Today’s news could affect your investment fund’s performance.

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INSIDE your August issue of MoneyMarketing...

131 August 2016 | www.moneymarketing.co.za

Continued on page 2

First for the professional personal fi nancial adviser

1 Cover family funeral costs

2 Get a lump sum at retirement

3 Get access to emergency

funds

8 Get a monthly

income at retirement

7 Protect family from loss of income

4 Buy or build a house

Rethinking South Africa’s employee benefi ts model

PRIORITIES FOR LONG-TERM SAVINGS

6 Pay for medical

expenses

5 Pay for education

Alexander Forbes says it does not believe the internationally accepted, decades-old

employee benefi ts model which places a singular focus on compulsory retirement savings as top priority, is relevant for the current fi nancial needs of South Africans.

Instead, the fi nancial services company has appealed to policymakers and employers to rethink how compulsory savings might be better deployed.

“We are not saying ignore the retirement income question, but are questioning whether we couldn’t create a controlled savings environment that provides more flexibility in terms of allowing individuals to more effectively address issues such as housing, education, health and other financial risks at the same time,” says Anne Cabot-Alletzhauser, Head of the Alexander Forbes Research Institute.

Alexander Forbes suggests that by allowing employees to prioritise how to best apply their compulsory savings during their working life, policymakers might better address issues of both fi nancial protection as well as fi nancial mobility.

A survey of Alexander Forbes Retirement Fund members,

conducted by ReThink Africa, revealed that over 80% of respondents highly valued long term savings programmes. The confl ict for them was whether receiving a monthly income on retirement was as relevant to their long term savings needs as obtaining or building a house, funding their children’s education, or addressing other fi nancial risks. Improving both

the quality of their life and their children’s futures were both factors that contributed to better retirement outcomes.

“Globally, employee benefi ts models target retirement savings as the top savings priority, irrespective of what one’s fi nancial circumstances are. But the question that emerged out of follow-up focus groups was whether this made the most

sense when it became clear that using savings to increase one’s social mobility was as important as using savings for social protections”, Cabot-Alletzhauser said. “This may be a model that is better-suited to fi rst world countries, where you have adequate employment and wealth generation. Our research is suggesting that if we can help individuals to

‘Women are remarkable at multi-tasking’MoneyMarketing speaks to Lindi Dlamini, Group Executive: Human Resources at PPS Page 17

Benefi ts of the multi-management approachAkona Mlamleli explains the benefi ts of the multi-management approach used at 27four Investment ManagersPage 22

FPI announces 2016 award winnersThe FPI recognises leaders in the fi nancial planning professionPage 6

2 31 August 2016

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NEWS &OPINION How compulsory savings might be better deployed

EDITOR’S NOTE

Janice Roberts

Continued from page 1

Globally, employee benefi ts models target retirement savings as the top savings priority, irrespective of what one’s fi nancial circumstances are

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Dear Reader

Women appear to be taking over a large part of the world. Chancellor Angela

Merkel has headed the German government for over a decade, while Ellen Johnson Sirleaf has been Liberia’s president since 2006.

Theresa May has now become Britain’s second woman Prime Minister while Hillary Clinton is likely to become the fi rst female President of the US with another woman, Elizabeth Warren as Vice President.

The Head of the International Monetary Fund (Christine Lagarde), the Head of the US Federal Reserve (Janet Yellen), as well as the US Attorney General (Loretta Lynch), are women. The next United Nations Secretary General – due to be chosen later this year – may just be a woman too.

This is a good sign for young women all over the world. Finally, they know there is nothing they cannot achieve. Furthermore, it is hoped that women leaders will use their experiences as women to make policies that address the gender inequalities that still exist in many parts of the world.

So do women make better leaders than men? No, the current rise in the number of women in politics just means that we are equally capable, something of which we can be very proud.

August is Women’s Month in South Africa and I am pleased, in this issue, to highlight some outstanding women in fi nancial services.

I wish all our female readers a Happy Women’s Month.

Janicejanice.roberts@newmediapub.co.za@MMMagzawww.moneymarketing.co.za

tackle their savings needs through an integrated, evolving process that responds to their changing fi nancial needs, we can squeeze far greater value from those savings. Financial imperatives suggest that when retirement fund members have greater priorities than retirement income, they will in many cases look to cash in their retirement savings to fund these more urgent needs. We believe that by understanding these needs better, we can rebuild our benefi t offering to help mitigate the relevant risks.”

The Alexander Forbes research showed that while saving for retirement ranked second in importance, deriving a monthly income in retirement seemed to be the more problematic issue.

One interviewee, from a black-owned fund administration

company, argued that for some of their clients, mostly low-wage employees, retirement benefi ts were a misplaced focus. He argued that rather than solely focusing on ensuing income after retirement,

policy reforms should consider how the benefi ts framework might be used to help people acquire assets such as housing. “One of the major drivers of poverty and fi nancial instability is the lack of assets owned in low-earning communities. The resources people hold in their employee benefi ts could be used to help them acquire these,” Cabot-Alletzhauser said.

“A new employee benefi ts model would be the fi rst real step in truly recognising that fi nancial wellbeing was about the journey, and not the end-game.”

Key to the new model’s success would be the creation of a new form of employee benefi ts platform

or programme that helps individuals control when to shift from one savings priority to the next.

“The model provides a way for South African workers to map their own way to fi nancial stability for their families. If this succeeds, it could reduce future dependencies on government-provided grants and social protections.”

The Alexander Forbes/ReThink Africa online survey reached 300 employed South Africans whose employee benefi ts were administered by the Alexander Forbes Retirement Fund. A number of focus groups and semi-structured interviews with self-selected members were also conducted.

The overwhelming majority of the respondents were from Gauteng, with the online survey having input from the Eastern Cape, Limpopo and Mpumalanga. Around 52% were male and 48.26% female, refl ecting the same gender spilt as the general population.

The data had a strong bias in the 20-29 age category and those in the R25 000 – R39 999 per month total income bracket.

331 August 2016

NEWS &OPINIONThe industry is far from where it should be on gender balance

Financial services industry lags in unleashing female leadership potential

Globally only one-fi fth of Boards and 16% of Executive Committees

in fi nancial services are comprised of women, according to the Women in Financial Services report by global management consultancy, Oliver Wyman. This is only a slight improvement in both categories since the report was last published in 2014.

Oliver Wyman notes that at current progress it will take a further 30 years (by 2048) for Executive Committees in the fi nancial services industry globally to reach 30% female representation; the level at which research suggests a minority’s voice comes to be heard in its own right. Currently, women have the highest representation on Executive Committees in Norway and Sweden, with Japan and South Korea needing the greatest improvement.

The report includes an analysis of 381 fi nancial services organisations in 32 countries, a survey of 850 fi nancial services professionals around the world and interviews of more than 100 senior female and male leaders.

Ted Moynihan, Managing Partner of Financial Services, Oliver Wyman, said: “The industry is far from where it

As MoneyMarketing celebrates Women’s Month, we look at a new survey that explores how far the fi nancial services industry has progressed towards increasing female representation within the boardroom and management tiers.

Memorable quotes from the survey:

“In Korea, whilst it is not as strong as in the past, there is strong tradition or culture that child care

and homecare is the woman’s job. This cultural pressure is the reason that so many women leave

their potentially successful careers, even when they don’t want to”

Seon-Joo Kwon, Chairman & CEO, Industrial Bank of Korea

“Women bring something different to leadership

meetings. Men can sometimes focus exclusively on numbers,

whereas women are more likely to take a wider view that

includes numbers, but also customer service and morale

in the offi ce. I fi nd that greater gender balance means both fi nancial and non-fi nancial issues are more likely to be

discussed in depth” Isabel Hudson, Chairman

of NHBC and Non-Executive Director at Standard Life

“There still seems to be a view that women in leadership are an unknown quantity and somehow more of a risk. So there has to be

a higher degree of certainty that a woman is going to perform, than if you were looking at

a man for the same job” Nicola Foster, Head of Transformation,

Shared Services, HSBC

“Progress to gender balance is slow in fi nancial services. Whilst awareness

is increasing, real change is only catching up slowly”

Anne Marion-Bouchacourt, Group Chief Country Offi cer for China,

Société Générale

“There still seems to be a view that women in leadership are an unknown quantity and somehow more of a risk. So there has to be

a higher degree of certainty that a woman is going to perform, than if you were looking at

a man for the same job” Nicola Foster, Head of Transformation,

Shared Services, HSBC

“Despite a lot of effort, most fi nancial services companies are stuck below 25% female representation at the top”

Alessa Quane, Executive Vice President and Chief Risk Offi cer, AIG

“In Korea, whilst it is not as strong as in the past, there is strong tradition or culture that child care

and homecare is the woman’s job. This cultural pressure is the reason that so many women leave

their potentially successful careers, even when

is increasing, real change is only

nne Marion-Bouchacourt, Group

“Half of the highly

educated population is underutilised. We educate

women to a high standard, but don’t get enough back. That’s not good for women or the economy.

I want to see greater diversity because of the business benefi t”

Chairman of a FTSE 100 company

“Our clients are diverse, so we have to be diverse to serve

them properly” Karen Fang, Managing

Director, Head of Americas FICC Sales, Bank of America

Merrill Lynch

should be on gender balance. We hope that this second report will advance the discussion – delving deeper into it, raising awareness and supporting much needed change in the industry.”

“The low representation of women on Executive Committees in particular is a problem. An organisation’s key business and strategic decisions are made by its Executive Committee and they are also highly visible, both internally and externally, making them effective as role models and sponsors – and driving business success,” Moynihan said.

Of additional concern, female executives in fi nancial services are 20-30% more likely to leave their employer than their peers in other industries. The data and responses suggest that many women face a mid-career confl ict and a less attractive ‘career trade off’ than men – with insuffi cient fl exible working hours and support for family responsibilities, persistent views of shortcomings regarding promotion and equal pay, and unconscious bias.

Astrid Jaekel, Partner and author of the report, said: “Diversity must be seen as a commercial imperative rather than just as part of corporate social responsibility or fairness in the workplace.”

“Gender balance provides access to the full talent pool, better decision making by bringing together different perspectives, better services to customers by better representing them, and a stronger economy. Organisations need to advance women by offering bolder structural solutions to the mid-career confl ict outlined in this report, creating the right working arrangements and fostering more profound cultural change,”Jaekel added.

4 31 August 2016

NEWS &OPINION We are challenged to convert problems into opportunities

P

RO

FILE

DOWNSUPS

‘Within every service delivery failure lies an opportunity to learn’

Diversifi ed chemical services provider Omnia has reported a fall in full-year earnings, due to a weak mining sector which has been crippled by falling prices. Headline earnings per share fell 29% to R10.33 in the year to March 2016 compared with R14.56 in the previous year. Revenue was

fl at at R16.8 billion, while Omnia’s agriculture division saw revenue growth of 13% to R8.2 billion. Revenue in the mining division plunged by 15% to R4.6 billion due to low commodity market prices.

Expanding its leadership, the Export Credit Finance Division of Nedbank Corporate and Investment Banking (NCIB) has announced the appointment of Michael Creighton as the new Head of Export Credit Finance. Creighton brings with him deep knowledge and experience garnered from his previous exposure as Executive Director at Credit Underwriting Agency (CUAL), undertaking term trade credit insurance, and as Sace SpA, the Italian Credit Agency’s Head of Africa where he was responsible for export credit fi nance – operating in various regions in sub-Saharan Africa, China and Asia Pacifi c.

Mokaedi Dilotsotlhe has been appointed as Santam’s new Executive Head of Brand. He brings to the position a wealth of experience in strategy, marketing, and distribution gained within the fi nancial services, petroleum and FMCG sectors. He previously held the position of Chief Marketing Offi cer at Old Mutual Emerging Markets. Prior to that he was General Manager for Alternative Distribution at Old Mutual and was previously also General Manager for Strategy and Marketing at Mutual & Federal. He holds a B.Com Honours Degree from Wits University and an MBA from the Thames Valley University in the United Kingdom.

Old Mutual Investment Group has unveiled plans to further strengthen its investment boutique capabilities by establishing a South African-based Global Equities team; hiring three members of Coronation’s Global Emerging Markets team to set up and manage the Global Equities capability. The new investment offering will complement the Old Mutual Investment Group Global Emerging Markets boutique’s emerging market capabilities.

Regarding the hiring of the team, Old Mutual Investment Group Director of Investments, Hywel George says he is thrilled to have investment professionals of their calibre on board. “The three-person team, Pieter Hundersmarck, David Cook and Kyle Wales, are seasoned investment professionals and have enjoyed great success at Coronation as instrumental members within their Emerging Markets and Global Equity strategies. They joined Coronation during the developmental phase of the business’s Global Emerging Markets capability, and thus have valuable experience in establishing a global equity investment business.”

Vickey Swanevelder, Head of Client Services at Momentum Short-Term Insurance

VERY BRIEFLY...

How did you fi rst get involved in the short-term insurance industry? Is it something you always wanted to do?After completing my law degree, I realised that I may have watched too many episodes of the legal series Ally McBeal when I was younger – litigating was not really my cup of tea. Fortunately, the legal spectrum is not only limited to litigation and I had a keen interest in contractual and delictual law and, more specifi cally, personal injury claims. After spending six years working with personal injury claims, I had an opportunity to broaden my horizons and I accepted a position as a recovery adviser at a short-term insurer… and that’s where it all started. For many years, I was fascinated and enthralled by the legal side of short-term insurance, specifi cally recoveries and liabilities. In 2009, I joined Momentum Short-term Insurance and the exciting world of claims opened up to me.

Have you personally ever experienced any problems with short-term insurance claims? If so, how was the situation resolved?I have been extremely fortunate to have only had one incident where it was necessary to submit a claim. Being in the industry and being someone with a tremendous focus on not just meeting but exceeding clients’

service delivery expectations, I freely shared with the provider (during my claims process) where I believed that they could have performed better. This was also premised by the viewpoint that within every service delivery failure lies an opportunity to learn. If a client takes the time and has the courage to highlight this, one should really listen and use that opportunity to improve one’s business.

