Blue Chip Issue 89

BLUE
CHIP
0.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
Issue 89 • Nov/Dec/Jan 2024
www.bluechipdigital.co.za
0.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
THE OFFICIAL PUBLICATION OF THE FPI
01 CONTINUOUS
PROFESSIONAL DEVELOPMENT
01 CONTINUOUS
PROFESSIONAL DEVELOPMENT
1.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
1.5 CONTINUOUS
PROFESSIONAL DEVELOPMENT
02 CONTINUOUS
PROFESSIONAL DEVELOPMENT
02 CONTINUOUS
PROFESSIONAL DEVELOPMENT
Noel de Kock, CFP®
Tom Brukman, CFP®
FINANCIAL PLANNER OF THE YEAR 2023
Meet this year’s three finalists
. . .
Lara Warburton, CFP®
TECHNOLOGY RETIREMENT PLANNING OFFSHORE INVESTING

BACK TO THE FUTURE!
We are living through extraordinary times, indeed! And we can thank the
Bokke for adding to the extraordinary! Well done, South Africa!
We are experiencing big overall trends: climate change, technological
disruption and social instability – all of which are reshaping the business
environment and our world today. People are feeling burdened by all of this. On page 82,
Judith Haupt attests that the risks these trends create only strengthen the relevance of
solid financial planning, of creating stability where we can. She says, “What is important to
realise though is that these trends pose new and huge risks, but also great opportunities
to rethink our work and our world fundamentally. The way we will handle the problems
we have today is going to impact the way we are able to work and live in the future.”
Going back to the future is what it is all about.
“Back to the Future” is the theme for the 2023 FPI Professional’s Convention. Key
presentations will be on the future of financial planning, the psychology of financial
planning, social media law and the South African political scene. At the gala dinner, the
FPI will be hosting the prestigious awards ceremony where excellence in the profession
is recognised. The event endeavours to acknowledge CFPs® from across Southern Africa
who demonstrate innovation, professionalism and commitment to their clients and the
profession. We wish the Financial Planner of the Year 2023 finalists, Noel de Kock, Lara
Warburton and Thomas Brukman, all the best. Meet these three exceptional CFPs® on
page 18.
Rob Macdonald reflects on the words of Paul Saffo, a Silicon Valley-based forecaster
who explores long-term technology trends and their impact on society: “The goal of
forecasting is not to predict the future but to tell you what you need to know to take
meaningful action in the present”. According to Chat GPT, “The future of financial advice
is likely to be shaped by several key trends and developments, driven by advances in
technology, changing consumer preferences and regulatory changes.” GPT outlines 10
aspects that are likely to be a reality. Macdonald lists these and considers the implications
of each, both now and in the future.
With the COFI Act impending, technology innovation is imperative. COFI will replace
the FAIS Act and it will shake up every component of FSP businesses. With these changes,
every FSP business will need an equaliser. Anton Swanepoel argues that this equaliser is
technology (page 62).
Arthur C Clarke once articulated that “any sufficiently advanced technology is
indistinguishable from magic”, Tim Slatter tells us. Social media possesses an escape from
reality and a conduit for connection, yet financial advisors struggle to effectively harness
its potential. In his article, Slatter guides you through the conundrum (page 68).
Going back to the future, GPT’s forecast may not be accurate but it provides some
indication of what meaningful action we can take in the present.
Enjoy this issue and for those who are going to the FPI Professional’s Convention, see
you there!
All the best
Alexis Knipe, Editor
Blue Chip Journal – The official publication of FPI
blue-chip-journal
Blue Chip is a quarterly journal for the financial planning industry and is the official publication of the Financial
Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes
contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.
A total of 7 500 copies of the publication are distributed directly to every CERTIFIED FINANCIAL PLANNER®
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ISSUE 89 |
NOV/DEC/JAN 2024
BLUE
CHIP
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CONTENTS
ISSUE
89
NOV/DEC/JAN 2024
01
06
EDITOR’S NOTE
By Alexis Knipe
NURTURING BETTER
FINANCIAL DECISION-MAKING
Message from the FPI CEO
08
14
ON THE MONEY
Milestones, news and snippets
PERCEPTION IS REALITY
Column by Rob Macdonald, Head
of Strategic Advisory Services, Fundhouse
15
THE 7 PILLARS OF FINANCIAL
HEALTH
Rob Macdonald’s new book
16
A NEW HORIZON
Column by Kobus Kleyn, Tax and
Fiduciary Practitioner, Kainos Wealth
17
CONSIDER PAYING OFF
DEBT PRIOR TO RETIREMENT
Column by Florbela Yates, Head of Equilibrium
18
BORN TO WIN
Meet the top three Financial
Planner of the Year finalists
22
FPI RESEARCH
The power of professional
financial planning
26
BEHAVIOURAL BIASES
Nicole Loker, Investment Specialist,
Fundhouse, unravels our irrational investing
habits
32
IS IT DIFFERENT THIS TIME?
The hype around investing
offshore is back at euphoric levels,
by Sheldon Holdsworth, Old Mutual
International Regional Offshore Specialist
34
THE INCREASING POPULARITY
OF SHARE BUYBACKS
Schroders’ research shows that buybacks
have became more widespread narrowing
the gaps with the US
36
MOMENTUM INVESTMENTS’
NEW CEO
Meet Ferdi van Heerden
37
DEMYSTIFYING SMART BETA
An investment strategy gaining
significant traction in the global and South
African asset management landscape
38
GLOBAL MODEL PORTFOLIOS
Florbela Yates, Head of Equilibrium,
writes about the vast investment
opportunity set available offshore
40
THE BERMUDA TRIANGLE OF
CHANGE
Tiaan Herselman, Head of Advice, Old
Mutual Wealth, speaks about the future of
financial advice
42
STICKING TO OUR KNITTING
Coronation Fund Managers
celebrates its 30th anniversary
44
MAXIMISING INVESTMENT
OPPORTUNITIES
The rising relevance of DFMs, by Cogence
48
NATURE’S DIVIDEND
Investing with impact to tackle
the dual climate and biodiversity crises, by
Melville Douglas
2 www.bluechipdigital.co.za

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CONTENTS
ISSUE
89
NOV/DEC/JAN 2024
50
ROUND TABLE SERIES
Offshore investing: where, how
and how much?
53
SO YOU HAVE BEEN THERE,
DONE THAT
Trevor Glassock, Head of Sales, Dr Roddy
Carter, thought he did
54
SYSTEMATIC INVESTING
The future of investing and the
integration of quantitative and qualitative,
by Prescient Investment Management
55
INTELLIGENCE: OF THE
EMOTIONAL AND THE
ARTIFICIAL
How emotional intelligence gives us the
edge that allows us to co-exist with AI, by
the School of Financial Planning Law
56
EFFORTLESS MEETING MINUTES
USING AI
Blue Chip speaks to Zeldeen Muller,
CEO of inSite Connect and creator of
AgendaWorx
58
WHAT DOES THE FUTURE OF
FINANCIAL ADVICE LOOK LIKE?
By Rob Macdonald, Head of Strategic
Advisory Services, Fundhouse
62
TECHNOLOGY INNOVATION
Anton Swanepoel, Founder,
Trusted Advisor, tells us that technology
changes everything in the onerous
regulatory environment
64
ELEVATING CLIENT SERVICE IN
WEALTH ADVISORY
The Seeds Analytics solution
66
TECHNOLOGY AND THE
CUSTOMER EXPERIENCE
Francios du Toit, CFP®, Founder of
PROpulsion, explains how to use
technology to improve the customer
experience
68
UNVEILING THE MAGIC OF
SOCIAL MEDIA FOR FINANCIAL
ADVISORS
Why struggles exist and how to conquer
them by Tim Slatter, Director, Slatter
Communications
70
ANNUITIES: CHOOSE WISELY
By Jeannie de Villiers-Strijdom, CFP®,
Senior Lecturer and Postdoctoral Fellow,
Department of Business Management,
Faculty Economic and Management
Sciences, Stellenbosch University
74
THE FUTURE OF RETIREMENT
PLANNING
Two-pot system insights by Matthew
Marrian, Chief Operating Officer,
InvestSense
76
ACCOUNTANTS CAN HELP
SMALL BUSINESSES
Karl Smith, Senior Education, Training and
Member Support Manager, SAIPA, writes
about four strategic steps to help SMEs get
back on track
78
THE ART OF ESTATE PLANNING
The role of a multi-family office in
preserving wealth and protecting family
legacies, by Private Client Holdings
80
HOW TO SUPPORT YOUR AGEING
PARENTS FINANCIALLY
By Stian De Witt, CFP®, Executive Head of
Financial Planning at NMG Benefits
81
LIMITING MEDICAL AID
INCREASES ISN’T THE ANSWER
By Gary Feldman, Executive Head of
Healthcare Consulting, NMG Benefits
82
DISRUPTION, REINVENTION AND
INCLUSIVE LEADERSHIP
Judith Haupt, Managing Director,
CONTRACT South Africa, informs us how
to use the opportunities of disruption and
inclusive leadership to create a better world
84
THE EVOLUTION OF ADVICE
From managing people to
managing advice, by Guy Holwill, Chief
Executive, Fairbairn Consult
86
20 YEARS OF BUILDING A
FINANCIAL PLANNING BUSINESS
Kim Potgieter of Chartered Wealth
Solutions shares 10 key learnings
4 www.bluechipdigital.co.za

Good things came to those
who didn’t wait.
We’ve spent the last 30 years dedicated to one thing and one thing only: turning
long-term savings into real wealth. Take those who had invested R100 000 in our
very first balanced strategy, Global Houseview, in Oct 1993 for example. They would
have seen their investment grow to R6 437 540 by the end of September 2023.
Not only did we grow their hard-earned money into real long-term wealth, but
we earned their trust along the way. What are you waiting for? Invest today.
Good things come to those who
don’t wait to invest.
Coronation is an authorised financial services provider.
Past performance is not an indication of future performance.
Returns for the strategy is quoted gross of fees.

BLUE
CHIP
FPI UPDATES | CEO message
Nurturing
better financial
decision-making
Lelané Bezuidenhout, CFP®,
CEO, Financial Planning
Institute of Southern Africa
The CEO of Financial Planning Institute of
Southern Africa shares FPI’s latest news.
Since the last edition of Blue Chip magazine, the
Financial Planning Institute (FPI) celebrated Women’s
Month in August and contributed in numerous ways
to enhancing the professional competency of our
members and furthering financial education.
This year’s theme for Women’s Month at the FPI was “Nurture
the Future”. The many female professional members of the FPI
nurture the future by helping their clients take control of their
finances and make informed financial decisions.
In July, the FPI submitted its response to Treasury’s
two-pot/component retirement savings system proposals
and facilitated a series of interactive peer collaboration
sessions to support this work. The first two sessions, in
July, hosted by the Practice Management Committee and
the Employee Benefits Competency Committee, focused
on practice standards and the proposed two-pot system
respectively. In the third session, in August, the Technical
Competency Committee focused on the Marriage Bill. The
peer collaboration sessions generated diverse views, which
were discussed and debated in good spirits.
The FPI held workshops for financial planners in August
and September. The retirement and investment online
workshop on 30 August covered diverse topics, from
cryptocurrencies and AI to the two-pot system. Our tax
workshop on 28 September delved into laws that have
a direct impact on financial planning. It covered Section
42 transfers, tax matters around emigration as well as the
functions and mandate of the Tax Ombud. If you missed
these workshops, you can still register for the workshops via
our website.
The FPI plays an important role in fostering financial literacy
and promoting the cause of professional financial planning in
South Africa. We supported and participated in the following
events over the past three months:
• Money Smart Week. This annual financial literacy campaign
by the National Consumer Financial Education Committee
(NFEC) was held from 28 August to 3 September. The NFEC
adopted the Global Money Week Theme for 2023: “Plan
your money, plant your future”. The FPI is a member of the
committee and participated in various consumer education
activities during the week.
• Leaderex 2023. Africa’s largest gathering of business leaders,
professionals and entrepreneurs took place from 12 to 14
September at the Sandton Convention Centre. The FPI had
a stand at the conference and hosted a series of financial
planning presentations.
• Humans Under Management (HUM). Several Certified
Financial Planner® members delivered presentations at this
popular conference for the advisory industry on 19 September
at the Allan Gray Auditorium, V&A Waterfront, Cape Town.
• Financial Planning Week. This annual initiative by the FPI
coincided with the International Organization of Securities
Commissions (IOSCO) World Investor Week from 2 to 8 October
and the Financial Planning Standards Board’s World Financial
Planning Day on 4 October. The FPI is proud to be part of these
6 www.bluechipdigital.co.za

The FPI plays an important role in fostering
financial literacy and promoting the cause of
professional financial planning in South Africa.
global campaigns to show people the wide-ranging benefits
of financial planning and the impact it can make in all areas
of their lives.
The highlight of the FPI’s calendar, the FPI Professionals
Convention, takes place from 14 to 15 November at the
Sandton Convention Centre. The theme is “Back to the
Future” and key presentations will be on the future of financial
planning, the psychology of financial planning, social media
law and the South African political scene in the run-up to
next year’s elections. The sessions will be streamed virtually
for those who cannot attend in person.
At the gala dinner on the evening of 14 November, the FPI
will hold its annual awards ceremony, announcing the 2023
Financial Planner of the Year and the 2023 Practice of the
Year. The FPI will also announce the winners of the 2023 Top
Candidate of the Year, Harry Brews, Diversity and Inclusion as
well as It Starts with Me awards.
This year’s finalists for the coveted Financial Planner of the
Year title are Noel De Kock, CFP®, Lara Warburton, CFP® and
Thomas Brukman, CFP®.
Of interest to our members are the following announcements:
• The FPI is excited to introduce the Next Generation Certification
Standards for the CFP® designation. The assessment process to
become a CFP® professional member of the FPI will be amended
from 1 January 2025 to closely align with international
requirements for certification. The process will incorporate a
practical component to ensure that new CFP® professionals
are tested in a practical manner across the knowledge, skills
and abilities components of financial planning.
• With input from members, the FPI has combined the
foundational member regulations into a single handbook.
The first edition of the FPI Member Handbook combines
the seven parts of the FPI’s member agreement; the FPI
glossary, standard interpretation rules and miscellaneous
terms; the FPI memorandum of incorporation, member
regulations, certification standard, disciplinary regulations
as well as the FPI’s information use, confidentiality and
data protection rules.
• The FPI and Due Diligence SA have partnered to provide
members access to the Due Diligence SA platform, providing
company- and product-level due diligence documentation
for asset managers in South Africa.
• There will be four PCE examination opportunities available
in 2024. Registrations for 8 and 9 February as well as 25 and
26 April 2024 are already open.
As we prepare for 2024, we reflect on 2023 and thank you for
your support as none of the above would have been possible
without the support of our members.
See you at the Convention!
Until next time,
Lelané Bezuidenhout, CFP®, CEO, Financial Planning
Institute of Southern Africa
www.bluechipdigital.co.za
7

BLUE
CHIP
On the money
Making waves this quarter
Win with Integrity and Blue Chip
INTEGRITY ACADEMY RECOGNISED AS AN FPI EDUCATION PROVIDER
The Financial Planning Institute of Southern Africa (FPI) is delighted
to announce that Integrity Academy has been approved as an FPIrecognised
education provider. Established in June 2013 by Johann
Cloete, CFP®, Justin Cloete and Lynessa Spies. Integrity Academy has
successfully served over 400 financial planning and advisory
institutions and more than 17 000 students – marking a decade
of excellence in the industry. As a significant milestone, the
Occupational Certificate: Financial Advisor and National Certificate:
Wealth Management offered by Integrity Academy will now
be recognised as underlying qualifications for the prestigious
designation of REGISTERED FINANCIAL PRACTITIONER with
the FPI. Starting from 2023, candidates who complete these
qualifications with Integrity Academy will be eligible to apply for
the designation without the need to undertake a professional
competency examination with the FPI. For more information
about Integrity Academy and its accredited online education
programmes, please visit www.integrityacademy.co.za.
BLUE CHIP ROUND TABLE SERIES WINNER
“It was great to participate with Andrew Finlayson, Greg Strachan, Cobie Legrange and Hannes
Viljoen at the recent Blue Chip Round Table Series on Offshore Investment. In a space filled
with a great deal of conjecture, it was amazing to see the firm-founded opinions based on
successful portfolio construction with experience in the field. It’s important to highlight that
building a wealth portfolio is about having ascertained a diverse view of opinions and identifying
your own. There is no luck in planning, but being prepared in your planning makes you open
to opportunity. We are here to help you
harness these opportunities within foreign
exchange. We are happy to announce that
Matthew Marrian of InvestSense is our
winner of the Garmin Fenix watch which Matthew Marrian (left) and Lara
was drawn from the registrants for the event. Lotter (right).
A hearty congratulations from us here at
Exchange 4 Free,” says Lara Lotter, Exchange 4 Free
“The offshore conversation is always interesting and holds significant importance
for us at InvestSense, especially when engaging with our clients. The complexity
of offshore allocation means there is no one-size-fits-all answer. Therefore, it was
enlightening to gain insights from Andrew and the panel regarding their perspectives
on this matter and how they approach it within their respective businesses,” says the
winner of the Garmin Fenix, Matthew Marrian, COO, InvestSense.
The Garmin Fenix 7x Solar Smart watch. Read an excerpt of the Blue Chip Offshore Investment Round Table on page 50.

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BLUE
CHIP
On the money
Making waves this quarter
Unprecedented introductions and congratulations
MILPARK SCHOOL OF FINANCIAL SERVICES INTRODUCES
UNPRECEDENTED QUALIFICATION
Brunhilde Gerber, Deputy Head, School of Financial Services
THE FPI CONGRATULATES THE ASISA FOUNDATION
NMG BENEFITS INTRODUCES NMG WILLS & TRUSTS
Milpark Education has added a new qualification to
its extensive portfolio, a Postgraduate Diploma in
Risk Management. It will be the first of its kind in the
country as it offers industry-specific streams. Deputy
head of the School of Financial Services, Brunhilde
Gerber, says this is an exciting chapter.
“Applications are open for admissions and
registration. The diploma gives the option of
specialising in a field of interest rather than just having
a broad overview,” she says.
Gerber adds that there are other plans in motion for
the school and concludes with the encouragement to
“watch this space”.
In support of the brilliant work done by the ASISA Foundation under the leadership of Ruth Benjamin-Swales and an unwavering
commitment to promoting Financial Planning for All, the FPI has been working in partnership with the ASISA Foundation since 2017,
with the shared goal of making financial planning an integral part of every South African’s life.
Taking our collaboration to new heights, the FPI and the ASISA Foundation signed a Memorandum of Understanding in 2022,
formalising our alliance and amplifying our joint efforts in supporting the ASISA Foundation’s mission to deliver impactful and objective
financial literacy and micro-enterprise development programmes to South Africa’s most vulnerable communities.
The ASISA Foundation, established in 2012 by ASISA, has already made significant strides in this domain, having successfully trained
over 80 000 beneficiaries through a range of programmes. The foundation’s strategic objective as an industry body is to develop,
implement and refine relevant financial education initiatives that bring about a positive and sustainable impact on South African society.
Aligned with the vision of the FPI, which aims to provide financial planning and advice for all, the FPI has been actively involved in
extending financial consumer education to South Africans, synergising with the ASISA Foundation’s ongoing efforts.
The joint endeavours of the FPI and the ASISA Foundation are a testament to our dedication to fostering financial planning for all
South Africans and to delivering impactful and objective financial education to more South Africans, creating a brighter and more
financially secure future for the nation.
NMG Benefits, a leading player in the financial industry, is excited to unveil
its latest offering, NMG Wills & Trusts. This product is set to revolutionise the
landscape of estate planning in South Africa by providing individuals and
families with a seamless and effective approach to securing their legacies.
Estate planning is an integral part of responsible financial management.
However, the intricacies involved often lead to confusion and oversight.
NMG Wills & Trusts addresses this need by offering a holistic and personalised
approach to estate planning that aligns with each individual’s circumstances.
For more information, simply email m1@nmg.co.za.

BLUE
CHIP
On the money
Making waves this quarter
Sustainable finance
SUSTAINABLE DEVELOPMENT FOR FINANCE PROFESSIONALS
One of Africa’s most impactful discussion forums on sustainable and economic
development will use its 2023 landmark event to focus on what sustainable development
means for the accountancy professional.
At its Africa Members’ Convention this December, the Association of Chartered Certified
Accountants (ACCA) will bring together up to 1 000 distinguished ACCA members and
business leaders from across the continent to hear from a range of leading experts.
Representing all spheres of business and the public and private sectors, delegates will be
able to tap into a wealth of expertise, inspiration and unparalleled insights.
Jamil Ampomah, Director – Africa at ACCA says: “Developing the ‘Africa we want’ means
that finance professionals must play effective roles in driving sustainable practices across
business and maximising trade opportunities. This event is a forum for exciting discussions
that will build awareness on the critical leadership, talent and partnerships demanded.”
Registration is now open and more information can be found online.
Jamil Ampomah, Director – Africa, ACCA
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BLUE
CHIP
COLUMN
Perception is reality
This is why how financial planning fees are charged is important.
Rob Macdonald, Head of
Strategic Advisory Services,
Fundhouse
Rob Macdonald has held
several senior positions in
the investment industry.
At Fundhouse, he acts as
a consultant and coach
to financial advisors and
develops and facilitates
training programmes in
behavioural coaching and
practice management. Before
joining the financial services
industry, Macdonald was
MBA director at the UCT
Graduate School of Business.
He is co-author of the book
Rethinking Leadership and has
consulted, written and spoken
widely on a range of topics.
Macdonald has a Master’s
degree in Management
Studies from Oxford University
and is a CFP® Professional.
At the recent HUM SA conference,
Alan Smith, a London-based financial
planner and the founder of Capital
Asset Management, shared some
of the lessons he has learned in building his
business. His talk was entitled Failing my way to
success, reinforcing the reality that the path of
progress is inevitably littered with both success
and failure. Smith says that he started Capital
with a clear vision to do things differently and
wanted to challenge conventional thinking in
financial services.
One area where he did this is how Capital
charges fees. Smith wanted to separate advice
fees from a client’s asset base. In so doing, he is
agnostic as to where a client’s money is invested
or what financial products a client may have.
Capital looks after the client’s total financial
life for a fee. Smith saw this approach as giving
him a competitive advantage as there are so few
other financial planners who operate like this.
The simplest analogy for Smith’s approach is
the medical profession, where a client pays their
doctor for assessment, diagnosis, advice and if
necessary, a prescription. The client then pays the
pharmacist for the products they are prescribed,
even if there is an in-house dispensary, a
separate payment is made. As difficult as it may
be to envisage, the separation of advice fees
from product fees must be an important step
for financial planning to take its rightful place
as a fully-fledged profession.
In my recently released book, The 7 Pillars of
Financial Health – Partnering with a Professional to
Thrive, as the title suggests, I encourage people
to partner with a financial planning professional
to achieve financial health. A common response
from readers who do not have financial planners
has been that while they recognise the benefits
of partnering with a professional, they don’t like
the way financial planners are remunerated.
Sadly, many still perceive financial advice as
an incentive-driven, sales and commissionoriented
service. This is despite the incredible
work that so many financial planners do for
their clients.
Alan Smith has been able to counter this
perception, saying he doesn’t have to worry
about having conversations with clients about
the link between his fees and products. His fee is
for advice only. Whenever I have fee discussions
with financial planners, the principle of
separating advice and product fees is not
necessarily disputed. The obstacle that many
see to adopting this approach is how to charge
the fee. Smith has solved this problem by
charging a retainer fee to clients. He agrees on
the scope of work and service with a client and
the requisite fee the client will pay, irrespective
of what products the client may need.
Many financial planners are trying to go this
route by charging fees for work done, whether
for initial consulting with clients, drawing up a
financial plan or implementing advice. But the
real challenge is when it comes to ongoing
fees. Here financial planners have legitimate
concerns about having to invoice clients
monthly and chasing debtors who get into
arrears. However, product providers already
have sophisticated and efficient systems for
ensuring financial planners are effectively
remunerated on an ongoing basis.
Adapting these systems to enable financial
planners to stipulate rand-based retainer
fees to be paid to them regularly (monthly or
quarterly), no matter the product type, would
be a huge step in enabling financial planners
to charge clients ongoing fees in the way that
Alan Smith has shown is possible. It would also
help people recognise that financial planning is
a genuine and complex profession that focuses
on helping clients achieve true financial health,
rather than one that many still see as simply
selling financial products.
14 www.bluechipdigital.co.za

