MoneyMarketing January 2022

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WHAT’S INSIDE YOUR JANUARY ISSUE POPI COMPLIANCE REMAINS A CHALLENGE Many businesses are still facing challenges in how personal information is stored and processed Page 4

IS THE CURRENT MARKET OVERESTIMATING GOOD NEWS? Markets are highly susceptible to the opinions of analysts and fund managers, which often leaves room for error and mispricing Page 10

DEVELOPING ADVISER-CENTRIC PLATFORMS To be truly advisercentric, you must design your business model and technology solution around the adviser and their business Page 16

31 January 2022

@MMMagza

@MoneyMarketingSA

First for the professional personal financial adviser

Key investment themes to watch in 2022 TIMOTHY RANGONGO Editor: MoneyMarketing

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ubstantial changes continue to rapidly reshape the world as we know it, with significant implications for investors.

Investors have to keep considering the issues that are most likely to drive future financial, social and political developments in a way that enables them to make the decisions needed to meet their investment objectives.

As a new year begins, so do new concerns over the global economy.

New restrictions related to rising Covid infections across the globe, including the emergence of the Omicron variant, are among growing concerns. The resurgence in positive cases is generally perceived as a short-term drive and shouldn’t generate significant economic damage.

With the new variant, the world is fortunately not back at square one as we were in March 2020. We have since learnt a lot about the virus; the science is moving at speed, including rising vaccination coverage levels. There is a lot that has been amassed from previous waves. There are now new tools and treatments to limit the impact on health systems. Though economic disruptions are instinctively projected, they will not destroy demand and spending outright.

Post-pandemic growth There are expectations of strong global growth in the coming quarters, mainly owing to continued medical improvements, a consumption boost from pent-up saving, and inventory rebuilding. According to Goldman Sachs estimates, for 2022 as a whole, global GDP is likely to rise 4.5%.

“There is a growing body of evidence that vaccinations will allow economies to open up, governments to reduce lockdown restrictions, and economic activity to return to pre-pandemic levels,” says Arthur Kamp, chief economist at Sanlam Investments.

Demand remains strong; surveys that track the pace of business activity have shown no let-up, while high-frequency data confirms this picture.

Companies recorded record third-quarter profits and margins, and have plenty of room to invest and support employment in the years ahead.

“The resurgence in positive cases shouldn’t generate significant economic damage”

Rising global inflation As inflation balloons beyond central bank targets, monetary policy and thinking have been reshaped for the past two years. One of the greatest dangers to global financial markets in 2022 remains the threat of rising inflation.

“Supply-side bottlenecks and long delivery lead times are putting upward pressure on prices,” says Kamp, who does not expect the demand and supply mismatch presenting in many countries

and industries to ease overnight. However, the good news is that central banks in the European Union, United Kingdom and the United States view today’s inflation pressures as temporary or transitory in nature.

There is a risk of an inflation blow-out in the US if policymakers get things wrong, but Kamp notes that the US Fed has acted prudently to date. “Inflation of around 2.5% is expected in the long term, which should be consistent with sustainable fiscal policy in the US; but asset managers will have to keep a close watch on what the Fed does over the course of 2022,” he says.

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Arthur Kamp Chief economist at Sanlam Investments

31 January 2022

NEWS & OPINION

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Inflation is also top of mind in South Africa, with CPI likely to top 5% entering 2022. Much of this domestic inflation pressure is attributed to the 2020/21 commodity price boom, including fuel prices. The good news from an inflation perspective is that commodity prices are showing signs of cooling, though there will be negative impacts on state revenues.

The South African Reserve Bank’s expectation is to gradually normalise monetary policy by following up on its recent 25 basis point hike in the repo rate, with a further 75 basis points spread across 2022. Melville du Plessis, portfolio manager of the SIM Enhanced Yield and SIM Active Income funds, is not overly concerned about the 2022 interest rate trajectory.

“The market is already pricing in more interest rate hikes than we expect to come to fruition, which allows us to benefit from both the increasing interest rate environment and being able to pick up a bit of extra yield longer out on the curve,” he says.

Regulatory interventions in China China’s economy is undergoing a profound transition, recently evidenced by surges in regulatory activity.

Chinese authorities are trying to engineer a property sector slowdown, reduce coal in the energy mix, and introduce regulatory crackdowns on technology to online education sectors.

“China has a vision of ‘prosperity for all’ and this will lead to ongoing interventions in various industries; we expect more regulation and scrutiny as their economy struggles,” says Vanessa van Vuuren, portfolio manager for the SIM Small Cap and the SIM General Equity funds. SIM funds with concentrated exposure to China, through Naspers’s holding in Tencent, are allowing for the heightened risks in their valuation models.

Inasmuch as the effects of the new regulation measures are fuelling additional pressures, market pundits say these measures should be positive in the medium term as they will lead to more stable growth. Policy support is expected to keep Chinese growth above 5%.

TO OUR in November confirmed two things – first, the world is NEWSLETTER

moving towards a greener future, and second, the move, bit.ly/2XzZiMV however, is not happening nearly fast enough.

A central part of climate-ready investment portfolios is understanding the risks – both physical and transition – to the current and potential holdings. Value can be protected in the portfolio through various approaches, such as more detailed analysis of environmental factors via ESG analysis, measuring and cutting the carbon footprint, or reducing exposure to assets at risk from climate change.

However, protecting portfolios does not protect the planet. Fundamentally, the global call to arms is to decarbonise economies and human activity. There is a need for more capital to catalyse the changes required. mployers in South Africa have New innovations to be developed. Existing ones to scale. increasingly been encouraging their Novel solutions to be invented. employees to get vaccinated against

EDITOR’S NOTE

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SA’s poor credit extension But raising capital for impact investment opportunities can prove challenging. “South Africa has made a remarkable V-shaped post-pandemic economic recovery, but for that projection to continue, we need investment spending to pick up,” warns Kamp. He adds that the country’s credit extension was weak, in real terms, and made worse by battling a “depression level” unemployment rate.

“Asset managers can and do play a critical role in resolving unemployment, particularly in the SME debt space,” says Nersan Naidoo, CEO of Sanlam Investments. “These SMEs, in turn, play a key part in creating jobs and economic growth.” But, he says, a range of issues need to be addressed to meet the credit extension theme head-on, not least of which is how the government’s large borrowing requirement is ‘crowding out’ private sector credit extension.

“The market is already pricing in more interest rate hikes”

ESG Environmental, Social and Governance (ESG) considerations are here to stay and will likely continue to influence investors’ choices in 2022 and beyond.

Allocators of capital have been singled out as essential enablers of the global climate response.

The focus into 2022 remains on extracting the maximum possible impact from each rand or dollar invested. Kamp says the COP26 Climate Change Conference held in Glasgow

Vanessa van Vuuren Portfolio manager for the SIM Small Cap and the SIM General Equity funds

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Fiscal constraints South Africa is facing real challenges in stabilising its debt, and even with prudent fiscal management, the Treasury expects the country’s debt-to-GDP to increase to 78% by 2025/26. “The problem is that the effective real interest rate we are paying on our debt is significantly higher than the real growth rate of the economy, and while that is the case, you have to run a big primary budget surplus,” says Kamp.

He says that government would have to rein in expenditure, a feature that could prove challenging given the socioeconomic pressures linked to inequality, poverty and unemployment. The country’s best hope is to grow the economy faster and for capital allocators to deploy capital with maximum impact for all citizens.

Nersan Naidoo CEO of Sanlam Investments

Covid-19 throughout the past year to make their workplaces safer and protect employees, their families, and communities. The spread of the Omicron variant at the end of 2021 and declining rates of new vaccinations has, however, brought a new urgency to the effort to increase vaccination rates.

As at December 2021, about 14.8m people in South Africa, representing 25.2% of the population, had been fully vaccinated. The take-up began to slow after the willing got their Covid-19 shots. Persuading the hesitant was always going to be more challenging, which has left corporates and public institutions with no choice but to introduce vaccine mandates.

At the start of this academic year, students will not be permitted to register at the universities of the Free State, Johannesburg, Wits, Western Cape and Rhodes without proof of vaccination or recent negative test results. The same applies to staff. MTN, Old Mutual, Standard Bank, SibanyeStillwater, Anglo American and Discovery, among others, have also toed the line in introducing mandatory vaccinations.

Will the mandates work? Well, in July last year, French president Emmanuel Macron took a gamble by announcing the introduction of a Covid-19 passport. Only those who were fully vaccinated, or had a negative test result, would be allowed into cinemas, sports stadiums, restaurants, bars, shopping centres and nightclubs, or on long-distance trains and flights.

He risked dividing the country and provoking the sort of national rebellion for which the French are famed. As with most profound change, resistance is part and parcel of the process. The outcry was indeed instant. But, in the hours following Macron’s announcement, over 1m people booked vaccination appointments. In the four weeks that followed, nearly 10m extra people got the first jab.

As most vaccine mandates inevitably kick off this year, questions surrounding privacy, individual rights, and collective responsibility are sure to surface, not to mention the possibility of imminent legal challenges. Will the right of admission remain reserved, or can it be demanded?

TIMOTHY RANGONGO timothy.rangongo@newmedia.co.za @MMMagza www.moneymarketing.co.za

31 January 2022

PROFILE

NEWS & OPINION

Sandile Shabalala Chief Executive of Business and Commercial Banking at Sasfin

What informed your move from TymeBank to Sasfin?

Both organisations are not big corporate banks.

TymeBank was a start-up and gave me a huge opportunity to learn and grow in that I had not led a project to build a bank from scratch. Sasfin, on the other hand, is already an established bank and has a lot of expertise and strengths in many areas, such as business lending and wealth management.

I also like the fact that Sasfin is a family-owned business built on the entrepreneurial spirit that is deeply embedded in its history. At Sasfin, I have an exciting mandate to organise and harmonise these areas of expertise into building a scalable, transactional and customer-centric business bank, which Sasfin’s shareholders and the Board have committed to and view as a strategic imperative.

How did you get involved in financial services – was it something you always wanted to do?

Honestly, when I grew up, I had ambitions of becoming a teacher. I guess I have an affinity for continuous learning, sharing knowledge and seeing others grow. Being involved in banking for so many years has been fulfilling and a continuous learning experience. I am at a stage in my career where I am always looking for opportunities to use my experience to add value and contribute to a broader community purpose.

What are some of the biggest lessons you have learnt in and about the banking sector?

You are always learning, as banking has many spheres and is very broad, which creates an exciting environment for personal growth and development.

It provides many life skills, such as embracing and managing risks and instilling financial discipline.

What was your first investment – and do you still have it?

Saving for my first car, which was a Citi Golf.

Gosh, I loved that car and unfortunately (with a very heavy heart) I had to sell it many years ago.

“I am at a stage in my career where I am always looking for opportunities to use my experience to add value and contribute to a broader community purpose” What banking/finance sector trends and macroeconomic realities will be on your watchlist in the new year?

The current exciting and forever evolving digital banking trends challenge the concept of what a bank is. The landscape is changing – from banking as a place you go to, to banking as a thing that you do. High levels of unemployment and the widening poverty gap mean that we have to challenge ourselves even further to create cost-efficient and more affordable banking services and products.

Furthermore, a concerted effort needs to be put behind creating more impactful, creative and beyond-banking funding solutions to support small and medium businesses, thereby creating more entrepreneurs, growing the economy and enabling more employment opportunities.

EARN YOUR CPD POINTS The FPI recognises the quality of the content of MoneyMarketing’s January 2022 issue and would like to reward its professional members with 1 verifiable CPD points/hours for reading the publication and gaining knowledge on relevant topics. For more information, visit our website at www.moneymarketing.co.za

VERY BRIEFLY Ninety One appointed Nazmeera Moola as chief sustainability officer. In this newly created role, Moola will be responsible for overseeing Ninety One’s firmwide sustainability initiatives. This includes investment integration, advocacy, corporate transition to net-zero, Nazmeera Moola and developing and implementing efforts to mobilise dedicated funding for an inclusive net-zero transition.

Moola was deputy MD and head of SA Investments at Ninety One. She joined the company in 2013 from Macquarie First South, where she was head of macroeconomic strategy. She began her career as an economist at Merrill Lynch in SA and London. She graduated from UCT with a Bachelor of Business Science degree and is a CFA® charterholder.

Tarina Vlok was named the new MD of Elite Risk Acceptances – a division of Old Mutual Insure. As co-founder of Elite, Vlok worked closely with the previous MD, Christelle Colman, to launch Elite in 2018 and to build the business.

Colman resigned in October to pursue Tarina Vlok personal interests.

“Elite Risk has quickly become known as an innovative, forward-thinking start-up under the OM Insure brand. I am now looking forward to hitting the ground running and building on this legacy,” she says.

