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Issue 73 • September/<strong>October</strong> <strong>2019</strong><br />
www.bluechipjournal.co.za<br />
The South African <strong>Journal</strong> of Financial Planning<br />
Food for thought<br />
Is your client’s financial<br />
plan sustainable?<br />
Digital innovation<br />
For succession planning and<br />
improved customer experience<br />
Professionalism<br />
and growth<br />
FPI Financial Planner of the Year <strong>2019</strong><br />
Hardi Swart & FPI CEO Lelané Bezuidenhout
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With the expertise of SA’s top Fund Managers, you can<br />
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Contact our client services team on 0860 123 263 or<br />
clientservices@nedgroupinvestments.co.za<br />
or talk to your financial planner.<br />
www.nedgroupinvestments.com<br />
UNIT TRUSTS | INTERNATIONAL | RETIREMENT FUNDS<br />
Nedgroup Collective Investments (RF) Proprietary Limited is the company that is authorised in terms of the Collective Investment Schemes Control Act to administer the<br />
Nedgroup Investments unit trust portfolios. Unit trusts are generally medium to long term investments. The value of your investment may go down as well as up. Past performance<br />
is not necessarily a guide to future performance. Nedgroup Investments does not guarantee the performance of your investment and even if forecasts about the expected future<br />
performance are included you will carry the investment and market risk, which includes the possibility of losing capital. Unit trusts are traded at ruling prices and can engage in<br />
borrowing and scrip lending. Certain unit trust funds may be subject to currency fluctuations due to its international exposure. Nedgroup Investments has the right to close unit<br />
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<strong>Blue</strong> <strong>Chip</strong> - Print Ad.pdf 1 29/10/2018 12:43:10 PM<br />
CONTENTS<br />
2 SPRING HAS SPRUNG AT THE FPI<br />
4 RETIRING SUSTAINABLY<br />
Issue 73 • September/<strong>October</strong> <strong>2019</strong><br />
www.bluechipjournal.co.za<br />
6 ON THE MONEY<br />
News for investors<br />
7 LOCAL ASSETS STILL TOPS<br />
SA offering better value<br />
ARE THE FUNDS<br />
YOU INVEST IN<br />
INDEPENDENTLY<br />
9 POSITIVE NARRATIVES<br />
RATED?<br />
The beginning, middle and end of storytelling in financial services<br />
10 EXPAND YOUR FOCUS<br />
Build a thriving sustainable practice in uncertain times<br />
FUND RESEARCH<br />
BESPOKE MODEL PORTFOLIOS<br />
OFFICES IN SA AND THE UK<br />
www.fundhouse.co.za<br />
The South African <strong>Journal</strong> of Financial Planning<br />
The South African <strong>Journal</strong> of Financial Planning<br />
Food for thought<br />
Is your client’s financial<br />
plan sustainable?<br />
Digital innovation<br />
For succession planning and<br />
improved customer experience<br />
Professionalism<br />
and growth<br />
FPI Financial Planner of the Year <strong>2019</strong><br />
Hardi Swart & FPI CEO Lelané Bezuidenhout<br />
12 PROFESSIONALISM AND PERSONAL GROWTH<br />
Meet the FPI Planner of the Year <strong>2019</strong><br />
Fundhouse Investment Advisors (Pty) Ltd is an authorised<br />
financial services provider. FSP 43960<br />
ISSN 1682-8666<br />
16 FOOD FOR THOUGHT<br />
How sustainable are your client’s financial plans?<br />
18 THE IMADIBA PROJECT<br />
Satrix takes Madiba’s "circle of dialogue" to the JSE<br />
Issue 73<br />
Sept/Oct <strong>2019</strong><br />
19 AVOID VALUE DESTRUCTION<br />
Living annuities: why you might be giving up important growth<br />
24 THE CREED OF WEALTH CREATION<br />
Uplifting women through financial planning<br />
26 VERIFIED SUBSTANCE<br />
Guernsey offers “flight to quality”<br />
No article or any part of any article may be reproduced without the prior written<br />
permission of the publishers. The information provided and opinions expressed<br />
in this publication are provided in good faith, but do not necessarily represent<br />
the opinions of this publication, the publisher or the editor. Neither this<br />
magazine, the publisher or the editor can be held legally liable in any way for<br />
damages of any kind whatsoever arising directly or indirectly from any facts or<br />
information provided or omitted in these pages or from any statements made<br />
or withheld by this publication. The publishers would like to express thanks to<br />
those who support this publication by their submission of articles and with their<br />
advertising. All rights reserved.<br />
30 CLIENTS ARE FOR LIFE<br />
Behavioural financial advice is not a soft skill<br />
32 STRATEGIC DECUMULATION<br />
Retirement means working with what you’ve got<br />
Pages for paid-for material are<br />
labelled ‘advertorial’, ‘profile’<br />
or ‘cover profile’<br />
34 SMOOTH TRANSITION<br />
Technology and succession planning<br />
Head Office:<br />
Cape Media House, 28 Main Road,<br />
Rondebosch 7700 Cape Town<br />
Tel: +27 (0) 21 681 7000<br />
Fax: +27 (0) 21 685 4448<br />
info@capemedia.co.za<br />
www.bluechipjournal.co.za
FOREWORD<br />
A new direction for the FPI<br />
As the days get longer and the leaves return to the trees, the FPI is experiencing a spring<br />
of its own. With groundbreaking new initiatives, fresh staff appointments and new<br />
events, it’s an exciting time for the Institute.<br />
Adele and Roxanne show the way forward<br />
We’re very pleased to announce the appointment of two awe-inspiring women to senior positions<br />
at the FPI. Adele Whyte has been given the great responsibility of heading up our Membership<br />
Hub while Roxanne van Blerk CFP® is our Head of Certification and Standards.<br />
Adele joined the FPI in 2011, after 28 years in the insurance industry. In 2012 she was charged<br />
with setting up the Centre of Professional Development – a task she performed with aplomb. She<br />
takes her new role as Head of the Membership Hub very seriously and feels privileged to get a<br />
chance to bring CFP® professionals in Southern Africa together.<br />
Roxanne joins us from academia. Her overriding objective as Head of Certification and<br />
Standards is to create awareness of the transformative value of sound financial advice and the<br />
significant impact it can have on clients’ quality of life. One of her immediate challenges is to<br />
heighten community awareness of the value of the CFP® certification and to raise the academic<br />
bar required to enter the profession.<br />
As CEO, it gives me great pleasure to reward and promote women who have proved to be<br />
worth their weight in gold to the FPI. They both have momentous tasks ahead of them, and I’m<br />
here to support them every step of the way.<br />
Promoting the financial planning industry on campus<br />
We recently hosted a very successful presentation to commerce undergraduate students at the<br />
University of Stellenbosch, with a view to encouraging students to become financial planners<br />
2 www.bluechipjournal.co.za
FOREWORD<br />
and thus assist in transforming the industry. Janet Hugo CFP® (Financial Planner of the Year 2018) discussed<br />
the difference between financial planning and investment management, while Hardi Swart<br />
CFP® (Financial Planner of the Year <strong>2019</strong>) spoke about how to become a professional influencer. We<br />
hope to give similar presentations to all South African universities soon and, ultimately, to extend the<br />
programme to high schools.<br />
Using our members to reach all South Africans<br />
Realising that our members are our biggest asset, we’re implementing a programme whereby an<br />
increased number of CFP® brand ambassadors will regularly contribute to the media. The programme<br />
will have a particular focus on fostering financial literacy among lower-income earners and promoting<br />
a healthy savings culture in South Africa.<br />
Two important events<br />
The recent Leaderex conference hosted more than 350 sessions across a range of topics. The Financial<br />
Planning roster was stacked with addresses by FPI members. Highlights included a session on finding<br />
investment value in the current economy by Gugu Sidaki CFP® and another on the unique challenges<br />
faced by women when planning for retirement by Kim Potgieter CFP®. Financial Planner of the Year,<br />
Hardi Swart CFP® spoke about taking the emotions out of investment.<br />
Last, but certainly not least, World Financial Planning Day was celebrated on 2 <strong>October</strong>. I hope you<br />
will join me in actively promoting the value of financial planning and the CFP accreditation on this<br />
significant day in our calendar.<br />
That’s it from me. Enjoy the warmer weather... and the rest of this mag.<br />
Lelané Bezuidenhout, CEO, FPI<br />
www.bluechipjournal.co.za<br />
3
ED'S NOTE<br />
Gregory Penfold, Editor<br />
Retiring sustainably<br />
For a long time, the world of financial planning<br />
revolved around the same set of client goals:<br />
the ability to retire securely and leave a legacy.<br />
These goals have not changed, but the environment<br />
in which they may be achieved has changed<br />
beyond all recognition. However, a lot of people still<br />
behave as though the world around them is the same<br />
as the world they grew up in. Ironically, this inability to<br />
see change could jeopardise those goals.<br />
As I write this note, thousands of people in South<br />
Africa, and millions more around the world, are taking<br />
part in some form of climate strike. Workers are not<br />
turning up to work and children are not showing up for<br />
school. Climate activist Greta Thunberg has succeeded<br />
in calling the bluff of the cynical political class in the<br />
USA by using the tool of integrity to upstage a Senator<br />
devoid of anything resembling an ethical principle. The<br />
idea is to send a loud and unequivocal message that it<br />
is time for those with the power to make a difference<br />
to use that power seriously and with integrity.<br />
What does this have to do with financial planning?<br />
Well, it makes a big difference where a client's assets<br />
are located. Funds that have performed well for you<br />
in the past may be deep into oil and coal. Considering<br />
that the effects of climate change may threaten not<br />
only the wellbeing of your clients' offspring but also, at<br />
a time when people can expect to live another 30 years<br />
after retirement, the wellbeing of your clients themselves.<br />
Imagine in a secure retirement village while the<br />
world around it is on fire. See Rob Macdonald's article<br />
on sustainability for some reflections on this theme.<br />
On a different tack, the lack of diversity in financial<br />
planning in South Africa has long been a bone of contention.<br />
Go to any financial planning conference and<br />
the demographics are much the same. However, a different<br />
force is driving transformation in the industry:<br />
the client base itself is transforming, and it is largely<br />
thanks to the efforts of black women. For this we have<br />
to thank "black tax", or family responsibility, a deeply<br />
entrenched aspect of the culture of the majority<br />
of South Africans. For the first time, the women on<br />
whose shoulders falls the burden of looking after the<br />
extended family have enough wealth to invest. This<br />
is changing the financial planning game from the<br />
bottom up. For more on this topic, see our interview<br />
with Wealth Creed's Gugu Sidaki.<br />
A prosperous Spring to all our readers.<br />
Editor: Greg Penfold<br />
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REAL RETURNS,<br />
LOW VOLATILITY<br />
Laurium Income Prescient Fund<br />
Laurium Capital launched the Laurium Income Prescient Fund on 1 March <strong>2019</strong>. The fund<br />
aims to achieve inflation-beating returns with controlled risk and low volatility.<br />
Target return of inflation +3% p.a<br />
Aims to avoid drawdowns over a rolling 3-month period<br />
Visit www.lauriumcapital.com today<br />
We know Investments<br />
T +27 11 263 7700 E laurium@lauriumcapital.com<br />
www.lauriumcapital.com<br />
Collective Investment Schemes (CIS) should be considered as medium to long-term investments. The value of your investment may go up as well as down as past performance is not necessarily a guide to future<br />
performance. CIS’s are traded at a ruling price and can engage in script lending and borrowing. A schedule of fees, charges, and maximum commissions is available on request from the Manager. There is no guarantee<br />
in respect of capital or returns in a portfolio. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. Prescient Management Company (RF) (Pty) Ltd is<br />
registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). Laurium Capital (Pty) Limited, Registration number: 2007/026029/07 is an authorised Financial Services Provider<br />
(FSP34142) under the Financial Advisory and Intermediary Services Act (No.37 of 2002). For any additional information such as fund prices, brochures and application forms please go to www.lauriumcapital.com
On the money<br />
Making waves this quarter<br />
Dealing with disruption<br />
Mazars launches financial services entity to offer skills on demand<br />
Global audit and advisory firm Mazars has launched a practice to offer<br />
skills and consulting services to businesses in the financial sector. Mazars<br />
Financial Services Africa is geared towards assisting companies to meet the<br />
challenges of an evolving market.<br />
Headed by Riaan Eksteen and George Ellis, industry veterans with<br />
20 years’ financial services experience each, Mazars Financial Services<br />
Africa will offer senior professional skills on-demand to financial services<br />
companies.<br />
Mazars Co-CEO Anoop Ninan explains that financial services companies<br />
are changing the way they operate. “Business has progressed from longrange<br />
planning and static workforce requirements to quick implementation<br />
of projects and a dynamic, agile workforce.”<br />
This is particularly true for South African financial services companies<br />
who need to manage digital disruption. According to the Digital Vortex<br />
<strong>2019</strong> study, financial services is one of the five industries that are most vulnerable<br />
to digital disruption. This means that companies in this sector need<br />
to respond rapidly to change and work quickly to implement new ideas.<br />
“Projects undertaken by businesses in the financial services sector typically<br />
require specific skills for their duration. While companies recognise that<br />
they need to have the right skills for each<br />
project, finding people with the required<br />
expertise isn’t easy,” Ninan comments.<br />
He adds that skills shortages and the<br />
war for talent are more than buzzwords.<br />
“They are very real and many companies in<br />
the financial sector are finding it difficult to<br />
hire the right professionals when and where<br />
they need them,” Ninan says.<br />
Appetite for investment<br />
Kingson Fund Two gets a boost<br />
Kingson Fund Two, a dynamic High-Growth Tech and Black-Owned SME<br />
Fund, launched in the first quarter of <strong>2019</strong> at R 400 million (c. $30 million),<br />
has been revised to $100 million. The reason behind increasing this up to<br />
$100 million is due to the enthusiastic investment appetite and committed<br />
capital from international investors.<br />
Recognising the importance of connecting South African startups to<br />
international markets and creating a viable venture capital ecosystem in<br />
South Africa, Kingson has been building investor networks into the US, and<br />
as a result, has garnered US investment support for its Fund Two.<br />
Kingson also pleased announced that to anchor its Fund Two, Stat Zero<br />
and its investors has committed a multi million-dollar (USD) investment<br />
into South Africa to enable Africa to become a global hub for tech innovation.<br />
Stat Zero is a digital investment platform aimed at aligning global<br />
entrepreneurship, government and venture capital to broaden opportunity<br />
and transform communities and global economies.<br />
"We are committed to bringing together innovation and emerging<br />
technology, with impact, to enact global change", says Marquis Cabrera,<br />
CEO and Co-Founder of Stat Zero. "Our investment into Kingson's Fund<br />