What do you like most about your position as Head of Operations at Momentum Short-term Insurance?While my current role still requires me to ensure that operations deliver on the strategy, I am now in the position where I can spend more time shaping an operational model for the future, which in itself is extremely exciting. Another highlight, of course, is the fact that I can focus more on building even stronger relationships. It really energises me to share with my mentees within the business and also the short-term insurance industry, the learnings that I have acquired over the past 20 years of my career – both positive and negative.

What challenges does your position present?Due to the multifaceted nature of the role, the challenges faced are just as diverse. One of them is to get staff to connect with the purpose that the company aims and aspires to achieve.

The changing competitive landscape also requires us to be agile, responsive and innovative in order for us to remain relevant and top of mind.

What problems does the short-term insurance industry face in the current economic climate?The effect of our current economic climate is causing consumers to tighten their belts. Clients are cutting costs and will move insurers at the drop of a hat for a more competitive insurance premium. This necessitates the need for insurance providers to stay ahead of the curve and pull out all the stops to retain their customers. Although diffi cult, we are challenged to convert problems into opportunities, and this, I believe, has the opportunity to facilitate a lot of innovation in the industry.

Transnet has unveiled a positive set of results for the year ended 31 March 2016. This was in spite of the tough economic environment characterised by weak economic activity. Revenue for the year increased by 1.7% to R62.2 billion underpinned by a 4.2% increase in rail containers and automotive volumes to 14.9 million tonnes (mt), from 14.3mt in the previous year, while petroleum volumes increased by 1.4% to 17.4 billion litres. The parastatal says this

is testament to the strides that the company is making in gaining market share and moving rail-friendly cargo off the country’s roads. Revenue from cross-border activities increased from R1.5 billion to R2.8 billion as the company’s plans to expand into the rest of the African continent gather momentum.

531 August 2016

NEWS &OPINIONEffective responsible investing depends on active investment research

Responsible investing needs active managementResponsible investing

is receiving increasing attention: globally, through the United

Nations-supported Principles for Responsible Investment (PRI) Initiative, and in South Africa through the Code for Responsible Investing in South Africa (CRISA).

“This is positive for investment managers. There is no doubt that long-term sustainable returns are dependent on stable, well-functioning and well-governed social, environmental and economic systems,” says Grant Pitt, Joint Head of Institutional Client Services at Allan Gray.

Effective responsible investing depends on active investment research – to identify issues to engage management upon and to do so intelligently – and on active investment management.

This allows a manager not to own companies which don’t deal with their environmental,

social and governance (ESG) challenges or which don’t respond on these issues.

Passive management is an investing strategy that tracks an index or portfolio. Active management is the opposite: active managers dedicate research efforts to analysing the intrinsic value of listed securities, buying those they believe are relatively cheap and avoiding those they believe are expensive, actively constructing their portfolios.

“Since they rarely address these issues and are often poorly resourced to do so, passive investment managers weaken shareholders’ ability to drive ESG issues with company managers,” says Pieter Koornhof, Investment Analyst at Allan Gray.

According to independent fi nancial advisers, some clients specifi cally want to be invested in socially responsible companies and ask lots of questions about

environmental, social and governance issues. Pitt and Koornhof say that it is important for investment managers to consider ESG principles in their research process and to actively engage with company management and vote during shareholder meetings.

“We take our role as stewards of our clients’ hard-earned savings seriously and think that proactive engagement with the board and executives of companies whose securities we have bought for our clients can result in better investment performance. These engagements can potentially shape a company into a better and more sustainable long-term fi nancial prospect, which is likely to increase its valuation,” says Pitt.

During 2015, Allan Gray’s analysts and portfolio managers formally engaged with company representatives on 464 occasions. These

engagements typically took the form of meetings with both executives and non-executives, site visits to companies’ operations, formal written correspondence and other forms of engagement such as conferences, road shows and analyst days.

Pitt and Koornhof explain that during these engagements various issues were discussed, including ESG and sustainability issues.

“We believe, if neglected, these issues may impact a company’s long-term economic success. This is because, over time, irresponsible and unsustainable conduct will weigh down on a company’s earnings and therefore

its valuation.“Actively engaging with

management and also assisting clients to exercise their right to vote are important components of the overall service we provide to our clients,” says Pitt.Allan Gray provides voting recommendations for general meetings of companies which have a material weight in its clients’ portfolios and for smaller companies in which its clients collectively hold a

signifi cant percent of the company.

“We make voting recommendations which we believe at the time to be in the best interests of our clients.

We disclose these voting recommendations, together with the outcome of the shareholders’ vote on each relevant resolution, quarterly on the responsible investing page on our website,” says Koornhof.

Some clients specifi cally want to be invested in socially responsible companies

IT DIDN’T TAKE 3 DAYS

IT TOOK 8 YEARS

TO GET APOLLO 11 TO THE MOON

On July 16, 1969, the astronauts aboard Apollo 11

set off to become the first human beings to walk

on the moon. For 76 hours, millions of people from

all over the world watched what became a historic

giant leap for mankind. What many people didn’t see

were the eight years of unwavering commitment

that made this momentous feat possible. At Allan

Gray we value this kind of commitment. It’s the

same philosophy we apply to investing and it has

worked well for our clients over the last 42 years.

Call Allan Gray on 0860 000 654 or your fi nancial

adviser, or visit www.allangray.co.za

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6 31 August 2016

NEWS &OPINION

The Financial Planning Institute (FPI) of Southern Africa recently hosted its

annual Awards Ceremony Gala Dinner, where it recognised leaders in the fi nancial planning profession for their outstanding level of professionalism and ethics.

Each year, the Institute honours a CERTIFIED FINANCIAL PLANNER® professional with the FPI Financial Planner of the Year Award. The award is described as ‘the industry’s equivalent of the Oscars.’ Launched in 2000, this award is one of the most prominent projects undertaken by the FPI.

The award is described as the industry’s equivalent of the Oscars

FPI announces 2016 award winners

OTHER AWARDS AND WINNERS ON THE NIGHT WERE:• The FPI Harry Brews’ Award recognises the professional who has made a signifi cant

life-long contribution to the fi nancial planning profession and FPI. The 2016 award was given to Ester Venter, CFP®.

• Acknowledging the outstanding contribution to continually promoting the FPI and the CFP® designation in the media, the 2016 FPI Media Award, was presented to Sydney Sekese, CFP®.

• For the second year the FPI honoured the CFP® professional who actively communicates the signifi cance of the CFP® designation, and regularly volunteers in the FPI’s consumer outreach initiatives. The FPI It Starts With Me Award, was presented to Kobus Kleyn, CFP®, for the second consecutive year for his ongoing contribution to promoting the CFP® mark.

• The FPI also recognised the student that achieved the highest rating in the FPI CFP® professional competency exams. Best performer, Monique Malan, won the Top Student in the CFP® Professional Competency Exam Award.

After a stringent process, Bruce Fleming, CFP®, advisory partner at Citadel, was announced as the 2016 FPI Financial Planner of the Year. Bruce has been involved in the fi nancial planning industry for approximately 20 years.

“We would like to congratulate Bruce Fleming, CFP®, as the new FPI Financial Planner of the Year. We acknowledge the level of professionalism and ethics adhered to by Bruce as a CFP® professional. This award recognises the individual with understanding of their role as a fi nancial planning professional as it also showcases the highest standard of fi nancial planning advice provided to their clients,” said Godfrey Nti, CEO of FPI.

“His role as the new FPI and CFP® mark brand ambassador

is to continue elevating the fi nancial planning

profession.

We certainly look forward to working with him in promoting the Institute and the CFP® mark – as well as creating awareness of the value of professional fi nancial planning,” added Nti.

Francois Le Roux, CFP® and Yolande Botha, CFP®, were named the 2016 FPI Financial Planner of the Year fi nalists.

Francois has over 15 years’ experience of achieving holistic lifestyle fi nancial planning in the affl uent and high net worth market sectors. He is a proud mentor to aspiring fi nancial planners in the FPI Mentorship Programme. Yolande has been a CFP® professional since 2008 and currently holds the position as Head of Wealth Management in the Galileo Capital Wealth Management business.

“It was defi nitely a tough process, but it’s been worth it in the end,” said Fleming.

“Entering the competition for the third time, I am looking

forward to working closely with FPI and continuing to make sure that my role is executed at the highest standards set by the Institute. My role as a CERTIFIED FINANCIAL PLANNER® professional is to help everyday people make the right decisions when it comes to their fi nancial future. I am grateful for this honour.”

Exhibitors recognised for excellence

Sydney Sekese receives his award

forward to working closely

standards set by the Institute.

everyday people make the

Bruce Fleming, Citadel

At the recent Financial Planning Institute’s (FPI) Awards Ceremony Gala

Dinner, the Institute presented the Exhibitors’ Excellence Awards to three deserving companies who not only were able to engage well with delegates but also managed to showcase their brand in the most outstanding and creative manner at the FPI Expo.

Winners• Gold exhibition excellence

winner: Liberty• Silver exhibition excellence

winner: LexisNexis• Bronze exhibition excellence

winner: Discovery

The winners of this FPI Exhibition Excellence Awards were chosen from over 22 exhibitors. These ranged from fi nancial services providers, education institutions, regulators, and books suppliers to lifestyle companies.

Criteria of the awardsThe excellence of these awards was measured and rewarded based on a standard of Gold, Silver and Bronze performance. The award was issued not on how well the company performed in its industry but rather on how well it used the exhibition as a marketing platform.

Winners were chosen based on their excellence in the following categories:• Exhibition planning and

execution process• Incorporation of attention

attracting devices, e.g. movement, signage, colour, audio and or visual displays

• Presentation techniques• Attitude of stand staff

toward delegates and other fellow exhibitors.

Kobus Kleyn receives his

award

731 August 2016

What you read in the news today could affect your investment fund’s performance.The Sanlam Investment Management Inflation Plus Fund. For the cautious investor who still wants bold results.

Find out more about the Sanlam Investment Management Inflation Plus Fund by speaking to your financial adviser or broker or visit sanlaminvestments.com for the Minimum Disclosure document (fund fact sheet).

Sanlam Collective Investments (RF) (Pty) Ltd is a registered and approved Manager in terms of the Collective Investment Schemes Control Act. A schedule of fees can be obtained from the Manager. This is a multi-asset,

low-equity fund. Maximum Fund charges include (incl VAT): Initial advice fee, 1.14%. Initial manager fee, 1.14%. Annual advice fee, 1.14%. Annual manager fee, 1.14%. Total expense ratio (TER), 1.26%. The fund is exposed to

equities, which means prices will go up and down.

Investmentswww.sanlaminvestments.com

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8 31 August 2016

A changing investment landscape

The local and global investment landscape is in the midst of signifi cant

change. Foreign exchange markets, global economies and stock markets have been characterised by acute volatility.

What have been the main factors behind the recent volatility?The South African economy has been under pressure for some time. We have seen meagre growth forecasts, increasing unemployment numbers and political uncertainty at the helm. This was further exacerbated on 9 December 2015 when President Jacob Zuma removed Nhlanhla Nene as Finance Minister, (dubbed as ‘Nenegate’).

The United States is experiencing a rise in unemployment and may be entering a prolonged interest rate hike environment, something not experienced over the past decade. Furthermore, the US election candidates have triggered a sense of uncertainty.

Further afi eld, the Chinese economy is undergoing a managed mammoth transformation from an export and manufacturing driven economy (focused on low margins) to a consumer economy driven by its internal growth.

More recently, and potentially one of the most

NEWS &OPINION Financial markets regularly undergo oscillationsPRACTICE MANAGEMENT

infl uential political events of the past decade, has been the United Kingdom’s vote to exit the European Union, termed as ‘Brexit’. The Brexit vote runs the risk of triggering a contagion effect in other EU nations. Although Brexit is not yet a done deal, it will have the effect of creating economic uncertainty which will impact both local and global markets in the short- to medium-term.

Is Volatility the ‘New Normal’?Financial markets regularly undergo oscillations. Although volatility is a characteristic of stock markets, this has been more intense recently. Yet the general long-term trend has always been upwards. But is heightened volatility now the ‘New Normal’? If one looks at the graph above which includes the JSE Top 40 and the South African Volatility Index (SAVI) over the past nine years, we can see that the market trends upwards in the long-term and although the day-to-day volatility has increased, over the longer-term, returns have not been more volatile.

Future Macro Global DriversDue to enhanced food production and distribution, improved public healthcare and the eradication of some major diseases, the world has been experiencing signifi cant population growth. As the depicted by the graph below, we have seen a steady growth in global population from 3.3 billion in 1965 to over

7.3 billion in 2015. Moreover, global population is expected to grow by a further one billion over the next decade. As global population grows, urbanisation increases dramatically. More than half of the world’s population now resides in towns and cities.

How does this create opportunity for investors?History has proven that fi nancial markets have the tendency of overreacting to uncertain market conditions and unexpected shocks. These overreactions can force prices below fair value when the news is negative, or raise them above fair value when the news is positive.

Source: World Bank

Price swings can, therefore, create opportunities to increase or decrease holding and create value to investors.

Global population growth and urbanisation will no doubt create numerous social and economic problems, but it will also provide economic stimuli and opportunities for mass markets, especially those focussed on the consumer-driven space. Manufacturers and food producers have the potential to benefit So be assured, although the investment landscape is changing rapidly, prudent investment decisions have the ability to create value for both local and global investors.

INSIDER CHRONICLES

MARC WIESEHead of Business Development, Warwick Wealth

8

PRACTICE MANAGEMENT

931 August 2016

COMPLIANCEIt is not possible to be an expert in all areas

Source: World Bank

COMPLIANCE CORNER

RICHARD RATTUEManaging Director, Compli-Serve SA

It is not possible to be an expert in all areas

A headline caught my eye recently, “FINANCIAL ADVISER ORDERED

TO REPAY WIDOW R650 000” and then in lower case; “No due diligence carried out on investment”.

