Opportunity - Issue 18 - 2022

OUR WEALTH PLANNING SERVICE WINS COVETED PAM AWARD

The award for Total Wealth Planning in the high-net-worth client category is given to the organisation that has provided the best advice and solutions for high-net-worth clients to enable them to preserve and enhance their total wealth.

This win follows our shortlisting for the same award in 2021 and was based on 12 months of consistent expansion of our wealth planning services – to include more clients and more support. For example, for clients about to retire or going through a divorce.

Our approach is that our advice to clients is led by wealth planning. By developing a cashflow plan first, our clients can invest in our discretionary investment management service through riskweighted portfolios that will deliver the returns they need based on their identified wealth goals. We also introduce appropriate services from our wider banking and lending offerings.

Advice can be internally or externally provided, based on the client’s needs and the type of advice required.

By working closely with clients to ensure they have a clear wealth purpose, they can make more informed and better financial decisions. This has resulted in more of our clients taking up and following a long-term wealth plan.

The PAM awards are acknowledged by the

industry as having the most rigorous judging process, with nominees subject to intense scrutiny and required to complete detailed submissions. Investment performance is also reviewed to ensure that clients can meet their wealth goals through the firm’s support.

Our head of wealth planning Simon Prescott and Anna Slater, paraplanner, accepted the award on behalf of the team at the Royal Lancaster Hotel in London in May.

This latest accolade follows closely the Best Private Bank award presented to us at the 2022 City of London Wealth Management Awards (COLWMA) for the eighth year running.

Below: Simon Prescott, head of wealth planning, and Anna Slater, paraplanner, collected our PAM Award on the night.

INTRODUCTION

It has been a while since our last issue and the seasons are on the change in the UK. Autumn is usually marked by children returning to school after the long summer break and life slipping back into more of a routine. But 2022 had more surprises in store.

In September, we sadly said farewell to Her Majesty Queen Elizabeth II. With a reign of more than 70 years, she was the UK’s longest serving monarch and a constant presence in our everchanging world.

Her passing marked the transition to a new order as we paid our respects to such a remarkable Queen and welcomed the succession of King Charles III.

The calm reflection of mourning was to be short lived, however, as the country and global markets were soon jolted by the shock of the new UK government’s tax-cutting mini-budget on 23 September. The ensuing market turmoil sent sterling plummeting, borrowing costs soaring and pension funds floundering, and the longer term ramifications are still playing out.

Against this volatile and uncertain economic backdrop, Simon Prescott discusses some of the potential benefits of turning to experts for financial planning advice.

Wealth planning is the cornerstone of our advice process, and I am delighted to announce that Simon has been appointed as our new head of wealth planning. Simon has been with us for over 15 years, but you can learn more about him and his plans for the role in the profile on page 8.

In this issue, we also examine philanthropy and the future for purposeful investing. Investment counsellor Rebecca Cretney looks at ways you can invest for impact without compromising on returns.

Finally, treasury dealer Brian Middlemiss outlines some of the wider foreign exchange services we can offer through our specialist treasury team.

I cannot sign off without mentioning how proud I am of our award for Total Wealth Planning at this year’s PAM Awards (see opposite). It is an independent acknowledgement of the work the entire team put in to deliver our holistic wealth management service. The PAM Awards are highly regarded and provide a valuable endorsement of our approach to wealth planning for clients.

Best wishes

8 OPPORTUNITIES TO REAP THE VALUE OF FINANCIAL PLANNING ADVICE

By Simon Prescott, Head of Wealth Planning

To encourage a better understanding, we set out eight tangible and intangible benefits stemming from professional wealth planning advice that we have heard from our clients.

1. Financial gain

One of the first questions we are often asked is what monetary value we would put on financial advice. Figures and thoughts in the industry vary. Some estimate working with a financial planning adviser adds about 3% a year more to your wealth, on average, than for those without one . Another report detailed those with an ongoing relationship with a financial planning adviser had almost 50% more in pension wealth compared to those that only sought advice at the outset.

While these numbers are only averages, both show the significant support planning should deliver for your long-term wealth. It’s also worth noting that any annual uplifts would also enable you to benefit from that growth compounding over time.

2. Saving a precious commodity – time

Chances are you’re already time-poor and struggling to juggle everything going on in your life. Now add on top the hours that would be needed to research investments and wealth strategies.

Recent research highlights that handing over the decision making to a professional who supports you with these aspects of life, day in day out, offers two further advantages. The first is that it limits procrastination and the second is linked to the proven benefit that time in the market rewards investors, so making decisions quicker should mean better outcomes.