Two reinforces this mission to evoke change for the better on a significant<br />
scale, which will<br />
help increase South<br />
Africa’s GDP by enabling<br />
global market<br />
access to Silicon Valley,<br />
California and U.S.<br />
markets and capital to<br />
grow and scale SMMEs<br />
in South Africa."<br />
Preservation and diversification<br />
Laurium Income Prescient Fund yielding 8.43% gross of fees as at 30 September <strong>2019</strong><br />
Fixed Income investments play a vital role as a source of income, for capital preservation, total return and diversification benefits.<br />
Having traditionally been a more equity-focused house, with the hire of Jean-Pierre Du Plessis in January this year, Laurium Capital launched<br />
the Laurium Income Prescient Fund (“The Fund”) on 1 March <strong>2019</strong>.<br />
The Fund has a primary target of generating inflation +3% returns, and a secondary objective of avoiding drawdowns over a rolling three-month<br />
period. This fund is for investors who want to obtain real returns, but with low volatility. It is focused on compounding real returns over time while<br />
minimising the potential for drawdowns. The largest determinate of returns will be derived from generating yield in the portfolio. There are several<br />
drivers which can be used to actively generate returns – duration, credit, inflation-linked bonds, preference shares, property and international<br />
assets and currency.<br />
The fund is currently yielding 8.43% with a duration of 0.31 years. Credit spreads continue to be tight versus where they have been historically,<br />
and as such, Laurium has positioned the fund conservatively with 1.43 years of credit duration but has been taking advantage of the higher spreads<br />
in SA credit offshore.<br />
For more information visit www.lauriumcapital.com
INVESTMENT OUTLOOK<br />
Local assets still tops<br />
SA offering better value<br />
The global macroeconomic environment<br />
is treacherous at the moment.<br />
The shift to populism and the<br />
resultant risks have brought politics<br />
front and centre. This is inherently unpredictable.<br />
Extreme monetary policy action<br />
has de-emphasised the standard cycle. In<br />
this world, it is prudent to focus more on<br />
valuation (price) and to hold macro views<br />
lightly, while focusing on building well-diversified<br />
portfolios.<br />
As part of our investment process, we<br />
develop a set of evolving themes that take<br />
the macroeconomic environment into<br />
consideration. The theme that influenced<br />
our latest portfolio construction is that<br />
the US will underperform and, as such, our<br />
portfolios are underweight US equities. This<br />
is based off very high profits, high valuations<br />
and a strong US dollar, making it difficult<br />
for things to improve. Globally, we expect<br />
a low-return world, which will force money<br />
to search for yield in an environment of<br />
ultra-low global interest rates. This has the<br />
potential to support SA assets, which are<br />
offering better value.<br />
In terms of SA, we maintain our<br />
"winds of change" theme. This theme<br />
recognises that things are by no means<br />
easy, but at the margin we expect<br />
improvement – with lower interest<br />
rates and faster economic growth. The<br />
risk to this is that government does not<br />
act decisively on the parastatals, particularly<br />
Eskom. If government does not<br />
take swift corrective action, we will be<br />
downgraded to junk status.<br />
Our expected returns across SA assets<br />
have generally been revised up, while<br />
global bonds have once again deteriorated<br />
and are now expensive. On a relative<br />
basis, the investment case is pushing<br />
harder towards SA and away from global<br />
assets. SA assets have de-rated; in other<br />
words, they’ve become cheaper and<br />
are now offering better value. To this<br />
end, we have increased our longer-term<br />
expected returns for SA equity and property<br />
and have maintained our outlook<br />
for SA bonds.<br />
Peter Brooke, Head of MacroSolutions at<br />
Old Mutual Investment Group<br />
WHY YOUR INVESTMENT<br />
CHOICES MATTER.<br />
Our investors want their investments to do well and do good. That’s why<br />
we incorporate environmental, social and governance factors into all our<br />
investment and ownership decisions. And why we have committed over<br />
R122bn of our clients’ capital to sustainable investments that generate longterm<br />
returns, while solving some of society’s biggest challenges.<br />
Invest for a future that matters. Read more at oldmutualinvest.com<br />
18 000 children receiving<br />
quality education.<br />
1 300 teachers employed.<br />
INVESTMENT GROUP<br />
DO GREAT THINGS EVERY DAY<br />
119872L<br />
The following entities are licensed Financial Services Providers (FSPs) within Old Mutual Investment Group (Pty) Ltd Holdings approved by the Financial Sector Conduct Authority (www.fsca.co.za) to provide advisory<br />
and/or intermediary services in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. These entities are wholly owned subsidiaries of Old Mutual Investment Group Holdings (Pty) Ltd and are<br />
members of the Old Mutual Investment Group. Old Mutual Investment Group (Pty) Ltd (Reg No 1993/003023/07), FSP No:604. | Old Mutual Alternative Investments (Pty) Ltd (Reg No 2013/113833/07), FSP No:45255. |<br />
African Infrastructure Investment Managers (Pty) Ltd (Reg No 2005/028675/07), FSP No:4307. | Futuregrowth Asset Management (Pty) Ltd (Reg No 1996/18222/07), FSP No:520. Figures as at 31 December 2018 unless<br />
otherwise stated. Sources: Old Mutual Alternative Investments; African Infrastructure Investment Managers (AIIM); Old Mutual Specialised Finance; Futuregrowth Asset Management.
On the money<br />
Making waves this quarter<br />
Global wealth report<br />
South Africa’s financial assets decline by 3.2%<br />
Island life<br />
Mauritius rolls out red carpet for foreign investors, residents<br />
The 10th <strong>edition</strong> of the Allianz Global Wealth Report reveals that in 2018,<br />
financial assets in industrial and emerging countries declined simultaneously<br />
for the first time; even in 2008, at the height of the financial crisis, this was<br />
not the case.<br />
Worldwide, savers were in a bind: on the one hand, the escalating trade<br />
conflict between the US and China, the endless "Brexit saga" and increasing<br />
geopolitical tensions, on the other hand, the tightening of monetary<br />
conditions and the (announced) normalisation of monetary policy. The<br />
stock markets reacted accordingly: global equity prices fell by around 12%<br />
in 2018. This had a direct impact on asset growth. Global gross financial<br />
assets of private households fell by 0.1% and remained more or less flat at<br />
EUR 172.5-trillion.<br />
In South Africa, the gross financial assets of households declined by<br />
3.2% in 2018, marking the first decline since the financial crisis back in 2008.<br />
The decline was triggered by a sharp fall in insurance and pensions (-2.0%)<br />
and other assets (-9.5%). Bank deposits, on the other hand, were growing<br />
relatively healthily, clocking a rate of 7.8% (but account for only 15% of<br />
all financial assets). Growth in liabilities accelerated to 6.9%, the fastest<br />
increase in six years. As a result, the debt ratio of households etched up to 44.3%<br />
at the end of 2018, well above the average of emerging markets of 40.3% – but<br />
still 10 percentage points below the pre-crisis peak.<br />
As result of declining assets and rising liabilities, net financial assets in<br />
South Africa fell by 6.4% in 2018. With net financial assets per capita of 6 470<br />
euros, South Africa remained at the 38th place in the ranking of the richest<br />
countries (financial assets per capita), just ahead of Brazil (39). At the top,<br />
the USA replaced Switzerland again, not least thanks to the strong dollar.<br />
The tropical island paradise of Mauritius is an increasingly attractive<br />
destination for foreign investors and residents, offering an idyllic lifestyle<br />
and a liberal approach to regulation and taxation for South Africans looking<br />
to live, work, open a business or buy property on the island.<br />
The <strong>2019</strong> Sovereign Trust Mauritius Seminar will unpack the various<br />
options available around immigration, residency, business structuring and<br />
investment in Mauritius. The seminar takes place at the Houghton Golf Club<br />
in Johannesburg (13 November) and the Premiere Hotel in Cape Town (14<br />
November). Topics include:<br />
• The business opportunities offered by the new company regime<br />
• SA tax considerations when setting up shop in Mauritius<br />
• Buying property for living, working and holidaying<br />
• The banking environment<br />
• Investing in Mauritius funds<br />
• Living the dream in Mauritius – pros and cons<br />
To register, please email ecchapman@sovereigngroup.com<br />
Stable and secure<br />
Guernsey offers “flight to quality”<br />
Financial services experts from Guernsey have been<br />
in South Africa over the autumn, promoting the<br />
island’s abilities in investment funds, private wealth<br />
and international pensions.<br />
Business links between the island, which is British<br />
but situated in the English Channel near France, and<br />
South Africa are well established. A number of wellestablished<br />
names in the wealth and funds sector<br />
have a presence in Guernsey, and in recent years<br />
business flows to the island have strengthened in<br />
all three sectors.<br />
James Crawford, Business Development Director<br />
at Guernsey Finance, the promotional agency for<br />
the island’s finance industry, says the delegations<br />
to Johannesburg and Cape Town have been well<br />
received.<br />
“Guernsey is well-positioned to do business<br />
with South Africa in private wealth, pensions and<br />
investment funds, and I’m delighted to be able to<br />
promote the island in a place I know well,” he said.<br />
“The journey to Guernsey is the ‘flight to quality’<br />
and our message to this market is that we are secure,<br />
specialist, safe, stable, and have verified ‘substance’<br />
in all our dealings. We are hearing from the South<br />
African market that they recognise the importance<br />
of real substance and so are looking to consolidate<br />
offshore structures to a single, credible offshore<br />
jurisdiction.”<br />
Guernsey Finance will be back in South Africa at<br />
least twice in 2020. For more information email<br />
jcrawford@weareguernsey.com or visit www.<br />
weareguernsey.com
MARKETING<br />
Positive narratives<br />
The beginning, middle and end of storytelling in financial services<br />
Putting together a book of financial<br />
advisors’ stories has reminded us<br />
– once again – of the immutable<br />
power of storytelling in financial<br />
marketing. Read on for the lowdown.<br />
I’m nearing the end of quite an incredible<br />
project that will eventually culminate in a<br />
book containing the personal and business<br />
development stories of a group of very successful<br />
financial advisors in South Africa.<br />
When I agreed to the task, I had no idea of<br />
what I was in for!<br />
It’s been a mammoth undertaking, but<br />
now – after endless flights around the<br />
country and intense two- to three-hour<br />
interviews with the advisors – I’m reassured<br />
of the irresistible value of storytelling. It<br />
isn’t just an excellent marketing tool; it is<br />
also an enriching conduit for deep personal<br />
development.<br />
Storytelling is science<br />
One of the most significant challenges<br />
in financial planning is to change<br />
how people behave around money.<br />
Fortunately, the solution to this complex<br />
conundrum is surprisingly simple.<br />
Neuroscience proves that storytelling has<br />
a significant effect on behaviour. Scientists<br />
have observed that a convincing tale with<br />
a dramatic narrative arc prompts a strong<br />
neurological response as our levels of<br />
the "feel-good" hormone oxytocin rise.<br />
When we engage with a compelling story<br />
that captures our imagination and holds<br />
our attention, we feel like we’re actually<br />
taking part in proceedings. It doesn’t take<br />
a neuroscientist to figure out that this<br />
empathy leads to action.<br />
Facts tell, stories sell<br />
Mention the words "financial services" to<br />
a random stranger and the chances are<br />
they’ll harp on about complexity and distrust.<br />
There are no two ways about it. Our<br />
industry is heavy on data and metrics that<br />
are meaningless to most clients – which<br />
is why we, more than almost any other<br />
industry, desperately need to make use of<br />
storytelling in marketing. Emotional narratives<br />
connect with people and differentiate<br />
businesses from each other. Storytelling<br />
is key to helping financial services move<br />
beyond data, to humanise our offerings<br />
and instil a sense of trust.<br />
Gems are polished by friction<br />
The financial advisors that I’ve interviewed<br />
for the book have much in common. Most<br />
notably, they’ve all overcome adversity<br />
in their personal and/or business lives.<br />
Adversity is humbling and it teaches us<br />
to empathise with others – an absolute<br />
must in financial services. Listeners (read<br />
clients) identify closely with adversity and<br />
form a connection with the storyteller (read<br />
advisor) by wondering how they would<br />
have behaved in similar circumstances.<br />
Mirror, mirror on the wall<br />
Storytelling is all about reflection – which<br />
is always beneficial if it’s brutally honest.<br />
Scientists have shown that accurate reflection<br />
enhances our cognitive ability and<br />
allows us to truly learn. Deep reflection<br />
prompts us to fundamentally change the<br />
way we process information and, thus, to<br />
profit from past experiences. As advisors,<br />
changing our clients’ financial behaviour<br />
starts with telling meaningful stories that<br />
cause them to reflect.<br />
Stories make the world go round<br />
The need for a strong social media presence<br />
in financial services goes without<br />
saying. Currently, there’s a marked shift on<br />
all platforms towards businesses engaging<br />
with their customers in a more personal<br />
manner. Facebook’s own Chief Product<br />
Officer, Chris Cox, has noted that stories<br />
stand to surpass feeds as the primary way<br />
people share things with their friends<br />
within the next year.<br />
What’s your story?<br />
It should, by now, have dawned on you how<br />
valuable your personal and business stories<br />
are and how much others will respect you<br />
for sharing them. The next time you need<br />
to come up with a marketing strategy, why<br />
not do the simplest thing in the world and<br />
get together with clients and colleagues to<br />
TELL YOUR STORY? •<br />
Need some assistance telling your story?<br />
FinCommunications is on a mission to<br />
humanise the South African financial<br />
services industry and would love to help.<br />
Drop Linda Graham a line on<br />
linda@fincommunications.com<br />
Linda Graham, CFP®<br />
www.bluechipjournal.co.za<br />
9
PRACTICE MANAGEMENT<br />
Expand your focus<br />
Build a thriving sustainable practice in uncertain times<br />
Conventional wisdoms in advising<br />
and guiding investors are being<br />
challenged and found wanting.<br />
The information arbitrage<br />
between client and advisor is disappearing.<br />
Clients are overloaded with information.<br />
The media isn’t helping to curb negative<br />
sentiment. Clients are dissatisfied with<br />
the outcomes of their investments and<br />
according to the Dalbar report they have<br />
reason to be.<br />
If an advisor’s value proposition was<br />
defined as fund selection and fund performance,<br />
then that advisor is locked into a<br />
performance trap. The advisor has no control<br />
over market performance.<br />
Many financial plans rely too heavily on<br />
the market’s contribution to a client’s retirement<br />
as opposed to relying on the client’s<br />
efforts. If the advice narrative was based<br />
on market performance or an over-reliance<br />
on market performance, then some clients<br />
tend to hold the advisor responsible for the<br />