I must admit I feel as if I am sometimes on a roundabout and I pass the same destinations time and time again, and reading headlines as above, I certainly feel this is the case. I have lost count of the number of times I have read of individuals placing investments for their clients where the investment vehicle/structure/cost cannot be argued to be in the client’s best interests or indeed, a suitable product for their needs.

General code of conductThe Financial Advisory and Intermediary Services Act has now been in force for well over a decade and if advisers did as requested/required by the legislation, specifi cally the General Code of Conduct, then one would assume that we would see far fewer headlines relating to mis-selling of investments than we currently do.

One could forgive a member of the public for believing that intermediaries appear to be an unethical lot, interested only in their own enrichment and not really too bothered about their clients’ affairs. This is far from the truth, of course as the vast majority of advisers are not at all like this.

Some advisers may have done the necessary due diligence before investing their clients’ money, reading up on the investment strategies, perhaps even met the manager/owners of the scheme/fund – and yet matters can still take a turn for the worse.

Jack-of-all-trades modelSo the question that arises is whether a financial adviser should indeed even be giving investment advice relating to specific products. The Retail Distribution Review (RDR) will force all of us to ask tough questions too. At the advent of FAIS, it was predicted that an adviser who tries to be all things to all people, would come up short as it is simply not possible to be an expert

in all areas. To my mind the perennial jack-of-all-trades model is downright dangerous where you are supposed to have an intimate knowledge of the structure of products and the inherent risks of such products before you make a recommendation to your client.

The oceans are awash with various investments of all hues and colours that have a target investor demographic ranging from post-offi ce bonds/index funds to high risk to private companies investing in cutting edge technologies that have at best, a 50% chance of success. By the very nature of humans, all investors are different and fall into various categories of risk which will need to be assessed.

Investment risk – should advisers make the product call?

It was predicted that an adviser who tries to be all things to all people, would come up short

RDR environmentAs we go forward into the RDR environment, pressure will mount on adviser fi rms to ensure that they stick to their knitting and recognise that one should always play to one’s strengths.

This, of course, does not mean to say that there are advisers who aren’t perfectly capable of selecting suitable investment products for their clients and indeed, I am not for a moment suggesting that such individuals should refrain from doing so. My point is rather towards the more generalist adviser practice that for some reason continues to make investment product decisions for clients when a plethora of investment professionals exist who are able to make such decisions, with the

support of researchers and systems that are simply beyond the reach of most smaller adviser fi rms.

To avoid risk, practices could operate in one of two ways. The fi rst would be by engaging an individual who is an investment professional who would sit within the practice to specifi cally advise clients on particular investment products after a fi nancial planner has set the required targets that the investments must achieve. The other option is to face up to the fact that decisions in respect of investment products should rather be left to fund managers, and therefore perform due diligence on managers rather than products, and once satisfi ed, engage with said managers on behalf of clients.

10 31 August 2016

NEWS &OPINION We never forget whose money is being managedINVESTING

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The journey matters in reaching the desired investment destination

Mario Fisher, Portfolio Manager at

Prescient Investment Management

If the investment destination, or objective, is to retire comfortably with a good income stream, it

matters how you get there.That’s according to Mario

Fisher, Portfolio Manager at Prescient Investment Management: “Ultimately the investment journey comes down to taking short- and medium-term risk controlled opportunities that give the benefi t of continuously compounding off a higher base, keeping the focus on the long-term destination and hopefully exceeding those expectations.”

Fisher stresses the importance of starting to save as soon as possible to take advantage of the power of compound interest.

“Never lose sight of the long-term goal to maximise returns, but take risk-controlled opportunities along the way. Along the investment road there will be potential for bankable profi ts which grow through compounding. By taking advantage of these it’s possible to exceed investment goals,” he says.

Short-term riskHowever, he notes the danger in taking excessive short-term risk to maximise short-term gains. If the investment declines, the long-term goal

impacted by many economic and fundamental infl uences. Occasionally, a single event is powerful enough to dominate these other factors and infl uence market returns. However, historically speaking, this is often an unpredictable event. Economic growth, earnings, valuation, interest rates, infl ation, and a plethora of other factors will ultimately decide the future direction of the investment markets. Attempting to forecast or predict the simultaneous magnitude, direction and effect of these forces borders on the realm of the mystic. The superfi cial liquidity in any given market is based on the psychology of the markets participants; when it turns from positivity toward increasing negativity, bids dry up, valuations collapse and forecasting in to the distant future become meaningless.

Attempting to predict the simultaneous magnitude, direction and effect of these forces renders most long-term forecasts meaningless.

Modern Portfolio TheoryBad investment decision-making is often the result of a lack of information, and this is a major shortcoming of traditional investing. Harry Markowitz’s landmark work on portfolio selection in 1952

to maximise value will be affected, and a few successive bets that blow out will severely compromise objectives.

To avoid getting caught up in ‘short-termism’, Prescient’s approach as a fund manager is not losing sight of the destination.

“We never forget whose money is being managed, and we recognise that our decisions have consequences and that our actions carry weight. This helps to avoid falling into the trap of taking excessive short-term risk in the hope for a short-term reward.”

A pragmatic approachIn this regard, he says that because many forecasted events never materialise, while others happen without being anticipated, a pragmatic approach to investing delivers better results.

“We actively manage risk and build investment portfolios by evaluating current market pricing, with a view to trading assets based on their current valuation, without forecasting in to the distant future. This pragmatic approach ensures that we are able to navigate through uncertain times and plot a course that generates consistent returns, without a crystal ball.”

Stock prices and markets are

led to Modern Portfolio Theory (MPT) and ‘effi cient portfolios’. While widely used, many fi nancial behaviourists have identifi ed what they view as fundamental fl aws in the MPT approach and its standard implementation. Building an effi cient portfolio under MPT assumes that each investor has perfect information about economies, markets and traded securities. It also assumes that investors act rationally, and that fi nancial market returns and volatilities behave according to normal statistical assumptions.

While these assumptions help simplify the mathematics of portfolio construction and measurement, we know from experience and common sense that they do not always hold up well in the real world. Most investors have too little information and are driven not by the information they have, but by how they are feeling at a given moment and worse, by forecasting what the distant future may hold.

On average, human behavioural tendencies are sometimes refl ected in chaotic and closely correlated market movements during times of

fear, uncertainty and high volatility, and in widespread investor complacency during times of calm. As a result, behavioural perspectives on investors and fi nancial markets have played an increasingly important role over the last decade.

The pragmatic, risk-controlled approach followed at Prescient Investment Management ensures that we are able to navigate through these uncertain times and plot a course that generates consistent returns, without a crystal ball.

1131 August 2016

The rand is a highly emotive factor INVESTING

PIETER HUGOManaging Director, Prudential Unit Trusts

Funds raised by private equity managers investing in South Africa and other

African markets reached R29.0 billion in 2015, the highest on record for the industry and up a signifi cant 145% from R11.8 billion in 2014. This is according to the Southern African Venture Capital and Private Equity Association( SAVCA) 2016 Private Equity Industry Survey, the annual survey of private equity and venture capital activity in Southern Africa.

A substantial majority of the funds raised during 2015 (75.9%) were from South African sources, and largely by independent fund managers from third-party investors for late-stage investment mandates. Pension funds, international development finance institutions and funds of funds were the most prominent investors into the industry.

Speaking at the survey

launch, CEO of SAVCA, Erika van der Merwe, said that the notable pick-up in fund raising was the outstanding theme to emerge from this year’s survey, and is an indication of the sustained interest by local and international institutional investors into private equity investments in Southern Africa. “UK, US and European investors are prominent investors in private equity in this region, with non-South African sources accounting for more than 45% of industry funds raised to date and not yet returned.”

The brisk capital raising contributed to the growth in industry-wide funds under management: Survey results reveal that South Africa’s private equity industry, including both government and private funds, managed R165.3 billion of funds at 31 December 2015, an increase of R15.0 billion from 31 December 20141. This represents a compound

annual growth rate of 11.9% since 1999, when the SAVCA survey fi rst began.

SAVCA, along with research partner KPMG South Africa, surveyed 72 managers, representing 82 funds, with a mandate to invest in South Africa and in other African markets. This research information was augmented through alternative sources for a further 10 managers representing 18 funds.

Van der Merwe explains that, of the industry’s funds under management, R40.6 billion in undrawn commitments – contractual capital commitments by institutional investors to private equity funds – will be called upon in the next few years as private equity fund managers implement their strategies. Around half of this capital is earmarked specifi cally for South African investments.

The invested component of funds under management

is allocated across a range of sectors, mainly in the form of expansion, development and buyout capital. Private equity investment activity in South Africa during 2015 totalled R10.5 billion across 534 deals, of which R4.4 billion was for follow-on investment and R6.1 billion for new investments. By value, the most popular sectors for deal-making in 2015 were banks, fi nancial services and insurance (15.9%), retail (15.7%), infrastructure (14.2%) and manufacturing (11.8%).

Nearly two-thirds of the value of deals done in 2015 entailed investee companies with a BEE rating of four or higher. “Black economic empowerment participation in investments is fundamental to the South African economy and remains a signifi cant driver of private equity activity in South Africa,” says Van der Merwe.

Proceeds from asset realisations – exits from

investee companies – totalled R4.5 billion in 2015, with trade sales being the most prominent exit route by value. Sales to other private equity houses were the second-most popular exit route. The private equity industry returned R8.9 billion to investors in 2015, representing proceeds from exits as well as dividends, loan repayments and interest payments.

“The signifi cant increase in funds under management evidences the attractive returns, sustained growth and long-term confi dence of investors in the Southern African private equity and venture capital industry,” Van der Merwe adds.

1 The PIC did not participate in this year’s survey, and thus no 2015 data is available. PIC data, classifi ed under Captives – Government, have been removed from the historical survey data to ensure comparability over time.

Private equity fund raising reaches record high

The fi rst half of 2016 has seen a rush by many investors to take funds offshore, precipitated

by the sharp depreciation of the rand following the Nenegate debacle in December 2015. Unfortunately, South Africans have a history of panicking when the rand weakens sharply and responding by taking money offshore. The rand is a highly emotive factor, so investors’ immediate focus is often solely on the level of the rand, and not whether an offshore investment actually makes sense from a valuation perspective – they ignore whether the South African assets they are selling and the foreign assets they are buying at the time are cheap or expensive.

It’s important to remember that we should expect the rand to depreciate against the US dollar over time: on a purchasing power parity (PPP) basis, economic theory tells us that the rand should depreciate by roughly 4% p.a. versus the US dollar over time, based on the infl ation

Going offshore: It’s not just about the rand

differential between the two countries. Surprisingly, it has averaged about 4% p.a. over the longer term, with wide variations over shorter time periods.

So did investors who panicked after the previous notable depreciations – in November 1985 and December 2001 – benefi t from moving offshore? A look at the equity market and currency valuations at the time tells us the results were mixed. In the graph, the black line depicts the value of the rand on a real effective exchange rate (REER) basis against a basket of currencies. It shows that, in the 1985 episode, investors would have sold the rand at about 30% cheap, sold SA equities at roughly fair value (as shown by the red line on a share price/book value basis) and bought offshore equities at about a 25% discount (depicted by the yellow line). After three years, we estimate that this would have resulted in about a 15% benefi t to investors relative to staying in SA.

However, in 2001 investors

did not fare as well. Not only did they sell SA equity somewhat cheap, they also bought offshore equity at 10-20% expensive levels, and they sold the rand at an exceptionally cheap 35-40% discount. We estimate that, after three years, investors would have benefi ted by approximately 121% to have stayed in the local market instead of going offshore.

In the current conditions,

the graph illustrates that both global and South African equities are marginally expensive, and the rand is 20%-25% cheap. It also highlights why this most recent rand depreciation is particularly painful for investors. The currency has moved from an expensive peak in December 2010 to its current very cheap position, a large swing in fi ve years.

It’s clear from these

examples of past experience that investors looking to take money offshore in the current environment need to understand asset valuations, as well as the value of the rand. And of course they should take a holistic view of the impact on their overall portfolio. Although it is the vagaries of the rand that capture all the attention, it is not the only factor that matters in such an important decision.

12 31 August 2016

NEWS &OPINION SA has suffered the consequences of poor governanceINVESTING

One doesn’t have to look very hard today to see that South Africa is at

an economic and political crossroad. Latest consensus estimates put GDP growth for 2016 at only about 0.5% with our country facing the very real possibility of a sovereign ratings downgrade to junk status this year. If a serious effort across all sectors to improve the current situation is not undertaken swiftly, the consequences will be dire for the future of our country and our economy.

Against this backdrop, a stepped-up approach to good governance across all sectors of the economy is a critical component of the remedy to ensure that a sustainable future is achieved. Key factors to note for this approach are the number of challenges facing the industry, as well as some of the recent developments in the governance arena that seek to address these challenges including our own efforts as an asset manager. These include the concerns South Africans have about poor governance; assessing its impact; showing how regulation such as King IV creates a platform for good governance practices; and how we, as Old Mutual Investment Group, are rising to the challenge of holding our investee companies to account for their governance practices.

South Africans across the board concerned about decline in governance According to over 1 000 respondents to the Institute of Risk Management South Africa’s Risk Report on South African Risks for 2016, lack of leadership and increasing corruption rank among the top ten risks facing the country. Respondents were from all industry sectors, including both the public and private arenas, and from all demographics. Furthermore, in a recent survey of Old Mutual’s retail customers, governance

Good governance matters – now more than ever

failure was highlighted as the biggest perceived risk to our customers’ investments and savings. As responsible stewards of the assets we manage on behalf of our customers, we think it is particularly important to manage potential governance risks effectively, as we all face the direct or indirect consequences, should they materialise.

