MAN bold distinguished You
Personal w e a lt h rePort 2014 From secret millionaires and execs who handle other people’s money to how we can all be philanthropists, DESTINY MAN presents your guide to creating wealth
(editor’s note) Depending on who you ask, the definition of wealth could be explained in economic or philosophical terms. I have no doubt I’d take the middle ground if you asked me – not because I’m a draadsitter (one who’s afraid to pick a side), but because I’ve been embroiled in such arguments before, presenting ideological viewpoints for hours on end. Ultimately, there’s no one answer to what wealth is. It’s whatever we
regard as our most valuable assets – whether those are monetary, human, intellectual or moral. At DESTINY MAN we believe in holistic growth, so we’ve compiled this 2014 Personal Wealth Report, in association with Nedbank Private Wealth, to cover a broad array of wealth-related topics. Whatever your aspirations or definition of wealth, we hope you find building blocks that will help you prosper in this report. Mzo Witbooi – Project Editor
In association with
(personal wealth report 2014) News
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Benny Hinn, televangelist and founder of Benny Hinn Ministries, USA: $50 million (about R514 million)
Pastor Chris Oyakhilome, Nigerian televangelist faith healer from the Believers Loveworld Ministries (Christ Embassy): $50 million (about R514 million)
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Dr Cindy Trimm, American spiritual leader and motivational writer: $15 million (about R150 million)
Billy Graham, Baptist minister and evangelist, North Carolina: $25 million (about R255 million)
Creflo Dollar, founder of the World Changers nondenominational church in Georgia, USA: $27 million (about R275 million) Compiled by Thabiso Thantsha
Earthly Rewards
6 Rev Jesse Jackson, prominent American civil rights activist, Baptist minister and politician: $10 million
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Temitope Joshua, leader of the Synagogue Church of All Nations in Nigeria: $10 million (about R100 million)
126 • Destinyman • January - February 2014
8 Matthew Ashimolowo, leader of Kingsway International Christian Centre in Nigeria: $6 million (about R60 million)
Al Sharpton, New York-born civil rights activist who made his fortune through his radio show, Keepin’ it Real: $5 million (R51 million)
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Bishop Eddie Long, senior pastor of the New Birth Missionary Baptist Church in Georgia: $5 million (about R50 million)
Source: w w w.therichest.com. Photographer: Boyd Harris. Galloimages/ge t t yimages.com
The top 10 preachers rolling in the dough around the world
(personal wealth report 2014) News
CHARITY DOESN’T BEGIN AT HOME Like Bill Gates and Hilton Baron before him, American oil and gas magnate Thomas Boone Pickens has announced that he’ll be giving at least half his net worth of $1,4 billion (about R14,4 billion) to charity. Inherited wealth, he says, generally does more harm than good to the beneficiary.
4 ways to protect your wealth
“The only thing that can grow is that to which we give energy. This is our greatest power – the power to choose.” – Bob Proctor @ bobproctorLIVE: #LawOfAttraction
Spokesperson Eunice Sibiya, Head of Consumer Education at FNB, offers the following advice
STAY AWARE The best way to guard your wealth is to be clued up on the markets, events in the economy and the effect these may have on your wealth. Read as much as possible, find out what obscure or insider financial terms mean and get expert advice.
MAKE YOUR MONEY WORK FOR YOU Ensure that the money you have is doing the maximum it can for you. Speak to a financial adviser and don’t be nervous to restructure your plans. Constantly take an interest in what your money’s doing.
WATCH THE PENNIES Just because you’ve managed to accumulate wealth, that doesn’t mean you shouldn’t still adhere to a budget. Understand what’s coming in and going out and continue paying your debts on time.
GUARD YOUR INCOME Ensure you place your money in suitable saving and investment vehicles. Don’t be tempted to take big risks with a large portion of your savings. Plan wisely.
RENT IS DUE!
What’s the world’s priciest place to work? Topping the list is St James in London’s West End, which is home to hedge and sovereign wealth fund banking specialists. It costs $194 (about R1 200) per square foot per year. DM
(personal wealth report 2014) Another Day at the Office
the GloBetrotter
Thebe Ikalafeng is the founder and MD of the Brand Leadership Group, a marketing and branding consultation organisation When did you realise you wanted to be an entrepreneur? Several years ago, after I did preliminary psychometric tests with a recruitment agency which was looking for an MBA graduate to assist the then CEO of Southern Sun Hotels. The agency told me I’d be more successful as an entrepreneur than as a corporate employee because I was a self-starter. I was disappointed that I didn’t get the job, but the test results made sense. As a child, I never used to bother my parents for pocket money. I earned my own cash selling oranges, snoek and vetkoek. Are you ever at the office? Not necessarily. I’m very mobile and have now established a working system with my team where I’m contactable even when I’m not physically present. I don’t even have a proper office any more. If I happen to be at our building, I just use any spare desk or work inside the boardroom. How much travelling do you do? I’ve been to all the world’s continents and almost all the countries in Africa. Last year, I spent more time outside SA than I did inside it. How do you stay in touch with the office during your travels? With today’s technology, you can work from pretty much anywhere in the world, as long as there’s mobile coverage. Skype, Teamviewer and Telecon allow you to participate in a meeting being held in Jo’burg, even if you’re in London. What apps would you recommend to other globetrotting executives? I’m always catching, changing or missing flights, so I appreciate apps like Flightboard, which simulates real time for boarding, Priority Pass (which allows me access to all airport lounges available if I’m not flying with SAA or a Star Alliance partner), Translate (to communicate in foreign languages), Gautrain for train schedules and Currency for money conversions. What’s been the most memorable place you’ve worked from? Every place where I’ve been able to receive and send emails is brilliant. I could be
“Last year, I spent more tIme outsIde sa than I dId InsIde It.”