lack of market performance.<br />
To break from the market performance<br />
trap, an advisor must change their narrative<br />
away from market performance and fund<br />
picking.<br />
The three keys to build<br />
These three keys are foundational to the<br />
success of an advisory business:<br />
• Goal-based planning;<br />
• Co-planning; and<br />
• Enabling technology.<br />
A definition of goal-based planning<br />
At Allegiance our definition of goal-based<br />
financial planning is as follows: “A process<br />
of financial life planning for both shortand<br />
long-term goals to achieve the client’s<br />
goals and dreams in the context of the client’s<br />
personal economy including assets,<br />
liabilities, income and expenses; by managing<br />
and optimising the client’s resources<br />
to enable the client’s financial goals; and<br />
to manage risks that could frustrate the<br />
achievement of their goals.<br />
This includes the ability to identify and<br />
plan for the implications of:<br />
• Foreseen and unforeseen events in the<br />
short and long term;<br />
• The acquisition of assets now and in the<br />
future;<br />
• The disposals of assets now and in the<br />
future;<br />
• Managing debt;<br />
• Saving and investing; and<br />
• Planning for retirement.”<br />
According to Kobus Barnard, CEO of<br />
Allegiance Consulting, goal-based planning<br />
expands your focus into all aspects of<br />
your client’s financial life and eliminates the<br />
product-only focus.<br />
“From a financial planning perspective,<br />
we traditionally siloed a client’s<br />
financial goals into a disconnected<br />
discussion about a specific need and<br />
a specific solution to that need.”<br />
It was disconnected from the client’s<br />
personal circumstances and the mere<br />
disconnect from the client’s personal circumstances<br />
meant that it became product<br />
focussed.<br />
Co-planning<br />
Co-planning is allowing the client to<br />
become the author of their own financial<br />
destiny with the financial guidance<br />
or coaching of their advisor. If the client<br />
becomes the author of their own plan, it<br />
becomes their plan.<br />
Traditionally, after a client consultation,<br />
advisors drew up a financial plan and presented<br />
a document reflecting the client’s<br />
initial thoughts.<br />
Changes to the plan were cumbersome,<br />
because it normally required the advisor to<br />
go back to the office, change the document<br />
and return with an updated plan.<br />
Co-planning is the financial planning discipline<br />
of allowing the client to co-create their<br />
plan in real time. This means they become<br />
the authors of their financial journey.<br />
The mere fact that it becomes their plan<br />
triggers what is called in behaviour economics,<br />
the endowment effect or ownership<br />
effect. People are more likely to value<br />
their financial plan because it is their own.<br />
The final key: enabling technology<br />
Advisors underestimate how important<br />
a system can be to enable their business.<br />
Production is directly related to the planning<br />
components of the system. If the planning<br />
components enable co-planning, life<br />
planning and can go into deep financial<br />
engineering then the advisor is enabled to<br />
do the following:<br />
• build an advice-driven practice;<br />
• compete, especially in the high value<br />
markets; and<br />
• realistically manage client expectations,<br />
and consequently advice risk. •<br />
If you would like to see what a true goalbased<br />
planning system can do for you, come<br />
and have a look at Avalon. Contact Johan<br />
van der Vyver or Charlene van Staden at 012<br />
360 0040 for a cappuccino and a demo.<br />
Kobus Barnard, CEO of<br />
Allegiance Consulting<br />
10 www.bluechipjournal.co.za
Avalon can be the small change that can<br />
change your future.<br />
DOING NOTHING AT ALL<br />
(1.00) 365 = 1.00<br />
VS<br />
SMALL CONSISTENT ACTION<br />
(1.01) 365 = 37.7<br />
Small disciplines repeated with consistency lead<br />
to great achievements gained over time<br />
WWW.AVALON.CO.ZA
FPI FINANCIAL PLANNER OF THE YEAR <strong>2019</strong><br />
Professionalism<br />
and personal growth<br />
Meet the FPI Planner of the Year <strong>2019</strong><br />
Hardi Swart, CFP®, Managing Director of<br />
Autus Private Clients and Family Office<br />
FPI Financial Planner of the Year<br />
Hardi Swart’s financial planning<br />
journey started at a very young<br />
age. Brought up on a farm near<br />
Naboomspruit in Limpopo, he was only 16<br />
when his entrepreneur father passed away<br />
as the result of a car accident.<br />
“My brother, my mom and I managed the<br />
family business for a couple of years. Then<br />
when I was in matric my mom got a great<br />
work opportunity in Cape Town. After matric<br />
I got a bursary at Stellenbosch and moved<br />
down here too. We flew to Johannesburg<br />
and went to the farm twice a month, and<br />
everything went well until our farm foreman<br />
passed away and we decided to sell the<br />
business lock, stock and barrel,” Swart<br />
relates.<br />
The family received a good offer for the<br />
farm and turned to a broker who was an<br />
old family friend for investment advice.<br />
“He invested the bulk of our assets into a<br />
property syndication, and let’s just say it<br />
didn’t turn out well for us,” says Swart.<br />
Fortunately, Swart and his brother had<br />
a bit of money left, which another broker<br />
invested in an endowment on their behalf.<br />
During his post-graduate studies, Swart<br />
met his future wife, who introduced him to<br />
her father, whose impressive track record in<br />
finance included a stint as a senior portfolio<br />
manager at Sanlam Investments. Inevitably,<br />
the conversation turned to finance.<br />
“I recall him asking me and my brother<br />
to come for an appointment. He had a look<br />
at our portfolios and pointed out that our<br />
endowments were inappropriate vehicles<br />
for our age – we were actually losing out,”<br />
recalls Swart.<br />
Shortly thereafter, Swart’s father-in-law<br />
invited him to join Autus Private Clients, the<br />
family wealth and investment advisory firm.<br />
Ten years later, he is managing director. He<br />
also serves on numerous industry bodies<br />
and is a member of the Investec Academy<br />
and the Allan Gray National Advisor Forum.<br />
On the private client side, Autus has<br />
some 700 clients in three categories –<br />
family office clients, wealth clients and<br />
prestige clients – grouped into 250 touch<br />
points. “A family with a father, mother, two<br />
children and a trust is actually five clients,<br />
but we see it as one engagement point,<br />
one person we can meet with and we will<br />
do the planning for the family,” says Swart.<br />
Every client offering is different. “Our<br />
main focus is higher-net-worth South<br />
African families, but we also have clients<br />
that are young professionals and clients<br />
where we take a longer-term approach.<br />
Where necessary, we will go out of our way<br />
to help – it’s not only about the money,”<br />
says Swart.<br />
Ten years at Autus have enabled Swart<br />
to grow “immensely”. “When I started my<br />
professional practice, I worked through<br />
every facet of financial planning. I attended<br />
a lot of training seminars.<br />
"In the beginning, there was never a<br />
permanent position where I had to sell a<br />
service or a product. I learned how to work<br />
with clients. A lot of young people come<br />
to the industry and immediately start<br />
working for the insurance houses where<br />
they become product salesmen from<br />
day one – they’re forced into a position<br />
where they have targets and have to sell<br />
products instead of creating great service,”<br />
says Swart.<br />
For Swart, becoming Financial Planner<br />
of the Year Award is the culmination of<br />
years of effort. “I first entered in 2015 and<br />
came in the top 10. Then we had our first<br />
daughter and another two daughters,<br />
twins, after that, so I waited until 2018 to<br />
enter a second time, when I came in the<br />
top three.”<br />
In Swart’s view, the process of<br />
participating in the FPI Financial Planner of<br />
the Year awards is above all an invaluable<br />
learning opportunity.<br />
“Every time you enter, the FPI gives<br />
you great feedback that you can then<br />
use to improve your business even if you<br />
don’t win. As my father used to say, ‘You<br />
don’t know what you don’t know’ – the<br />
awards process helps you find out where<br />
12 www.bluechipjournal.co.za
FPI FINANCIAL PLANNER OF THE YEAR <strong>2019</strong><br />
the missing pieces of the puzzle are and<br />
improve on that,” he explains.<br />
As this year’s FPI Ambassador, Swart<br />
is hoping to create a lot of awareness to<br />
improve the public perception of the financial<br />
planning industry. “Unfortunately it hasn’t<br />
always had the best reputation because<br />
there are a lot of people that sell themselves<br />
as financial planners but are actually policy<br />
salesmen. It isn’t necessarily their fault, it is<br />
just the industry as a whole. I’m hoping to<br />
carry the message that financial planning<br />
is actually a very professional occupation –<br />
that having a really good financial planner<br />
can actually add tremendous value to your<br />
portfolio as well to your life. The Certified<br />
Financial Planner qualification is an important<br />
part of that.”<br />
When Swart looks to the future, he sees<br />
opportunity. “Our industry is dominated by<br />
males, so I think there is a big opportunity<br />
for females and up-and-coming young<br />
professionals. Back in the day, you could be a<br />
part-time broker as well as being a preacher,<br />
a pastor, a builder or whoever – nowadays<br />
we’re getting people with Honours degrees<br />
and Master's degrees who are providing<br />
a comprehensive service. It’s about really<br />
adding value to your clients’ lives.”<br />
A passionate advocate of continuous<br />
professional development, Swart considers<br />
the FSCA’s requirement that financial<br />
planners be CPD compliant a step in the<br />
right direction.<br />
“Continuous professional development<br />
is a part of all professional occupations.<br />
It’s about constantly improving yourself<br />
and staying on top of what is happening<br />
in your industry. It does create a bit of red<br />
tape, which could be potentially a struggle,<br />
but I think in general it’s a positive thing.<br />
“It’s something we at Autus have<br />
incorporated into our practice for a long<br />
time. We’re constantly doing training<br />
programmes for the staff. For the industry<br />
as a whole, it is extremely positive and it<br />
is something that I am going to convey<br />
when I talk to people in my capacity as FPI<br />
Ambassador.” •<br />
Johan Swart, CFP®<br />
Johan joined the financial planning<br />
industry in 2006 and completed his<br />
Post Graduate Diploma in Financial<br />
Planning at the University of the Free<br />
State in 2014.<br />
He joined as a member of the<br />
Financial Planning Institute (FPI)<br />
in 2015 and attained the Certified<br />
Financial Planner® designation in<br />
the same year.<br />
Johan has a passion for enabling<br />
families to manage their health<br />
and wealth to create significant<br />
legacies.<br />
Johan is a principal and<br />
founding partner of PPW and<br />
Associates, a proud Old Mutual<br />
Personal Financial Advice General<br />
Practice, and with more than 60<br />
years combined experience in<br />
their practice, where clients can<br />
be sure that their advisors have<br />
the necessary skill and expertise<br />
to help them, with even the most<br />
challenging financial planning<br />
scenarios.<br />
They use financial insights and<br />
integrated wealth planning to create<br />
bespoke solutions for families and<br />
institutions alike.<br />
Introducing the runners-up<br />
Craig Turton, CFP®<br />
Craig believes that the key to financial<br />
freedom lies with Chartered Wealth<br />
Solutions’ Retirement Planning process.<br />
Retirement Planning is about<br />
envisaging the life you really want to<br />
live and then making sure you merge<br />
your money to that life.<br />
“Money, after all, should be<br />
your servant, not your master,” he<br />
says, whether you are planning<br />
for, nearing, or in retirement. Craig<br />
heads up the Wealth Creation Team<br />
and looks after clients who are not<br />
yet ready to retire and are still in the<br />
process of building their wealth for<br />
their Retirement.<br />
Craig obtained his Post-Graduate<br />
Diploma in Financial Planning and<br />
is a Certified Financial Planner®<br />
professional.<br />
He has been in the financial planning<br />
industry since 2010 and is a<br />
member of the Financial Planning<br />
Institute. Craig is tenacious, sincere<br />
and competitive. He is passionate<br />
about holistic financial planning,<br />
sport and his family.<br />
He is married to Lientjie and<br />
they have two children, Tristan and<br />
Kaylee.<br />
Greg Penfold<br />
www.bluechipjournal.co.za<br />
13
ADVERTORIAL<br />
Applied financial planning<br />
USB offers financial planners a pathway to a<br />
successful career – students across South Africa<br />
can now attend lectures from anywhere<br />
Mike Savva, Dr Lee-Ann Steenkamp and Dilshaad Samsodien<br />
The University of Stellenbosch Business<br />
School’s (USB) Post-Graduate Diploma<br />
in Financial Planning is a well-established<br />
and highly regarded programme<br />
with a long pedigree. <strong>Blue</strong> <strong>Chip</strong> spoke to<br />
USB’s Dr Lee-Ann Steenkamp as well as two<br />
recent graduates, Mike Savva and Dilshaad<br />
Samsodien, to find out more about the<br />
benefits this programme has to offer.<br />
Accredited by the Financial Planning Institute<br />
of Southern Africa (FPI), the programme<br />
is geared towards preparing students for<br />
the FPI’s professional competency exam, or<br />
Board Exam, so it follows the FPI’s syllabus. To<br />
date, some 700 graduates have gone through<br />
the programme since its inception in 2005.<br />
One successful alumnus is Hardi Swart, FPI<br />
Financial Planner of the Year for <strong>2019</strong>.<br />
“The duration of the programme is one<br />
year, although students can opt to do it<br />
over two. The lectures are in the evenings<br />
after hours, because nearly all of our students<br />
are working individuals. Those that<br />
do it over two years might have family<br />
or work commitments, so we are a bit<br />
flexible in that regard. From next year,<br />
we will offer even greater flexibility by<br />
operating the programme on USB's successful<br />
blended learning platform. The<br />
evening lectures will be live-streamed<br />
so that students can attend from anywhere<br />
in the country – indeed from anywhere<br />
in the world!” says Steenkamp.<br />
“The course comprises four compulsory<br />
modules, each roughly three months in<br />
duration, so there are six weeks of lectures,<br />
every Tuesday and Thursday evening<br />
–quite a demanding time commitment. At<br />
the end of each module, students write<br />
assessments and continue with the next<br />
module. The final module concludes in the<br />
format of a case study that simulates the<br />
FPI’s Board Exam case studies,” Steenkamp<br />
explains.<br />
To facilitate the learning process, students<br />
receive a great deal of hands-on<br />
support. “Being a residential-based programme,<br />
we don’t operate in the distance-<br />
or online-learning sphere, which<br />
means that we have contact sessions:<br />
students come to campus and get a lot<br />
of face time with the lecturers. Just as<br />
importantly, they get ample opportunity<br />
for peer-to-peer collaboration learning,<br />
which we also facilitate by providing<br />
breakaway rooms for students to form<br />
14 www.bluechipjournal.co.za
ADVERTORIAL<br />
study groups if they want to. We also<br />
have tutors that students can make use<br />
of,” says Steenkamp.<br />
In addition to the formal contact sessions,<br />
students can attend supplementary<br />
Saturday workshops to bridge any knowledge<br />
gaps they might have. “The programme<br />
modules cover various aspects<br />