The impact of poor governance on SAAs a nation, South Africa has suffered the consequences of poor governance, such as the sacking of ex-Finance Minister Nene, which has directly impacted our economy and our ability to attract foreign investment. The co-ordinated effort by business and government to address these consequences resulted in a joint eight-point plan (strongly supported by Old Mutual), which, if implemented, will look to minimise the impacts on the SA economy. One of the points of the plan was the need for more effective management of state-owned entities.

In his 2016 Budget Speech, Finance Minister, Pravin Gordhan, acknowledged the critical importance of good governance in state-owned entities stating, “Our aim is to strengthen our state entities so that they can play a propulsive and dynamic role in our development. Further fi nancial support to state-owned companies

will depend on the clarity of this mandate and fi rm resolution of governance challenges.” The implication of this statement is that state-owned entities with weak governance, or that engage in corrupt practices, risk losing the support of government.

The impact of poor governance has not only been felt in the public sector. Recent examples of poor governance across the local listed-equity space, such as African Bank, and MTN, and, internationally, Volkswagen, show how destructive governance failure can be for investors, with the share prices of these companies falling materially and rapidly, cutting huge chunks from investors’ retirement savings and taking a very long time to recover their value, if ever.

By actively researching the governance quality of the companies we invest in and through direct engagement with management, asset managers can actively support the pursuit of their customers’ long-term fi nancial goals, while at the same time raising the bar on good governance practices in South Africa.

An important departure point for our approach to good governance practices is the King Code on Corporate Governance, which critically aims for a stakeholder-inclusive approach. We have recently been involved in the drafting of King IV, which will make an important contribution to strengthening governance practices in South Africa.

Why is King IV important & how is it different this time?King IV is a signifi cant factor as it places a specifi c focus on long-term value creation as a foundation principle, and it is in the long term where good governance can and does support the sustainability of companies and societies. This is in line with the needs of investors, who are becoming more vocal in their demands for companies to focus on long-term value at the expense of short-termism.

Essentially, long-term value creation can be achieved through strengthening of the existing principles in the Code, with specifi c regard to executive and director remuneration; integrated reporting; responsible investing and linkage with the Code for Responsible Investing in South Africa (CRISA); the strengthening of the composition of committees; and leadership and strategic risk management.

We therefore expect that the fi nal version of King IV will emphasise integrated thinking across all entities to which the Code will apply (including state-owned entities). This in turn should enhance how these companies contribute to long-term value creation. It will also underpin existing legislative frameworks, such as the JSE Listing Requirements and the Public Services Financial Management Act, in helping to place good governance at

ROBERT LEWENSONESG Engagement Manager, Old Mutual Investment Group

the forefront of the strategic management of those entities.

The key difference from previous iterations of the Code is that by focusing on outcomes, and encouraging the creation of practices to put the principles in action, King IV provides a comprehensive guideline for companies in all sectors to step up to the application of corporate governance best practice.

What role can asset managers play in improving good governance practices?As an asset manager, Old Mutual Investment Group continues to take a proactive stance with regards to our active ownership responsibilities on behalf of our customers. We use our infl uence in the market to assist in improving the governance practices of the companies we invest in, and we have achieved many successes in these engagements over the last year. These include improvements in board governance, focusing on the quality and leadership of directors and their remuneration, along with better disclosure on climate change practises.

We seek to be a positive infl uence on the future development of good governance in South Africa, especially during this currently challenging time, not only through responsible investment, but also though building the governance skills of our current and future leaders. To support this, we have partnered with the University of Stellenbosch Business School and INSEAD in creating the Africa Directors Programme, which is a modular course aimed at improving the calibre of boards and directors on the African continent. The inaugural course took place in August 2015, and was attended by Old Mutual Investment Group executives and investment professionals.

INVESTING

One doesn’t have to look very hard today to see that South Africa is at

an economic and political crossroad. Latest consensus estimates put GDP growth for 2016 at only about 0.5% with our country facing the very real possibility of a sovereign ratings downgrade to junk status this year. If a serious effort across all sectors to improve the current situation is not undertaken swiftly, the consequences will be dire for the future of our country and

failure was highlighted as the biggest perceived risk to our customers’ investments and savings. As responsible stewards of the assets we manage on behalf of our customers, we think it is particularly important to manage potential governance risks effectively, as we all face the direct or indirect consequences, should they materialise.

The impact of poor governance on SAAs a nation, South Africa has

ROBERT LEWENSONESG Engagement Manager, Old Mutual Investment Group

1331 August 2016

INVEST WHERE THE FUND MANAGERS INVESTAt Old Mutual Investment Group, our fund managers do things differently by investing their own money alongside yours.

www.oldmutualinvest.com/asinvested

Our fund managers are just like you. They’ve got dreams and aspirations, and they want to grow their wealth. They do this byinvesting their own money into the funds they manage. This means that when you invest with us, you can be assured that yourinvestment is as important to us as it is to you.

Speak to an Old Mutual financial adviser or your broker about investing alongside our fund managers or call 0860 INVEST (468378).

FCB10019899JB/E

Old Mutual Investment Group (Pty) Limited (Reg No 1993/003023/07) is a licensed financial services provider, FSP 604, approved by the Registrar of Financial Services Providers (www.fsb.co.za) to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may not get back the full amount invested. Past performance is not necessarily a guide to future investment performance.

14 31 August 2016

NEWS &OPINIONINVESTING Hedge fund fees tend to be higher

Alpha -αThis is a measure of a manager’s ‘value

added’ in selecting individual securities, independent of the effect of overall market movements. There are some really good hedge fund managers in the industry that have demonstrated their ability to consistently generate alpha over time.

Beta – βBeta of a portfolio is the portfolio’s sensitivity

to market movements. In market neutral funds, the fund manager’s intention is to limit the impact of market movements and rely solely on his or her ability to pick stocks (alpha generation) by making investments in both long and short positions so that the beta measure of the overall fund is as low as possible.

CorrelationHedge funds typically have a low correlation

to other traditional asset classes, by allocating a portion of your investment to hedge funds, you can enhance the overall returns.

DrawdownOne way to gauge a hedge fund’s

performance is maximum drawdown (the peak-to-trough decline during a specifi c record period of an investment). Protection on the down side is one of the big benefi ts of a hedge fund.

Exposure (Net)It is key to understand the net exposure of the

funds that you are investing in. Hedge fund managers can either purchase stocks they feel will increase in value, (long position) or sell short stocks they think will decrease in value (short position). In most cases, the fund will have positive exposure to the equity markets – for example, having 70% of the funds invested long in stocks and 30% invested in the shorting of stocks. In this example, the net exposure to the equity markets is 40% (70%-30%).

FeesHedge fund fees tend to be higher than that

of long only fees. Your hedge fund performance will not benefi t from more assets in the fund, as low fees force you to become an asset gatherer. Investors should compare investment alternatives on an after fee basis.

Gearing Leverage is calculated as the sum of the

absolute value of total long exposure and total short exposure of the fund divided by the fund size. Leverage is used as an indication of the fund’s exposure relative to its size. Leverage is sometimes also referred to as ‘Total Gross Exposure’ or ‘Gearing’. This is a very important metric to understand as the more leveraged an investment, the higher the risk. Some are very aggressive and may have up to 400% gross exposure (like some QIHFs), while others may be more conservative and have an average net exposure of 150%.

LiquidityLiquidity risk, especially short positions in hedge

funds, is the reason for the downfall of many a hedge fund manager. Investors need to understand how quickly the portfolio they are invested in can be liquidated.

Market Neutral Strategy A hedge fund buys

stocks (long) and sells stocks (short) but seeks to minimise the exposure to the broad market. Typically, market neutral funds have a small net long exposure to the market, for example, the Laurium Market Neutral Fund may have a maximum net exposure of between -15% and +15%, and has had an average net exposure of 6%.

NAVNet Asset Value (NAV) is the market value of

a fund’s total assets, minus its liabilities and intangible assets. The measure is used to determine prices available to investors for redemptions and subscriptions.

Pair TradingHedge fund managers may often use pair

trading where they may match a long position with a short position e.g. long one bank stock and short another. Ideally a manager wants the long to go up, and the short to go down, but profi t is also made if the long position goes up further than the short position.

QIHFsHedge Fund Managers had to decide whether

to apply for approval of their funds either as Retail Investor Hedge Funds (RIHFs) or Qualifi ed Investor Hedge Funds (QIHFs). QHIFs have limited regulation and are only available to institutions and qualifi ed Investors who have knowledge of the market. Minimum investment in a QIHF is R1m.

RIHFsRetail Investor Hedge Funds (RIHFs), have no

restrictions on who can invest.

Short (or Short Position)Going short is the

sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.

WithdrawalsThe withdrawal policy on Retail

Investor Hedge Funds (RIHFs), is one calendar months’ notice. This differs to that of the more conventional unit trusts, which are able to process withdrawals over a couple of days.

Yield-CurveFixed interest hedge funds form a smaller

part of the industry (about 14% of assets in 2015). Yield-curve arbitrageurs seek to profi t from shifts in the yield curve by taking long and short positions in fi xed-income instruments of various maturities.

Zero Cost CollarHedge fund managers often use derivatives to

protect capital, such as zero cost collars, where they buy a put option and sell a call option with a lower strike price. The purchase of the put protects the portfolio if the price falls.

RIHFs, QIHFs, long, short, gross, net, leverage, etcetera, are all terms that easily roll off the tongue for those involved in the hedge fund industry. But for most, this terminology is rather foreign. With many hedge funds already approved by the Financial Services Board for sale to the public under the Collective Investment Schemes Control Act, fi nancial advisers and clients alike should become more familiar with the jargon and terms used by the industry. Laurium Capital provides this handy guide.

ZHedge fund managers often use derivatives to

protect capital, such as zero cost collars, where they buy a put option and sell a call option with a lower strike price. The purchase of the put protects the portfolio if the price falls.

Hedge fund terminology

1531 August 2016

MitonOptimal South Africa (Pty) Ltd, registration no 2005/032750/07, is an authorized Financial Services Provider, License No. 28160. MitonOptimal South Africa (Pty) Ltd complies with all the requirements of the Financial Advisory and Intermediary Services (FAIS) Act (Act 37 Of 2002). The value of investments and the income from them may vary and you may realise less than the sum invested. Past performance is not necessarily a guide to future performance and no guarantees are offered in respect of investment returns and/or capital invested.

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The South African economy is now more likely to fall back into recession and extreme

currency volatility indicates that a downgrade of its credit rating to non-investment grade in December is now almost inevitable. Bi-lateral security cooperation and aid programmes face less disruption.

The South African economy is greatly exposed to the global economy and in particular its currency is the most volatile among its emerging market peers. South Africa is reliant on foreign capital to fi nance its wide current account defi cit. Additional fears of euro-scepticism in other EU countries have also stoked fears that South Africa’s trade with the EU is under threat. South African exports to the EU reached over USD14.2 billion in 2015. However, the impact on the South African economy would be short-lived and relatively manageable. In a worst case scenario, where the UK economy were to shrink by 5% and UK imports were to drop by 10%, South Africa’s economic growth would fall by only 0.1% (according to research by SA’s

SA is reliant on foreign capital INVESTING31 August 2016

The South African economy is now more

economy would be short-lived

North West University).South Africa’s Finance

Minister Pravin Gordhan has said that the country’s Treasury and the central bank would take any additional measures to cope with the implications of the ‘Brexit’ vote, while South Africa’s President, Jacob Zuma has assured markets that South African banks and fi nancial institutions could withstand the shock, as demonstrated during the 2008/09 global fi nancial crisis. While a 0.1% loss in GDP growth is relatively small, the country’s economic growth rate has already slumped, recording a 1.2% contraction in the fi rst quarter of 2016, as mining and farming output shrank. The UK exit vote thus indicates that a recession will be increasingly likely for the South African economy in 2016.

The impact on the currency would be more signifi cant and have longer term implications on the country’s debt rating. The rand has already lost 21% against the US dollar so far in 2016. On 24 June, (the day the referendum results were announced), the South African rand was the worst performing currency after the UK pound, before paring some of its previous losses.

This is due to South Africa’s close fi nancial ties to the UK and the fact that many large South African companies have a dual listing on the London and Johannesburg stock exchanges.

According to research by Unicredit, UK banks’ claims on South African companies account for 178% of South Africa’s foreign currency. South Africa’s already volatile currency and a probable recession would further increase the prospect of a downgrade of the country’s

credit rating to non-investment grade by December. The longer term implications would lead to weak growth, higher infl ation and interest rates, as well as extensive capital fl ight.

According to Bloomberg, the UK is South Africa’s fourth largest export destination, mostly dominated by metals and agricultural goods. The bulk of these exports have duty-free access to the EU under the terms of the Trade Development Co-operation Agreement. The trade terms with the UK will now need renegotiation and revision, which could take up to two years, and signifi cantly impact investment in key industries such as mining and agriculture. Moreover, South Africa is a member of the Southern African Customs Union (SACU), which is dominated by asymmetric trade with South Africa.

Other SACU members, i.e. Botswana, Namibia, Lesotho, and Swaziland, will similarly be affected by the trade renegotiations with the UK. South Africa’s Trade and Industry Minister, Rob Davies has offered UK companies that stand to lose their duty-free access to EU markets a base in South Africa, thereby

continuing these companies’ access

to the EU through the EU-SADC Economic

Partnership Agreement (EPA), which includes six countries of the Southern African Development Community (SADC).

Beyond trade and investment, the implications of an eventual ‘Brexit’ are less likely to be extensive. The presence of the British Peace Support Team (BPST) in South Africa, which provides for bilateral military co-operation such as joint exercises with the South African National Defence Force (SANDF), is unlikely to be affected. South Africa is one of the top ten countries receiving British aid, which could be cut down as the UK economy enters severe recession. Britain’s bilateral development programme in South Africa came to an end in 2015; the relationship between the two countries has shifted to one of mutual co-operation and trade.

