FINANCIAL PLANNER ® professional designation is
internationally recognised as the standard for financial planning professionals
which sets them apart.
The status gives consumers confidence that the financial planner they are dealing with is suitably qualified
to give trusted advise to assist them with their varied financial planning needs. Consumers are assured
that a CFP ® professional remains up to date with developments in their profession to better serve the
needs of their clients.
Below are just some of the main secondary member benefits of being a
CFP ® professional with the FPI
• Commissioner of Oath status
• Designation recognized by South African Qualifications Authority (SAQA) & registered on the National
Learning Database
• Apply with FPI to become a SARS Tax Practitioner
In addition to this, the CFP ® designation has been recognized by the FSCA in their proposal as the only
mark to currently meet the standard and will be limited to a Financial Planner title of an adviser holding a
professional designation.
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BLUE
CHIP
INVESTMENT | ETFs
The arithmetic is not in
active funds’ favour
Morningstar reported that a third of European active
equity managers outperformed the average passive
fund in the one year to the end of June 2023.
However, in the last decade, only 17.1% of active
equity and 23.1% of bond managers outperformed their passive
peers, highlighting the compelling value proposition of indexbased
funds. Global fund flows show more investors than ever
are choosing indexation strategies.
Fund flows tell the story
Morningstar makes it clear that while active managers may have
had success recently in the volatile global market, the long-term
picture shows that index funds are more consistent performers. Its
study of almost 26 000 active and index funds indicated that funds’
survival is tied to their success and, typically, index funds outlast
their active counterparts.
Here is further insight into the explosive growth of indexation
or rules-based strategies:
• Over the last 14 years, index-based funds absorbed 65% of net
global flows [1] .
• According to Morningstar, exchange-traded funds (ETFs) in
South Africa now account for 6.3% of market share, and unit
trusts are at 7.5%. Among high equity balanced funds, the assets
under management (AUM) of rules-based or indexed balanced
funds sit at 8.2% but they have attracted an outsized 57.1% of
net flows over the last 12-months within the ASISA South African
Multi-Asset High Equity category [2] .
• Satrix ETF AUM across linked-investment service provider
(LISP) platforms have grown more than six-fold in the past
three years [3] .
The arithmetic of active management
The Arithmetic of Active Management paper by Nobel Prize winner
William F Sharpe shows that for every dollar that outperforms
the market benchmark, another dollar will underperform; it’s a
zero-sum game among all market participants, before costs.
In practice, however, all investing and investment funds incur
costs (from trading and management), which means that the
average fund underperforms the market benchmark, leaving a
minority of funds able to outperform over a given period.
The crux
Active managers’ value should be highest when opportunities to
differentiate are the strongest.
Historically, however, this has not been the case. For a South
African multi-asset manager, the period after 2020 coincided with
a time when getting active calls right was the most profitable
in our history. Despite this, according to Bloomberg and Satrix,
the weighted average 12-month rolling returns of rules-based
balanced funds have outperformed the median rolling returns of
active managers 73% of the time, since 2020. This is also not a new
phenomenon: over the 10 years since the Satrix Balanced Index
Fund’s inception, it has outperformed its active peers over 90% of
the time on a rolling three-year basis.
48 www.bluechipdigital.co.za

INVESTMENT | ETFs
BLUE
CHIP
Kingsley Williams, Chief Investment Officer, Satrix*
Active management
has an important price
discovery role to play.
This suggests that either active managers are not capitalising on
available opportunities to differentiate themselves using active
tactical decisions to compensate for higher fees, or that making
the correct tactical calls is exceedingly hard to do consistently. The
real reason is probably a combination of both.
Man and machine
Active management has a very important price discovery role
to play, and this is something that vanilla index solutions are
ill-equipped to do. Active managers should be able to identify
opportunities that may not be obvious from quantitative measures
alone. This means that indexation can never fully replace active
management, nor should it aspire to do so.
Now, in an age of AI, prevailing prices will increasingly accurately
reflect available information, eroding easy opportunities for active
differentiation. Active versus passive is a dead concept. A blend
of man and machine, or active and indexation, should be the best
strategy going forward. The numbers are too clear to ignore.
*Satrix is a division of Sanlam Investment Management.
[1]
Nedgroup Investments Core Chartbook 2023 | Investment
Company Institute
[2]
Morningstar & Satrix, 31 December 2023
[3]
Satrix, 31 December 2023
CIS disclosure
Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this
information at your own risk. Consult your Financial Adviser before making an investment decision. Satrix Managers is a registered Manager in terms of the Collective Investment Schemes Control Act, 2002.
While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients,
agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any
loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.
Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments.
With Unit Trusts and ETFs, the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit
Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange.
ETFs are index-tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur
additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments/units may go up or down. A schedule of fees and charges,
and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and
scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document.
www.bluechipdigital.co.za
49

BLUE
CHIP
PRACTICE MANAGEMENT | Technology
The growing threat of cybercrime
Cybercrime has emerged as a significant threat in today’s digital age, affecting both individuals and
corporations on a global scale. In this article, we delve into the intricate world of cybercrime.
At its core, cybercrime encompasses a wide range of
illicit activities that exploit vulnerabilities in computer
networks, software and online platforms. These activities
are not limited to lone hackers but often involve organised
groups and even state-sponsored actors, such as reported cases of
North Korea’s cyber espionage on the US. Cybercriminals target
individuals, organisations or even governments.
The most common forms of cybercrime can be categorised as
phishing, ransomware, hacking/identity theft and data breaches.
The methods used are constantly adapting and getting more
sophisticated over time. Let’s take a closer look at some of them:
• Phishing. In this scheme, cybercriminals impersonate trusted
entities, such as banks or technology companies, sending
fraudulent emails, messages or websites to deceive individuals
into divulging sensitive information. Phishing attacks persist
because of their relative simplicity and high effectiveness.
• Ransomware. Typically, infected emails and attachments are
sent to random targets. If an individual then clicks on an infected
link or attachment from the email, this malicious software then
encrypts a victim’s data, rendering it inaccessible. The attacker
then demands a ransom, typically in cryptocurrency, in exchange
for the decryption key. Ransomware attacks have been on the
rise due to the potential for significant financial gain.
• Identity theft. Cybercriminals steal personal information,
such as identity numbers, financial records or driver’s licence
details to assume the identity of their victims. This information
is often used for fraudulent activities, including opening
accounts, making purchases and committing financial fraud.
The consequences can include substantial financial losses and
damage to one’s reputation.
The impact of cybercrime
The repercussions of cybercrime are far-reaching. Individuals
can suffer financial losses, exposure to personal information
and emotional distress. In contrast, corporations face significant
financial setbacks, reputational damage, loss of intellectual
property and potential legal issues. The 2021 Cybersecurity Risk
Survey by Deloitte revealed that 40% of respondents experienced
at least one cybersecurity incident in the past year, highlighting
the pervasive nature of this ominous menace.
The scale of the issue
A study that was commissioned by the cybersecurity company
Surfshark identified South Africa as the fifth-most affected country
in the world in terms of cybercrime. The widely quoted figure of
R2.2-billion lost annually to cybercrime in South Africa comes from
a 2013 report by the South African Banking Risk Information Centre
(Sabric). Reports from BusinessTech indicate a very concerning
356% increase in impersonation fraud between April 2022 and
April 2023. In addition, a cybercrime report by Interpol discovered
50 www.bluechipdigital.co.za

PRACTICE MANAGEMENT | Technology
BLUE
CHIP
One of the most targeted
sectors within South Africa is
the financial services industry.
that more than 230-million cyber threats were detected in South
Africa in 2021, the highest number on the continent. Some more
startling statistics are that cybercrime is more profitable than the
global drug trade, as well as costing more per year than all natural
disasters combined. If it were a global economy (measured in GDP),
it would rank as the third largest after the USA and China. Chart 1
illustrates how massive the scale of the problem is and just how
costly cybercrime will be in the coming years.
Chart 1. Estimated cost of cybercrime worldwide (in trillion US
dollars) as of November 2022
Source: Statista Technology Outlook, National Cyber Security
Organizations, FBI, IMF
Targeting critical infrastructure
It is essential to acknowledge that cyber threats transcend national
borders. Cybercriminals operate on a global scale and trends in
attack techniques and targets often cross geographical boundaries.
Understanding these global dynamics is crucial for individuals and
organisations seeking to elevate their cybersecurity defences.
Cybersecurity has become paramount in safeguarding critical
infrastructure, including pipelines, energy grids, water distribution
and food-processing plants.
Notable global cybercrime incidents
• SolarWinds Hack (2020). A highly sophisticated supply chain
attack compromised numerous US government agencies and
private companies, with cybercriminals inserting malicious code
into software updates for prolonged access to sensitive data.
• Colonial Pipeline Ransomware Attack (2021). This major
fuel supplier in the US fell victim to a ransomware attack that
demanded $4.4-million in cryptocurrency, leading to fuel
shortages and economic disruption.
One of the most targeted sectors within South Africa is the financial
services industry. This makes intuitive sense as companies
working in this industry have access to confidential information
and documents related to client information such as ID numbers,
bank account details, etc. All of these are valuable details to be
used by cybercriminals to perform their nefarious activities such
as fraud, setting up false bank accounts and the list goes on.
Think of all the emails and text messages you receive regularly
from your “colleagues” or “clients”. These relentless attempts
by cybercriminals aim to gain access to information from
unsuspecting victims. Individuals can’t afford to let their guard
down, as the consequences of a single lapse in concentration
can be dire.
Here are some local examples of just how serious the
consequences can be:
Notable South African cybercrime incidents
• A ransomware attack took down a R2-trillion investment
administration company for five days: Even though the money
was not at risk, the outage prevented the financial services
provider’s clients from processing investment-related instructions
or offering other services. Its asset management clients include
Old Mutual, Sanlam Investments and Futuregrowth.