BEHAVIOURAL FINANCE | Books
BLUE
CHIP
The 7 Pillars of Financial Health –
Partnering with a Professional to Thrive
Blue Chip interviews the author of The 7 Pillars of Financial Health, Rob Macdonald.
What inspired you to write the book?
I have always enjoyed writing and as you know I write regularly
for Blue Chip and have previously co-authored a book entitled
Rethinking Leadership. About six or seven years ago, I began
facilitating behavioural coaching programmes for financial
planners and frequently got questions and queries about how the
insights and ideas from these programmes could reach a broader
audience. I thought the obvious way to do this was to write a book.
When Covid struck my wife had just signed up to do a PhD so I took
it as the perfect opportunity to begin writing the book.
Who do you want to read it?
When I initially began writing the book, I wrote it for the financial
planner. I am a firm believer that financial planning is a noble
profession that helps people make decisions about their life and
money. Until now, the focus of financial planner education has
been on the money and the technical aspects of the work, yet I
believe human skills are critical to sound financial advice. When I
took the book to my publisher Vindigo Press, they questioned why
I was limiting the audience to financial planners as they believed
with a little more work it would be appropriate for anyone who
was considering getting financial advice, or who worked with a
financial planner. The response from both financial planners and
the person in the street has been very positive. My hope is that
financial planners will see the book as useful for themselves and
their clients.
What do you think is unique about this
book?
I think you could put personal finance books
into three broad categories. First, those
that provide advice on technical aspects of
investing, financial and retirement planning.
Second, those that offer lessons about how
to handle your money, whether from stories
about people and their money or the author’s
life experience. Third, there are books that
focus on the person and their behaviour,
whether about life planning or informed by
insights from behavioural finance, which
educates us on our many biases and how they
influence our approach to money. My book is
probably closest to this third category, but I
believe is unique because it doesn’t only share
information but also focuses on applying
human skills, both intrapersonal and interpersonal, that are key to
influencing behaviour, which I believe is the greatest determinant of
financial health.
How would a financial planner find this book useful?
I hope it will challenge financial planners to look into the mirror and
perhaps think differently about how they go about their work. There
are also practical skills outlined in the book that financial planners
will be able to apply immediately upon reading the book. These
skills obviously require practice, but there is enough in the book to
help a financial planner who wants to become more skilled on the
human side of financial advice to practically implement new ways of
interacting with their clients.
How would a potential or existing client of a financial planner
find the book useful?
Firstly, to recognise that their financial health is not just about
money and that the financial planning process provides clients
with the opportunity to really think about what they want out of
life. Secondly, that a successful financial planning outcome has
more to do with our human skills, who we are and how we turn
up in the world, than how much knowledge one has about money
and finance. Thirdly, a key message in the book is that a client will
be better off working with a professional financial planner than
going it alone but that clients can also work on their human skills
to improve their financial planning outcome.
If there is one thing that you want the
reader to take away from the book, what
would it be?
Most importantly, I would like the reader to
enjoy reading the book. I love reading, but
not everyone does. So, if someone chooses to
spend some of their valuable time reading the
book, if nothing else I hope they will enjoy it. I
also hope that the book is a catalyst for anyone
who is hesitant about seeking financial advice,
to engage the services of a professional
financial planner. Finally, I hope that financial
planners will find the book a good resource
for their work and that clients, or potential
clients, recognise that financial planning is a
noble profession and that their lives will be
richer in all senses of the word by working with
a financial planner.
www.bluechipdigital.co.za
15

BLUE
CHIP
COLUMN
A New Horizon
The Three Piggy Bank system and the future of retirement planning in South Africa.
Kobus Kleyn, CFP®, Tax
and Fiduciary Practitioner,
Kainos Wealth
Kobus Kleyn has published
over 200 articles and authored
four books. He is a multiple
award-winning professional
and holds eight memberships
with professional associations.
His most recent awards were
lifetime achievements awards
from the FPI (Harry Brews),
The Million Dollar Round
Table (Top of the Table Life
Membership) and Liberty Group
(Life Membership) in 2021/22.
Retirement planning, at its core, is an
interplay of saving, strategising and
securing a future. As a Certified Financial
Planner® (CFP®), I have witnessed the
metamorphosis of these mechanisms in South
Africa. Today, we stand on the precipice of one
of the most transformative shifts in how we think
about our retirement: the introduction of the
“Three Piggy Bank” system.
The origin of the Three Piggy Bank concept
The term “Three Piggy Bank” system is nostalgic
in my heart. As a child, I had three piggy banks
where I would allocate my allowance. One for
immediate spending, another for short-term
savings and the third for long-term aspirations.
These piggy banks acted as early lessons in
financial planning, teaching me the importance
of balance between immediate desires and
long-term goals. Today, I see a reflection of that
personal history in the proposed legislation for
retirement planning in South Africa.
Understanding the Three Piggy Bank system
The proposed system divides retirement funding
into three separate but interconnected components:
1. Vested Component (Piggy 1). This “bank”
is dedicated to safeguarding all retirement
savings accumulated up to skrikkeljaar (29th
February 2024). Beyond this date, its growth
will be limited, except for some specific
scenarios. For instance, those related to
provident fund members aged 55 or above as
of 1 March 2021 will find more flexibility here.
2. Savings Component (Piggy 2). Starting
from skrikkeljaar 2024, this “bank” will receive
a third of all retirement contributions. It’s
designed with flexibility, aiming to serve as
a financial cushion. Annual withdrawals are
allowed from this pot, offering solace during
financial emergencies.
3. Retirement Component (Piggy 3). Acting
as the vault for most post-leap day 2024
contributions (two-thirds, to be precise),
this “bank” focuses on ensuring financial
security post-retirement. While its primary
purpose is preservation until retirement,
provisions will exist for early withdrawals
in specific situations, such as emigration or
job redundancy.
It’s essential to stress that the system is still
evolving. While the foundation is being laid,
the architectural details are in flux. Feedback,
discussions and negotiations are an ongoing
part of this process, making it a collaborative
effort. Cosatu’s involvement has been noteworthy.
Current discussions hover around a cap of
R25 000 for the maximum annual withdrawal
from the Savings Component in the initial
year. Yet, given the energy and direction of the
dialogues, I foresee this ceiling being revisited
and adjusted upwards soon.
Why this system holds promise
South African retirement planning is navigating
uncharted waters. Its blend of flexibility and
stability makes the “Three Piggy Bank” system
particularly promising. As a CFP®, I firmly
believe that this structured, yet adaptive
approach could serve as a bedrock for future
generations and help mitigate the taxpayer’s
load. The world is watching developments in
our pioneering work.
The ongoing negotiations and discussions
are typical when introducing a change of this
magnitude. They’re essential to refining and
enhancing the system, ensuring it meets the
diverse needs of our population. What’s crucial
is to embrace the evolutionary nature of this
process and to remain open to adjustments that
align with the best interests of South Africans.
In conclusion
The coming of skrikkeljaar 2024 is set to mark a
significant chapter in South African retirement
planning. The proposed system, deeply rooted
in a philosophy of balance, can potentially
redefine our approach to retirement. Drawing
inspiration from the simple financial lessons of
my childhood, this system promises immediate
financial relief and long-term security. I eagerly
anticipate its role in shaping a brighter, more
secure future for future generations.
16 www.bluechipdigital.co.za

COLUMN
BLUE
CHIP
Consider paying off
debt prior to retirement
Coming to the end of your working career requires a step up in terms of financial planning.
Florbela Yates, Head of
Equilibrium
Florbela Yates is the head of
Equilibrium in the Momentum
Metropolitan group.
Equilibrium is an independent
discretionary fund manager
that partners with financial
advisors to help them enable
their advice outcomes.
Equilibrium brings balance to
an advice practice by delivering
services and investment
solutions to help clients achieve
their defined investment goals.
You need to ensure you have sufficient
means to afford a comfortable
retirement. But as we know, despite
having a well-thought-out budget
and a tax-efficient financial plan, most South
Africans still retire without having saved enough
and often go into retirement with large debt
burdens. Research conducted by the South
Africa Reserve Bank and Stats SA shows that
South Africans spend 75% of their take-home
pay on refinancing debt, and one in three South
Africans retire with debt.
Planning for retirement takes time. If your
clients leave it until the day that they retire, it
will be too late. Some of the considerations that
your clients will need to think about are:
• How much money will I need to meet my
monthly financial needs?
• Will my emergency fund be able to
supplement any unforeseen expenses?
• Will sufficient cash be available to meet my
funeral costs or estate duty if I die prematurely?
• Is my current medical aid plan still going to
suit me and be affordable post-retirement?
• Do I want to leave a legacy for my family?
In addition to the above considerations, it
also depends on what stage your clients find
themselves in their retirement years, being
the initial retirement stage, the second stage
of retirement, or the third or final stage of
retirement. Regardless of the stage, additional
circumstances will affect each person differently
during each of these.
One of the aspects not considered is being
in debt in retirement. I asked a colleague
who spent much of his career as a valuator
and advisor to retirement funds how trustees
tend to guide their members. Rowan Burger,
head of strategic finance at Momentum
Metropolitan and a regular commentator on
regulatory and investment matters, says that it
starts with how you consider your house in your
retirement plan.
A house should not be considered a capital
asset but rather that it reduces the required
retirement income as you do not need to pay
rent. Banks extend debt to those who have
income to cover the debt. In retirement, you
don’t have a salary to cover the debt repayments.
But in the event you have debt at retirement,
should you pay it down immediately?
Rowan suggests this is the wisest course of
action. If you consider that a typical bond rate
is a bit less than the prime rate, then currently it
could be about 11%. Your investment return after
fees would then need to be around 13% to cover
the interest cost (as share growth attracts capital
gains tax). It is very difficult to get a return of
13% in the current environment, and at an older
age, you certainly do not want to be taking on
unnecessary investment risk. For that reason,
taking one-third of your retirement fund as a
lump sum (as clients are allowed to do) to settle
any debt is a good idea (and even more essential
for more expensive debt such as credit cards).
Debt must be paid down as quickly as
possible in the retirement savings plan. In future,
there will be less scope for cash at retirement to
bail out debt. This is a result of the introduction
of compulsory annuitisation, which can be
made worse by the two-pot retirement system
if clients consume their one-third lump sum
before they get there.
At Equilibrium, we bring improved balance
into your financial advice practice. Our unique
advice-led model portfolios are designed to
be efficient and optimised through market
cycles, so your clients stay invested and achieve
their investment goals. As an independent
discretionary fund manager (DFM), we enable
you to do what matters – spending more time
with your clients so that you can help them
make the right decisions for their retirement.
Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07)
is an authorised financial services provider (FSP32726) and part of Momentum Metropolitan Holdings Limited, rated B-BBEE level 1.
www.bluechipdigital.co.za
17

BLUE
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FPI | Financial Planner of the Year
Born to win
The Financial Planner of the Year Award was launched in 2000 and is the most prestigious award in the
industry. It recognises South Africa’s top CERTIFIED FINANCIAL PLANNER®. Meet the three 2023 finalists.
Zig Ziglar once said, “You were born to win, but to be a
winner you must plan to win, prepare to win and expect
to win.” The top three finalists for 2023 have planned
and prepared to win and wait in anticipation for the
FPI’s annual award ceremony on 14 November to discover who
this year’s winner is.
TOM BRUKMAN, CFP®
Retiremeant Specialist and Director, Chartered Wealth Solutions
How has the process of applying for the Financial Planner of
the Year Award benefitted or changed your business?
It has benefitted our business as it has allowed me to take a step
back from the day-to-day tasks of a financial planning specialist and
really work on the business itself. We have built better processes
around onboarding new clients as well as tweaking the financial
plans we present to clients.
I have built a deeper understanding of what best practice is and
I have started to create a documented succession plan document.
It is so important that our clients feel comfortable that their
financial plans do not rest on my shoulders alone.
What are the changes you would like to see in the financial
planning industry?
I would like to see it continue to professionalise and find its status
at the top end of all revered professions. I would also like to see
financial planning introduced at a school curriculum level so that
the importance of financial literacy is taught to younger people.
I believe that changes to legislation which set out who should
be calling themselves a financial planner will go a long way
in educating and protecting the public against compromised
practices and individuals. The CERTIFIED FINANCIAL PLANNER®
designation needs to be elevated through a combination of
legislation, education and marketing.
What are your long-term objectives?
I want to grow my business (clients and employees) and bring
in younger financial planners to mentor. This includes diverse
planners as we need our country’s demographic to start
reflecting more in our profession.
BIOGRAPHY
I am a CFP® financial planning specialist and director of Chartered Wealth
Solutions, Western Cape. I have nine years of experience as a financial planner
and have been in the financial services industry for almost 15 years.
From a relatively early age, I knew that helping people with complex
decisions was something that I loved to do and I thrived doing it. Knowing
this led me to the financial planning profession and the amazing career I
have. I started a business and office for our Western Cape arm in 2019 and
our business has been fortunate to grow each year since then.
Financial planning is nuanced and deeply personal. I have learnt that
being present and able to hear what my clients are grappling with is how I
can best connect and help. My clients rely on me in many aspects of their lives
and that is a privilege that I need to step up to every day. My clients share
details of their and their families’ lives with me which few other people know.
The emotion and value attached to money are well documented. Helping
people deal with these emotions around money inevitably leads to good
decisions and financial stability. I continue to improve myself as I believe
that our profession evolves every day. We hold a key role, not only in our
clients’ lives but in society at large and we must keep working hard to help
people achieve their goals.
18 www.bluechipdigital.co.za

FPI | Financial Planner of the Year
BLUE
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LARA WARBURTON, CFP®
Managing Director, Integral Wealth Management
How has the process of applying for the Financial Planner
of the Year Award benefitted or changed your business?
The application process for this competition has been thoughtprovoking
and has given me an opportunity to have a high-level,
strategic look at what we do and how we do it. Our business is only
seven years old, so our processes and tech support are designed for
the current regulatory framework. As an FPI-approved Professional
Practice, our business already meets the FPI practice management
standards, so we are fortunate in that we don’t need to implement
any changes because of the application process.
What are the changes you would like to see in the financial
planning industry?
One of the challenges we have as financial planners is our ability to
integrate data from the various product providers that our clients
invest with. With the new COFI bill reporting requirements, we
are going to be challenged with the collation of that information,
especially if a company deals with a broad range of providers,
which we do. In addition, many service providers are offering
amazing tools to help us better service clients and better manage
our businesses. If all the product providers could provide data
regularly, which could be integrated into the various service
provider tools, this would make our lives as financial planners
much easier, and it would significantly add to the client experience.
It would also foster greater client trust in our profession if we
were able to quickly access clear information on product fees,
which remain hidden or hard to access with some of the oldergeneration
products. This is a project we have already discussed
at the FPI-approved Professional Practice monthly meetings and
we are planning a project to further this objective.
The COFI bill is also going to place a greater onus on product
providers to make sure the products they create have a target
market, and it will require them to take greater responsibility for
the suitability of products. I welcome this as a positive change – I
still see clients who are being sold products that are not suitable
for their circumstances and are extremely complex to understand.
One of my concerns about our profession at present is the
number of young interns who are qualifying as professional CFPs®
and then being poached by the banks and product providers to
become call centre agents, which effectively closes their door to
becoming financial planners. It’s a great loss to our profession,
and often marks the end of any personal growth for these young
people who are attracted by the large salaries that corporates offer.
What are your long-term objectives?
Integral Wealth is structured differently from many of the other
independent companies in that we have no restraints on trade,
and we believe that in many instances the client-advisor relationship
is stronger than the client-company relationship. We understand that
when an advisor leaves our business, he or she will take most of their
clients. We have a robust and scalable practice management model,
supported by excellent systems.
I hope that we will attract advisors to join our company, to better
scale what we offer and spread the costs across a broader base of
advisors. Our advisors are incentivised to run their own businesses
within our company and there is no limit to their earnings potential.
We also want our advisors to own shares in our company and
contribute to the strategy and growth of the business. Financial
planning is one of those careers that gives advisors a lot of freedom
to live the lives they want and this is also the example we want to
set for our clients.
Integral Wealth has employed three ASISA interns over the past
three years, who we are encouraging to become CFPs®. Two of
them are now completing their post-graduate diplomas in financial
BIOGRAPHY
My career in financial services began at Investec in its retail sales division
and a year later I joined RMB Unit Trusts to start their unit trust business.
Seven years later, I was sales and marketing director with a one-year-old
second child and could not keep up with the travel requirements. I joined
RMB International as the head of South African distribution. Two years later, I
joined a client of mine in her independent financial planning practice, where
we focused a lot on offshore investing as exchange controls relaxed. I then
joined Imara Asset Management as managing director of their South African
investment and wealth management business.
Seven years ago, some colleagues and I started Integral Wealth. Our primary
business focus is to always put our clients first as they are the lifeblood of
our business and to build long-term relationships with all stakeholders of
the company. A passion of mine is staff development. We are always on
the lookout for advisors wanting to build their client base and become
shareholders in Integral Wealth; strategic input is essential to our growth.
www.bluechipdigital.co.za
19