Thebe Ikalafeng, founder and MD of the Brand Leadership Group
receiving calls at a ski resort in France, writing a report from a mountain spa or answering a letter at an airport or during a flight. What’s the next big thing for Brand Leadership? We’ve offered advice to more than 100 brands in many countries, including elections in Ghana, banking in Zambia, food security in Tanzania, higher education in Botswana and pretty much everything in SA. Our footprint’s embedded across the continent and there are enough challenges in Africa to tackle for some considerable time to come.
Written by Mzo Witbooi
eXeCs at larGe
Entrepreneurs Thebe Ikalafeng, Alef Meulenberg and Mike Eilertsen are regular travellers who spend extended periods away from their offices. They tell us about building wealth on the move
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(personal wealth report 2014) Another Day at the Office
the hIGh-FlYer
Michael Eilertsen is CEO of LIVEOUTLOUD SA, an all-encompassing luxury lifestyle brand organisation. It comprises a luxury magazine, an events company, a virtual vault and a travel concierge that offers tailor-made itineraries for discerning consumers When did you realise you wanted to be an entrepreneur? I’ve always known it. At primary school, marbles were the currency of the day. I remember analysing their value, which fluctuated from high during the year to almost worthless by the end of it. I also noticed that some children were naturally skilled, so I devised a scheme where they would win marbles on my behalf, which I then sold to Grade 0 mothers. You’ve worked in interesting spaces during your entrepreneurial journey. What’s been the worst place you’ve worked from? The side of the road. That was an experience that definitely shaped who I am. A motorist can completely nullify your existence when they get that steely look in their eye. I found this affected me deeply and to this day I
“I remember analysIng the value of marbles, whIch fluctuated from hIgh durIng the school year to almost worthless by the end of It.”
Michael Eilertsen, CEO of LIVEOUTLOUD
acknowledge and affirm everybody, from car guards to CEOs. How much travelling do you do and how do you stay in touch with the office when you’re away? I’m a born traveller and have been to many parts of the world. I love visiting developing countries like Peru, Egypt and Cambodia. They’re brimming with opportunities. By contrast, I find that most opportunities in First World countries have already been realised. My laptop and my cellphone keep me in contact with the office. On my first international business trip, I enabled international roaming and came back to a cellphone bill of R18 000! Now, when I land, I buy a local SIM with unlimited data and calls. On my last trip this cost me only R900. Have you ever had any bright business ideas on holiday? Yes – on a deserted beach in Mozambique. During the day my office informed me that a signed R1 million deal had been cancelled. Those were the funds I was going to use for my salary run in six weeks’ time. I knew I had a small window to make back the money. I found a quiet
(personal wealth report 2014) Another Day at the Office
“The iniTial projecT was in Brazil, where we BuilT our firsT school – one of The BiggesT in The amazon region.”
Alef Meulenberg, founder and Chairman of the Rhiza Foundation
130 • DeStinyMan • January - February 2014
the go-getter
Alef Meulenberg is the founder and Chairman of the Rhiza Foundation, an international organisation that establishes schools and sustainable educational projects in developing areas and countries. Rhiza has operations in Brazil, Ghana, SA and the USA What made you want to be a social entrepreneur? From the start, I knew I wanted one thing from entrepreneurship: the social and economic components of my business to lie parallel to each other. When my business started, it was designed to be sustainable. We created a cycle that started with investments in education. Through those, we invested in business and made profits. With the profits, we continue reinvesting in education so that society can grow. Where did it all start? The initial project was in Brazil, where we built our first school – one of the biggest in the Amazon region. We designed the building to have both classes and business facilities (a bakery and an Internet café) and ensure that the establishment would be self-sustainable. Today we’re selling bread to local shops and the Internet café is buzzing most of the time. Then we went to Ghana, where we invested in an IT school. It also has an Internet café and teaches business English. In Alexandra, Johannesburg, our business also revolves around IT. How do you stay in touch with the office during your travels? When I’m in Europe and the USA, there’s usually good Internet connection. I stay in touch mainly with my PA through email and Skype. In Brazil we work in the Amazon jungle and in Ghana our projects are in the rural areas, some of which have no telephone or Internet access, so I wait to find a hot spot where I can do work that requires connection. How do you cope with time-zone differences when you’re working overseas? I only experience major time differences in Brazil and the USA. What works best for me is to start working earlier. For example, the time difference with Brazil is four hours, so when I start work at 6am, it’s 10am in SA. What tools do you need to set up an office elsewhere? Wi-Fi connection, my cellphone, my iPad and a laptop. I also have a solar charger in case there’s a power failure. What’s been the most memorable place you’ve worked from? A village called Ressaca in the Amazon jungle. We got there by floatplane and it’s one of the most beautiful places I’ve ever seen. It was the closest I ever felt to nature. We lived in huts and heard animals prowling around the jungle. During the day we worked from hammocks, waving away insects and spiders, and although there was zero access to Internet, it was a paradise. What’s the next big thing for Rhiza? Renewable energy from a socio-economic point of view. That means creating jobs and training local youth while sustaining the environment. DM
Pierre van Den bosch. GalloimaGes/Ge t t yimaGes.com
spot and brainstormed my most profitable business to date. Do you need a certain level of financial freedom to be able to work from anywhere in the world? No. You merely have to manage the cash flow. If you know a trip’s going to cost a certain amount, you ensure you use opportunities while you’re away to make back the money you spend. In that way, even a holiday is time that works for you, not against you. What apps would you recommend to other travelling executives? Dual World Clock, which tells me what time it is anywhere in the world. FaceTime is a Skype-type app for Apple devices that offers audio and visual, uses very little data and enables good connectivity. What’s been the most memorable place you’ve worked from? The 16th floor of the liner Celebrity Silhouette in the Mediterranean, overlooking the Italian coastline. Connectivity was good. What’s the next big thing for LIVEOUTLOUD? Convergence, via a matrix of apps servicing every conceivable need on cellphones. Our “Join Us” campaign is about this journey of convergence.