• Department of Justice hit with ransomware attack: The
department said the attack led to all its information systems
being encrypted and unavailable to both internal employees as
’
well as members of the public. All electronic services provided
by the Department including issuing letters of authority, bail
services, email and the departmental website were affected.
Countering cybercrime
Effectively countering cybercrime
necessitates proactive measures, including:
• Maintaining strong cyber hygiene, such as
regular software updates, strong passwords
and two-factor authentication. Investing
in cybersecurity software, encompassing
firewalls, intrusion detection systems and
antivirus solutions.
• Continuous education and training to
empower employees and users with
cybersecurity best practices.
• Implementing advanced threat
detection systems and active
network monitoring for swift
threat identification.
Investing in the latest and
most advanced cybersecurity
Greig Phillips, Investment
Specialist, Fundhouse

BLUE
CHIP
PRACTICE MANAGEMENT | Technology
Chart 2. PwC survey question: How exposed do you believe your company will be to the following threats in the next 12 months
and five years?
Source: PwC’s 26th Annual Global CEO Survey Investment opportunities in cybersecurity
programmes in the market is of the utmost importance. It is one
of the best ways in which to combat any potential risks. This is a
high priority for global business leaders.
According to PWC’s 26th Annual Global CEO survey in
2023 which spanned 4 410 chief executives, cybercrime was
highlighted as a greater potential risk than climate change and
an equal risk to geopolitical conflicts over the next five years. It
underscores how seriously top business leaders globally are taking
this endemic problem.
Investment opportunities in cybersecurity
Some individuals have taken advantage of the investment case for
cybersecurity and explored opportunities among the top companies
within this sector, including Palo Alto Networks Inc, Fortinet Inc
and Zscaler Inc among others. The need for and importance of
these types of companies will only be
increasing in years to come.
Chart 3, also from the recent PWC
Global CEO survey, underpins what can
be considered as an investment case
for cybersecurity companies. Almost
half of CEOs surveyed said that they
would be increasing their spending on
cybersecurity and data privacy in the
upcoming year.
financial loss or invasion of privacy. As technology and AI continue
to advance, cybercriminals become more sophisticated, making
personal vigilance essential.
Understanding and analysing the potentially far-reaching
impact on the investment landscape is also becoming more
and more prevalent. While there can be significant growth
opportunities within cybersecurity-linked sectors, analysing the
impact of data breaches on all businesses and how they can
result in significant financial losses, reputation damage and legal
liabilities is also key. The resilience of a company’s cybersecurity
measures is fast becoming a pivotal factor in investment decisions,
determining who is better positioned to mitigate risks and
safeguard their financial performance. As technology evolves, so
will the sophistication of cybercrime, intensifying the importance
of these considerations.
Chart 3. PwC survey question: Which of the following actions, if any, is your company
considering to mitigate against exposure to geopolitical conflict in next 12 months?
Why cybersecurity’s multifaceted
significance is important
From a personal perspective, being
aware of cybersecurity is crucial as our
digital lives are increasingly intertwined
with personal information and assets.
Cyberattacks can lead to identity theft,
Source: PwC’s 26th Annual Global CEO Survey
52 www.bluechipdigital.co.za

PRACTICE MANAGEMENT | Technology
Become a
REGISTERED
FINANCIAL
PRACTITIONER
professional
Who should apply?
For individuals who are qualified and have one
year or more relevant financial services
experience. FPI offers the REGISTERED
FINANCIAL PRACTITIONER TM Designation so
that you can differentiate yourself through the FPI
Code of Ethics and Professional Standards.
The Criteria
This membership type is for an individual who has:
Completed a level NQF5 (old) or level NQF6 (new)
qualification;
Has one (1) year relevant financial services
experience or more;
Has completed the professional competency
examination (written or exempt*); and
Has agreed to abide by the FPI Code of Ethics and
Professional Standards.
Exemption* :Honours/ Post Graduate Diploma In Financial Planning ;BCom in Financial Planning; BCom Finance;
Certificates in financial planning & Wealth Management obtained from Milpark Education; Moonstone (MBSE);
SANLAM Connect Academy; Universities- Academia, Free State, Johannesburg, Kwa-Zulu Natal, Stellenbosch,
Johannesburg, NNMU.
businessdevelopment@fpi.co.za | +27 11 470 6000 | www.fpi.co.za

BLUE
CHIP
INVESTMENT | Economy
Could smaller companies
have a bright spot despite
a gloomy environment?
Investing in smaller capitalisation (small cap) stocks when
economic conditions are tough can feel uncomfortable. Yet,
history tells us that this can be a good time to start considering
whether these companies deserve a place within a diversified
portfolio. We analysed data from the past five decades to get some
insights from history to test this thought.
The stock market gazes into the crystal ball
One of the best leading indicators is the stock market itself. This is
because investors are not only concerned with today’s headlines but
also how the future will unfold. Investors anticipate how the future
might unfold and then transact in company shares accordingly,
driving the share price up or down in advance of actual news. This
means – for example – when a company announces how much it
has grown its sales by, the share price might not change on that
day if the company grew by the amount that investors expected.
What tends to send the share price moving on the day is when
the announcement is above or below what was expected. Small-cap
stocks are no different in this way, and this can be a clue to guide
us to what may be in store for their future.
What the market expects
Over the past year, the fortunes of large and small companies
worldwide have diverged. This was primarily driven by the largest,
so-called magnificent seven companies in the US, but also reflects
the risks associated with owning smaller companies, which are
more sensitive to the economic cycle.
One-year cumulative return for global large vs small
companies (USD)
Investors may favour larger companies in the late phase of an
investment cycle for a few reasons. Larger companies have multiple
research analysts interpreting their performance which reduces
uncertainty, they have easier access to finance in times of need and
they have multiple diversified products to sell which helps stabilise
their cash flows. This makes larger companies an attractive offering
going into an economic slowdown. But as the above performance
chart shows, this may have already been acknowledged by the
market. The key question is whether small-cap stocks may have
enough “bad expectations” in their price; we could look to history
to guide us.
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them
may go down as well as up and investors may not get back the amounts originally invested.
54 www.bluechipdigital.co.za

INVESTMENT | Economy
BLUE
CHIP
The key question is whether smallcap
stocks may have enough
“bad expectations” in their price.
What does the long-term evidence show?
We have crunched the data going back to 1980 to find out. We
studied how large and small-cap share prices behave during each
phase of the investment cycle. The table below shows that investing
in small caps when the environment feels uncomfortable has
generated good results when investors take a long-term approach.
mindful that investment performance can be hit by increasing the
allocation to smaller companies too early, it’s prudent to ensure
you have a seat at the table to avoid missing out on small-cap
performance, which often arrives suddenly.
We are selectively allocating to smaller companies across our
investment solutions, with a keen eye on risk management. The
focus is on the regions offering the best valuation opportunities,
and selecting fund managers who are well-equipped to navigate
any tough conditions ahead to implement this exposure.
Average monthly return in US dollars (%)
Phase of the economic cycle Small caps Large caps
Recession and recovery 1.80% 0.85%
Expansion and slowdown 1.13% 1.10%
Source: Schroders as of October 2023. Past performance is not a
guide to future performance and may not be repeated.
While the average returns from small-cap and large-cap stocks in
the expansion and slowdown phases have been similar over this
period, small-cap stocks have – on average – delivered more than
double the returns from large caps through both the recession
and recovery phases. However, no two cycles are exactly alike, and
the current cycle may provide its own clues as to what may lie in
store for investors.
Positioning for the next phase in the economic cycle
While it’s always challenging to identify the exact turning points in
any economic cycle, we are starting to see some evidence building
that we are closer to a turning point than we have been in the
past. Our study provides evidence that you tend to get rewarded
for looking ahead to when smaller companies will do well again.
We are starting to find some attractive opportunities among
small caps, particularly in regions that have already experienced
the pain of higher interest rates. When markets do recognise that
a new phase in the investment cycle has begun, stock prices will
often change sharply and suddenly. While it’s important to be
Nkosi Kondi, Country Head - South Africa, Schroders
Important Information
For professional investors and advisers only. The material is not suitable for retail clients. We define "Professional Investors" as those who have the appropriate expertise and knowledge e.g. asset managers,
distributors and financial intermediaries. Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities
or adopt any investment strategy. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. Past Performance is not a
guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
Exchange rate changes may cause the value of investments to fall as well as rise. The views and opinions contained herein are those of the individuals to whom they are attributed and may not necessarily
represent views expressed or reflected in other Schroders communications, strategies or funds. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy.
Issued in January 2024 by Schroders Investment Management Ltd registration number: 01893220 (Incorporated in England and Wales) which is authorised and regulated in the UK by the Financial Conduct
Authority and an authorised financial services provider in South Africa FSP No: 48998
www.bluechipdigital.co.za
55

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INVESTMENT | Hedge funds
Using hedge funds to harness
the power of compounding
The magic of compounding, as it relates to long-term investment returns, cannot be overstated.
"The first rule of compounding: Never interrupt it unnecessarily.” – Charlie Munger
“The first rule of an investment is don’t lose money. And the second rule of an investment is don’t forget the first rule. And that’s all the
rules there are.” – Warren Buffett
While most investors understand the importance of
compounding, the impact of compounding over
long periods can still be astonishing. Numerous
academic studies have found that humans
systematically underestimate the impact of exponential growth
(ie compounding) through time. This is clearly illustrated with a
well-known example. How many folds in half of a single sheet
of 0.1mm thick paper would it take you to reach the moon? The
answer is a mere 42 folds (I encourage interested readers to check
the mathematics: 0.1mm x 2 42 ~ 420 000km vs the distance to the
moon of 384 400km).