BLUE
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FPI | Financial Planner of the Year
planning on our bursary scheme and we have registered them as
representatives on our licence. They have started to see their own
clients under supervision and are both excited to become financial
planners, hopefully at Integral Wealth. I take great pleasure in
upskilling them, and we plan to continue this work going forward.
NOEL DE KOCK, CFP®
Executive Financial Planner, Nel & Associates
schools, clinics, hospitals, SAPS and the Department of Correctional
Services, both as an FPI member and in my personal capacity.
I have seen how my skillset and knowledge as a CFP® have
radically changed the lives of those who typically would not
have access to a professional. My long-term goal is to both
encourage and mobilise other professionals to do the same,
as well as increase the scope and scale of how I continue to
empower communities in our great country.
How has the process of applying for the Financial Planner of
the Year Award benefitted or changed your business?
My intention in applying for the award was to, primarily, ensure
that we’re doing right by our clients. We wanted to objectively
assess not only our approach to financial planning, but also
every other aspect in our practice that affects our clients; this
includes our values and ethics, our internal processes and the
way we use technology and coaching methods to better serve
them and their families. And what better way to stress-test this
than to have it assessed against the FPI’s practice standards. As
a continual learner in our profession, we also wanted to see how
we rank against our peers and learn from their best practices.
I’m naturally overjoyed to find out that we’re on the right track
in building a business that is sustainable, ethical and has our
client at the very centre.
What are the changes you would like to see in the financial
planning industry?
I would love to see the continued reform of financial planning
away from being seen as an industry towards being seen as a
profession. I believe that this would raise the bar with regard
to advice and ethics across the board and root out those who
may not have a client’s best interests at heart. What a day it
would be when every financial planner aspires to attain the
CFP® standards of ethics and competency as a baseline and
the bare minimum.
I would also like to see more professionals involved with
pro bono work. I believe that we as financial planners (not
just CFPs®) could lift families and entire generations out of
poverty. We need to create a way for communities to access
our knowledge and expertise. The future really is in our hands.
What are your long-term objectives?
I’m passionate about creating a future for my kids within our
amazing country. To care about their futures means that I need
to care about the future of the children in our communities
that they’ll grow up with. The question I asked myself was: how
do I, personally, care for those children? I can’t sit with every
parent. I can, however, impact the key role-players that serve
our communities, namely its teachers, police and nurses. If I can
empower them and impact their futures, the knock-on effect
should be the upliftment of the communities around them.
This has spurred me on to give a large part of our time to pro
bono initiatives where I present financial planning workshops at
BIOGRAPHY
I see my main job as being a loving husband to my wife, Lara, and a proud
daddy to my two boys and little girl. This passion extends to my clients,
who I see as part of my family. A motto that keeps my practice centred is:
“We’re all things to some people, not all things to all people, and we’re very
specific about who those some people are.” Our clients are those whose
values and ethics are aligned, who fully buy into the way that we conduct
our business, and who want to walk a life-long journey with us. They
become part of a family. We strive to know our clients deeply and specialise
in helping them understand themselves and to see the big picture in their
lives. We then use professional knowledge in tax, retirement, investment,
risk and estate planning to create a long-term, integrated financial plan
that helps them attain the future they want for their family. Although I
hold a post-graduate diploma in financial planning from Milpark and am
a proud CFP® professional, I’m very curious by nature, and love acquiring
knowledge from a vast range of topics.
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BLUE
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FPI | Research
The power of professional
financial planning
CFP® professionals benefit their clients holistically in ways beyond growing their wealth. Clients realise this, as
shown in the FPI and Financial Planning Standards Board’s Value of Financial Planning Research 2023 study.
A
significant study by the Financial Planning Standards
Board (FPSB) shows that South Africans who work with
CERTIFIED FINANCIAL PLANNER® (CFP®) professionals
have a better quality of life, enjoy greater financial
confidence and resilience and are more satisfied with their financial
situation than people who have non-CFP® financial advisors or
who do not use an advisor.
The FPSB Value of Financial Planning Research 2023 study
took the form of an online survey of 15 332 respondents
across 15 countries in February 2023 by independent research
company MYMAVINS.
The research had three objectives:
1. Lead the conversation about financial planning.
2. Measure the benefits of CFP® professionals.
3. Understand next-generation clients.
The study examined the value of financial planning for consumers
while debunking myths surrounding financial planning and
analysing the future of the profession.
The South African survey, undertaken in conjunction with the
FPI, involved 1 005 respondents. To be included in the survey,
respondents had to be over 25 years of age and earn over
R1-million a year or hold more than R600 000 in investable assets.
The sample included both advised and unadvised consumers.
Advised consumers (519 respondents) were those who were
currently working with a financial planner, who sought financial
advice as needed or who had received financial planning
advice in the past three years. They included 105 clients of CFP®
professionals. Unadvised consumers (486 consumers) were those
who had never received advice from a financial planner or had not
received advice in the past three years. Table 1 gives a breakdown
of employed versus retired respondents.
KEY FINDINGS
The survey introduced the FPSB Value of Financial Planning Index,
a quantitative measure of the financial and non-financial value for
consumers of financial planning across four metrics: quality of life,
financial confidence, financial satisfaction and experienced value.
The index measures differences between those who do not
use a financial planner and those who do (scores range from 0 to
100). The CFP® Professional Delta is the positive difference a CFP®
professional has on the lives of clients.
1. Quality of life. Non-financial personal assets are the key
pillars of a “good life”. They include health, personal connections,
capabilities, purpose and life satisfaction. A CFP® Professional
Table 1: Employment status of respondents.
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FPI | Research
BLUE
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Graphic 1: Value of financial planning.
Delta score of +5 showed that consumers who worked with
a CFP® professional experienced a better quality of life and
greater life satisfaction (72%) compared with their unadvised
counterparts (67%).
2. Financial confidence. Measuring financial confidence included
a personal assessment of security and the ability to achieve goals
and manage risks. A CFP® Professional Delta score of +4 showed
that consumers who worked with a CFP® professional felt far
more confident about their finances (61%) than those who were
unadvised (57%).
3. Financial satisfaction. This metric measured consumers’ personal
satisfaction with their financial situation, including their spending
behaviour, financial risk management, ability to adhere to a financial
plan and overall wealth. A CFP® Professional Delta score of +4 showed
that consumers who worked with a CFP® professional reported higher
levels of satisfaction (54%) than those who were unadvised (50%).
4. Financial planning experience. This measured the directly
attributable value of the experience of financial planning and
working with a financial planner, as well as tangible financial
benefits such as financial gains and meeting critical financial
needs. A CFP® Professional Delta score of +1 showed that clients
who worked with a CFP® professional enjoyed a better experience
(75%) than those who were advised by other professionals (74%).
TAKEOUTS FOR CFP® PROFESSIONALS
Of the 105 respondents who used a CFP® professional:
• 74% agreed with the statement, “I am successful in sticking with
my financial strategies” versus 64% of unadvised respondents.
“Trust, honesty, integrity and loyalty no money can buy! Those are the most important foundations my
relationships are built on. To have a financial advisor with those qualities is the best investment bonus ever!”
Client of a CFP® professional | Female, 58, Gauteng
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• 84% agreed with the statement, “I am satisfied with my dayto-day
cash flow and spending confidence” versus 73% of
unadvised respondents.
• 80% agreed with the statement, “I am satisfied with risk
management to protect my wealth” versus 70% of unadvised
respondents.
• 94% said the services provided by their planner were meeting
their needs.
• 86% agreed with the statement, “My CFP® professional has
supported me to make the best financial decisions I can”.
• 88% agreed with the statement, “My CFP® professional has
helped me manage financial risks in my life”.
BENEFITS BEYOND MONEY
The survey underscored the benefits the clients of CFP®
professionals enjoy beyond purely financial ones:
• 80% agreed that financial planning helped fulfil life dreams.
• 65% said financial planning positively impacted their family life.
• 83% felt they could cope better when faced with health issues.
• 62% reported that financial planning positively impacted their
mental health.
DEBUNKING MYTHS ABOUT FINANCIAL PLANNING
The survey puts to rest several popular myths about the profession:
Myth #1: Financial planning is only for the rich. Fact:
Quality of life, financial confidence and financial satisfaction see
improvement in the advised, even those with lower incomes.
Advised respondents earning less than R1.25-million a year
showed higher scores on all metrics compared with unadvised
respondents in this income group.
Myth #2: Financial planning is only needed at retirement.
Fact: Advice has benefits to quality of life, financial confidence and
financial satisfaction at all ages. Almost half of Gen Y respondents
(47%) cited buying a property as their top trigger for seeking
financial advice.
Myth #3: Financial planning costs more than its worth. Fact:
The experienced value of financial planning delivers benefits that
far outweigh the fees clients pay. Almost nine in 10 advised clients
(87%) agreed that financial advice had brought more value than
it costs.
Myth #4: Advisors lack objectivity. Fact: Unadvised consumers
have concerns about finding a trustworthy financial planner. However,
the evidence shows that advised consumers overwhelmingly trust
their advisors to put their interests first – 94% of respondents
using a CFP® professional said they trusted their planner and
87% valued their planner for being independent.
YOUNGER GENERATIONS
Of the 1 005 respondents in the South African survey, 508 were
Generation Y or “Gen Y” (born between 1981 and 1996), 284
were Generation X or “Gen X” (born between 1965 and 1980),
and 213 were Baby Boomers or “BB” (born prior to 1965).
“Having a financial planner gives peace of mind because they help you establish goals and
achieve them. It also reduces the risk of losing money because you know the decision you are
making is the best one. Since you are helped by a professional, you have confidence.”
Client of a CFP® professional | Female, 28, Gauteng
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Gen Ys are proving to be highly engaged with their finances
and are open to the value financial planning can bring. Now
established income earners, Gen Ys are on the verge of receiving
unprecedented levels of intergenerational wealth via inheritance
or gifts.
Almost half of Gen Ys (47%) and a similar percentage (43%)
of Gen Xs already have or are likely to come into an inheritance
or major financial support – 32% of Gen Ys and 44% of Gen Xs
expect to do so in the next five years, and for some, the amounts
will be significant. Over half of Gen Ys (54%) said they would
turn to a professional advisor for help with their inheritance
as opposed to obtaining help from family or friends or using
other sources.
The survey found Gen Y is different from older generations
in the following respects:
• While face-to-face advice is a top choice (73% of Gen Y versus
82% of Boomers), Gen Ys are significantly more likely to turn
to digital channels to manage their finances (77% of Gen Y,
70% of Gen X and 67% of Boomers are using apps or websites
to help with budgeting, investments or credit).
• Gen Y is more hands-on, having greater experience with
direct investing: 19% of them had taken up direct online
trading since 2020, with a further 13% already trading before
the pandemic and continuing to do so.
• Gen Y prioritises socially responsible investing: over 90% of
Gen Ys prefer to invest in companies that have some purpose
beyond profits, higher than Boomers (seven in 10).
• Gen Y is more interested in investing in novel, non-traditional
asset classes. Crypto assets are more popular among younger
generations: 40% of Gen Y respondents claim to currently
have some crypto assets and 35% would consider it. This
compares with 44% of Boomers who would not even consider
it. However, Gen Ys are under no illusions about the risks crypto
presents: 60% of them agreed that it is a “very risky investment”.
PERCEPTIONS AND BARRIERS TO ENTRY
Clients who have interacted with CFP® professionals are highly
likely to recommend them to others. The Net Promoter Score
(the difference between promoters and detractors) for CFP®
professionals is significantly higher than for non-CFP® advisors:
+34 versus +28.
The CFP® designation is widely recognised even among
respondents who do not use an advisor (55% of them were aware of
it). Of those, 74% agreed with the statement “The CFP® designation
is the only globally acknowledged mark of professionalism for
financial planners”.
So, what are the ongoing barriers to entry, and what would
trigger someone to see a planner? Key reasons for not using a
financial planner were:
• Finding someone I could trust. (Gen Y 34%, Gen X 35%, BB 45%)
• I feel it is too expensive. (Gen Y 32%, Gen X 38%, BB 40%)
• Lack of urgency, I will do it when I am older. (Gen Y 23%)
• I don’t know where to start. / It’s too complicated or confusing.
(Gen X 24%)
• Finding and assessing a suitable planner. (BB 27%)
Key triggers were:
• Buying a property. (Gen Y 47%, Gen X 24%, BB 13%)
• Coming into a substantial sum of money. (Gen Y 37%, Gen X
48%, BB 53%)
• Approaching retirement. (Gen Y 34%, Gen X 50%, BB 41%)
• Have more financial control/grow wealth. (Gen Y 36%, Gen X
38%, BB 47%)
• Financial distress/bankruptcy or debt. (Gen Y 37%, Gen X 40%,
BB 31%)
CONCLUSION
Money is a source of stress for many people. For some, it can take a
personal toll, affecting their quality of sleep and even their mental
health. The current economic climate isn’t helping. The global
economic outlook is strained, with stubbornly high inflation,
rising interest rates and living costs squeezing family budgets.
The good news is that professional financial planners can enable
people to take control of their financial lives, empowering them
to feel more confident and stay on track to achieve their goals.
Lelané Bezuidenhout, CFP®, CEO of the FPI, and Dante de
Gori, CFP®, CEO of the FPSB, say the survey endorses the value
of professional planners in today’s uncertain world.
Bezuidenhout says, “Obtaining professional financial advice
from a CFP® professional is important as they have specialised
knowledge and expertise in various financial planning areas.
CFPs® create personalised financial plans, helping clients achieve
their financial goals, manage risks, optimise tax strategies and
operate with a fiduciary duty to prioritise the client’s best
interests. The findings of this study show that consumers should
entrust their financial planning to a professional, and more
specifically, a CFP® professional.”
De Gori adds, “In this current volatile climate, where unexpected
events can send shockwaves through the global economy, the
role of financial planning in general and of CFP® professionals
in particular has become even more critical in empowering
consumers to make informed financial decisions and achieve
their long-term goals while enjoying a better quality of life. The
findings in this global study illuminate a compelling reality:
the immense value that CFP® professionals bring in supporting
clients’ financial needs amid times of uncertainty, reinforcing
the reputation of the CFP® certification as the global symbol of
excellence in financial planning.”
“He is a certified financial advisor with ongoing studies, knowledgeable in keeping
up to date with compliances, market performance, and products.”
Client of a CFP® professional | Female, 65, Western Cape
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CLIENT ENGAGEMENT | Behavioural finance
Behavioural biases: unravelling
our irrational investment habits
Amid market volatility, currency fluctuations and a climate of uncertainty surrounding
South Africa’s growth prospects, it becomes increasingly important to explore the
common biases that can significantly impact financial decision-making.
Biases, inherent to human psychology, often influence
our judgements and actions in ways that may not align
with rational economic principles. These biases become
particularly relevant as we navigate the challenges posed
by the current landscape. From Eskom’s persistent power supply
issues to concerns over corruption and political uncertainty,
these factors have contributed to a loss of faith in the system by
many investors. By understanding and addressing these biases,
individuals can strive to make more informed financial choices,
mitigate risks and potentially navigate turbulent market conditions
with greater resilience.
In this article, we look at five of the most common behavioural
biases that influence an investor’s decision-making.
1. Confirmation bias
Let’s start with one of the most common biases in finance –
confirmation bias. This bias leads us to seek information that
confirms our existing beliefs and ignore evidence that challenges
them. An investor might have a strong belief that a particular
industry or company is poised for success, leading them to
selectively consider news and reports that support this belief.
Buy when the blood is
running in the streets.
Unfortunately, this bias can hinder objective decision-making
and prevent investors from considering alternative perspectives.
One example of a well-known share that has experienced
confirmation bias in the past is Steinhoff International Holdings
N.V. (Steinhoff), a multinational retail holding company based in
South Africa.
Before the revelations of accounting irregularities in late 2017,
Steinhoff was considered one of South Africa’s most successful
and promising companies. It had a track record of rapid expansion,
acquiring various retail chains globally and gaining the trust of
many investors.
Confirmation bias became evident as many investors and
analysts held a positive view of Steinhoff’s financial performance
and growth potential by focusing on all the good news. They
focused on the company’s consistent revenue growth, its highprofile
acquisitions and the apparent strength of its balance sheet
which led to continued buying and an increase in its share price.
However, when the accounting irregularities were exposed, it was
revealed that Steinhoff had manipulated its financial statements,
leading to a significant loss in market value and a collapse in investor
confidence. This revelation highlighted how confirmation bias had
influenced investors’ perceptions of the company.
Despite analysts pointing out warning signs and red flags,
such as complex and opaque financial structures, and even being
laughed out of court, some investors chose to ignore or downplay
these indicators that contradicted their optimistic viewpoint.
They selectively interpreted positive news and disregarded or
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Chart 1: Steinhoff Historical Share Price
Source: Sharenet.co.za
undervalued information that highlighted potential risks or
inconsistencies in Steinhoff’s financial reporting.
The example of Steinhoff demonstrates how confirmation
bias can cloud judgement and lead investors to overlook critical
information that contradicts their preconceived notions. It serves
as a cautionary tale about the importance of conducting thorough
due diligence and considering diverse perspectives when making
investment decisions.
2. Anchoring bias
Anchoring bias refers to the tendency to rely heavily on the first
piece of information encountered when making subsequent
judgements or decisions which can influence the valuation of
assets. For instance, if an investor perceives a particular stock’s fair
value to be at a certain level, they might anchor their expectations
to that value, even in the face of new information that suggests
a different valuation. A good example of anchoring bias is house
prices.
A closer to “home” look at behavioural anchoring bias and
the influence of house price anchors. When individuals are in the
process of buying or selling a house, they often encounter an anchor,
such as the initial asking price, the listed price or the most recent sale
price of a similar property. This anchor serves as a reference point
that influences their perception of the property’s value.
Assimilation Effect. In this case, individuals tend to adjust their
perception of a house’s value closer to the anchor. For example, if
a house is listed at a high price, potential buyers might consider it
to be a premium property, even if it lacks certain desirable features
or is overpriced compared to similar properties in the area. This
assimilation effect can lead to buyers overestimating the value of
a property and making offers that are closer to the anchor price.
Contrast Effect. On the other hand, the contrast effect occurs
when individuals adjust their perception of a house’s value away
from the anchor. If a house is listed at a significantly lower price
than similar properties in the area, potential buyers might perceive
it as a bargain or a distressed sale. This contrast effect can lead to
buyers underestimating the value of a property and potentially
making lower offers than they would for similar houses with higher
anchor prices.
The anchoring bias in the housing market is further exacerbated
by factors such as limited market transparency, subjective valuation
methods and emotional attachments to properties. These factors
can reinforce the influence of the initial anchor and make it more
challenging for buyers and sellers to objectively evaluate the true
value of a house.
Another well-known example was during the launch of the iPad
when Steve Jobs defied the experts’ prediction of a $999 price
tag and surprised everyone with an actual price of $499, causing
people to be amazed by its fairness due to the phenomenon of
placing greater emphasis on the initial information encountered.
In the investment world, a common scenario arises when
investors accumulate an overweight position in shares because
of their current or past employment, typically through a
company’s share incentive scheme. However, over time, there
may be a growing need to diversify these shares. Unfortunately,
investors often fall into the trap of anchoring their expectations
of future share prices solely based on previous highs or historical
performance. They maintain the assumption that the shares will
eventually reach or surpass those previous levels, disregarding
changing market conditions or other factors that can impact the
share price.
Consequently, they tend to only consider selling when the
shares breach or approach this specific threshold. This situation
raises a critical question about whether potential alternative
opportunities have been overlooked, irrespective of whether the
share price may eventually rebound to its all-time highs.
3. Herding behaviour
Humans are social creatures, and this is evident in financial markets
through herding behaviour. This bias describes the tendency to
follow the crowd and make investment decisions based on what
others are doing and is often seen during periods of market
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euphoria or panic. When everyone is investing in a particular
asset or sector, individuals may feel pressured to join in, often
overlooking careful analysis of the investment’s fundamentals.
Research showed that there is an 80% correlation ratio between
Bitcoin prices and Internet searches for the asset. (The table below
shows a snapshot of Bitcoin price vs Google searches for Bitcoin
over a two-year period.)
upside. A discerning approach, grounded in thorough research
and analysis, is essential to identify attractive investments with
strong fundamentals and promising growth prospects.
By capitalising on mispricing caused by herding behaviour,
investors have the potential to take advantage of this by buying
assets with depressed prices. Baron Rothschild, a prominent
financial figure, once famously remarked, “Buy when the blood
Chart 2: Prices for Bitcoin vs online searches for the asset
Source: Yahoo Finance, Google Trends
On the home front amidst negative press triggering a collective
exit of investors from South African-incorporated (SA Inc) stocks,
herding bias emerges as investors follow the crowd. However,
caution is warranted as this bias might lead to missed opportunities.
Certain companies offering exceptional value and significant
upside potential could be overlooked. By blindly succumbing
to herding bias, investors risk missing out on undervalued
opportunities that could yield favourable returns and significant
is running in the streets.” By invoking the imagery of chaos and
distress, Rothschild underscores the contrarian nature of successful
investors who possess the courage and insight to act when others
are fearful.
4. Recency bias
This bias occurs when we rely on recently available information
when making decisions, rather than considering the entire range
Table 1: Examples of well-known SA Inc stocks trading on single-digit price-earnings (P/E) ratios as end March 2023
End March 2023 Over a five-year period (April 2018 to March 2023)
Company name Current P/E Minimum P/E Maximum P/E Average P/E
SAPPI 3.7 2.2 26.1 6.9
ANGLO AMERICAN PLATINUM 4.2 4.2 29.5 15.3
KAP 4.6 3.6 35.4 13.1
SASOL 5.0 2.8 170.6 25.8
STANDARD BANK GROUP 8.3 5.8 13.5 10.1
Source: Refinitive
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Table 2: Demonstrates how last year’s asset class winners are not in the top quartile the following year
Source: Refinitive
of relevant data. For example, if a particular asset class has been
performing well recently and receives extensive media coverage,
investors may allocate an undue amount of their portfolio to that
asset, neglecting the diversification principle.
Similarly, investors often follow top-performing funds by
electing to switch in after a much-publicised run of strong
performance relative to peers, frequently selling low and buying
high as a result. Recency bias is often heightened at points of
volatility and when investors are anxious. An example on the
home front could be investors looking to externalise their
investments at any cost in the aftermath of the US accusation
that Russia received arms in South Africa, with the Rand crashing
to a new record low of R19.83/$.
5. Home bias
Home bias refers to the tendency of investors to exhibit a
preference for investing in their home country’s assets, leading
to an overallocation of investments domestically compared to
offshore. In the context of South Africa, we frequently observe
opposite home bias where investors show a preference for
investing offshore due to recent strong offshore returns and
negative sentiment towards our home country.
Between January 1995 and October 2007, a notable divergence
occurred between the developed and emerging markets. In the
first phase, from January 1995 to March 2000, the developed
world witnessed a growth-driven bull market known as the
dot.com bubble, fuelled by a surge in investments in Internet
and technology stocks. However, the hype surrounding start-ups
The question that lingers is: what
lies ahead for South Africa?
reached its peak in March 2000, leading to a subsequent decline in
the S&P 500, which fell by 49% from March 2000 to October 2002,
and which for most of the 2000s remained negative for investors.
However, at the same time, domestic investors benefitted from
an unexpected windfall from 2003, earning bumper returns over
the next four or five years as the following chart shows. Given
the dire economic recession, high interest rates and political risk
in our country at the time, many investors did not benefit from
this surge to the extent they could have and it would have taken
a courageous investor to be fully invested in South Africa over
this period.
The question that lingers is: what lies ahead for South Africa?
Will the current negative trend persist or are we on the verge of
a resurgence reminiscent of the period between 2002 and 2007?
Changing your thinking
To foster more rational thinking and overcome behavioural biases,
several techniques can be employed:
Decision-making frameworks. Implementing structured
decision-making frameworks, such as setting investment criteria,
defining risk tolerance and adhering to a disciplined approach, can
help reduce the influence of emotions and biases.
Education and awareness. Understanding the various
behavioural biases that affect investment decisions is the first
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Chart 3: JSE ALSI (in ZAR) vs S&P 500 (in USD) over period January 1995 to October 2007
Source: FE Analytics
step towards mitigating their impact. Educating oneself about
cognitive biases helps develop self-awareness and enables
investors to recognise their own biases in real-time.
Seeking diverse perspectives. Actively seeking out diverse
viewpoints and opinions, engaging in constructive debates and
considering alternative scenarios can help challenge one’s own
biases and promote more well-rounded investment decisions.
Regular self-reflection. Engaging in regular self-reflection
allows investors to critically evaluate their past decisions, identify
patterns of bias and make necessary adjustments to their
investment approach.
Professional guidance. Collaborating with financial advisors
or professionals who are trained to navigate behavioural biases
can provide valuable insights, accountability and a more objective
perspective on investment decisions.
Conclusion
Behavioural biases present significant challenges for investors
and individuals seeking to make prudent financial decisions. The
flow of money moving offshore appears to be partially influenced
by a combination of these biases. However, by recognising
and understanding these biases, particularly during times of
heightened volatility or extreme market conditions, we can
make well-informed investment choices that consider both the
challenges and opportunities, locally and globally.
Nicole Loker, Investment Specialist, Fundhouse
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INVESTMENT | Offshore
INTERNATIONAL
Is it different this time?
The hype around investing offshore is back at the euphoric levels of the mid-90s.
Offshore investing trends in the mid-1990s differed
hugely from today. Fund choices open to South
Africans extended to no more than five options, yet
almost every application form received allocated the
funds, whether on a recurring premium basis or as a lump sum, to
asset swap/feeder funds*.
Gradually as the relaxation of exchange control limits began,
investors had the option to use their newly introduced lifetime
offshore allowance limits to invest directly offshore, in hard
currency (US dollar, British pound, euro or Swiss franc) and access
assets around the world. Investors or their heirs could redeem their
investments anywhere in the world.
These investments could physically leave South Africa via
perfectly legal means and would be held in jurisdictions generally
within the Channel Islands. The factor which attracted many
investors to this option was protection against political risk, which
was an important consideration but not the only reason to bear in
mind when investing offshore.
The value of a well-diversified investment portfolio cannot be
overstated and the fact that both the markets and the currency
could be cyclical also need to be considered in planning when and
where to invest offshore. If not, when these cycles go against you,
many investors make poor decisions driven by fear, when patience
and resilience are required.
It is however always so easy to reflect on these issues in
hindsight, forgetting the factors in play at that specific time –
especially in terms of political uncertainty. And while we are
often reminded that past performance shouldn’t be an indicator
of future growth, it is so tempting to invest in all the areas where
money has been made most recently, as we often then feel like we
are the only ones missing out on this opportunity.
And while we as South Africans have previously been excluded
from accessing these global economies, markets around the world
have experienced amazing returns since the early 1980s. Looking
at these hard currency returns and for so long having been unable
to participate in this bull run, it is no surprise that South African
investors jumped in boots and all. And just to add more incentive,
the depreciation of the rand over that previous decade was yet
another bonus when considered over and above the hard currency
returns achieved. For example, the Cape Town Olympic bid to host
the 2004 Olympics was based on an exchange rate of 25/1, and
investors therefore expected a rand depreciation of at least 10%
per annum going forward.
Looking back, you could easily argue that the timing of the
relaxation of exchange control was a perfect storm. The 18-year
bull run in offshore assets had created an expensive market, and
the commodity super-cycle driven primarily by the incredible
demand for commodities from China resulted in significant
benefits for South Africa as a resource-based economy. In line with
this, we saw the rand appreciate from a level of just over R14 to the
US dollar to just below R7 over the following decade.
This impact also saw the South African market rally with returns
of around 13% per annum from the turn of the century up until
2013, while offshore markets ran flat over that period with the
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The value of a well-diversified
investment portfolio
cannot be overstated.
added impact of the subprime crisis of 2008. We then once again
witnessed offshore markets rally hard post the financial crisis
over the proceeding 12 years and with a drop in demand for
commodities, the South African market and the rand were under
pressure once again.
At this point, you may feel more confused and uncertain than
before you started reading this article and leaving your money in
the bank may seem like a pretty good idea. Alternatively, simply
invest in the perceivably low-risk property market – at least you
can see the asset and many investors have become very wealthy
over the last 30 years plus. How many times at a braai have you
heard someone bragging about buying a property and flipping it
a year later, doubling their money?
Although property is a very good asset class to include in a
diversified investment portfolio, how often do we consider the
concept of liquidity (a reality that hit home during the KZN riots),
the fact that in the current environment of heightened political risk
and focus on increased taxes aimed at the “easy targets”, the hassles
and costs associated with managing those properties and finally
the very real risk associated with legislation that clearly favours
the tenant over the landlord, making it very hard to get rid of nonpaying
illegal occupants?
But fear not as there are solutions to manage these daunting
decisions. While we would like it to be as simple as possible the
fundamentals remain fairly aligned, they will inevitably differ
from person to person and in many instances not simply based
on objective financial planning but will also include some very
emotive issues. Nevertheless, the ultimate way to establish financial
independence and security in retirement is to invest across a
diversified portfolio of assets. Yes, that’s the boring route, and
you will never be able to be the person around the braai with the
legendary tale of making quick money, but you will be the person
who will be at the braai every year while the “big talkers” may not.
Financial advice is key
While my role focuses purely on direct offshore investment and
the methods to simplify the tax and estate planning implications
of holding funds directly abroad, I am not naive enough to think
that this is the solution for all your funds and a one-way ticket
to inflation-beating returns year on year. I do however believe
that when constructing a diversified portfolio, you must be
aware of some of the risks mentioned above. It’s also important
to consider your overall assets and not just your discretionary
fund when deciding what portion of your funds you should look
to invest abroad.
Once you have established, with the guidance of your financial
advisor, what percentage of your portfolio should be invested
offshore in line with your means and objectives, don’t underestimate
the additional benefit of having those funds held physically abroad.
These may never be required in your lifetime, but the chances of
them being redeemable offshore for your children or grandchildren
one day are a reality.
In closing, to answer the question of it being different this time, the
risks associated with markets will continue to be cyclical and the
rand will remain volatile. However, the big question is how high
the political risk barometer is and what impact it will have on our
markets and currency going forward.
It would be so easy to list these issues, but scaremongering
should not cloud your decisions into focusing on one option such
as putting everything offshore. We also need to be realists, as hard
as that may sometimes be, and at the very least remain openminded
about how these issues will impact our beautiful country
in the future. While, like you, I hope that things will improve and
we as South Africans will once again show our resilience in the
face of adversity, use the options available to offer some form of
protection, because this time it may well be different.
Sheldon Holdsworth, Old Mutual International Regional
Offshore Specialist
*Asset swaps arise when a company uses its offshore investment allocation on behalf of clients to invest funds across a much broader range of assets around the world. These funds are ultimately only
redeemable in South African rand and cannot be paid out abroad.
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INVESTMENT | Economy
The increasing popularity
of share buybacks
Schroders’ research shows that buybacks became more widespread in 2022, with
some markets narrowing the gap with the US, where they’re most common.
Kondi Nkosi, Country Head
South Africa, Schroders
Companies on the S&P 500 index spent $3.9-trillion
buying back their own shares in the five years to 2022.
This surpasses the $2.5-trillion they paid out in dividends
over the same period. Buybacks divide opinion but one
thing is clear: corporate buying has provided an incremental
source of demand for US shares.
Our new research confirms that buybacks continued to be more
popular in the US than in other major markets in 2022. But that
gap narrowed – with their use becoming more widespread in the
UK, Europe and Japan. Buyback activity will always fluctuate over
time, and one year doesn’t make a trend. But as a tailwind for equity
demand and a mechanical boost for earnings per share numbers,
their increased popularity outside the US is worth keeping an eye on.
Why buybacks are a divisive subject
Share buybacks divide opinion. On the one hand, they are a way
for company management to return excess cash to shareholders
in a way that is less binding than a dividend increase. And they
can be more tax efficient for investors as capital gains are often
taxed at a lower rate than income. On the other hand, they
are open to criticism about being open to manipulation by
management. The same earnings divided by a smaller number
of shares leads to an increase in earnings “per share”. If executive
remuneration is naively linked to earnings per share growth
this could be enriching management at the possible expense
of shareholders.
Some also argue that they are a way for management to
prop up an ailing share price, again potentially to boost their
compensation. But the counterview is that if management
believes their shares to be undervalued then this would be the
best time to buy back their shares. An increase in buybacks may
also signal an absence of profitable investment opportunities
for the company concerned. So, rather than a positive, they
could be interpreted as a negative. One indication of the
strength of feeling about buybacks is that US policymakers have
recently introduced a “buyback tax”, forcing companies to pay
tax amounting to 1% of the value of any buybacks. This came
into effect on 1 January 2023.
US still leads buybacks, but UK and other markets closed the
gap in 2022
Based on our calculations, 45% of large US companies bought back
at least 1% of their shares during 2022 (net of any shares that were
issued). This is broadly in line with the average of the three years
before Covid (buyback activity dropped dramatically in 2020,
distorting any calculations encompassing this period).
More unusually, UK companies almost matched the US on this
basis last year (Figure 1). The proportion of UK companies buying
back at least 1% of their shares soared to a record high in 2022.
There has also been a rise in buyback activity among Japanese,
French and German companies. Activity remains limited in
emerging markets. In Japan’s case, many companies are valued
at less than the book value of their shares and are hoarding
cash. With regulators keen to see improvements in firms’ capital
efficiency, buybacks can be considered one effective use of that
cash, especially if shares can be bought back at a cheap valuation.
Buybacks are less common among smaller companies
Intuitively, smaller companies are less likely to engage in buyback
activity and more likely to issue new shares than larger companies.
Smaller firms are typically growing quicker and so potentially need
the extra capital. This may also explain why emerging market
companies have been less keen on buybacks. We can see this effect
by comparing the proportion of large-cap companies buying back
34 www.bluechipdigital.co.za

INVESTMENT | Economy
BLUE
CHIP
1% of their shares (net of any issuance) with the proportion of the
overall market doing so (Figure 2). And the same analysis is based on
the proportion increasing their share count by 1%. For example, there
are 627 companies in the MSCI USA index but 2 470 companies in
the MSCI USA Investible Market Index. The difference between these
two indices is the inclusion of 1 843 small and mid-cap companies,
which make up 75% of the total. In all major markets, the number
of small and mid-cap companies far outweighs the number of
large companies.
to another. For the same reason, we focus on individual countries
rather than regions. The aim here is to capture only genuine changes
in equity supply. In the 12 months to July 2023, net equity supply
was negative in the US, UK, Japan, France and Germany (Figure 3).
However, what is most striking is that the pace of de-equitisation
has recently been greater in non-US markets than in the US. Mergers
and acquisitions explain some of this. For example, UK companies
have traded at a discount to US companies, making them attractive
acquisition targets by both US companies and private equity.
Continuing with the US as an example, 45% of large US companies
bought back at least 1% of their shares in 2022 compared with
33% of the broader corporate universe. In contrast, 20% of large
US companies increased their share count by at least 1% compared
with 30% of the broader corporate universe. This difference in
behaviour between large companies and the broader market holds
across other markets.
Buybacks and “de-equitisation”
There’s been much commentary around the shrinking pool of
investable public equities in recent years. One way this happens is
when more companies leave the market through de-listings (down to
mergers and acquisitions) than join through new listings/initial public
offerings (IPOs).
But buybacks also remove equity from the public markets. By
carrying out a similar calculation to that used above but applying it to
the stock market rather than individual companies, we can get a sense
of the scale of this “de-equitisation” trend. Unlike the previous analysis
which focussed on net buybacks alone, this captures the combined
effect of net buybacks and new entrants/delistings. We refer to this
as “net equity supply”.
Our analysis is based on the broad stock market of large, mid
and small companies in each country to remove any distortions
from companies being promoted/demoted from one size segment
Delistings have also picked up considerably in Japan, with figures
for last year almost triple what they were a decade earlier.
With non-US companies continuing to be valued at steep discounts
to their US peers, their appeal as takeover targets is unlikely to wane.
Conclusions
While much focus has been on the declining number of listed
companies, we shouldn’t forget the contribution of share buybacks
to the trend of de-equitisation. Use of share buybacks picked up
significantly in 2022 and it will be interesting to see if this continues
in the years ahead. With global interest rates expected to be higher
for longer and a continuing weak growth outlook, firms have a lot
to consider.
They’ll be working out how to use any excess cash, the
extent to which their equity prices look cheap, and whether the
flexibility of buybacks is more attractive than dividends in an
uncertain environment.
Corporate buying, whether through buybacks or mergers
and acquisitions, has the potential to support share prices. For
investors, the increased popularity of buybacks outside of the
US will be a trend to watch. And, so long as non-US companies
continue to trade at large valuation discounts to their US peers,
they are likely to feature prominently on lists of potential
takeover targets.
Important Information: For professional investors and advisers only. The material is not suitable for retail clients. We define "Professional Investors" as those who have the appropriate expertise and
knowledge eg asset managers, distributors and financial intermediaries. Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell
any financial instrument/securities or adopt any investment strategy. Reliance should not be placed on any views or information in the material when making individual investment and/or strategic
decisions. Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get
back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise. The views and opinions contained herein are those of the individuals to whom they
are attributed and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. Information herein is believed to be reliable but Schroders does
not warrant its completeness or accuracy. Issued in September 2023 by Schroders Investment Management Ltd registration number: 01893220 (Incorporated in England and Wales) which is authorised
and regulated in the UK by the Financial Conduct Authority and an authorised financial services provider in South Africa FSP No: 48998
www.bluechipdigital.co.za
35