3. A holistic approach

We find many clients tend to look at aspects of their finances in isolation. Instead, a professional adviser will take all aspects of your financial life into account – including your wants, needs, plans and goals – to create a bespoke, well-rounded plan that works for you and your loved-ones. This can also highlight potential issues such as too many of your assets invested in a particular asset class or where your home bias is much higher than recommended.

4. Specialist thinking

We want clients to realise it’s okay not to have all the answers when it comes to their wealth. Advisers, on the other hand, will have worked with many other clients in similar situations. With years of experience under their belts, they will also have access to a network of colleagues and specialists to call on as and when they need it.

“Many receive advice,” said Harper Lee, “only the wise profit from it.” Here, Simon Prescott examines the advantages of turning to experts for financial planning advice.

5. Planning beyond the next generation

As well as ensuring you are on track to meet your personal wealth goals, wealth planners also look beyond your immediate needs and will help you bring to life the plans you may have for other family members further down the line. Perhaps you want to ensure the business you founded stays in the family, or that your grandchildren have access to the best in education? Maybe inheritance tax is a real concern? Financial planners will take the time to discuss these with you and develop an approach that allows you to live your life to the fullest today, while providing for those that you love tomorrow.

6. Groundwork for the unexpected

No one likes to think about serious illness or no longer being around. And you shouldn’t have to dwell on what happens if you and your family find yourselves in a difficult situation. Having a plan means not only will you be faced with fewer decisions at a potentially distressing time, but also your wealth planning will be there to support you where needed.

7. Emotional guardrails

“Your emotions,” says Bill Keen, the best-selling author of ‘Keen on Retirement’, “can wreck even the most well-built financial plan.” A good planning adviser will help ensure you do not fall into the behavioural biases we are increasingly aware of and, in effect, protect you from yourself. Even if you have developed the self-awareness to know you occasionally make rash or emotion-fuelled decisions, having those guardrails could be invaluable.

8. Confidence

One of the most cited positives of working with a trusted financial partner is increased confidence . It’s thought that talking about money helps people make better-informed choices, feel less stressed or anxious and more in control. It also helps them form stronger personal relationships so they can help their children develop good lifetime money habits too.

Whatever way you look at it, and whatever is important to you in life, we know that collaboration and the strong partnerships we enjoy with our clients more often than not underpin success. So please speak to your private banker about the opportunity to create your wealth plan and start benefiting more from your relationship with us.

THE FUTURE FOR PURPOSEFUL INVESTING

By Rebecca Cretney, Investment Counsellor

The essence of philanthropy is typically the pursuit of what is good, noble or beautiful. In this way, philanthropists have sought to ‘do good’ with their wealth. Previously, this was limited to the gifting of created wealth: generously giving away what was previously mine. But are there other ways, in which societal change can be encouraged? Can investing be one of those mechanisms and, at the same time, generate competitive returns?

Set the scene: imagine a stockbroker’s office in the 1950s. A suited man sits behind a solid mahogany desk, reading the financial press and puffing at a cigar, a mountain of paperwork precariously perched before him.

First surprise: the door to his office opens and the man’s secretary ushers in a lady. The man’s bushy eyebrows shoot up, but sensing money (a wellhoned instinct of his) he politely offers a seat.

Next surprise: instead of listening to his counsel on return maximisation, the woman starts talking about her personal hopes and ambitions for the future. Should she not seek to learn from his immense experience, expert knowledge and, dare he say, wisdom? The stockbroker is offended. Does this woman think I should listen to her? Does she not know who I am and the millions I have made for far better men than her?

The final straw: the woman then proceeds to tell the stockbroker she would like her portfolio to be invested for more than just return. She wants to invest in companies who might help eradicate poverty, contribute to cleaner air and, worst of all, support female empowerment. She is clearly mad. Must have gone to one of those liberal schools. Madam, he exclaims, you clearly have never sought the employ of a stockbroker and I bid you good day. I cannot assist you.

It is now decades since the investment management sector recognised it could help its clients create an impact beyond philanthropy.

Other areas of a client’s finances should also be considered and aligned to each person’s values and beliefs.

While on paper the ring-fencing of capital is simple, the reality is more difficult. How can you prevent a consumer electronics manufacturer using funds raised in financial markets to invest in its arms division? If you create an investment blacklist, how do you avoid excluding multinational conglomerates because of one small division? Why harangue the oil and gas sector for change when there are easier options that sell quick ways to benefit the world? Why sit down with Volkswagen when Tesla is right there?