While the process of compounding (in the above example,
a doubling) is extremely powerful on the way up, both the
investing legends quoted at the start of this article caution about
when the compounding is negative: in a geometric sequence of
compounding, losses have a disproportionate impact on the result.
Consider if you had R1-million invested and then lost 20%, leaving
you with R800 000. From that point, you would then need a gain
The avoidance of losses,
especially large losses, is
paramount to overall investment
outcomes through time.
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INVESTMENT | Hedge funds
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of 25% on your R800 000 just to get back to where
you started. If you had lost 50%, you would need a
gain of 100% just to get back to your starting point.
Another feature of compounding is that large
single-loss events can severely disrupt a longterm
process of compounding. Consider an
investment that returned 25% annually for 10
years and then lost 90% in the 11th year. That
investor would be down on his initial capital,
despite 10 straight years of fantastic returns
and one terrible year.
The nature of compounding means that
despite the arithmetic average of the annual
returns over the 11 years being 14.5%, this
is irrelevant to the poor investor who has lost
initial capital and whose compound annual return
is negative. You cannot eat arithmetic returns.
Investors live in a world where losses are also
compounded through time and a solid record
of annual average returns can be undone by a
single large loss.
The avoidance of losses, especially large losses, is
paramount to overall investment outcomes through time.
It is therefore unsurprising that the positive impact on a
portfolio which simply avoided the 10 worst months on the JSE
over the last 14 years is more than 50% greater than the impact
of missing out on the 10 best months. It is far more important to
avoid the losses than it is to take full advantage of market rallies.
Consider an investor who invested R1-million into the JSE ALSI
on 1 May 2009 (the launch date of the Steyn Capital QI Hedge
Fund). By 30 September 2023, this ALSI portfolio would have been
worth R5.3-million. However, if this investor was a savant with
perfect knowledge of the future and who simply skipped the 10
worst months on the JSE over the next 14 years, his portfolio as at
30 September 2023 would have been worth almost double the
ALSI portfolio, at just over R10.3-million. Said differently, sitting
out just 6% of the months over the 14-year investment period
adds the equivalent of five times the investor’s starting capital
to his result.
This is the power of compounding. Conversely, had the investor
instead been so unfortunate as to miss out on the 10 best months,
his investment would be worth just over R2-milliom, a pedestrian
result to be sure, but in rand terms far less impactful than the gain
of avoiding the worst months.
The chart shows the portfolio outcomes for a range of scenarios
our savant may have chosen.
One of the significant advantages of hedge funds is their
ability to harness this phenomenon by mitigating downside risk
while still participating in market upside. Indeed, one of the key
characteristics of the Steyn Capital hedge fund strategy is our
strong focus on downside protection, which since inception has
significantly reduced both the frequency and depth of portfolio
drawdowns, allowing the magic of compounding to do its thing.
In fact, in the 10 biggest monthly drawdowns on the JSE since the
inception of our strategy, our strategy has generated a positive
median return, with the median return of our strategy across all
the JSE down months being positive 0.8% compared to the JSE
ALSI median return of -2.4%. The cost of this downside protection
is that in months of blistering market rallies, we’re unlikely to
keep up. But for long-term investors, who understand the power
of compounding and who rightly focus on the ultimate portfolio
outcome, the long-term results speak for themselves.
James Corkin, Portfolio Manager, Steyn Capital Management
www.bluechipdigital.co.za
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PRACTICE MANAGEMENT | Technology
Cybersecurity: building awareness
and resilience in an ever more
complex technology landscape
Earlier in 2023, I was speaking at a conference on Linktank’s
specialist topic of finding, selecting and implementing the
right technology for advisory practices. Midway through, a
member of the audience asked me for advice on solutions
to assist in the mitigation of cybersecurity risks. I did not have an
answer for him. Until that point, we had not put a special focus
on this aspect of the technology stack – we simply assumed it
was something that fell firmly into the realm of the software
providers and IT support, those with the more technical know-how.
Subsequent conversations with advisors and vendors, however,
have put the item firmly on our agenda.
My explorations into the topic of cybersecurity highlighted just
how vulnerable not only financial institutions are, but how every
advice practice, every South African business and indeed all our
clients, fall victim to these attacks regularly.
I’m aware that there are a multitude of articles by specialists
who have a far better grasp of the subject than I do but given the
urgency of this topic, I have decided to add my voice. At the very
least, to highlight the requirement for all of us to build awareness
and resilience in this space and to understand a bit more about
what it all means. Going forward it is critical to ensure that any
South Africa is ranked among
the highest cyber-attack
regions in the world.
decisions about selecting and implementing technology prioritise
a clear cybersecurity strategy as well.
The period over the Covid-19 lockdowns hastened the move
to client engagements online and more of the implementation
and financial planning activities also shifted into the cloud. Many
of us find this new way of working more efficient and more costeffective
but it also comes with a whole new set of risks which
every business, especially those in financial services, now must
navigate. The FSCA has drafted standards which practices need to
comply with, but I wasn’t sure how many actually have yet. Turns
out, not many.
In an article on ITWeb 1 in July 2023, Tracy Burrows for Rubrik
wrote that “African financial services organisations have around 15
months to comply with the new Joint Standard: Cybersecurity and
Cyber Resilience by the Financial Sector Conduct Authority (FSCA)
and the South African Reserve Bank (SARB) Prudential Authority”
but at the time of writing a poll of participants revealed that only 2%
are 100% prepared to implement the Joint Standard and an audit.
A total of 22% said they had completed a gap analysis and were
swiftly moving to prepare for it. Another 28% were investigating
the policy intending to prepare and a further 28% had not yet
investigated the policy. A staggering 18% responded, “What are
the Joint Standards?” Moreover, when it comes to complying with
the terms of any cybersecurity insurance, financial advisors have
expressed how complex it is to understand the requirements, let
alone comply with them.
There is a critical need for better understanding and more
awareness building for advisors, while vendors and support
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services actively work to ensure that we build technology solutions
which keep our businesses, employees and clients safe. Saying
this, however, making IT support teams entirely responsible for
managing cybersecurity risk or relying purely on software providers
to ensure the safety of your data is foolhardy. Cybercriminals’
tactics evolve all the time, and our IT teams and software vendors
can do all they can to keep up, but it is ultimately down to each
user of technology to build their knowledge around the types of
threats out there and stay vigilant.
Why the urgency and what are the types of risk?
South Africa is ranked among the highest cyberattack regions in the
world. 2 According to Interpol’s African Cyberthreat Assessment Report
2022, a total of 230-million cyber threats were detected in South Africa,
out of which 219-million, or 95.21%, were email-based attacks. What’s
worse is that the nation is already suffering from an alarming 100%
increase in mobile banking application fraud and is experiencing on
average 577 malware attacks every hour.
And what are the loopholes in South Africa’s cybersecurity system
that bad actors are taking advantage of? Basically:
1. Poor investment in cyber-security systems
2. Lack of awareness across users of technology
3. Poor law enforcement to act on cyberattack cases
Where do we start to build awareness?
We, the users, are our own first line of defence. Make sure you and your
team are aware of the most prevalent threats and how they work. Most
of the threats come via email with a variety of forms and outcomes:
• Ransomware – business email compromise and ransomware
• Phishing attacks – these are experienced across email, WhatsApp,
SMS platforms and even QR codes are now used to get access to
your information network
• Social engineering/impersonation
• Implementing robust security measures, next-generation antivirus
solutions, including:
· firewalls
· antivirus software
· encryption
· secure data storage
· regular data backups
· multi-factor authentication, strong access controls and incident
response plans.
Building resilience means that a business has the processes
and backups in place to “bounce back” if they have fallen into a
cyberattack trap. Sounds technical right? So, make sure that the
team that is supporting you from an IT perspective is talking to you
about these issues, ensuring necessary checks are in place and that
your team and clients understand why the processes are required.
In summary, don’t let this be another case of “kicking the can
down the road” because the consequences could put you out of
business. Ask questions and find the right team to educate, advise
and support you.
Sources
1. Financial services must move to comply with new standards for
cyber resilience, by Tracy Burrows for Rubrik. www.itweb.co.za
2. What makes SA a target for cybercrime? What actions can be taken? by
Eleanor Barlow, content manager at SecurityHQ. www.itweb.co.za
But there are other threats like:
• Insider threats – posed by discontented employees or
ex-employees/colleagues
• Device mismanagement
• Weak passwords
• Third-party risk – your technology infrastructure and email
domain may be secure, but we cannot assume the same for third
parties, especially clients using public email addresses
The good news is that there is a growing number of service
solutions that offer comprehensive course material advisors can
use to build awareness. Most of them will “test” staff members
on their cybersecurity prowess. Companies like Mimecast and
Synaptic SA are just two which we have recently engaged with,
but we intend to find more.
Where do we start to build resilience?
As we gain a better understanding of how to mitigate risks,
financial planning practices will start to hear more and more about:
Robyn Clay, Director, Linktank
www.bluechipdigital.co.za
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PRACTICE MANAGEMENT | Technology
Maximising efficiency
in board management
A guide for employee benefit consultants using cloud computing and AI.
In an era where efficiency is paramount, employee benefits
consultants must embrace the technological advancements in
cloud computing and Artificial Intelligence (AI) to streamline
executive board management. Zeldeen Müller, CEO of inSite
Connect and creator of AgendaWorx, highlights the transformative
power of these tools in enhancing board operations.
First off, why cloud computing and AI?
If you look at a historical perspective on data storage, in 1956, a
five-megabyte hard drive weighed one ton. In 1980, a one-gigabyte
hard drive weighed 250kg and cost US$40 000. Contrast this with
today, where one gigabyte of extra data costs merely R4.50 when
hosted on large data centres. This dramatic evolution underscores
the incredible advancements in technology that have reshaped how
we manage and store data and interact with information.