of law and commerce, so if you find that<br />
your background is not as solid in financial<br />
calculations, for example, you can<br />
then attend a Saturday workshop just to<br />
bring you up to par with your classmates,”<br />
Steenkamp clarifies.<br />
The basic qualification to enter the<br />
course is a relevant bachelor degree such<br />
as an LLB or a BCom, but there is some<br />
flexibility in this regard. “Interestingly,<br />
we do get BA students every so often.<br />
We had a financial journalist who was<br />
admitted to the programme based on<br />
work experience, so even if you do not<br />
have a relevant bachelor degree, if your<br />
work experience is such that you are on<br />
par, you would also be allowed into the<br />
programme,” says Steenkamp.<br />
The content of the course is constantly<br />
being adapted to keep up with changes<br />
in the financial planning profession. “We<br />
have to adhere to the FPI syllabus to<br />
keep our accreditation, so whenever the<br />
FPI changes something we follow suit.<br />
When they changed the format of their<br />
case study exam, we changed our format.<br />
We are also in the process of an extensive<br />
curriculum renewal taking the latest fintech<br />
developments like robo advice into<br />
account.”<br />
Lecturers play a tremendously important<br />
role in keeping the programme up to<br />
date in terms of current industry practice.<br />
“Most of our lecturers are practitioners:<br />
some might be in the full-time employment<br />
of a financial services firm, others<br />
might have their own business, and then<br />
there are a couple of full-time academics<br />
like me. As a result we have a nice blend<br />
of academics and practitioners; everyone<br />
brings something important to the table,”<br />
says Steenkamp.<br />
“We don’t want students to learn<br />
things by rote, so we have a very strong<br />
focus on application, which all comes<br />
together nicely in the last module. It’s<br />
difficult to bring a whole year’s work<br />
together into one case study, so the<br />
lecturers also go through past exam<br />
papers from the FPI and help students to<br />
approach the questions in the right way.<br />
This focus on exam technique extends to<br />
real-life practice because then you know<br />
what questions to ask. It can be difficult<br />
to get information out of a client – they<br />
don’t know what they don’t know – so<br />
this programme helps you to know what<br />
to ask and how to ask it.”<br />
One distinct advantage of the programme<br />
is that graduates are eligible to<br />
apply for our prestigious MBA.<br />
“It is very important for USB to offer a<br />
learning pathway to our students,” says<br />
Steenkamp.<br />
Appreciative alumni<br />
Dilshaad Samsodien, who works as a legal<br />
advisor at Sanlam Life Insurance Limited,<br />
finished the 2018 programme at the top<br />
of her class. She comments: “For me,<br />
what sets the University of Stellenbosch<br />
aside from other institutions is the fact<br />
that it’s not a distance-learning programme:<br />
there are interactive bi-weekly<br />
classes presented by excellent lecturers<br />
and additional workshops to assist students<br />
in preparing for the examinations<br />
for the various modules, as well as additional<br />
workshops for those students who<br />
go on to write the FPI exams. That definitely<br />
assisted me a great deal.<br />
“When I joined Sanlam at the end of<br />
2016, I was very new to the insurance<br />
industry and was keen on studying something<br />
that would give me a holistic view<br />
of the financial services industry. That is<br />
exactly what I got out of this course.”<br />
Samsodien affirms that the programme<br />
is directly applicable to professional<br />
practice: “Since doing the course<br />
I successfully passed my FPI exam in<br />
February, and I must say that I have been<br />
able to apply the knowledge that I’ve<br />
gained to different matters that come<br />
before me as a legal advisor at Sanlam<br />
and also in my personal life.<br />
“Integrating the course with my<br />
work-life was quite challenging. It took a<br />
considerable amount of time, effort, dedication<br />
and tears, but I put in the hours and<br />
it paid off in the end.”<br />
Fellow graduate Mike Savva offers his<br />
appreciation of the programme. “I come<br />
from a financial management background,<br />
which is a bit different to the financial planning<br />
side. I wanted to gain more knowledge,<br />
skills and experience in order to deal<br />
with clients better.”<br />
Savva acknowledges that the programme<br />
takes commitment: “You have<br />
to put time aside for it every day. When<br />
you’re not at lectures, you’re summarising<br />
or studying or making notes in order to<br />
make things easier for the exams and the<br />
case study at the end.”<br />
Savva agrees with Samsodien that the<br />
lecturers’ professionalism is a distinct asset.<br />
“It’s easy to learn and to keep up with the<br />
textbook, but also, since the lecturers are<br />
experienced people in the industry, the<br />
programme teaches us to how to deal with<br />
clients in the working world.<br />
“For the past five years of poor returns,<br />
clients have all asked why their investments<br />
have fallen. The programme taught<br />
us to deal with those situations and make<br />
clients realise that their investment is<br />
designed for the long term – short-term<br />
volatility is the norm. It’s one of the things<br />
that has actually come to good use in<br />
practice.”<br />
Savva continues: “The programme<br />
gave me the confidence to deal with<br />
any type of client, from a more established<br />
client to someone that is just<br />
starting. When you are starting out in<br />
the industry, you are anxious about<br />
seeing someone that’s going to ask you<br />
a lot of questions you might not know<br />
the answers to – especially when, like<br />
me, you like to know everything. The<br />
course really gave me the ability to be<br />
able to see anyone and respond to any<br />
questions they may have.”<br />
Of course, nobody can be expected<br />
to have an answer for everything. “The<br />
programme also teaches you how to deal<br />
with questions you can’t answer – either<br />
by telling the client that you will get back<br />
to them or referring them to someone that<br />
may be able to,” says Samsodien .•<br />
www.bluechipjournal.co.za<br />
15
Food for thought<br />
How sustainable are your client’s financial plans?<br />
Few in the know would debate that<br />
Jeffreys Bay has the best righthand<br />
break wave in the world. It is<br />
a surfing mecca. Pilgrims journey<br />
there from everywhere, all year round. It<br />
hosts the annual international World Surf<br />
League event, the J-Bay Open. My family<br />
are not surfers, but we appreciate the<br />
remarkable athleticism on display. At the<br />
end of a recent holiday we had a night’s<br />
stopover in Jeffreys Bay on our way home.<br />
We hoped to see some of the world’s best<br />
athletes preparing for the annual event. But<br />
just like investment markets, the surf is not<br />
always up. We didn’t see much surfing.<br />
We did manage to have a meal at<br />
the aptly named Kitchen Windows restaurant,<br />
which takes its name from the<br />
beach it overlooks. Local folklore has it<br />
that before Jeffreys Bay became a strip<br />
mall miraculously transplanted from<br />
Midwest America, local surfers would<br />
look out their rustic “kitchen windows” to<br />
see if the surf was up. Without adjusting<br />
our heads, we could read the menu and<br />
watch the surf, what little there was of<br />
it. It turns out this was not the only thing<br />
in short supply.<br />
Not everything on the menu was<br />
available that night. No line fish. In fact<br />
our waiter said there is seldom freshly<br />
caught line fish these days. And the<br />
calamari? It was from Patagonia. From<br />
our table, we could see the “chokka”<br />
boats out at sea fishing for calamari.<br />
We asked the obvious question. Why<br />
no local calamari? “No, that’s too tough<br />
and chewy. It gets exported,” our waiter<br />
explained. There we were, watching<br />
about twenty fishing boats hard at<br />
work, but there was only one local fish,<br />
hake, on a menu topped and tailed by<br />
Patagonian calamari and Norwegian<br />
salmon.<br />
We scratched our heads. Literally<br />
and figuratively. We were “haked out”<br />
after 10 days on the South African Wild<br />
Coast and wanted to spoil ourselves<br />
with something different on the last<br />
night of our trip. Little did we think<br />
that we would face an ethical dilemma<br />
in our menu choice. Behavioural guru<br />
Dan Ariely says that with most ethical<br />
dilemmas, as long as you can<br />
16 www.bluechipjournal.co.za
SUSTAINABILITY<br />
rationalise your decision you are okay.<br />
Our thinking exactly. The planes had<br />
already offloaded their CO2 to bring<br />
the calamari and salmon to our shores.<br />
My wife and I were desperate for some<br />
calamari, and Patagonia is closer to<br />
South Africa than Norway. Less damage<br />
done. We reassured ourselves. The<br />
calamari was delicious. But we did feel<br />
a little guilty.<br />
Despite what Donald Trump says, our<br />
world is in a climate change crisis. Polar<br />
caps are melting. Certain areas of India<br />
are becoming uninhabitable because<br />
of the heat. Our seas are filling up with<br />
plastic. Africa is increasingly water<br />
scarce. Human behaviour impacts every<br />
biological process and species. Life as we<br />
know it is not sustainable.<br />
The need for us to change<br />
our behaviour is irrefutable.<br />
Yet we ate the Patagonian<br />
calamari. Such a simple and<br />
seemingly innocent act. But<br />
it perpetuates the problem<br />
for at least one more sitting<br />
at Kitchen Windows. Supply<br />
meets demand.<br />
To divert my guilt, I wondered<br />
about the menus<br />
financial planners put in<br />
front of their clients. At its<br />
essence, financial planning<br />
is a process of helping clients<br />
meet their life and<br />
financial goals. A recent<br />
Harvard Business Review<br />
paper suggests that “leaving<br />
a legacy” is a key goal that<br />
financial planners' clients<br />
want to achieve. So financial<br />
planners are in the game of<br />
helping clients achieve sustainable<br />
financial futures.<br />
Now it’s not quite sustainable<br />
fishing, but it begs the<br />
question, to what extent is<br />
the concept of sustainability<br />
addressed in the menus<br />
offered to clients?<br />
Standard financial planning menus<br />
include items such as a financial needs<br />
analysis; a risk analysis and plan; an investment<br />
plan; an estate plan; help with budgeting<br />
and managing debt. The menu may<br />
also include life planning items, such as<br />
a client’s history with money, transitions<br />
they are facing, their life goals, and of<br />
course their legacy. These are all great and<br />
necessary. But if climate change destroys<br />
life as we know it, then these menus will<br />
be to no avail.<br />
Greta Thunberg, the 16-year-old climate<br />
change activist, refuses to fly. She<br />
believes the impact on the environment<br />
is too severe. When she spoke at Davos<br />
recently, she took a 32-hour train journey<br />
to get there. Thunberg has energised the<br />
global climate change movement, particularly<br />
among the youth. She shows<br />
the power of individual action.<br />
Financial planners work with individuals<br />
every day. What impact can<br />
they have? Profound, I think. Imagine<br />
a financial planning menu that had a<br />
section on sustainable living. How are<br />
you recycling at home? What measures<br />
are you taking to reduce your<br />
energy and water consumption? How<br />
do you travel? Perhaps if we all had<br />
an individual sustainability plan in<br />
place, we wouldn’t need to rationalise<br />
eating Patagonian calamari. Guilty as<br />
charged.<br />
I’m sure no financial planner wants a<br />
world where their own or their clients’<br />
children or grandchildren can no longer<br />
eat fish, have enough water, heating or<br />
clean air. Perhaps our contribution to<br />
a sustainable future for the world is to<br />
ensure that clients plan for such a future<br />
on an individual basis.<br />
A sustainable future does not mean<br />
one without fun or enjoyment. I, for one,<br />
want to go back to Kitchen Windows and<br />
preferably eat locally-caught calamari.<br />
And definitely to have the deconstructed<br />
cheesecake. To coin that well-known culinary<br />
term, “It’s to die for.” •<br />
Rob Macdonald, Head of Strategic<br />
Advisory Services, Fundhouse<br />
www.bluechipjournal.co.za<br />
17
FINANCIAL INCLUSION<br />
The iMadiba Project<br />
Satrix takes Madiba’s "circle of dialogue" to the JSE<br />
During his imprisonment on<br />
Robben Island, global icon<br />
Nelson Mandela encouraged<br />
honest debate, conversing in a<br />
circle in which every voice was heard, and<br />
discouraging polarisation and the elevation<br />
of an individual’s status above that of the rest<br />
of the group. It is this “circle of dialogue” that<br />
Satrix chose to take to the Johannesburg<br />
Stock Exchange.<br />
Satrix shares the principle<br />
of “access for all”<br />
“To the untrained eye an investment<br />
company is a world away from Robben<br />
Island but it’s the principles and the manner<br />
in which Mandela brought about change,<br />
wanting freedom and equality for all, on<br />
which Satrix builds to provide financial<br />
access for all,” says Helena Conradie, CEO of<br />
Satrix. Access for all and financial inclusion<br />
are maxims at the heart of the Satrix<br />
business, “and we at Satrix are proud to be<br />
the first corporate to sponsor and support<br />
Erhardt Thiel and the Nelson Mandela<br />
Foundation on their journey to roll out the<br />
iMadiba Project,” says Conradie.<br />
iMadiba celebrates Mandela’s<br />
legacy by creating safe spaces<br />
The iMadiba Project is a global art project that<br />
celebrates Nelson Mandela’s legacy through<br />
the promotion of conversation in safe spaces.<br />
To this end, three Satrix-sponsored cement<br />
installations echoing Nelson Mandela’s<br />
Robben Island cell have already been built<br />
at the JSE, the Iziko National Gallery in Cape<br />
Town and the Nelson Mandela Museum in<br />
Qunu. These cement structures exhibit the<br />
exact floor dimensions of Madiba’s Robben<br />
Island cell and function as interactive and<br />
participative art installations.<br />
The world’s largest museum for<br />
reflection and conversation<br />
The broad intention of the project is to create<br />
the world’s largest museum for reflection<br />
and conversation in Mandela’s honour by<br />
building micro museums throughout South<br />
Africa and the world.<br />
The iMadiba Project was conceptualised<br />
and created by Stellenbosch-based<br />
photographer and artist Erhardt Thiel. It was<br />
built in partnership with and in support of the<br />
Nelson Mandela Foundation. One of the aims<br />
of the project is to assist the foundation in its<br />
objectives of honouring Madiba’s legacy. It has<br />
been made possible through the support of<br />
sponsors, and the ongoing need is to find more<br />
sponsors as the project grows. The project also<br />
produces income for the foundation.<br />
100 micro museums in<br />
Mandela’s 100th year<br />
The project has gained great momentum.<br />
To date, there are artist copies at several<br />
venues in Stellenbosch. Thiel used these<br />
sculptures, together with a similar one<br />
which was burnt in the Tankwa Karoo at<br />
AfrikaBurn, to test the final design. The<br />
next sculptures were built at Mthatha<br />
and Qunu in the Eastern Cape. Further<br />
sculptures can be viewed at the V&A<br />
Waterfront, Nelson Mandela Square in<br />
Sandton and in the grounds of St Stithians<br />
College in Johannesburg. Thiel hopes to<br />
expand the project to all schools in South<br />
Africa and erect at least 100 installations<br />
in Madiba’s centenary year, both locally<br />
and globally. In total 21 iMadiba sites have<br />
already been built, sponsored by various<br />
corporates, schools and individuals, each<br />