Vlok has a wealth of industry experience spanning over 20 years. During her career thus far, she has built strong relationships with brokers and maintains their support through regular interaction and engagements.

HSBC announced Muneer Ismail as the new CEO of HSBC in SA. Ismail was previously the CEO, chief country officer and head of global markets for Deutsche Bank SA, a role he had held since 2016. He joined Deutsche in 2004 as a research analyst covering mining stocks, moving Muneer Ismail on to become head of equity sales in 2009 and head of Deutsche securities in 2011.

He says the appointment “is an honour, and a big responsibility to take on the leadership of HSBC’s franchise in South Africa. HSBC’s international network is a key competitive advantage for HSBC. “Together with the bank’s excellent team, I am looking forward to further leveraging our unique global connectivity for our clients. Supporting cross-border trade and financing between major trade corridors will help drive sustainable growth for the bank.”

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31 January 2022

NEWS & OPINION

Asset owners forum launched to collaborate on infrastructure development funding

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n November, the Batseta Council of Retirement Funds for South Africa (Batseta), in partnership with the US Agency for International Development (USAID), World Bank, and MiDA Advisors (Mobilising Institutional Investors to Develop Africa’s Infrastructure), launched the Asset Owners Forum South Africa (AOFSA or the Forum).

The AOFSA is a first-of-its-kind collaboration of local pension funds to support a common goal of investing in South African infrastructure and real assets for the benefit of their members, while maximising the positive socioeconomic impact of those investments.

The Forum was founded by 12 of the largest pension funds in South Africa, with collective assets approaching R3tn (about $200bn) and aims to align key investments in infrastructure and other alternatives for economic and social impact.

“Given the current environment, this is a clarion call to action for pension funds to align and seek synergies and mobilise long-term capital to provide resources for the development of our local infrastructure.

This should be done by generating sufficient risk-adjusted returns for our members to retire on, while developing a sustainable world for them to retire into,”

The signing of the AOFSA constitution. From left to right - Front row: Ndlabe Mkize, Chair of AOFSA, and Jolly Mokorosi, Vice Chair of AOFSA. Second row: Tumi Mathabatha, Project Development Specialist, Regional Economic Growth at USAID/Southern Africa; Roslyn Spencer, Managing Director of MiDA Advisors; Anne-Marie D’Alton, CEO of Batseta and AOFSA Secretariat. Third row: Aymeric Saha, CEO of MiDA Advisors; Todd Flower, Director, Regional Economic Growth Office Southern Africa Regional Mission; Vincent Spera, US Consulate General; Radesh Maharaj, Chair of Batseta; Malizole Mdlekeza, Chair of Investment Working Committee; and Kutlwano Mokhele, Vice Chair of Investment Working Committee.

said Ndabezinhle Mkhize, Chairman of the AOFSA and Chief Investment Officer of Eskom Pension & Provident Fund.

A further key goal of the Forum is to invest over R3.75bn in long-term projects over the next five years by pooling assets from pension funds, including small and medium-sized funds.

There are currently more than 5 000

POPI compliance remains a challenge for many SA businesses SAMEER KUMANDAN Managing Director of SearchWorks

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pension funds in South Africa, according to the Financial Sector Conduct Authority, with total estimated assets of R4.6tn.

Unpacking the 2021 Mercer Report on Infrastructure financing in sub-Saharan Africa, Jolly Mokorosi, AOFSA Vice-Chair and Independent Trustee, noted that asset owners have never had a better time to invest in infrastructure in sub-Saharan Africa.

outh Africa’s Protection of Personal Information Act (POPIA) officially came into effect in July, and many businesses are still facing compliance challenges in how personal information is stored and processed.

Businesses should have already analysed their internal policies, processes and procedures and aligned them to the most applicable data privacy standards in the POPI Act. It’s also crucial that organisations understand the role their business has as either a responsible party or a processor, and have ongoing training to ensure all areas of the business are POPI compliant.

The POPI Act’s purpose ensures that the right to privacy is taken seriously and includes a data subject’s right to be protected against any unlawful collection, retention, dissemination and use of their personal information.

These rights are subject to justifiable limitations, including balancing the right to privacy against other rights, particularly the right of access to information.

From a technical perspective, businesses should consistently ensure the security of their IT environments to prevent data leakage. This is in addition to ongoing reviews of how information enters and exits the organisation and the impact of this on day-to-day business activities.

As one of South Africa’s largest innovative data aggregation platforms, SearchWorks began its formal data privacy journey in 2019. The early start has allowed the company to have a steady, engaging compliance program that managed the impact for all clients while still achieving all necessary privacy objectives. Due to SearchWorks having dealt responsibly with data and its retention, and being subject to audits by the National Credit Regulator

Rebounding from the Covid downturn means robust macroeconomic growth on the continent, while deepening capital markets and potential partnership opportunities with local institutional investors.

“The timing of the launch of this Forum couldn’t be more auspicious,” said Roselyn Spencer, Managing Director of MiDA Advisors. “Given Mercer’s research and the current proposed amendments to Regulation 28 of the Pension Funds Act, we see investment opportunities arising at exactly the moment that institutional investors need to be taking advantage of them.”

As a major contributor to the Forum’s success, USAID has provided resources to support implementation partners like MiDA Advisors in providing advisory support, capacity building and technical assistance to develop the Forum’s framework to unlock and mobilise private capital in South Africa.

This support aims to drive local investments in infrastructure and facilitate two-way, objective-focused investment between US investors and South African pension funds.

“We see this as enormous progress in local pension funds making a difference in the lives of their communities. It is a step forward for funds to unite as co-investors to develop the economy,” said Radesh Maharaj, Chairman of Batseta.

(NCR) for several years, there were no major new rules to implement ahead of the July POPIA deadline.

Many businesses are wrestling with regulations enforcing informed consent, how to handle a breach should one occur, the rights of access to personal information, how to handle consumer queries and staff training, and how to designate the official information officer’s role.

“Many businesses are still facing compliance challenges in how personal information is stored and processed” SearchWorks allows users to perform live, credible individual, company and property searches via more than 160 different search types. Businesses can rest assured that the privileges and rights of all our consumers have been a high priority for SearchWorks and will continue to be dealt with in a responsible manner.

While organisations may have some residual challenges to iron out, the Act is a welcome development as it allows a greater sense of ownership for the data subjects. It allows for the validity and use of their data and a far greater onus of responsibility for both responsible parties and operators.

POPI compliance can assist businesses of all sizes to build a more trusting relationship with customers and the public. As consumers become increasingly concerned with how their data is handled, demonstrating transparency and responsibility makes good business sense.

31 January 2022

NEWS & OPINION

STANLIB and JP Morgan: Partnering for the future of investing At the end of 2021, STANLIB entered into a partnership with JP Morgan Asset Management. The partnership combines two firms committed to the future of investing. It will provide clients with access to more robust solutions that deliver investment performance while also contributing to sustainable outcomes.

At the launch, senior leaders and experts from both firms shared what the future of investing with them entails, and their market outlook for the new year.

Karen Ward Chief Market Strategist for EMEA at JP Morgan

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ollaborations with international asset management companies provide local companies with significant benefits over and above investment diversification and returns. According to Derrick Msibi, STANLIB CEO, partnerships such as the one between STANLIB and JP Morgan have a multi-faceted effect.

One is the direct effect on the local investment management organisation to boost their competitiveness, thinking and problem solving on behalf of clients. The second impact speaks to the nation’s need to mobilise capital to meet the country’s various and manifold demands. The developmental agenda is dependent on people who can manage and deploy capital successfully.

Moreover, STANLIB’s strategic partnership with JP Morgan was motivated by STANLIB’s desire to offer even greater breadth and depth of investment opportunities and options for its clients. The partnership is about finding a partner who can manage money successfully on behalf of clients and one who can help STANLIB become a strong leading investment management organisation.

STANLIB will exclusively distribute JP Morgan products in South Africa. The two companies have also been collaborating to jointly innovate and distribute new products relevant to a changing world. The partnership gives STANLIB access to a company with $2.7tn assets under management across all asset classes and a global

“STANLIB’s strategic partnership with JP Morgan was motivated

by STANLIB’s desire to offer even greater breadth and depth of investment opportunities and options for its clients”

Kevin Lings Chief Economist, STANLIB

presence; but more importantly, a company focused on investment performance.

The future of asset management: Technology, AI and impact investing For Paul Bateman, Chairman of JP Morgan, the asset management industry is constantly evolving, with a need to take every opportunity to get decisions right.

Technology is critical, and there is an expectation of a rapid increase in the use of AI across the industry to boost returns. The move from selling products to solving client solutions continues, and the techniques for managing multi-asset portfolios are steadily evolving.

Impact investing and sustainability have brought about the biggest change in the sector and will continue to be a major investment theme in the future.

2022 outlook: Looking for value amid high valuations and high expectations Issues of supply and demand, and what policymakers do in response, are among the key questions asset managers ask themselves. Karen Ward, Chief Market Strategist for EMEA at JP Morgan, has no concern about consumer demand – consumers have accumulated massive savings during lockdown (amounting to 12% of GDP in the US and 8% to 10% in Europe), asset and house prices have gone up, and the jobs market is surprisingly strong across the developed world.

But supply is struggling to keep up with the strength of demand, and this brings the question of inflation to the fore. While central banks are saying inflation is transitory, Ward remains unconvinced, saying elevated inflation could last into next year. She expects policymakers to stay accommodative and to take their foot off the accelerator slowly, without wanting to go anywhere near the brake. This means no significant rates rise anytime soon.

Kevin Lings, Chief Economist STANLIB, says another major theme of the coming year, and an important question, is how the world learns to live with Covid-19; what is the regime of controls that countries have as

Derrick Msibi CEO, STANLIB

“Impact investing and sustainability have brought about the biggest change in the sector and will continue to be a major investment theme in the future” a minimum and will that impinge on future economic growth in any significant way?

Another is that commodity prices have been of huge benefit to South Africa in terms of the trade balance, performance of mining companies, tax receipts, and support for the rand, so inflation hasn’t been so problematic, and interest rates did not have to rise. But China may not demand as many commodities as in the past, and we may be in a lower average commodity cycle for the next five or so years.

While macro trends provide a somewhat benign backdrop for markets, Ward says that a lot of that is already priced, and valuations are high, meaning that “we are shopping in an expensive mall”. However, there are opportunities in some value segments of the market. The pandemic has been very good for growth areas of the market, and tech in particular.

Locally, the focus is still on having money offshore, says Lings, and offshore markets have done well, especially the US, where there is still opportunity. Lings remains concerned that the rand can come under pressure, as it has been heavily supported. He notes that investment flows have not been good.

There are areas of value, such as in financial stocks, but we need to see an inkling of a better growth dynamic, he says. Suppose public-private partnerships for energy provision, the auctioning of the spectrum, water provision licences and other initiatives start to get implemented, and we get a better prospect for economic growth. In that case, there’s quite a lot of value in SA equities.

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31 January 2022

NEWS & OPINION

The pandemic shines a spotlight on interconnected risks

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ith ransomware attacks filling the headlines and the Covid-19 pandemic pushing organisations to embrace remote working and online business models, cybersecurity has become a top-of-mind concern for many business leaders. It should come as no surprise, then, that cyberattacks and data breaches rank first on the list of the top 10 risks in Aon’s 2021 Global Risk Management Survey.

The pandemic had a clear impact on the top concerns facing the top decision-makers Aon surveyed. Perhaps unsurprisingly, pandemic risk/health crises have moved into the top 10 for the first time to seventh place, up from 60th in Aon’s last biennial survey.

The 2021 Global Risk Management Survey drew online responses from 2 344 risk decision-makers from 16 industrial sectors, representing small, medium and largesized companies across 60 countries. The report details the leading risks and provides guidance on addressing them.

Top 10 Risks: 1. Cyber Attack/Data Breach Cybercriminals were quick to capitalise on the move to remote work and online business during the pandemic. For example, ransomware attacks grew dramatically, increasing 400% from the first quarter of 2018 to the fourth quarter of 2020. The report suggests that business costs associated with ransomware attacks could reach $20bn this year.

The spike in losses has pushed cyber-insurers to increase their rates while reducing capacity. However, cyber-insurance is just part of the solution to online attacks. Businesses must strive to keep pace with hackers and those initiating ransomware attacks, investing in cybersecurity and constantly assessing their potential exposures.

2. Business Interruption Businesses worldwide saw operations come to a screeching halt in early 2020 as governments imposed lockdowns and travel restrictions to combat the Covid-19 pandemic. The experience – along with the increased reliance on technology and a connected world – changed the way many think about business interruption, recognising that such disruptions can be systemic and not just local events.