EXX AFRICA is a specialist intelligence company that delivers forecasts on African political and economic risk to businesses.

Specialist intelligence company EXX AFRICA recently published an analysis of the impact of ‘Brexit’ on three of the UK’s important African markets: South Africa, Nigeria, and Kenya. MoneyMarketing takes a look at what EXX AFRICA

had to say about the effect of the UK’s ‘Leave’ vote on our local economy.

The Impact of ‘Brexit’ on South Africa

16 31 August 2016

‘Differentiate yourself with your fantastic attitude’WOMEN’S MONTH

SIDU MTSHALIEquity Analyst

Is the ‘glass ceiling’ preventing women from reaching the highest level in their professions still in place?Unfortunately, the numbers suggest there are still very few women in the pinnacle of power. A lot is being done but we still have some way to go in closing corporate gender gaps.

What qualities are needed for women to succeed? I believe it is about passion – putting heart and soul into your vision, mapping out an execution plan and then taking it just one day at time until you get there.

Who inspired you and why?My biggest cheerleader – my mom. She always encouraged me to get out of my comfort zone and be open to new ways of doing things. And if I happened to embarrass myself or things didn’t work out, she’d recommend taking a short nap and having another go.

Do you regard taking time off to have a family as an obstacle to your career advancement?In the beginning of your career you may feel that way. But as you mature, you realise time out creates a happier, more creative and productive you.

What advice do you have for young women starting a fi nancial services career?Find something you love to do then be tireless in fi nding ways and means to do it to your best ability.

‘Work hard and take pride in everything you do’MoneyMarketing meets the outstanding women of ALUWANI Capital Partners. ALUWANI is a Tshivenda word meaning ‘to prosper’ or ‘to grow’.

MAMOKETE LIJANEMacro Strategist

Is the ‘glass ceiling’ preventing women from reaching the highest level in their professions still in place?I do believe that the glass ceiling is still in place, but that the nature of the ceiling, especially in South Africa, is different from what people believe. In my experience, there is such a shortage of skills in South Africa that no one is stopping anyone from rising up the ranks because of their gender. However, because most women are mothers, the demands of their families can compete with those of their careers. Meeting both obligations at a high level, and successful women are Type A’s who want to do well at everything, can be diffi cult. Women often opt out of reaching for the highest positions in their chosen careers to have time for their families. In a sense, the ceiling can be internally as opposed to externally imposed.

Who inspired you and why?I have been inspired by many women over the years and my role models change all the time. When I was a young professional I was greatly inspired by Maria Ramos as Director General of National Treasury. Lately I look at the great ladies of the fi nance and economic world with awe. Gill Marcus is awesome, Christine Lagarde is a queen and Janet Yellen… Wow!

Do you regard taking time off to have a family as an obstacle to your career advancement?When I decided to start a family many people said that it would affect my career negatively. I decided to do it anyway and let the cards fall where they would. I came back to work a few months later and I had defi nitely changed as a professional. I could not be the same person I was before and had to renegotiate the terms of engagement between myself and my job. For one thing, I could no longer stay at work until all hours and I had to be more disciplined around working on weekends.

What qualities are needed for women to succeed? Bravery is key to growing in your career as a woman, especially in male dominated careers where you do not see many other women excelling. It is absolutely essential for women to venture into spaces that they do not think were designed for them, where the reception might at times be uncertain. Often an opportunity will come that you think is a bit beyond your ability, too challenging or too frightening. You need to overcome that fear and be brave enough to show up.

JACKIE EBERLECredit Analyst

What qualities are needed for women to succeed? Besides brains, a constructive attitude, willingness to learn and the ability to build relationships are extremely useful attributes. Women have signifi cant advantage over men when it comes to social skills like communication and teamwork.

Is the ‘glass ceiling’ – preventing women from reaching the highest level in their professions still in place?In some companies I think it still exists, although I have been fortunate not to experience it directly. Fortunately, South African companies are progressing and more companies are recognising the unique contribution of women to better outcomes. Truly progressive companies are leveraging women at all levels as a competitive advantage.

Do you regard taking time off to have a family as an obstacle to your career advancement?If there are obstacles, they are self-imposed, naturally brought about by increased responsibility at home. In my case, naked ambition was tempered (but not extinguished) by the birth of my son, but luckily I am able to have a happy balance of both.

Who inspired you and why? That’s easy, my parents. I couldn’t have had a better example of hard work, tenacity and teamwork. They also taught me the power of unconditional love.

What advice do you have for young women starting a fi nancial services career? Be different. Early in your career differentiate yourself with your fantastic attitude, hard work and insatiable appetite for learning. The market place will reward you.

MISHNAH SETHHead of Frontier Strategies

Who inspired you and why?The two women closest to me – my mother and sister. They have given me the courage and strength to follow my dreams.

Is the ‘glass ceiling’ preventing women from reaching the highest level in their professions still in place?I think it depends on your environment as well as your perception of your experiences. I believe that if you have the right attitude, work hard and back yourself, you will excel in your chosen profession.

Do you regard taking time off to have a family as an obstacle to your career advancement?As women we often take on many roles and put an immense amount of pressure on ourselves to excel at everything: it is not easy. We, however, live in an era that allows women to strike a balance between family and professional responsibilities. What is important is to have the right support structures at home and work, and to fi nd a corporate that values diversity, thereby recognising that fl exibility does not equate to a reduction in productivity.

What qualities are needed for women to succeed? We are often our worst critics. What was very important for me was the realisation that we are all just human and all have strengths and weaknesses. It allows one to become comfortable in one’s skin which is essential as it means that you are not afraid to speak your mind or to stand your ground. Lastly, I think it is important to continuously learn and ask questions: as individuals we will never have all the answers. True greatness is created when we work as a collective.

What advice do you have for young women starting a fi nancial services career?Work hard and take pride in everything that you do. Back yourself. Treat yourself with respect and treat others the way you want to be treated and keep learning and improve from mistakes.

will come that you think is a bit beyond your ability, too challenging or too frightening. You need to overcome that fear and be brave enough to show up.

More companies are recognising the unique contribution of women

1731 August 2016

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WOMEN’S MONTH‘There’s a lot of untapped potential out there’

Does our society still believe a woman’s job is one of child and home care?A lot of preconceived notions about women persist. Some still believe we as women won’t give the job our all as a man would - because we have children. That’s a myth. We have learned how to integrate work and life; it’s long ceased to be about balancing the two and more about integration. Women are remarkable at multi-tasking. At any given time it can be work, work, work but sometimes you take time out for your family.

Is our fi nancial services industry still male dominated?I think it goes in peaks and troughs and right now I’d have to say that’s its very, very male dominated. If you look at the CEOs of all the major fi nancial

services fi rms like banks and insurers, they tend to be male. There are quite a lot of senior women within those fi nancial services fi rms and there has been some change in that some are at the helms of business unit subsidiaries, but I don’t think that it’s enough. There’s a lot of untapped potential out there.

What I have noticed over the years, having worked at major fi nancial service companies, is that many of my male exco colleagues have wives that stay at home – and that almost reinforces the way in which women are seen. There is absolutely nothing wrong with making the choice to be a fulltime care giver. But sitting across from someone whose main partner is taking that path makes me ask: how valid do they think my presence at

this table is?In the same breath, I can’t say

I’ve seen any colleague respect me any less because of my career choice.

In your position as Group Executive: Human Resources, you must meet a lot of young women just starting their careers? Are they increasingly ambitious?Without a doubt they are! They are so unapologetic and confi dent about the space they want to take up. In fact, I’m fi nding now that younger men are more reticent and less forceful than prior generations. It’s almost as if there’s a generation of women coming into their own – all they need is molding and direction.

I love the fact that they know who they are, what they’re about. They don’t want you to cast them in your own path; they believe fi rmly that they’re part of a different generation which has a different journey and paradigm.

The personal mastery I see in young women is really something to admire. Our confi dence was a quieter one and it needed to be teased out. These women are saying: “I’m here, deal with me, take me, shape me,” and I love that.

You have no less than three law degrees?Yes, I have a BA in law, an LLB and an LLM in tax law. I spent a bit of time at a labour consultancy because that’s what I thought I wanted to do, change the world – one labour battle at a time! But I was young then. Back then there were labour councils and industrial councils. There were battle-weary people all around me with emotions that came from being in a bad space. I found that I didn’t enjoy it.

I wanted to work in the corporate world where I felt my curiosity would be better satisfi ed and would give me access to so many different paths. I wasn’t wrong.

From being a legal adviser, I went into compliance functions, governance roles and I looked after customer service and operations at a large insurer. And from there I looked after one of their retail businesses and then another retail business at another fi nancial services group. All of this was due to constant curiosity – as you touch one thing it opens the door to something else and you take a peak and you think, “I might want to be in there.”

If you said to me two years ago that I would be heading up an HR function, I would have said “really?”

‘Women are remarkable at multi-tasking’

WOMEN’S MONTH

‘Women are remarkable at multi-tasking’MoneyMarketing spoke to Lindi Dlamini, Group Executive: Human Resources at PPS, about women in our fi nancial services industry

18 31 August 2016

‘Work hard and don’t give up’WOMEN’S MONTH

SARAH LOVE heads up the fi duciary division called Private Client Trust.

An admitted attorney and notary, with a BCom and LLB from the Nelson Mandela Metropolitan University, Sarah moved to Cape Town in 2008 where she articled in a small fi duciary focused practice. Realising that practising as an attorney was not for her, Sarah joined the Private Client Holdings family in 2012. Since then, she has become a Fiduciary Practitioner of SA, as recognised by the Fiduciary Institute of SA and completed her Certifi cate in Deceased Estates Practice with distinction in 2013. Recently, she completed a post graduate diploma in fi nancial planning.

Asked what advice she would give young women thinking of joining the fi nancial services industry, Sarah says: “Educate yourself, take every opportunity you get to study, be it for your career or for self-fulfi lment. My great grandmother told me that you should try to learn something new every day.”

Sarah adds that the challenges she faced in her career included the motivation

Private Client Holdings celebrates Women’s Month

to put in long hours of study behind a desk, when friends were out having fun.

“It is also challenging that you have to prove to the outside world that you are educated, informed and really know your stuff even though you are young or female”

She sees her role at PCH as being fundamental to the company’s success and the family offi ce offering, Sarah says: “Working in fi duciary, my role is to provide the softer touch; at Private Client Trust it’s about understanding the family dynamic and ensuring structures are in place to avoid confl ict when the client is no longer there to be the linchpin of the family.”

Started as a tax consultancy 25 years ago, Private Client Holdings has grown into a fully-fledged wealth and asset management company and provides a multi-family office service to its ultra-high net worth clients. Based in Cape Town, the company’s success is underpinned by its key team of educated, competent, decisive women in the wealth management, portfolio management, fiduciary and financial services departments.

SUE BLAKE is part of the Private Client

Financial Services division and provides essential tax specialist advice both internally to the Private Client wealth managers and externally to clients. After school Sue took a break, working in the UK to fund her travels through Central America, Africa and parts of Europe. On her return she completed her BCom Accounting and Honours at UCT before completing her articles and board exams to qualify as a chartered accountant. She went on to study tax honours during which time she joined PC Financial Services department.

“Leaving home straight after school, I had limited access to fi nancial support, however, thanks to the National student fi nancial aid loans, Pick n Pay and various family members, I was able to complete my degree,” she says.

She urges young women starting careers in the fi nancial services industry to ‘work hard and don’t give up.’

“It’s not how clever you are that determines your success, it’s how badly you want it! (Sue is currently studying for a CFP ® qualifi cation as she believes the more knowledge a person has, the better the service they can offer and the more valuable they become).

Of her role at PCH, she says: “I work in an area that requires attention to the fi ner details and an integrated knowledge of the services PCH offer. Together with the wealth managers and fi nance team, I work toward optimising the tax affairs of our clients.”

SUSAN VERMAAK is part of the portfolio management team and PCH Investment Committee. She works closely with the PCH wealth managers and directors, asking the right questions, listening and then implementing strategies to create long-lasting wealth. The investment specialists

within the portfolio management team use their combined talents and experience to successfully build up clients’ portfolios, maintaining and generating wealth through the discretionary management of unique portfolios for private clients and their families.

Susan says a life-long passion for investment strategic thinking and detailed implementation skills carried her through being an administrator and a portfolio manager, to obtaining a masters in economics and qualifying as a facilitator.

For young women hoping for a career in fi nancial services, she has a short, but important message: “For this journey, pack your bags with creative thinking and focused actions.”

She has been involved in various aspects of the industry over 25 years. This has enabled Susan to co-ordinate and add value to various processes within PCH’s family offi ce offering.

MICHELLE VAN WYK is an Internal Consultant and Employee Benefi ts Specialist in the Private Client Holdings wealth management department. Michelle grew up in Port Elizabeth, and after completing her BCom Accounting degree at Nelson Mandela Metropolitan University, she moved to Cape Town to further her career. She has a post graduate diploma in fi nancial planning and is

a CERTIFIED FINANCIAL PLANNER ®.She started out as an assistant to a Wealth Manager, which gave her a good understanding of the

fi nancial services industry. “During that time I was able to grow and learn and build a solid foundation by becoming a CFP®

Professional. At PCH, we have a strong team of specialists (asset managers, accountants, fi duciary specialists, tax specialists) around us and information sharing is very much part of the company culture and comes naturally. Cutting my teeth in this organic way has been very rewarding.”

She says that demands she’s faced include working in a rapidly changing industry, as well as in a growing company, which have brought the challenge of being able to adapt to these conditions.

“Finding a balance between academics, career growth and lifestyle is challenging, but the sacrifi ces have paid off.”