Feature • Section
Writ ten by name & surname
May - June 2013 • www.Destinyman.com • 00
(personal wealth report 2014) Generation Wealth
00 • Destinyman • january - February 2014 00 • Destinyman • january - February 2014
(PERSoNAl wEAltH REPoRt 2014) Generational Wealth
I
f you reflect on the history of families such as the Oppenheimers and Maponyas, they all have humble beginnings, says Sibusiso Nsibanyoni, Team Leader for Established Wealth at Nedbank. “However, their drive and ambition led to their success. If you believe in your vision, you can sustain your legacy for future generations of your family,” he adds. He believes the common factor among successful families is one individual who’s usually the primary creator of wealth. This is a person who’s typically highly driven, fuelled by a clearly defined vision and sense of purpose.
Generational wealth has a stronG link to the overall structure of the family and this has to be nurtured.
RANDS AND SENSE
Building generational wealth is a result of a family’s ability to retain and preserve its assets and therefore isn’t limited to making sound investment decisions. “It’s also about clearly articulated guidelines of what it means to be a member of that particular family. To effectively build generational wealth, there has to be a bigger purpose for the family which goes beyond money,” says Nsibanyoni. He deconstructs building and maintaining wealth into the following factors: Educating heirs about their family history is essential to helping them understand the link between long-standing, deeply entrenched family values and wealth. It also gives heirs an insight into what’s expected of them in return for the money they inherit. “If heirs are expected to ensure that they increase the family fortune and pass it on to the next generation, this message must be conveyed,” says Nsibanyoni. Members of the family who initially accumulated its wealth are frequently seasoned individuals with a wealth of knowledge and experience accumulated over many years. They’ve also often overcome daunting challenges and impoverished circumstances in order to create their fortunes. “They’re usually exceptional at what they do and have learnt valuable lessons through their failures,
Healthy Relationships
Unhealthy relationships can be destructive for any family, but for a wealthy one with the objective of preserving wealth from one generation to another, they can be catastrophic. Generational wealth has a strong link to the overall structure of the family and this has to be nurtured. To achieve this, families must maintain trust among themselves, communicate regularly and have a speedy and productive way of handling conflicts.
Guidelines and Governance
Family History
Business Philosophy
resulting in a business philosophy that defines how they do business,” says Nsibanyoni. He adds that when it comes to heirs, often the big question is how they can be mentored to develop a similar set of skills and a working knowledge of the family’s business philosophy.
Sibusiso Nsibanyoni, Team Leader for Established Wealth at Nedbank
“Governance becomes very important in maintaining a family’s fortune. It provides the necessary structure to guide members on handling wealth and helps clarify expectations,” says Nsibanyoni. Importantly, it also clarifies what’s considered taboo within the family ethos and imposes restraints on individuals who may be tempted to abandon tried and tested methods of doing business in favour of newer principles. This reinforces a sense of continuity and unity, which is a crucial factor in any family empire. Moreover, these rules provide valuable guidelines to individuals on what the family’s broadly trying to achieve, the criteria a member needs to fulfil to participate in the family business, the income they’re entitled to, their authority and status in the family chain of command and the expectations of them in terms of business responsibilities. To conclude, Nsibanyoni quotes American industrialist and philanthropist John D Rockefeller: “I believe the power to make money is a gift from God, to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, I believe it’s my duty to make money and still more money, and to use the money I make for the good of my fellow man, according to the dictates of my conscience.”
illustration: siyamthemba bobot yana
Written by Nazley Omar
FAmIly FoRtuNES
For money-savvy dynasties who are able to maintain a long line of wealth, keeping it in the family really pays off
(personal wealth report 2014) Generational Wealth
a FaMIlY aFFaIr
When McDonald’s announced its expansion into Africa, Dhiroo Nathoo – a respected entrepreneur in Durban – decided to pursue the opportunity and launched McDonald’s Old Fort Road in KwaZuluNatal in 1998. Over the next decade, he expanded the business to five branches across the province. In 2010, he passed away, leaving his sons, Prakash (48) and Sanjay (36), to continue their father’s legacy and spearhead the business. “We believe building a legacy is about sacrifice, success and the contribution you make by positively impacting the lives of families in your community,” say the brothers. “Our father always put his team before himself. Every decision he took considered the benefits it would potentially realise not only for himself, but for
the nathoos’ sUCCess strateGIes Be passionate about the business. Be committed to taking everyone in it on a journey of success, both personally and financially. Enjoy the journey while you focus on your destination. Remember, while you can’t take anything with you, what you leave behind will become your legacy. Make sure it’s a worthy one.