BLUE
CHIP
INVESTMENT | Leadership
Momentum Investments’
new CEO: Ferdi van Heerden
Ferdi van Heerden took over the reins at
Momentum Investments on 1 September
2023. He has a wealth of experience
in all areas of investments, locally and
globally, and has spent the bulk of his decadeslong
career at Momentum. During this time, he
filled a range of executive positions in the group,
culminating in more than a decade of leadership
in the international investment industry as head of
Momentum Investments' UK business, Momentum
Global Investment Management (MGIM).
Van Heerden will serve as a member of the
Momentum Metropolitan Executive Committee and
his portfolio includes among others Momentum’s
retail investment offerings, all local and global
investment management businesses, as well as
Momentum Money.
In his own words: “I see this role as a great new
challenge for me, but also an opportunity to use
all the skills I have developed and experience I
have gained over the years to lead the Momentum
Investments team on its continued journey, building
on the sound foundations of the past five years.
There’s much we need to do, with many challenges
in a fast-paced, changing world. I look forward
to helping navigate these challenges with our
leadership team and to helping build our collective
dreams into reality.”
Jeanette Marais, Group CEO of Momentum
Metropolitan, says “Ferdi is a highly respected leader
who has filled a range of executive positions in the
Group. His executive track record is proof of his
ability to see the bigger picture, provide strategic
direction, and lead businesses to successfully
execute their plans. I am also particularly pleased
that we appointed one of our executives to the
Group level. This not only shows that we focus on
growing our people, but it also enables continuity:
Ferdi has been part of the Momentum Investments
Exco for 13 years and truly understands our culture
and the wider industry challenges.”
Meet Ferdi van Heerden
Academic and professional qualifications
B.Sc Honours in Mathematical Statistics, Advanced Management
Programme (AMP) from INSEAD (France), Diploma in General
Management from Reading University (Henley Business School/
UK), Member of the Chartered Institute for Securities and
Investments (MCSI).
Approach to business and life
Positive mindset. His guiding motto is “Think with a positive mindset:
Offer alternatives and seek solutions,” a testament to his optimistic
and solution-oriented approach to challenges.
Inclusivity matters. Throughout his life and career, Van Heerden
values treating others with respect, dignity and inclusivity, ensuring
everyone has a voice and a contribution to make.
Belief in opportunities. He firmly believes that the more you explore,
the more opportunities will cross your path. He believes in taking
action and pursuing opportunities fearlessly.
The best advice. Van Heerden holds dear the advice he received
early in his career: “Outwork and outthink peers and competitors.” A
principle he continues to live by.
Making a difference. Van Heerden is most excited about the incredible
people in this industry and the vital role we play in society as asset
allocators, knowing we can genuinely make a positive impact on the
world and society.
Ferdi van Heerden, CEO, Momentum Investments
36
www.bluechipdigital.co.za

INVESTMENT | Asset management
BLUE
CHIP
Demystifying Smart Beta
Smart Beta, has disrupted the binary choice between active and passive investing.
Combining the benefits of both active and passive strategies,
Smart Beta offers a systematic and rules-based approach to
portfolio construction.
What is Smart Beta?
Smart Beta, also known as active quant, offers an alternative
to traditional market capitalisation-weighted indexing. Many
passive index funds and exchange-traded funds (ETFs) are
“capitalisation-weighted”. This means that the individual
stocks within the index are based on each stock’s total market
capitalisation or size. Stocks with higher market capitalisations
are weighted more heavily than stocks with lower market
capitalisations. As a result, it’s possible for some overvalued
stocks to represent a large percentage of the index’s total value.
Rather than relying solely on market size to determine a stock’s
performance relative to its index, Smart Beta strategies seek to
enhance returns or reduce risk by selecting and weighting stocks
based on investment styles that have historically demonstrated
the potential to generate superior risk-adjusted returns.
Smart Beta is not a blend of active and passive investing but
rather it is a standalone investment methodology that constructs
portfolios systematically.
How does Smart Beta work?
Unlike fundamental active management, which relies on
subjective judgements and individual stock selection by costly
analyst teams, Smart Beta employs an objective, rules-based
methodology using publicly available data. To exploit a particular
investment style such as Momentum, Value or Quality, Smart Beta
strategies use set metrics to determine whether a stock should be
overweight, neutral or underweight relative to an index, ultimately
aiming to combine the return of the market with the potential of
outperformance with stocks that align to specific styles.
Differentiating benefits of Smart Beta compared to traditional
active and passive investing:
1. Objectivity that cuts out human bias. Smart Beta strategies
rely on a disciplined and transparent set of rules that guide the
construction of a portfolio. This approach eliminates emotional
biases and the potential for human error that may be present
in traditional active management.
2. Lower fees that affect client outcomes. Smart Beta strategies
typically have lower fees compared to actively managed funds,
making them an attractive option for cost-conscious investors.
Furthermore, although they may have slightly higher expenses
than traditional passive
funds, the potential for
enhanced returns justifies
the incremental cost.
3. Potential outperformance
relative to benchmark.
Unlike traditional passive
funds that track the
overall market, Smart Beta
strategies focus on specific
investment styles. For
example, a value-based
Smart Beta strategy would
overweight stocks with
lower price-to-earnings
ratios. A quality-based
approach would overweight
stocks with stable earnings
and low debt levels and
lastly, a momentum-based
Ali Simpkins, Fund Specialist,
Momentum Investments
approach would overweight stocks that have demonstrated
positive price momentum over a defined period. This targeted
exposure allows investors to potentially capitalise on styles that
have historically contributed to excess returns.
4. Diversification. Smart Beta strategies construct portfolios very
differently when compared to traditional active and passive
investing. That in itself is a diversification layer. Furthermore,
each investment style represents a unique source of return
that may perform differently under various market conditions.
By combining multiple styles within a Smart Beta strategy,
investors can diversify their portfolios across different drivers
of returns.
As a segment of the South African general equity market, Smart
Beta assets have grown by approximately 31% per year over
the last decade, albeit off a low base. As this innovative strategy
continues to gain popularity, it is expected to play a significant
role in shaping the future of asset management in South Africa.
Investing is personal and Momentum Investments offers a broad
Smart Beta offering including individual style unit trusts as well
as a blended approach for each client’s unique circumstances.
For more information, contact ali.simpkins@momentum.co.za.
For more about our Smart Beta funds, visit momentum.co.za.
Momentum Collective Investments (RF) (Pty) Ltd (the “Manager”), registration number 1987/004287/07, is authorised in terms of the Collective Investment Schemes Control Act, No 45 of 2002 to
administer Collective Investment Schemes (CIS) in Securities. The Manager is the manager of the Momentum Collective Investments Scheme. Standard Bank of South Africa Limited, registration number
1962/000738/06, is the trustee of the scheme. CISs are generally medium to long-term investments. The value of participatory interests may go down as well as up and past performance is not necessarily
a guide to the future. The terms and conditions, a schedule of fees, charges and maximum commissions, and additional risks are available on the minimum disclosure document (MDD) and quarterly
investor report (QIR) for each portfolio which is available on momentum.co.za. All performance figures are net of fees and represent the A class in each portfolio.
www.bluechipdigital.co.za
37

BLUE
CHIP
INVESTMENT | DFM
Global model portfolios
for your advice practice
There is significant interest in
investing offshore, whether to
address a specific investment
need, hedge currency risk
associated with the rand or provide
exposure to bigger, deeper capital markets
and unique industries and companies.
However, the investment opportunity set
available offshore is vast.
So how do advisors decide which fund
managers and asset classes to choose?
Partnering with a discretionary fund
manager (DFM) can help with this
Florbela Yates, Head of Equilibrium
conundrum. The new Equilibrium
global model portfolios, sub-managed
by our London-based investment
business, Momentum Global Investment
Management (MGIM), give South African
investors access to a diversified range of
global opportunities across a broad range
of asset classes, countries, companies,
currencies and market sectors.
The model portfolios are designed to
take the guesswork out of navigating the
global landscape by removing the burden
of selecting the optimal asset allocation
and fund manager mix – our team in the
UK does it for you. At the same time, we
do not just invest in one country, in one
stock market or use the expertise of one
fund management house, but instead,
look everywhere for the best investment
opportunities globally.
The global model portfolios are
constructed using the same outcomebased
investing philosophy as our local
portfolios. This process starts with the
portfolios’ long-term strategic asset
allocations (SAA), which is the optimal
blend of asset classes required to achieve
the desired return outcomes in US dollar
terms with as little risk as possible, while
also minimising the probability of shortfall
versus those objectives.
To complement the SAA, shorter-term
tactical tilts are overlayed depending
on valuations and the outlook for a
particular asset class at that point in time.
Then finally, further value is added at
the implementation stage by selecting
specialist fund managers per asset class
and per investment style and investment
strategy – having a global presence enables
the team to search far and wide for the best
investment talent.
The Equilibrium global model portfolio
range consists of three risk-profiled
portfolios, allowing advisors to select the
most appropriate investment option based
on their client’s individual risk profile and
investment time horizon.
The best way to get
investors to their
objectives is for them
to stay invested
through the cycle.
The Equilibrium Global Cautious portfolio
is designed for more conservative
investors given its higher allocation to
fixed-income instruments; the Equilibrium
Global Managed Portfolio is for investors
looking for a more balanced blend of asset
classes; and the Equilibrium Global Growth
portfolio is for investors with a higher
risk appetite given its approximate 90%
allocation to global equities.
Through consistent application of the
outcome-based investment process, the
global model portfolios have an excellent
track record of delivering on their return
objectives in US Dollar terms over time, as
represented by a similar strategy managed
by the same MGIM investment team going
back to 1 January 2016.
The purpose of partnering with a DFM
like Equilibrium is to ensure that there is
alignment between your advice process and
the investment portfolios that your clients
invest in, whether that be local or global.
Why is this important? We know that the
best way to get investors to their objectives
is for them to stay invested through the
cycle. That means not only when markets
are performing, but more importantly, even
when they’re not. Let Equilibrium help you
so that you can do what you do best: giving
your clients the best financial advice for their
unique circumstances.
Equilibrium Investment Management (Pty) Ltd (Equilibrium) is an authorised financial services provider (FSP32726)
and part of Momentum Metropolitan Holdings Limited and rated B-BBEE level 1.
38 www.bluechipdigital.co.za

Partner with us, become an FPI
Approved Professional Practice TM
FPI Approved Professional Practice TM
firms
For more information, get in touch with us
Email us
businessdevelopment@fpi.co.za
Contact us:
Visit our website
+27 11 470 6000 www.fpi.co.za

BLUE
CHIP
PRACTICE MANAGEMENT | Technology
The Bermuda Triangle of change
in the future of financial advice
For many years, the financial planning profession has been
striving to be recognised as a true “profession”. In this
pursuit, we find ourselves navigating a complex landscape,
which we can aptly describe as the Bermuda Triangle of
financial planning. This triangle consists of three interconnected
elements reshaping the industry as we know it: automation,
artificial intelligence (AI) in the advice and planning stages and
the fascinating field of behavioural sciences. Let’s take a closer look
at our proverbial Bermuda Triangle.
EMBRACING AUTOMATION
Automation provides financial planners with powerful tools to
enhance their services. Here are some key methods of incorporating
automation into the financial planning process:
1. Client onboarding and reporting. Digital platforms are used
to gather client data, introduce services and ensure compliance.
Automation can be applied to simplify investment reports and
financial documents for clients, saving time and improving efficiency.
2. Data aggregation. In a world where financial data is scattered
across various sources, automation can consolidate this
information, offering a comprehensive financial overview for more
informed decision-making.
3. Portfolio management. Investment platforms equipped with
automatic portfolio rebalancing help maintain portfolios aligned
with client goals. Outsourcing this functionality to a portfolio
manager is crucial for effective management.
4. Online presence. Consistency is key in the digital era.
Automation ensures a steady flow of content on social media
platforms, enhancing an advisor’s online presence.
5. Chatbots. Basic client queries are addressed instantly with the
help of chatbots, saving time and providing quick responses to
common questions.
It is essential to remember that the personal touch in financial
planning remains irreplaceable.Automation should serve as a complement
rather than a substitute for the client-planner relationship.
THE FUTURE
Artificial Intelligence (AI) is a transformative force in financial
planning. Combined with insights from behavioural finance, AI
reshapes the future of the profession. Here’s how:
1. Managing emotions and educating clients. Financial planners
guide clients through emotionally charged financial situations,
ensuring that decisions are not solely driven by emotions.
Educating clients about their behavioural biases can make them
more informed and engaged in the planning process.
2. Addressing biases. By identifying
biases such as loss aversion or
overconfidence, planners tailor advice
to counteract these tendencies,
leading to more rational financial
decisions. AI also helps predict
which clients would have more
emotional reactions to market events
and proactively remind financial
planners to reach out to them at the
appropriate time.
3. Improved communication.
Understanding behavioural biases
helps planners communicate more
effectively, resulting in clearer and
more persuasive advice.
4. Simplified choices. Decision
overload can paralyse clients. AI assists
in limiting options, making choices
clearer and more manageable.
5. Hybrid-advice offering. For
clients with straightforward financial
planning needs, such as planning
for children’s education or a holiday
home, automation takes care of
financial planning and goal tracking,
ensuring efficient solutions.
Incorporating these technological
advancements into financial planning
practices enhances the advisor’s
value-add to clients. However, it’s
crucial to emphasise that the personal
touch remains vital. Technology Tiaan Herselman, Head of Advice,
should complement, not replace, Old Mutual Wealth
the qualities of human intuition and
empathy that financial planners bring to their clients.
Furthermore, the incorporation of behavioural finance
principles enables financial planners to provide more personalised,
psychologically-aware advice. This approach leads to better
outcomes and fosters stronger client relationships. As we navigate
the Bermuda Triangle of change in financial planning, embracing
automation, AI and behavioural sciences is not just a strategic
choice but an essential one. In a world where change is constant,
adaptability is the key to thriving and providing invaluable services
in the evolving landscape of financial planning.
40 www.bluechipdigital.co.za

MAKE YOUR
MONEY WORK
ANYWHERE.
At Old Mutual International, we recognise that investing offshore
is all about opportunity. We provide access to the best investments,
wherever they may be.
TEAM UP WITH OUR GLOBAL EXPERTS.
For more information, visit www.omi-int.com
INTERNATIONAL
DO GREAT THINGS EVERY DAY
Old Mutual Life Assurance Company (SA) Limited is a liscenced FSP and Life Insurer.

BLUE
CHIP
INVESTMENT | Economy
Sticking to our knitting
Reflecting on what has contributed to our investment success 30 years on.
The year 2023 has been a period of reflection for Coronation
Fund Managers as we celebrate our 30th anniversary.
Over time, we have actively grown the long-term savings
of millions of South Africans thanks to an unwavering
commitment to a single investment philosophy and purpose.
Since 1993, the critical tenets of our investment philosophy
remained that of investing with a long-time horizon and a focus on
valuation when selecting instruments or making asset allocation
decisions. This enabled us to benefit from the increasingly
shorter time horizons that we see play out in market prices and
to implement portfolio-defining investment ideas with courage
and conviction.
The combination of these factors has resulted in a track record
that, we believe, speaks for itself.
But it’s not just about a sound investment philosophy
A sound investment philosophy alone cannot drive a successful
investment track record. Executing it requires a well-resourced,
experienced and passionate group of people.
Over the past three decades, we have focused on developing and
investing in a global investment team of 55 professionals. Today,
A 30-year track record that speaks for itself
Growth of R100 since inception*
R
8
7
6
5
4
3
2
1
0
Period
Coronation
Global
Houseview
Benchmark
Alpha
Total Value
Added per
R100m
*SI cumulative 6 337,54% 4 537,44% 1 800,10% R1,8 bn
*SI annualised 14,89% 13,64% 1,25%
20 years (p.a.) 14,72% 13,75% 0,97% R244 m
15 years (p.a.) 12,19% 10,98% 1,21% R84 m
10 years (p.a.) 9,41% 8,23% 1,18%
5 years (p.a.) 9,86% 7,67% 2,19%
3 years (p.a.) 13,29% 11,45% 1,84%
Coronation Global Houseview Strategy
c.1 800,1%
value added
over 30 years
Benchmark**
Sep-93 Sep-98 Sep-03 Sep-08 Sep-13 Sep-18 Sep-23
Performance is gross of fees: Annualised performance figures represent the geometric average return earned by the fund
over the given time period. *Since inception - October 1993; **Benchmark - Median of peer group
Performance is gross of fees; * Since inception – October 1993; **Benchmark – Median of peer group
Source: Coronation, as at end-September 2023
Source: Coronation, as at end-September 2023
A sound investment philosophy
alone cannot drive a successful
investment track record.
this team applies our tried and tested investment philosophy
across all our portfolios in a collaborative and integrated manner,
allowing us to pick the best investment ideas to be represented
in our investment portfolios, regardless of asset class or region.
People and philosophy also require a process
We believe that the core strength of an investment process is when
it enables the philosophy, the people and the investment work
produced (the research, modelling, and constant interrogation of
conclusions reached) to seamlessly come together when the big
calls need to be made.
R6 437,54
R4 637,44
Thinking slow, acting fast
This core strength was best demonstrated during
five key market moments that presented severe
dislocations but also created the most attractive
investment opportunities over our three-decade
track record. (See table and graph on the right.)
If we pause at each of the significant crises
illustrated, our portfolio actions at the time
were not informed by the prevailing market
sentiment but instead by our long-term work
(the ability to think slowly) that gave us the
conviction to take advantage of the disconnect
between price and value during those critical
moments on behalf of our investors (by
implementing quickly).
When preparation meets opportunity
When reflecting on why our positioning in
these examples worked in our clients’ favour,
the answer comes down to a tried and trusted
investment philosophy that has been applied
consistently over many years. Coupled
with a deep and experienced team doing
detailed proprietary work as the backbone
of the process, it gave us the comfort to act
42 www.bluechipdigital.co.za

INVESTMENT | Economy
BLUE
CHIP
Thinking slow but acting fast when opportunity knocks
Growth of R100 since inception*
R
8
7
6
5
4
3
2
1
0
Coronation Global Houseview Strategy
Commodity cycle
GFC
Benchmark**
Covid
Polycrisis
Sep-93 Sep-98 Sep-03 Sep-08 Sep-13 Sep-18 Sep-23
R6 437,54
R4 637,44
with conviction when the best investment
opportunities became available.
Sticking to what works
As simple and obvious as our actions may look
with the benefit of hindsight, the reality at the
time was that we first had to endure painful
periods of short-term underperformance
while being as affected as everyone else by the
prevailing news flow and headlines.
However, a solid philosophy and trusted
process, executed by an experienced team,
enabled us to look beyond those moments of
market panic and uncertainty. Having stuck
with these principles over three decades stood
us in good stead and we believe they will
continue to contribute to us replicating our
track record into the future.
Coronation is an authorised financial services provider.
Performance is gross of fees; * Since inception – October 1993; **Benchmark – Median of peer group
Source: Coronation, as at end-September 2023
The commodity boom of 2007
The commodity bust of 2015
The Global Financial Crisis,
2008
The Covid pandemic, 2020
The polycrisis of 2022
How did we respond?
With commodity prices flying in response to China’s infrastructure rollout, our long-term work
on commodity prices indicated normal prices were well below the spot. We significantly reduced
portfolio exposure in response, which contributed to outperformance in subsequent years.
When resource prices were in the proverbial hole following a slowdown in Chinese demand and
the shale energy boom in the US, our long-term work indicated a strong disconnect between price
and value, and we upweighted our commodities exposure in response. While this call contributed
to underperformance initially, it added to significant alpha in 2016.
After markets endured one of the most severe bear markets in history, our long-term work on equity
valuations indicated a large margin of safety, giving us the conviction to take our portfolios’ equity
exposure towards a full weighting by early 2009.
While our portfolios were not well-positioned going into this unprecedented event (fairly full equity
weighting and low exposure to the safe-haven assets of gold and USD cash), we leveraged our
research process and spoke to as many experts as possible to understand how the pandemic
would evolve and the impact of lockdowns on consumer behaviour and company results. We
used this knowledge to update and refresh our models across the investment universe to refresh
our valuation estimates. Cross-collaboration within the investment team unearthed the attractive
opportunity presented by select equities, giving us the conviction to significantly increase equity
exposure across our portfolios by December 2020.
A big derating in global assets in response to higher inflation and interest rates coincided with the
relaxation of Regulation 28’s offshore limits. Our long-term work on valuations allowed us to step
into the opportunity presented by offshore assets meaningfully and rapidly – moving our Balanced
Plus Fund’s offshore allocation from around 20% to 45%.
Coronation Balanced Plus is the retail equivalent of the institutional Coronation Global Houseview Strategy illustrated in the visual. Coronation Balanced Plus was launched in April 1996. The Balanced
Plus Fund should be considered a medium- to long-term investment. The value of units may go down as well as up, and therefore Coronation does not make any guarantees with respect to the protection
of capital or returns. Past performance is not necessarily an indication of future performance. Unit trusts are traded at ruling prices and can engage in borrowing and scrip lending. The fund is mandated
to invest up to 45% of its portfolio into foreign securities and may as a result be exposed to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar
investments in the South African markets. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. Coronation Management Company (RF) (Pty)
Ltd is a Collective Investment Schemes Manager approved by the Financial Sector Conduct Authority in terms of the Collective Investment Schemes Control Act.
www.bluechipdigital.co.za
43

BLUE
CHIP FINANCIAL PLANNING | DFM
The rising
relevance
of DFMs
In August 2022, Discovery launched Cogence, South Africa’s first truly global discretionary fund manager
as well as the first discretionary fund manager to fully model retirement solutions by taking
health experience into account.
As an independent discretionary fund manager (DFM),
Cogence plans to fill a gap in the country’s burgeoning
DFM industry stemming from the increasing scale and
sophistication of global markets, as well as the vital link
between health and wealth.
At a time when local investors enjoy unprecedented access to
these markets, they also bear the burden of investment, as well as
behavioural and longevity risk.
To take advantage of all that the world has to offer, the local
advice industry stands to benefit from DFMs that blend local
knowledge with truly global asset management expertise to
deliver optimally diversified portfolio solutions.
To adequately consider the multi-dimensionality of individual
retirement journeys alongside risk in a volatile and uncertain world,
a blend of industry-leading technologies is essential to guide the
conversation between financial advisers and their clients.
Yet, many retail investors – and indeed many investment
professionals – are unclear about the added value provided by
this once-niche complement to traditional financial advice. Kenny
Rabson, CEO of Discovery Invest, weighs in on why financial
advisers should pay attention to DFMs.
What is a DFM – in a nutshell?
A DFM is an established asset manager with the requisite licence
and mandate to buy and sell investments on behalf of its clients.
In ideal cases, DFMs have research teams capable of assessing the
vast global investment universe of unit trusts and passive solutions
and the know-how to select from these to construct optimally
diversified investment portfolios on behalf of financial advisers.
Single-asset managers typically select investment instruments
from within a unit trust fund. By contrast, a DFM, also known as
a retail multi-manager, selects from multiple of these managers’
funds to construct its solutions. While some DFMs offer bespoke
portfolio solutions to financial advisers, others focus on providing
model portfolio solutions for a range of risk profiles that suit an
adviser’s clients.
Regardless of the approach, DFMs all essentially fulfil the
day-to-day active investment management of clients’ portfolios,
therefore simplifying the investment process and creating
efficiencies to the benefit of both adviser and client.
Best-of-breed DFMs pair global reach and expertise with
technologies that can help digest the enormous complexity of
markets and translate this into both real-time and forward-looking
insight relevant at the level of the individual portfolio.
Why the interest in this sector?
Globally, as well as locally, the use of DFMs has grown rapidly in
recent years and most advisers expect this trend to continue. 1
On the one hand, the investment universe grows ever
more complex and sophisticated as well as more volatile and
uncertain. As the number of investment options increases it is
becoming practically impossible for advisory practices to build
the internal research teams needed to keep abreast of it all.
While global diversification has become vital to local investors
44 www.bluechipdigital.co.za