As the business interruption threat evolves, organisations should strive to better understand how they might be affected by the changing threat. Then, they must build solutions to address the risk, including appropriate risk transfer and building resilience against the potential for more frequent extreme scenarios that could disrupt business.

3. Economic Slowdown/Slow Recovery The global economy contracted 3.2% in 2020 due to the impact of the pandemic, and while a recovery is underway, troubling signs of volatility remain. Faced with ongoing economic uncertainty, businesses should look for ways to maintain and increase revenue, control expenses and take steps to build resilient operations and workforces. A sound enterprise risk management program can contribute to that resilience and help improve businesses’ competitiveness and agility.

4. Commodity Price Risk/Scarcity of Materials As businesses wait for commodity supply to rebalance with demand, there is uncertainty about whether the global economy has experienced fundamental changes that will lead to permanent increases in the prices of some

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commodities and materials, fuelling inflation.

In this risk environment, businesses will need to take such steps as implementing detailed cost tracking, examining various scenarios and taking advantage of risk analytics. Meanwhile, procurement departments should strive for agility and familiarise themselves with the full range of hedging opportunities.

5. Damage to Reputation/Brand Reputation and brand damage slipped slightly in this 2021’s ranking – down from second place in 2019 – but the threat is still significant. Given the impact of social media on the speed and spread of potential reputation-damaging news, businesses should identify their exposures and make addressing them part of their enterprise risk management programs. Scenario analysis and developing and testing response plans can also reduce the risk.

6. Regulatory/Legislative Changes The global regulatory landscape for businesses grows ever more challenging. With governments around the world looking to increase their authority in such areas as public health, financial markets, climate change, taxation and technology, regulatory complexity will likely grow.

Regulatory risk should be an element of an organisation’s enterprise risk management programs.

Multinational organisations should develop integrated global compliance efforts that can respond quickly to the enforcement environments across various jurisdictions.

And the compliance team should be involved in the product development, risk assessment and design stage to ensure compliance across various markets.

“Business costs associated with ransomware attacks could reach $20bn this year”

7. Pandemic Risk/Health Crises The nature of the current crisis is testing business leaders in new ways. This pandemic will change both countries and businesses as consumer behaviours change, supply chains

are reshaped, business models rewritten and expectations of governments shift.

For all organisations looking to deal with this risk, the pandemic has underscored the importance of four key components of resilience: leadership that provides a sense of reassurance and common purpose; accurate, honest and frequent communication; the use of available information to craft new business models, operating methods and communications channels, adjusting as needed; and the use of data to build agile and resilient workforces.

8. Supply Chain or Distribution Failure To lessen the impact of supply chain risks, businesses should take a holistic view of their supply chains. They should strive to understand the entire length of their supply chain and who touches what at each link on the chain.

In many cases, data and sensor technology can provide insights into supply chains that were previously unavailable.

9. Increasing Competition Several factors can influence an organisation’s competitive position. Its comparative resilience, new competitors, changing consumer trends, technological advances, regulatory changes, economic trends and competitor strategies can all play a part.

Faced with the risk of increasing competition, organisations should identify all the factors that might result in loss of market share and take steps to address them.

Having identified the areas that might affect its competitive position, a business can take steps to address those potential threats. Meanwhile, factoring those insights into the organisation’s enterprise risk management program can contribute to increased resilience.

10. Failure to Innovate/Meet Customer Needs Innovation involves taking a step into the unknown.

Organisations must become more comfortable with uncertainty and ambiguity, fundamental aspects of the innovation process. A lack of resilience, lagging digital capability, or a failure to manage volatility can impair an organisation’s ability to innovate, underscoring the importance of effective and comprehensive enterprise risk management programs in helping organisations innovate successfully and anticipate and meet customer demand.

31 January 2022

INVESTING

Investing offshore: Diversification over the long term beats timing the rand ANIL THAKERSEE Executive: Marketing & Business Development, PPS Investments

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nvesting offshore is an important part of any long-term investment strategy, as it offers diversification beyond the opportunity set available via South African markets. South Africa is a relatively small, open economy with around 330 investable companies listed on the local exchange with a market capitalisation of just over $1tn. To put this into context, total global equity markets had a market capitalisation of just over $94tn in the same period. In essence, the South African market represents around 1% of global equity markets.

In addition to the wide breadth of industries and companies available in global markets, the additional benefit is exposure to economic growth in foreign economies, which makes your portfolio less dependent on growth in the South African economy to drive overall returns.

Investing offshore remains an important tool in the asset class toolbox to build diversified portfolios. The blending of different asset classes, each occupying different coordinates on the risk-return spectrum, optimises the overall risk-return profile at a total portfolio level.

Forecasting the rand The rand is not just the metric most South Africans use to measure their financial wealth but is often seen as a reflection of our country’s share price. As a result, fluctuations in the local currency can impact investor sentiment and, at times, trigger reactive decision-making. It is worth noting that the wild swings seen in the currency over the last few decades have almost all been related to global events resulting in declining global risk appetite and declining global liquidity. This is not to say we don’t have social and growth challenges as an economy; however, in a system of floating exchange rates, the equation is more dynamic, and we have a multitude of factors impacting the exchange rate.

As one of the most liquid emerging market currencies in the world, the rand, at times, can indeed be very volatile.

Several things tend to impact the rand, including commodity prices, inflation differentials, interest rates, economic growth and the impact of domestic issues. This makes it exceedingly difficult to try and predict where the rand is going to end up over the short term.

Graph 1 shows the calendar year appreciation or depreciation of the rand over 26 years, with each line representing an individual year. It doesn’t have a

Graph 1: Calendar Year Appreciation/Depreciation of the rand 1994-2020

Source: IRESS

Graph 2: The Rand: Long-Term Depreciation

Source: IRESS

discernible pattern from year to year, and, for the most part, trying to determine the movement of the rand over the short term is very much a guessing game.

Historically, the rand tends to depreciate over the long term. The circled points in Graph 2 highlight periods of heightened uncertainty in markets where the rand tends to overshoot in weakness; however, the trend since 1994 has been for the rand to depreciate. It is worth noting that while this depreciation has been in nominal terms, in real terms (after factoring in inflation differentials), the rand remains close to its Purchasing Power Parity (shown by the dotted line), which accounts for the inflation differential. Countries with higher inflation rates, like South Africa, will have their currency depreciate against a country with lower inflation.

Offshore investing – navigating a world of investment opportunities A major theme playing out in recent years has been the strong outperformance of growth stocks over value stocks, and to some

degree, this has been a driving factor in performance for global portfolio managers.

The top 10 S&P 500 companies account for nearly a quarter of the index’s total market capitalisation. These giants have, in recent years, done the heavy lifting for the index, and exposure, or lack of exposure to these companies, has skewed investment performance.

In addition, global managers have had to balance exposure to structurally faster-growing emerging markets against more stable, but lower growth developed markets. This has been made even more challenging in the pandemic environment where different countries are in different phases of re-opening their economies.

Once the decision has been made to allocate to offshore-based assets, there are numerous challenges in identifying and selecting the best partners. At PPS Investments, our focus has been to partner with large established managers with a long track record of consistently delivering excess returns through the various cycles and volatility presented by markets.

It remains critical to obtain sound financial planning advice on structuring one’s investments to meet the required outcomes, including balancing domestic and offshore investments.

www.moneymarketing.co.za 7

INVESTING

The ‘boring’ asset class?

RUDESH PATEL Research Analyst, Absa Multi Management

G

enerally, for most investors, fixedincome investing lacks the allure of equities. The growth rate of stocks, dividend payments and earnings growth are attractive features for investors and the performance of their stock holdings.

Fixed-income investing has proven to hold much stability. This very complex asset class creates a strong foundation in the investment process that includes understanding risks and opportunities and using a robust diligence and credit review process. This allows us to take advantage of favourable opportunities and navigate through a volatile, uncertain, complex and ambiguous (VUCA) world.

The fixed-income asset class makes up an important constituent of a well-managed and diversified investment portfolio. The most common type of fixed-income instruments are cash, bonds and credit.

Broadly, they focus on the preservation of capital and income and pay a fixed interest and dividend payment until maturity date, with the principal paid at maturity. The aim of this type of investment strategy is to provide a steady stream of income with less risk than equity investing. Unlike equities that may pay no cashflows to investors, the payments of a fixed-income security are known in advance.

Examples of cash-type instruments are money market instruments, treasury bills, among others. Their aim is to preserve capital by investing in short-term (less than 13 months) securities and highly liquid short-term debt instruments that are very secure. The IB money market benchmark broadly represents it.

A bond is an obligation or loan made by an investor to an issuer. They mostly comprise treasury, government and corporate bonds. They can have various maturities, principals and credit ratings and are broadly represented by the JSE All Bond Index (ALBI).

The issuer promises to repay the principal on a fixed maturity date and to make the scheduled interest payments.

While interest rates and bond prices move in opposite directions, bond markets are bullish when interest rates are low or are falling. The benefits of having a bond to a

portfolio are diversification, lower risk and a level of stability.

Credit instruments provide an additional source of low-volatility income. Generally, a good credit mix may include a combination of both government and corporate bonds and debt instruments that provide inflationbeating returns. The JIBAR three-month benchmark can broadly represent this. While the credit market is generally expensive, smaller funds can access cheaper sources of credit in the secondary market.

These instruments are the first to react during periods of market volatility, i.e. asset quality and demand falling and spreads between corporate and bank instruments widening due to higher perceived risks for corporate paper.

Long-term equity returns have been significantly higher than fixed-income returns throughout history, and nobody knows when this might end. This is illustrated in graph 1 of the JSE All Share Index relative to the fixed-income instruments since 2001.

As a result, many investors focus more on the risk of their equity investments. Since the beginning of the twentieth century (2000), there have been major events that have had a direct impact on financial markets, i.e.:

Graph 1. Source: Morningstar (end Sept-21)

“Unlike equities that may pay no cashflows to investors, the payments of a fixedincome security are known in advance”

• 2000/01: Dot Com Bubble • 2001: 9/11 Terror attacks • 2003: SARS (epidemic) outbreak in Asia (China) • 2008/09: Global financial crisis (GFC) • 2011: EU Sovereign debt crisis • 2018: Tariff hikes, US/China Trade War • 2020: Covid-19 declared a pandemic by the World Health Organisation (WHO).

Over this period, the returns from the JSE All-Share Index have outperformed the

8 www.moneymarketing.co.za

Graph 2. Source: Morningstar (end Sept-21)

returns from the aforementioned fixedincome instruments, while the Sharpe Ratio (Risk/Return) illustrates that these instruments outperformed the All-Share Index through periods of market volatility.

Graph 2 illustrates the Sharpe Ratio of the JSE All Share Index relative to these fixedincome instruments since 2001.

The fixed-income environment gives an investor a useful indicator of the direction of future economic activity, i.e. bond prices and bond yields are excellent indicators of the economy as a whole and of inflation in particular. Graph 3 illustrates changes in bond yields with the direction of interest rates over the past 20 years.

The steepness of the yield curve implies strong economic growth, while

“Bond prices and bond yields are excellent indicators of the economy as a whole and of inflation in particular”

31 January 2022

“The ‘boring’ approach to fixedincome investing is the most efficient way to achieve long-term success because it reduces investors’ likelihood of making mistakes”

Graph 3. Source: Bloomberg (end June-21)

the inverted yield curve suggests an economic slowdown or warns that a recession is coming.

Graph 4 illustrates the credit rating of South Africa’s bonds through the various rating agencies. As SA’s credit rating improved, so did its holdings by foreign investors. Even when SA exited the World Government Bond Index (WGBI) in April 2020, foreigners continued to hold SA bonds at levels before its exit. This clearly illustrates the quality of SA bonds, i.e. that while the credit rating on SA bonds has deteriorated, the yield on them has remained attractive to foreign investors.

Over the past 18 months (over the Covid-19 pandemic period), many managers have realised that bonds are anything but boring, but rather an

important diversifier in their portfolios that will dampen volatility.

As the name states, fixed-income instruments aim to provide regular returns (which may be more modest) but are generally secured. These instruments serve a critical role in many portfolio strategies, such as: • reducing overall volatility • providing liquidity • diversifying risks.

Graph 4. Source: Absa Asset Management (end June-21)

They can provide stability but have lower long-term returns than equity.

Fixed-income instruments such as bonds can provide a predictable stream of income that equities can’t. And in some cases, these instruments may be government-guaranteed, providing a

safer return for investors and may have a higher claim to assets in bankruptcies.

The ‘boring’ approach to fixed-income investing is the most efficient way to achieve long-term success because it reduces investors’ likelihood of making

mistakes when their normal emotional response would be to do something they shouldn’t (also known as acting irrationally).

