31 October 2020 | www.moneymarketing.co.za
@MMMagza
First for the professional personal financial adviser
WHAT’S INSIDE
YOUR OCTOBER ISSUE
CONSIDERING 100% ALLOCATION TO OFFSHORE FUNDS IN LIVING ANNUITIES – IS IT SENSIBLE?
EXPLORING NEW BUSINESS FRONTIERS WITH EMPLOYEE BENEFITS
How much to invest offshore and where to invest offshore are questions that advisers grapple with Page 12
Although the employee benefits industry is highly regulated, it is easy to enter the market Page 30
Will SA become a failed state by 2030? JANICE ROBERTS Editor, MoneyMarketing
S
outh Africa is heading towards economic and political collapse by 2030, unless it changes its economic model. That’s the conclusion of a report written by Claude Baissac, CEO of Johannesburg-based risk consultancy, Eunomix. The socio-economic consequences of COVID-19 have been brutal for the country. “South Africa entered the pandemic highly vulnerable, weakened by a ‘lost decade’ of abusive governance and poor growth,” Baissac writes.
Claude Baissac, CEO, Eunomix
In April 2019, he was quoted by Bloomberg as saying that the likelihood of arresting SA’s decline was limited by “the unsustainable structure of South Africa’s economy, in which economic power is largely held by an elite that wields little political influence, a product of its apartheid history and its status as one of the world’s most unequal societies. The ability of politicians to make the unpopular decisions needed to boost growth is hampered by this imbalance.” Eunomix’s pre-pandemic model forecasted that South Africa would fall into lower-middle income and very high fragility in the early-2030s. The coronavirus pandemic has sped up the clock. Apartheid state The report, described by Baissac as “a strategic, structural analysis of the fundamental impediments to growth in this country,” finds that the design of the apartheid state to exclude black people led to the creation of one of the most unequal societies in the world. “The apartheid elite was incentivised to resist large-scale labour mobilisation because doing so would have shifted the politicaleconomic balance toward the majority. The regime feared a black middle class as much as it did a general uprising.”
While the advent of democracy in 1994 ended formal political exclusion, the ANC replicated a central attribute of apartheid by spurning job-intensive growth policies. Instead it raised wages and supported the poor through welfare. “While apartheid suppressed the majority, democracy has subsidised it, but both locked it out of the productive economy, and in doing so precluded durable development,” Baissac writes. “Rejection of labourintensive export-orientation as a cornerstone of development has been the foundational mistake of democratic South Africa.” Zuma administration The report finds that the administration of former president Jacob Zuma inherited a relatively sound economy only to face global recession. Indifferent to policy detail, opposed to fiscal prudence, Zuma seized the moment by focusing on expanding the role of the state. In so doing, he had the support of the ANC’s left “who hungered for the state-centrism it believed Mandela and Mbeki had abandoned”. The fragile foundations of growth were destroyed by worsened policy, fiscal recklessness, institutional capture and largescale corruption.
BEE.conomics 2020 TM
Available now at 27four.com
17 sustainable goals to transform our world.
Software packages designed with financial advisers and brokers in mind. Page 15
Ramaphosa’s course Buttressed by a left remorseful of its support to Zuma on one side and nationalists on the other, Ramaphosa has sought a course in-between. “Adopting superficial pro-growth discourse, he has maintained the strategy and thus accelerated social, economic and political adversity.” Baissac explains that macroeconomic policy is in the hands of the right in the ANC. “They tend to be more orthodox and they really do believe that you can create economic growth through macroeconomic policy.” Microeconomic policy has been given to the left “and they are absolutely opposed to any of the macroeconomic policy approaches of the right, as well as any changes to the cost of doing business.” He believes that both approaches are flawed and could hasten the country’s downturn. The report states that South Africa’s shallow economy rests on a small working population that is burdened by high debt and taxes, while unemployment, poverty and inequality are at record levels. “Agriculture and mining, pillars of the economy, have been relentlessly targeted for transformation, Continued on page 3
AS YOU TRANSITION TO MORE SUSTAINABLE INVESTMENTS, WE KNOW THE NUMBER OF PRODUCTS, TERMINOLOGY, AND DATA INTERPRETATIONS CAN BE CONFUSING. INVESTING SUSTAINABLY DOESN’T NEED TO BE THAT WAY. WE BELIEVE INDEXING PUTS YOU IN CONTROL OF WHAT TYPE OF SUSTAINABLE INVESTOR YOU WANT TO BE, PROVIDES CONSISTENT ESG* METHODOLOGIES, AND WITH TRANSPARENT DATA INSIGHTS INDEXING CAN GIVE YOU THE CLARITY YOU NEED TO BUILD A MORE SUSTAINABLE PORTFOLIO. iShares. Sustainable, simplified. Choose clarity when you build a more sustainable portfolio.