FINANCIAL PLANNING | DFM
BLUE
CHIP
given successive relaxations to the offshore limits of Regulation
28 of the Pension Funds Act, this complexity grows by orders of
magnitude when looking abroad. Few companies in the world
have the analytic capabilities and global presence required to
research and develop a comprehensive understanding of the
risks and opportunities that exist in such a vast, volatile and
sophisticated investment landscape. On the other hand, the
regulatory environment is becoming more onerous for advisers,
which increases the compliance risk they face in their practices.
By bringing in a deep and broad level of local, and ideally global,
investment expertise to perform asset management advice,
DFMs allow financial advisers to focus on what they do best –
providing financial advice. 2
What are some of the benefits of a DFM?
The principal benefit of DFMs is that they offer much more
investment and research expertise than advisers generally can.
Many DFMs emerge from other asset managers, and they have
dedicated teams whose job is to focus on managing investments.
In the South African context alone, there are more than 1 000
unit-trust options available to investors. To know all their details
requires significant research capability.
At Cogence, we have brought in RisCura – which has established
itself within the South African manager research environment,
with over 20 years of experience and a dedicated team that
researches every fund manager in the country, to select the local
component of fund manager selection. When looking abroad – as
is necessary given that clients can now have 45% of their money
invested offshore under Regulation 28 of the Pension Funds Act –
this scope expands enormously.
We believe that a truly global footprint, with a presence and
skillset in most major markets, is required to keep abreast of the
global investment universe, which is why we have partnered with
one of the world’s leading asset managers, BlackRock.
DFMs have a FAIS Category II licence from the FSCA, which
allows them to make changes easily on behalf of the individual
client according to the investment mandate signed with the DFM.
This removal of paperwork enables rapid changes to a portfolio in
response to or anticipation of market events and opportunities.
A further benefit comes by way of the efficiencies of scale.
DFMs that reach a significant size can negotiate wholesale fee
classes in the unit trusts selected, thereby reducing – or even
nullifying – the overall DFM costs experienced by the end
client. This scale also allows DFMs to provide enhanced access
to investments such as private equity, global hedge funds,
broad passive solutions and private credit. As we enter a period
characterised by high inflation and uncertain, volatile equity
market returns, these alternatives are growing in popularity.
Technology is another key benefit.
The pace and complexity of global markets alongside changing
consumer behaviours in the wake of the Covid-19 pandemic and
the increasing need for personalised, real-time-reporting and
portfolio monitoring is quickly making use of advanced technology
indispensable in the world of financial advice.
DFMs allow
financial advisers
to focus on
what they do
best, providing
financial advice.
www.bluechipdigital.co.za
45

BLUE
CHIP FINANCIAL PLANNING | DFM
For instance, Aladdin Wealth, an innovative portfolio analytics
and risk management technology brought to South Africa by
Cogence, equips advisers with a wide range of sophisticated
tools that leverage data-driven insights to help improve portfolio
management and reporting.
This technology allows advisers to test their ideas for suitability
against a client’s portfolio while also being able to stress-test
against future risk scenarios, such as a repeat of the subprime
mortgage crisis. Technology is also essential for factoring in
modern demographic and behavioural trends that are becoming
central to mapping out individuals’ retirement journeys.
Finally, the combination of technology and expertise can greatly
enhance reporting as a DFM can offer full transparency and a realtime
overview of a client’s investment picture based on a variety
of personalised metrics. Personalisation through digitisation can
guide the conversation between adviser and client to overcome
biases and help investors stay on track to meet their long-term
goals, despite market volatility.
A DFM introduces top-quality strategic allocation,
increases efficiencies in the advisory practice and improves
investor governance while allowing advisers to build better
relationships with their clients, focus on their needs and
find solutions to those needs. Ultimately, as most advisers
are focused on performance when selecting a DFM, the
partnership should work to improve the investment outcome
for clients.
website link: www.cogence.co.za
Disclaimer
Cogence (Pty) Ltd. Registration 2009/011658/07. An authorised financial services provider (FSP No 52242). BlackRock® is a registered trademark of BlackRock, Inc. and its affiliates (“BlackRock”) and is used
under license. BlackRock makes no representations or warranties regarding the advisability of investing in any product or the use of any service offered by Cogence (Pty) Ltd. BlackRock has no obligation
or liability in connection with the operation, marketing, trading or sale of any product or service offered by Cogence (Pty) Ltd.
BlackRock’s Aladdin Wealth platform is designed for financial professional use only and is not intended for end investor use. Aladdin Wealth is a financial technology and risk analytics platform that is
independent of Cogence. Cogence program users undertake sole responsibility and liability for investment or other decisions related to the technology’s calculations and for compliance with applicable
laws and regulations. The technology should not be viewed or construed by any Cogence program users, or their customers or clients, as providing investment advice or investment recommendations
to any parties. This material should not be construed as a representation or guarantee that the use of Aladdin Wealth technology will satisfy your legal or regulatory, tax or accounting, obligations.
BlackRock, as provider of the technology, does not assume any responsibility or liability for your compliance with applicable regulations or laws, or tax or accounting obligations. BlackRock may modify
or discontinue any functionality or service component described herein at any time without prior advance notice to you.
[1] What are advisers thinking | NMG consulting on NinetyOne | https://ninetyone.com/en/south-africa/insights/what-are-advisers-thinking. 2020
[2] South African DFMS, Multi-Managers & Wealth Managers | Insights into Investment Boutiques, RMI 2018 | https://bit.ly/3TYrEwH
46 www.bluechipdigital.co.za

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BLUE
CHIP
INVESTMENT | Responsible investment
Nature’s Dividend: investing with impact to
tackle the dual climate and biodiversity crises
Climate change and biodiversity loss are closely linked
and mutually reinforcing. As climate change alters
the habitats and ecosystems that support life
on Earth, biodiversity loss reduces the resilience
and adaptability of nature to cope with climate impacts,
perpetuating a vicious cycle that is having an increasingly
detrimental effect on the planet.
Biodiversity loss affects climate change by weakening the
capacity of nature to regulate the climate and store carbon. Forests,
wetlands and oceans are natural carbon sinks that absorb and
store large amounts of greenhouse gas emissions; however, when
these ecosystems are destroyed by human activities, as they are
currently, they release carbon into the atmosphere, contributing
to global warming.
The dual climate and biodiversity crises:
What it means for our future
The loss of biodiversity, be it through climate change and/or
human interference, poses very real threats to the health and
well-being of humanity. The World Economic Forum estimates
that more than half of the world’s GDP depends upon nature and
its services (including for water quality and disease control).. And
consider that more than a quarter of the global population already
experiences food insecurity. By 2025, half of the global population
will face water insecurity – and South Africa will not be exempt.
We will also have to deal with the increased spread of diseases as
population migration and density increases. Not to mention that
global heat records are being broken with alarming frequency. The
year 2023 is on track to become the hottest year ever recorded.
Globally, more than five-million people die each year because of
excessive temperatures. These are just some of what these crises
mean for everyday life
Investing for impact
Climate change is also influencing the financial world as asset
managers struggle to assess the impact of physical climate risks
on their investment portfolios. S&P Global Sustainable research
estimates that over 90% of the world’s largest companies have at
least one asset which is financially exposed to climate risks.
Business is taking action though. Currently, over 4,000
companies, covering over a third of the global economy’s market
capitalisation, having either set, or committed to setting, Paris
Agreement-aligned or Net Zero emissions targets via the SBTi
(Science Based Targets initiative). A very high proportion (of
these targets) are from listed companies in the developed world
including Europe, North America and Japan. This is impressive,
but we should also recognise that companies from these nations
should be doing this (and more) when you consider their
disproportionate national emissions. Four developed regions
– North America, Europe, Japan and Australia – are responsible
for around 53% of cumulative global CO2 emissions. Africa in its
entirety has contributed only 4.8%, with South Africa accounting
for approximately 1.5%.
The responsibility of remedying our biodiversity and climate
crises doesn’t rest entirely with companies. Investors have a key part
to play, too, by directing resources to where they’ll be managed
responsibly. Cue impact investing in the listed equity universe.
Developed market-listed equities provide the most viable way to
identify and mobilise significant amounts of capital into progressive
companies that are intent on generating positive impacts and
providing relevant solutions for a sustainable, more resilient future.
Through the mobilisation of such
capital, the market should reward
impactful companies with superior
share price appreciation. That is the
essence of impact investing.
There’s a perception around
impact investing that one must
sacrifice financial returns and
forego performance to do good.
This is not true. Impact investing
is a strategy that aims to generate
positive, intentional impacts in the
real economy alongside positive
financial returns by investing in the
best quality and most forwardthinking
companies that contribute
to solving social and environmental
challenges. This shared approach
to growing wealth while leaving
a positive footprint is one that
investors need to determinedly
champion if we are to avert the very
worst scenario of global warming
and its related impacts.
Considering how detrimental
both climate change and the loss
of biodiversity are to the economy
and our collective future, it’s time
we got serious about this.
Diane Laas, Global
Impact Fund Manager,
Melville Douglas
Rob Stewart, Global
Impact Fund Manager,
Melville Douglas
48
www.bluechipdigital.co.za

Help us create a
better tomorrow.
Invest with impact.
We know that investing means creating wealth for the
future. We also know that critical issues like the climate
crisis, scarcity of resources, biodiversity loss, and social
insecurity raise serious concerns about what type of
society we will leave behind for future generations.
That’s why we’re focused on the longevity of the planet
and its people when growing your long-term wealth.
Our Global Impact Fund offers you a unique opportunity
to align your values with your investments. We identify
long-term growth themes that seek to solve the world’s
most pressing challenges. Through our proprietary impact
assessment, we invest in quality global companies that
deliver positive, sustainable impact aligned to key social
and environmental UN Sustainable Development Goals.
Join us to deliver on a shared objective to grow your wealth
while making a positive impact, the Melville Douglas way.
To learn more, visit melvilledouglas.co.za
Melville Douglas is a subsidiary of Standard Bank Group Limited. Melville Douglas Investment Management
(Pty) Ltd. (Reg. No. 1987/005041/07) is an Authorised Financial Services Provider. (FSP number 595).

BLUE
CHIP
ROUND TABLE SERIES | Offshore investing
Offshore investing:
where, how and
how much?
In an exclusive Blue Chip discussion, South Africa’s leading
investment professionals focus on offshore investing
and why it is important to engage with a
financial advisor. Part Two deals with the
practicalities of taking money offshore, the
exchange rate and the importance of timing.
THE PRACTICALITIES OF TAKING MONEY OFFSHORE
Andrew Finlayson (AF): In terms of the actual practicalities of
taking money overseas, what are the different ways in which
a client can physically take money out of the country?
Lara Lotter (LL): The reality is that one is not limited to the
amount that can be externalised outside of South Africa. The
differences lie in the different requirements for different amounts,
and for any level, being able to show the source of the funds.
Single discretionary allowance of R1-million
If you have a green barcoded ID book and a valid tax number,
you can remit up to R1-million in a calendar year without
having to obtain any clearance from the revenue office.
One simply has to report where the money comes from.
Additional investment transfer clearance process
This process, formerly referred to as the foreign investment
allowance, governs the amount after your single discretionary
allowance (R1-million) up to a maximum of R10-million. The
main requirement for this process is simply reporting the
source of the funds to SARS (eg is it inheritance proceeds, a
unit trust portfolio, a local matured endowment portfolio) with
the supporting documentation. There are a few additional
requirements such as declaring your global assets and liabilities,
a certificate of good standing, and of course, providing
your efiling profile so that the submission can take place.
Letter of compliance application process
The letter of compliance application process is for amounts
over a total of R11-million (R1-million plus R10-million
above). This is a tax clearance which must also go through
the South African Reserve Bank, so there are two reporting
entities that need to see the source of the funds. And some
of the information is more rigorous; for example, if the
source of funds is a unit trust portfolio, for the additional
investment transfer clearance process (above), you would
have to provide statements for three months, whereas for the
letter of compliance application process, you would have to
provide statements for six months. If you fulfil the regulatory
requirements, there are no limits.
AF: Practically, how has that affected your business and people
looking to take money overseas?
LL: In April 2023, the foreign investment allowance tax clearance
and the IT21(a) tax clearance were merged forming the approval
50 www.bluechipdigital.co.za

ROUND TABLE SERIES | Offshore investing
BLUE
CHIP
MODERATOR
EXPERT PANEL
Lara Lotter, Business Development,
South Africa, Currencies Direct
Greg Strachan, CFP®, Wealth
Manager, Alpha Wealth
Andrew Finlayson, Co-Founder,
Maven Wealth
Hannes Viljoen, CEO and Head of
Investments, Kudala Wealth
Cobie Legrange, Co-founder,
Rexsolom Invest
of international transfers (AIT) clearance or tax compliance
status (TCS) pin letter and the processes that have changed
from our side in terms of submissions and requirements have
been very little.
If you are trying to move funds
offshore just because you
believe that the rand is going
to weaken you are really doing
it for the wrong reasons.
The one area where additional information requirements by SARS
are significant is in reporting that your source of funds is coming
from a trust. Then SARS wants to have a more comprehensive
understanding of that inter vivos or testamentary trust, who the
ultimate beneficial owners are and what your actual share or
interest in that trust is. So, the process change itself has been for
SARS internally, on how they handle the submissions. Does that
mean that it is not going to change? Absolutely not, there will be
a change, but at present all the requirements remain the same.
There has been talk in the media that SARS is now requesting
assets and liabilities, but that has always been the case. SARS is
putting a more efficient machine into play to process clearances
faster because there is a higher volume of them now than there
ever was before when it comes to South African residents looking
to send money offshore, diversify portfolios and so on. It’s just
simply that they need to process them faster. That, at least, is
our take on it.
AF: And I suppose if one looks at what has happened, partly
owing to factors such the Reg 28 legislation changing from
30% to 45%, if anything, the move has actually been the
opposite way; instead of being more restrictive it has been
far more allowing of the flow of capital out of South Africa.
Cobie Legrange (CL): I think what we have seen, quite possibly
because of the greylisting that we went through at the beginning
of 2023, is a tightening up on the processes rather than a material
change to the movement of funds offshore.
www.bluechipdigital.co.za
51

BLUE
CHIP
ROUND TABLE SERIES | Offshore investing
AF: A lot of South Africans take money overseas largely as
a bet against the rand and aren’t too concerned about the
performance of the offshore investment itself. Rather, they
rely on the rand’s weakness to give them a rand return. Is this
a sensible motive? And if you think it is, how do you manage
clients around this issue?
Greg Strachan (GS): I always try to dissuade my clients from
making decisions based on trying to benefit from rand devaluation,
because I think it is founded on the wrong principles. In an “offshore
or not” decision, a key consideration should be determining what
portion of your assets need to be held in the currency where your
liability is. I can’t stress enough the importance of matching the
location of assets and liabilities and this should be the key driver
of your clients’ thinking about a move offshore.
There are a couple of misnomers
in the media from time to time
around what’s permissible,
limitations on what an individual
can take offshore and so on.
Once your client is clear about where their assets should be sitting,
then a sensible decision can be made about taking excess capital
offshore. And then once this decision is made, I don’t think it makes
sense to put too much store on what the current exchange rate is.
If the rate is a bit high, one can send it off strategically, say monthly
or every two weeks, rather than trying to “call” the rate.
To reiterate, it is very important to get the client to understand
fundamentally the inherent risks associated with holding offshore
assets, and it is really a case of making the client very aware that
having funds offshore that are supporting a lifestyle in South Africa
is not the most efficient way to hold assets. Having said that, some
clients will still decide to take the risks as a premium against political
instability in South Africa.
AF: When your clients are looking to take money overseas how
much do you look at the valuation of the asset on the other
side versus the currency?
Hannes Viljoen (HV): Our preference is squarely on the
valuation of the asset on the other side. I believe if you are
trying to move funds offshore just because you believe that
the rand is going to weaken you are really doing it for the
wrong reasons. It should be about what you believe your
offshore asset is going to give you versus what your onshore
asset is going to give you. Because the truth is, no-one can
know what the future may bring, and how unforeseen events
may affect the exchange rate one way or the other. So, we put
most of the weight on the expected return rather than on the
base of the rand.
PRACTICAL MEASURES FOR TIMING THE
EXCHANGE RATE TO A CLIENT’S ADVANTAGE
AF: The exchange rate looms large in many people’s minds and
is a significant factor in when and how much they consider
taking offshore. But how important should the exchange rate
be in the decision, and more specifically, how important is
getting the timing right? Is it worth, for example, getting a
tax clearance in place, to be able to move quickly when the
time is right?
LL: I think it is very important to consider the realities of SARS
turnaround times. At present, provided you have your ducks in
a row in terms of documentation, etc, that turnaround time is 15
to 21 working days (though they can be shorter). So, if you have a
client who is likely to want to move funds soon, it makes sense to
have an existing tax clearance certificate in play.
There are also other measures available that help with timing
for our wealth manager clients, such as rate watch facilities or
forward exchange contracts.
AF: Do a lot of your clients put a level at which they want to
trade the currency and have that in the market, so the system
can then just trade automatically?
LL: Absolutely. Our rate watch facility works slightly differently
though. What happens is there is a realistic target range set, we
then monitor the rates via the client’s designated dealer and we
monitor the markets. Should that rate alert trigger, we contact
the client or the designated person (quite often this is the wealth
manager) who then may determine whether to proceed. You can
also reset the goalposts depending on what the market movement
or market volatility is on local currency.
So, again, it is about creating potential hedging strategies on
foreign exchange whereas previously clients really haven’t been
able to do that and have been at the mercy of whatever the banks’
rate of exchange was.
To watch the round table series in full, visit www.bluechipdigital.co.za or scan the QR code.
52 www.bluechipdigital.co.za

FINANCIAL PLANNING | Self development
BLUE
CHIP
So, you’ve been there,
seen that and done it all?
I thought I had.
After almost 30 years in the financial services sector, the
final 14 as a CEO of a profitable company, I believed that
this was it: I’d reached the pinnacle of a successful life.
Besides my professional qualifications and career, I had
played sports at a national level, flown planes and had a healthy
sense of self. Or so I thought. I honestly believed I’d achieved
everything I wanted. The only niggling feeling of failure was related
to my personal life and intimate relationships.
A chance reading of a post by Dr Roddy Carter promoting
his recently published book, Fireside Wisdom: Conversations to
Inspire Personal Mastery changed me. Not just because Dr Carter
and I were high-school classmates but because something else
resonated deeply within me.
My parents gifted me the book which I read over the Christmas
break. I was riveted. An unsettling realisation became obvious:
my mindset was my greatest impediment. I was jeopardising
my own life through my thoughts, assumptions and responses.
It was difficult to admit that I wasn’t leading the wonderful life
I thought I was and that my brain was the obstacle! This book
gave me a sense of how my mind “works” – with all the cognitive,
emotional and spiritual elements that make for happiness and
fulfilment. Using cutting-edge neuroscience, Dr Carter unravels the
complex interplay between our thoughts, emotions and personal
satisfaction. The path to success and happiness is about making
your mind your best friend.
A subsequent catch-up call where we reminisced about our
school days became the gateway to an insightful three-month
odyssey that revolutionised my perspective on life. Dr Carter’s
candid admission that he wished he understood this science earlier
in life was inspirational: Compassionate Neuroscience outlines all
the untapped resources within each one of us. These resources
have impacted every part of my life.
Yes, I thought I had it all, but I found out
how much I was missing. What a pity we
don’t learn how to operate our brains
much earlier in our lives.
After our conversation, Dr Carter
kindly couriered me his first book,
Body Wealth: Journey to Abundance.
During my career, I tailored, set
and implemented financial plans
achieving anticipated results. Once I
familiarised myself with the ideas associated with Compassionate
Neuroscience, I was hooked and was keen to participate in the
Unstoppable YOU programme. Admittedly, my initial focus was on
my failed personal relationships where I felt “stuck”.
I enrolled for the 14-week Unstoppable YOU programme, which
had me devoting 90 minutes every week to my feelings, fears and
a sense of self-awareness. My “people-pleasing” tendencies soon
emerged: I tend to think about the well-being and happiness of
others at my own expense. I learnt, through the Brain Operating
System, to manage my fears, identifying and confronting the
justifications I use as excuses.
Gradually, I identified the traits enriching my life and those
sabotaging it. Time spent reflecting and writing enabled me to
plan the life, professional and personal, that I ultimately want.
Ironically, I have been doing this for my clients for decades, creating
bespoke financial solutions for them while I completely ignored
my personal development. It’s easy to let the numbers translate
into a “successful” life. Through the Brain Operating System, I
discovered what was to become one of my favourite concepts in
the programme: the idea of “psychic push-ups”. When we initially
confront our fears and negative perceptions, it’s uncomfortable
and difficult. Over time, the benefits of “psychic push-ups” become
evident – easier to practice and the rewards are priceless.
After completing the lessons on Owning the Office of the
CEO (read: mastering your brain), Clearing the Filter, Conquering
Fear and Driving Belief, I noticed some fundamental shifts in
how I handle personal relationships. As time went by, I began to
understand and appreciate my assets and strengths, the positive
character traits that were serving me well and the triggers which
were negatively impacting my life. Admittedly, I needed to delve
much deeper into my thoughts, feelings and fears. The simple
exercises required by the programme taught me to pause, explore,
think, question, challenge and disagree with what I had effectively
been doing most of my life to understand the person whom Dr
Carter refers to as the authentic you or the “you you”.
Reflecting on the past eight months, it’s almost surreal to
recall my initial state of mind. In today’s tumultuous world, rife
with technological advancements and information overload,
the programme stands as a beacon for personal mastery and
resilience. To echo the words of Ralph Waldo Emerson, “The only
person you are destined to become is the person you decide to
be.” It is that simple.
Trevor Glassock MBA, CA(SA), CFP®, Head of Sales, Dr Roddy Carter
www.bluechipdigital.co.za
53

BLUE
CHIP
INVESTMENT | Systematic investment
Systematic investing:
the future of investing
In the rapidly evolving landscape of asset management,
integrating quantitative and qualitative skills has emerged as
a pivotal trend shaping the industry’s future. Quantitative and
qualitative approaches bring unique strengths to the table, and
it’s increasingly evident that synthesising these skill sets is essential
in achieving investment success. The days of large, traditional asset
management teams are fading, making way for leaner, technology
and data-driven investment approaches.
The symbiosis of quantitative and qualitative skills
Quantitative skills, enhanced with coding experience, involve
analysing vast amounts of data, constructing models and using those
insights to inform investment decisions. Advanced algorithms and
machine learning models underpin quantitative approaches because
they can efficiently process massive datasets, identify patterns and
correlations that are more difficult for humans to do and minimise
the human tendency to detect patterns that don’t exist.
On the other hand, qualitative skills help in holistically
understanding broader economic trends, market sentiment
and company fundamentals. Both approaches provide unique
perspectives and the synergy between them offers a comprehensive
view of investment opportunities.
The scrutiny of fees and the need for efficiency
Globally, investors are seeking cost-effective solutions without
compromising on performance, which means the fees investment
managers charge clients are under scrutiny, necessitating a leaner,
more efficient operational structure.
Research shows that asset management firms are recognising the
essential role data science and quantitative skills will play in this costconscious
environment. They allow for more streamlined and efficient
decision-making and operations, minimising costs and optimising
returns to the benefit of end investors.
AI and machine learning, advanced statistical analysis, and detailed
portfolio construction and optimal portfolio formulation.
To deliver on the above, we have a dedicated in-house data science
team that is an integral part of our investment process. We process
over 120-million data points per day on our platform, allowing for
enhanced analytics and creating operational efficiencies across
the investment team.
Our investment process is deeply rooted in rationality, driven
by rules and evidence, while also underpinned by a data-driven
approach that reduces human biases and promotes factual analysis.
This enhances our ability to navigate complex market dynamics
and ensures consistency in clients’ long-term outperformance.
Research by S&P Global shows that few active equity funds
outperform their benchmark over the longer term, while most
fixed-income funds do. At Prescient, our systematic fixed-income
investment approach allows us to generate consistent and
reliable outperformance. Combined with Prescient’s derivative
management expertise, we can generate enhanced passive returns
in the equity space, offering a wide range of products across asset
classes to fit the needs of our clients.
Our experience shows that integrating quantitative, data-driven
analysis and qualitative insights is indispensable in achieving
consistent, long-term outperformance by efficiently navigating
evolving markets in uncertain times, optimising costs, and
providing consistent value to our clients.
The Prescient approach
At Prescient Investment Management, we are ardent believers that
the future of asset management requires integrating quantitative and
qualitative skills. The synergy of these two skills enables us to make
investment decisions that consider it all, resulting in greater financial
certainty for our clients. That is why we are committed to systematic
investing and have been leading the way for the past 25 years.
Our systematic approach to investing has three broad pillars:
Conway Williams, Head
of Credit, Prescient
Investment Management
Sajjaad Ahmed, Quantitative
Analyst, Prescient
Investment Management
Prescient Investment Management Ltd, is an authorised financial services provider (FSP 612). Please note there are risks involved in buying or selling a financial product, and past performance of a financial
product is not necessarily a guide to future performance. The value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market
conditions. There is no guarantee in respect of capital or returns in a portfolio. The forecasts are based on reasonable assumptions and are not guaranteed to occur. Please note there are representatives
acting under supervision. This document is for information purposes only and does not constitute or form part of any offer to issue or sell or any solicitation of any offer to subscribe for or purchase
any investments. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether direct or
consequential) or expense of any nature whatsoever which may be suffered as a result of, or which may be attributable directly or indirectly to the use of or reliance upon the information.
54 www.bluechipdigital.co.za