The ‘boring’ approach to investing means more peace of mind and less stress. Isn’t this what you wanted to start with?

www.moneymarketing.co.za 9

31 January 2022

INVESTING

Current market may be overestimating the good news while underestimating US equities risks “There’s so much good news now, and it seems like the market is completely overestimating this aspect and underestimating the risks”

ADRIAAN PASK Chief Investment Officer, PSG Wealth

S

outh Africa’s sovereign downgrade to ‘junk status’ in 2020 set off a chain reaction among the investment community, exacerbated by the Covid-19 pandemic.

The prevailing sentiment was that local investment carried a substantial risk – an opinion that was priced in by the market.

With the breaking of that news, yields went from 8.5% to 9% and even to almost 12% in some cases. Shortly after, the markets settled down following the downgrade – an indicator that risk can sometimes be overestimated when sentiment is poor. For strategic investors, mispricing of this kind marks a promising (and potentially lucrative) opportunity.

One example is that of the US market, which went through a tapering exercise in 2013. At this point, the market saw bond yields spike from 2% to 3%. However, 2014 would see those yields falling again from 3% to 2%, marking a significant opportunity and indicating that risk was overestimated due to overarching pressure.

Reciprocally, the inverse may be true of the current state of US equities, where market sentiment is overwhelmingly positive. Wall Street equities, for example, recently completed their longest streak of record closing highs since the late 1990s. Stocks and shares have therefore been priced accordingly.

“Forward-thinking investment professionals need to be able to identify the areas where other investors are potentially making mistakes” 10 www.moneymarketing.co.za

There’s so much good news now, and it seems like the market is completely overestimating this aspect and underestimating the risks. That’s something that strategic investment professionals should look out for in the coming months.

These pricing mechanisms point to that markets are highly susceptible to the opinions of individual analysts and fund managers who trade stocks, which often leaves room for error and mispricing. The influence that sentiment has on the market amidst (and often despite) a myriad of other contributing factors, including historical data and geopolitical events, cannot be underestimated.

Mispricing, however, is a phenomenon that opportunistic investors can exploit to their benefit.

Forward-thinking investment professionals need to be able to identify the areas where other investors are potentially making mistakes and then use those mispricing opportunities to generate investment answers for their clients.

A useful rule of thumb is that when markets are on

the up and opportunities are often overestimated and risks underestimated, all the focus is on the good news.

Contrary to that, when markets are under pressure, we often see that the risks are overestimated and the opportunities underestimated, which then creates some opportunities as well.

Being able to identify these gaps in the market comes down to experience, which should arguably be one of the most important traits to look for when choosing an investment partner like a financial planner, wealth planner or investment manager.

Ultimately, even in markets dominated by technical and sentiment analysis, there is often a case to be made for the importance of experience. Seasoned advisers who have paid close attention to pricing mechanisms over a number of years and have dealt with the way that markets overreact to news will have invaluable insights to share and strategies to develop that are driven by a holistic outlook.

My advice is: Obviously, diversify the portfolio for that unexpected event – whatever it might be. And then also have realistic expectations of what markets do over the short and the long term. Suppose you’ve got realistic expectations that a decent market correction, or a serious market event, is something that you’re going to see along your investment journey. In that case, I think that will really help in making sure you don’t make mistakes when these events occur.

31 January 2022

INVESTING

What to know about developed market bond yields

B

Allan Gray is an authorised financial services provider.

onds are typically included in an investment portfolio to provide diversification and deliver yield.

Developed market bonds are currently offering much lower yields than their emerging market counterparts, yet they are perceived as less risky and are, therefore, more popular. But is the safe option the best one?

Graph 1 is a remarkable reminder of why getting the big things right matters.

It shows the yield on the US government 10-year bond since 1970. Bond prices move in the opposite direction to bond yields; hence consistently lower yields have resulted in consistently higher prices.

A US bond investor in the 1980s needed to get one thing right – that inflation and, therefore, yields would fall – and stick to this conviction for the following 40 years.

This downward yield trend has not been restricted to US government bonds; most developed market government bond yields have fallen towards zero and negative for safe havens such as Germany and Switzerland. Even Greece, which appeared likely to default on its debt obligations following the global financial crisis, now pays less than 1% for its government debt.

Corporate bonds have experienced similar yield compression, often irrespective of underlying fundamentals. The Bank of America US High Yield Index tracks US corporate debt rated below investment grade, more commonly known as junk bonds. Junk bonds offered around 10% yield for much of the 1990s and 2000s. Investors were rewarded for taking on the ‘junk’ credit risk. Today, in many ways a more challenging period than the 2000s, these bonds offer a historically low 4% nominal yield and negative real yield.

the carry. As for diversification, the zero lower bound on yields skews the upside/downside potential from bonds. Simplistically, bond prices may fall more than equity prices rise in risk-on scenarios and rise less than equity prices fall in risk-off scenarios.

Limited value, low carry and questionable diversification leave us with few reasons to own bonds. We are fortunate that we are not forced to fill a bond bucket or mimic a

benchmark, and can have low fixed-income exposure in our funds. Instead, we own under-priced assets relative to their cashflow and provide diversification by behaving differently to mainstream equities. These include cash, gold, energy exposure and a basket of cheap, idiosyncratic companies.

These offer higher long-term returns than developed market bonds, as well as better yield and diversification benefits.

Low yields mean fewer opportunities Undiscriminating low yields pose a problem for long-term fixed-income investors. Most importantly, in contrast to opportunities in Africa, low yields mean there are fewer opportunities with an attractive probable return. They also nullify two reasons we hold bonds in a balanced portfolio: to earn the carry (‘the carry’ is the return accruing to an investor from holding the bond) and diversification.

The S&P dividend yield and long-duration US government bond yields are similar, making it difficult to justify holding bonds for

KINGJAMESJHB 3490

MARK DUNLEY-OWEN Investment team member, Orbis

“Bond prices may fall more than equity prices rise in risk-on scenarios and rise less than equity prices fall in risk-off scenarios”

www.moneymarketing.co.za 3490_2020_You get what you preserve_100x220.indd 1 2021/11/17 12:33 11

31 January 2022

INVESTING

Allocators of capital must enable the COP26 goals to be achieved

G

“It is in the long-term interest of the allocators of capital to create an environment that enables the COP26 goals to be achieved” One of the positive outcomes from COP26 is that the Green Climate Fund (GCF), which was created to support developing countries in responding to climate change, has announced some large value transactions, which benefit SA. In the first few days of the conference, a financing partnership totalling $8.5bn was announced between South Africa and a consortium consisting of France, Germany, the UK, the US and the European Union (EU). The partnership aims to support South Africa’s just transition to a lowcarbon and climate-resilient economy and society.

“The GCF’s recent decisions reinforce the shared, but differentiated, responsibility between developed and emerging economies; namely that countries that were historical polluters should provide access to capital and intellectual property, while emerging market economies seeking growth should do so on the basis of green economic principles,” says Jon Duncan, Head of Responsible Investment at Old Mutual Investment Group.

“This climate funding is a great opportunity for South Africa to reset our approach to climate governance across the markets, but it also presents us with an opportunity to imagine a new reindustrialisation pathway for the South African economy,” says Duncan.

It is in the long-term interest of the allocators of capital to create an environment that enables the COP26 goals to be achieved. “It is in our interests to steward investee firms towards positive climate outcomes, take advantage of green economic opportunities, and provide the market with worldclass and ESG-focussed equity products to achieve this,” says Lewenson.

12 www.moneymarketing.co.za

IMAGE CREDIT: MAURO UJETTO / SHUTTERSTOCK.COM

lobally, asset managers can play a decisive role in redirecting institutional and retail investors’ capital towards achieving the decarbonisation goals set by the recent COP26 Climate Change Conference.

This was the message from Old Mutual Investment Group following the conference held in Glasgow, Scotland, this November, which has singled out capital, or the impactful application of capital, as a vital cog in the world’s climate response machinery.

“As one of the largest asset managers on the African continent, our focus goes beyond identifying and funding impact opportunities to understanding how climate impact and transition risk affects the companies we invest in,” says Robert Lewenson, Head of Stewardship at Old Mutual Investment Group.

Meanwhile, listed markets have already seen a decline in the relative market capitalisation of primary producers of fossil fuel, which today account for a small percentage of the MSCI World index.

“Yes, investors should start thinking about decarbonising their listed equity portfolios, but they should also consider the real-world decarbonisation impact that comes from investments in infrastructure such as renewable energy,” Duncan says.

Support for portfolios that achieve ESG outcomes, including decarbonisation, is on the rise thanks to the growing understanding that sustaining ourselves and the economy requires capital to be directed in a manner that solves for returns, risk and impact.

“Stewardship will emerge as our biggest impact in delivering sustainable development outcomes in the listed space. Our North Star is to achieve impactaligned sustainable development goals through our proactive listed equity stewardship and targeted engagement plan,” says Lewenson.

“More than 50% of the JSE’s carbon intensity links to electricity grid emissions from Eskom’s ageing coalfired power infrastructure” In this context, all stakeholder engagements take place in cognisance of factors like climate risk, ethical leadership, social inequality, sound pay, and social justice and transformation.

However, South Africa will have to clear some tough socioeconomic hurdles to achieve a just transition away from fossil fuels. These hurdles will be overcome with a combination of reallocating capital from areas

with high fossil fuels exposure towards renewables and ongoing engagements with listed companies on their transition plans.

The country’s main carbon culprits are easily identifiable, offering clear wins for purposeful policymakers. More than 50% of the JSE’s carbon intensity links to electricity grid emissions from Eskom’s ageing coal-fired power infrastructure, while much of Sasol’s carbon footprint stems from its steam reformation hydrogen extraction process.

An accelerated shift to renewables seems a sensible starting point.

“We are in the top decile in the world in terms of the quality of both our solar and wind resources, and modelling has been done to show that our baseload peak demand can be met with renewable energy,” concluded Duncan.

South Africa’s private sector developers and funders, in partnership with the government, already have a solid track record of bringing solar and wind power projects on stream quickly.

All that is needed for South Africa to meet its 2050 net-zero emissions target is to scale our renewables response.

Robert Lewenson, Head of Stewardship at Old Mutual Investment Group

Jon Duncan, Head of Responsible Investment at Old Mutual Investment Group

INVEST FOR A FUTURE THAT MATTERS – TOGETHER How we invest today determines our tomorrow – a future shaped by a collective voice and vision that has the power to impact our world. By placing ESG at the heart of everything we do and investing in the things that matter most, we can achieve sustainable, long-term returns for our clients – while creating growth and opportunity for Africa.

Invest with Africa’s most responsible investor.* Visit oldmutualinvest.com/institutional to invest for a future that matters.

INVESTMENT GROUP DO GREAT THINGS EVERY DAY Old Mutual Investment Group (Pty) Ltd is a licensed financial services provider. *Awarded Best ESG Responsible Investor – Africa 2021,

by Capital Finance International (https://cfi.co/).

31 January 2022

TAX-FREE INVESTING

It’s time to take advantage of those tax-free savings KIM ZIETSMAN Head: Business Development and Marketing, Laurium Capital

“The eighth wonder of the world, compounding, is on offer, tax-free”

Your investment after 25 years would be worth R3 249 1261, but only worth R2 012 039 after tax if you had not been in a taxfree savings account.

This cumulative sum is a combination of the following: • Tax saved: R1 237 122 (tax you would have paid if it was invested in a taxable account) • Cumulative growth had the investment been taxed: R1 512 039 • Cumulative contribution: R500 000 (your amount invested over the 14 years).

Summary of Unit Trusts managed by Laurium that are offered as tax-fee savings accounts – these can be accessed directly via our website (www.lauriumcapital.com):

L

aurium offers a wide range of topquartile performing unit trust funds, many of which are available for tax-free savings. Invest before 28 February 2022 and benefit from every bit of growth from your investment by paying no tax on interest, dividends or capital gains.

Individuals may contribute a maximum R36 000 per year and R500 000 over a lifetime.

The example below assumes a monthly debit order of R3 000 a month for 14 years until the lifetime limit of R500 000 is reached. We have then allowed the investment to grow for an additional 11 years, completing a 25-year investment period. The investment return assumes a return of CPI +5% per annum, which is the benchmark of the Laurium Flexible Prescient Fund. (The Laurium Flexible Prescient Fund has beaten CPI +5 by 1.6% per year since inception 1 February 2013 to 31 October 2021). A personal tax rate of 45% has been assumed. Please note that these values are for illustrative purposes only and are not guaranteed.