I remember analysIng theIr value, whIch fluctuated from hIgh durIng the year to almost worthless by the end of It.
those who were on his journey with him. He left a void in many lives when he died and big shoes for us to fill.” While they were both MBA graduates, with years of business experience between them, neither brother was fully equipped to take over the family venture. “The McDonald’s standard is very high. You must know exactly how the business works before you can run it,” says Prakash. The two spent almost a year undergoing the intense training and testing necessary to become registered McDonald’s franchisees and were then each given one outlet to run. They had to demonstrate that they were capable of running the franchises successfully before they were entrusted with running the other three restaurants. “We both had to manage our time over the transition phase, while also managing our existing roles and responsibilities. It required great sacrifice, trust and a common vision,” they say. The Nathoos later expanded the business to eight stores. “We see ourselves as custodians and elevators of our father’s brand. We remain true to his core values, as well as the culture he established. Our goal is to build on the foundation he provided for us. “We’re in the business of being successful partners and we wouldn’t shy away from hard work to get a store running and profitable. It isn’t as simple as just opening an outlet and waiting for customers to come. Successful McDonald’s franchisees have ketchup in their veins! It’s a way of life, a marriage – not just a speculative investment,” they say. The brothers have also adopted their father’s approach to finance. “Wealth is about gaining experience and treating the mistakes you make on your journey as opportunities to learn and improve. Our father loved people and the social aspect of being a businessman. It was never about how much money he made, but about how well he lived,” they say. DM
GalloimaGes/Ge t t yimaGes.com
Prakash and Sanjay Nathoo
134 • Destinyman • january - February 2014
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(personal wealth report 2014) Millionaires
the propertY GUrU
I
’m lost in thought on Clifton Beach in Cape Town when my ringing cellphone interrupts my reverie. It’s a private number. “Hello, are you Mzo? I got your number from a friend who says you’re looking for ‘secret millionaires’.” When I tell him where I am, he laughs. “If that’s you wearing the red sweater, I can see you from my penthouse.” He says he’ll call me back in half an hour. When he does, our conversation’s almost surreal. I have no idea what he looks like or where he’s seated as he talks to me. But the voice is distinctive, assertive and compelling “Here’s the thing: many people know I’m well off, but they’re not aware that I’m a dollar millionaire – and I’m happy with that. The problem with us black people is extended family. If your uncles and aunts know you have money, they’ll fleece you.” He says he made his millions building schools and RDP houses, but he’s no longer getting contracts from the government. “The administrators have changed, but I make a lot of money in the private sector these days. I own a few blocks of flats and property is my business.” Despite being in his mid-40s, this property guru says he has no intention of getting married because he’s afraid having a family would slow him down. Besides, he says, he loves chasing bucks a lot more than he enjoys chasing women. “For me, making money is as addictive as fitness is to a gym rat.” He reveals that his net worth is “a little more than R100 million”, most of it in property. “Other than the many construction vehicles I use in the business, I only have two cars: a Toyota Hilux double cab that I drive every day and a Mercedes-Benz C63. They’re exceptionally good cars and I have no intention of buying new or fancier ones.”
“Here’s tHe tHing: many people know i’m well off, but tHey’re not aware tHat i’m a dollar millionaire – and i’m Happy witH tHat. tHe problem witH us black people is extended family. if your uncles and aunts know you Have money, tHey’ll fleece you.”
I tentatively ask for his take on the perception that rich people are greedy. He snorts. “I give a lot of money to the needy through my local church. I pay hefty taxes and have been involved in many projects building free housing for the poor. My church also supports a number of welfare projects, such as the Thembalethu School for the Disabled in Gugulethu.”
For the loVe oF the GaMe: the BUIlDInG sUpplIer
I
’m emailing an entrepreneur who’s been requested to contact me. He kicks off our exchange by reminding me that the condition of our conversation is that I don’t reveal his name or address. He writes that the most profound lesson he’s learnt about wealth creation is that it’s a daily pursuit. “It needs lots of hard work and perseverance. You can’t sit back and think things are going to happen on their own. You need to make bold decisions early in your life with regard to your career or your intended line of business. You need to thoroughly enjoy what you do, or you won’t make it through the tough times – and they come and go periodically in any business.” Although he holds a degree in accounting, he doesn’t entirely attribute his success to what he learnt at university. Instead, he credits his sharp business acumen and hard work. “I started my building supplies business about 15 years ago and it’s been a roller-coaster ride much of the time. However, we’re on steadier ground now.” He writes that he had to make some tough decisions about five years ago – including retrenchments. “No employer likes messing around with people’s lives and we made sure our retrenchments were unavoidable.” He adds that he’s learnt to look after every cent
Written by Mzo Witbooi
seCret MIllIonaIres What would be the chances of staying under the radar if you became a millionaire? Take a leaf out of these guys’books
136 • Destinyman • january - February 2014 136 • Destinyman • january - February 2014
(personal wealth report 2014)
illustration: siya BoBot yana
Millionaires
and “continuously reinvest” in the business. “My qualifications helped me understand law and taxes, but you need a business mind more than anything else. You may have a degree, but you need to put in the hours.” He writes that he’s far more comfortable keeping his millionaire status a secret: the only people who know about his wealth are those closest to him. “But we don’t live a particularly flashy life. One of the reasons I don’t talk about my wealth is that it makes people behave strangely towards me. I don’t believe money’s changed me at all – I’m the same person I was 20 years ago.”