Invest in something bigger. *Environmental, Social, and Governance (ESG). Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor may not get back the amount originally invested. UK and outside the EEA: Until 31 December 2020, issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. From 1 January 2021, in the event the United Kingdom and the European Union do not enter into an arrangement which permits United Kingdom firms to offer and provide financial services into the European Economic Area, the issuer of this material is: (i) BlackRock Investment Management (UK) Limited for all outside of the European Economic Area; and (ii) BlackRock (Netherlands) B.V. for in the European Economic Area, BlackRock (Netherlands) B.V. is authorised and regulated by the Netherlands Authority for the Financial Markets. Registered office Amstelplein 1,1096 HA, Amsterdam, Tel: 020 – 549 5200, Tel: 31-20-549-5200. Trade Register No. 17068311. For your protection telephone calls are usually recorded. Switzerland: This document is marketing material. Please be advised that BlackRock Investment Management (UK) Limited is an authorised Financial Services provider with the South African Financial Services Board, FSP No. 43288. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. © 2020 BlackRock, Inc. All Rights reserved. 1251975.
NEWS & OPINION
31 October 2020 Continued from page 1
handicapped by unceasing policy change and uncertainty – not to mention the Eskom crisis. “In doing so, the ANC has sapped the foundation of its mineral-energy complex development focus. It has reduced the growth, revenues and unemployment contributions of these sectors, turning a vital source of competitiveness away.” For Baissac, the COVID-19 pandemic is the last nail in the coffin of strategic fiasco. “We can’t carry on like this,” he tells MoneyMarketing. “We can’t have no growth, very low investment and a decline in employment in all the productive sectors, while maintaining the labour regime, as well as perpetuating a welfare state and simultaneously investing in infrastructure. It just can’t happen.”
workers, can be found in the country’s SEZ program, he says. SEZs are geographically designated areas set aside for specific targeted economic activities. These industrial hubs are supported by special measures that are not available to the country’s wider economy. There is, however, a need for the country to reform its SEZ strategy. “The SEZs have cost a fortune; they are targeting the wrong sectors and they do not offer a particularly attractive set of investment conditions,” Baissac adds. His report states that the economic impact of the SEZs has in the past been low due to their focus on capital-intensive industries, high infrastructure and subsidies costs, and awkward governance structure. Priorities would include the simplification of the SEZ law and regulations and the elimination of unnecessary red tape. The current SEZ tax and customs regime are broadly adequate, as long as their administration is significantly improved. “The planned one-stop-shop should give way to a single delegated SEZ licencing and permitting authority where SEZs are represented. Investment in the development, management and promotion of SEZs would be meaningfully opened to the private sector – thus lifting a burden on government resources and generating scarce private sector investment.” The SEZ Board would introduce effective private sector representation and influence. Central to the strategy would be the streamlining of labour practices and the easing of black economic empowerment requirements in the SEZs. One of the difficulties of the dual-track approach would be the almost impossible task of convincing labour to change its priorities, meaning that compromise would be important. “The notion that all social partners have to agree on everything at all times amongst themselves and with government for any policy strategy to be implemented is clearly the path to disaster,” Baissac says. “When I speak about the grand bargain, I don’t mean necessarily a negotiated grand bargain, but rather what I mean is government simply stating its position and its willingness to make compromises on the proviso that other parties make compromises too.” At the time of writing, there had been no government or business reaction to Baissac’s report.