encouraging others to join a conversation<br />
for change close to their heart. Plans are<br />
currently underway for three more sites in<br />
South Africa, three in the US, two in South<br />
America, one in the UK and one in Berlin.<br />
From an oppressive, inhumane<br />
system to open conversation<br />
The micro museums are artistic recreations<br />
of Madiba’s Robben Island cell with bars<br />
and an open doorway signifying that the<br />
space is always open for conversation and<br />
reflection. People are invited to engage<br />
with the installations as the cold concrete,<br />
bars and cramped dimensions of the<br />
micro museum bring home the oppressive<br />
conditions which Madiba endured for so<br />
many years. Through this engagement, we<br />
will be reminded of the inhumane system<br />
that was in place, the work done in moving<br />
forward, and the work still to come.<br />
Satrix welcomes the conversation<br />
around financial inclusion<br />
“It is the spirit of listening and acceptance<br />
which has enabled Satrix to become The<br />
People’s Choice (SALTA 2018 and <strong>2019</strong>),<br />
spreading the news that investing is for all<br />
and that everyone can invest. As the first<br />
corporate sponsor of the iMadiba Project<br />
we are pleased to have secured space at<br />
the Johannesburg Stock Exchange to erect<br />
a micro museum. To us, as a business, this<br />
represents an opportunity to continue the<br />
conversation of financial inclusion and<br />
access that is at the very heart of the financial<br />
system. We’d like to start a conversation here<br />
so that everyone knows that they too can<br />
own the market,” says Conradie. •<br />
18 www.bluechipjournal.co.za
LIVING ANNUITIES<br />
Avoid value destruction<br />
Living annuities: why you might be giving up important growth<br />
For many South Africans, retirement<br />
comes without warning. Only then<br />
do they realise they have not saved<br />
enough to live the rest of their lives<br />
in peace and comfort. For those choosing<br />
a living annuity, the consequence is that<br />
investors scrutinise every percentage point of<br />
investment returns even more closely.<br />
When returns from the ASISA low equity<br />
sector fall below that of the income sector as<br />
we’ve experienced recently (see chart below),<br />
it is unsurprising to see large flows of capital<br />
into the income sector, both in terms of new<br />
money invested as well as transfers away from<br />
the low equity category.<br />
The chart shows the difference in rolling<br />
three-year returns of low equity versus<br />
income. As can be seen, in recent times<br />
the income category has dramatically outperformed.<br />
Although this has happened<br />
before and is bound to happen again, we<br />
would urge investors to consult a qualified<br />
financial planner to ensure their choices are<br />
consistent with their longer-term risk tolerance<br />
and investment goals. Over the past 15<br />
years, for example, the average low equity<br />
fund has outperformed income, which has<br />
in turn outperformed the money market.<br />
As shown in the cumulative return chart<br />
above, the average low equity fund trumps<br />
its lower risk peers quite easily over the long<br />
term. So, is it a simple choice to just go out<br />
and invest in the highest risk product that you<br />
can find? Our previously published research<br />
shows that living annuity investors have<br />
historically stacked the odds in their favour<br />
when choosing higher risk funds. In other<br />
words, on average your capital has tended<br />
to last longer, or you would have been able to<br />
sustain a higher drawdown over the course of<br />
your retirement. The caveat, however, is that<br />
many investors are unable to emotionally<br />
withstand the volatility of returns that comes<br />
with taking more risk.<br />
While we view risk as the permanent loss of<br />
capital and not meeting your planned outcomes,<br />
it is also difficult to see your market<br />
values fall, no matter how small the quantum<br />
of the loss turns out to be. What is quite reassuring<br />
is that by extending your time horizon<br />
for performance measurement, you can minimise<br />
the chances of suffering loss.<br />
light green) versus the typical income fund<br />
(in darker green) for various time periods all<br />
the way up to 10 years. Our research confirms<br />
that income funds usually have a narrower<br />
range of returns than their low equity<br />
counterparts; however, they are also characterised<br />
by lower expected returns overall.<br />
In other words, income funds can usually<br />
provide better protection from short-term<br />
losses, but investors pay for that protection<br />
through lower long-term returns and<br />
should therefore be aware of the potential<br />
consequences of any switching decisions.<br />
Investors who initially made the wrong<br />
decision to invest in low equity and are now<br />
switching to income are likely making the<br />
correct decision for their needs. On the other<br />
hand, some investors could switch based on<br />
recent past performance which will no doubt<br />
be value destructive. While short-term returns<br />
are not at all predictable in advance, over time<br />
investors have typically received appropriately<br />
higher rewards for investing in riskier assets.<br />
Whether you choose to invest for your<br />
living annuity in an income fund or a low<br />
equity fund, it is important to carefully<br />
consider the reasons for your choice and how<br />
the expected risk and return profile fits into<br />
your emotional tolerance bands and longterm<br />
financial planning goals so as to avoid<br />
the enormous value destruction caused by<br />
ill-timed switching decisions. •<br />
The “funnel graph” above displays the range<br />
of returns for the typical low equity fund (in<br />
Anil Jugmohan, Senior Investment Analyst<br />
at Nedgroup Investments<br />
www.bluechipjournal.co.za<br />
19
INTERVIEW<br />
Putting clients<br />
and advisors first<br />
PPS Investments leads in multi-channel digital innovation<br />
Digital servicing has been a core focus of PPS<br />
Investments’ service offering since the investment<br />
management services provider of the PPS Group<br />
was launched in 2007. With a secure site and a<br />
self-service app for clients, PPS was at the head of the digital<br />
pack. Over the years, PPS built on this advantage and<br />
now offers a multi-channel approach based on the secure<br />
site, self-service app, and PPS Horizon, the web-based financial<br />
planning tool. <strong>Blue</strong> <strong>Chip</strong> spoke to James Fraser, Chief<br />
Operating Officer at PPS Investments, for more insight into<br />
the new developments.<br />
James Fraser, Chief Operating Officer, PPS Investments<br />
Bird’s-eye view<br />
A tremendously useful and empowering feature built into<br />
the new secure site is a flexible reporting system that enables<br />
financial advisors to draw book reports on their practice.<br />
“It enables you to see your client base as a whole, from<br />
an investments perspective, and then segment that and slice<br />
and dice it in many different ways. You can see an overview of<br />
your book, drill down into certain aspects and then see who<br />
your younger clients are, who your older clients are, who is in<br />
a medium risk investment, who is in a high risk investment,<br />
and so on. You start understanding your book and your clients<br />
better so you can identify which clients need more support<br />
or have gaps in certain places, or which technologies or<br />
functionalities could assist those clients,” says Fraser.<br />
Another exciting feature is a robo-advice platform with<br />
a very different proposition from the average robo-advisor.<br />
“Generally the robo-advisor is seen as direct to client.<br />
When we entered the robo-advice space, we found that<br />
many companies were struggling to get clients to try the<br />
tool. Interaction with financial advisors was very much<br />
still seen as a benefit and a requirement in the process.<br />
Consequently, the industry started turning to a hybrid<br />
model. A special feature of our hybrid robo-tool is an<br />
advisor module that allows our financial advisors to drive<br />
their own robo-advisor,” says Fraser.<br />
20 www.bluechipjournal.co.za
INTERVIEW<br />
Essentially, PPS has built a platform that<br />
advisors can use for the benefit of their<br />
clients, moving away from a direct-toclient<br />
proposition while dispelling the<br />
fear of dis-intermediation – the widespread<br />
fear that robots are coming to<br />
take people’s jobs.<br />
“PPS Horizon, our robo-tool, is integrated<br />
with our secure site, and the<br />
advisor can offer it to clients in whichever<br />
way he wants to take that forward.<br />
One use that springs to mind would be to<br />
address wealth-accumulation clients. It’s<br />
not profitable to see them face to face, but<br />
you want to maintain the relationship. This<br />
is specifically appropriate in the PPS world<br />
where you’re trying to build a membership<br />
or client base from graduation through to<br />
retirement and beyond.<br />
“So we see this as a tool that advisors<br />
can use to build and develop that relationship<br />
with Millennials and digitally savvy<br />
graduates, to help them and partner with<br />
them through their lives.”<br />
PPS Horizon tool<br />
The genius of the PPS Horizon financial<br />
planning tool is the functionality for<br />
advisor and client to work through the tool<br />
together in different locations, obviating<br />
the need for anyone to travel. This opens up<br />
a genuinely empowering two-way learning<br />
and communication process.<br />
“As a client moves through the tool, at<br />
any point in time they can ask for advice.<br />
The advisor will be notified that this specific<br />
client has reached a particular stage<br />
and provided with the information they’ve<br />
produced so far. The advisor can then<br />
assist the client to move forward from<br />
that point.<br />
“In turn, the tool allows the advisor<br />
to create a proposal for the client. Then<br />
it allows the advisor to create a financial<br />
plan, which includes the product wrapper<br />
and the underlying investments. The plan<br />
can be implemented directly at the click<br />
of a button.”<br />
There is also a unique link for each<br />
advisor who enrols for the tool.<br />
“Whenever a client clicks on the<br />
link, the tool will identify which advisor’s<br />
client it is, enabling the advisor to<br />
create campaigns targeting existing or<br />
new clients with that specific link. When<br />
the potential or existing investor clicks<br />
on the link, the tool is automatically<br />
pre-populated with all the information<br />
that exists, saving time for the client,”<br />
says Fraser.<br />
Creating a campaign entails a client<br />
base segmentation process to identify<br />
appropriate targets for the tool, such as<br />
wealth-accumulating clients or group<br />
advice.<br />
“In the graduate space, an advisor can<br />
give advice to a group of graduates who<br />
have brought their personal devices and<br />
who will end up being bespoke for that<br />
advisor because they’re putting their own<br />
information into this tool,” Fraser points<br />
out.<br />
Advisors who are trying to move from<br />
the risk space into an investment space<br />
can be reassured that their FAIS compliance<br />
requirements are met.<br />
Less admin, more value<br />
The whole aim of the multi-channel<br />
approach is to reduce the advisor’s<br />
administrative burden in favour of more<br />
value-adding activities such as finding new<br />
clients and providing better support.<br />
“By way of example, the PPS Horizon<br />
tool has a digital signature feature that<br />
allows both the client and the advisor<br />
to sign via their phones. The tool allows<br />
you to convert a proposal into an online<br />
application form at the click of a button.<br />
Once signed, it goes straight through into<br />
processing.”<br />
The result is a reduction in administration<br />
and an increase in speed and<br />
accuracy. This, in turn, translates into<br />
greater trust. Fraser expands: “When I<br />
first got into financial services, at induction,<br />
the CEO said that clients come<br />
along and give you their life savings, and<br />
all you give them in return is a piece of<br />
paper – their statement. If there is anything<br />
wrong with that piece of paper,<br />
the trust is broken immediately. That’s<br />
why the focus on accuracy, great service<br />
and good feedback is so critical in this<br />
space.<br />
“It’s really helpful as a financial advisor<br />
to be able to look at your information, to<br />
be able to get educational material so you<br />
can upskill yourself, understand what the<br />
offering is, and explain the products and<br />
services to a client.”<br />
www.bluechipjournal.co.za<br />
21
INTERVIEW<br />
Positive feedback loop<br />
To ensure maximum relevance, the new<br />
features were developed using Agile project<br />
management methodology.<br />
“We focus on short blocks of work, roll<br />
them out and get feedback from clients<br />
and advisors. Then we update based on<br />
that and get guidance on what the next<br />
important thing is to build. We believe this<br />
approach has helped us build a platform<br />
that represents what clients and advisors<br />
actually want rather than what we think<br />
they want,” says Fraser.<br />
Feedback has been very positive across<br />
each of the channels.<br />
“The new secure site has had excellent<br />
feedback. The app has had great feedback<br />
from a usability perspective and<br />
quick access to your information. The PPS<br />
Horizon tool has had excellent feedback<br />
from those who understand how to use it<br />
in their businesses.<br />
“Our focus for the next period is to<br />
build case studies of people who have<br />
used the tool successfully and take that<br />
as a roadmap that we can roll out to<br />
other financial advisors. This will help<br />
them understand and build the tools<br />
and analysis to enable segmentation<br />
of their clients and run their own<br />
campaigns.”<br />
Ultimately, the aim is to create a<br />
member- and advisor-level view of the<br />
PPS Group as a whole with a true omnichannel<br />
approach to match.<br />
“The app, the website and the PPS<br />
Horizon tool are separate at the moment, so<br />
you can basically engage with us on multiple<br />
channels,” says Fraser. “What doesn’t happen<br />
is if you’re halfway through PPS Horizon and<br />
you want to pick it up again on the website<br />
– that link isn’t there yet.<br />
“However, we will soon be launching<br />
a PPS Group secure site that will enable<br />
members and advisors to log in and see<br />
their holistic offering in the group, from<br />
short-term insurance to life insurance,<br />
investments and medical aid. As part of<br />
that development going forward, we’re<br />
looking more and more at an omnichannel<br />
experience.”<br />
Touch and engage<br />
Being ahead of the game has its own<br />
challenges – especially in the traditionally<br />
conservative space of financial<br />
services.<br />
“Getting buy-in can be an issue. People<br />
are used to apps like AirBnB and Uber but<br />
from a financial services perspective it’s<br />
not always as clear. Banking is one thing<br />
– you’re spending money on your card<br />
or bank account every day, so there’s<br />
something to go and look at – but from<br />
an investments perspective it’s a longer<br />
term horizon: you don’t really need to<br />
look at your investments every day. Part<br />
of the challenge going forward is how<br />
to engage with investors – also from an<br />
insurance perspective. In this space, the<br />
touch points are even more infrequent<br />
– generally the member engages when<br />
they take out their insurance and when<br />
they need to claim,” says Fraser.<br />
However, the primary objective of digital<br />
technology is to help investors behave<br />
less emotionally and stick to their longterm<br />
goals.<br />
“A lot has been written around<br />
investors not achieving the same<br />
performance as the markets because<br />
they’re buying at the wrong times.<br />