“we don’t live a particularly flashy life. one of the reasons i don’t talk about my wealth is that it makes people behave strangely towards me. i don’t believe money’s changed me at all – i’m the same person i was 20 years ago.”
His attitude towards money is based on the awareness of how quickly it can be lost due to poor judgement and recklessness. “I respect it, but I remember the saying: ‘Easy come, easy go’.” Accordingly, he’s mindful of investing it with a view to security and permanence. “You need to look after your wealth and plan sufficiently for the future, as well as unforeseen events. I’m very grateful for what I have in SA, a developing country with millions of people battling to make ends meet. I firmly believe that you need to give in order to get, which is why I contribute regularly to various charities.” DM
“Many of the restorations i’ve received have coMe froM people who tried to do the work theMselves, but realised it was beyond theM. each painting has its own requireMents. there are no shortcuts in restoration. why risk daMaging soMething so valuable in order to save a bit of Money?”
Peter Spence is inspired by saving oil paintings that, to an untrained eye, seem to be beyond repair. Working from his smallholding in Somerset West, he’s one of SA’s foremost art restorers. Over the years he’s been entrusted with restoring the Rupert collection and many other multi-million-rand works. Art restoration isn’t something you should attempt to do unless you’ve been trained, as you could cause a lot of damage, cautions Spence. “Many of the restorations I’ve received have come from people who tried to do the work themselves, but realised it was beyond them. Each painting has its own requirements. There are no shortcuts in restoration. Why risk damaging something so valuable in order to save a bit of money? “If you’re seeking a piece of art that’s been discarded because of its state, you need to look for the potential to salvage it. It takes time and experience to develop an eye for this sort of thing. “Auctions are good places to look for art – you can get tipped off that private people want to sell their collections. But many auction houses won’t take damaged paintings – they’ll tell the owners to have them restored first. You should also look in junk shops, second-hand shops, garage sales and markets: just keep an eye open. It’s unlikely you’ll uncover something really valuable, but you still might find some interesting artwork,” says Spence. The returns can be excellent, but you need to know what you’re doing. “If you get the right painting you can do very well, but that’s the exception, not the rule. Start with something you like,” suggests Spence. “That way, if you’ve misjudged the value, you can at least enjoy it hanging on your own wall.” Some galleries offer courses and workshops in art restoration. There are also books on various techniques available in bookshops and online.
BUILDING CAPITAL GROWTH
Philasande Bongo, a Johannesburg-based dealmaker at a private equity fund focused on residential property and a Director of the South African Institute of Black Property Practitioners, looks for the things others miss in property. “The key drivers for property returns are yields and the potential for capital growth,” he says. “Most of the opportunities for refurbishments we see are in the central business districts of major cities. Old industrial buildings also offer opportunities in areas where office parks struggle, leaving property owners with limited alternatives.
Above: Philasande Bongo Left: Peter Spence
The economic slow-down hasn’t helped property owners who don’t have strong balance sheets. This puts buyers on the front foot, especially if they’re cash buyers. “It’s important to buy at the right price per square metre and be realistic about refurbishment costs, as these both impact the yield you’ll get on the property. We like CBDs, as they present solid rental demand, given the convenience offered to tenants – such as easy access to public
Written by Justin Wolff
TREASURE HUNTERS
Winston Churchill once famously described a pessimist as someone who sees the difficulty in every opportunity and an optimist as someone who sees the opportunity in every difficulty. Meet three men with a knack for finding hidden value
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THE THRILL OF THE TURNAROUND
Denga Ramuedzisi, a young, Johannesburg-based entrepreneur with experience in auditing, investment banking and consulting, takes a similar approach, albeit along a different path. “For me, the challenge of turning around a business is the ultimate thrill: converting something that was considered almost worthless into something everyone wants a piece of.” Returns can be excellent, says Ramuedzisi, but they depend on many factors, some controllable and others not. “The sky’s the limit
sTRATEGIEs Pick your field and build experience in that area. Do your homework so you’re prepared when opportunity knocks. Be sure you understand what you’re getting yourself into and what it will take to unlock value.
“For me, the challenge oF turning around a business is the ultimate thrill: converting something that was considered almost worthless into something everyone wants a piece oF.”