Fund

ASISA Category

Benchmark

Launched

Reg 28

Nedgroup Investments SA Equity Fund (A2)

SA Equity General

Capped SWIX Total Return

Mar 2014

No

Laurium Flexible Prescient Fund (A1)

SA Multi-Asset Flexible

CPI +5%

Feb 2013

No

Amplify SCI Balanced Fund (A1)

SA Multi-Asset High Equity

Multi-Asset High Equity Average

Dec 2015

Yes

Laurium Stable Prescient Fund (A1)

SA Multi-Asset Low Equity

CPI +3%

Dec 2018

Yes

Laurium Africa USD Bond Prescient Feeder Fund (A1)

Regional (Africa) Multi-Asset Flexible

Standard Bank Africa Sovereign Eurobond (excl. South Africa) Total Return Index (ZAR)

Dec 2019

No

Laurium Income Prescient Fund (A1)

SA Multi-Asset Income

STeFI

Mar 2019

Yes

There are some caveats to TFSA accounts; however, these have been put in place to encourage individuals to stay invested and invest as soon as possible: • There is no carry-over of your annual allowance into the following year. By way of example, if one did not make any TFSA investment in the tax year ending 28 February 2020, they could not carry the allowance into the 2021 tax year. You remain limited to R36 000 per annum until reaching the lifetime limit of R500 000.

• Any withdrawals made from a TFSA cannot be replenished. If you choose to withdraw R100 000 from your existing TFSA account, your overall lifetime limit will then drop from R500 000 to R400 000.

• Contributing in excess of the annual R36 000 and lifetime limit of R500 000 will result in tax penalties.

There are several incentives to use a Tax-Free Savings Account:

• For younger investors, a TFSA allows one to invest tax effectively in a liquid investment vehicle towards a future event. This may include buying a house or affording a wedding.

• Unlike retirement savings, TFSA is not subject to Regulation 28, allowing one to invest more aggressively in equities or at higher offshore exposures than the 30% offshore plus 10% in Africa.

• Should one’s investment strategy or objective change, switches between TFSA unit trusts may be made without triggering a CGT event (introduced in 1 March 2018). There is no limit on the number of tax-free accounts one can have.

• Down the line, in retirement, drawing down on one’s TFSA account can be used to offset the withdrawals needed from a living annuity. This will result in an overall tax saving until the TFSA is depleted.

“Unlike retirement savings, TFSA is not subject to Regulation 28, allowing one to invest more aggressively in equities or at higher offshore exposures” 14 www.moneymarketing.co.za

The eighth wonder of the world, compounding, is on offer, tax-free. Make sure you take advantage of this opportunity and invest today!

31 January 2022

WHAT ADVISERS WANT FROM PLATFORMS

Advisers demand platforms to deliver big in 2022 BARRIE VAN ZYL Head of Account Management at Iress

T

echnology has become the not-sosecret weapon for any financial adviser, as digital tools consolidate data to forecast and plan for the inevitable, as well as connect and engage and automate administrative tasks. Independent Financial Advisers (IFA) are looking at technological solutions to build a scalable practice and provide excellent client service while managing clients’ diverse portfolios in the most profitable way. You need to be a superhero with multiple digital and traditional superpowers for your clients.

If this sounds familiar, then get ready to unleash these three digital powers in 2022:

comfortable lives. The good news is that your software sidekick can go with the workflow and automate those everyday tasks, including client fact finds, review processes, revenue management, compliance and service personalisation. It’s time your technology took one for the team to improve processes. Xplan users are saving time with pre-sale compliance checks, postsale case checking, pipeline processes, and that’s only the start.

Zap tasks using the power of collaboration “Look! Up in the sky! It’s a bird! It’s a plane!” No, actually it’s super platforms that provide ease and collaboration for your business. Ideally, your software solution should be like a super vehicle that hosts several tools and features that makes things easier to boost collaboration within the practice and provide supersonic service to clients – making everyone’s worlds more integrated and easier to navigate. We’re talking digital portals, video conferencing, digital signatures, and decentralised services to run a nationwide practice with employees working remotely across the globe, but still able to function productively and, importantly, are still in contact with clients, no matter where they are.

Automation adds the ka-pow It’s all in a day’s work to make every client shine, be financially fit, money-wise and make good economic Smash it with a single view through integration Money Marketing 22/11/2021 decisions toZAbecome profitable,Advertorial.pdf secure and stable2 to live To be 12:04 the guardian of your client’s galaxy, you need a

C

M

Y

CM

MY

CY

CMY

K

single view of your business and of your clients’ entire portfolio – because in the investment world, you need to diversify and not keep all your gems in one spot... right? A typical client portfolio will include investments, a tax-free savings account, a retirement annuity, and a life policy. The holy grail would be for your platform to integrate all of these investments and policies into a dashboard that gives you and your client a single view of their financial health.

Not all software providers can be everything to everyone, so make sure your technologists are the right fit for your business, big or small. In a nutshell, it’s not easy running a financial advice business. Every day there are more demands on your time and money. To put it straight, with no superhuman strength, we can help with affordable IFA software that has everything you need to work in a smarter and more automated way. So you can do more of what makes you brilliant.

Visit iress.com/ifa.

“You need to be a superhero with multiple digital and traditional superpowers for your clients”

Built for your business Aim high and do more with IFA software built for better performance.

Discover Xplan at iress.com/ifa

www.moneymarketing.co.za 15

31 January 2022

WHAT ADVISERS WANT FROM PLATFORMS

Putting advisers at the centre of your development MICHAEL SUMMERTON Head of Proposition and Marketing, INN8

T

o be truly adviser-centric, you must design your business model and technology solution around the adviser and their business.

First, you must listen.

All too often, the art of listening is lost. Being adviser-centric firstly means truly understanding the real challenges advisers face in building and growing their business, then working with them to address those challenges. It could be technology, service process, knowledge

gaps – or all the above. Listening doesn’t only happen once; it’s a continuous active endeavour to engage with advisers at all stages of their journey.

Seamless integration The adviser exists in an ecosystem of interconnected systems, data and business needs. As a platform, you must build your solution within that ecosystem in a way that understands and supports it and does not force an adviser to work ‘your way’.

Being open to collaboration is important.

A valuable question to ask is, “Does your platform create extra work for the adviser as they integrate it into their ecosystem, or is it a seamless experience?” One example is compliance requirements – an endless headache for advisers that a smart platform can solve.

What else can you offer?

Platforms should always be looking for ways to add value to the lives of their advisers and their clients. Your team’s expertise and experience go beyond a tech solution: figure out what else the adviser needs and find a way to provide it. There may be opportunities to provide technical or legislative insight or even practice

“A truly adviser-centric platform keeps the language, accessibility and functionality simple and easy to understand and never hides behind jargon”

16 www.moneymarketing.co.za

development tools. Sometimes these extras may not drive direct revenue, but they do build trust and give your advisers a reason to keep coming back to you. The solution should provide easy ways to help them look good to their clients. Sometimes the simplest, seemingly obvious features can be a gamechanger for them.

Build confidence and trust Sustaining and growing relationships with advisers requires trust in your system, in your service, and your people.

One thing that helps build trust is transparency. A truly adviser-centric platform keeps the language, accessibility and functionality simple and easy to understand and never hides behind jargon.

Responsive, knowledgeable service helps maintain trust. The adviser knows they can call on you to help with solutions for their clients, empowering them in their own service offering.

Prompt, comprehensive and easy-tounderstand communication goes a long way towards building adviser confidence – especially when problems arise. The relationship with the adviser extends beyond the digital interface.

Simply put, it’s still about people first. A

“Being advisercentric firstly means truly understanding the real challenges advisers face in building and growing their business” platform is only as good as the people who power it, and your sales and service teams are the secret ingredient that make the difference between a mediocre platform experience and an exceptional one.

To be adviser-centric, the platform puts the adviser at the centre of their universe.

Simple as that.

Liberty Group Limited is a Registered Long-Term Insurer and an authorised Financial Services Provider (“FSP”) with FSP number 4209 and registered office residing at 1 Ameshoff Street, Braamfontein, Johannesburg, 2001; INN8 is a registered trademark of STANLIB Wealth Management (Pty) Limited, an authorised FSP with licence number 590 and registered office residing at 17 Melrose Boulevard, Melrose Arch, Johannesburg, 2196, South Africa; and a registered business name of STANLIB Fund Managers Jersey Limited, regulated by the Jersey Financial Services Commission with registration number 30487 and registered office residing at Standard Bank House, 47-49 La Motte Street, St Helier, Jersey JE2 4SZ. © 2019 INN8

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WHAT ADVISERS WANT FROM PLATFORMS

INVESTING YOUR LUMP SUM IN 2022

31 January 2022

Finding certainty in the unpredictable Integration. Four syllables that encapsulate where industry focus needs to be directed, at the same time as highlighting (by its absence) one of the most persistent blockers to reaping the efficiencies and timesaving benefits digital adoption has long promised.

BEN LESTER Head of Distribution – UK & International, Praemium International

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n 2019, Origo, a UK-based fintech company, published A Disconnected World: The Adviser’s Reality, a deep dive into software integrations in the retail investment space. Or, to be more accurate, the lack of them. The research unearthed a host of problems that advice firms face getting various systems to talk to one another.

The lack of integration is not a new issue, but it is a significant one, and it can’t continue to be pushed to the bottom of the collective industry’s ‘to-do list’ – pandemic or no pandemic.

So, what do the report’s findings say advisers are up against?

• Firms are using an average of five systems in the process of giving advice, building portfolios and managing clients.

That doesn’t include platforms, which once added in, see the average climb to seven. When factoring more general systems like accounting and office software, it rises to 10.

• Not a single firm researched could at the time access real-time two-way integration between the systems they use.

• Six in 10 described the lack of integration across their software suite, which necessitated lots of rekeying of basic client information, as ‘very impactful’ or ‘severely impactful’.

• 87% agreed that a lack of integration from provider to provider means their firm does considerably more administration than they would like.

It makes for bleak reading, both in terms of the administrative burden and its impact on commerciality.

The report’s authors concluded that a typical firm could be “100% more administratively efficient if systems were properly integrated, as measured by the amount of assets under administration each staff member can look after”.

Advice firms are doing twice the work needed. And there’s a real danger here that, if neglected, disconnection will continue to be accepted as the norm.

Although our focus here is about how we can help to support advice firms, better integration will benefit all involved in the supply chain. The less time advisers spend rekeying, the more time they can spend with clients, creating more opportunities to write business to place with asset managers, product providers and platforms.

Yet, in our sector we’ve noticed a reluctance to open up. Opening up is the first step to creating a connected world that better serves advisers and their clients. Great kit and systems are only as good as their ability to talk to other bits of great kit and other systems.

“The lack of integration is not a new issue, and it can’t continue to be pushed to the bottom of the collective industry’s ‘to-do’ list” There’s no overnight fix for making it a connected world, but there are some fundamental steps each back office or tool provider and platform can take to get us closer to that reality. It’s a case of prioritising the stuff that makes a genuine difference. And opening up is the first step.

The platform sector can’t bemoan the lack of connectedness, all the while guardedly not letting our own tech talk to other systems, including the competition.

The very least providers can do is open up their APIs. It’s the first step, we believe, to making two-way, real-time integration the stuff of now, not just of dreams.

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EUGENE BOTHA Deputy CIO, Momentum Investments or investors to be successful at investing, it is essential to be aware of how our own human behaviours and biases affect our decision making.

Nothing is more personal than our own human behaviour, and being aware of that behaviour makes investing personal.

As human beings, we are often biased by information or our experiences.

Anchoring bias occurs when people rely too much on pre-existing information or the first information we find. While certain economic and political factors are important, some issues in South Africa, in particular, might anchor us toward negativity and bias us away from investing locally. It is important to remember that these factors are not the only driving forces of potential growth over the longer term. Often, with uncertainty comes opportunity.

The decision to have exposure to one specific geography, asset class, or sector is to some extent a function of future economic conditions. As perfect foresight is impossible, it is vital to remember that we cannot with any degree of certainty predict the turning points in any economic event.

Investing decisions should therefore be based on a rational and pragmatic assessment of the facts at hand.

Markets evolve, and economic conditions change, and therefore it is important to regularly reassess those facts to determine a realistic range of possible future outcomes. A greater focus on a rational evaluation of investment markets can equip you for a greater chance of success at investing through time.

It helps to think of possible future scenarios that a couple of broad macroeconomic themes will predominantly define. These themes would lead to natural consequences for the key economic and financial variables. Each of the possible scenarios would lead to probable return

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implications for the different asset classes. A scenario-based approach helps remind us that we need a robust solution under many different possible outcomes.

The current environment is particularly difficult. What should you do when confronted with a difficult investing environment? Remain patient, disciplined and diversified. Patience, as this is a long-term problem. Disciplined, because emotions can lead to bad decisions. Diversified, because your solution must be robust in many possible future scenarios.

Not knowing exactly what the future holds, it is important to remain focused on the end goal that the investment is trying to achieve for you.