‘Dual-track’ strategy His recommendation is for the country to adopt a ‘dual-track’ strategy of developing significant levels of social support bolstered by a vigorous special economic zone (SEZ) policy, which promotes growth and employment, even if this is at lower wages. He explains that many successful late-developing nations adopted dual-track economic development, “one foot in statism and the other in selective marketreform, one foot in protectionism and the other in liberalisation.” Deng-Xiaoping, who was the paramount leader of the People’s Republic of China from 1978 until 1989, famously called this prudent approach ‘crossing the river feeling for stones’. Baissac states that in none of these cases did export-oriented labour-intensity replace established strategies – whether collectivist, importsubstitutive, or capital-intensive export-driven. “Restructuring, rather than reform, is the shared attribute – a progressive process set over a decade or more, that gradually gains acceptance and support through the polity as labour-intensive export-led growth makes its case through employment creation and growth acceleration. Eventually, the tracks merge into diversified economies with low levels of unemployment, more sustainable fiscal resources and high levels of social capital providing improved socioeconomic resilience.” Baissac acknowledges that the dual-track strategy’s initial growth would be low: “I don’t see any scenario in South Africa where you’ll have economic growth in the next two, three, or four years.” Special Economic Zones The seed of a dual-track strategy for South Africa that would lead to mass employment for low-skilled
EDITOR’S NOTE
T
his issue sees the launch of our inaugural Software Supplement. We asked our readers if this was something that they’d like to see in the magazine, and following a resounding ‘yes’, we went ahead with it. In this regard, I must extend our thanks to Francois du Toit, owner and director of PROpulsion, who provided the guidance and the knowledge around the supplement. It was important to me that we engage the assistance of someone who regularly works with financial planning software and Francois has been of enormous help. Writing the cover story for this issue was extremely educational. South Africa is not short of plans intended to grow its economy. In our August issue, we looked at the ANC’s Framework for Reconstruction, Growth and Transformation as well as B4SA’s strategy to improve the economy’s future. Both have their merits, but there is a new way of looking at our growth problems that has been recommended by risk consultancy Eunomix. My conversation with the author of the plan, Claude Baissac, was very enlightening and I find it hard to believe that government has, as yet, shown no interest in his strategy. This issue also contains a feature that outlines the plans of several major medical aid schemes for the year ahead. At present, the country is in a vastly different position to what it was this time last year. The coronavirus pandemic has brought uncertainty to South Africans, leading to many rethinking their lifestyles and budgets – as well as their medical aid schemes. I do hope that those thinking of making the ill-advised decision to cancel their medical aid think again, as there is well-researched evidence that this action is always irresponsible and careless. Janice janice.roberts@newmedia.co.za @MMMagza www.moneymarketing.co.za
Subscribe to our
NEWSLETTER
bit.ly/2XzZiMV
Eunomix™ advises governments and corporations on reducing fragility, decreasing risk and improving resilience.
THOUGHTFUL INVESTING FOR PRIVATE CLIENTS FOR
20 YEARS.
Platinum Portfolios, celebrates 20 years of a single-minded pursuit of consistent performance. Renowned for its range of local and offshore funds, total independence and personalised service.
www.platinumportfolios.com
|
FSP: NR 641 WWW.MONEYMARKETING.CO.ZA 3
NEWS & OPINION
PROFILE
31 October 2020
VERY BRIEFLY
NICK DENNIS FUND MANAGER, ANCHOR CAPITAL
How did you get involved in financial services – was it something you always wanted to do? I always knew I wanted to be involved in business, but over time I realised that I was more of a thinker than an operator. As I was winding up my three years of auditing articles, I met with a fund manager who told me about asset management. It was as if a lightbulb went off and I remember thinking that it sounded perfect for me. Markets are endlessly fascinating, combining business, economics, politics, psychology and chaos. I am very lucky to do something I love.
What was your first investment – and do you still have it?
In 1998, my dad bought me shares in Dimension Data for my birthday, right in the middle of the tech bubble. I didn’t know much about the business and I’m not sure my dad did either! The shares performed well for a few years and then collapsed SA INVESTORS when the bubble burst. I held on NEED TO GIVE until 2010, when SERIOUS Nippon from CONSIDERATION Japan acquired Dimension Data TO INVESTING for a fraction of OFFSHORE my cost price.
What have been your best – and worst – financial moments?
Best financial moment: Getting my first paycheque and thinking “I’m rich!” Worst financial moment: Wasting money, like reversing my car into a pole, and thinking “I’m an idiot!” I tend to be sanguine when it comes to the vicissitudes of the markets. I’m not a robot and have emotions like everyone else, but with experience you learn that one phrase holds true throughout: ‘This too shall pass.’ When it comes to individual shares, you have
to accept that you’re going to be wrong. A lot. Nevertheless, with each loser there are lessons that take you closer to finding the next winner. Most importantly, the beauty of investing is that one huge winner can offset a number of losers.