Left: Denga Ramuedzisi
for the top end. The bottom end depends on the resources you have or are willing to invest in an opportunity.” He’s careful to invest only in industries he knows and understands. He examines what caused the business to sink into its current financial situation, including the way it was managed. Then he decides whether he’s willing to commit sufficient time and resources to address the causes he’s identified. “There’s no one specific formula for successfully turning around a distressed company,” he says, “but it’s important to stick to your investing principles.” Ramuedzisi adds that turnaround opportunities aren’t hard to find. “Opportunities are everywhere. It’s just a matter of spending the time and effort to find the right ones,” he says. “Accounting, legal and consulting firms are generally the first to identify business turnaround opportunities, but the best way to increase your strike rate is to build your network in the business community.” DM
PhotograPhers: vanessa bre wer & sarah de Pina. grooming: zenzi masuku & sian bianca moss @ infidels
lower yields and over the holding period we expect the upside to be above inflation capital growth every year.” Bongo also finds his inspiration in opportunities presented by media and the efficient dissemination of knowledge. “The key,” he says, “is to understand how you can maximise the potential of the property. For example, if a building’s a struggling office block, it might make sense to rezone it and turn it into a residential block. Or if it’s currently a retail unit, maybe it would be better positioned as offices, provided these would suit the location it’s in.”
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HIGHLIGH TS TOP REASONS FOR GIVING – Care about the cause – Want to make a difference – Want to give back to my community – Religious beliefs – Family tradition
91% of HNW individuals gave money, time or goods in 2012, slightly down from 94% in 2010.
Giving most commonly targeted social and community development causes (hospices, children’s homes, support for the aged).
VALUE GIVEN
7%
BENEFICIARIES
56%
Most (63%) gave less than R25 000 in value (2010: 50%). At the high end, 7% gave more than R100 000 in value (2010: 6%). 63%
Implementing institutions (non-profit organisations) were the most popular beneficiary type.
TE
VO 4% 4%
Political parties and advocacy groups were the least popular.
MOST IMPORTANT SELECTION CRITERIA
STRATEGIC PLANNING
More than half of givers have neither a strategy nor a budget for giving. Larger givers follow a more formalised approach to giving.
PURPOSE OF FUNDING
Nearly three-quarters (74%) of givers provide general support.
1 2 Reputation 3
Alignment with personal interests
Proven
impact
POST-DONATION BEHAVIOUR
Half of givers expect no follow-up after making donations. The most common expectations were a thank you letter and ongoing communication.
TRENDS
– Slightly fewer HNW individuals gave in 2012 (91% compared to 94% in 2010). – Value of giving was marginally lower (63% gave less than R25 000, up from 50% in 2010). – Religion was a significantly more common motivation for giving in 2012 (cited by 37% versus 19% in 2010). – Givers are taking a longer-term approach to their donations: 45% have been giving to the majority of their beneficiaries for more than five years (2010: 33%).
MEASURING SUCCESS 70% of givers do not measure the impact of their donations.
M
S O U T H A F R I C A | U N I T E D K I N G D O M | U N I T E D A R A B E M I R AT E S | J E R S E Y | G U E R N S E Y | I S L E O F M A N N e d g ro u p P ri va t e We a l t h ( P t y ) Lt d ( Re g N o 1 9 9 7 / 0 0 9 6 3 7 / 0 7 ) , t ra d i n g a s N e d b a n k P ri va t e We a l t h , i s a n a u t h o ri s e d f i n a n c i a l s e r v i c e s p ro v i d e r a n d re gi s t e re d c re d i t p ro v i d e r t h ro u g h N e d b a n k Lt d , a n d a m e m b e r o f J S E Lt d t h ro u g h N e d g ro u p P ri va t e We a l t h S t o c k b ro k e rs ( P t y ) Lt d .
(personal wealTh reporT 2014) How to be a Philanthropist
Above, from left: Warren Buffett, Bill Gates, Melinda Gates, George Lucas and Dr Mo Ibrahim
Written by Kojo Baffoe
a CUlTUre oF GIVInG Although giving back is often associated with mega-wealthy individuals like Warren Buffett and Patrice Motsepe, anyone can be a philanthropist
T
he Giving Pledge organisation was established to encourage extremely wealthy individuals and families (initially in the USA, but now globally) “to commit to giving more than half their wealth to philanthropy or charitable causes, either during their lifetime or in their will”. American investor Buffett is the “poster boy” for philanthropy and, like Bill and Melinda Gates, has been very vocal about the responsibility of the wealthy to share their fortunes. Other individuals who have committed to The Giving Pledge include George Lucas, Dr Mo Ibrahim, Ted Turner, Sir Richard and Joan Branson, Mark Zuckerberg and SA’s Motsepe. The public pledging of wealth is integral to The Giving Pledge, but one does not have to make this a visible or vocal gesture. Neither does one have to be a high-net-worth individual (HNWI) to be philanthropic. This is something that Inyathelo: The South African Institute for Advancement seeks to decode. According to Programme Director Gabrielle Ritchie: “Inyathelo was established in 2002, initially to support the development
142 • Destinyman • january - February 2014
“PhilanthroPy is traditionally defined as the desire to Promote the welfare of others, exPressed esPecially by the generous donation of money to good causes. for us, PhilanthroPy is about sharing wealth imPactfully and in a financially Prudent way. this should be done with the objective of creating value and a lasting legacy.”