That’s often driven by media<br />
speculation, short-term focus or feardriven<br />
decisions,” says Fraser.<br />
“The ability to access instant valuation<br />
of your investment could<br />
encourage you to look at it too shortterm.<br />
A typical knee jerk reaction is a<br />
client thinking, 'my investment fell by<br />
5% yesterday so I must sell.' Tomorrow<br />
the investment could come back up by<br />
5%. That’s where technology will help.<br />
We are investigating machine learning<br />
and artificial intelligence and using<br />
them to nudge and guide our investors.<br />
What we hope to see in the next<br />
5 years of this journey, is that when an<br />
investor logs in and there’s been some<br />
event in the markets, we can drive a<br />
message into our digital platforms,<br />
whether it be the app or our online<br />
site, to say ‘don’t worry, speak to your<br />
financial advisor and look to the longterm,<br />
you are still on track for your<br />
long-term goals’.<br />
“We believe this is the next step in our<br />
journey. We need to create that touch<br />
point, to have that level of engagement<br />
and communication with our investors.<br />
It should not only be about the performance<br />
of my investment but whether<br />
I am on track to achieve my goals,” Fraser<br />
concludes. •<br />
22 www.bluechipjournal.co.za
WOMEN IN FINANCE<br />
The creed of<br />
wealth creation<br />
Uplifting women<br />
through financial planning<br />
From being a stockbroker in a<br />
boutique stockbroking firm in<br />
Johannesburg 10 years ago, Gugu<br />
Sidaki has soared to the heights<br />
of wealth management, servicing high<br />
net-worth individuals and ultimately,<br />
with Palesa Dube, founding Wealth<br />
Creed, where she serves as director and<br />
wealth manager. Sidaki has an impressive<br />
string of qualifications behind her name,<br />
including a BCom Economics degree from<br />
the University of Pretoria, BCom Honours<br />
degree in Investments Management from<br />
the University of Johannesburg and a Post-<br />
Graduate Diploma in Financial Planning<br />
from the University of the Free State. She is<br />
also a member of the FPI. We spoke to her<br />
about her passionate journey as a black<br />
woman in financial services and the ongoing<br />
transformation of the industry itself.<br />
Sidaki entered wealth management at the<br />
suggestion of one of the women running<br />
the wealth management team in the<br />
boutique firm where she was working as a<br />
stockbroker. “She thought I would fit in well.<br />
I hadn’t considered wealth management<br />
until that point. I made the transition and<br />
literally have been doing that ever since,”<br />
says Sidaki.<br />
When the business was bought out<br />
by FirstRand, Sidaki became a wealth<br />
manager for RMB, where she stayed until<br />
founding Wealth Creed in 2017. Reflecting<br />
on her experience as a woman in a maledominated<br />
industry, she says, “For the vast<br />
majority of my time as a wealth manager<br />
there have been fewer female financial<br />
advisors compared to male. It really makes<br />
a difference because if you have a lot of<br />
the same group of individuals within the<br />
Gugu Sidaki, Wealth Manager and<br />
Co-Founder of Wealth Creed<br />
business, that’s what sets the tone. It’s<br />
neither a good or a bad thing, but you<br />
do need a good mix of different kinds of<br />
individuals to bring in different kinds of<br />
skills sets.”<br />
For Sidaki, lack of diversity can affect<br />
performance. “It manifests in so many<br />
different ways that we cannot deny that it<br />
does not affect us. For example, not being a<br />
male and being a mom in particular means<br />
I am not going to be joining the boys every<br />
other night when they take out clients for<br />
drinks or whatever the case is, because it<br />
would be impractical, and if I miss out on<br />
that, I miss out on a very good opportunity<br />
to bond with team members.”<br />
The same holds true from a client<br />
perspective. “I have found myself bonding<br />
a lot deeper with certain clients because<br />
I brought what they needed. Women are<br />
better listeners, not to say that men don’t<br />
listen, but women have a better way to<br />
connect with individuals. Of course there are<br />
clients who really couldn’t care less what your<br />
gender and what your race is as long as you<br />
get the job done, but in certain instances I<br />
know that I have progressed more with<br />
specific clients because of my femininity,<br />
because I am a woman, because I bring a<br />
different skills set to the table,” shares Sidaki.<br />
Adding another layer is the fact of race.<br />
“Not only are there few female wealth<br />
managers, but there are even fewer black<br />
females or black advisors in general, which<br />
creates a whole different dimension. I have<br />
not been victimised or treated differently<br />
because for being black and female –<br />
on the contrary, I have been privileged<br />
and fortunate enough to work for an<br />
organisation that has been quite progressive<br />
in treating individuals such as myself – but<br />
whenever I go to industry functions or<br />
events, I am always one of two or three black<br />
females in that room. Ultimately it does get<br />
a little exhausting to have to over-extend<br />
myself in a particular way to get people to<br />
understand me a little bit more because of<br />
my background,” Sidaki says.<br />
Transformation from the ground up<br />
Given that wealth has been largely in white<br />
male hands historically, it makes sense<br />
why the industry looks the way it does.<br />
Nonetheless, says Sidaki, the industry is<br />
changing: “I have been seeing a lot more<br />
people needing advice who are not male,<br />
who are not white, and who have extensive<br />
wealth. To a large extent, that is going to<br />
drive the change in the industry.”<br />
Sidaki elaborates: “Our primary (but not<br />
exclusive) target is black females. The more<br />
24 www.bluechipjournal.co.za
WOMEN IN FINANCE<br />
interaction we have with black women, the<br />
more we understand that they too require<br />
people like us to join the industry. We get<br />
to delve deeper into issues that affect black<br />
women in particular that they normally<br />
ordinarily struggle to get across with other<br />
advisors. It’s not to say that these kind<br />
of clients are literally and only requiring<br />
individuals that look like me, but the fact<br />
that they now have access to people who<br />
look like me enables them to expand more<br />
on issues that they hadn’t necessarily been<br />
able to in the past. A recurrent topic is the<br />
issue of so-called black tax – we prefer<br />
'family responsibility' – and how to navigate<br />
it if you’re wanting the best for not just<br />
immediate but also extended family and<br />
you have the financial ability to do so.”<br />
Family responsibility opens up new<br />
financial planning pathways. “We are<br />
facilitating family meetings, for example,<br />
where we chat to clients about how to<br />
navigate their family responsibility and<br />
chat to extended family members about<br />
the limitations and the resources that are<br />
available. It’s about women learning how to<br />
tell extended family members that there is<br />
somebody to help, but it doesn’t mean that<br />
it is an unlimited resource – they too need<br />
to come to the party and be responsible on<br />
their end when they’re receiving income.<br />
It can get touchy. On one occasion I told<br />
a client that a couple of the people they<br />
support will have to try a little harder to<br />
look for employment to help out with the<br />
situation. Sometimes you do come across<br />
as quite cold. However, it’s a conversation<br />
that needs to happen, and it’s quite fruitful<br />
when we start having those engagements,”<br />
says Sidaki.<br />
These encounters entail a lot a financial<br />
coaching.<br />
“Often it’s a client’s first encounter with<br />
a financial advisor, so we’re having to do a<br />
lot of financial educational programmes<br />
covering the basics. We are constantly trying<br />
to direct behaviour. We want individuals<br />
to not only get invested but stay invested<br />
too. We are encouraging clients to consider<br />
opening investment accounts for extended<br />
family members too,” says Sidaki.<br />
Financial belief system<br />
Wealth Creed’s financial planning<br />
interventions are helping to relieve the<br />
stress experienced by women who support<br />
extended families. “All of a sudden they are<br />
not dealing with ad hoc requests. If you are<br />
able to build a kitty for that specific purpose<br />
and that kitty is invested in a clever way, the<br />
stress or the burden is released or lessened<br />
to a large extent. Our role is to devise<br />
strategies to help individuals manage family<br />
responsibility.”<br />
Women to whom financial planning was<br />
quite alien are now embracing it with a will.<br />
Sidaki refers to an illustrative case: “One<br />
particular client I had to deal with has two<br />
siblings who are working but the biggest<br />
responsibility of funding the rest of the<br />
family lies with her. When I spoke to her, I<br />
said, the request is coming – you know you<br />
will have to fork out some money for your<br />
parents at some point, whether it’s to fix a<br />
leaking roof or whatever the case is. Why<br />
don’t we get your siblings around the table<br />
to let everyone contribute to a kitty in a way<br />
that they are able to match? Suddenly the<br />
entire family got involved proactively and<br />
her burden was greatly reduced.”<br />
Financial planning as a tool for social<br />
transformation and empowerment is<br />
integral to Wealth Creed’s approach.<br />
Sidaki explains: “Our logo is the Tree of<br />
Life, representing the individuals that we<br />
are advising: the breadwinners footing the<br />
lion’s share of family responsibility. The<br />
‘creed’ is the belief system we are creating<br />
for our clients. Previously ignored by the<br />
financial services sector, these individuals<br />
are now coming into money – we want to<br />
help them manage it and build a legacy for<br />
their loved ones.”<br />
In this regard, education is key. “Financial<br />
literacy initiatives are what can change<br />
this industry in order to bring everybody<br />
into the fold, if you will – to include as<br />
many people as possible in the process of<br />
financial planning. Everyone deserves a<br />
financial planner, whether you make R500<br />
a month or whether you make a million.<br />
There is definitely huge scope for many<br />
more financial advisors.”<br />
For women and anyone else interested<br />
in furthering their careers in the industry,<br />
Sidaki advises: “Reach out to people who are<br />
already doing what you are doing. People<br />
are always willing to share information.<br />
When my business partner and I embarked<br />
on this journey, every time we knocked on<br />
a door for information or help, people were<br />
willing. We often reciprocate in turn. You<br />
would be surprised what help is at hand<br />
when you actually ask.”<br />
Sidaki enthusiastically recommends the<br />
FPI as the go-to forum for people wanting<br />
more information about the industry. She<br />
is also an active member of the Women in<br />
Finance Network:“Kim Potgieter started it<br />
a few years ago because she also felt the<br />
need to bring women in the finance sector<br />
together. We meet every quarter to talk<br />
about the challenges that women are facing<br />
in a male-dominated environment and to<br />
create a safe space for women to share and<br />
understand what it takes to succeed as a<br />
woman.” •<br />
Greg Penfold<br />
www.bluechipjournal.co.za<br />
25
PROFILE<br />
A flight to quality<br />
Guernsey is a secure and stable financial centre for advisors and clients<br />
Trading links between South Africa and<br />
Guernsey go back many years, with a<br />
number of the country’s big finance<br />
houses having a presence in the<br />
island, which is perfectly positioned between<br />
England and France. That relationship is certainly<br />
strengthening again as Guernsey is<br />
seen as a secure and stable financial centre<br />
for financial advisors and clients seeking that<br />
comfort in politically turbulent times.<br />
I have been privileged to visit your country<br />
in August and September, promoting<br />
Guernsey’s strengths in international pension<br />
provision and private wealth services,<br />
and again most recently to discuss the structuring<br />
of investment funds.<br />
I used to be a regular visitor to South<br />
Africa a decade ago in a previous private<br />
wealth role. The message has not changed<br />
greatly – Guernsey is still in the vanguard of<br />
private wealth solutions for those wanting<br />
to invest outside of their home country.<br />
However, I could discern a much stronger<br />
interest in our message at this time, and<br />
our delegation was well received in both<br />
Johannesburg and Cape Town.<br />
Feedback we regularly received was<br />
that those already experienced in investing<br />
outside South Africa were often frustrated<br />
by poor performance and spiralling costs<br />
in other jurisdictions. By contrast Guernsey<br />
meets the need for a well-regulated, secure<br />
jurisdiction, offering a quality, bespoke service<br />
with a solid reputation, with a stable and<br />
sensible cost base.<br />
The “flight to quality” became the motto<br />
for our private wealth trip, as it seemed to<br />
describe perfectly the solution that the<br />
clients and advisors which we met were<br />
looking for.<br />
The search for a reputable tax environment,<br />
based on economic substance and<br />
modern standards of transparency, has been<br />
a big issue in the offshore industry over the<br />
past two years. Some jurisdictions have taken<br />
the process more seriously than others, and<br />
confirmation of Guernsey’s position of compliance<br />
in these areas, supported by the<br />
endorsement of international bodies such as<br />
the OECD and the EU, is a significant selling<br />
point for us as a jurisdiction.<br />
The island has certainly benefited recently<br />
from migrations of structures and companies<br />
to Guernsey. An industry-wide drive<br />
to find cost-effective security and stability<br />
is leading clients to consolidate offshore<br />
structuring to a single, credible jurisdiction<br />
such as Guernsey, where existing local regulations<br />
provide a strong economic substance<br />
framework set to withstand the ebb and flow<br />
of the new international substance tide for<br />
years to come.<br />
Investment managers in South Africa<br />
continue to be attracted by the opportunity<br />
not only to invest outside of the country, but<br />
also to attract capital from overseas institutions<br />
and high net worth individuals into<br />
the country, and are finding that Guernsey<br />
investment funds are the perfect structures<br />
to facilitate these ambitions.<br />
We have discovered on previous trips to<br />
the country that EU UCITS funds are something<br />
of a default, but South African clients<br />
should be aware that there is no need to use<br />
those structures compared to a Guernsey<br />
“Class B scheme”, which is quicker and more<br />
cost-efficient to launch, and offers managers<br />
far more flexibility and control, without<br />
the burden of European regulation and<br />
compliance.<br />
The value of a Guernsey platform is<br />
already well known to a number of established<br />
South African managers, and more are<br />
picking up on the opportunities offered all<br />
the time as word spreads<br />
www.weareguernsey.com<br />
James Crawford, Business Development<br />
Director, Guernsey Finance<br />
26 www.bluechipjournal.co.za
INSURANCE INVESTMENT FUNDS TRUST & COMPANY PENSIONS INVESTMENT MANAGEMENT BANKING<br />
WE ARE SAFEGUARDING<br />
YOUR FUTURE<br />
In rising and falling tides, Guernsey’s bathing<br />
pools have provided families with a safe place<br />
to bathe for more than 150 years.<br />
weareguernsey.com<br />
Similarly our private wealth specialists provide a<br />
safe, secure, and well-supervised environment<br />
for you and your assets.