PRACTICE MANAGEMENT | Technology
BLUE
CHIP
Intelligence:
the emotional and the artificial
Emotional intelligence gives us the edge that will allow us to coexist and not resist artificial intelligence.
One of my bucket-list items has always been a solo trip
abroad; this year I was lucky enough to realise that
dream. My first stop was Istanbul, and on the train to
my Airbnb I was scrolling on my phone when a meme
that I shared on Facebook precisely five years ago popped up as a
memory: “Travelling alone will be the scariest most liberating lifechanging
experience ever. Try it at least once.” What an absolute
goosebump moment.
As the trip was a combination of work and some sightseeing,
I made sure that I saw all the historical sights and museums.
Most of Istanbul is older than South Africa, and you are acutely
aware of the coexistence of past and present. There is evident
respect for each other’s boundaries and the unique and diverse
contributions both past and present bring to the flourishing
metropolis of Istanbul, and it is blatantly apparent that without
the other the city would be less. Not bad, not unable to survive
or exist, just less.
Sitting in the square in front of the ancient Blue Mosque,
typing away on my smartphone with super-fast 5G, sipping on
a coconut smoothie that I bought by simply tapping my phone
on a card machine, made my mind jump forward a few centuries.
I am sitting in an ancient place, using modern technology, and
this made me question the uncertainty and fear the development
of artificial intelligence (AI) is creating. Is it rational to fear this
modern development and to think it might make human
contribution obsolete?
The point of AI should be to make our lives more comfortable.
It will allow us to work smarter, not harder. AI can analyse data
and put it in any specific
format that we require (saving
us precious time) and we
can just apply our minds and
original thought processes
to find solutions. It will allow
financial advisors to see more
clients, as AI can do the “grunt
work”. AI will not cause job
destruction but job disruption.
New human-centric careers
will develop where emotional
intelligence plays a vital role.
These careers include financial
planners, financial coaches,
financial therapists and
mentors. Financial therapy
and financial coaching are
newly developing careers
focusing on people-centric
mentoring, assisting people in
Henda Kleingeld CFP®,
FPSA®,TEP, Programme
Director: PGDIP in Financial
Planning, School of Financial
Planning Law
dealing with financial biases, bad spending habits and moneyscripts,
as well as trying to find solutions to why our clients make
unfavourable financial decisions. Our generation does not want
advice on their money, investments and financial decisions from
an AI bot.
Research has shown that investment funds managed by
people outperform those managed by AI. If the Covid-19
pandemic taught us one thing, it is that people use machines
to get things done, but people still need people. The high rate
of mental health problems that have arisen since 2020 indicates
that humans struggle when isolated.
Individuals working in the financial industry are in a unique
position in that we are used to dealing with constant changes
and embracing new technology. We can be comfortable using AI
for administrative tasks and then apply our minds and emotional
intelligence to provide the best solution for our clients. We can
embrace the benefits of AI by respecting the boundaries and
coexist to ensure a more accurate service for our clients, but
without losing that human touch that is such a vital part of what
we do. I want to conclude with a quote from Sri Amit Ray, pioneer
of Compassionate AI: “Emotions are essential parts of human
intelligence. Without emotional intelligence, artificial intelligence
will remain incomplete.”
www.bluechipdigital.co.za
55

BLUE
CHIP
PRACTICE MANAGEMENT | Technology
Effortless meeting
minutes using AI
Online Board Packs &
Secure Board Portal
Blue Chip spoke to Zeldeen Muller, CEO of inSite Connect and creator of AgendaWorx, about three board
portal Artificial Intelligence automation tools that will help you transform your minutes process.
First off, what is AgendaWorx?
AgendaWorx is a cloud portal designed to automate all the tasks
you need to make your life as a board member easier. Imagine
having a single, secure location that isn’t cluttered with your
everyday documents and emails.
What if you never again had to wonder where that important
document is, what the outcome of last March’s voting poll was,
whether everyone has signed the resolution or where that email
you sent to David last February has gone?
Say goodbye to all that frustration. With AgendaWorx, you
have one dedicated place in the cloud where you can find all your
documents, sign resolutions, vote on decisions, jot down notes
on agendas, chat about issues and so much more. It’s not just a
searchable library; it’s also a comprehensive archive with easy
access to recordings, signed documents, voting results, email logs,
Section 37C files and shared documents.
And let’s not forget about compliance. The need to meet both
new and old compliance protocols is crucial. Failing to do so can
land you in the sort of headline news no-one wants to be a part of.
With AgendaWorx, automation takes care of that, too.
Why did inSite Connect decide to include agenda and
minute creation functionality into AgendaWorx?
Modern technology, like Zoom and Microsoft Teams, has been
helpful, but they often produce overwhelming amounts of text that
secretaries must then distil into actionable minutes. AgendaWorx
simplifies this by automating the creation of board packs using AI,
thereby reducing the time spent on these tasks by 70%.
Zeldeen Muller, CEO, inSite
Connect and Creator,
AgendaWorx, Board Portals
How does AgendaWorx
leverage AI to assist
secretaries in creating
board packs or minutes?
AgendaWorx incorporates three
powerful AI-driven tools:
Firstly, we offer precise
transcription services tailored to
South African accents. Secondly,
AI professionally rewrites these
transcriptions, omitting any
unnecessary chatter. If you’re
handling minutes, the AI will
convert your content into the past tense and rewrite it as if it
were reporting on what occurred during the meeting. So, with a
single click, you can transform your agenda content and meeting
transcription into a professional set of minutes. Lastly, our software
enables real-time collaborative editing of documents, which it then
formats consistently with just one click. All these tools combine to
revolutionise the process of taking minutes.
That’s impressive. Can you elaborate on how these
automated features improve efficiency?
With AgendaWorx, everyone can contribute to the same agenda
or set of minutes simultaneously. You can integrate content from
emails, PowerPoints and reports, which in usual circumstances will
be very messy. Then, with the press of a button, AgendaWorx will
format your entire document according to your company’s style
guide. It will fix all fonts and font sizes, justify your text, indent
paragraphs and add breaks after headings.
What about document assembly?
Our one-button solution assembles all your attachments, adds
them to the corresponding agenda items, numbers the pages
and even creates an indexed, bookmarked PDF with clickable
hyperlinks - all in a matter of seconds. If there’s a late addition, you
can quickly drag and drop it into place and AgendaWorx updates
everything for you.
Given concerns around data security and AI, how does
AgendaWorx ensure safety?
We use the ChatGPT APIs, which are not employed by OpenAI to
train its models. This means your data remains secure behind the
AgendaWorx firewall.
What is next for AgendaWorx?
We’re working on features that allow boards to request and compare
quotes directly within the portal. Also, we’re integrating AI to answer
questions about board rules and other documents. Imagine the
impact on efficiency when Zoom or Teams recordings can be
automatically divided into relevant minute items, transcribed and
professionally edited – all with a single button click!
There you have it – an in-depth look at how AgendaWorx,
powered by AI, is setting new standards in board governance and
meeting documentation.
56 www.bluechipdigital.co.za

USE AI FOR EFFORTLESS AGENDAS & MINUTES
YOU - will talk, not type!
AI
- will:
1. Transcribe (99% accuracy with SA accents) & convert
basic transcription into professional, AI edited copy;
2. One button will: fix formatting (fonts, justification,
spacing, indentation and more), one button will
collate, number pages, create numbered index &
add hyperlinked bookmarks. Yes, two buttons will
do ALL this.
Online Board Packs &
Secure Board Portal
Decrease the time to create your agendas and
minutes by 80%. Can you afford not to try it?
info@agendaworx.com

BLUE
CHIP
FINANCIAL PLANNING | Technology
What does the future of
financial advice look like?
Last year Boris Eldagsen won the World Photography
Organisation’s Sony World Photography Awards. Eldagsen
submitted a piece titled The Electrician which looks like
an old photograph showing two women, one of whom
crouches behind the other and another person’s hand extends
toward the front woman’s body. Eldagsen declined the award after
admitting that he had submitted an AI-generated piece.
In a description of his work, Eldagsen wrote, “Just as
photography replaced painting in the reproduction of reality, AI
will replace photography. Don’t be afraid of the future. It will just be
more obvious that our mind always created the world that makes
it suffer.”
In a similar vein to Eldagsen, I thought of submitting an article
on the future of financial advice written by Chat GPT. The reader
would be none the wiser and there is every chance that it would
be better than what I can conjure up on my own.
I then considered the words of Paul Saffo, a Silicon Valley-based
forecaster who explores long-term technology trends and their
impact on society. Saffo observes that “the goal of forecasting is
not to predict the future but to tell you what you need to know to
AI and data analytics will
enable completely customised
portfolios with less work
than current approaches.
take meaningful action in the present”. With this in mind, rather
than just leaving Chat GPT to predict the future, I thought I would
join it in considering what meaningful action to take in the present.
The result is a co-authored article between Chat GPT and me.
To begin the writing process, I asked GPT the question: “What
does the future of financial advice look like?” To Saffo’s point, GPT’s
forecast may not be completely accurate but it certainly does
provide some indication of what meaningful action we can take
in the present.
According to GPT, “The future of financial advice is likely to
be shaped by several key trends and developments, driven by
advances in technology, changing consumer preferences and
regulatory changes.” GPT forecasts the future of financial advice
by outlining 10 key aspects that are likely to be a reality. I list these
aspects with brief observations from both GPT and me (RM) as
we consider the implications of each, both now and in the future.
Photo Edition Berlin
Boris Eldagsen’s piece titled The Electrician.
1. Increased use of Artificial Intelligence (AI) and automation
GPT: AI-driven robo-advisors and virtual assistants will become
more prevalent. These tools will provide personalised financial
advice, portfolio management and answers to common
financial questions.
RM: These tools are already with us. GPT’s observation challenges
financial advisors to determine what their real value add is. And
provides the opportunity to become so much more efficient by
embracing the tools.
GPT: Automation will streamline routine tasks like account
management, data analysis and reporting.
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FINANCIAL PLANNING | Technology
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RM: I believe you should do everything you can now to automate
any repeatable process in your advice process and business. Start
using AI to help you make decisions and do tasks.
2. Personalisation
GPT: Financial advice will become highly personalised, taking
into account an individual’s financial goals, risk tolerance and
life circumstances.
RM: I believe that an in-depth understanding of a client’s life
and money will be non-negotiable. This understanding will need
to go beyond even what GPT suggests. A thorough personality
assessment of each client will be the starting point of the advice
process, as well as an exploration of the client’s relationship with
money.
GPT: AI and data analytics will enable advisors to offer tailored
recommendations and solutions for each client.
RM: Increasingly financial planners will be challenged to
personalise solutions for clients. Often financial planners cluster
clients into solution groups – for example, investment portfolios
with an asset allocation that is appropriate for a group of clients.
AI and data analytics will enable completely customised portfolios
with less work than current approaches.
Being human will be a financial
planner’s superpower.
3. Data-driven insights
GPT: Advisors will leverage big data and analytics to provide
clients with actionable insights into their financial situations. These
insights can help clients make informed decisions.
RM: Data will be personalised to ensure that each client’s
uniqueness is catered for when it comes to making decisions.
GPT: Predictive analytics may be used to forecast future financial
scenarios and recommend appropriate actions.
RM: Scenario planning in real-time with clients and the ability to
consider actions in the calm before the storm is a key method
of managing the behaviour of clients. For example, simulating a
market crash and its subsequent recovery with the client’s actual
portfolio will enable financial planners to agree on what action will
be taken ahead of time. This will be a key behavioural technique to
keep clients invested when they inevitably want to sell out because
they are fearful.
www.bluechipdigital.co.za
59

BLUE
CHIP
FINANCIAL PLANNING | Technology
4. Digital platforms and mobile apps
GPT: Clients will increasingly access financial advice and services
through digital platforms and mobile apps.
RM: The trend for clients to use digital platforms and mobile apps
is already with us. In April 2023, Amazon had 5.3-billion direct hits
on its website from users wanting to make a purchase. A total
of 20% of global retail sales are now made online, with 70% of
transactions being done using mobile. Financial planners ignore
this reality at their peril.
GPT: User-friendly interfaces and intuitive apps will make it easier
for clients to monitor their investments, track expenses and receive
advice on the go.
RM: If you don’t already have an app that your clients can use to
access their information and interact with you, you are already
behind the curve. Just think about how your clients access their
banking services, retail purchases, medical aid providers, taxi
services… you get the point. This is not something to resist. In
the past financial planners have been the gate-keepers of client’s
information. This time is now over.
5. Hybrid models
GPT: Hybrid models that combine the strengths of human advisors
and technology-driven solutions will become more common.
Clients may have access to both robo-advisors and human advisors.
RM: Financial planners will need to embrace the concept of roboadvice
to enable clients to do their own “fiddling” and “scenario
planning”, but also to use robo-advice tools for their own planning
with clients. Currently, many financial planners have tools that they
use to “drive” the financial planning process. Enabling clients to
“drive” as well won’t diminish the role of the financial planner, they
will just empower clients to be more confident in the process and
to take ownership of their financial futures. Positive outcomes for
both planner and client.
GPT: Human advisors will focus on complex financial planning,
emotional support and building long-term relationships.
RM: This is potentially the most important point that GPT makes.
Firstly, despite advances in technology, financial planners will still
need to be technically competent to deal with complex financial
situations. Technology will do the maths, find the relevant tax
regulation or do the first draft of an estate plan or will. However,
the financial planner’s expertise will be needed to make sure that
the outcome is appropriate for the client. Secondly, providing
emotional support and building long-term relationships will be
why clients deal with human financial planners rather than just
robo-advisors.
Being human will be a financial planner’s superpower, but only
if they develop the advanced human skills which justify a client’s
choice to work with a human rather than a robot.
6. Regulatory changes
GPT: Regulatory bodies are likely to continue evolving regulations
to ensure transparency, fiduciary responsibility and consumer
protection in the financial advice industry.
RM: Financial planning is on the path to being a fully-fledged
profession. Robust regulation and consumer protection are
integral to this. Financial planners who do not put their clients
first will be rendered redundant.
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FINANCIAL PLANNING | Technology
BLUE
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There is no point in saving and
investing for a future that is
destroyed by climate change.
GPT: Advisors will need to adapt to new compliance requirements
and digital record-keeping.
RM: The good news is that technology will enable compliance in a
way that is totally integrated into the advice process. Compliance
will no longer be regarded as an additional burden.
7. Ethical considerations
GPT: Ethical considerations and responsible investing will play a
more prominent role in financial advice. Clients may seek advice
on socially responsible and sustainable investing.
RM: This is already happening, but perhaps not on the scale that
Chat GPT anticipates will happen in the future.
GPT: Advisors will need to be well-versed in ethical investing
options and client preferences.
RM: Ethical investing is likely to be magnified by the climate crisis
which has resulted in unprecedented climate-related disasters in
2023. Until now, the ethical agenda has tended to be driven by
client preferences.
In the future, it may need to become an advisor-driven
consideration. In the same way that clients need nudges to save
for their retirement, like debit orders for their retirement annuities
and life insurance policies, they may need nudges when it comes
to ethical investing. There is no point in saving and investing for a
future that is destroyed by climate change.
8. Continued education and certification
GPT: As financial advice becomes more technology-driven and
complex, advisors will need to continuously update their skills and
knowledge.
RM: While it is self-evident that advisors will need to become
more technology-savvy, it is also clear that to justify their value to
clients, advisors will need to develop advanced human skills. We
already see the need for this with subjects like Financial Psychology
becoming part of CFP® curricula in other parts of the world.
GPT: Ongoing education and certifications will be essential to
maintain professionalism and competence.
RM: Financial planning is a complex and noble profession. As with
other professions, ongoing professional development will be key.
In the 21st century, financial planning will be as important as the
medical professional. Increasing longevity in many parts of the
world means that people don’t only need healthcare for longer,
but also the means to access it.
9. Globalisation
GPT: Technology will enable clients to access financial advice and
investment opportunities globally. Cross-border financial planning
and investment management will become more accessible.
RM: One of the biggest challenges that financial planners face in
South Africa now is client emigration. Financial planners who want
to retain these clients are developing the ability to provide crossborder
advice and solutions. This is good preparation for the reality
that a client’s location is no longer an indicator of where they will
source their financial planning professional.
10. Cybersecurity and data privacy
GPT: As financial advice moves online, cybersecurity and data
privacy will be paramount. Advisors will need robust cybersecurity
measures to protect client information.
RM: Cybersecurity and data privacy are already critical
considerations for financial planners. Financial planners who are
not already on top of these are tempting fate.
GPT: In summary, the future of financial advice will be characterised
by a blend of technology-driven solutions, personalisation and
regulatory changes. Clients will have access to a wide range of
digital tools and platforms that offer tailored advice, while human
advisors will continue to play a crucial role in offering expertise,
guidance and emotional support in complex financial matters.
The industry will need to adapt to these changes to provide the
best possible service to clients in an evolving landscape.
Paul Saffo says that “first we invent our technologies — and then
we turn around and use technology to reinvent ourselves as
individuals, as communities and as entire societies”. GPT is one
such technology that we (humans) have invented which suggests
that the opportunity is here to reinvent financial planning and
reinvent ourselves in the process. Doing this in partnership with the
increasingly powerful technology we have available to us is a unique
privilege of our generation. In the words of the legendary late Robin
Williams from the film The Dead Poets’ Society, “Carpe diem”.
Rob Macdonald, Head of Strategic Advisory Services
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BLUE
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PRACTICE MANAGEMENT | Technology
Technology innovation: the one
thing that changes everything in an
onerous regulatory environment
As South African financial services providers (FSPs)
prepare for the promulgation of the Conduct of Financial
Institutions (COFI) Act in the next year or so, some of
the leading FSPs are already in the initial exploratory
stages to establish how COFI will impact the efficiencies in their
businesses. The quest for business efficiencies is, and will remain,
an ongoing process especially as regulatory reform continues.
Few advisors, if any, will argue that technology plays an essential
part in managing an effective, efficient and profitable business. In
this article, we will only focus on the significance of technology
innovation and the impact that it will continue to have on FSPs as
we brace ourselves for COFI.
During a recent Trusted Advisor survey, advisors were asked
whether we are over-regulated as an industry and, given the
current regulatory obligations and other factors impacting
advisors and intermediaries, providing advice has become
extremely challenging and increasingly difficult to do business
profitably. Eighty-seven percent (87%) of advisors agreed.
Regulatory reform may be well-intended, but it is an undeniable
fact that legislation has brought with it complexity, additional
administration and significant costs to financial advisory
businesses over the last two decades.
Regulatory reform started in 2001 when the Financial
Intelligence Centre Act (FICA) was introduced, and shortly
thereafter the Financial Advisory and Intermediary Services (FAIS)
Act was implemented in 2004, and it was clear that legislation
was here to stay. These laws added more requirements, more
paperwork and administration and put further pressure on the
advisor/client experience. More recently, the Protection of Personal
Information Act (POPIA) added yet another layer of legislation and
administration, which further exacerbated the process. As stated
at the outset, it cannot be denied that the volumes, complexity
and exacting nature of the legislation that applies to advisors
and intermediaries puts a tremendous administrative burden on
financial services providers. In this complex, admin intensive and
exigent environment, FSPs need something that will help them
to not only survive in the industry but to stay at the cutting edge
of the profession.
When there are only 24 hours in a day to do business and
administration, and there are more things to do due to more
legislation, logically, you will have to do things faster and more
efficiently if you want to finish the work at the same time. At the
risk of stating the obvious, if you do not want to employ more
people to do the additional work, the only logical solution is to
use technology effectively.
With the COFI Act on its way in the next year or so, technology
innovation is going to be more important than ever. COFI will
replace the FAIS Act and it will have a ripple effect throughout
every component of FSP businesses. With these changes, every
FSP business will need an equaliser – a tool that can simplify
the complexity of doing business, and automate business and
compliance processes, whereby the effectiveness and efficiencies
in the business are enhanced. Without it, FSPs will find it
increasingly difficult, if not impossible to stay in business and meet
their requirements.
Fortunately, leading financial planning and CRM software
companies are aware of this dilemma that FSPs are facing, and it
offers great business opportunities for them to add tremendous
value to their FSP clients. The leadership of business software
solutions like Elite Wealth, Avalon and atWORK recognise that
there are many components in the business of FSPs where
they can make a significant contribution to enhance business
processes and efficiencies. For them, it will be helpful to know
that the underlying components of all FSP businesses can be
illustrated as follows:
S
U
I
T
A
B
I
L
I
T
Y
Representatives /
Supervisor / KI
The 10-Step Process
Prospecting
Set up appointment
Professional introduction
Gather information
Agree on services
Conduct an analysis
& prepare report
Present the proposal
Agree on production solution
Implement the solution
Ongoing advice & services
Income / Remuneration
R
E
C
O
R
D
K
E
E
P
I
N
G
Culture & Governance
P
O
L
I
C
I
E
S
Principal / Key Individual
Business Management
People
Training
Business infrastructure
Processes & systems
Marketing
Risk management
& compliance
Administration
Remuneration
Financial management
Income / Remuneration
Directors / Principals
/ Managers / Key Individual
FSP Reporting
FIC
Prudential Authority
Information Regulator
Financial Sector Conduct Authority
South African Revenue Service
Profit growth
Increased shareholder value
Client experience
Source: The fundamentals of practice management for representatives
This illustration identifies all the essential underlying components
of every single FSP, not only in South Africa but globally. Client
engagement (column on the left) is the heartbeat of every FSP
as it is during this process that clients are acquired and retained
in the business. It is also from this process that revenue is earned.
P
R
O
C
E
D
U
R
E
S
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PRACTICE MANAGEMENT | Technology
BLUE
CHIP
Professional client engagement is a process and through
technology, many of these steps can be automated from
an administrative point of view. Client engagement has
two essential components that cannot be separated,
namely best business practice aimed at building client
trust, and compliance aimed at confirming suitable
advice and keeping accurate records of advice and
transactions. Best practice principles and compliance are
inseparable and must be integrated to ensure consistent
and efficient application.
The 10-step process of professional client
engagement is one of the most important processes for
software and CRM companies to capture in a workflow.
Advisor and client information must be prepopulated
in compliance templates to save time, and automation
is essential to enhance efficiencies and consistency in
the process. Ideally, the FICA process and the POPIA
requirements should also be integrated into the
process and automated as far as possible. Prepopulating
information, automation and even digitalisation will go
a long way to enhance the advisor and client experience
during the client engagement process, which will give
real substance to the FSP’s value proposition.
Technology is not only a game changer in the client
engagement process. It can play a significant part in
every component of the business, such as HR, training,
systems, processes, marketing, compliance and financial
management, etc. For example: COFI will be introducing
a Conduct of Business Return (Omni-CBR), like the former
compliance report that had to be submitted to the
Financial Services Board a few years ago, but the Omni-CBR
is going to be an FSP compliance report on steroids. I have
conducted a high-level analysis of the proposed return
and it did not take me long to realise that it is going to be
impossible for FSPs to submit this report effectively and
efficiently without the help of technology.
There is no doubt in my mind that FSPs will become
increasingly dependent on technology innovation by
software and CRM businesses to absorb the additional
burden of administration. This is one of the reasons why
this topic will be discussed during the 2023 FPI Convention
on the 14th and 15th of November at the Sandton
Convention Centre.
Anton Swanepoel,
Founder, Trusted Advisor
If you do not want to employ
more people to do the additional
work, the only logical solution is
to use technology effectively.
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63