Investing is personal, and successful investors know that success is measured against their own goals and objectives and not relative to what other investors are doing. They avoid making mistakes due to the fear of missing out and are disciplined in terms of sticking to their clearly defined financial plan.

They know that their goals depend far more on saving enough money and controlling the risk of their portfolios than trying to predict the next winner.

Disciplined, patient and steady decision making is what wins the race. Focus on the end goal and maintain a diversified approach to choosing your investments and your managers.

“Often, with uncertainty comes opportunity”

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).

We believe in giving our clients and our planet a bright, secure future.

Because with us, investing is personal.

Responsible Investing is one of our core beliefs. Responsible investment practices resonate directly with our outcome-based investing philosophy, and they are aligned with our clients’ long-term goals to positively influence the world they will retire to. We uphold responsible investing principles by consistently reporting back to our clients and seeking disclosure and transparency from the companies we invest in. There is no better time than now to secure a brighter tomorrow.

Because with us, responsible investing is personal.

Speak to your Momentum Consultant or visit momentum.co.za @MomentumINV_ZA

Momentum Investments

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Momentum Investments

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.

31 January 2022

INVESTING YOUR LUMP SUM IN 2022

Global investing: Cash and diversified equities best in volatile conditions ERIC LONERGAN Portfolio Manager for Multi-Asset and Macro Funds at M&G Investments (UK)

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hile there are still attractive investment opportunities in global markets these days, careful diversification and more active management and intervention are needed to get the best results in an offshore portfolio, due to the relatively expensive valuations and higher volatility now prevailing, according to Eric Lonergan, portfolio manager for multi-asset and macro funds at M&G Investments (UK).

Speaking at the launch of the M&G Investments brand in Cape Town (previously Prudential Investment Managers), Lonergan said that the global investment manager currently prefers cash and diversified global equities in their asset allocation, while global bonds remain expensive across most maturities and investors are paying up (or even losing money) for their diversification and duration benefits.

Is higher inflation here to stay?

Weighing in on the current debate around ‘transitory’ versus longer-lasting higher inflation around the world, Lonergan said that investors can’t conclude that higher

inflation will necessarily become a more permanent feature of national economies and result in much higher interest rates and future stagflation, as some are forecasting.

“The Covid pandemic saw unprecedented and unplanned shutdowns across national services sectors and manufacturing. Producers postponed investment in expanding their capacity and instead cut costs. Supply chains have consequently had difficulties gearing back up to meet consumer demand – which has jumped amid the re-opening of economies – in turn causing supply bottlenecks and rising prices. The extremes of the economic downturn, and its following rapid rebound, mean that we can’t predict when supply and demand will rebalance across different sectors. Pricing mechanisms still need to fully adjust, in our view, and it’s premature to say whether or not we have an inflation problem.”

He also observed that predictions of longer-lasting higher inflation ignored the fact that global growth was being driven by several structural engines, including the recoveries in three main regions: the US, Europe and China. Lonergan noted that the global rate hiking cycle had begun, with several developed countries having started raising interest rates – but notably, several were in response to factors other than inflationary pressures.

Positioned for higher returns with cash and equities The group favours cash and equities (well-diversified and not concentrated in any particular sector or geography).

Developed market bonds are expensive and generally to

Offshore diversification and quality in a tough local property market KIRSTIN GOVINDASAMY Investment Professional at Marriott Investment Managers

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he South African listed property sector has had a tumultuous 18 months, from being the worst performing sector in 2020 to the best

performing sector in 2021, year-to-date.

Credit can be given to management teams who navigated their way through a difficult time by focusing on supporting tenants and bolstering the balance sheet. Further credit can be given to debtholders who remained pragmatic and supported landlords through the crisis. The sector is now out of its deepest troughs as collections have recovered to more than 100% in some instances, and fears of covenant breaches have since eased.

Although these short-term fears have dissipated, some of the longerterm negative structural impacts of the pandemic remain. The divergent impact of the pandemic has resulted in ‘winners and losers’ in the various sectors. The retail sector is, unfortunately, one of the losers against the backdrop of rapid growth in ecommerce, and the office

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be avoided, only being useful for diversification purposes.

M&G Investments had, instead, identified more attractive opportunities elsewhere; that is, in emerging market government bonds, such as Chile, that would add value to portfolios over the medium term, for example.

Lonergan said episodes of bond market volatility and mispricing had increased significantly, especially since the onset of the Covid pandemic, making it advantageous to adopt a more active (or interventionist) tactical asset management approach to get added alpha from the asset class. “This means we have been taking advantage of mispricing more frequently, buying and selling assets more quickly to add alpha to client portfolios,” he explained. Having cash on hand for flexibility in tactical asset allocation (TAA) was important in executing this strategy, he added.

As for global equities, M&G Investments considers the MSCI All Country World Index (ACWI) to be “reasonably priced” from a historical perspective. With valuations trading around fair value, their portfolios are positioned broadly neutrally from an asset allocation perspective, he revealed. Within the asset class, however, investors need to be well-diversified, largely due to the wider divergence across company earnings, sectors, national policies, and different growth prospects around the world.

M&G Investments has focused on being well-diversified in their equity exposure and holding more cash than usual to capitalise on sudden asset price swings. Lonergan cautioned global developed bonds are best avoided. M&G Investments believes that being more interventionist, and taking on more and smaller bets in portfolios, are among the best responses to market conditions amid the global recovery from the Covid crisis.

sector being negatively impacted by the work-from-home trend. On the other hand, the logistics and distribution warehousing space has emerged as a relative winner of the pandemic as it has benefitted from the rapid growth in ecommerce, as well as supply chain optimisation.

Although the outlook for the South African property sector remains subdued given the structural headwinds and weak economic outlook, it is important to be mindful of the variance among portfolios offered in the listed property sector. On a look-through basis, approximately 50% of the South African listed sector is based in properties offshore.

This phenomenon aids in geographical diversification and provides an escape from the weak fundamentals locally. It is likely that the operating performance of a property portfolio like Sirius, who own business parks in Germany, and Nepi Rockcastle, a landlord of shopping centres in the Central and Eastern European region, will differ vastly from a property portfolio predominantly exposed to South Africa.

The disparity of fundamentals within the listed property sector gives us the opportunity to cherry-pick portfolios exposed to quality properties in relevant sectors with strong fundamentals, low

balance sheet gearing, and management teams with good track records and specialist advantages. This combination of factors, we believe, will result in stable, defensive income streams in the future.

Companies have also opted to employ pay-out ratios between 75%-95% – an income that is not lost but will aid in further strengthening the balance sheet and maintenance of current portfolios.

This will improve the overall sustainability of dividend payments over the long term.

Although property has benefitted from the rebound trade this year, we are aware of the challenges in the local environment and structural changes facing the sector.

As quality-focused managers, we are not benchmark-cognisant, and only the best companies are included in our portfolios.

We believe selecting relevant portfolios that should be able to reasonably weather any further obstacles remains a prudent strategy.

Given our filtering process, the average loan-to-value of the portfolio is 31%, relative to the FTSE/JSE SA-listed property index (SAPY) at 37%. This past year has been a true testament to the direct correlation between balance sheet strength and dividend payments. The Marriott Property Income Fund currently offers an income yield of 7% and expected growth in income of 3%.

Invest for reliable income in uncertain times

More Predictable Investment Outcomes Contact our Client Relationship Team on 0800 336 555 or visit www.marriott.co.za

31 January 2022

RETIREMENT RULES

Retirement roadmap: Think long term and focus on capital accumulation ANIL THAKERSEE Executive: Marketing & Business Development, PPS Investments

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here are several key enablers to help clients achieve their retirement goals, such as compounding returns, asset allocation, diversification and tax benefits, but one of the primary objectives when planning for retirement is capital accumulation.

Successful planning for retirement is about capital accumulation through multiple economic and market cycles.

These cycles have always been there and are likely to continue to be part of the investment landscape. However, if clients have time on their side, these cycles can present opportunities, particularly if they make regular contributions to their retirement savings.

When considering the traditional asset classes, equities have typically delivered the best real returns over the long term.

This attractive real return does come with volatility over shorter periods and is, to some extent, the nature of this asset class.

You will often see headlines detailing massive losses and double-digit drops in market returns during a crisis. However, it’s important to remind clients that the numbers they see in the news are not their portfolios.

Clients will not have exposure to one specific share or company with a well-diversified portfolio, but have diversification across asset classes, asset managers, geographical locations, and even investment strategies. This means that, at any point in time, clients will have exposure to an element in their portfolio that, when optimally combined, could act in a complementary way. Therefore, the portfolio is better able to withstand fluctuating market conditions, creating smoother returns over the long run.

“Market volatility is a natural and inevitable part of investing, and those declines are often unpredictable”

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“Successful planning for retirement is about capital accumulation through multiple economic and market cycles” Strategy over tactics When investing through a crisis, emotions play a big part in decisionmaking. Panic often leads to reactive decision-making, and this phenomenon seemed to play out in 2020. Data from the Association for Savings and Investment SA shows that some investors either lowered their exposure to or completely disinvested from equity during the Covid-19 period as news of negative economic growth dominated the narrative.

It’s important to note that investors require exposure to growth assets, such as equity, during the accumulation phase to ensure they have enough capital at retirement. When clients make knee-jerk changes to their portfolio allocation based on short-term market events or news, it can have lasting consequences on their ability to reach retirement saving goals.

Retirement roadmap Market volatility is a natural and inevitable part of investing, and those declines are often unpredictable, but history shows that the return profile eventually smooths out over time.

Encourage clients to remain invested in a sensibly diversified portfolio and focus on the long term rather than responding to market events that may be shortlived. Doing this helps ensure they stay on track to achieve their retirement goals set out as part of their holistic retirement plan.

PPS Investments offers a range of funds across the risk spectrum to help you, as the financial adviser, construct a sensibly diversified portfolio that provides growth opportunities, while also providing downside protection to keep your client’s retirement portfolio on track during all investment cycles.

Disclaimer: The information, opinions and any communication from PPS Investments Group, whether written, oral or implied, are expressed in good faith and not intended as investment advice; neither does it constitute an offer or solicitation in any manner. Furthermore, all information provided is of a general nature with no regard to the specific investment objectives, financial situation or particular needs of any person. It is recommended that investors first obtain appropriate legal, tax, investment or other professional advice prior to acting upon such information.

PPS Investments Group is a subsidiary of Professional Provident Society Insurance Company Limited, a Licensed Insurer and Financial Services Provider. PPS Investments Group consists of the following authorised Financial Services Providers: PPS Investments (Pty) Ltd (“PPSI”), PPS Multi-Managers (Pty) Ltd (“PPSMM”) and PPS Investment Administrators (Pty) Ltd (“PPSIA”); and includes the following approved Management Company under the Collective Investment Schemes Control Act: PPS Management Company (RF) (Pty)Ltd (“PPS Manco”).

Financial services may be provided by the representative(s) rendering financial services under supervision.www.pps. co.za/invest

THE DIFFERENCE BETWEEN US ISN’T 20 YEARS, IT’S 240 SALARIES. Invest your 240 opportunities into a PPS Investments retirement annuity.

Is your client prepared for retirement? PPS Investments offers a retirement annuity that prioritises the security and health of their savings. By choosing PPS Investments, you help provide your clients with full transparency, giving them a full view of their progress on their retirement savings journey.

Visit pps.co.za/invest, or call 0860 468 777 to find out how you can turn your salaries into opportunities.

PPS is an authorised Financial Services Provider.

INVESTMENTS

RETIREMENT RULES

Micro pensions ideal for a two-pot retirement system PETRI GREEFF Head of Investment Advisory Services, RisCura

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he government is expected to release proposed measures for a two-pot retirement system early this year. The system, which would allow for one or more withdrawals before retirement from their ‘access pot’, comes with the trade-off that members need to keep the balance of their retirement fund savings in their ‘preservation pot’ until they retire, should they resign.

While the government’s attempts at addressing multiple retirement issues is to be applauded, in their effort to make retirement funds everything to everyone they also risk reducing their impact to nothing for no one.

The amount of work and consultation required to redesign the existing retirement system to allow for limited withdrawals and mandatory preservation is extensive, and legislating the inclusion of a two-pot system will require retirement funds to develop additional investment strategies and increase their monitoring, administration and governance burden.

Instead of imposing reforms onto existing funds, government should consider micro pensions schemes. With micro pensions, small amounts of money that informal and formal workers can individually save during their working lives are invested collectively to provide for short-term requirements and yield returns in the long term.

Micro pensions have successfully been deployed in many frontier and emerging market countries, including India, Uganda, Ghana, Nigeria, and the Solomon Islands.

This kind of innovation could be adopted by South Africa, which has a long history of informal savings in the form of stokvels and other savings clubs.

