Meet the Equilibrium team
From left standing: Nomathamsanqa Khoza - Portfolio Manager, Thokozani Zwane - Investment Analyst, Mersey Booysen - Investment Operations Manager, Nontobeko Mabaso - Investment Administrator, Methula Sikakana - Business Development Manager, Riaan Bosch - Portfolio Manager, Kamini Naidoo - Chief Investment Officer
From left sitting: Rupert Giessing - Portfolio Manager, Pat Magadla - Head of Distribution, Bongekile Sithole - Executive Assistant, Florbela Yates - Managing Director
The key factors that matter to financial advisers
Florbela Yates, Managing Director
To effectively serve their clients, advisers need certain essential elements to streamline their operations, enhance client interactions, and provide access to accurate and up-to-date information. There are seven key factors that can contribute to their success and in delivering top-notch financial advice:
1.
Saving time
By using efficient tools, technology, and streamlined processes, advisers can minimise administrative tasks and focus on providing valuable advice to their clients. Time-saving measures can include automated data inputs and analysis, streamlined client onboarding, and efficient portfolio management systems.
Advisers can also look to a discretionary fund manager (DFM) like Equilibrium to find ways to enhance the value of their advice practices.
Some of the benefits that a DFM brings are aligning portfolios across advisers in a practice or network, establishing a fund list, helping advisers with succession planning, and even the alignment of books during an acquisition.
2. Making conversations with clients easier
Advisers need tools and resources that facilitate seamless communication with their clients, such as secure messaging platforms, video conferencing capabilities, and client portals. This is especially important during times of increased market uncertainty and high volatility. Over the past three years, the demand for real-time communication and access to underlying holdings in the portfolio has increased substantially. Since advisers don’t typically have access to this information, they rely on us to provide regular updates literally at the touch of a button.
3. Access to real-time information, manager insights, and portfolio information
Access to real-time information is crucial for advisers to make informed decisions and provide accurate advice. Having access to market data, economic insights, and portfolio performance analytics allows advisers to stay ahead of market trends, identify investment opportunities, and provide timely advice to their clients.
4. Access to portfolios that tie in with their advice process
Advisers require access to a range of investment options and portfolios that align with their unique advice process. This includes diversified portfolios, model portfolios, and customisable investment solutions. By having access to a wide range of investment options, advisers can tailor their recommendations to meet their clients’ financial goals.
5. Reasonable fees
Advisers understand the importance of providing value to their clients while ensuring their services remain affordable. Offering reasonable and transparent fee structures builds trust and reinforces the adviser-client relationship. It is essential for advisers to communicate their fee structure clearly and demonstrate the value they provide in exchange for their fees.
6. Access to a human being
Despite advancements in technology, the human touch remains invaluable in the financial advisory industry. Advisers appreciate having access to dedicated support teams and experts who can assist them and enhance the adviser’s ability to deliver highquality advice.
7. Access to data and other information
Accurate and comprehensive data is necessary to make informed decisions and provide reliable advice. Access to reliable market data, research reports, economic indicators, and industry insights enables advisers to stay informed and offer wellinformed recommendations. Additionally, access to educational resources and industry updates helps advisers stay up-to-date with the latest trends.
Conclusion:
By prioritising these factors, advisers can enhance their efficiency, improve client interactions, and provide valuable advice that aligns with their clients’ goals and objectives.
Navigating uncertain times: Crafting a robust investment portfolio
Kamini Naidoo – Chief Investment Officer
We (continue to) live in uncertain times, where economic volatility, geopolitical tensions, and rapid technological advancements create a complex investment landscape. Amidst these uncertainties, constructing a robust investment portfolio becomes crucial for securing financial stability and achieving long-term financial goals.
At Equilibrium, we believe that diversification is the key to constructing resilient portfolios. Through diversification and the strategic use of various asset classes, we aim to create robust portfolios that are capable of weathering market volatility and increases the probability of achieving portfolio outcomes. Our investment approach is a multi-faceted one and involves the strategic selection and allocation of various asset classes, striving for a well-balanced mix that aligns with clients’ risk tolerance, investment horizon, and financial goals.
The journey starts with the strategic asset allocation, which is like planning a road trip before you set off – it is the long-term plan designed to get to the destination (long-term financial goals) despite any ups and downs of the journey. This involves choosing asset class allocations and rebalancing the allocations periodically. Tactical asset allocation is then used to make short-term adjustments through the journey based on changing conditions (risks and opportunities). Constructing a portfolio is like assembling and packing your vehicle for the road trip. This includes choosing the right vehicle (model portfolio or fund of fund) and the engine and mechanics (investment holdings).