Traditional board data management involved complex,
costly internal servers provided by employee benefit (EB) firms,
with limited, if any, access to board members and reduced
flexibility. With the advent of the Internet and accelerated by the
Covid-19 pandemic, a shift towards digital tools for remote board
management occurred.
Consultants and boards adopted various digital platforms for
tasks such as document sharing, email communication, meeting
arrangements and tools for signing, voting and evaluations.
However, the proliferation of these different tools often resulted
in disjointed experiences for board members and heightened
security risks due to the fragmented nature of tool usage.
How can employee benefit consultants and boards use
cloud computing to reduce the number of tools needed for
everyday board operations?
Cloud computing addresses this by offering integrated
application solutions, reducing the need to juggle multiple
platforms and enhancing data security. It takes board
management to the next level by consolidating various tasks
into a single, efficient platform.
At AgendaWorx, we ensure that a single tool now enables rapid
agenda preparation, minute creation, signing, board resolution
approval, follow-ups, evaluations and comprehensive library
creation with intuitive folders and action reminder automation,
eliminating the need to navigate multiple tools.
How is AI utilised to leverage more efficiencies?
AI enables intuitive interactions, such as conversing with it
to format and integrate inputs into agendas or minutes. This
removes the need for typing, copywriting, copy editing, collating,
formatting and many other time-consuming tasks for employee
benefits consultants. Additionally, AI’s analytical capabilities are
becoming invaluable in tasks like comparing investment returns
and analysing service provider quotes. The integration of cloud
computing and AI is revolutionising board management.
Zeldeen Müller, CEO, AgendaWorx
That sounds great. Why should employee benefit consulting
houses consider these tools?
For employee benefits consultants, adopting these technologies
not only saves valuable time but also elevates service quality. In
a competitive landscape, leveraging the efficiencies of AI and
cloud computing is essential for staying ahead and providing
top-tier consultancy services. We have seen a marked increase in
the uptake of our platform since January this year, as consultants
are beginning to understand the benefits of leveraging these
technologies to stay relevant.
60 www.bluechipdigital.co.za

USE AI FOR EFFORTLESS AGENDAS & MINUTES
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AI
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collate, number pages, create numbered index &
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do ALL this.
Online Board Packs &
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Decrease the time to create your agendas and
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info@agendaworx.com

BLUE
CHIP
PRACTICE MANAGEMENT | Technology
Finding the balance between
digitalisation and personal touch
For over a decade, I’ve been working with financial planners
who have found themselves at a vertiginous crossroads
when it comes to digitalising their client engagement
and communications strategies. Discerning advisors are
enthusiastic about embracing the age of digital transformation;
however, they haven’t been willing to sacrifice their unique voice
and the personal touch that sets them apart.
The digital domain presents both opportunities and challenges.
Advisors understand that their clients are increasingly online,
seeking information, advice and meaningful connections. Yet, they
also fear that going digital could mean losing the essence of what
makes them valuable to their clients – their individuality, expertise
and the authentic relationships they build.
While certain traditional client interaction strategies will always
remain essential, this virtual platform can neither be ignored nor
avoided. We live in a newly emerged communication culture
driven by social media and online conversations.
For years, my team and I have believed that this new strategy is
paved with the power of blogs.
Rather than seeing them as mere content pieces, I consider
blogs as conversation sparkers. They are the connective tissue
that bridges the gap between digitalisation and personalisation,
allowing financial planners to maintain their unique voices while
engaging clients in meaningful discussions.
In a recent Blue Chip article, I spoke about the three Cs of
conversation – content, connection and community. Each
component is interwoven with the others, creating a holistic
approach to client engagement, and blogs fit into the first C, content.
Your online brand is a
powerful tool, working for
you around the clock.
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The power of blogs as conversation sparkers
Blogs, when used strategically, embody the essence of the three
Cs. They are not just information dissemination tools; they are the
instruments that transform your online presence into a dynamic
platform for client engagement.
From education to engagement. While education has
always been a vital component of financial planning, blogs offer
the opportunity to take it further. They assist in keeping your
online conversation going, encouraging clients to participate in
discussions actively. In this way, blogs elevate client engagement
from passive learning to active interaction.
Effective email campaigns. Regular email campaigns remain
one of the best ways to stay in touch with your clients, and blogs
make this task significantly easier to sustain. With blogs in place, it’s
a streamlined activity to send out monthly newsletters with blog
teasers, providing clients and prospects with bite-sized, valuable
content that piques their interest without overwhelming them
and sparks conversations. Email campaigns (when sent through
apps like MailChimp) also offer valuable insights, allowing you to
track opens and clicks, helping you understand how your clients
prefer to engage with your content, and who is likely to want to
chat with you.
Incorporating blogs into client meetings. Online
communication isn’t just for online engagement. It can enhance
your in-person meetings, too. Imagine having a folder on your
bookmarks toolbar labelled “blogs for clients”. In it, you save blogs
that you believe would add value to your upcoming meetings (with
clients and prospects). You could easily and quickly access these
blogs as conversation sparkers, facilitating deeper discussions
that are not centred around products or market performance.
Intertwining your online and offline interactions creates
opportunities for richer, more meaningful client experiences.
Leveraging LinkedIn. LinkedIn is a professional social network
offering a unique platform for expanding your reach (linking
content and community). You can build brand advocacy because
sharing your blogs on LinkedIn stimulates the potential for your
clients to promote you within their networks. It’s an authentic way
of turning your clients into advocates, fostering organic growth
and influence as well as building your online brand.
Online branding: the key to the future
Your online brand is a powerful tool, working for you around
the clock. It should empower you, not ensnare you in the digital
labyrinth. Most importantly, it should lead to direct interactions
with your clients – calls to your phone, not just clicks on your posts.
Here are three key objectives to hold in mind when building
your online brand:
1. Reinforce, not replace. Ensure that your online brand reflects
and reinforces your identity. It should be a digital extension of
who you are, not a replacement.
2. Empower, not ensnare. Your online brand should empower
you to engage with your clients more effectively. It should be
a strategy that enables you to nurture relationships and foster
valuable conversations.
3. Calls, not clicks. Your online brand should lead to direct
interactions with your clients. It should serve as a gateway for
them to reach out, inquire, and engage with you.
Blogs are not just content for search engine optimisation;
they’re conduits for conversation, and driving connection with
your community. They have the power to elevate your client
engagement strategy to new heights. Do you think it’s time to
shift your focus from educating to engaging, sparking dialogues
that build trust and foster lasting relationships?
If you want to put people first and bring out the human element
in your online communication, blogs can be a powerful way to
achieve this through a scalable, sustainable strategy.
Tim Slatter, Creator of Contatto and Director,
Slatter Communications
www.bluechipdigital.co.za
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PRACTICE MANAGEMENT | Technology
Get ready for the
greatest wave
of technological
innovation
We find ourselves in a time where technology is
changing quickly, with artificial intelligence (AI)
at the front of the pack and about to change the
financial planning and advice business. Forever.
If you did not feel a little sick when reading the words “artificial
intelligence”, you haven’t spent enough time on it yet. Also,
notably, now that many (if not most) use Microsoft 365, the time
is right for game-changing tools like Microsoft’s Copilot. Copilot
and similar tools can help with both efficiency and new ideas in
ways that have never been possible before.
The revolution in AI
The latest information from the Microsoft Envision conference in
London and Microsoft Ignite in Seattle shows that we are living
in a very important time in the history of technology: Microsoft is
putting a lot of money into AI, and they see the launch of Copilot
as being like the release of Windows and the personal computer.
They candidly shared that the last major innovation was the
iPhone in 2007 and before that, the Internet in 1993. And they
believe this is much bigger. This should give us a preview of how
Copilot could change the way work is done similarly to how these
technologies did before.
Copilot isn’t just another piece of technology; it changes the
way we do work in a big way. It’s supposed to turn boring tasks into
streamlined processes, give people more personalised experiences
and let companies build their solutions. Instead of taking a slow
walk, its release is like riding a bike – faster, more efficient and
with less effort.
The two types of AI
According to the Gartner Opportunity Radar, there are two types
of AI, namely Everyday AI and Game-changing AI.
AI offers many benefits and
opportunities for financial
planners and advisors.
Everyday AI is very much about AI that everyone will be using,
and it is the type of AI that most of us are currently exploring and
experimenting with. Without Everyday AI, you will not be able to
compete with others. Everyday AI will be vital in your back office
and some firms will be comfortable using this in client-facing
scenarios as well.
Game-changing AI is about creating new products and services
never been seen or delivered before. It is also about investing in
creating new core capabilities never possible before. This type
of AI is costly at the moment and therefore only big corporate
businesses and the like are currently focusing on this.
What AI means for financial planners and advisors
AI offers a lot of benefits and opportunities for financial planners
and advisors. Imagine being able to automate simple jobs or keep
an easy-to-read log of all your interactions with clients. AI tools
like Copilot can look at data, draw conclusions and even make
beautiful visualisations that make complicated information easy
to understand.
AI can revolutionise taking notes, writing documents and
doing prep work in the real world, making these jobs faster and
more accurate. By automating these tasks, financial professionals
can focus on making strategic decisions and having one-on-one
conversations with clients, which will help the business grow and
improve the level of service.
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Virtual agents are a big step up from the traditional chatbots we
came to dislike over the years. Why? These virtual agents can have
human-like conversations and draw on information from your firm
and your practice that relates to the client it is engaging with. In
other words, it will have a normal conversation with context. This
will be helpful to provide a 24/7/365 service to clients to answer
questions and provide them with relevant information on a realtime
basis.
Getting ready for the AI wave
To deal with this AI wave, you need to be strategic. People who
work as financial planners and advisors or who run a financial
planning or advisory firm should learn more about AI tools and
how they work.