1931 August 2016

WOMEN’S MONTH

A wonderful, fl exible world

‘Financial services is no longer a one gender industry’ WOMEN’S MONTH

Hazel Lerman, Divisional Director for Underwriting and Claims, Liberty

It’s not the best-kept secret that women are under-represented in the corporate world.

A mere 21 of the Fortune 500 companies’ CEOs are women, and in South Africa, where women outnumber men, only 8.79% of JSE-listed companies have 25% or more women directors. The fi gures are not much better for senior management positions where women fi ll just 23% of leadership roles. The picture has lots of room for improvement – and fi nancial services may just be the sector that leads the way.

One powerhouse in the industry is Hazel Lerman, the Divisional Director for Underwriting and Claims at Liberty. She has spent over thirty years in an industry that was once notorious for its gender bias.

In her time Hazel has had to deal with the most diffi cult of clients, the most challenging cases and legislation that has completely changed the industry. She is proof that one can cope with stress and remain young. She’s also optimistic as more women take on leading roles. Financial services is no longer a one gender industry.

Hazel believes that when it comes to getting the gender balance right, we have seen a defi nite change – for the better.

“More female fi nancial advisers are entering the market, and both male and female advisers now acknowledge and recognize the importance of the female market,” Hazel says.

As more women enter the work force, there is more female decision making. “Women need to work and

they want to be independent. They have many fi nancial needs that our industry can meet. Women need to be adequately covered for all aspects of risk, and have investment products that meet their goals and provide for a comfortable retirement.”

More women are using the products and services financial companies offer and the female market offers a great opportunity for financial advisers, men and women.

Gender obstaclesThe door to equality wasn’t always wide open and Hazel has fi rst hand experience of gender obstacles. “In the early days, women were expected to do the traditional things women did – making tea, taking notes and organising venues. This has not been an obstacle, rather a frustration.” Today, she says she almost never encounters these stereotypes.

Not all perceptions and beliefs have changed, and caring for children and the home is frequently seen as the role of women. This is a dilemma women continue to face: how to balance work and family life?

“I think that this perception is changing for various reasons,” Hazel observes.

“Women are wanting to pursue their careers and work, and there is more sharing of roles and responsibilities in the home. The stigma that ‘males must provide and go to work’ is also changing. More and more families are taking the decision around who should work based on potential and not gender. So it’s not that the woman must care for the children, but rather who is best poised to be the primary caregiver.”

These are not easy decisions to make. “I think guilt attached to working moms is high, and whatever the trade off they may feel they have dropped the ball.”

Women take on a lot of responsibility as they try to juggle family and work, and feel the need to be brilliant and ever present in both roles.

“Women face more problems than men when considering how to combine private and professional life,” says Hazel. “Women have a softer side and often consider different things when trying to balance the two.”

This can make it diffi cult to progress in a career, with men still taking up senior positions, and being promoted, more frequently. Hazel believes that this, too, is changing and that gender is no longer the sole determinant of advancement.

“I defi nitely think that the gap for equal opportunities is narrowing with the best person being promoted, rather than promotions being based on gender.”

However, there is still a gap. Hazel shares a sobering thought: “I think there is still the reality that women in the main have to work harder to prove themselves.”

Commitment and results How do women achieve a world where there is equal opportunity?

“Women, sadly, are often their own barriers to success. They feel that if they juggle commitments, or take time out, or work a fl exible day, they won’t get ahead.”

Hazel disputes this belief, and says that women must not sabotage their opportunities. “It’s about commitment and results.”

Women could learn a few tricks from men. “Men are less afraid to ask for help or support. When women do that – they feel like they have dropped the ball. Women take things personally and hold on to it for ages whereas men deal with it and move on. Women must help women. Mentoring and networking are key. A sponsor is also a valuable asset.”

Hazel says the role of fi nancial adviser is a wonderful and fl exible career for women. “Financial services is a wonderful place where women can thrive.”

Hazel’s top tips for women embarking on a career in fi nancial services• Do your best to be your

best• Get yourself a mentor• Find a role model• Learn all you can and

grasp every opportunity• Volunteer for tasks and

projects• Believe in yourself

Visualise your success and do what it takes to get there.

* Sources for data: Fortune.com, Women in business: Turning promise into practice, Grant Thornton 2016, Women in leadership Census 2015 BWASA

20 31 August 2016

‘Have patience and a positive attitude’WOMEN’S MONTH

Do you think the fi nancial services industry in South Africa is still very male dominated or have we seen an improvement when it comes to gender balancing?The offi cial statistics on gender diversity in the fi nancial services industry make for encouraging reading, with defi nite progress having been made over the last decade. Unfortunately closer inspection of the numbers reveals that there are a disproportionate number of women in support functions and administrative roles. The higher you go up the hierarchy towards actual money management, the more pronounced the under-representation of women

‘Embrace all the different aspects of your own personality and abilities’

MoneyMarketing spoke to Nerina Visser, ETF Strategist & Advisor at eftSA about her career

becomes. According to the ASISA 2015 Investment Sector survey, more than half of support staff are female, but only a quarter of investment decision makers are women. This further deteriorates the higher one goes up in the industry’s hierarchy – out of 34 CIOs, just four are female.

Is there still a belief in South Africa that child care and home care is a woman’s job, or is this perception changing?There seems to be some change taking place, but not nearly fast enough to allow women to take up their rightful role in the workplace. Home care and sharing responsibilities for older children are the areas where most progress has been made, but the role of primary care-giver in the early years is still almost exclusively the responsibility of women. Other than day care facilities at large companies, there has been little innovation by employers to allow for fl exible working conditions, such as job-sharing or tele-commuting, to assist new mothers.

Do women face more problems than men when considering how to combine private and professional life? This is an aspect where I think the differences are more pronounced along personality traits, rather than gender line. As much as we tend to focus on the diffi culties that women experience in fi nding work-life-harmony (especially when ‘life’ includes having a young family), many men fi nd themselves marginalised if life-outside-the-offi ce does not fi t the mold of either the company, or of society.

Do you think that women in the fi nancial services industry are less likely than men to be promoted?Promotion in any job depends on much more than just profi ciency, or being in the right place at the right time; it is often dependent on the assertiveness of the employee, and the willingness to take on more than what you currently feel capable of. This is an aspect where men seem to be more forthright than women, in general. But this is something which is not just exclusive to the fi nancial services industry

– it applies to many industries where women traditionally feel that they have to work and deliver twice as much, to be recognised and appreciated half of much as their male colleagues. Having said that, this is one aspect that is almost entirely in the hands of women – to self-promote and challenge ourselves beyond our current abilities.

Have you personally encountered any gender-based obstacles in your career path?I am very fortunate to have grown up in a female-dominated family, and attended an all-girls high school. In hindsight I can recognise that I was raised with an outlook on life, that I can be anything I want to be, and do anything I put my mind to. When I then compare the general lack of gender-based obstacles I encountered in my own career path, I have to ask myself: To what extent are some of the (apparent) diffi culties women experience just career challenges in general? But I say this with huge empathy to the many women who experience specifi c gender discrimination; let’s just make sure that we do

not play into the hands of our detractors, and allow them to exploit us.

What advice do you have for young women embarking on a career in the fi nancial services sector?The best advice I can give any young person, not just women, is to embrace all the different aspects of your own personality and abilities, and not to restrict yourself to the facets that you believe are required or desired in a particular job or industry. Not only will this give you much more fulfi lment in your profession (and even help you to identify the right one for you), but it will make you a catalyst for broad-based diversity in the workplace – gender, age, culture, language, race, cognitive abilities, approach to problem solving and confl ict resolution, etc. As we have learnt in South Africa, it is when we embrace and celebrate our diversity, that we become immensely powerful as a collective, and all industries can benefi t from such broad-based diversity, not just the fi nancial services sector.

SHEHNAZ SOMERSHead of Commercial Lines Underwriting at Santam

Shehnaz Somers did not follow a traditional path into the financial

services sector. In fact, she landed in this industry quite by accident. Once there however, she moved through the ranks rapidly and today is a senior leader at Santam – the largest general insurance group in Africa.

Armed with a Master’s degree in French literature (she grew up in the Seychelles), Shehnaz joined the Munich RE Group as an executive personal assistant in 1996. After getting to know the business, she quickly realised she wanted a change of direction, however, and after qualifying as a Chartered Secretary she

eventually took on the role of Company Secretary and later Head of Strategy.

Joining Santam in 2007, Shehnaz is now responsible for developing and implementing the group’s commercial insurance strategy and ensuring the growth and profitability of Santam’s Commercial Lines business.

She says the ‘glass ceiling’ preventing women from reaching the highest level in their profession, is starting to crack. “I don’t think we’ve progressed enough, but there is definitely hope for the future. The conversation is starting to change. There are a lot of young women coming into our organisation, and they are

much more impatient than the women of my generation were – so we are being forced by them to change.”

Shehnaz says the fact that Santam has a female CEO – Lizé Lambrechts was appointed in this position in 2015 – sends out a positive message to women considering the financial services industry in which to build a career. “Lizé is a role model for others to look up to, showing that women who excel in this sector, will progress.”

Her own female role models include her mother (a shop owner), and her seven sisters, who have all achieved success in their chosen careers. “My father, an entrepreneur, taught me

to always have a humanist approach in business, and my husband, Alan, has always encouraged me to tackle difficult issues head on, even if this means having uncomfortable conversations,” she says.

Shehnaz, who has a daughter currently completing a Master’s degree in environmental studies, believes it is never a sacrifi ce for women to take some time off work to raise a family. “You may have a slightly slower start when you return to work, but bringing up a child is the most valuable thing you can do. You need to remember you are investing in the next generation, and there is no job more important than this.”

Her advice to young women thinking of pursuing a career in the financial services industry is to ‘have patience and a positive attitude. This will in itself unleash opportunities.’ She says too many young women today come into the workplace with a sense of entitlement and ‘want everything yesterday.’

“If you are great in your current job, you will be noticed. But you can’t just come in and expect things to happen immediately – you need to earn what you deserve,” Shehnaz adds.

‘The conversation is starting to change’

WOMEN’S MONTH

SHEHNAZ SOMERSHead of Commercial Lines Underwriting at Santam

deserve,” Shehnaz adds.

2131 August 2016

WOMEN’S MONTH‘We have made a conscious decision to invest in young women’

“Over the last two decades in South Africa we have witnessed a steady rise in the

number of women entering the fi nancial services industry and more specifi cally the asset management industry. Despite this increase in women starting careers in investment management, the industry still remains largely male dominated. At Argon Asset Management, we believe that by developing young female graduates straight from university into the industry, the country will begin to address the current gender disparity in the industry,” says Thabi Leoka, Economist at Argon Asset Management.

“At Argon Asset Management we have made a conscious decision to invest in young women who have proven themselves with strong academics, demonstrate leadership potential and show a keen interest in growing their careers in the investments and fi nancial services industry.”

Graduate development programme“As an important part of continuously strengthening our capacity to better serve our clients, we have

Argon gearing young female graduates towards careers in investment management

WOMEN’S MONTH‘We have made a conscious decision to invest in young women’

Argon gearing young female graduates towards careers in Argon gearing young female graduates towards careers in Argon gearing young female

investment managementcommitted to developing new talent through our graduate development programme. This programme focuses on exposing high quality new graduates to the investment management industry. It is from this programme that we source our future personnel and also aim to do what we can to develop skills, create opportunities and employment in our society. This year, during our graduate recruitment process we took particular interest in talented, driven young women with a passion for investments. The end result was that out of 674 applications received, six of the eight successful interns in our programme are female,” says Leoka.

Schroders Investment ManagementFour of the graduate interns (of which three are female), will head to London for a four month training period as part of Argon’s exclusive partnership (institutional clients) with Schroders Investment Management, the largest listed independent investment management fi rm on the London Stock Exchange. Through this partnership, Argon is uniquely positioned to offer its Southern African clients the best in class global investment portfolio solutions.

“London is the global fi nancial services hub and in the midst of the current market uncertainty brought on by Brexit, the graduates will have front row seats to the unfolding of Brexit on the British and European economies. For some of our graduates, this will be their fi rst time abroad and the time spent in London will help them to contextualise the impact of global issues on South Africa as well as develop them personally by further broadening their thinking.”

Leoka emphasises the importance of development programmes on the successful integration of women into the industry, “When I started working in the fund management industry many years ago, there was very little support in career development. Young graduates were thrown in the deep-end with little to no work experience, and I believe that had there been structured development programmes in place, many more black female professionals would still be practising in the industry. But

now there is a community of women in the investments industry which is steadily growing. We lend each other support and encourage new entrants coming up the ranks,” says Leoka.

Senior Management committeeFurther to the graduate development programme, Argon Asset Management has expanded its Senior Management Committee to now include two women. Leoka joins the committee with Loyiso Kula, an MBA holder who joined the business in the role of Stakeholder Engagement Manager in July 2016.

In her role as economist, Leoka’s responsibilities as part of the management team include helping portfolio managers form decisions on their investment positions based on her macroeconomic insights and business development management. She has 14 years’ experience in the industry and completed her Masters in Economics and PhD in London where she also worked for Barclays

“Six of the eight successful interns in our programme are female”

Capital and Barclays Wealth as an Emerging Markets Economist for a few years before returning to South Africa.

Leoka joined Argon Asset Management in February 2016, a global multi-award winning independent owner-managed investment management fi rm. Argon Asset Management has seen tremendous growth since inception in April 2005. The fi rm has grown assets under management organically from zero to R32 billion (end May 2016) across 39 institutional clients.

“Through our active research-based fundamental investment process, our award-winning funds have consistently delivered excellent performance, thereby creating sustainable long-term wealth for our clients. This is of course driven by our principle of hiring and developing the best talent in the market to deliver on those results,” she adds.

Thabi Leoka, Economist, Argon Asset Management

Mbalenhle Mthombeni, Revival Ramaifo, Litha Madabane, Lebohang Mofokeng and Shiluva Sono

serve our clients, we have uniquely positioned to offer its Southern African clients the best in class global investment portfolio solutions.