Like our stockbroker’s reactions, many assume investing in line with their values is too difficult, or that it necessitates forgoing returns. We argue there is ample opportunity; arguably the biggest opportunity since the industrial revolution is within grasp, if we are brave enough to collectively embrace it. The level of investment needed to meet goals on climate change is of a magnitude not seen since the 18th century. The opportunity for return is huge.

So as investors we should not feel torn between returns and values. The inescapable truth of investing is that all investments have an impact and provide a return. In the same way that a trickle of water causes some form of erosion, or has the capacity to bring life, our money has either an impact for good or bad.

We would argue that a three-pronged approach is required:

• Embrace the good

• Avoid the bad

• Capture the opportunity

How do we embrace the good?

Our portfolios have a net positive alignment to the United Nations’ (UN) sustainable development goals (SDGs). These were launched by the UN in 2016 and list 17 global ambitions most could agree were critical, such as sustainable cities, gender equality, affordable and clean energy, decent work and economic growth, industry, innovation and infrastructure.

The goals offer a focus for development capital, allow a chance to differentiate personal values,

TREND THEME

Demographic change

Environmental change

Habitual change

Technological change

and offer a framework to report on the level of change achieved.

How do we avoid the bad?

The most used framework is MSCI’s Socially Responsible Investment exclusions. We limit overall investment in industries such as firearms, gambling or tobacco to 2% of the portfolio. In addition, we have added fossil fuels to MSCI’s list. Limiting investment in these areas reduces the risk of stranded assets, reputational, or regulatory risks.

Capturing the opportunity Change brings opportunity. Our portfolios allow investors to gain exposure to key trends, which result from impetus behind the UN’s goals.

Ageing population Middle class expansion

Decarbonisation

Energy transition Resource scarcity

Online life Cultural consumption

Nutritional shift Automation Medical advancement

In acknowledging that every investment has an impact, clients are choosing to direct their funds for both return and to effect change.

An investment which is aligned with a set of values is like the gentle drip, drip, drip of water. Over time, it not only yields solid returns, but it also forms beautiful stalactites or underground rivers. Water

INVESTMENT OPPORTUNITY

Care home / assisted living Biotech / Healthcare Education

Fintech Student accommodation Electric vehicles Energy storage Forestry Renewable energy Cloud storage Music licensing Water scarcity Cyber security Online retail Food technology Robotics

pools to form the beginning of a stream. And as multiple streams converge, we begin to see how the build-up of collective actions creates impetus and a movement that will force changes in direction and, overtime, result in wonders such as the thundering of the Niagara Falls.

MEET SIMON PRESCOTT HEAD OF WEALTH PLANNING

Simon Prescott became our new head of wealth planning in July. He’s been with Nedbank Private Wealth for over 15 years, working initially as a private banker and then as a senior wealth planner. Following his new appointment, we put some questions to Simon about his background and his plans for the new role.

What does the head of wealth planning do?

In summary, I assist high-net-worth individuals and families to attain their financial goals and aspirations, with the overriding aim of helping them achieve the ‘life they want to live’. I advise our clients and their families on all aspects of financial and wealth planning to help them structure their investments and other financial assets to achieve their goals and aspirations. This is done through the development and creation of bespoke wealth plans.

What are your responsibilities?

Heading the wealth planning division, I have responsibility for working with our team of private bankers and their clients. My role is to listen to client goals, analyse their assets, develop and produce bespoke plans. This can include structuring of the assets, for example, to efficiently meet expenditure needs, estate and legacy planning for the next generation, philanthropic giving and, ultimately, helping clients to invest for a purpose that is unique to them rather than investing for investment’s sake!

What do you find most rewarding about your role?

Truly listening and understanding each client’s goals and aspirations. We believe it is extremely important to understand a client’s values and beliefs about money. Money can be very emotive and stressful, and I find it extremely rewarding to help clients reduce the stress by working with them to create truly unique wealth plans based on their specific circumstances. When a client can see their financial future clearly in front of them, they have clarity on the steps needed to achieve their goals and – very often – dreams.

Tell us a little about your professional background?

I’ve been providing wealth planning and investment advice to clients for over 24 years (more than half my life!), 15 of which have been with Nedbank Private Wealth. Prior to joining the bank, I worked in private banking for a large UK banking organisation working in the UK, Jersey and Dubai.

What are your plans for the business?

Over the last four years as a business, we have made a huge difference to our clients by positioning wealth planning at the heart of all our investment conversations. This bespoke advice approach for each client is rare in the wealth management space. Our plans are to extend this service to many more of our existing clients, and to attract new high-net-worth clients who are not experiencing this level of service from their existing wealth managers.