It’s also important to organise and optimise data so that AI
can use it and use AI tools to get hands-on experience. Working
together with tech experts and experienced AI professionals
can help you learn a lot and make the switch to an AI-integrated
workflow go smoothly.
Other ways to learn include LinkedIn Learning, Microsoft Learn,
YouTube and Udemy.
Three pillars for AI-readiness
The three pillars are principles, data and security. This is evident
from the focus at several events I attended over the last number
of months.
The first step is to be clear about your own ground rules when
it comes to the implementation, adoption and use of AI. Your do’s
and your don’ts. Your clients’ do’s and don’ts. Regulatory do’s and
don’ts. This is your decision framework.
The second step is getting your data ready. And not all your
data needs to be ready. Identify the 20% of data that is important
for 80% of the services and tasks you perform and focus on that.
An important aspect is to be able to identify data that is used
for specific tasks using tags (or labels). As part of the data step,
documented processes are a must.
The third and final step is ensuring that you implement the
relevant security measures and protocols. Who will have access to
what data? Who can share data? What data can be shared? How will
you ensure secure communications with clients, products and other
service providers? How will devices be secured and managed? And
what training will you facilitate for staff and clients alike?
Must-know highlights from Microsoft Envision and Ignite
One of the best features, M365 Chat, is going to become an AI
assistant that is essential to both work and personal life. This app is
meant to be a hub for work and life, and it encourages interaction
between users that is like talking to a real assistant.
Copilot’s integration features are a game-changer because they
make jobs like making client presentations possible in a matter of
seconds. Also, Copilot and Azure make it easier to build custom
technology. For example, we built a client fact-finding landing
page quickly using the Microsoft Power Platform and Copilot.
Because making technology is so easy, financial advisory firms
can now produce their own solutions, which is a truly groundbreaking
development.
Copilot’s data security is very important, especially for financial
planning companies that deal with private client data. Professionals
who are worried about data breaches can take comfort in the
fact that Microsoft has put a lot of effort into making the Copilot
ecosystem’s security strong.
Lastly, Microsoft wants users to learn how to prompt AI tools
well so that they can move away from standard search engine
queries and towards more conversational, instruction-based
interactions with AI.
Risks and taking charge
There are risks to consider, even though the benefits are plenty.
Privacy and protection of data are very important, especially when
dealing with personal and related financial data. To reduce these
risks and stay ahead in the business, you need to keep learning and
adapting to how AI is changing and what to look out for.
In conclusion
AI isn’t just a fad; it’s the way things will be in the future for
financial planners and advisors. You can be at the forefront of
this technological revolution by understanding AI’s potential,
preparing its integration and managing the risks that come with
it. You can use AI’s power to improve efficiency, customer service
and business growth.
Stay curious!
Francois du Toit, CFP®, Founder, PROpulsion
www.bluechipdigital.co.za
65

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CLIENT ENGAGEMENT | Coaching
The financial planner
as thinking partner
Thinking with clients or for clients?
I
believe a key role a financial planner plays for a client is that of a
Thinking Partner. The dilemma this raises is whether this means
the financial planner must think for the client or with the client.
The quality of advice is as important as how it is delivered
Emotional and economic well-being are both key to financial
health. The link between money and life is also clear. The two
are inextricable. And that’s why even though clients may go to
a financial planner for advice, getting advice too quickly may be
more damaging than helpful. It is not only the quality of the advice
that counts but also how that advice is delivered. In other words,
what a client talks about with a financial planner before receiving
advice is key.
Financial planners are wired to advise clients. It’s in their DNA.
And it’s what clients expect from them. Clients often want their
financial planner to tell them what to do. The problem with this
approach, as much as clients want it, is that it makes the financial
planner accountable for their client’s life and money. This may seem
justifiable because, after all, the client is paying for this advice. So
if things don’t work out, the client has someone to blame. And of
course, they can then switch to a new advisor. In a sense, they have
“rented” the financial planner’s advice or solution rather than taken
ownership of it. Much easier for them. And, in some ways easier for
the financial planner, although they may lose an unhappy client
now and again.
Economic and emotional well-being are key to financial health
Yet, client ownership of the outcome is key to clients achieving
good financial outcomes. Research by Sarah Newcomb of
It is not only the quality of the
advice that counts but also
how that advice is delivered.
Morningstar shows that for clients to achieve genuine financial
health, they need both economic and emotional well-being. 1
Wealthy people who spend little are at risk of being as financially
unhealthy as happy people who spend generously.
Newcomb suggests that economic well-being depends not so
much on how much money clients have, but rather on the extent
to which clients think into the future. Newcomb’s research shows
that people with a full financial life plan save up to 20 times more
than people who are only able to think a year or less into the future.
Accordingly, it is a client’s time horizon more than their income
that determines economic well-being, and Newcomb’s research
shows that this influences not only savings habits but cash and
debt management as well.
Emotional well-being has a critical influence on how we
manage our money. According to the American Psychological
Association, money is consistently the number one source of
stress for US households. 2 Newcomb suggests that “by identifying
specific patterns of thought that may sabotage a client’s overall
financial health, an advisor can help guide clients into making
better financial decisions and increase their satisfaction and peace
of mind”. 3
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Thinking with a client means getting a client to think
for themselves
While clients see financial planners for advice not coaching,
adopting a coaching approach with clients can help clients think
for themselves and feel empowered before the financial planner
gives advice. A coaching approach involves getting the client to
find the answers to questions they may have. Often a question
may be technical, in which case the financial planner may be best
positioned to answer the question. But when the question is about
their own life, the client undoubtedly will take more ownership of
the answer if they come up with it themselves.
Thinking with a client means getting a client to think for
themselves. It’s tempting to want to do the thinking for the
client. To believe that is a way to show real value and expertise.
But getting a client to think for themselves is the real work of a
Thinking Partner. It is a way for clients to feel empowered, take
ownership of their financial health, and ensure that when the seed
of expert advice is given, it lands on fertile soil.
Client ownership and empowerment determine
financial satisfaction
Newcomb’s research shows that irrespective of income, people
who feel empowered in their financial lives feel more emotionally
satisfied with their financial lives. People who agreed with the
statement “I create my financial destiny” had more positive
experiences regarding their financial situation than those who
said they had “very little power” over their financial life.
When a client seeks financial advice, for that advice to land it
is key that the advice makes sense to the client from their unique
perspective. It’s not enough that it makes sense from the advisor’s
perspective, which would be fine if the job of a Thinking Partner
was to think for a client.
Newcomb’s research reinforces the importance of clients
taking ownership of their financial circumstances, even when
seeking financial advice from a professional. It also highlights
the role of financial planners in helping clients to think as far
as possible into the future with as much detail as possible. This
suggests that key to the role of a Thinking Partner is to think with
the client, in other words, get the client to think, rather than think
for the client. That way there is a greater chance that the client
will own the outcome of whatever advice the financial planner
eventually gives.
After all, we each have a unique perspective on the world that is
influenced by a myriad of factors, including our upbringing, family,
education, culture, values, habits and language, to name only a
few. This unique combination underpins each of our perspectives
on the world and gives truth to writer Anais Nin’s observation that
“we don’t see things as they are, we see them as we are”.
References
1
Sarah Newcomb, When More is Less: Rethinking Financial Health,
Morningstar Behavioural Science Research, 2016.
2
American Psychological Association, Stress in America Survey,
October 2022.
3
Sarah Newcomb, When More is Less: Rethinking Financial Health,
Morningstar Behavioural Science Research, 2016. p.7
Rob Macdonald, Head of Strategic Advisory Services, Fundhouse
www.bluechipdigital.co.za
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CLIENT ENGAGEMENT | Behavioural finance
Unleashing client success: the
power of value-based conversations
When it comes to financial decisions, clients are not
solely driven by logic – emotions and deeply held
values play a significant role in their judgement and
reasoning. Planners who recognise the importance
of understanding their clients’ core values can transform their
financial planning approach and propel clients towards lasting
success. Value-based conversations establish a meaningful
connection between planners and their clients, and clients are
more likely to support the financial strategy and adjust their
money habits to attain their financial goals when the plan aligns
with what they value most.
Understanding the emotional drivers: aligning money choices
with core values
It is no secret that emotions significantly influence money choices,
often leading to poor decision-making driven by fear, greed or
guilt. However, when clients are in touch with their ideals and
beliefs, their financial actions and behaviour align with their values,
empowering them to make decisions that truly serve their best
interests. As financial planners, it is crucial to unravel the emotional
drivers behind financial choices and gain a deeper understanding
of our clients’ needs and aspirations.
Renowned researcher and author Dr Brené Brown has
demonstrated the power of values in driving productive
decisionmaking. I participated in a recent webinar for Certified Dare
to Lead Facilitators, where she shared how astronauts at NASA
embraced daring leadership by explicitly naming and clarifying
their values, then translating them into specific behaviours with
clear expectations. This approach drives thoughtful, decisive and
aligned decision-making.
Financial planners can adopt a similar approach by helping
clients uncover their core values and translating them into
actionable financial strategies that align with their beliefs.
Where to start
Financial planners should be clear about their own values because
they shape intentions, decisions and advice. Being consciously
aware of our values allows us to be better equipped to offer
guidance that resonates with our clients’ needs and aspirations –
even if it may differ from our own.
Consider the case of a client, Ben, who was unexpectedly
retrenched at 54. With a younger wife and a young son with years
of expenses ahead, Ben needed to produce at least another two
decades of income. However, he was unsure about what his next
chapter should look like. By understanding Ben’s values through
our conversations, I discovered that he wanted to take time out to
align his future work with his values, assess what he loved about
his career and leave behind aspects of work that he did not enjoy.