of skills for universities to raise funding. We then established the Philanthropy Awards in 2007 as a key way of profiling and building energy towards local philanthropy. There was an international shift, where a lot of funding that used to come to SA was being directed elsewhere and we were increasingly being seen as a middle-income country with growing wealth and a middle class that should be able to support its civil society.” The awards – in addition to the Philanthropy SA website – were set up to encourage giving by identifying role models and showing the full range of giving, from people who have very little to huge foundations which are capable of multigenerational giving. “We have a fledgling democracy and growing and maintaining it requires a strong civil society which depends on local giving,” says Ritchie. “For civil society to really reflect the involvement of active citizenry, we need to make that contribution.” Nedbank Private Wealth (NPW) also identified philanthropy as an imperative and, as a result, established a Philanthropy Office
(personal wealth report 2014) How to be a Philanthropist
GalloimaGes/Ge t t yimaGes.com
Above, from left: Ted Turner, Sir Richard Branson, Joan Branson, Mark Zuckerberg and Patrice Motsepe
about seven years ago, with a focus on HNWIs. To truly understand the field, it has done extensive research with the Giving Report I and II. The second report analysed the philanthropic activities of a sample of HNWIs over the course of 2012. It found that they donated approximately R8 billion in cash, with a focus on social and community development. For the HNWIs, the desire to make a difference by supporting a cause, fulfil religious beliefs or uphold family tradition were among the leading reasons for these donations. Wealth Manager Stuart Milroy, a certified financial planner at NPW, explains its philosophy: “Philanthropy is traditionally defined as the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes. For us, philanthropy is about sharing wealth impactfully and in a financially prudent way. This should be done with the objective of creating value and a lasting legacy. “To achieve this, NPW assists with setting up foundations, wills and formal vehicles for giving (whether in perpetuity or for a specific period), ensuring efficient tax exemptions on philanthropic trusts and corporate trustee services.” Ritchie and Milroy agree that there should be solid and sustainable structures in place. “Strategic investment in the longer term aims to shift things systemically, rather than taking a ‘Band-Aid approach’, such as funding research for finding a cure for cancer or HIV/Aids. Also, the financial aspect of philanthropy is extremely important,” says Ritchie Milroy adds: “It is interesting that the Giving Report II showed that 70% of givers do not measure the impact of their donations. This is something we would like to change. Only by knowing whether there is a real social return can we understand whether our actions are truly making a difference.” The reality is that anyone can be a
“It Is InterestIng that the GivinG RepoRt ii showed that 70% of gIvers do not measure the Impact of theIr donatIons. thIs Is somethIng we would lIke to change. only by knowIng whether there Is a real socIal return can we understand whether our actIons are truly makIng a dIfference.”
philanthropist. Generosity and giving can be found among the poorest South African communities. The Inyathelo Awards have shown that people are recognising the importance of not relying on government to fulfil all the needs of society and picking up the slack themselves. Past winners like 13-year-old Jordan van der Walt with his Just One Bag initiative (where pupils are asked to each bring a single bag of maize meal to school to donate to charity – a project which has already fed more than one million hungry children) have proved this. Ritchie does feel that there is a need to intensify the message, including teaching active citizenship, rights, responsibilities and the importance of giving at an earlier age at schools. Inyathelo has also set up a philanthropy service providers’ network providing access to tax consultants, lawyers, monitoring and evaluation, etc, to make it easier for the average citizen to participate. Milroy says: “With the tremendous need in SA and the increasing inequality gap, formalising individual giving is important so that there is purpose and continuity. The face of philanthropy is changing to innovative ways of making a real difference. NPW offers new methods and instruments for facilitating philanthropy, such as social enterprise, venture philanthropy, impact or social investing and social impact bonds.” In the words of American neurosurgeon Ben Carson: “Happiness does not result from what we get, but from what we give.” DM CONTACTS Inyathelo: www.inyathelo.org.za Philanthropy SA: www.philanthropy.org.za
ONLINE BONUS For tips on finding the right charitable organisation, visit: www.destinyman.com
(personal wealth report 2014) Managing finance
Written by Nazley Omar
mone ygem ent
If money talks, then financial advisers need to weigh its words – but what are the risks, rewards and repercussions of managing other people’s finances?
(personal wealth report 2014) Managing Finance
H
GAlloIMAGeS/Ge T T yIMAGeS.CoM
andling other people’s investments requires an eagle-eyed perspective of their needs and the markets at large. In the current economic climate, those in the investment and asset management sector are under increasing pressure to ensure that their clients make sound and solid financial decisions. “Every long-term, sustainable and successful partnership requires trust,” says Vince Boulle, Executive Head of Nedbank Private Wealth. “It’s a binding component when it comes to matters of finance or a wealth management partnership, but it shouldn’t be blind. All parties need to build and demonstrate that the basis of trust is sound.” The benefits and pitfalls of putting your money into someone else’s hands is largely dependent on their skills and level of commitment to diligent investment governance principles. Investment professionals must have expertise, experience and the competencies to help you move forward financially. While past performance isn’t a guarantee of future success, certain fundamentals such as sound research and stringent processes are essential. Furthermore, it’s important to remember that noone knows your circumstances and future goals better than you do. To avoid a situation where your financial adviser misunderstands your needs and ends up not managing your money optimally, you need to do your homework beforehand and then spend sufficient time articulating your needs to him or her. When it comes to investing, the most dangerous thing is making decisions based on fear or greed. There are few unconditional guarantees, warns Boulle. “The ‘tortoise and the hare’ analogy comes to mind. Investment management is a long-term game that rewards patience, process, competence and discipline. The allure of unrealistically high returns, the gloss of the latest fad and a fight-or-flight response to short-term news can be especially costly to investors.” When financial advisers fail to offer sound advice and compromise people’s investments, the industry as a whole gets a bad name. “Financial advisers and industry participants are responsible for adhering to and enforcing elements of regulation that aim to prevent money-laundering and other corrupt practices,” says Boulle. “In addition to defined legislation such as the Financial Intelligence Control Act and the Financial Advisory and Intermediary Services Act, we apply our own specific business policies.” MAKING MOOLAH It’s important not to view financial affairs in silos. Financial advisers have a responsibility to offer investors a holistic view of how their money’s being managed and more, importantly, where savings and investments can be made. For Boulle, investing is a client-centric process. He believes it’s imperative to understand the client’s situation, needs, aspirations and objectives.