What challenges do you see firms and clients facing in the next 12 months?

It feels like there’s a lot of bad news in the world at present. A constant bombardment of bad news by the media makes people feel nervous and uncertain about the future and their finances. I have always had a very positive mentality and believe it is important to focus on the long term, especially when it comes to finances and

investing, and look past the short-term noise. The challenge for wealth management firms is to stay close to their clients, providing vital guidance and coaching through this difficult period, to ensure that emotions do not end up negatively impacting their financial decisions. The world and economies will reset as they always have done before and will, ultimately, continue to move to new highs.

What team or personal achievement are you most proud of?

Our recent PAM Award win for ‘Total Wealth Planning HNW’. The PAM awards are the Oscars of the financial world, and having spent the last four years designing, building and implementing our wealth planning department, to be independently recognised with such a prestigious award was a massively proud moment for me and everyone at the bank.

Do you work in the office or from home?

A combination of both, as I spend time travelling around our various offices.

What do you like to do in your downtime, away from the office?

I’d like to answer by saying I do lots of adventurous and cool stuff, but I’m afraid I don’t. I prefer a laid-back lifestyle these days. I spend a lot of time with my wife and two young children, gardening and cooking – all inevitably fitted around ferrying the kids to the seemingly endless clubs and activities they go to each week.

Quick fire:

Early bird or night owl? Early bird. Town or country? Country.

Last holiday? Biarritz in South West France.

Do you have a favourite team? I’m a big Formula One fan so my favourite team is McLaren – I still have faith they will come good again sometime soon.

Favourite book? Not necessarily the favourite but I did enjoy reading ‘Total Competition: Lessons in Strategy from Formula One’ by Ross Brawn.

Favourite film? I’m a big fan still of the 80’s sci fi action films such as, Predator, Aliens and Blade Runner.

Do you have any pets? We have a cat. Although it’s actually my daughter’s cat, called Jeffrey!

What’s your favourite ice cream? Häagen-Dazs Strawberry Cheesecake.

HOW TO GET THE MOST OUT OF FOREIGN EXCHANGE

By Brian Middlemiss, Treasury Dealer

I remember in years gone by that one of the exciting parts of going away on holiday was the build-up and buying our holiday cash. As a family, we would study the tourist exchange rates and part of the fun was trying to buy the currency at the best possible rate. When we met new people while away, one of the hot topics of conversation was often, “What exchange rate did you get?”

Things have progressed since then. People are more internationally mobile and foreign exchange transactions are not just for holidays. Individuals can be domiciled in a foreign country or paid in a foreign currency and need to switch funds for many reasons. For these types of transaction, our online wealth services allow users to exchange funds, priced from real-time market rates, and make payments of up to £50,000 (or currency equivalent) at the click of a button.

Foreign exchange trades of more than £50,000 can be booked directly through your private banker, who will obtain the best rate from the bank’s treasury team.

But what can you do if you have a significant foreign exchange transaction to complete where the best rate really matters, but the trade is not required immediately? It could be for the purchase of a property abroad or an upcoming foreign investment opportunity. How do you ensure you receive the best possible rate or protect yourself from market fluctuations, or even do both at the same time? The answer is by using a foreign exchange limit order.

What is a foreign exchange limit order?

A foreign exchange limit order is a means to set a specific exchange rate, to maximise profits or to guard against adverse market movements. Orders can be placed for sums of £100,000 or more (or the currency equivalent) and can be held for a specific period, or left open until executed, as long as the cleared funds remain on account to cover the amount.

All orders are monitored 24 hours a day from the market opening on Monday morning in Sydney until the close of business on Friday in the United States. Should the desired level be struck entries will be passed across client accounts during normal business hours on the day of the trade, or during the next working day if the transaction takes place out of hours.

There are three types of foreign exchange limit orders which can be tailored to suit your specific needs.

Take Profit

By placing a take profit order with our treasury team at your desired rate, we can then monitor the exchange rate for a pre-agreed period, and your trade will be settled if your desired level is reached, even if it is out of hours.

This option provided flexibility for one of our clients who lives in the UK, but receives income in EUR. They needed to exchange their savings into GBP but wanted to take advantage of an anticipated weakness in GBP. Through their private banker, they were able to place take profit orders in tranches, at various levels, so their cash flow requirements were also met.

Stop Loss

This type of foreign exchange order is particularly useful if you have a requirement to exchange funds in the near future and have a feeling that rates will move in your favour in the interim period, but also wish to protect yourself against adverse market movements.