During our meeting, I could see that he had enough to fund a
two-year gap from work. I showed him that after this pause, he
would need to move into the next phase of his working life and
generate income again until age 70. Rather than solely focusing
on earning immediately, he agreed to work more years – doing
work his values aligned with.
It is essential to recognise that unconscious biases or implicit
preferences can influence our advice. This could result in planners
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recommending strategies aligned with their own beliefs and
views, potentially neglecting options that may be more suitable
for the client. Regular self-awareness and reflection on our values,
assumptions and belief systems allow us to deliver unbiased,
client-centric recommendations.
Why knowing your clients’ values matters
Understanding your clients’ core values enables you to align
your advice and recommendations with their needs, goals and
aspirations. Core values shape priorities and long-term goals. By
uncovering these values, financial planners can customise their
advice to reflect what truly matters to their clients. This deeper
level of understanding fosters trust and enables you to frame
choices that align with your clients’ values, leading to decisions
consistent with their beliefs.
CLIENT CASE STUDIES
Let’s explore two case studies that highlight the power of
valuebased conversations:
John to embrace retirement confidently and retain his sense of
purpose as a provider.
Unlocking success through value-based conversations
Integrating clients’ core values into the financial decision-making
process enables financial planners to provide personalised and
meaningful advice. By aligning financial goals with core values,
clients experience a greater sense of purpose and satisfaction
in their decision-making, paving the way for long-term financial
well-being. I have found the values exploration exercise a helpful
tool to help clients uncover their core values. Begin by presenting
them with a list of values and ask them to identify their top 10.
Through a process of elimination, guide them to identify their top
two values. This exercise can be repeated over time as values may
evolve during life’s transitions.
By embracing these conversations, financial planners empower
clients to make decisions that align with their values, goals and
aspirations. This approach fosters a deeper connection, builds trust
and leads to meaningful financial success.
Family first
Sarah, a successful corporate professional and single mother of
two young children, wanted to invest in a holiday home to spend
more quality time with her children. Through conversations
centred on core values, we discovered that her children were
at the forefront of her priorities and that this investment would
mean longer working hours to afford it. She would hardly have
the time for holidays and her children would have left home when
her loan was paid. By aligning her financial plan with these values,
we crafted a strategy allowing Sarah to reduce her working hours,
spend more time with her children and have regular holidays and
rent holiday homes instead. This alignment gave Sarah a sense
of purpose, satisfaction and a life that resonated with her values.
Emotions significantly influence
money choices, often leading
to poor decision-making
driven by fear, greed or guilt.
Redefining retirement for a provider
John, a dedicated father and provider, faced a significant challenge
as he approached retirement. He had always associated his
selfworth and identity with providing for his family. The transition
from saving to spending during retirement created a mental
struggle. By exploring his values and beliefs, we helped John
understand that his investments were now the means of continued
provision for his loved ones. Together, we redefined his role and
created a retirement plan aligned with his principles to support his
family and provide financial security. This shift in mindset allowed
Kim Potgieter CFP®, Director, Chartered Wealth Solutions,
ICF Professional Certified Coach, New Money Story® Mentor
Coach, Certified Dare to Lead Facilitator
www.bluechipdigital.co.za
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FINANCIAL PLANNING | Estate planning
Closing the circle: the importance of
closing the wealth management loop
Most people want to enjoy life while they are working
and building wealth, have enough savings to
maintain their lifestyle when retired plus ensure that
any dependants are financially taken care of when
they die. Achieving this takes careful planning and a disciplined
strategy. Engaging a trusted wealth manager to look at your
entire financial picture and implement strategies to achieve your
short- and long-term financial goals may reduce your stress about
money, support your current financial needs and help you build a
nest egg for your goals.
“Wealth managers owe their clients the best possible structuring
and guidance for their lifetimes, but also the best outcome if their
lives are cut short,” says Sarah Love, a fiduciary practitioner with
Private Client Trust, the fiduciary pillar of Private Client Holdings.
Love works with wealth managers to make sure that the financial
planning loop is closed. She offers advice and guidance on estate
planning and makes sure that a legal and watertight will is in place.
Love starts her fiduciary role by establishing if a client has any
legal obligations, such as a spouse, minor children or other financial
dependants. “Once we have this information, we need to establish if
there is enough wealth for them to meet both their legal obligations
and maintain their chosen lifestyle. If not, we need to consider
additional solutions to fill the gap,” says Love. A critical aspect of
closing the wealth management loop is for clients to have a valid will.
“Given the delicacy of family relationships, it’s critical to work
with a fiduciary practitioner when drafting a will as a minor
Given the delicacy of family
relationships, it’s critical to work
with a fiduciary practitioner
when drafting a will.
oversight may have severe consequences for beneficiaries,” says
Love. An incorrectly executed will can not only tear families apart
emotionally, but can result in intestate succession or, if there
are grounds, a High Court application to condone the incorrect
execution and declaration that the will is accepted.
With people increasingly owning property and having capital
offshore, all worldwide assets must be included in a will. “Offshore
inheritance taxes and estate duty may decimate local estates with
devastating consequences for the South African heirs if a fiduciary
practitioner was not consulted when the will was drawn up,” says Love.
Once the will meets the client’s wishes and is executed
correctly, Love advises circling back to review all their beneficiary
nominations for pension funds, annuities, endowments and life
policies to ensure that the right people have been nominated
to receive the right benefits. She also advises her clients, where
appropriate, to consult with their adult beneficiaries and make
them an integral part of the succession planning process to make
sure everyone is aware of the
implications and can arrange
their affairs accordingly.
“Our structuring will have
been in vain if a will doesn’t meet
the needs of a client’s heirs and
factor in their whole financial
plan. Unwinding structuring
such as a trust and or company
may also trigger unnecessary
taxes and administration costs,”
concludes Love.
For more information email
sarah@privateclient.co.za or
visit www.privateclient.co.za.
Sarah Love, CFP®, Fiduciary
Practitioner, Private Client Trust
PRIVATE CLIENT HOLDINGS IS AN AUTHORISED FINANCIAL SERVICES PROVIDER. The licenses we hold with the Financial Sector Conduct Authority (FSCA) are Private Client Holdings – FSP 613, Private
Client Portfolios – FSP 399 78 and Private Client Wealth Management – FSP 399 79. Private Client Trust has taken care to ensure that all the information provided herein is true and accurate. Private Client
Trust will therefore not be held responsible for any inaccuracies in the information herein. The above press release does not constitute advice and the reader should contact the author for any related
concerns. Private Client Trust shall not be responsible and disclaims all loss, liability or expense of any nature whatsoever which may be attributable (directly, indirectly or consequentially) to the use of
the information provided.
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PRIVATE CLIENT HOLDINGS IS AN AUTHORISED FINANCIAL SERVICES PROVIDER.
The licenses we hold with the Financial Sector Conduct Authority (FSCA) are: Private Client Holdings – FSP 613,
Private Client Portfolios – FSP 399 78 and Private Client Wealth Management – FSP 399 79.
PRIVATE CLIENT TRUST . BLUE CHIP MAGAZINE 2022

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FINANCIAL PLANNING | Legislation
SOME IMPORTANT CHANGES IN
THE WORLD OF DIVORCE LAW
The family law fraternity (divorce lawyers in particular)
are all a-buzz with the Constitutional Court’s recent
judgement in the case of EB v ER and Others; KG v
Minister of Home Affairs and Others.
For any aspiring law geeks among you, the full judgement
penned by Justice Rogers is well worth a read, but as it stretches
to a lengthy 72 pages, I thought you may appreciate something
a little punchier.
The liberal view is that the
judgement is a triumph for our
constitutional democracy.
What’s it all about?
The nub of the issue is essentially this:
In the past, wealthy people getting married would often
try to safeguard their assets against divorce by insisting on an
antenuptial contract (or prenup) stipulating that the marriage
would be out of community of property and would exclude
the accrual system. For the sake of simplicity let’s call this a
“No Share ANC”.
Effectively a No Share ANC stipulates “what’s mine is mine,
what’s yours is yours (‘til death or divorce do us part) and the
fact that we’re getting married for a bit in between isn’t going
to change that”.
Typically, with a No Share ANC, the wealthier spouse (let’s
call them No Share Sherlock) slept comfortably at night secure
in the knowledge that when the marriage ends (and let’s face
it, all marriages come to an end at some point, even if only
because eventually somebody dies) they won’t have to hand
over any assets to their former spouse (or their spouse’s heirs,
for that matter).
Since the EB v ER and KG judgement things have changed
– and No Share Sherlock should now be aware that there is a
possibility that some assets will be “redistributed”. Effectively,
the recent Constitutional Court judgement has resulted in a
change in the law – such that a court is now empowered to
order No Share Sherlock to transfer a portion of his/her assets
to his/her former spouse, even though they both signed a No
Share ANC.
The rands and cents
How much might No Share Sherlock have to pay? you ask.
The amount that the court deems “just and equitable” in the
circumstances, is the answer. While this may seem a bit vague
and unsatisfactory, one should take (some) comfort from the fact
that, at least in principle, it shouldn’t be a totally arbitrary award.
The various factors a court will take into consideration are dealt
with extensively in the full judgement (so you might have to read
it after all, sorry!).
Among other things, the court will need to be satisfied that No
Share Sherlock’s soon-to-be ex-spouse has made a contribution
(monetary or otherwise) towards the accumulated assets they now
want to share.
Bottom line
In a nutshell, what the EB v ER and KG judgement does, is to sound
the warning for those who are married or getting married: they are
in for a financial partnership of sorts, whether they like it or not.
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What do the critics say? (Extra reading for over-achievers)
The conservative view is that the judgement:
• Undermines established legal principles like freedom of
contract, the sanctity of contract and the established legal
principle of “pacta sunt servanda” (a Latin term which means
that contracts must be honoured).