ADVERTORIAL<br />
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Are you ready for the 4th Industrial<br />
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through transitions in their lives (eg divorce, job<br />
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• Needing to help clients see how their attitudes<br />
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being able to do this as effectively as possible.<br />
• Not being sure how to discourage clients from<br />
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• Needing to help clients define their real life goals,<br />
based on what is important to them, and guide them<br />
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HUMANS UNDER MANAGEMENT<br />
Clients are for life<br />
Behavioural financial advice is not a soft skill<br />
With artificial intelligence and<br />
robo-advice expected to<br />
become a permanent feature<br />
of the financial planning<br />
landscape in the future, financial planners<br />
are going to have to offer clients skills that<br />
technology doesn’t have.<br />
The good news is that humans will always be<br />
able to establish an emotional connection<br />
that artificial intelligence would be hardpressed<br />
to achieve. Thus, financial planners<br />
need to begin redefining their roles to exploit<br />
their competitive advantage.<br />
That’s where behavioural finance-based<br />
advice comes into play. But what is that, you<br />
may ask? Behavioural finance-based advice<br />
relies on an understanding of a client’s motivations,<br />
expectations and, ultimately, behaviour<br />
in finance and investing. This requires the<br />
financial planner to extend his ambit into the<br />
realm of psychology and people skills.<br />
Incorporating behavioural finance<br />
insights into financial planning was the topic<br />
of the Humans Under Management (HUM)<br />
conference held in Cape Town in September.<br />
During the day, speakers and attendees<br />
engaged on how to build on the work that<br />
great advisors are doing in developing their<br />
behavioural finance practices.<br />
Kim Potgieter, director at Chartered<br />
Wealth Solutions, spoke on why financial<br />
planning should not be an event,<br />
but, rather, a relationship full of courage,<br />
empathy and true connection. While some<br />
financial planners may dismiss these emotional<br />
attributes as nice-to-haves and not<br />
core to what they do when planning for the<br />
clients’ future, Potgieter highlighted how<br />
important these will be in setting clients<br />
up for future financial success.<br />
She said that they will be needed even<br />
more going forward and that before a<br />
financial planner puts a plan together, they<br />
will need to understand how the client got<br />
to where they are and understand their<br />
principles and values. “We need to look at<br />
a client’s goals and dreams and work out<br />
how we enable them to have a life with<br />
more meaning.”<br />
Potgieter said it takes courage to embrace<br />
the softer skills needed to become a successful<br />
financial planner of the future. These<br />
include vulnerability, empathy and connection.<br />
She explained that vulnerability is an<br />
emotion that the client experiences during<br />
times of risk and financial exposure. Often<br />
there is shame attached to money, she added.<br />
The ability to empathise is a critical skill that<br />
financial planners will need to have, namely<br />
30 www.bluechipjournal.co.za
HUMANS UNDER MANAGEMENT<br />
the ability to show the client they are available<br />
to help their client process emotions<br />
and help them not to feel alone.<br />
The emotional support extended to clients<br />
will enable financial planners to foster<br />
deep connections with their clients and give<br />
the financial planner the information they<br />
need to put a financial plan together that<br />
the client is asking for rather than the one<br />
the planner thinks they need.<br />
Abraham Okusanya, Founder and Director<br />
of Finalytq and Timeline, shared his views on<br />
how to become an indispensable advisor<br />
in the face of a mounting global retirement<br />
challenge. He highlighted that the average<br />
person in <strong>2019</strong> will outlive their savings by 10<br />
years. “If left to their own devices, on the current<br />
trajectory, the overwhelming majority<br />
are heading for a financial shortfall.”<br />
He notes that most clients don’t understand<br />
the difference between risk and volatility<br />
– a problem most speakers highlighted<br />
on the day, including the founder of the HUM<br />
conference, Andy Hart.<br />
Volatility is the day-to-day fluctuations in<br />
asset prices, which clients with a short-term<br />
focus or anxiety about their investments<br />
interpret as risk. On that basis, they consider<br />
equities to be high risk and cash low risk.<br />
However, as Hart pointed out, true risk<br />
is more difficult for clients to understand.<br />
If they avoid investing in equities because<br />
“they don’t want any risk in their portfolio”,<br />
they could well outlast their money<br />
because, as both Okusanya and Hart<br />
pointed out, equities are the asset class<br />
that give clients the best chance of meeting<br />
their retirement goals.<br />
Cash or money market assets, on the<br />
other hand, may seem risk-free but they<br />
expose investors to the risk of losing<br />
their purchasing power over time.<br />
Hart noted: “There are various flavours<br />
of risk your client needs to know they are<br />
dancing with: loss of capital, which is the<br />
most dangerous flavour of risk; inflation,<br />
which undermines your purchasing power,<br />
and volatility, which is the friend of the<br />
financially literate but the enemy of the<br />
nervous investor.”<br />
Okusanya pointed out that there are 400<br />
known human biases that need to be managed<br />
and summed up the role of the financial<br />
advisor as: “Your job is not to manage<br />
the market but to manage your investor.” He<br />
advised finding a way to get investors more<br />
comfortable with volatility so that they can<br />
calmly get their minds back on the goals.<br />
All the presentations at the HUM conference<br />
had one thing in common: the<br />
soft skills are undoubtedly going to<br />
be the hard skills in the future. As Rob<br />
Macdonald, Head of Strategic Advisory<br />
Services at Fundhouse and co-organiser<br />
of HUM SA, pointed out in his presentation,<br />
financial planners who embrace<br />
these skills, and incorporate a coaching<br />
way of being into what they do, will help<br />
clients avoid making costly financial<br />
decisions when they are fearful about<br />
declining markets or going through difficult<br />
life transitions.<br />
Financial planners who successfully do<br />
this will have clients for life. •<br />
Pierre Taljaard, Independent Financial<br />
Advisor and Consultant and Co-organiser of<br />
Humans Under Management Conference,<br />
South Africa<br />
www.bluechipjournal.co.za<br />
31
RETIREMENT<br />
Strategic decumulation<br />
Retirement means working with what you’ve got<br />
Discussions around retirement<br />
typically revolve around having<br />
the required funds to live comfortably<br />
once a person stops<br />
working. This “income for retirement” is<br />
what most of us save up for during the bulk<br />
of our lives.<br />
But what happens when it comes<br />
time to decumulate that wealth?<br />
Arthur Case, Brand Marketing Director at<br />
Evergreen Retirement Holdings, believes<br />
more must be done to highlight investment<br />
strategies around this critical aspect.<br />
Decumulation refers to the stage in your<br />
life when you start drawing retirement<br />
income from your portfolio. But one of the<br />
key concerns for any person approaching<br />
retirement is whether there is enough<br />
saved especially given how life expectancy<br />
has increased over the years.<br />
So, instead of spending 10 or 15 years in<br />
retirement this could easily translate to 20<br />
or 25 years. This puts an enormous amount<br />
of pressure to ensure people’s funds still<br />
work for them when they are no longer<br />
able to or want to.<br />
“Of course, this is not only a challenge<br />
in South Africa but globally as well. Many<br />
who fall into the baby boomer generation<br />
category still think they will be able to pull<br />
a rabbit out of their hat during the last<br />
few years of their working life. With this<br />
being unlikely, they need to wise up as to<br />
how to work with the capital they do have<br />
available,” says Case.<br />
Perhaps the most concerning aspect<br />
is that financial advisors often disappear<br />
during the decumulation phase of one’s<br />
life. With advisors generously compensated<br />
for growing assets during the investment<br />
cycle, they don’t seem to be available<br />
to offer advice when those funds start<br />
eroding or need to be spent on buying a<br />
retirement property.<br />
“In fact, one of the most pertinent questions<br />
retirees are asking themselves is<br />
where they are going to see out their twilight<br />
years. The where and how they are<br />
going to live become significant questions<br />
that will fundamentally impact the rest of<br />
their lives. Things like whether they want<br />
to live in the same home or look at downsizing<br />
to an apartment, or perhaps residential<br />
or retirement estate are all burning<br />
questions that they need to work through.”<br />
Too often, when people are concerned<br />
about their future, they put their heads in<br />
the sand and hope it will miraculously work<br />
out for the best. Sadly, the reality does not<br />
always work that way.<br />
When it comes to property, there are<br />
several models to consider. On the one<br />
hand, there is the traditional approach<br />
of buying a sectional title or a freehold<br />
property in a retirement village. On the<br />
other, is the increasingly popular life<br />
rights model.<br />
“This sees a person buying the right<br />
to occupy a property for the rest of their<br />
life. Typically, this is done via a once-off<br />
payment with the original capital returning<br />
to the estate of the life right holder when<br />
they pass away. In other words, the person<br />
has the security of guaranteed lifetime<br />
occupation of a property.”<br />
One of the ways this is different to the<br />
traditional concept of buying property<br />
is that the developer of the estate stays<br />
involved even after the building stops. It is<br />
all about building a long-term relationship<br />
with residents.<br />
In contrast, with the traditional<br />
model, once an estate has been built, the<br />
developer packs up and goes on to the new<br />
project. However, in the case of life rights,<br />
the developer continues to invest in the<br />
village to keep it pristine.<br />
“So, the developer stays involved<br />
and provides all the services and care<br />
required, taking out most of the cost and<br />
risk involved in managing your property.<br />
Going the traditional route sees the need<br />
to form a body corporate with residents as<br />
members that need to manage everything<br />
themselves. Even if they opt to get a<br />
professional firm in to assist, the thirdparty<br />
will rarely be as committed as a life<br />
rights developer to ensure the success of<br />
the village.”<br />
Furthermore, given the importance of<br />
a long-term decumulation strategy, there<br />
are flexible pricing models available when<br />
it comes to life rights.<br />
“The standard strategy would be to<br />
pay the purchase price for the unit that<br />
is aligned to the market value. However,<br />
if this is unaffordable, then the developer<br />
can reduce the purchase price and is then<br />
compensated by reducing the capital paid<br />
back at the end, so the person’s estate<br />
might only get back 60% to 80% of the<br />
original capital. This is certainly proving<br />
to be a boon for people concerned about<br />
what will happen to them during the<br />
decumulation stage of their lives,” he<br />
concludes. •<br />
Arthur Case<br />
32 www.bluechipjournal.co.za
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TECHNOLOGY<br />
Smooth<br />
transition<br />
Technology and succession planning<br />
Whether you are passing on an existing<br />
business to new blood in the practice or<br />
selling the business to another financial<br />
advisor who can take it over easily and<br />
keep the existing client base from jumping ship, technology<br />
plays a crucial role in getting your business in<br />
a position where you can pass it on to your successor<br />
confidently.<br />
Two reasons for this are:<br />
• You need to get the intellectual property and history<br />
of financial advisor/ client relationships out of<br />
an advisor’s or the owner’s head and into a form that<br />
is enduring and can ensure ease-of-transition during<br />
succession handovers.<br />
• You need to have reliable and accurate business<br />
intelligence data that enables the successor to<br />
understand your clients and your business and to<br />
ultimately measure the value of your business.<br />
Centurion Market Makers, an Australian-based specialist<br />
in succession planning, asked the following<br />
question: “What do you find to be the hardest thing<br />
about buying a business?” It elicited the following<br />
response: “Inadequate preparation of the right information<br />
by sellers is one of the most common mistakes<br />
we see when transactions are taking place. It is also the<br />
number one reason why practice owners fail to maximise<br />
value, minimise transaction risk and transact in<br />
less than six months.”<br />
So the crux of preparing a smooth success plan is<br />
“How do I access the correct information about my<br />
business, in my business?”<br />
Let’s look at some of the common hurdles:<br />
• How do you demonstrate that you have a technologically<br />
enabled business if you are using multiple<br />
tools, but each tool is poorly implemented, and<br />
manual processes still abound?<br />
• Multiple tools themselves create the following<br />
challenges:<br />
1. Difficulties in understanding your client base and<br />
how to communicate and transition them<br />
2. Lack of structured, clean client, investment and revenue<br />
data to help you understand your business<br />
3. Absence of intelligent insights provided by this data<br />
in order to form the basis for a valuation<br />
4. Lack of a documented, systemised client service<br />
model that will provide continuity in your absence.<br />
• How do you formulate strategic decisions in the business<br />
without informing those decisions with facts, i.e.<br />
quantifiable data from your practice?<br />
34 www.bluechipjournal.co.za
TECHNOLOGY<br />
• Is it enough to simply know what is<br />
going through your bank account?<br />
• How do you show who your clients are<br />
and how they rank in terms of AUM and<br />
income?<br />
• How do you prove the value of your business<br />
if you can’t access accurate information<br />
about your clients and revenue?<br />
• How do you understand the real cost of<br />
lack of operational efficiencies in your<br />
business and how this impacts your<br />
bottom line?<br />
As an illustration of what is currently happening<br />
in many advisory practices, one<br />
of the selected highlights from our 2018<br />
independent advisor survey contained<br />
a question about whether practices use<br />
proper revenue reconciliation tools. The<br />
survey answers revealed that very few FSPs<br />
properly track revenue and fewer still can<br />
connect revenue with income for management<br />
information purposes:<br />
The same survey highlighted some of<br />
the typical causes of frustration for financial<br />
services providers relating to data<br />
management:<br />
• Poorly maintained client data integrity<br />