Retired clients living in Spain wished to make a EUR 500,000 gift to each of their three grandchildren, who still lived in the UK, so they needed to convert the funds to GBP. They believed the exchange rate would improve in the coming weeks and wished to take advantage of this to maximise the gift, while also protecting themselves against the chance their view was incorrect.

Having discussed the situation with their private banker, they put a stop loss order in place at a level they were comfortable with. This enabled them to hold onto their EUR to benefit should their view

prove correct, but at the same time protect them from an adverse movement against them. Periodic review meetings were arranged with their private banker and at one of these the couple decided to execute the exchange at a more advantageous rate than the original price.

One Cancels Other

This is a combination of a take profit order and a stop loss order. It can be used by clients who have a transaction that needs to be completed at a specific exchange rate and when they want to protect their capital against any adverse market movements. Should one leg of the order be executed, the other leg will automatically be cancelled.

A client living in the UK needed to buy US$1 million for investment purposes but had a minimum exchange rate at which they wished to convert their funds. While the sterling to US dollar exchange rate was above their minimum rate at the time, they had a strong view that it would move in their favour in the coming weeks and would reach their target rate. By placing a one cancels other order, the client protected against the exchange rate dropping below their threshold and, at the same time, allowed the opportunity to take advantage if their target rate was achieved. Three weeks later, during Asian trading hours, the take profit element of the order was executed, with the stop loss element immediately cancelled.

If you’d like to learn more about our specialist foreign exchange services, please contact your private banker.

WE NEED TO TALK ABOUT MONEY

Talking about money remains a taboo for many. A recent survey found that in over a third of co-habiting couples, one or both partners didn’t know what the other earned. The results also showed that people were more comfortable talking to their friends and family about the state of their marriage, their mental health and even politics than money.

So why don’t we talk about money?

One of the main reasons is we simply don’t like talking about it – it’s seen as a sensitive subject and very personal. We’re conditioned to believe that it’s inappropriate.

But it’s only by thinking and talking to others that you can start to understand the opportunities and challenges that your wealth can bring. As a company, we want to help you see the financial options open to you and your family.

To start the thought process, we create and publish articles, case studies, videos and updates on numerous topics on our website. You can also sign up to receive emails as often as you want on the topics you find of interest, via the subscription centre on our website. Just check the relevant boxes, type in your email address and press submit. You can unsubscribe at any time.

We hope you find the articles on our website interesting and insightful. But if you would like to start a conversation with one of the team, get in touch with client services on +44 (0)1624 645000 or email client.services@nedbankprivatewealth.com.

Start investing in financial knowledge today.

This publication does not constitute an invitation or inducement to buy or sell any investments, nor does it constitute any advice or personal recommendation. The value of investments and the income from them can fall, as well as rise and you might not get back the original amount invested. Exchange rates may affect the value of investments. Past performance is not necessarily a guide to future performance. Nedbank Private Wealth does not provide tax advice. We always recommend that you seek specialist tax advice to suit your individual circumstances. The opinions in Opportunity are those held by the authors at the time of printing. All data herein is sourced from local exchanges via Reuters, Bloomberg, and other vendors. The information herein has been obtained from public sources believed to be reliable. Nedbank Private Wealth makes no representation as to the accuracy or completeness of such information. If you no longer wish to receive this publication or any information about Nedbank Private Wealth’s products and services, please advise us in writing.

Nedbank Private Wealth is a registered trade name of Nedbank Private Wealth Limited. The parent of Nedbank Private Wealth Limited is Nedbank Group Limited, which is incorporated in South Africa and is regulated by the South African Reserve Bank. The latest audited report and accounts, and details of the credit rating are available at www.nedbankprivatewealth.com. Nedbank Private Wealth Limited is licensed by the Isle of Man Financial Services Authority and is a participant in the Isle of Man Depositors’ Compensation Scheme as set out in the Compensation of Depositors Regulations 2010. For full details, please see www.iomfsa.im. Registered office: St Mary’s Court 20 Hill Street Douglas Isle of Man. The Jersey branch is regulated by the Jersey Financial Services Commission and is a participant in the Jersey Banking Depositor Compensation Scheme. See www.gov.je/dcs for full details of the Scheme and banking groups covered. The London branch is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registration No: 313189. Your eligible deposits with Nedbank Private Wealth Limited, London branch, are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme. Any deposits you hold above the £85,000 limit are unlikely to be covered. Please ask for further information or visit www.fscs.org.uk. UAE representative office in Dubai licensed by Central Bank of UAE. Representation in South Africa is through Nedbank Limited. Registered in South Africa with Registration No 1951/000009/06, an authorised financial services and registered credit provider (NCRCP16).

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