BLUE
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PRACTICE MANAGEMENT | Client service
Elevating client service in wealth
advisory: the Seed Analytics solution
In the competitive world of wealth management, advisors often
only have a few chances a year to prove their mettle – primarily
during the annual review. Betting your practice’s success
on these rare touch points is a risky strategy. This situation
prompts the question: how can advisors differentiate themselves
consistently throughout the year?
The competitive landscape
Wealth advisors must understand that they operate in a
competitive market with rivalry. Clients are willing to jump ship
at the slightest hint of better service elsewhere. This is why referrals
are golden; they prove that one advisor can offer superior service.
To stand out, advisors need to do two things:
1. Provide value in every interaction.
2. Increase the frequency of these value-added touch points.
But herein lies the challenge. Consistently delivering these valuegenerating
touch points absorbs considerable time – a resource
better spent on growing the business and managing existing
portfolios. Advisors often end up increasing their back-office staff
to handle this load, inadvertently hiking operational costs.
How can advisors differentiate
themselves consistently
throughout the year?
The advantage
The true solution to this dilemma is leveraging best-of-breed
technology. Seed Analytics comes to the rescue by offering 12
meaningful touch points in the form of monthly, white-labelled
consolidated investment statements. These custom-branded
statements not only keep
clients updated on their
investments but also
elevate the advisor’s brand.
When clients receive these
statements, they associate
the value they’ve just gained
with their advisor, reinforcing
loyalty and trust. Advisors
can offer this service simply
by hiring more back-office
staff, but that would be
expensive compared to
Seed Analytics’ offering.
Furthermore, the back-office
approach increases business
complexity. More staff
demand more time from
the advisor. The technologydriven
approach Seed Analytics offers allows advisors to focus on
what really matters – growing their client base and funds under
management – while also providing an elevated level of service that
sets them apart from the competition.
Adopting Seed Analytics is not merely a way to provide a
higher level of service; it is a strategic move to de-risk and scale
the business. In a market where the difference between gaining
and losing a client can be as simple as the frequency and quality of
touch points, Seed Analytics offers a robust, cost-effective solution
for advisors committed to excellence.
Seed Analytics reduces advisor admin burden by producing
white-labelled, monthly consolidated portfolio statements,
rebalancing tools and book reports for wealth advisors.
Find out more at www.seedanalytics.info
Email: andries@seedanalytics.info
Andries de Jongh, Senior Sales and
Key Account Manager,
Seeds Analytics
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PRACTICE MANAGEMENT | Technology
Technology and the
customer experience
In today’s fast-paced digital era, the financial planning industry is
undergoing significant transformation. With the advancement
of technology, financial advisors and financial planning
professionals face both challenges and opportunities. The key is
to use these technological advancements to improve the customer
experience, ensuring that clients get the best of both worlds: the
efficiency of modern tools and the irreplaceable human touch.
Douglas Adams’ technology rules
The Salmon of Doubt is a book that was published after Adams’
death. The book contained an essay he wrote titled, How to Stop
Worrying and Learn to Love the Internet. For context, Adams was
an early adopter of technology and was the first person to buy a
Macintosh in Europe back in 1984. He is also the guy who wrote
The Hitchhiker’s Guide to the Galaxy.
Adams suggested in this essay that there is a set of rules we can
follow to describe our relationship with technology:
1. Anything that is in the world when you’re born is normal and
ordinary and is just a natural part of the way the world works.
2. Anything that’s invented between when you’re between 15 and
35 is new, exciting and revolutionary. You could get a career in it.
3. Anything invented after you’re 35 is against the natural order
of things.
I have a theory that, as we get older, most of us start losing our
sense of curiosity and our energy for learning and exploring new
ideas. However, that does not make the world stand still.
The evolution of customer experience
Traditionally, financial planning was dominated by face-to-face
meetings, paper-based processes and manual data entry. While
these methods had their advantages, they were often timeconsuming
and lacked the scalability and efficiency that today’s
clients are looking for.
Enter the digital shift. With the introduction of online platforms,
mobile apps and automated tools, the financial planning
landscape is being transformed. Advisors can now interact with
clients in real time, provide instant updates and provide a more
streamlined service.
Key technologies
Several technologies stand out in their ability to improve the
customer experience in financial planning:
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The key is to use technological
advancements to improve
the customer experience.
1. Financial planning software. Modern software solutions
provide real-time financial projections, scenario planning and
risk assessments in many cases. These tools provide clarity and
understanding, allowing clients to make informed decisions about
their financial future. For example, Asset Map provides a great way
for clients to not only see the big picture through informative
visualisations but also to engage in the financial planning process
while the Wealth Integrator tool from Old Mutual Wealth enables
advisors and planners to make changes in real time while in
conversation with clients to help them make appropriate decisions.
2. Client portals and dashboards. These secure platforms
provide clients with a clear view of their financial data. They can
easily track their progress, set goals and communicate with their
advisors. Clients trust such platforms because they have constant
access to their financial information and can see the impact of
their decisions instantaneously. Most of the financial planning
and advice CRM providers now offer some form of client portal
in South Africa.
3. AI and chatbots. While receiving financial advice from a
machine may seem impersonal, AI-powered tools can provide
instant responses to basic client queries, schedule appointments
and even offer preliminary financial advice. However, it is critical
to strike a balance. While AI can handle routine queries, complex
financial planning necessitates the nuanced understanding that
only a human advisor can provide. Also, I want to mention that
chatbots are getting a major upgrade through generative AI. Such
virtual agents can have human-like conversations with context to
what is being discussed. No longer will a chatbot be reliant on the
right keywords.
4. Virtual and augmented reality. Imagine a client being able
to visualise their financial future through an immersive experience.
VR and AR tools can provide interactive scenarios ranging from
visualising retirement plans to understanding the potential
outcomes of various investment strategies. Such tools can make
the financial planning process more engaging and relatable. With
the introduction of the new Apple Vision and Meta’s Quest 3 that
was just introduced, you can expect amazing experiences in the
future. For you and your client.
Personalisation and data
Financial advisors have a wealth of information at their disposal in the
age of big data. By analysing client data, advisors can gain valuable
insights into their clients’ financial behaviours, preferences and
needs. This data can be used to personalise financial advice for each
client. However, with great power comes great responsibility. The
security and privacy of client data is critical. Advisors must be aware
of regulations such as the Protection of Personal Information Act
(POPIA) and ensure that they are compliant.
Francois du Toit, CFP®, Founder, PROpulsion
The human element
Despite the abundance of technological tools available, the
human element remains critical in financial planning. Clients
seek advisors who understand their emotions, aspirations and
fears. They value human interaction, the ability to ask questions
and the reassurance that comes from speaking with a real person.
Hybrid models, which combine the efficiency of technology with
the personal touch of human advisors are becoming increasingly
popular. These models provide clients with the best of both
worlds, ensuring that they receive personalised, tech-enhanced
advice without losing the human connection.
Future trends and predictions
The financial planning industry will evolve alongside
technology. Emerging technologies, such as blockchain and
advanced data analytics, have the potential to improve the
customer experience even further. Furthermore, as clients
become more tech-savvy, their expectations will shift. Financial
advisors must stay ahead of these trends by constantly adapting
and learning to meet their clients’ changing needs.
Finally, technology provides financial advisors with a whole
universe of tools to improve the customer experience. However,
it is critical to remember that technology should be used to
supplement, not replace, the human touch. By striking the right
balance, financial advisors can provide their clients with a service
that is both efficient and deeply personal.
Stay curious!
Visit www.propulsion.co.za for more information.
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CLIENT ENGAGEMENT | Communication
Unveiling the magic of social
media for financial advisors
Why struggles exist and how to conquer them.
In 1931, Albert Einstein famously penned, “The most beautiful
experience we can have is the mysterious.” Fast forward to
the digital age, and this sentiment resonates deeply with our
interaction with social media platforms. Social media possesses
a magical allure – an enigmatic realm of wonder, a captivating
escape from reality and a conduit for connection. Yet, within this
captivating realm, financial advisors often grapple with a curious
conundrum: the struggle to effectively harness the potential of
social media and online communication.
In the 1960s, Arthur C Clarke articulated that “any sufficiently
advanced technology is indistinguishable from magic”.
Today, the technology underpinning social media has
progressed to a stage where it seamlessly intertwines with the
notion of magic itself. We find ourselves captivated by the intricate
hidden workings of algorithms, akin to the mystique of a magician’s
sleight of hand. These platforms evoke a sense of empowerment,
spark nostalgia for childhood memories and seduce our attention
with a constant stream of content. The challenge lies in the need
for a comprehensive strategy – both for the consumption and
creation of content. We need a blueprint that brings boundaries
and balance to the enchanting world of social media.
In the decade that I’ve been helping financial advisors craft,
recraft and carry out their digital communication strategies,
I’ve relied on what I refer to as the three Cs of successful online
communication: Content, Connection and Community – the
glimmering stars of a conversational communication strategy
designed to align with the fundamental questions of who, what
and why. Content is often the blinding light of an online strategy,
and it’s where most financial advisors focus all of their energy.
Content simply for the sake of content only creates more clutter
in our communication environments. This is where the struggle
becomes real, but it’s not without a solution. We only need to dig
a little deeper into our strategic intent.
Our content needs to be directed to creating connections that
transcend transactional interactions. Maya Angelou once said that
people will forget what you said, people will forget what you did,
but people will never forget how you made them feel. This doesn’t
mean that we don’t really need to say anything specific; it means
that our content needs to reach deeper than just the transaction.
It needs to reach the hearts and minds in ways that spark change.
We need to reflect on connection.
Connection is the second C — a bridge that links advisors
with their audience on a personal level. The power of connection
extends beyond likes and shares; it delves into resonating with
the lives, aspirations and challenges of the reader. Establishing
these deeper connections fosters a sense of relevance and
relatability, turning online interactions into valuable conversations
that resonate at a life level. It’s about understanding that social
media is more than a virtual billboard; it’s a vibrant avenue for
forging meaningful relationships based on shared experiences and
genuine understanding.
This culminates in the third C: Community. Engaging with the
right people is as critical as refining your value proposition and
articulating your message. If you address the wrong audience,
your content and value proposition might flounder for traction –
and this becomes another reason why financial planners struggle
with social media. Among the financial advisors I collaborate with,
many have only connected with colleagues on LinkedIn, family on
Facebook or their kids on Instagram. As soon as they strategically
build a community of current clients and potential prospects, they
engage more and struggle less.
When we put these three Cs together, we find that we can
be strategically conversational and not default to coming across
as being transactional. Almost three decades ago (1996), Bill
Gates said that content would be the new king in our digital
communication era, and for a fleeting moment – he was right.
But I believe that Conversation is the new king.
Tim Slatter, Creator of Contatto and Director,
Slatter Communications
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Amidst the sea of content, it’s the conversations sparked that carry
the real momentum for change. This shift from content-centric to
conversation-driven strategies is where the magic happens. The
core principle of social media – that which birthed its existence
– is reconnecting individuals digitally, fostering meaningful
discussions with friends, family, colleagues and like-minded
individuals. It’s about restoring the power of conversation in an era
overshadowed by relentless ads vying for our precious attention.
We need a blueprint that brings
boundaries and balance to the
enchanting world of social media.
The journey begins by revisiting the core goal of social media:
facilitating genuine connections. It’s about transcending the
clutter and the noise to rediscover the joy of connecting.
While platforms are flooded with ads striving for our attention, our
greatest asset is indeed our attention. We need to shift this asset
from mindless scrolling to purposeful engagements that foster
lasting relationships.
The rekindling of social media’s magic lies in sparking
conversations of meaning. The Three Cs – Content, Connection
and Community – converge to drive Conversations that matter. As
financial advisors, it’s imperative to embrace this holistic approach
and weave the threads of enchantment, strategy and connection
into a seamless, sustainable digital presence.
In the grand illusion of social media, let us not merely
be dazzled by its allure. Instead, let us empower ourselves
to use it as a catalyst for genuine connections, enlightening
discussions and a realm where magic is the bridge between
purpose and possibility.
With the three Cs as our foundation, we can navigate this
enchanting realm with clarity, forging authentic connections
that illuminate the path toward meaningful engagement in the
digital age.
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FINANCIAL PLANNING | Retirement
Annuities: choose wisely
Financial advisors have the critical challenge of helping their clients convert
retirement capital into an income stream to see them through their retirement years.
There are two main annuity income products (AIPs) that
financial advisors assist their clients to choose from,
namely: a guaranteed/life annuity (or annuitisation);
and a living annuity (or self-annuitisation). The former
guarantees an annuity income for life, whereas the latter
exposes capital to volatile investment returns, with the possible
danger of depletion before death, especially in the wake of
excessive withdrawals.
Contrary to the recommendation based on economic theory,
very few people avail themselves of the benefits that a guaranteed
annuity provides – instead most retirees prefer a living annuity, an
investment portfolio from which the annuitant withdraws income,
with the possibility of leaving heirs a bequest of the remaining
retirement capital at death.
The worldwide phenomenon of reticence among retirees to
protect themselves against longevity and investment risk is an
annuity puzzle that has been the subject of vigorous academic
debate and applies especially in the South African context.
A better understanding of the annuity puzzle is essential,
especially in the wake of longer life expectancies of retirees due
to medical innovation, unsustainable living annuity withdrawal
rates and poor investment performance delivered by the
JSE All Share Index (ALSI) from time to time.
Annuity decision-making factors
In my PhD research, I looked at the factors associated with annuity
decision-making. Specifically, the factors (grounded in annuity
puzzle literature) that relate to i) individuals’ annuity perceptions
and intention pre-retirement and ii) annuitant satisfaction levels
post-retirement, were investigated. The two parts of the study ran
concurrently with distinctive samples. I performed a quantitative
analysis on cross-sectional primary data collected by conducting
survey research using online questionnaires.
The sample for the first part of the study consisted of employees
of Stellenbosch University (SU) who are members of the University
of Stellenbosch Retirement Fund (USRF), and employees of Exxaro
who are members of the Exxaro Retirement Fund.
In part one of the study, 63% of the total sample (311
respondents) had chosen a living annuity and 37% had chosen
a guaranteed annuity. The ratio of respondents choosing a living
annuity over a guaranteed annuity of ≈1.73:1 is expected, as most
South Africans favour the living annuity option. The sample in
part two of the study consisted of former employees of SU, who
are fully retired from the USRF, and Glacier annuity clients. In
part two, 76% (229 respondents) out of the total sample of 303
respondents had chosen a living annuity, exactly as the
annuity puzzle predicts. The data from both samples
was collected in June 2020.
PHOTO: ANDREA PIACQUADIO
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A discussion of how some of the annuity decision-making factors
interrelate brings us to the main conclusions of the study.
1. Managing retirement capital – burden rather than blessing
The most unexpected finding from the research was that the
desirability for flexibility and control over retirement capital to
pursue capital growth significantly contributed to discontent.
Paradoxically, the attributes that initially positively related to
the favourability of a living annuity can often be associated with
dissatisfaction in retirement. In other words, respondents (preretirement)
with investor confidence and a desire for flexibility/
control and accessibility find self-annuitisation beneficial.
However, when another group of respondents were asked
about the responsibilities that come with self-annuitisation
in their retirement, these factors that were desirable before
retirement, became a burden. Deductively, this finding challenges
the accepted belief in Western culture that more control,
choices, flexibility and autonomy lead to a better outcome or an
improvement in well-being.
The flexibility and control of managing a living annuity and
earning an above-average return shift the responsibility and
burden of not making suboptimal decisions to the annuitant,
whereas a guaranteed annuity runs automatically and requires
no further decision-making, once the initial irreversible decision
of exchanging a capital lump sum for a consistent income stream
of payments has been made.
The belief of “doing better” with a living annuity (as opposed to
a guaranteed annuity) could be attributed to investors looking
at the annuity choice through the investment lens/frame,
by focusing on the return and risk features of an AIP, without
considering the consequences for consumption.
Very few people avail themselves
of the benefits that a guaranteed
annuity provides – instead most
retirees prefer a living annuity.
The attractive feature of self-annuitising under the investment
lens/frame is the possibility of generating superior investment
returns, whereas the unattractive feature of annuitisation through
the investment lens/frame is the potential to lose money in the
event of premature death. The unattractive feature of a living
annuity under the consumption frame is the possibility of outliving
retirement capital. However, under the consumption frame, a
guaranteed annuity is attractive, as it serves as a form of insurance
for consumption throughout retirement.
Annuity characteristics should be viewed through both lenses/
frames to enable retirees to have a more balanced outlook on
annuity decision-making. Retirees should be made aware that
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FINANCIAL PLANNING | Retirement
the extent of the responsibility/load in managing living annuity
capital, especially in old age, or when the spouse who handled the
finances dies first, can become unbearable.
2. The fear of outliving retirement capital
The fear of outliving retirement capital contributed to living
annuitants’ dissatisfaction with retirement. Having the option to
access retirement capital and withdraw large capital lump sums
may tempt retirees to use such capital unwisely. A strong sense
of discipline is required to honour the ultimate goal of retirement
funds, ie providing the annuitant with an annuity income stream
for life. The freedom of selecting investments and deciding on
withdrawal rates therefore comes with much responsibility.
In behavioural finance, the theory of risk-order bias supports
the notion that individuals underrate the probability of far-off
periods, in contrast to near periods. As a result, the probability of
poverty in old age is gravely underestimated.
Annuity decision-making tool
For an annuity decision-making tool, consisting of two questionnaires
and user’s manuals, to be used by financial advisors/benefit counsellors,
in educating and guiding their clients (pre and post-retirement) with
respect to their choice of an optimal AIP, the researcher can be contacted at
jeannie@sun.ac.za.
Understanding the tried-and-tested mechanisms underlying
a formal guaranteed annuity market could offer retirees a
lifestyle unencumbered by the fear of outliving retirement
capital. Especially recently, given South Africa’s favourable yield
curve/long rates.
3. The bequest motive
The bequest motive, which refers to the annuitant’s desire to leave
the remaining retirement capital to heirs at death, is significantly
related to individuals’ positive attitude towards a living annuity.
The bequest motive is mostly driven by an altruistic desire
to leave something of value behind to surviving family
members at death.
The uncertain nature of this potential bequest should be given
due consideration, as no-one knows for sure what the amount of
the bequest will be or when it will occur. The eventual size of the
bequest could also potentially have a negative value, in the event
of capital depletion before death, in which case family members
may instead “inherit” the financial obligation to provide for the
retiree. It could also be argued that relieving one’s family of the
financial burden of support is an altruistic gesture in and of itself. A
guaranteed annuity exempts the retiree’s family members from the
financial risk and subsequent burden of providing for the retiree
at some future date.
4. Role of the financial or benefit counsellor
Having trust in the integrity of financial advisors is significantly
related to individuals’ annuity perceptions and intentions.
AIP awareness and financial literacy are not only related
to individuals’ outlook on annuities but also their eventual
satisfaction in retirement.
Therefore, financial advisors and benefit counsellors have a
duty of care to assist their clients in extensively examining the
validity and legitimacy of the underlying motives and reasons for
favouring any AIP, otherwise, it may direct their choice unjustly.
In addition, creating awareness of various cognitive biases
present in annuity decision-making could facilitate rational and
deliberate AIP choices.
Closing remarks
The freedom obtained by choosing the self-annuitising route carries
a great responsibility and the burden of living with the potentially
irremediable consequences of your choice. Alternatively, receiving
a guaranteed income stream (either partly or in full) affords the
freedom to live unbound without any further difficult investment
decisions or the possible detrimental consequences of outliving
retirement capital.
Dr Jeannie de Villiers-Strijdom, CFP®, Senior Lecturer and
Postdoctoral Fellow, Department of Business Management, Faculty
Economic and Management Sciences, Stellenbosch University
References
1) De Villiers-Strijdom, J., 2021, “Annuity decision-making”, Doctoral thesis,
Stellenbosch University. https://scholar.sun. ac.za/handle/10019.1/109846.
2) De Villiers-Strijdom, J. & Krige, N., 2023, “Living annuity satisfaction”, Journal of
Economic and Financial Sciences 16(1), a841. https://doi.org/10.4102/jef. v16i1.841.
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FINANCIAL PLANNING | Retirement
The future of retirement
planning: two-pot
system insights
In an era marked by ever-changing career trajectories and
unforeseen financial challenges, the preservation of retirement
savings has become an increasingly pressing concern.
Enter the two-pot system, a legislative innovation designed
to strike a delicate balance between safeguarding those
hard-earned retirement funds and providing individuals
with the flexibility to navigate short-term financial needs.
This groundbreaking system is not only reshaping the landscape
of retirement planning but also reshaping the way we perceive
financial security in an unpredictable world. In this article, we
delve into the intricacies of the two-pot legislation, unravelling its
components and exploring how it aims to empower individuals
to secure their financial future, one pot at a time.
Intentions behind the two-pot system
The primary goal of the two-pot system is to provide South
Africans with the flexibility to access a portion of their retirement
savings at various stages of their careers, creating a financial safety
net for unexpected challenges. This need became evident during
the Covid-19 pandemic when many individuals faced severe
financial difficulties, often unable to access their retirement funds.
Additionally, the system seeks to discourage individuals from
prematurely depleting their savings by cashing them out when
changing jobs or resigning solely to access their retirement funds.
Components of the system
The two-pot system is designed to strike a delicate balance
between the long-term goal of accumulating retirement savings
and addressing unforeseen financial challenges. To achieve this, the
system introduces three distinct “components” within its framework:
1. The savings component. This segment is tailored to meet
the immediate financial needs of retirement fund members
facing financial stress. It allocates one-third of a member’s net
retirement fund contributions, which can be accessed before
retirement. Members can make a single withdrawal from the
savings component each tax year, with minimum withdrawals
of R2 000 and a maximum of 100% of the component’s value.
These withdrawals are subject to taxation at the member’s
marginal tax rate. Any remaining balance in the savings
component at retirement can be withdrawn in full, in part, or
transferred to the retirement component to secure a retirement
income through an annuity. However, waiting until retirement
to access your retirement savings has a tax advantage. When
taking lump sums from your savings pot upon retiring, it will
be subject to the retirement fund lump sum benefits tax table,
ranging from 0% to 36%, with the first R550 000 being tax-free.
The goal is to discourage members from withdrawing funds
from their savings pot prematurely and encourage them to
maintain it for emergencies.
2. The retirement component. Two-thirds of a member’s
contributions are allocated to this component, accessible
only as an annuity at retirement. Lump sum withdrawals are
permitted in cases where individuals emigrate from South
Africa and cease to be tax residents.
3. The vested component. Comprising retirement savings
accumulated before the implementation date of 1 March
2024. This includes vested benefits from provident fund
contributions made before 1 March 2021 and any growth and
non-vested benefits. Members retain their existing access rights
to these benefits after 1 March 2024. This means they can make
full withdrawals upon resigning or being retrenched from an
employer’s pension or provident fund, make one full or partial
withdrawal from a preserved benefit in a preservation fund,
or, upon retirement, withdraw the entire value of the vested
benefit in cash and up to one-third of the non-vested benefit
in cash.
Once the new system takes effect, members can’t contribute to
their vested component any more, except for provident fund
members aged 55 or older on 1 March 2021. They can keep
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contributing to their vested component until they retire or leave
the fund they were in on 1 March 2021. If they choose to continue
these contributions, their entire contribution goes to the vested
component, and they can’t contribute to the savings component
and retirement component. However, if they want to participate
in the new two-pot system, they can’t keep contributing to their
vested component and must split their contributions between
the savings component and retirement component like other
retirement fund members.
Tax considerations
Regarding taxation, the fundamental principles remain
unchanged. Retirement fund contributions continue to be
tax-deductible within existing limits. Investment returns on
a member’s benefits in the three components remain taxexempt.
Withdrawals from these components are subject to
tax. Savings withdrawal benefits from the savings component
will be taxed at the member’s marginal tax rate, with retirement
fund administrators applying for a tax directive from SARS for
each withdrawal.
In summary, the two-pot legislation aims to strike a balance
between preserving retirement savings and providing flexibility
for members to address short-term financial needs. By allocating
contributions to different components, members can access
savings when necessary while ensuring a substantial portion
remains preserved for retirement, ultimately enhancing
retirement security and financial well-being. The legislation is set
to benefit retirement fund members by increasing their retirement
savings and providing more controlled access to their funds.
Matthew Marrian, Chief Operating Officer, InvestSense
Our financial planning
qualifications are aligned
with the FSCA requirements
and the Financial Planning
Institute of Southern
Africa’s (FPI) designations.
Our Postgraduate Diploma
in Financial Planning offers:
●
●
●
Flexible starting dates
Online lectures
and exams
High quality tuition by
experienced professionals
We’ve got you.
You’ve got this.
+27 86 999 0001
enquiries@milpark.ac.za
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PRACTICE MANAGEMENT | Accounting
Get back on track, in
four strategic steps
Accountants can help small businesses.
By Karl Smith, Senior Education, Training and Member Support Manager, SAIPA.
“
Business Rescue” and “liquidation” are unfortunately
words that are too often used in public discourse, due to
the devasting impact companies – with depleted cash
reserves – have realised over the past two and half years.
With an increase of 44.8% in business liquidations (Stats SA)
and fewer businesses reported to have entered Business Rescue,
small businesses in South Africa are assessing financial positions
too late – when they can no longer keep the doors open.
This is where Professional Accountants (SA) can be a
company’s internal advisor, helping to re-strategise operations
for better success and restoring financial wellness. With small
businesses employing from 50% to 60% of South Africa’s
workforce and contributing around 34% of GDP, there is a new
market opportunity and duty for Professional Accountants (SA)
to provide advisory support to help keep small businesses on
track and financially sound.
Accountancy professionals are trained to exercise judgment,
engage in critical thinking and have a deep understanding of
complex multi-faceted operations and the resulting financial
consequences. They are ideally suited to help small business
owners and entrepreneurs identify their strengths, weaknesses,
opportunities and threats, as well as create a plan to address them.
With global entrepreneurship high on our country’s economic
agenda, here are several ways Professional Accountants (SA)
can strengthen the small business sector and help companies
regain financial stability while wrestling through the tough
economic climate.
Review the business’ financial status
The pandemic could have exacerbated financial issues that a
business was already experiencing, such as cash-flow problems
or a decline in business activity that resulted from changes in
the business cycle or broader economic pressure. A professional
advisor should assist in determining whether the business had
any pre-existing conditions that are not necessarily related to
the pandemic, but that may have been masked because of it.
Cash flow management can
be a deciding factor in a
small business’ prospects of
survival and ability to thrive.
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Once a clear picture of where the business currently stands is
established, the advisor and owner can look at ways to stabilise
business performance.
Create a recovery plan
Cash-flow management can be a deciding factor in a small
business’ prospects of survival and ability to thrive. Cash provides
liquidity, negotiation power, a security reserve and a hedge –
although arguably a depreciating one during inflationary periods.
Having reviewed financial health and objectives, accountancy
professionals can offer practical advice such as where to access
finance to keep afloat if you have a gap in working capital
requirements, help identify areas where you could cut costs to
free up cash flow, and so on.
Restore stability
Having a good understanding of a business and how it operates,
along with a familiarity with its financial strategy, helps advisors to
plan the best next steps. While small business owners know their
operations best, complexities such as taxes and debt restructuring
are not always part of their daily operations. Partnering with an
advisor who understands these processes in more detail and who
can advise, will help restore stability.
Talk about the medium to long-term vision
Most of us have a sense that the pandemic has changed our
world for good, but we are not entirely sure which changes will be
permanent or which will dissipate. By partnering with professional
advisors, SMEs can start to review which trends have had a positive
or negative impact on their business and what strategies can be
deployed to maximise the positive changes.
The time for businesses to seek out and seize the opportunities
emerging in the recovery is now. This involves conducting an afteraction
review to collect data and insights on lessons learned and
use these to prioritise actions to relook business models, enhance
business value today and build strategic resilience for tomorrow.
Small businesses that take these steps now will be well-placed
to capitalise more effectively on the opportunities rising and to
continue winning in their marketplaces as greater certainty and
stability return.
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FINANCIAL PLANNING | Estate planning
The art of estate planning
The role of a multi-family office in preserving wealth and protecting family legacies.
The greatest value of an estate plan is that it empowers
an individual to draw a line in the sand at a particular
moment in their lives and reconcile what they own
and owe and how they want to manage, nurture and
distribute their assets after their death. But estate planning is more
than just setting up a trust and drafting a will.
“It’s listening to what a client wants to happen when they die
and structuring their finances and will accordingly. This includes
structuring their estate in a way that enables them to achieve their
goals while bearing in mind their liquidity needs and tax efficiencies,”
says Luke Hirst, wealth manager, Private Client Holdings. The AfrAsia
Bank Africa Wealth Report 2021 predicts that total private wealth in
Africa will rise by 30% over the next eight years, reaching $2.6-trillion
by 2030, making the multi-family office service a fast-growing wealth
management segment in South Africa and Africa.
Multi-family offices are usually privately held companies that
handle investment and wealth management for several wealthy
families with the goal of effectively growing and transferring wealth
across generations. It is also where the personal financial affairs of
the owners and related family members (companies and trusts) are
overseen and managed.
Private Client Holdings, a multi-family office based in Cape Town,
has been managing the wealth of high-net-worth individuals for
the last 30 years. Their Trust division specialises in estate planning
and developing strategies to preserve a client’s wealth and protect a
family’s legacy for future generations.
Governance
Governance is a critical element of estate planning at Private Client
Trust. “It can be very expensive and frustrating to have your entire
structure fail because there were no clear ‘rules of the game’,” says Sarah
Love, fiduciary practitioner, Private Client Trust. When developing
their governance plan, Love uses principles from the Organisation
for Economic Co-Operation & Development and in a South African
context, the King code.
“We incorporate principles of fairness, responsibility and
transparency to ensure that the advisor who will work within the
structure and with future generations is well-prepared to ensure the
long-term wellbeing and responsible stewardship of family wealth,”
says Love.
Purpose-driven structuring
“When estate planning for families, we start with purpose-driven
structuring,” says Love. “This entails a deep dive into their world
to understand any current structures as well as the geography of
individuals, entities and investments. During this process we look at
a client’s long-term intentions and goals, the nature of their businesses
and investments, where they run their businesses and investments,
where they live and how they fund their lifestyle,” says Love.
Against this backdrop, Love’s team will consider various local and
offshore trusts and corporate structures to meet a client’s needs.
“We do this as administratively and tax efficiently as possible. Not
everyone needs a trust, but those that do can’t afford not to have
one,” adds Love.
Managing expectations
At some point during the estate planning process, the next generation
must be introduced to the family’s generational wealth plan. This
timing is unique to each family. “In some cases, there are opportunities
within a family business for the next generation, other families
have a philosophy that the next generation must work elsewhere
before joining a family business, while others believe that the next
generation must take care of and/or work on a family property, or
part of its philanthropic portfolio to understand the responsibility of
the family’s stewardship role,” says Hirst.
The “art” of estate planning
With family members increasingly scattered across the globe, this can
make estate planning more complicated for families. These are some
of the complexities that the Private Client Trust team helps clients
navigate during the estate planning process:
1. Where does the client currently live and is this likely to change?
Do the beneficiaries live in the same or a different country and
how will beneficiaries living elsewhere receive their inheritance?
2. Is a trust and/or a company involved? If so, are there loans between
the trust and company? How will these be dealt with and what tax
and cashflow implications need to be considered?
3. Who are the beneficiaries of life insurance policies, living annuities
and other structures? Have beneficiary details been kept up to date
or changed when necessary to ensure the right people inherit and
to prevent any unintended tax consequences?
Given the complexities of estate planning, especially when multigenerational
wealth is involved and where family members are in
different geographies, Love advises getting input from a fiduciary
specialist. “When a wealth creator dies, we provide support and
guidance to ensure the family’s wealth grows and is seamlessly
transferred to the next generation,” concludes Love.
Private Client Holdings is an Authorised Financial Services Provider (License #613). Private Client Holdings has taken care to ensure that all the information provided herein is true and accurate. Private
Client Holdings will therefore not be held responsible for any inaccuracies in the information herein. The above press release does not constitute advice and the reader should contact the author for any
related concerns. Private Client Holdings shall not be responsible and disclaims all loss, liability or expense of any nature whatsoever which may be attributable (directly, indirectly or consequentially)
to the use of the information provided.
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GOALS
BASED ASSET
MANAGEMENT
HEALTHCARE
SERVICES