South Africans also appear ready for such an alternative, based on recent consumer research by market research firm KLA. They surveyed potential recipients of the proposed basic income grant (BIG), asking them what they would do with a monthly grant. While basic needs were considered important, there is an indication that consumers are also thinking of ways to save and grow their money to create financial security — with 51% indicating they would open a savings account to save their money, 20% would join and contribute money to a stokvel, while another 34% would invest money in unit trusts, shares and bonds.

Along with the will to save evidenced in this research, South Africa also has a welldeveloped investment and pensions industry with the skills and experience to manage short- and long-term savings. The country’s well-developed banking industry also has a large digital footprint among formal and informal workers.

Banks are increasing their digital footprint by, for example, allowing new clients to sign up online without visiting a branch. Capitec Bank announced earlier last year that they managed to increase their digital client base by 22% to nine million clients in the six months up to August. That means that more than half of their 17 million client base is now digital. Digital financial inclusion strategies like this provide an excellent platform for micro pensions to operate. Micro pension schemes seem like an obvious answer to both government and peoples’ needs.

“South Africa also has a well-developed investment and pensions industry with the skills and experience to manage short- and long-term savings”

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EMPLOYEE BENEFITS

31 January 2022

To defer or not to defer – the annuitisation question JOHANN SWANEPOEL Product Actuary at Just SA

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here are many options for retirees to consider when choosing an investment or product to provide them with an income in retirement. Life annuities (a guaranteed income for life) are growing in popularity to serve this purpose.

Although many agree that a guaranteed life annuity should form part of their postretirement investment strategy, they may still opt to defer annuitisation.

Three possible reasons for this are: • Human behaviour • The misperception of relative value • The misperception of the drivers of the price of a life annuity.

Human behaviour Arguably the biggest factor contributing to this conundrum is that humans tend to have an inherent desire to defer big decisions. Unfortunately, this inclination makes fertile ground for opposing arguments to take root and look for reasons to support the desire to defer. It is therefore easy to see how common misperceptions can lead to decision-making contrary to ensuring a sustainable retirement income for life.

is currently experiencing) make guaranteed life annuities unattractive. What matters in pricing life annuities is long-term interest rates. In South Africa, long-term interest rates have increased from pre-Covid levels, and despite coming down from their peak in March 2020, annuity rates are still attractive. Buying an annuity now means you benefit from these higher long-term rates. A view of short-term interest rate movements should not influence the decision of when to buy a life annuity.

To defer or not to defer The inherent desire to defer big financial decisions, and the common misperceptions of price and value are some of the reasons why many South African retirees opt to defer annuitisation. As we’ve shown, it makes sense to annuitise earlier, but that Misperception of value doesn’t mean that retirees must commit There is a common misperception that high solely to a guaranteed life annuity. life annuity rates at older ages represent Partial annuitisation in a blended living better value. While it is true that life annuity annuity is also an option and is deemed an rates are higher for older ages, it isn’t true optimal solution in retirement. A blended that these rates represent better value for annuity is a living annuity that uniquely has money. For example, many a guaranteed life annuity people incorrectly assume it as an investment portfolio is better to buy a life annuity Clarifying example option inside its legal at age 70 with an annuity If the annuity rate is structure. This means rate of 10% than buying at 10% for a 70-year-old the best features of both age 65 with a rate of 8.5%. male and 8.5% for products are offered in In fact, it is relatively a 65-year-old male, one solution. more expensive. This allows one assumes 10% Research shows that for five years’ worth of is better than 8.5%. blended annuities provide additional potential annuity However, this does not a more sustainable payments from a product compare like-for-like income in retirement. provider, which are not as the annuity rate Retirees can secure cover included in the annuity rate for the 65-year-old is for essential expenses from age 70 onwards. expected to pay five with guaranteed income If you correctly compare years more income. from the life annuity, the price of the payments while allowing for the from age 70 onwards, the balance to be invested decision to defer annuitisation from 65 to more aggressively for capital growth and 70 is between 10%-15% more expensive. to possibly leave a higher capital legacy It is better value for money to secure an at death – all in a single product. And it is income for life sooner rather than later. not an all-or-nothing decision. Blending allows annuitants to structure a suitable Misconception of the drivers of the combination over time, balancing the price of a life annuity various trade-offs by switching additional Another common misperception is that low tranches into the life annuity component short-term interest rates (like South Africa as required.

31 January 2022

EMPLOYEE BENEFITS

The importance of flexible employee benefits in the modern workplace TANYA TOSEN Tax and Remuneration Specialist at Remuneration Consultants

JANINE O’RILEY Chartered Reward Specialist and Psychometrist at Remuneration Consultants

“The effects of remote working and the adoption of digital platforms in the workplace have turned human resources and payroll departments upside-down” What are the advantages of flexible employee benefits?

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he effects of remote working and the adoption of digital platforms in the workplace have turned human resources and payroll departments upside-down. While debatable whether these will have a positive or negative long-term influence, it gave rise to flexible timeframes and flexible working environments.

This was made more complex by the difficult task of ensuring employee productivity and performance with remote working arrangements and overall staff well-being and morale during an ongoing pandemic. Consequently, employers began focusing on flexible employee benefits to adjust to the new demands.

What are flexible benefits?

Employees are no longer simply hunting for a job and a basic salary. A company’s employee benefit offerings have become just as important as the employee’s net pay position or cost-to-company total.

These fringe benefits could include company contributions towards health insurance or medical aid schemes, pension funds, life and risk cover options, and even travel allowances.

Employees are often able to adjust the amounts on their retirement savings

initiatives or select a level of healthcare according to their own specific needs.

For example, an older employee with children and a degree will have an entirely different list of preferences or requirements than a younger employee without children. For this reason, flexible needs require flexible benefits.

Other flexible benefit examples may include in-house professional development (as with internships) or student loan reimbursement (as with higher education institutions).

The company might also offer their employees a car benefit scheme or a host of other benefits through rewards partners, such as exclusive deals with gyms, cafeterias, or wellness institutions.

Personalised benefits In the same way that customers are more responsive or engaging to a personalised marketing narrative, employees also find that personalised benefits speak more directly to their needs. The more personalised the benefit structure, the more it could appeal to them at that current moment.

Increased engagement Allowing employees to have some say over the structuring of their benefits and rewards schemes already increases their engagement. It has further been established that employees who are satisfied with their remuneration packages and benefits show more engagement in the workplace.

Improved employee retention Employee retention can become a silent killer if not closely monitored.

It often serves as a clear indicator that employee morale or sentiment is

suffering. It’s not unfeasible to assume that the additional rewards that employees reap from their remuneration package could make them less likely to leave the company. Flexible benefits go a long way towards improving employee satisfaction and wellness, ultimately impacting their retention.

Improved employee recruitment In contrast to employee retention, there may be the dilemma of being unable to fill a position because the current reward structure is not accommodating enough for new recruits. Employers should consider that potential employees could sacrifice competitive compensation for a preferred work culture or the flexible benefits that form part of their overall remuneration package.

Remuneration or payroll specialists are there to assist HR departments in structuring or restructuring a company’s job profiles, salaries and benefit structures. Given the increased demand for flexibility, it is best to consult a firm with a proven track record in remuneration services and experience in employee taxation.

“A company’s employee benefit offerings have become just as important as the employee’s net pay position or cost-tocompany total”

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31 January 2022

EMPLOYEE BENEFITS

Momentum Corporate’s new online resource to help financial advisers, employers and employees

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e know what a powerful tool a compelling employee value proposition (EVP) is for companies to attract and retain top talent and that employee benefits (EB) are a key component of the EVP. We also know that the world of work is changing and that younger generations of employees have different needs.

Research by Momentum Corporate shows that when employees feel appreciated and protected by their employer as they see how their benefits improve their lives, engagement levels increase. They become more productive and more invested in the business succeeding – in effect becoming strategic enablers of the business’s success.

These are some of the main reasons we have made an online resource available to any South African employee who wants a better understanding of their employee benefits.

What’s the use of a great EB offering if employees don’t fully understand its value?

The research also shows that many employees feel confused and overwhelmed by the terms and language that usually appear in information and communication about their employee benefits.

While the misunderstanding of benefits is present across generations, older employees do have a better grasp, perhaps because they’ve been exposed to employee benefits for longer. Regardless of age, however, these gaps in understanding of how their benefits can help them mean that many employees remain unempowered to make sound decisions to make their work journey into retirement a financially successful one.

Qhawekazi Mdikane, Chief Marketing Officer at Momentum Corporate, says, “It’s important to make meaningful resources

available if we want to help employees understand their benefits and empower them to make good financial choices.”

Now, there is help Recognising these gaps and needs, Momentum Corporate has created a website that simplifies and explains the language of employee benefits so that any employee can easily understand it.

Mdikane believes that this new website, employeebenefitsexplained.co.za, addresses an industry-wide challenge and simplifies a subject that should never have been so complicated. She says, “Many South African employees don’t have a thorough understanding of their employee benefits. And if they don’t understand what we mean when we talk to them about their benefits, how can they see their value or know what choices to make?”

This is just the start Employeebenefitsexplained.co.za has launched with terms that employees most frequently struggle with. Further development will include more informative

“Many employees feel confused and overwhelmed by the terms and language that usually appear in information and communication about their employee benefits”

Money Marketing_November ad.indd 1 26 www.moneymarketing.co.za

Qhawekazi Mdikane, Chief Marketing Officer at Momentum Corporate multimedia content and interactive functionalities, where users can post comments, like and share content, and ask experts questions.

Helping clients help their employees see the value of their benefits increases productivity The website also benefits financial advisers and employers. Employees who feel more empowered and in control of their financial journey are less distracted by financial uncertainty and more likely to engage productively at work.

Mdikane encourages financial advisers to share the website with their group clients and encourage them and their employees to use it. “We want financial advisers to give us feedback, so we can keep shaping the site around meeting the needs of their clients and clients’ employees.”

2021/10/15 09:15

It’s not only about taking care of billions of rands.

It’s also about taking care of millions of lives.

The success of your clients and their employees is our business. That’s why we work with you to offer a suite of benefits that best suits the unique needs of your clients’ employees. That’s also why we make our solutions as flexible as possible, so that when life changes, employees can change their plans along with it.

When you partner with the right employee benefits provider, your advice helps employers put solutions in place for their employees to feel appreciated, protected and invested in the success of their business. #AdviceForSuccess Talk to your Momentum Corporate Specialist momentum.co.za | move to Momentum Here for your journey to success.

Momentum Corporate is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider.

BRAVE/7350/MOM/E

31 January 2022

RISK

“The value for the insurer is the ability to pre-empt (and prevent) claims before they occur”

Demystifying the benefits of IoT home solutions for insurance companies and their customers MARK ALLEWELL CEO of Sensor Networks

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roving the business case of the Internet of Things (IoT) remains a challenge, both for start-ups looking to build and for large companies looking to adopt new technologies into their existing suite of legacy products. A 2017 report by Cisco Systems surveying more than 1 800 IT and business decisionmakers found that almost two-thirds of IoT projects don’t make it past the proofof-concept stage. Sensor Networks has been looking to change this, working with some of the country’s largest insurance providers with one goal in mind: to prove that IoT works for South African insurance.

The Cape Town-based tech company has developed a smart-geyser controller that can be retrofitted to any standard electric geyser. The device offers two main value avenues: Customers benefit from a 37% to 40% reduction in household geyser energy consumption and gain greater control of their household hotwater heating solution. At the same time, insurance providers enjoy notable risk mitigation and clear reductions in insurance claims.

Turning a traditional electric geyser into a smart geyser is a simple process.

Through their household insurance

provider, customers agree to the installation of a smart-geyser controller.

A qualified plumber, trained on telemetry devices, completes the installation in 45 minutes. The customer has instant access to the smart-geyser solution via an Android or iOS mobile app. In the event of a geyser failure, both the customer and their insurance provider receive an automated first notification of loss (FNOL), allowing for the claims process to kick off, making the repair and replace cycle tighter and more seamless.

One of Sensor Networks’ early insurance partners, Santam Real Estate, is spearheading efforts to demystify the hype around the benefits of coupling insurance

28 www.moneymarketing.co.za

with the Internet of Things. Santam Real Estate is a specialist arm of South Africa’s largest insurer, Santam, which focuses on the collective property-scheme industry (sectional title, homeowners associations and retirement villages).

According to Karl Bishop, head of Santam Real Estate, their roll-out of the Sensor Networks smart-geyser solution to multiple body-corporate locations across seven cities in South Africa has already proved itself. Bishop states, “The value for the insurer is the ability to pre-empt (and prevent) claims before they occur.