• Fails to respect a couple’s right autonomously to choose their
preferred matrimonial regime and seeks paternalistically to
impose a concept of “forced sharing”.
• Has the effect of promoting uncertainty about the ultimate
potential economic consequences of marriage.
• Will open the floodgates to a tsunami of litigated divorces,
initiated by disgruntled spouses keen to see whether they
can persuade a court to exercise this newfound discretion in
their favour.
• The liberal view is that the judgement is a triumph for our
constitutional democracy, in that it develops our law by
empowering courts to promote substantive gender equality.
The argument is that:
• In many spheres of South African society there is still a very real
and substantial power imbalance between men and women
(largely because of still prevalent cultural and social norms).
• As a result of their (still) generally lower economic and
occupational status in society, women are still (usually) in
a weaker bargaining position than men when it comes to
negotiations regarding the economic consequences of marriage.
• Because of this pervasive and continuing power imbalance, it is
disingenuous to argue that the choice of marital regime always
represents an exercise by both parties of their autonomous
“free will”.
• In the spirit of gender-sensitive realism and promoting
substantive gender equality (rather than just lip service to a
concept), courts should be (and now are) able to come to the
assistance of parties who may otherwise find themselves victims
of exploitative agreements that they cannot, with a straight face,
be said to have “agreed freely” to.
No prizes for guessing which view I share.
Hannah Wilson, Director, Simplifi Law
www.bluechipdigital.co.za
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DEVELOPMENT | Internships
Transformation through inclusive
approaches to internships
The Independent Financial Advisor (IFA) Internship, which
has been running since 2016, is one of a two-pronged
transformation initiative funded by various ASISA
member companies 1 through the ASISA Enterprise and
Supplier Development (ESD) initiative. While one programme
focuses on supporting and developing existing black-owned IFA
practices in a 12-month programme, the year-long IFA internship
seeks to build a pipeline of young black talent into the IFA space.
The ASISA Academy has delivered the IFA Internship since
its inception in 2016, and since then 252 black graduates from
various universities around the country have come through the
programme. This includes the 31 interns who are currently entering
the final three months of their internship which will conclude in
February 2024.
Many university graduates emerge from their tertiary education
experience poorly prepared for the professional world of work.
Add to this the complexity that most black youth face in our
country – poverty, hardship, unemployed or underemployed
parents and siblings, many of whom have not seen the inside of
a university lecture hall, let alone a corporate boardroom. You’ve
barely survived life as a student, now you are expected to take on
the working world and be the consummate professional, and you
may well have to shoulder the responsibility of taking care of your
ASISA Academy provides
graduates applying for a
spot on the IFA internship
with a head start.
family members financially. An added burden is that of student
debt you may have accumulated because – go figure. Can we even
begin to fathom this scenario?
Through the generous sponsorship of ASISA members,
ASISA Academy provides graduates applying for a spot on the
IFA internship with a head start, firstly by providing them with
guidance on what to expect during job interviews and how to
show up for them. To those who are selected for the programme,
a two-week work readiness course is delivered, which helps them
bridge the gap between student life and working in a professional
work environment.
Topics not only ensure that they understand how the financial
services industry hangs together and what the business of an
independent financial advisory practice is all about but also
include a variety of the world of work skills, often referred to as
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soft skills. These include topics like office etiquette, dress code,
grooming, effective communication, conflict management,
teamwork, mental health and wellbeing, resilience and dealing
with failure, managing personal finances and so forth.
The feedback we receive from interns after the work readiness
course is always highly affirming of how the content helped to
prepare them for the world of work. They emerge from those two
weeks of training well-equipped with the knowledge and skills to
start their journey towards becoming a professional.
The Academy also allocates a dedicated mentor to each intern,
who has years of life experience coupled with a sincere interest in
seeing young people thrive in their first year of work.
While challenges form part of the experience, it is encouraging
that the successes by far outweigh any of the challenges we have
encountered while running this internship. Each year, the Academy
sees more than 90% of interns completing the programme and
between 80% and 85% of interns being retained by their host
practices. The remaining interns are fortunate in that they are
quickly snapped up by the broader industry.
While the overall success lies within the dynamic partnership
between programme sponsors, the ASISA Academy and the IFA
host practices who provide interns with 12 months of full-time,
on-the-job work experience, a great deal of credit must go to
the host practices who keep making it work year after year. We
are most delighted to see certain practices growing their teams
by absorbing their interns and continuing to participate in the
programme by taking a new intern each year.
Here are a few additional reasons why we believe certain host
employers make a success of the internship year after year:
• Commitment to diversity and inclusion.
• Bringing their teams on board and ensuring open channels
of communication.
• Having the right people conducting the interviews and selections.
• Selecting the graduate who is the best fit for their business.
• Excellent onboarding processes that are well-implemented.
• Treating the interns respectfully and like adults.
• Providing clear reporting lines.
• Creating a welcoming environment for the intern and working
systematically with the set of learning outcomes provided.
• Having cultural intelligence (CQ) – an awareness of the cultural
differences that exist between people working in the business
and celebrating this rather than shying away from it.
• Exposing interns to learning opportunities such as product training.
• Making time. Time to work and time to play. Time to train, give
feedback, chat and learn about their intern.
• Involving their intern in as much as they can.
• Giving their intern a clear set of responsibilities and holding
them accountable.
• Genuinely caring.
1
Founding Sponsors: Allan Gray, Coronation, M&G Investments and Ninety One
Other Sponsors: Camissa Asset Management, Colourfield, Marriott, Old Mutual, Perpetua Investment
Managers and Swiss Re
The ASISA Intern Programme.
Alicia Davids, CEO, ASISA Academy
www.bluechipdigital.co.za
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FINANCIAL PLANNING | Legislation
Corporate governance: a
compliance or business issue?
As highlighted in one of my previous articles, the Conduct
of Financial Institutions (COFI) Bill is founded on culture
and governance. Where a previous article focused on
culture, this article puts the spotlight on corporate
governance. It will show how, contrary to popular belief, it is not a
compliance issue but a business issue.
Sadly, as a result of the wave upon wave of onerous rulesbased
regulatory reform that has challenged the financial
services industry since the turn of the century, the concept
of governance has left a stain of compliance in the minds of
many industry stakeholders, instead of a set of best practice
principles and guidelines. It may be a good idea to test your
attitude towards governance.
If your first response is to associate corporate governance
with compliance, it may prevent you from seeing governance as
your friend instead of an enemy. If that is the case, one of the first
things you will have to do is to adopt an attitude of best practice,
not compliance. Generally, compliance drags you down, but the
desire to be the best inspires you to succeed in every possible way.
Replacing a compliance mindset with a best-practice mindset will
go a long way to preparing your business for success.
What is corporate governance?
Corporate governance is the system of principles, best practices,
rules and processes by which a company is directed, controlled
and managed. It essentially involves balancing the interests of a
company’s many stakeholders, which can include shareholders,
directors, senior management, employees, customers, suppliers,
lenders, government and the community. Corporate governance
includes practically every aspect of management.
In his book, The Corporate Citizen, Prof Mervyn King defined
good governance as fairness, accountability, responsibility and
transparency on a foundation of intellectual honesty. In his view, in
arriving at their decisions, directors have to thoroughly understand
the duties of good faith, care, skill and diligence 1 . According to
King, it is not good governance when a compliance officer reports
to a board that a company has complied with the code and the
rules of governance, without the board applying its mind as to how
the company should be governed. 2
“Governance is about judgement calls and process.”
– Mervyn King 3
The benefits of good corporate governance
Corporate governance is of fundamental importance to any
business, big or small, simply because good corporate governance
leads to sustainable business success that can benefit all
stakeholders, while bad governance can lead to scandal and ruin.
There are many, many examples of failed enterprises globally that
confirm this fact.
There can be no doubt that sound corporate governance is good
for business and that it lays the foundation for the sustainability of
any financial services provider. In reality, most successful businesses
strive to have exemplary corporate governance. For many, if not
most stakeholders, it is not enough for a company to be profitable;
it also must demonstrate good corporate citizenship through
ethical behaviour; sound policies, procedures and corporate
governance practices as well as environmental awareness.
Corporate governance guides the leadership of firms to align
the interests of clients, shareholders, directors, management and
employees, and it helps to build trust between all the stakeholders.
Corporate governance can give all stakeholders a clear idea of a
company’s direction and business integrity. It promotes long-term
financial viability, opportunity and returns. It serves as a sound
foundation to facilitate the raising of capital, if needed. Good
corporate governance can translate to rising share prices and it can
reduce the potential for financial loss, risks and corruption. It lays
the foundation for resilience and long-term sustainable success as
well as increased shareholder value.
Good corporate governance can
translate to rising share prices.
How can the legislation help providers to succeed?
If you have a compliance mindset, you will probably only see
the rules and obligations, as highlighted below, and not the
sound, guiding principles that will assist you as a business to be
competitive at the highest level in our industry. Hopefully, the
comments in the next section of the article will help you to see
how these principles, captured in the legislation, will help you to
establish best-practice principles in your business that will give
you a sustainable competitive advantage.
Obligations of governing body
Section 15. 4
(1) The governing body of a financial institution is accountable for:
Best practice: Where there is no accountability, there is no
leadership responsibility, and where there is no leadership
responsibility, scandal and ruin usually follow.
(a) Compliance with the requirements of this Act; 5
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Best practice: Every game has its rules aimed at competing
safely and fairly for the benefit of all. Every business must have
a defensive strategy, which is equally important to an offensive
strategy. Compliance with legislation usually reduces risk to all
stakeholders.