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FINANCIAL PLANNING | Medical aid
Limiting medical aid
increases isn’t the answer
Earlier in the year, the Council for Medical Schemes
(CMS) recommended that medical aid schemes cap
their contribution increases for 2023 at 5.7%. On the
face of it, limiting medical aid increases looks like a
prudent cost-cutting measure. The bigger challenge is that
private healthcare is not sustainable in its current format.
There is clear overservicing in many areas. That’s why both
the private and public healthcare systems need to be reviewed
to come up with a system that affords all South Africans access
to decent healthcare.
In the meantime, the healthcare industry is trying to
balance affordability and sustainability. It’s essential that the
industry finds ways to manage rising healthcare costs. However,
restricting contributions to medical aid schemes is a blunt
response to a complex and nuanced situation.
The harsh reality is that few if any medical aid schemes will
adhere to the 5.7% contribution cap being proposed by the CMS.
Claims have gone back to pre-Covid levels, so schemes will come
under severe financial pressure if they don’t make more realistic
increases now.
What type of increases can we expect? In general, medical
inflation is around 3% higher than the consumer price index (CPI).
What that means is that we can expect to see increases of at least
CPI plus 3%, if not more. Some schemes will justify contribution
increases above inflation due to some industry-specific cost
factors. We’re already seeing hospitals increasing their prices by
10% or more, for example. It doesn’t help that providers hike their
rates by 10%, but funders can only increase their contributions by
5.7%. That’s simply not sustainable. To ensure the sustainability
of schemes, we anticipate increases of between 7% and 10%. Of
course, the bigger question is what steps need to be taken to
create a more sustainable and equitable healthcare system. At
the moment, there are about 4.5-million registered members of
different medical schemes, serving a total of around nine-million
beneficiaries.
That leaves 51-million South Africans who rely on the public
health system. And here, the elephant in the room is National
Health Insurance (NHI). Make no mistake, an NHI is necessary,
because everybody in the country has the right to access decent
healthcare. As we know all too well, there are several challenges
to NHI. Perhaps the biggest of those challenges is that there’s
low to zero trust in the ability of government to manage what
will effectively be a medical scheme that’s 20 times bigger than
Discovery. Then there’s the funding of the NHI, which remains
a well-kept secret. Throw into the mix the chronic shortage of
doctors, nurses and facilities in our country, and you’re starting to
get an idea of the mountain facing NHI. Medical schools are still
generating the same number of doctors they did 30 years ago, and
our population has doubled since then. At the same time, the brain
drain is robbing us of the highly trained medical professionals our
healthcare system is crying out for. The bottom line? NHI may not
be fully implemented in our lifetime.
We’re already seeing many members downgrading their
plans and options, and any further increases will only put more
pressure on consumer wallets that are already under immense
strain. Most of the larger medical aid schemes have introduced
network options to maintain affordability. Other than that, their
options are limited in the current healthcare setup. The best
thing medical aid members can do at this
stage is to speak to an informed
broker to ensure they get the
best coverage for their
family’s needs at a price
point they can afford.
Ultimately, balancing
affordability with the
provision of quality
healthcare requires
a holistic approach
that recognises the
complex relationships
between the various
stakeholders in the
system. Until then, we’re
not going to reduce
healthcare costs, let
alone ensure a
robust and
sustainable
healthcare
ecosystem
for all.
Gary Feldman, Executive Head of Healthcare Consulting, NMG Benefits
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FINANCIAL PLANNING | Retirement
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How to support your
ageing parents financially
A growing number of South Africans are finding themselves supporting their ageing parents,
thanks to the combination of a tough economy and insufficient retirement funding.
It’s critical to plan this key transition
carefully to ensure your own finances
stay on track and to maintain a healthy
relationship with your parents.
Financially preparing for ageing
parents is an important responsibility that
requires proactive planning and open
communication, says Stian De Witt, CFP®,
executive head of financial planning at
NMG Benefits. By starting early, establishing
budgets, understanding healthcare costs,
seeking professional advice and regularly
reassessing the plan, you can make a major
impact on your parents’ financial stability.
Here’s how to help your parents ensure
their long-term financial security and
well-being.
Start the conversation
This is the first and most crucial step to
helping your parents with their finances.
Have an open discussion with your parents
about their financial situation, including
their income, savings, investments and
any debts they have. This will help you to
understand their current financial situation
and how much support they will need.
Estate planning is
important for the
entire family.
Create a budget
If your parents don’t already have a
budget, help them to set one up. Ask if
you can look at their bank statements
to make sure there are no hidden costs,
such as banking charges. See if there
are ways for them to save money, like
downgrading their cellphone contracts.
They could also trade their car in for a more
economical model.
Assess their healthcare requirements
This is a key element of financial planning for
the elderly. What are the future healthcare
costs you need to consider? Do your parents
need chronic medication? Will they need
specialised treatment in future? If they
have a medical aid, make sure they’re on
the most appropriate plan for their budget
and needs. Here, the help of a financial
planner could make all the difference.
Get their estate planning up to date
Estate planning is important for the
entire family. If they don’t already have
one, encourage your parents to create a
will and get all their financial documents
and policies together in a safe place. This
is a vital step to make sure their wishes
are respected. It will also help avoid
delays and legal complications that arise
when an estate is wound up without a
will in place.
Get professional advice
Speak to a professional financial advisor
about your own financial plan, and that of
your ageing parents. Regularly review and
update these plans as your circumstances
change. Make sure you stay involved in
their financial matters to provide ongoing
support as they need it.
Be sensitive and empathetic
This is a difficult time for your parents as
well. Make sure they understand you’re not
trying to take away their independence,
and that any assistance you provide is
based on their preferences and needs.
“Being prepared, having a plan in place and
monitoring your plan regularly will give
your family the best chance at achieving
your financial goals and keeping your loved
ones financially secure,” says De Witt.
Stian De Witt, CFP®, Executive Head of
Financial Planning at NMG Benefits
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FINANCIAL PLANNING | Leadership
Disruption, reinvention and
inclusive leadership:
how can we use the opportunity
to create a better world
We are living through extraordinary times,
experiencing big overall trends; climate change,
technological disruption, a mental health crisis, a
fracturing world and social instability – all of which
are reshaping the business environment and our world today.
Many people are feeling hugely burdened by all of this, and
rightly so. The risks these trends create only strengthen the weight
and relevance of solid financial planning, of creating stability
where we can. What is important to realise though is that these
trends pose new and huge risks, but also great opportunities to
rethink our work and our world fundamentally. The way we will
handle the problems we have today is going to impact the way
we are able to work and live in the future – and I want to take it as
far as saying it will impact how we inhabit our planet.
The need for reinvention
In its recent CEO survey, PwC interviewed over 4 000 CEOs in over
100 countries. Almost 40% of CEOs said that if they continued their
current course, their business would not be viable in 10 years’ time.
“Evolve or die,” many of them said. A big need was identified: the
need for reinvention. Reinvention being the shifting of mindsets,
the “re-imagining and re-making of our reality to create something
new and improved, with new qualities and attributes”.
If businesses are pressured to reinvent, so are their leaders
and their people… this creates pressures and burdens for
individuals, yet once again opportunities! What if the rethinking
and re-imagining of our current reality could create something
better? Better working conditions, a more humane economy, a
better treatment of our planet?
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What if disruption could be used
as a positive force for good?
What if individuals could see their own reinvention as impacting
today’s society and its transformation? What if disruption could be
used as a positive force for good?
Let’s encourage ourselves, our clients and each other to tap
into new voices and new thoughts to reinvent and create new
opportunities out of the risks and challenges we are facing.
If we did more of this, I think we might just be able to agree
with this beautiful quote from Arundhati Roy:
“Another world is not only possible, she’s on her way – on a
quiet day, I can hear her breathing.”
Using disruption as a positive force
When people are demotivated, worried or burdened by the
disruptive and worrying events we face today, it can be useful to ask:
• How could what you are experiencing be “forcing” you to rethink
things, to reinvent?
• How could you tackle what is happening to you differently and
shift your approach for the better?
• Could what is happening today be the basis for us to create a
new, better way?
One aspect that is helpful in rethinking things or tackling
something from a different perspective is to look in different
places and to listen to different voices. This is best described as
inclusive leadership.
Inclusive leadership as force for reinvention
Inclusive leadership is a practice of recognising the uniqueness and
value that every human being can possibly bring to a discussion. It
is about creating psychological safety for everyone to be part of a
discussion and bring themselves in, without fear of being judged
or discriminated against.
It is also about bringing in marginalised voices. By valuing
and respecting diverse perspectives, inclusive leaders encourage
open dialogue, active participation and constructive dissent.
They establish a culture that embraces different viewpoints and
encourages everyone to contribute their thoughts without the
fear of being judged or marginalised.
Who can practice inclusive leadership? Absolutely every one
of us. Whether we are leaders in organisations, whether we are
financial planners serving our clients, leaders of our own lives…
absolutely everyone. We need new thinking in our world today, so
let us not listen to the “usual” voices, but rather those who have
not been heard so much so far!
What does this all mean?
South Africa is so culturally rich and filled with such incredibly
different people, but we do not fully tap into this potential. We
have incredible potential to use disruption as a positive force for
good; to reinvent and to practice inclusive leadership.
How do we encourage ourselves, our clients and our network
to search for differences rather than similarities? To look for
answers to their challenges in new places? To be able to reinvent
ourselves, our organisations and our lives to face many of the
risks we face today.
Judith Haupt, Managing Director, CONTRACT South Africa
www.bluechipdigital.co.za
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CLIENT ENGAGEMENT | Behavioural finance
The evolution of advice
From managing people to managing advice.
There is a saying credited to the Greek philosopher
Heraclitus that says that “the only constant is change”.
This is as true for the interactions between people as it is
for the interactions between people and machines – and
financial advice finds itself at the intersection of these two.
On the one hand, we’ve got the rise of Artificial Intelligence
(AI) that is threatening to disrupt jobs, and on the other, we’ve got
a movement where financial advisors are becoming behavioural
coaches rather than technicians. I believe that you need to make
this shift to avoid being disrupted by AI and to enhance the value
that you add to your clients.
Let me explain by starting with your value to clients. Most
advisors have an elevator pitch about how they add value to clients.
In many cases, it is something about independent advice, which
sounds great until you realise that you’re anchoring your value
in product selection. Wouldn’t it be better if you said something
about “helping clients achieve their dreams” or “taking the stress
out of retirement” rather than talking about the products that
you’re going to sell to people?
Make no mistake, as a financial advisor you need to be able to
advise on the money and select the best solutions for your clients.
But there is a growing number of advisors who understand that
clients have different hopes, dreams, fears, biases and so on. These
advisors understand that two clients with very similar financial
needs and resources may need to be treated differently or end up
with different financial solutions. That value add is very different
to offering independent advice on the products.
Many advisors who have bought into this attend Humans Under
Management (HUM), which is a conference for financial advisors
that was started by Andy Hart in the UK and now happens annually
Turning a money business
into a people business.
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CLIENT ENGAGEMENT | Behavioural finance
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in both South Africa and the UK. The title is a pun on Assets Under
Management and the strapline is, “Turning a money business into
a people business”.
Without trying to summarise an entire conference in a short
article, here are some of my notes and take-outs from HUM SA
2023, which will give you a sense of the topics that were discussed:
• When it comes to identifying scams, a clear red flag is when
they promote a supposed “new way to build wealth”. The reality
is that there is no “new way”, and the traditional method still
works beautifully. You simply need to contribute to a diversified
portfolio and give it enough time.
• Behavioural coaching is about understanding the clients’
emotional drivers. This approach has led to different product
recommendations such as advising a wealthy retiree who was
terrified of running out of money to take a guaranteed annuity,
even though there was very little chance that they would run
out of money.
• The most value you can add to a client is simplification.
• Don’t refer to coaching because many people don’t want to be
coached. You need to make it fun.
• When you start working with a client, you’ll be in a “fix phase”
that is fun for both you and your client because you are problemsolving
and implementing solutions. However, once everything
is in place, you’ll move to the “fine phase” where things can
become boring. If you don’t intervene here, there is a risk of
drifting apart. To prevent this, you need to move to the “flourish
phase” where you get new insights and set new goals so that you
return to the “fix phase” and repeat.
numbers, objective analysis and optimising solutions (managing
money), but they are very bad at understanding people’s emotions
(managing people). This means that AI will become a threat to
advisors who manage their clients’ money and will complement
those who manage their clients.
So, whether you choose to join the movement towards behavioural
coaching or whether you want to future-proof your business from
AI – you need to think about turning your money business into a
people business.
To see how far you are on this journey, think back over the last
year and count the number of investor roadshows vs the number
of seminars on the psychology of money that you attended. I
suspect that this will show that most advisors are managing their
clients’ money rather than their clients. That’s okay because the
shift is a process and not an event. So long as you choose to make
the shift from managing money to managing people.
: Fairbairn Consult is a Licensed Financial Service Provider and a member of the Old Mutual Group.
Now let’s consider the impact of AI. In 2017, I completed an online
course through MIT to understand the impact of AI. At the end
of the programme, I wrote an article called “What do artificial
The most value you can add
to a client is simplification
intelligence and robo-advice mean for financial advisors”, which
you can read on my LinkedIn profile. My conclusion was: “We
should see AI as an ‘employee’ that is amazingly efficient, always
consistent, gets smarter every year, never forgets anything,
doesn’t need sleep, is never sick and doesn’t expect an annual
bonus. And one last thing, we need to think about the skills that
advisors will need to thrive in a world where technical financial
planning skills are no longer the primary requirement.”
This may have been truer in 2017 than now, as AI has
jumped significantly since then with the advent of generative
content. These jumps will continue over and over, which
means that AI like Chat GPT 10 will become a genuine threat
to jobs at some point.
Before you despair, let’s think about AI’s strengths and
weaknesses. Machines are very good at research, crunching
Guy Holwill, Chief Executive, Fairbairn Consult
www.bluechipdigital.co.za
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PRACTICE MANAGEMENT | Business development
20 Years of building a
financial planning business:
10 key learnings
As we mark the 20-year milestone of our independent,
privately-owned financial services company, it’s not
just about celebrating but acknowledging resilience,
adaptability and a journey marked with profound
challenges, learnings and insights.
Chartered Wealth Solutions began as a small venture two
decades ago, but John Campbell and Barclay Hoar envisioned
something bigger. They placed clients at the heart of their business
and wrote comprehensive financial plans instead of offering a list
of products. In 2003, they introduced lifestyle financial planning,
which made them realise that their role extends beyond helping
clients accumulate wealth to delivering customised financial
planning solutions aligned with their clients’ life plans.
From the outset, Campbell and Hoar opted for a salaried
approach rather than commission-based incentives. They also
incorporated investment consultants into the business model,
started recruiting planners who shared their passion and vision
and employed their first hire not involved with clients.
Chartered has grown into a business serving over 2 000 clients
with a dedicated team of over 80 staff. Looking back at the past
20 years, we have reflected on some of the lessons learned and
insights gained along the way.
OUR LEARNINGS
#1 Work on the business – not in the business
Campbell and Hoar started with weekly Friday strategy meetings
on how to build a successful planning business. Fast-forward 20
years, and we are still strategising how to improve and grow our
business. We constantly ask how we can do it better. This year, six
members of the Chartered team were sponsored to participate
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We have learnt that there is a
story, as well as dreams and fears
behind every financial decision.
in the Stanford Seed transformation programme. It was a hugely
beneficial opportunity to study and analyse the Chartered business
from a team MBA perspective.
We have learnt that clients are a valuable source of feedback.
We appreciate listening to their views on what’s working, what
should change and their recommendations for improvement.
Insight. Working on the business (as opposed to in it) has
transformed our roles from planning meetings to management.
Seeing clients you have spent years building relationships with
happily meeting with other team members can be a bitter-sweet
experience. Although we miss our time with clients, we know they
are well looked after by planners within the company.
#2 Distinct value proposition – putting clients at the centre
of everything we do
Campbell reflects on his most defining moment at Chartered:
“Putting clients at the centre of everything we do and providing
proper, holistic financial planning is crucial to our success. This
understanding was the foundation for all the decisions and actions
we took during the growth and development of the company.”
At the heart of the Chartered philosophy lies the conviction
that financial planning interconnects with the clients’ aspirations
and that guidance, advice and implementation should always
support the enabling of dreams and life visions. This approach,
helping clients get the most meaning from their money, has been
instrumental in shaping our culture, service approach and client
relationship focus.
#4 Cultivating a team in a connected culture with shared values
With our value proposition focused on relationships and enabling
clients’ lives and our values crystallised, we started recruiting
people who would be a good fit for our culture. At first, we called
our team the Chartered Family as we were a small, close-knit
group, but this term evolved to TEAM, representing our shared
vision and values, as opposed to being part of the same family.
Our approach is professional but warm, approachable, caring and
passionate about what we do.
Insight. It is not always possible to retain planners, and it is easy
to feel despondent when great planners leave your business. We
have learnt that planners occasionally join us for only a part of their
career and have embraced the opportunity to grow, develop and
train them regardless.
#5 Creating a WOW client experience
We always aim to make our clients feel supported, valued, seen and
heard. One of our significant investments was purchasing a building
and refurbishing Chartered House to create a warm, inviting and
comfortable space for clients to meet. This may be one of the best
investments we’ve made – and our clients love visiting us here, often
popping in for a slice of cake and the best cappuccino in town. Being
in the relationship business, we have realised that small gestures go a
long way. Our clients value the little things we do, from hand-written
birthday cards and gifts to our beautiful bathrooms, invitations to
events and ongoing communication.
#6 Our financial plan is our product
Putting clients at the heart of our business has instilled a deep
commitment to serving their best interests, and we’ve invested
many hours in research and foundation work to conceptualise a
product that speaks to our philosophy and fits each client.
#3 Crafting a unique brand identity
Our “Purple Cow” (borrowed from Seth Godin for a product
that’s intrinsically different) is life planning and Retiremeant.
I introduced life planning in 2008 when I joined Chartered,
reinforcing the value proposition of providing clients with a
return on life and a return on investments. In 2009, we tailored
our services to a specific retirement demographic, allowing for a
deeper understanding of our clients’ lives.
The term Retiremeant – to get more meaning from your
money in your second chapter – connects seamlessly with our
value proposition. Now, 20 years later, we have extended our
expertise with a new tagline “Planning with Purpose”, helping
clients across different life stages and transitions with a meaningful
financial plan that aligns with their life goals, enabling them to live
their lives to the fullest.
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“We prioritised developing a comprehensive understanding of
each client’s unique situation, enabling us to tailor our advice and
recommendations to their specific needs,” says Campbell. Today,
our financial plan is our product and comprises four parts: a life
plan, scenario plan, investment plan and estate plan. We did not
charge for this plan at first but realised that clients don’t see much
value in something offered for free. Today, we charge a standard
fee for a financial plan.
#7 Collaborative planning meetings – teams of two
We have implemented a simple yet profound concept of having
two planners present during planning meetings, bringing
diversity and using planners to their best strengths. Each planner
brings a unique worldview, influenced by their age, gender and
experience and by pairing different planners, clients receive
a blend of fresh, innovative ideas and wisdom. We mostly see
couples and found it hugely beneficial to have both a male and
female planner in the room. It allows for a broader understanding
and a more rounded approach.
In addition, our articled programme for young Certified Financial
Planner® professionals to join Chartered and gain mentorship and
experience without having to acquire their own clients has been a
game changer. It challenges our thinking all the time!
Insight. When we deal with clients, their lives and their money, it is
difficult not to get emotionally involved. Feeling the pain of clients
during tough times is difficult, and when clients face loss, illness
or heartbreak, we feel those things with them.
#10 Upholding professional standards
As an FPI-approved practice and active member of the FPI, we
strive to promote the financial planning industry as a profession.
We regularly share our learnings and insights at conferences and
use every opportunity to promote financial planning as a profession.
Conclusion
We are extremely grateful to our wonderful clients who have
allowed us into their lives and shared their dreams with us. We
have learnt that there is a story, as well as dreams and fears behind
every financial decision. We are equally grateful to our team at
Chartered, our suppliers and planning practices who sold their
businesses and entrusted their clients to us.
#8 In-house specialist services
As the business grew and more and more clients asked for
additional financial services, we expanded our offering across
investment solutions, will and estate services as well as tax
planning, ensuring that the same company manages every
part of the client’s portfolio, with the planner involved in every
aspect. Recently, due to changes in the financial landscape, we
recognised the need for strategic investment management and
created WealthStrat. Our Cat II licence also allows for more control
in changing investment consultants if necessary and minimises
fees for our clients.
#9 A relationship business
Financial planning is managing your client’s relationship with
money and guiding them to put money in its proper place – as
an enabler of their goals and dreams. Money is not an easy topic
to discuss, and very often, life-planning conversations are deeply
traumatic, unveiling a host of underlying emotions such as fear,
anxiety, worry and shame. Yes, planners do need exceptional
financial and technical skills, but these three skills in building and
nurturing relationships are equally important: curiosity, coaching
and self-awareness.
We have learnt a great deal from life planning with clients and
invested in interpersonal skills and self-development training
for all our team members. We teach planners to be curious, ask
probing questions, respond with empathy, have non-judgemental
listening skills, authenticity as well as the ability to coach, mentor
and inspire.
Kim Potgieter CFP®, Director, Chartered Wealth Solutions,
ICF Professional Certified Coach, New Money Story® Mentor
Coach, Certified Dare to Lead Facilitator
88 www.bluechipdigital.co.za

YOU SHOULD THINK CAREFULLY
ABOUT THE PROS AND CONS OF
MOVING TO FAIRBAIRN CONSULT
Pros
• You continue to own your business
• You no longer need to be an accountable
institution or the KI
• You don’t need to worry about the additional
compliance from CoFI
• You have real succession options
• You have access to over 100 product providers,
but you don’t need to stand surety on contracts
• You can leverage our scale to afford great tech
like automated client portfolio statements
Cons
• While you can give unbiased advice, you can’t
describe yourself as independent
ombds 08.2023 C8469
To find out more, visit www.fairbairnconsult.co.za or scan these QR codes.
Fairbairn Consult is a firm of Registered Financial Advisers.
We are a licensed FSP and a member of the Old Mutual Group.