What do you tell investors who are worried about their investments due to SA’s current economic environment and COVID-19?
I run a global equity fund, so I’m biased, but SA investors need to give serious consideration to investing offshore. Notwithstanding the challenging outlook for corporate SA, the fastest growing and most innovative companies are found beyond our borders. One of the standout features of the past few years has been the disparity in performance between the winners (predominantly in tech) and the losers (in ‘old’ industries like banks, industrials, retail etc). COVID-19 has accelerated this trend, as businesses and consumers have adopted technology at an unprecedented rate. The winners in this new world are found offshore. Fish where the fish are!
What’s the best book on investing that you’ve ever read – and why would you recommend it to others?
One up on Wall Street and Beating the Street by Peter Lynch stimulated my interest in investing early on. Lynch is one of the all-time investing greats and his optimism is contagious. I still come back to these books every year or two because the wisdom is timeless. Trading in the Zone by Mark Douglas deals with psychology and markets and goes deeper than the simplistic platitudes you frequently hear. The book had a significant impact on me; with that prompt, I think I’ll read it again!
EARN YOUR CPD POINTS The FPI recognises the quality of the content of MoneyMarketing’s October 2020 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
4 WWW.MONEYMARKETING.CO.ZA
First National Bank (FNB) has officially welcomed South Africa’s Rugby World Cup winning captain Siya Kolisi as its ambassador. “Siya is a selfless global icon,” says Faye Mfikwe, FNB Chief Marketing Officer. “He is a true embodiment of nation building, Siya Kolisi unity and demonstrates the true value of help, trust, leadership and togetherness. We are proud to have him on board as our ambassador and look forward to working with him in driving our commitment to make a positive contribution to society through the principles of shared value.”
Allianz Global Corporate & Specialty (AGCS) has announced the appointment of Asheen Maikoo and Piet Schutte as Senior Risk Engineers to continue to provide risk consulting services to help businesses in Africa manage, prevent and reduce risks. Maikoo brings over 11 years of experience in power generation, Risk Based Inspection (RBI), risk analysis, maintenance, and operation and performance improvement of power plant systems. He holds a Bachelor of Science in Engineering (Chemical Engineering) from the University of KwaZulu-Natal in South Africa. He is also an accredited Risk Examiner and Risk Professional with Steinbeis University in Berlin. Schutte has nine years of experience in engineering and specialises in fire protection. He has a Bachelor of Engineering (Mechanical Engineering) from North-West University in South Africa and has accreditations with the University of Greenwich in London, the Automatic Sprinkler Inspection Bureau, as well as the South African Qualification & Certification Committee for the fire industry.
Bowmans has made a substantial investment in its tax dispute resolution capacity in East Africa by expanding its Tax Practice in Nairobi. Partner Andrew Oduor, together with associates Nelly Chepkoech and Maurice Manani, joined the firm on 1 September 2020, adding further depth to the firm’s tax service offering, especially in the area of tax dispute resolution. Announcing the appointments, Bowmans’ chairman and senior partner, Robert Legh, says the growth of the firm’s Tax Practice in the region was in the interests of its clients, many of whom are facing escalating challenges from a tax Andrew Oduor perspective. “Tax disputes are on the rise in Kenya, reflecting the growing complexity of the country’s tax laws and intensifying pressure on the Kenya Revenue Authority (KRA) to collect more taxes. This has heightened the need for highly specialised tax dispute resolution services, and we have responded accordingly,” Legh says. Oduor is one of a small number of professionals in the region who has high-level legal and tax expertise. He is an advocate of the High Court of Kenya and has 15 years of tax experience, including working in audit firms, negotiating with the KRA and representing clients at the Tax Appeals Tribunal, the High Court of Kenya, the Court of Appeal and other dispute resolution bodies.