“Six of the eight successful interns in our programme are female”

Loyiso Kula, Stakeholder Engagement Manager, Argon Asset Management

22 31 August 2016

There exists a multitude of investment opportunities out there

REPRO_Eggs_Ad_220x155mm 7/8/16 12:10 PM Page 1

Composite

C M Y CM MY CY CMY K

What are the benefi ts of the multi-management approach used at 27four Investment Managers?The benefi ts of the multi-management approach come from the ability to diversify the sources of risk that any investor is exposed to. This happens through the careful construction of risk cognisant portfolios that provide investors with access to a broad range of investment opportunities in a way that is mindful of their risk appetite and that allows them to access the best of breed investment professionals across all of these opportunities.

MoneyMarketing speaks to Akona Mlamleli, Risk and Transformational Investment Analyst at 27four Investment Managers, about the multi-management approach.

Benefi ts of the multi-management approachExplain and put in to practice the concept of ‘Don’t put all your eggs in one basket’?There exists a multitude of investment opportunities out there, be it equities, bonds or hedge funds. All of these opportunities have risks associated with them because the price of an asset doesn’t only go up, sometimes it can go down and the investor will lose money over the period in which the asset is down. If all of your money is in a single asset, then your total investment will experience all of the ups and downs associated with that asset. However, if you have a carefully blended combination of assets, over time one asset may be down while others will be doing well and offset the impact of the price decline in any single asset. The sum of the parts will always be greater than the whole when portfolios are skillfully constructed.

Not putting all your eggs

in one basket means having a blend of different assets, different asset classes, exposure to different geographies, different asset management houses and different styles of managing money.

How can the man on the street ultimately benefi t from this approach?The man on the street benefi ts because all of the hard work is done for him. Investors get the correct blend of different assets within their portfolios and they also get access to the very best investment managers managing each group of assets. They don’t have to decide for themselves which asset manager to back, they get professionals choosing for them and blending the different managers together to ultimately give them a more optimal solution.

What opportunities and products are there for individuals to benefi t from the multi-management approach?Individuals have the opportunity to invest into a balanced fund and not just a single manager strategy. Balanced funds allow the investor to diversify and not be invested in one particular asset class fund e.g. equity fund or a property fund, but rather a fund that contains various asset classes such as equities, bonds, cash, listed property, alternatives and offshore all in one fund with different weightings set by the portfolio manager. Investors are able to select a fund that meets their individual needs ranging from a low risk profi le fund to a fund in a higher risk spectrum, depending on the investor’s risk appetite. Good research is important and there is certainly plenty of it for investors to look through.

As August is Women’s Month, what advice do you have for women starting and building longevity in their careers and how do you manage your money?One of the fi rst and most important lessons that I myself have applied and was encouraged to do by women, was to invest and save at the beginning of my career. Invest for the long-term and save for the little pleasures such as travel or even a pair or two of Christian Louboutin shoes.

Contact 27four Investment Managers to learn more about their process and the balanced funds available: www.27four.com.

31 August 2016

Benefi ts of the multi-management approach

There exists a multitude of investment opportunities out thereThere exists a multitude of investment opportunities out thereMULTI-MANAGERS

2331 August 2016

MULTI-MANAGERSAsset manager research has expanded

Multi-Management 2.0Traditional multi-

management used to be about building products where

clients could invest using a strong asset manager research framework and some potentially naive portfolio construction mechanics. In this framework, clients had little or no say in what they were investing in, and very little emphasis was placed on understanding client needs and preferences.

This has changed dramatically. Progressive multi-management of today demands a strong focus on client needs and preferences, and a far more customisable approach to solutions constructed by multi-managers for clients. Thus it is no longer the multi-manager which sets the terms of engagement, but the client – and the client can decide the level of input they wish to have in the process/partnership.

What has not changed within multi-management is the robust structure off which this has been built. Asset manager research as well as market research and portfolio construction skills are still core to being able to implement all the various service levels. Multi-managers have had to grow in these areas and improve their skill sets in order to deliver appropriate customisable service to clients.

Asset Manager ResearchAsset manager research, for example, has expanded due to the increased number of service providers and strategies that have become available. Within any client solution it is vital to understand and be up-to-date on changes within asset manager businesses. Far from just explaining manager philosophies and performance through the two traditional styles of value and growth, we

are now able to break down a manager’s investment style to a far more detailed degree to include additional factors such as momentum, quality, yield, size biases, etc.

In addition, a well-balanced and diversifi ed portfolio requires strategies that lie outside traditional equities, bonds and cash products. Hedge funds, Africa and private equity strategies are often considered in designing client solutions. Multi-managed solutions can therefore be more appropriately described as multi-‘strategy’ solutions.

Portfolio ConstructionTo account for the multiple strategies that are available, portfolio construction skills have needed to be improved. As clients now have access to bespoke solutions with different levels of service, multi-managers need to be able to create and advise on the best

solutions, given objectives and preferences. This can include risk targets, return targets, fee budgets, outsourcing versus insourcing asset allocation, style preferences, passive active and so on.

Another evolving perception that multi-managers should be less risky than single asset managers is also being challenged. With improved portfolio construction skills, multi-managers are able to design solutions for clients that will match the risk requirements of the client, while ensuring that multiple and complementary risk factors are introduced, so that the risk budget awarded is used most effectively.

The end result is that multi-managers of today are able to take clients’ needs and preferences into account and utilise their manager research and portfolio construction skills in order to construct the

most appropriate solution for each client.

CostsA big misconception can often be that multi-manager solutions are more expensive than single manager solutions. While in the past this was often the case, it isn’t necessarily the case in client portfolios today. Multi-managers are often able to negotiate bulk fee deals with many managers and can thus design similar products for competitive pricing relative to single managers. Costs have also become far more transparent over time and clients are much more aware of the various cost structures available.

Disclaimer: Sanlam Multi Manager International is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act (FAIS) 2002.

SOME MIGHT CELEBRATE THIS AWARD

WE CELEBRATE WHAT IT STANDS FOR

Old Mutual is a Licensed Financial Services Provider.* Batseta Imbasa Yegolide Awards 2015 & 2016 accolades for professional excellence in the retirement fund industry. Batseta Council of Retirement Funds for South Africa is a professional industry body that looks after the interests of retirement funds, trustees and principal officers in the retirement industry.

FCB10020278JB/E

Old Mutual Multi-Managers is once again the proud winner of the Manager of Managers of the Year Imbasa Yegolide Award.*

Old Mutual is honoured to be consistently recognised as a leader in the retirement fund industry not because of what it means for us, but what it means for our clients. Our experienced Multi-Managers investment team determine the top asset managers in the country, selecting the right ones to form a solution that will deliver results for you and help you achieve your retirement investment goals. Ensuring that when we achieve great things, so do you.

www.ommultimanagers.co.za

PAUL WILSONPortfolio Manager and Head of Asset Manager Research, at Sanlam Multi-Managers

31 August 2016

Asset manager research has expanded

PAUL WILSONPortfolio Manager and Head of Asset Manager Research, at Sanlam Multi-Managers

24 31 August 2016

MULTI-MANAGERS

Investing with a coachHow multi-managers guide investors to success

The best international cricket teams have a balanced mix

of quality batsmen who score at a slower defensive pace but accumulate lots of runs, and some hard hitters who can quickly score 50 runs towards the end of an innings. Having the combination and versatility of skills and

regardless of the conditions.Not dissimilar to

international cricket, diversification is important for investment success. Good multi-managers not only understand the importance of diversification, they also understand how to use it to maximum effect to generate higher risk-adjusted returns.

Diversifi cationSimplistically, a multi-manager fund can provide up to three levels of diversifi cation, namely diversifi cation across managers by allocating to more than one single manager, diversifi cation across asset classes, and diversifi cation

across instruments. An investor in a single

manager fund will typically achieve diversifi cation in only two of these areas: asset classes and instruments. Diversifi cation among managers and not selecting only one manager reduces the impact of selecting a poor performing manager. The graph below of fund returns over three years for the ASISA South African Multi-Asset High Equity category illustrates our point.

Not all investment philosophies and processes perform well all the time. As can be seen in the below graph, one fund had a negative return of almost 4% over the last three years, while the top performing fund returned over 16% annualised. This is a 20% per annum difference in annualised returns from funds trying to achieve a similar long-term objective (or 76% cumulative – almost double).

An economy moves in cycles. For a period of time interest rates may be rising, followed by a period of low interest rates. Infl ation may be pushing higher or it may be under control. Commodity prices could be in a strengthening cycle or in a period of prolonged weakness.

understanding which type of player will perform in changing match conditions is what creates a world class team. This is the essence of good multi-manager funds.

At STANLIB Multi-Manager we strive to be what a coach is to a cricket team. We look for different combinations of skill, philosophy and process to blend into one fund. Think of it as understanding factors like the condition of the pitch, the bowler’s pace, the light and ball visibility on any given day and having the correct combination of players to perform

RICHO VENTERHead of Research and Development, STANLIB Multi-Manager

Managers may construct portfolios to have exposure to many different risk factors

2531 August 2016

We strive to be what a coach is to a cricket team

Exchange rates could also be volatile. The macro-economic environment is just one aspect managers consider when constructing their portfolios.

Even though there could be an overlap in parts of managers’ investment philosophy and process, every manager is unique (with different people, specifi c assumptions in their different models, teams with diverse backgrounds and different processes). While some single managers employ forward looking strategies, such as estimating future cash fl ows, others focus more on historical information, such as historical price earnings ratios.

Managers may construct portfolios to have exposure to many different risk factors. They could be rand or interest rate sensitive or focus on defensive companies with stable earnings (quality). They could follow a growth philosophy, a value bias, or a momentum bias chasing past winners higher until the bubble pops. Others go where they think they can buy instruments below their intrinsic value and have no specifi c style bias. These factors play a critical role in driving a manager’s performance.

In the context of changing economic cycles or changing market conditions, it is important to understand which blend of managers has the best chance of outperforming through the cycle while not taking excessive risk. This is where the role of multi-managers becomes critical. We blend managers to achieve the combination that we think will outperform over the medium- to long-term.

We determine diversity through a number of different measures, including correlation, which measures the strength of the relationship between two assets. We are interested in the correlation (or relationship) of returns between different managers in a portfolio as we don’t want managers that are highly correlated i.e. underperform at the same time, as this would limit diversifi cation. When constructing a fund, we are typically looking for managers who improve diversifi cation to achieve a balance between risk and return.

Correlations are however a pretty blunt tool in understanding the differences between

managers, so we employ a range of additional advanced statistical techniques to understand this complex dynamic.

Often investors choose single managers based on their record of past performance. A manager’s past performance may have benefi ted from a specifi c economic environment, such as a depreciating rand. Investors often do not consider how the manager will perform in the long-run, through various changing economic environments. The problem with this approach is that a manager will go on to underperform, and investors will not understand why, so they disinvest. The manager then goes on to outperform again, and investors lose out by continually switching out of great managers to chase the managers at the top of the latest ranking tables.

STANLIB Multi-Manager builds portfolios that will deliver great risk-adjusted returns over the long-term, through various business cycles. This is achieved by

We look for different combinations of skill, philosophy and process to blend into one fund

selecting and blending managers based on rigorous qualitative and quantitative analysis of the managers across many dimensions that are important in determining future performance. These managers are monitored on an on-going basis to ensure that they continue to meet the client or portfolio’s investment objective. We don’t do this in isolation, but in combination with all the other managers we have selected. Whether it’s international cricket or fi nancial markets, understanding the playing fi eld and picking the right combination of players has been shown to deliver superior results.

26 31 August 2016

EMPLOYEEBENEFITS SA’s culture of saving is a concern

South Africa does not have a culture of saving. Many of us are victims

of procrastination, impatience, temptation (instant vs delayed gratifi cation), and the overwhelming consumer culture in which we function. We are hard-wired to think short-term.

This means that often, when we are given a choice, we do not take the best option available to us. For example, we contribute the minimum amount to our pension pots so that we take home more cash each month, or we invest too conservatively, or we withdraw our savings when we change jobs.

It is for these reasons that the government is implementing retirement reform measures, which act as an incentive for South Africans to get into the habit of saving:• Mandatory preservation

(legislation delayed)

• Tax incentives to encourage saving

• Enhanced portability of investments (legislation delayed)

• Transparent and cost-effective management of funds

• Taxation harmonisation and fund consolidation

• Simplifi cation of retirement products

Industry insightsThe necessity for saving has become exponentially important over the last decade. This is partly due to greater longevity. In a country where, statistically, only 30% of all citizens will retire within their means, and only 13% believe they have enough money left for savings after covering all their spending needs, effective communication of the right message is crucial. An alarming 3.5 million South Africans have seriously considered cancelling an investment in order to service debt (Finscope South Africa 2015 survey).

More than 80% of our pensioners qualify for social grants. Incidentally, more than 70% of South Africans never obtain professional fi nancial advice.

Preservation needs to be actively encouraged and the implications of withdrawing retirement savings at retirement or when leaving an employer needs to be explained in a way members can easily understand and relate to. Member apathy also needs to be addressed as a matter of urgency. This can be done by means of high-impact, hard-hitting induction, and member guidance from day one of employment. If members are educated effectively, they will invest correctly according to their individual needs, and voluntarily revisit their decisions whenever necessary. If all of this can be achieved, defi ned contribution funds will succeed in their aim of providing the best benefi ts possible to members.

The next step – purchasing the right pensionLife annuityMembers who purchase a life annuity pay over their savings to an insurance company at retirement. The insurer will look at the amount available and inform the member as to how much he/she can receive as

a monthly annuity (pension), depending on factors such as current interest rates, assumed future interest rates, age, etc. In order to maintain his/her standard of living, the member needs a net replacement ratio of at least 75% or more at retirement.