As a discretionary fund manager (DFM), we consider these investment decisions in line with the unique set of financial outcomes of the client. At Equilibrium, we follow an outcome-based investment approach in our portfolios. This requires us to come up with a strategic asset allocation for each portfolio that maximises the likelihood of delivering on long-term client outcomes. We focus on long-term fundamentals to determine the forward-looking return expectations for each asset class in which we invest. These forward-looking expectations, in conjunction with the client risk budget, are key inputs into our portfolio construction process to determine the optimal long-term asset allocation to achieve the client outcome.
The market environment is constantly changing, and we are continuously evaluating the market landscape to determine if there are any tactical opportunities or risks that may require dynamic adjustments to portfolio allocations.
As part of the portfolio construction process, manager selection is a critical component that involves choosing the right fund managers who align with the portfolio’s investment strategy and goals. When selecting managers, it’s essential to consider their track record, investment philosophy, and consistency in performance. This decision often hinges on whether to adopt an active strategy or a passive strategy, or a combination. At Equilibrium, we leverage our extensive and experienced manager research capabilities to evaluate the merits of the various investment strategies and active, smart beta and passive strategies are blended in diversified portfolios.
We also maintain a rigorous review process and continuously test the alignment of the long-term fundamentals and portfolio constructs to the long-term objectives of our clients.
At Equilibrium, our commitment to outcome-based investing and strategic diversification forms the cornerstone of our portfolio construction approach. By focusing on our clients’ unique financial goals, we carefully balance investment strategies to optimise performance, and try to ensure a smooth journey for our clients on the journey to achieving long-term financial success.
The winning formula for a successful DFM partnership
Pat Magadla, Head of Distribution and Mersey Booysen, Head of Operations
Discretionary Fund Managers (DFMs) play a vital role in managing investment portfolios, allowing advisers to focus on client relationships and business growth. But what makes a DFM truly successful? And what are the key ingredients for building a winning partnership between DFMs and advisers?
The foundation of a successful DFM is building trust through exceptional service and operational excellence. Advisers need a DFM that is readily available and responsive to inquiries. Timely responses demonstrate respect for the adviser’s business and builds trust.
A strong operational capability within a DFM is essential. Without a robust infrastructure, consistently delivering on service, reporting, and portfolio management promises would be impossible. DFMs should offer comprehensive reporting capabilities, including standard monthly factsheets, quarterly reports, and asset flow reports. Additionally, flexibility in providing bespoke reports caters to the specific needs of each adviser. In-depth reporting empowers advisers to effectively manage clients’ exposure to DFM portfolios and facilitate meaningful client communication. DFMs can streamline an adviser’s workflow, allowing them to dedicate more time to client relationship building and strategic planning.
Building strong relationships is a key success factor. A shared investment philosophy and mutual respect form the foundation for a long-lasting partnership. Open and transparent communication fosters collaboration, leading to the development of solutions that prioritise client needs. A DFM that fosters open communication, respects advisers’ expertise, and actively seeks feedback, creates a fertile environment for collaboration. Ultimately, a successful DFM partnership strengthens the adviser’s value proposition.
However, success goes beyond “soft skills”. A diverse and experienced investment team within a DFM allows for a wider range of perspectives and a more robust discussion process when making investment decisions. This diversity fosters creativity and innovation, ultimately leading to better investment outcomes for clients.
Markets and client needs are constantly changing, and successful DFMs must be adaptable. They understand the adviser’s specific context and tailor their services to address those needs. By offering a range of model portfolios aligned with various investment goals and risk tolerances, DFMs empower advisers to deliver optimal solutions for their clients’ investment goals.
When selecting a DFM partner, advisers should conduct thorough due diligence. Key areas of evaluation include the DFM’s investment research capabilities, portfolio construction expertise, and historical performance. The DFM’s manager research team should also be well-versed in both domestic and global asset managers.
The success of a DFM hinges on exceptional service and a strong operational capability within a DFM is essential. Adaptability and a commitment to understanding evolving advisers and client needs are crucial for navigating the ever-changing investment landscape. Ultimately, an established, well-oiled DFM can deliver on its promises and support advisers in achieving their clientcentric goals. This is what transforms a DFM from a service provider to a trusted partner in an adviser’s practice.
At Equilibrium, we have a different, human approach to collaboration and establishing long-term reciprocal relationships. Equilibrium becomes your practice’s investment management team and an extension of your practice.
To find out more about Equilibrium and how we bring improved balance into your financial advice practice, visit eqinvest.co.za.