(b) Approval of the governance arrangements referred to in section 16;
Best practice: The process before approval will serve as an
opportunity to plan, consider, strategise, deliberate and agree
on the best-practice principles that will enable your business
to compete in a very tough and onerous industry. Approval will
confirm the company policy and must be communicated to all
the internal stakeholders. When you consider your governance
arrangements from a best-practice point of view, you will comply
with the legislation by default in most cases. If you approach it by
asking, “What do I have to put in place to be the most honourable
and fierce competitor in the marketplace?” you will set yourself up
for success and comply at the same time.
(c) Overseeing the establishment, implementation, subsequent review
of, and continued compliance with, the governance arrangements
referred to in section 16.
Best practice: Approval of the best-practice governance
arrangements without ensuring that the arrangements are
properly implemented, maintained and reviewed from time to
time will be meaningless.
Governance arrangements
Section 16: 6
1. A financial institution must document, establish, implement,
monitor and review the effectiveness of governance arrangements
that are reasonably necessary to ensure compliance with the
requirements in this Chapter and any related conduct standard
or joint standards.
Best practice: To document conduct standards and governance
arrangements that are reasonably necessary to ensure compliance
with the requirements in this Chapter and any related standards
can serve as a business manual for all the stakeholders – a common
point of reference. It can also serve as a sound training manual for
management, representatives and support staff.
2. The governance arrangements referred to in subsection (1) must:
(a) Promote accountability of key persons and address roles,
responsibilities and duties of the governing body and key persons;
Best practice: Again, where there is no accountability, there is
no leadership responsibility, and where there is no leadership
responsibility, scandal and ruin usually follow. It is just a matter
of time.
(b) Ensure that key persons possess the necessary skills, knowledge
and expertise, and have appropriate resources, to fulfil their
functions, and perform those functions in a manner consistent
with Part 1;
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FINANCIAL PLANNING | Legislation
Best practice: I believe that every key person would agree that
possessing the necessary skills, knowledge, and expertise, as
well as having appropriate resources to fulfil their functions,
and perform those functions properly are basic requirements
for any firm to be successful over the long term.
(c) Provide for mechanisms to identify and, where appropriate,
remove practices that, or persons whose, conduct materially
increases the risk of the financial institution not complying with
Part 1;
Best practice: I firmly believe that the reasonable key person,
who understands the principle of accountability to his/her firm,
would want to reduce or eliminate risk to the business and its
stakeholders. From a best practice point of view, to identify and,
where appropriate, remove practices that, or persons whose,
conduct materially increases the risk of the financial institution
not complying, would be a basic part of the job description.
(d) Be proportionate to the nature, size, scale and complexity of
the conduct risks or business model of, and activities performed
by, the financial institution;
Best practice: Respectfully, the principle of proportionality
is something that makes absolute sense, and looks good on
paper, but it remains to be seen how exactly the regulator is
going to apply it in practice. This aspect will be addressed in
a future article.
(e) Provide for management processes and responsibilities and
the establishment, implementation and management of control
functions within the financial institution;
Best practice: Many respected and bestselling authors on
business have made the point that bad systems will trump good
people every time. It is a fundamental fact that sound systems
and processes create effectiveness and efficiencies in the
business that can be applied consistently. It is simple – sound
policies and procedures in any business are good for business.
(f) Deal with internal and external remuneration and
compensation practices in a manner that promotes compliance
with Part 1;
Best practice: Best practice remuneration and compensation
policies will establish an attractive employment value
proposition and will ensure the sustainability of the business.
(g) Demonstrate how the licensed financial institution will comply
with this Act; and
Best practice: Sound, written policies, procedures and
oversight have many advantages for the business, as already
highlighted above.
(h) Address and provide for any additional matters relating to
governance arrangements required by this Act.
Best practice: Leading key persons will go beyond the
obvious to ensure that they can create a very competitive and
sustainable business.
There is no question in my mind that leading financial services
providers will excel in corporate governance, not because they
have to, but because they want to.
1
Mervyn King, The Corporate Citizen, page ix
2
Mervyn King, The Corporate Citizen, page 12
3
Mervyn King, The Corporate Citizen, page 19
4
Conduct of Financial Institutions Bill
5
The Conduct of Financial Institutions Act, read with the Financial Sector Regulation Act.
6
Conduct of Financial Institutions Bill
Anton Swanepoel, Founder, Trusted Advisor
78 www.bluechipdigital.co.za

FPI | Certification
BLUE
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Next Generation
Certification Standards
Want to become a CERTIFIED FINANCIAL PLANNER®? The Financial Planning Institute introduces the Next
Generation Certification Standards.
The FPI is excited to introduce the Next Generation
Certification Standards for the CERTIFIED FINANCIAL
PLANNER® (CFP®) designation. The assessment process
to become a CFP® professional member of the FPI will be
amended from 1 January 2025 to align closely with the current
international requirements for CFP® certification.
WHY WE ARE CHANGING
When determining the competencies of financial planner
candidates, the FPI assesses both their knowledge and whether they
possess the required financial planning skills and abilities.
In line with international trends, the FPI is adapting the assessment
processes for CFP® to include a practical component in the form of a
Capstone 1 course and a financial plan assessment.
The entire assessment process, across the four Es required for
certification (education, examination, experience and ethics), is
being streamlined. This will ensure that a new CFP® professional
is evaluated practically across the knowledge, skills and abilities
components of financial planning, which includes the drafting of
a financial plan.
WHAT IS CHANGING?
The CFP® professional competency examination in its current format
will be discontinued at the end of 2024. From 2025, candidates on
the two different pathways to CFP® certification will be required to
complete the steps as shown in the table successfully.
How does it affect candidates on our CFP® pathway?
If you obtained your recognised underlying qualification during
or before 2023, you will be encouraged to complete the FPI
Professional Competency Examination (PCE) in its current format
before the end of 2024. Should you not attempt the PCE, or not
be successful in passing the PCE at this time, you will have
to complete the three components of the CFP® RPL pathway
examination requirement from 2025 onwards (multiple choice
examination, Capstone course and financial plan).
The FPI encourages all qualifying candidates to complete this
examination and apply for CFP® membership as soon as possible.
There will be four examination opportunities available in 2024.
Visit www.fpi.co.za to register for the February (8-9) or April
(25-26) PCE exams.
FREQUENTLY ASKED QUESTIONS
How will the FPI ensure that the standard of new entrants to
the CFP® designation is upheld?
Although the process and method of assessment is changing,
it is still based on the global international standards and
requirements for CFP® professionals. Education requirements
CFP® PATHWAY
Education Examination Experience Ethics
Obtain the recognised underlying
qualification at an FPI recognised
education provider.
Complete the Capstone course
(practical online course on how to apply
the knowledge component in practice).
Prove three years’ relevant
financial planning experience as
assessment for skills and abilities.
Adherence to the Code of Ethics and
professional responsibility and practice
standards.
and
or
or
Complete the qualification’s
Integrated Case Study Module from
2024 onward to assess the knowledge
component for certification.
Successfully complete the
mentorship programme.
and
Submit a financial plan as the final
form of examination assessment for
knowledge, skills and abilities.
Complete the mentorship programme
as assessment for skills and abilities.
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BLUE
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FPI | Certification
CFP® RPL2 PATHWAY
Education Examination Experience Ethics
Hold an advanced degree or
designation as approved per the
current challenge examination criteria.
Pass the FPI multiple choice CFP®
examination for knowledge assessment
for entry into the Capstone course.
and
Prove five years’ relevant financial
planning experience as assessment
for skills and abilities.
Adherence to the Code of Ethics
and professional responsibility
and practice standards.
Complete the Capstone course.
and
Submit a financial plan as the final
form of examination assessment for
knowledge, skills and abilities.
are still set at an NQF level 8, and the Capstone course will
allow candidates to apply the knowledge in practice. The
financial plan assessment will evaluate whether candidates
have mastered the skills and abilities to apply this knowledge
at the level expected of a CFP® professional.
Does this mean that I must write an extra examination to
become a CFP® professional?
The above should not be seen as an additional examination but
rather a different format of assessment in that the candidates
will from 2025 onwards not write “another” exam, but rather
submit a portfolio of evidence (financial plan) after completing
the Capstone course. The exam written at the universities, from
2025 onwards, will be the standard-setting examination that tests
for minimum competence across all FPI-recognised educational
providers. Only candidates who obtained their qualification before
or during 2023 who do not attempt or pass the PCE by the end of
2024 will be required to also pass the multiple-choice examination
to gain access to the Capstone course.
Will the costs for completing the Capstone course and
submitting a financial plan be significantly different to the
current PCE examination fees?
No. The FPI will ensure that the cost for candidates is similar to the
registration cost of the PCE in its current form.
What is Capstone course format?
The Capstone course will be an online course with an eight to
10-week timeline to completion. It will run throughout the year and
will include live sessions, pre-recorded material, reading material
and various types of assessments, etc. It will be aimed at assisting
candidates to apply the knowledge obtained in the education
requirement to the everyday practice of financial planning.
How will the financial plan assessment work?
After completion of the Capstone course, a candidate will be
provided with a case study. This candidate will have a prescribed
time to develop and submit a financial plan to the FPI that meets
the requirements for a financial plan as prescribed. Once submitted,
this financial plan will follow an assessment process by the FPI
to determine whether the candidate has met the competency
requirement for this assessment component.
What are the dates for the examinations and how do I register?
Visit our website at www.fpi.co.za or email certification@fpi.co.za
for more information.
Nici Macdonald, CFP®,
Head of Certification and
Standards, FPI
1
A Capstone course is a project
that serves as the culminating and
integrative praxis experience of an
educational programme. It is the final
culmination of a learning experience,
in this case, the combination of the
knowledge, skills and abilities a
candidate has to master during their
studies.
2
Recognition of Prior Learning
3
https://fpi.co.za/membership/
professional-membership/education/
80
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