The missing linkMembers very often compare an escalating or infl ation-linked annuity with a level annuity and opt for the increased starting pension of the latter. The value of their pension is soon eroded, which leaves the pensioner in a compromised fi nancial situation. It is important to provide members with the tools and information to understand this.

Living annuityIn this case the member invests a cash lump sum with an insurer and then withdraws a monthly pension from that amount. The larger the capital and the higher the investment returns, the more the member will be able to withdraw. The member’s money remains invested after retirement and is still subject to the rise and fall of the stock market. To ensure that the investment provides an adequate income for the rest of the member’s life, he/she needs to select an appropriate level of withdrawal that does not deplete the capital investment amount.

ConclusionThe large-scale conversion from Defi ned Benefi t to Defi ned Contribution arrangements and the legislative changes

over the last 20 years have increased member responsibility tenfold. Members have not embraced this responsibility, which leads to a large shortfall in funding for retirement across the industry. Assisting members to make the transition can not only be achieved by the communication efforts of retirement funds, but will have to involve human resources departments and the organisation as a whole. Education will have to be frequent and continuous, supplemented and enhanced by employee wellness programmes.

Ultimately, however, it is the responsibility of employers and boards of trustees to accept the obligation and fulfi l the role of educating leaders. By guiding employees instead of dictating to them, by ensuring they understand why they should be making certain decisions, instead of merely telling them what decisions they ought to make, the retirement industry in South Africa is sure to become progressively healthier.

Ronelle Kind is the Chief Operating Offi cer at Liberty VIEWPOINT. At Liberty VIEWPOINT, we are passionate about making a difference in people’s lives by making their fi nancial freedom possible. Contact us today for a discussion on how we can assist in educating your employees holistically across your organisation.

If members are educated effectively, they will invest correctly according to their individual needs

BY RONELLE KINDChief Operating Offi cer: Liberty VIEWPOINT

A South African retirement story

2731 August 2016

The Advantage of Knowing

An employee bene�ts package trusted by 10 000 employers.We don’t know if one of your employees is ready to resign. We don’t know if they’ve had an interview already, or signed that letter of intent. But we do know, replacing an employee can cost your company up to 9 times their salary.

Which is why we give you comprehensive bene�ts, to help you engage and retain sta�. Bene�ts like Trauma Counselling, Retirement, and Life Cover. Bene�ts that will make your employees stay, and bene�t your bottom line. It’s why more employers trust us with their employee bene�ts than any other.

To give your bottom line the Liberty Corporate Advantage, speak to your Financial Adviser, visit liberty.co.za, or call us on 011 408 2999.

28 31 August 2016

WALTER VAN DER MERWECEO at FedGroup Life

EMPLOYEEBENEFITS There is a critical need for employers to encourage preservation

Staff should be adequately informed about benefi t schemes

‘My Retirement Member App’ launched

EMPLOYEEBENEFITS

In a bid to ensure better retirement outcomes for its fund members, the Sanlam Umbrella Fund

has launched a member app. The first major commercial umbrella fund to create such functionality, Sanlam’s ‘My Retirement Member App’ will go a long way towards helping its members be more hands-on with their retirement savings, says Irlon Terblanche, CEO of the Sanlam Umbrella Fund.

“Year after year, we see shocking statistics in the Sanlam BENCHMARK Survey. Retirees can’t make ends meet, and the current workforce doesn’t reinvest retirement monies when changing jobs. Too often, the same complaint comes up: ‘The communication

from our fund is poor. We don’t really know where our savings stand.”

He said the fact that retirement fund members are not making adequate provision for retirement can largely be attributed to two factors: members are generally apathetic towards retirement and other employee benefit issues; and they possess low levels of financial knowledge when it comes to making informed decisions about retirement.

This app is all about empowering members – of all ages, not only the highly tech-savvy millennial – to have a very strong handle on their retirement savings. There will no longer be the need to wait for an annual benefit statement or make

contact with the fund for information. It will be at the member’s fingertips at all times. The functionality includes:• A view of current

retirement savings and benefits (including risk and insured benefits)

• Where the money is being invested monthly and how much

• Easy access to the fund performance fact sheets

• Access to important contacts and links

• Educational content that will help ensure a good retirement outcome

• A retirement calculator giving insights into how well the member is doing in saving towards retirement.Members can also:

• Email their HR rep should

any of their personal info need updating

• Request an additional voluntary contribution to boost retirement savings – (as of 1 March 2016, you can get a tax deduction of 27.5% of your taxable income on contributions to all types of retirement funds, regardless of your employer’s fund rules). The app forms part of

a larger digital project underway from the Sanlam Umbrella Fund which is aimed at improving retirement outcomes. Other elements include ‘Retire-mate’, a ground-breaking new online and telephonic retirement planning service for fund members which features an online self-

Integrated employee benefi t schemes, which often combine medical aid and

retirement annuities or provident funds with group life, critical illness and disability insurance, are commonplace among large corporations, with an increasing number of small-to-medium enterprises (SME) gaining access to these types of benefi ts via umbrella funds.

This may attract and retain staff, or ensure more of South Africa’s historically poor savers gain access to formalised, effi cient retirement savings, while also giving the uninsured majority access to benefi ts that will increase their fi nancial security.

However, as the number of those with formal employment gain access to

employee benefi ts, few are aware of what they’re getting, or even that many funds offer some degree of fl exibility in terms of employee fund contributions and cover. This includes umbrella funds targeted at the SME market, which are able to offer both standardised cover and some degree of customisation and choice due to the economies of scale the funds achieve.

In these instances, the onus lies with the employer to ensure that if a fund structure that offers fl exibility is selected, their staff are adequately informed and educated on the options available and the impact this will have on their benefi ts, income tax and take-home pay. Employers may also select to forgo the fl exibility option due to the associated

increase in the admin and management requirements, which directly impacts on cost, but there is still a duty on the employer to explain this to staff.

Done with the assistance of the service provider or a fi nancial adviser, the employer has the opportunity to include basic fi nancial literacy and fi nancial advice to ensure all employees understand the need for benefi ts, particularly the need to save towards retirement.

With an adequate base of financial literacy and knowledge established, employers and advisers are then required to share scheme and fund information with their staff on a regular basis. Ideally, this needs to be presented

in a user-friendly manner that is easy to understand, preferably in the staff’s home language. This makes person-to-person engagement the best option. In terms of the broader knowledge and info sharing requirements, group sessions are often best, as they offer a platform for engagement.

During these engagements, the importance of maximising retirement savings can be emphasised, and individualised fi nancial advice dispensed according to the fund member’s specifi c requirements.

With this dual education and advisory approach, employers are also helping to boost fund preservation

rates, which is a major issue in South Africa. When staff leave one job for another, the trend is to cash in their annuities as many feel that they’re entitled to that money. There is a critical need for employers to encourage preservation, particularly upfront as there is often no opportunity or benefi t to offer advice when an employment is terminated. It is also often easier to administer fund withdrawals than preservation, which means many companies may not promote this step. It is therefore ideal to have a fi nancial adviser engage with staff during the process of leaving, both from a good governance and moral perspective.

help capability packed with information for every step of the retirement savings journey, backed by telephonic support from a financial counsellor.

The app is available for download on GooglePlay and the Apple App Store, just search ‘Sanlam My Retirement’.

Irlon Terblanche,

CEO of the Sanlam

Umbrella Fund

2931 August 2016

Sanlam Umbrella Fund app empowers membersRecently Sanlam became the first major commercial umbrella fund provider to launch its own member app. The group hopes the ‘My Retirement Member App’ will go a long way towards helping its members be more hands-on with their retirement savings.

Irlon Terblanche, CEO of the Sanlam Umbrella Fund, says: “Year after year, we see shocking statistics in the Sanlam BENCHMARK Survey. Retirees can’t make ends meet, and the current workforce doesn’t reinvest retirement monies when changing jobs. And year after year, the same complaint comes up: ‘The communication from our fund is poor. We don’t really know where our savings stand’.” This app is all about empowering members – of all ages, but mostly the highly tech-savvy millennial – to have a strong handle on their retirement savings. There will no longer be the need to wait for an annual benefit statement or make contact with the fund for information. It will be at the member’s fingertips at all times.

The functionality includes:• A view of current retirement savings and benefits (including risk and insured benefits)• A view of where the money is being invested monthly and how much• Easy access to the fund performance fact sheets• Easy access to important contacts and links• Easy access to educational content that will help ensure a good retirement outcome• A retirement calculator giving insights into how well the member is doing in saving towards retirement.

Members can also:• Email their HR rep should any of their personal info need updating• Request an additional voluntary contribution to boost savings – (as of 1 March 2015, you are able to contribute up to 27.5% of your monthly pensionable salary, regardless of your employer’s fund rules). The app forms part of a larger digital project underway from the Sanlam Umbrella Fund which is aimed at improving

retirement outcomes. Other elements include ‘Retire-mate’, a ground-breaking new online and telephonic retirement planning service for fund members which features an online self-help capability packed with information for every step of the retirement savings journey, backed by telephonic support from a financial counsellor.

For more information on the Sanlam Umbrella Fund, please contact Shakeel Singh on tel: (011) 778 6660

Sanlam is a Licensed Financial Service Provider.

“This app makes managing my retirement so simple and easy. The user interface is very well designed and is quite pleasing to the eye. Very chu�ed with Sanlam for implementing this.” – Sanlam Umbrella Fund member, 24, Gauteng.

The app is available for download by searching “Sanlam my retirement” on:

30 31 August 2016

We’re not going to brag about the fact that

we’ve won gold for our Group Risk product at

the 2016 PMR Awards, as voted for by independent

financial advisors.

OK, maybe just this once.

fedgroup.co.za FedGroupFedGroup Life Ltd (Reg. No. 2007/018003/06)

An authorised financial services provider. FAIS No. 40607

BOOKS ETCETERA Comparisons are being made between Hanbury and Soros

THE BOOK NOOK

SUDOKUEnter numbers into the blank spaces so that each row, column and 3x3 box contain the numbers 1 to 9.

The Disruptors: Social Entrepreneurs Reinventing Business and Societyby Kerryn Krige and Gus Silber

For a new breed of social entrepreneurs, striving to build and grow enterprises that fi ght social ills, foster opportunity, and help to improve society, the answer is not can, it’s must.

In this book, brought to you by Johannesburg business school, GIBS, you’ll get to meet The Disruptors: impassioned by purpose, and emboldened by ideals, social

entrepreneurs imagine a better way to a better world. And then they go out of their way to bring it to life.

Through these tales of daring, struggle, triumph and innovation, you’ll learn their secrets as they blend business principles with social change. From healthcare to mobile gaming, from education to recycling, from dancing to gardening, these are the game-changers, the difference-makers, the doers of good.

From Debt to RichesPhumelele Ndumo

In this easy-to-read guide, Phumelele Ndumo addresses

the fi nancial problems of ordinary South Africans who are battling with garnishee orders, admin orders, debt counselling, paying university fees, buying homes etc. She talks about fi nance issues in such a simple manner that the book is suitable for the man- or woman- in the street. Moreover, this book is for

every South African who is in and who wants to avoid debt. It is for parents who have dreams of taking their children to university but battling with fi nances for that. It is for the young who are still starting out with their own fi nances. You might also want to buy it as a gift for that taker sibling who uses you as a cash cow, and hope he/she will get the message.

Most people have always thought that it was only high income people who could end up fi nancially independent. That is not true! All of us can become fi nancially independent, provided we are willing to have self discipline and put into practice the simple suggestions that are contained in this book.

From Debt to RichesPhumelele Ndumo

In this easy-to-read guide, Phumelele Ndumo addresses

A hedge fund manager has won $150 million for his clients by betting that the United Kingdom would

choose to leave the European Union and that the pound would plunge on

the news.Harrow and Edinburgh University educated

James Hanbury, 36, manages the $1.5

billion fund Odey Absolute Return Fund (OAR) at Odey Asset Management.

Bloomberg reported that

the fi rm at which Hanbury

is a partner, had conducted a poll

that showed the vote on membership of the political bloc would be much closer than stock markets were suggesting.

Comparisons are now being made between Hanbury and business magnate George Soros who in 1992 bet the pound would drop when

Hedge fund manager wins millions for clients on ‘Brexit’

Britain quit the European Exchange Rate Mechanism. (This time round, Soros got it wrong as he was an extremely vocal backer of the Remain campaign).

The Wall Street Journal reports that the money made by Hanbury after the ‘Brexit’ vote put his fund in the black for the year – though just barely. “Still, Mr. Hanbury has generated compound annual growth of 18% since his fund launched in 2009, according to someone close to the matter.”

Many investors suffered big losses after the recent referendum, with most convinced that the United Kingdom would vote to remain in the EU because of the economic chaos that would inevitably follow a vote to leave.

The real winners in predicting the outcome of the referendum were the computers. Human investors were swayed by opinion polls and also bet on the outcome that they preferred. Meanwhile, the computers bought government bonds and gold. The yellow metal, which is traditionally viewed as a safe haven in times of market turmoil, hit a two-year high of $1.350 per troy ounce on the day the referendum result was announced.

their secrets as they blend business principles with social change. From healthcare to mobile gaming, from education to recycling, from dancing to gardening, these are the game-changers, the difference-makers, the

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Most people have always thought that it was only high income people who could end up fi nancially independent. That is not true! All of us can become fi nancially independent, provided we are willing to have self discipline and put into practice the simple suggestions that are contained in this book.

choose to leave the European Union and that the pound would plunge on

the news.Harrow and Edinburgh University educated

James Hanbury, 36, manages the $1.5

billion fund Odey Absolute Return Fund (OAR) at Odey Asset Management.

Bloomberg reported that

the fi rm at which Hanbury

is a partner, had conducted a poll

that showed the vote on membership of the political bloc would be much closer than stock markets were suggesting.

Comparisons are now being made between Hanbury and business magnate George Soros who in 1992 bet the pound would drop when

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