and centralisation<br />
• Inability to obtain complete and reliable<br />
management information.<br />
Data issues are one of the common underlying,<br />
unidentified denominators for advisors<br />
changing their technology, rather than<br />
issues with the system itself.<br />
The bottom line is you need to understand<br />
your data in order to understand your business<br />
and in order to trust what your data<br />
is telling you, you need to know where it’s<br />
coming from, where it’s stored and what<br />
it looks like.<br />
In most practices multiple software<br />
tools result in unconsolidated, messy<br />
data. Over 90% of businesses use multiple<br />
software tools in combination; the vast<br />
majority without any integration. Almost<br />
none have a “one-stop-shop” model.<br />
Why does the data get messy? Most<br />
practices have multiple sources of external<br />
and internal data being fed or manually<br />
captured into multiple systems:<br />
• External – Astute, Investment feeds, platform<br />
information, sometimes by clients<br />
via client portals<br />
• Internal – client data manually captured<br />
into internal systems or onto excel<br />
spreadsheets leads to errors in capturing.<br />
The result is that you have multiple versions<br />
of one client lying in different<br />
systems and the information and data<br />
attached to each version is incomplete<br />
and/or incorrect. Now, multiply that one<br />
client by 500 or 1000 and you start to<br />
understand the problem.<br />
Nina Lowes, Linktank director<br />
This highlights how important it is get your<br />
data house in order before thinking about<br />
succession. Steps the advisor can take to<br />
truly understand all the metrics of the<br />
business and solidify the<br />
practice-management<br />
process are assessing the<br />
efficiency of the technology<br />
and determining<br />
whether the data is consolidated,<br />
integrated and<br />
accurate.<br />
Achieving accurate<br />
business intelligence<br />
using technology and<br />
accessible data has<br />
become a cornerstone<br />
in measuring the success of a business<br />
strategy and illustrating demonstrable<br />
business value. The practices<br />
that get this right will experience a far<br />
smoother and successful succession,<br />
be it to planner within in the practice<br />
or a new owner. •<br />
www.bluechipjournal.co.za<br />
35
PRODUCT NEWS<br />
Planning through<br />
technology<br />
Integrated software boosts profitability and the<br />
customer experience for financial advisors<br />
opportunities as well as efficiently deliver<br />
complete and compliant financial solutions<br />
to their customers.”<br />
Xplan from Iress offers contemporary,<br />
cloud-based software which covers all<br />
aspects of running a successful financial<br />
advice and wealth management practice.<br />
This end-to-end offering integrates:<br />
• Client information and relationship<br />
management<br />
• Advice development and modelling<br />
• Research<br />
• Advice recommendations and<br />
documents<br />
• Advice execution and lodgement<br />
• Client portfolio management<br />
• Client engagement and experience<br />
• Compliance and risk management<br />
• Practice management<br />
Richard Bell, Business Development Manager, Iress<br />
Financial advisors in South Africa<br />
are turning to technology-driven<br />
financial planning and wealth<br />
management software to improve<br />
the customer experience and automate<br />
processes as they seek to reinvent<br />
their businesses in an age of growing<br />
compliance demands, emerging digital<br />
channels and rising client expectations.<br />
“South Africa’s financial advice and<br />
wealth management industry is changing<br />
exponentially as a new generation of<br />
consumers, seeking a better and more<br />
seamless experience, embark on their<br />
financial services journeys,” says Richard<br />
Bell, the Business Development Manager<br />
at Iress.<br />
“To improve their profitability, financial<br />
advisors are looking for unified technology<br />
platforms that enable them to better<br />
meet compliance needs, achieve greater<br />
efficiency, reduce risk and improve speed to<br />
market. They are also looking for tools that<br />
help them become more customer-centric.<br />
”Administration across fragmented<br />
systems are not only a drain on the<br />
advisor’s time and profitability, it also has a<br />
negative impact on the client experience,”<br />
says Bell. “Shifting to integrated software<br />
empowers advisors to maximise business<br />
With the recent Xplan and Silica integration,<br />
Iress Funds Trading now enables fast,<br />
efficient and transparent trading of funds.<br />
Once FICA documents have been verified,<br />
transactions are automated. The trading<br />
software also provides access to new<br />
investments and additions, fund switching,<br />
client data, payments, fees and reports.<br />
This means financial advisors can offer<br />
their clients the broadest range of funds –<br />
from leading investment managers – at the<br />
lowest possible cost. Their clients will also<br />
have online access to their portfolios which<br />
meets the market demand for self-service<br />
options and greater transparency.<br />
Bell says: “Adopting integrated software<br />
like Xplan allows financial advisors to<br />
streamline their businesses and shift<br />
their focus from administration to adding<br />
value through the advice and service they<br />
provide their clients.” •<br />
36 www.bluechipjournal.co.za
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ADVERTORIAL<br />
Sustainable transport<br />
From efficient trucking to progressive public<br />
transport solutions, IVECO is an ESG leader<br />
IVECO (Industrial Vehicle Corporation)<br />
was born in 1975 from a 110-year-old<br />
journey of innovation, entrepreneurship<br />
and partnership that traces back to the<br />
very beginning of automotive engineering.<br />
Today IVECO is one of the foremost leaders<br />
in innovation for sustainable drivelines for<br />
commercial vehicles and the undisputed<br />
leader in Natural Power propulsion based<br />
on methane gas, either as compressed<br />
(CNG) or liquefied (LNG) natural gas. The<br />
company is also very active in electrical<br />
transmission and there is also much investment<br />
in other renewable sources of energy.<br />
All this adds up to a very attractive investment<br />
proposition from an ESG standpoint.<br />
<strong>Blue</strong> <strong>Chip</strong> spoke to Elvis Mutseura, IVECO<br />
South Africa Product Marketing Manager,<br />
to find out more about what’s under the<br />
hood at IVECO.<br />
“The company’s commitment to<br />
sustainable development is not limited to<br />
its products,” Mutseura points out. “CNH<br />
Industrial, one of the largest capital goods<br />
companies in the world and the group<br />
to which IVECO belongs, has for nine<br />
consecutive years been recognised as<br />
Industry Leader in Machinery and Electrical<br />
Equipment in the Dow Jones Sustainability<br />
Indices (DJSI) World and Europe. We<br />
live daily by our motto ‘Your partner for<br />
sustainable transport’.<br />
For IVECO, climate change is an inescapable<br />
reality that demands sustainable solutions<br />
now – an attitude that investors will<br />
38 www.bluechipjournal.co.za
ADVERTORIAL<br />
continue to benefit from. Moreover, IVECO<br />
has committed to Africa as a growth point<br />
for sustainable development.<br />
“The negative effects of climate change<br />
are already evident to all of us on a daily<br />
basis. Consequently, the focus and need<br />
for sustainable transport will continue<br />
to increase into the future and will soon<br />
be a non-negotiable component of any<br />
transport decision. IVECO is a leader in the<br />
development of sustainable commercial<br />
transport solutions and continues to invest<br />
Elvis Mutseura, IVECO South Africa Product<br />
Marketing Manager<br />
strongly in increasing its expertise and<br />
leadership in this critical area. The investor<br />
who joins IVECO will reap the benefits for<br />
a long time into the future.<br />
“IVECO has shown a strong commitment<br />
to the African market with one of the<br />
widest support networks and structures on<br />
the continent. In South Africa, as a case in<br />
point, IVECO took the decision to invest<br />
R600-million into an assembly and manufacturing<br />
plant because we believe in the<br />
potential of the African market.<br />
“Africa has a young and growing population<br />
and a great need for land transport<br />
solutions. Unfortunately, there is also under<br />
investment in rail infrastructure which<br />
means that road transport plays an even<br />
bigger role than it does in most developed<br />
economies. IVECO is well placed to meet<br />
much of this need,” says Mutseura.<br />
Africa’s sustainable public<br />
transport partner<br />
Recognising that the public transport<br />
sector is an important enabler of sustainable<br />
development, IVECO has developed<br />
the Afriway bus exclusively for the African<br />
market.<br />
“The cost and time-efficient transportation<br />
of commuters from home to their<br />
places of business and back is an incredibly<br />
powerful tool to unlocking economic<br />
activity and an engine for driving the<br />
same. The amount of productive time<br />
wasted queuing for transport and then<br />
again on the roads is simply criminal for a<br />
developing economy. When one adds the<br />
level of greenhouse gas emissions that are<br />
part and parcel of our one-person-per-car<br />
culture in South Africa, then the importance<br />
of public transport cannot be understated<br />
and can never be emphasised enough,”<br />
says Mutseura.<br />
“By building the entire Afriway bus<br />
under our control, we are able to provide<br />
seamless one-stop-shop support for the<br />
bus post sale. This is critical in a territory<br />
as vast as South Africa because a common<br />
shortcoming when a bus is built by several<br />
partners is that not all the support required<br />
is available in the same workshop. We have<br />
also engineered some useful features into<br />
our bus such as positioning the engine<br />
quite far back in the chassis. This has several<br />
benefits such as better mass distribution.<br />
Very importantly this position also<br />
protects the most important components<br />
of the drivetrain from impact damage in<br />
the event of a collision – translating into<br />
reduced maintenance costs. Low fuel<br />
consumption and the optimal mass distribution<br />
means that the Afriway offers the<br />
lowest capital cost per passenger.”<br />
Minibus taxis are an essential component<br />
of urban African mobility and an excellent<br />
arena for companies to practice social<br />
responsibility. For IVECO this translates<br />
into safety.<br />
“The Daily minibus is truly the safest<br />
minibus on the road today. Optimal driving<br />
position and comfort are ensured by the<br />
adjustable steering column and suspended<br />
driver seat that also incorporates lumbar<br />
www.bluechipjournal.co.za<br />
39
ADVERTORIAL<br />
support. Best-in-class roll-over kit and<br />
standard fitment airbags for the driver<br />
and front passengers provide maximum<br />
protection in the event of an accident. Grab<br />
handles for the driver and front passengers<br />
help to prevent slipping while entering or<br />
exiting the vehicle. Standard fitment cruise<br />
control with speed-limiting function assists<br />
the driver to avoid exceeding legal speed<br />
limits. Driver fatigue is reduced thanks to<br />
the standard air conditioning, while the<br />
standard fitment <strong>Blue</strong>tooth radio and<br />
multifunction steering wheel facilitate<br />
hands free telephony thus ensuring that<br />
the driver keeps focus on the road ahead,<br />
even while taking a call,” says Mutseura.<br />
Cleaner air, cooler climate – the road<br />
ahead<br />
A lower regulatory standard for fuel<br />
quality means that African markets are<br />
unlikely in the near future to benefit from<br />
the stringent emissions policies that are in<br />
force in Europe. However, IVECO is doing<br />
everything it can to hasten the process.<br />
“In Europe and in much of the developed<br />
world, legislation calls for vehicles to<br />
conform to the Euro VI emission standard<br />
that sets very strict and stringent limits<br />
on the level of pollutants in a vehicle’s<br />
exhaust. Concomitant with these emission<br />
levels is the quality of fuel that must<br />
be available and be used, which for Euro<br />
VI diesel engines need to be refined to<br />
10ppm levels. In South Africa, our legislation<br />
sets Euro II emission standard as<br />
the minimum and 500ppm diesel is still<br />
the fuel that is supplied by local refineries<br />
and consequently the fuel of choice<br />
for trucks. A move to better fuel quality<br />
and stricter emission levels would usher<br />
in the latest diesel engine technologies<br />
for better fuel consumption and cleaner<br />
exhaust. Unfortunately, the capital investment<br />
required to upgrade local refineries<br />
to the required standard is quite high and<br />
we may have to wait a while before we see<br />
this happen.<br />
“Fortunately, not all is lost. There is much<br />
that we are already doing with our vehicles<br />
and there is much that the operator can do<br />
to reduce fuel consumption and in this way<br />
not only save money but also contribute<br />
to a cleaner environment. If we burn less<br />
fuel for a given transport task, we produce<br />
lower amounts of pollutants per unit of<br />
transport work done.”<br />
Efficiency is not only about fuel–<br />
engineering and design play an equally<br />
important role.<br />
“Efficiency improvements in drive –<br />
lines are achieved in many ways that<br />
encompass better electronic control of<br />
the combustion process and reduction of<br />
friction throughout the drivetrain as well<br />
as more responsive drivetrains in general.<br />
These interventions result in incremental<br />
improvements that we continue to deliver<br />
on with fuel consumption improvements of<br />
up to 5% from one truck generation to the<br />
next,” says Mutseura.<br />
Of course, technology can only achieve<br />
so much on its own – the human factor is<br />
of paramount importance. This is reflected<br />
in IVECO’s approach to training.<br />
“A step change in efficiency can almost<br />
always be achieved by better driver<br />
training and management. The difference<br />
in fuel consumption achieved by the best<br />
driver and average driver in a given fleet<br />
is easily as much as a staggering 15%. The<br />
worst driver in the fleet is probably costing<br />
an arm, a leg and several vital organs. By<br />
focussing on spreading best practice<br />
though the fleet by way of a healthy<br />
driving culture and even weeding out the<br />
drivers who just are not capable of delivering<br />
the required standard, the operator<br />
can make enormous financial savings and<br />
can contribute to a cleaner environment in<br />
ways that will broaden smiles and increase<br />
bottom lines. To this end we offer driver<br />
training solutions to demonstrate and<br />
teach how to get the best performance<br />
out of our trucks. Bad driving habits have<br />
a way of creeping back into the normal day<br />
to day and this is one of many areas where<br />
telematics helps to identify issues immediately<br />
and offer both reliable and objective<br />
information for training and reinforcement<br />
of good habits and techniques. Having<br />
reliable and objective driver performance<br />
information is also an invaluable tool for<br />
creating reward systems that strengthen<br />
the desired driving culture in the fleet,”<br />
Mutseura concludes. •<br />
40 www.bluechipjournal.co.za
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