“Having a qualified financial adviser goes a long way towards ensuring tHat your money’s invested tHe best possible way, given your future needs.”
Vince Boulle, Executive Head of Nedbank Private Wealth
ChoosInG a FInanCIal aDVIser Research from financial data company Morningstar shows that over time, a financial adviser can add about 30% to your retirement income. This means their decisions about how and where your money’s invested significantly impact the amount you get in the end. Choosing the right financial adviser, however, is crucial to your financial stability. Do your research before you choose an adviser. Ask people you trust to refer you to someone they’ve dealt with in the past. Don’t rely on historical performance alone. Select an asset manager who works with solid processes which enable him or her to make sound investment decisions in the future. Ensure that the practice is registered with the Financial Services Board. According to the Financial Advisory and Intermediary Services Act, advisers are obliged to disclose to their customers whether they’re acting for an authorised financial services provider and to produce a document setting out the products in which they’re trained and accredited to provide advice.
“Essentially, the service depends on establishing a relationship with each client. Based on the client’s response to a proposal, a strategy can be implemented, monitored via regular reviews and adapted, when required,” he says. Having a qualified financial adviser goes a long way towards ensuring that your money’s invested in the best possible way for your particular needs. However, it’s important that you understand exactly what’s being done with it, so read all the documents you receive and ask questions about anything you don’t understand. Also, follow these tips: • Keep investing at regular intervals over the long term. It makes sense to keep investing through market lows, when share prices are undervalued and a lot cheaper, so that you gain more wealth during the highs. • Understand your time horizon and risk profile. The younger you are and the longer you have to invest, the more risk you can afford to take. • Don’t put all your eggs in one basket. Diversifying makes sense because when one market doesn’t perform well, you’ll still have your investments in others doing their best for you. Don’t focus on returns from individual investments. See your portfolio as a whole. • Balance your portfolio. Don’t invest only in property or cash. Maintain a sensible balance between different types of investments. • It’s time in the market that counts, not timing the market. The longer investors are in the market, the better their chances of making up for any losses. DM
(personal wealth report 2014)
Written by Andile Khumalo
the law oF s retUrn hInG DIMInIs Are you chasing big bucks? Slow down, tiger: it should be wealth you’re after – not riches!
I
n his 2004 DVD release Never Scared, Chris Rock jokes about the difference between rich and wealthy. The one comment I can’t get out of my mind is: “Shaquille O’Neal is rich. The white man who signs his cheque is wealthy.” In his first season at the Miami Heat, O’Neal earned an annual salary of just under $28 million (about R274 million). Today he’s estimated to be worth in excess of $250 million (about R245 million) and is raking in at least $10 million (about R98 million) per annum years after his dunking days. Many entrepreneurs I meet openly declare their ambition
146 • Destinyman • january - February 2014
to become multi-billionaires. They’re obsessed with accumulating as much money as they can in the shortest time possible. That may be a good reason to buy a lottery ticket, but not necessarily to start a business. Often entrepreneurs are motivated by the desire to solve a problem, rather than become rich. Money is the consequence of their activity, not its objective. Which isn’t to say that money’s not important. It is. A friend once told me: “Money gives you choices. If you have no money, you have no choices.” He was right. Life offers you many more options if you can afford
Maintain a very clear and siMple relationship with Money: respect it, but don’t worship it.
Andile Khumalo
to take risks. However, there’s a point of optimal equilibrium, where the accumulation of money doesn’t necessarily result in a more enjoyable life. My erstwhile university lecturer, Prof Adrian Saville, founder and Chief Investment Officer of Cannon Asset Managers, taught me a fascinating economic principle called “The Law of Diminishing Returns” which states: “In all productive processes, adding more of one factor of production, ceteris paribus [all things being equal], will at some point yield lower perunit return.” If accumulating money is the only productive process defining your existence, know that the returns you derive will at some point start diminishing with every extra rand attained. True, too little money robs you of important things in life, like education, good healthcare, security and comfort. Equally, though, too much of it has the potential to rob you of other important things like family, friends, spirituality, humility and a clear conscience. You only have 24 hours in a day, seven days in a week and 52 weeks in a year. To make matters worse, the World Bank says the average lifespan of South Africans is just 52,62 years. You can only sleep on one bed at a time. You can only drive one car at a time. You can only be in one place at a time. Think carefully about whether pursuing wealth is how you want to spend your brief time on this Earth. Try to maintain a very clear and simple relationship with money: respect it, but don’t worship it. Be careful what you spend it on, but insist on having fun with it. You work hard for it. Don’t let it define who you are. I don’t have to be the guy who pays Shaq. I’d be content with the money Shaq has. DM
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