Over the past three years, we’ve seen a significant improvement in our loss ratio related to geyser claims at the properties where the smart-geyser solution has been installed, and a reduction in resultant damage.” This essentially offsets the cost of purchasing the hardware, having it installed, and enables Santam Real Estate to offer the smart-geyser solution to their customers for free.

“IoT products are a way for insurers

to better understand perils-based claims. When buildings are fitted with IoT products, data about the overall health and profile of that risk address is provided,” continues Bishop. “Combined with a transparent real-time view of their entire book, insurers are able to tailor their pricing to that specific property’s needs.”

Bishop says their average geyserrelated claim is over R8 300 (excluding the customer excess). Up to 40% of these claims include some form of consequential damage, for example, water damage to the home or household contents as a result of water leakage. The smart-geyser solution effectively nullifies this outcome, greatly improving the insurance provider’s collective risk profile. Body corporates, such as complexes, golf estates and retirement villages, are most impacted by this risk mitigation, providing larger volumes in a single area that insurers can use to provide better pricing, such as zero excess for claims or levy and premium reductions for homeowners.

“IoT products are a way for insurers to better understand perils-based claims.

When buildings are fitted with IoT products, data about the overall health and profile of that risk address is provided”

31 January 2022

COMPLIANCE

Compliance tips: Two themes to consider in 2022 RICHARD RATTUE Managing Director of Compli-Serve SA

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s I typically do at the beginning of each year, I once again would like to suggest some compliance tips to keep in mind for the year ahead. This time, in honour of 2022, I will focus on two main themes that are sure to shift compliance requirements and continue to reshape the financial services industry.

1 ESG: The acronym of the hour Environmental, Social and Governance (ESG) needs no introduction, and while not in its infancy, it’s still largely at the start of its road, effectively a teenager, and it won’t be going away. ESG is an increasingly important component of investor decision making and will not so much be led by boardroom governance but rather by activists putting pressure on stakeholders to exercise change.

This will be carried through to how customers interact with or choose brands. An example is Shell’s recent plan to conduct seismic testing off the Wild Coast. At least 285 000 signatures were against this at the time of writing this article, boycotting Shell because of the impact on sea life, particularly mammals who rely on sonar. Globally, big oil is already taking ESG strain, and this is a story

“We should not be sacrificing the environment to boost investment”

that depicts why we need to improve ESG factors going forward. We should not be sacrificing the environment to boost investment. It may increase jobs in the short term but shouldn’t be at the long-term cost of our environment.

ESG requires firms to tread a fine line. While we see many companies making strong statements, with promises to be carbon neutral by 2030 or 2050, the trouble is none of these plans are quick fixes. They are complicated to execute or could have unintended consequences. Even with COP26 commitments, funding falls far below the estimated cost to bring about a green transition in developing countries. Pledges made at the conference last November will only see success if they are carried through. The Covid-19 pandemic has severely crimped available budgets, as developed nations spent trillions of dollars in stimulus to support their economies.

Wealthy countries simply haven’t followed through on previous promises to provide $100bn per year to poorer countries that need help adapting to climate change and switching to cleaner energy sources. The clock doesn’t stop, and it’s trendy to talk about ESG, but it should be about the results of promises being kept instead of oneupmanship on potential ESG commitments.

“It’s trendy to talk about ESG, but it should be more about the results of promises being kept instead of oneupmanship on potential ESG commitments” It requires a generational change to solve the issues within the ‘E’ and the ‘S’ factors of ESG, while Governance is perhaps a quicker win for some. But focusing on the ‘G’ isn’t enough, and it’s essential not to greenwash ESG efforts.

From a compliance perspective, the IFRS International Sustainability Standards Board’s (ISSB) new sustainability framework will develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs, and will promote further transparency. This will be an essential tool for investors and other stakeholders to engage corporates and measure progress and performance toward net-zero emission commitment.

2 Crypto cometh Local regulation for cryptocurrencies (cryptos) is still some way from fruition. Still, traction continues in the cryptos investment space, where the returns can be seductive, but it’s very risky as the losses can be high. The money invested into cryptos should, in my opinion, be casino money for now and be what you’d be comfortable losing until there is some regulatory safety net in place.

Once Central Banks adopt cryptocurrencies and issue stablecoin, digital payments will likely go into the mainstream. The cryptos space is a stormy place right now, and you must be brave to plunge into the surf. It reminds me of hedge funds before regulation, which were subsequently given a “retail-friendly face” via the Collective Investment Schemes Control Act (CISCA).

“The money invested into cryptos should be casino money for now and be what you’d be comfortable losing until there is some regulatory safety net in place” The same may happen for cryptos. We could have regulated tokens that have to comply with certain levels of disclosure, and there could be unregulated tokens that are riskier, or they might all be regulated in the same way. The point is to watch this space as regulation is coming, and cryptos may well form an important part of an alternative investment strategy, with compliance requirements in the future.

All the best for the year ahead.

www.moneymarketing.co.za 29

31 January 2022

PROFESSIONAL DEVELOPMENT

5 must-have soft skills for intermediaries in 2022 THUTHUKA GUMEDE Regional General Manager: Gauteng South, SanlamConnect

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ithin the next four years, 50% of employees worldwide will need reskilling. With the fourth industrial revolution already changing how we work, South African advisers and brokers will have to be savvy to stay afloat.

When the world closed over a year ago, Zoom was something we associated with a camera, and relationship-building meant meeting face-to-face. The postpandemic world that we are edging

“With financial literacy being a sensitive topic for many South Africans, advisers must be able to communicate deftly and empathetically with their clients”

towards will require adopting and honing a new set of soft skills.

In this climate, a strong arsenal of soft skills is essential. Emotional intelligence is more important than ever before as we navigate the new and steer our way through relationship-building in a world of digital ubiquity. Intermediaries’ businesses are built on forging lasting connections with clients. We need to ask ourselves: how do we reach people at the right time, in the right way?

Here are some of the most essential soft skills for 2022: Genuine engagements aimed at building relationships A handshake, body language and eye contact. In the time before the pandemic, all those things were crucial items in an adviser’s relationship-building toolkit. In the age of Zoom, Microsoft Teams and Google Meet, being good at those is simply not enough.

From the way we prospect to the way we engage with clients and vice versa, the pandemic has necessitated that we operate differently. This means that the way we build relationships must change if intermediaries want to continue providing top-tier service to our clients and grow their businesses.

1

2

Technological skills While it may not be necessary to be able to code like the owner of a tech start-up in Silicon Valley, being the person who cannot mute or unmute themselves on a call won’t cut it. Intermediaries need to learn to be open and flexible enough to use various communication applications that their clients may want to use.

Having technological skills is critical, and adopting a one-size-fits-all strategy

won’t work. You have a multitude of clients who want to engage with you in whatever way feels best to them. Some use Zoom and others use Microsoft Teams. Some may use both or other platforms altogether. So, the key is to gear one’s business in a way that is beneficial to all parties.

3

Business development Learning how to build your business in this day and age is a significantly more complex task than it was in the past.

For many years, the way an adviser or a broker prospected clients was quite different to what it is today. Combine that with legislation like POPIA, which changes the way you contact clients, and you find yourself having to answer too many questions that you wouldn’t have had to in the past.

You will need to ask yourself how to develop your business in innovative ways that would address the needs of clients and build your brokerage — segmenting your client base and working on your value proposition.

4

Continuous active learning The world is constantly evolving and those who do not evolve with it fade away.

In order to keep up, advisers need to make

A comprehensive list of contacts for financial products, services and tailored solutions.

sure that they are continuously plugged into what is happening in the industry and augment their existing skillset.

5

Coaching Being a financial planner is about a lot more than being able to crunch numbers. With financial literacy being a sensitive topic for many South Africans, advisers must be able to communicate deftly and empathetically with their clients. More and more, intermediaries will play the role of empathetic coaches and provide holistic financial plans.

Job losses and retrenchments have left many South Africans feeling helpless and not knowing if they have any advantageous options left. As an intermediary, having the ability to help coach clients and give them favourable options is a powerful trust-building tool.

Many people are anxious about the future and how they will make it through the present moment. This, therefore, calls on intermediaries to be able to communicate with and coach their clients without causing feelings of fear or shame.

This skill, above almost all of the others, will be the one that helps to develop trust.

A client who trusts you will be more likely to benefit from your advice and be more open to future sales opportunities.

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EDITOR’S

31 January 2022

BOOKS ETCETERA

BOOKSHELF

History of South Africa

By Thula Simpson South Africa was born in war, its growth has been marked by crises and ruptures, and it once again stands on a precipice. History of South Africa explores the country’s tumultuous journey from the aftermath of the Second Anglo-Boer War to the Covid-19 pandemic.

Drawing on never-before-published documentary evidence, including diaries, letters, eyewitness testimony and diplomatic reports, the book follows the South African people through the battles, elections, repression, resistance, strikes, insurrections, massacres, economic crashes and health crises that have shaped the nation’s character.

Tracking South Africa’s path from colony to Union and from apartheid to democracy, History of South Africa documents the influence of key figures, including Pixley Seme, Jan Smuts, Lilian Ngoyi, Hendrik Verwoerd, Nelson Mandela, Steve Biko, PW Botha, Thabo Mbeki, Jacob Zuma and Cyril Ramaphosa.

The book gives detailed accounts of definitive events such as the 1922 Rand Revolt, the Defiance Campaign, Sharpeville, the Soweto uprising and the Marikana massacre.

Looking beyond the country’s borders, it sheds light on the role of people such as Mahatma Gandhi, Winston Churchill, Fidel Castro and Margaret Thatcher, and unpacks military conflicts such as the World Wars, the armed struggle and the Border War. The book explores the transition to democracy and traces the phases of ANC rule, from the Rainbow Nation to transformation, state capture to the New Dawn. It examines the divisive and unifying role of sport, the ups and downs of the economy, and the impact of pandemics, from the Spanish flu to AIDS and Covid-19.

With South Africa currently facing a crisis as severe as any in its history, the book shows that these challenges are neither unprecedented nor insurmountable, and that there are principles to be found in history that may lead us safely into the future.

The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race

By Walter Isaacson Driven by a passion to understand how nature works and to turn discoveries into inventions, Jennifer Doudna and her collaborators turned a curiosity of nature into an invention that will transform the human race – an easy-to-use tool that can edit DNA. Known as CRISPR, it opened a brave new world of medical miracles and moral questions.

The development of CRISPR and the race to create vaccines for coronavirus will hasten our transition to the next great innovation revolution. The past half-century has been a digital age, based on the microchip, computer and internet. Now we are entering a life-science revolution. Children who study digital coding will be joined by those who study genetic code.

Should we use our new evolution-hacking powers to make us less susceptible to viruses? What a wonderful boon that would be! And what about preventing depression? Should we allow parents, if they can afford it, to enhance the height or muscles or IQ of their kids?

After helping to discover CRISPR, Doudna became a leader in wrestling with these moral issues and, with her collaborator Emmanuelle Charpentier, won the Nobel Prize in 2020.

SUDOKU

ENTER NUMBERS INTO THE BLANK SPACES SO THAT EACH ROW, COLUMN AND 3X3 BOX CONTAINS THE NUMBERS 1 TO 9.

The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources

By Javier Blas and Jack Farchy The modern world is built on commodities – from the oil that fuels our cars to the metals that power our smartphones. We rarely stop to consider where they come from. But we should.

In The World for Sale, two former Financial Times journalists lift the lid on one of the least scrutinised corners of the economy – the workings of the billionaire commodity traders who buy, hoard and sell the earth’s resources.

It is the story of how a handful of swashbuckling business people became indispensable cogs in global markets – enabling an enormous expansion in international trade and connecting resource-rich countries, no matter how corrupt or war-torn, with the world’s financial centres.

It is the story of how some traders acquired untold political power, right under the noses of Western regulators and politicians, helping Saddam Hussein to sell his oil, fuelling the Libyan rebel army during the Arab Spring, and funnelling cash to Vladimir Putin’s Kremlin in spite of strict sanctions.

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KINGJAMES 53532

Confidence Rule 28: YOUR MOST VALUABLE ASSET IS YOUR ABILITY TO EARN. PROTECT IT.

The most valuable asset in this picture is the one most people forget to insure.

Your clients’ most valuable asset might not be something that they can see or touch, but it’s infinitely more valuable. It’s their ability to earn an income. Offer your clients peace of mind with Income Protector from Sanlam. It gets to work when they can’t by delivering a monthly income if an illness or injury leaves them unable to work, either temporarily or permanently. With first-in-market features and enhanced benefits, it gives clients a greater level of assurance and peace of mind that they will be financially secure, come what may. So they can live with confidence knowing that today will be good. And tomorrow will be even better.

Contact your Sanlam consultant for more information on our enhanced Income Protector offering.

www.sanlam.co.za

Sanlam is a Licensed Financial Services Provider.