NEWS & OPINION
31 October 2020
RICHARD RATTUE MD, Compli-Serve SA
Continuity: Considerations to keep your FSP running smoothly
T
here are many faces of risk for FSPs (similarly any business owners) from personnel to property, information and data, operational liability, interruption, and legal risks, among others. Continuity risk is another critical area to address. Continuity risk defines any event that renders your business un-operational. Fortunately, these potential damages can be reduced through proper planning.
what went wrong and why. Were any predications accurate; were there predictions of the risk in the first place? Realigning your risk controls may be required. FAIS legislation requires that key risks be addressed to ensure your client impact is minimal and that continuity is in place. Among the common risks for IFAs are advice risk, inappropriate conduct, the lack of a Key Individual (KI), bad processes or file records in place, and cyber risks, to name a few. FutureForewarned is forearmed proofing your practice means facing It’s important to do an assessment further risks such as technology of what could happen and why such advancement getting ahead of you, events would take place. Knowing death and disability, and thus the the possible consequences or continuity of your business. outcomes before In the time of they come to be, COVID-19, uncertainty THOSE WHO ARE has never been more allows you to be prepared. You can PREPARED END obvious. We are only calculate the cost UP BETTER OFF certain that life can and magnitude of change very suddenly, the results beforehand, ensuring but we have also seen that those you are able to manage the true who are prepared end up better expenses that come with the risks. off. While the world may be normalising or getting used to how A simple calculation of things are, it’s as crucial as ever to impact and probability have a continuity plan in place. This To determine your net readiness factor is true even if you are struggling (NRF), calculate the consequences to see ahead. You might consider of the incident by the probability of reserving a KI or putting a buy and the occurrence, minus the controls in sell agreement or business/FSP place to mitigate the fallout. transfer in place. Implementing practical measures to reduce risk is important to Only human avoid damage and minimise At the end of the day, your fate has consequences. You might, for little to do with risk. Almost all example, plan around what to do risks are caused by human action, in the case of a breach and how so can be somewhat influenced. It’s to recover from that. Some risks the unidentified risks that cannot cannot be eliminated entirely but, be managed as easily, making risk wherever possible, operations need management everybody’s game in to be able to continue in a worstyour FSP. case scenario. Plan ahead by assessing every aspect of your business and Follow ups, learnings and preparing wherever possible. This is legislation particularly important for the risks Some risks will come to fruition, you can control, so that if the ones as real situations facing you head you can’t roll around, contingencies on. Once the dust has settled and will be in place – which, through as much repair is done as possible, proper thought, will include a part of moving forward successfully successful risk management plan to should include an assessment of see you through.
CHRISMAN LOUW Head: Product Development, PPS
Technological advances impacting a financial adviser’s approach
A
reputable financial adviser uses their knowledge and expertise to provide clients with constructive advice to help them meet their financial goals. This is done by developing personalised financial plans underpinned by targeted savings, investments, insurance and tax strategies. It also requires the adviser to regularly check in with clients at different life stages and when life events such as divorce or marriage trigger the need for reevaluation. Having the right tools is critical. The fourth industrial revolution saw businesses gradually introduce digital models, not only to stay relevant, but to also revolutionise the way they interact with customers. However, COVID-19 accelerated this digital take-up and has emerged as a significant game-changer to achieve sustained operational excellence. Chrisman Louw, Head of Product Development at PPS, provides some views on how digitalisation impacts the world of an adviser post COVID-19 in the insurance industry, and how advisers can ensure they keep ahead of the pack. Face-to-face versus virtual meetings Digital interaction has become the new normal in business practice as we navigate the restrictions placed on physical interaction. Programs such as Microsoft Teams, Skype, Google Hangouts or Zoom have seen a sharp increase in usage to manage client queries and expectations. COVID-19 certainly forced insurance companies to come up with digitally-enabled application processes in order to stay relevant in the life of an adviser. Moving from paper to fully digital applications Prior to COVID-19, the norm was for advisers to personally run through application forms with clients. Going forward, the adviser’s role will change as a shift towards digital application platforms are expected to emerge. Advisers have a certain DIGITAL level of control over administrative processes in a INTERACTION paper-based world. Digital platforms, and more widely used tele-underwriting techniques as a HAS BECOME means to gather information from clients, are forcing advisers to trust life insurance companies’ THE NEW fulfilment processes more. NORMAL IN Electronic signatures are increasingly being BUSINESS used to validate applications and claim forms. Medical tests for life insurance applications may be PRACTICE supplemented with appropriately consented use of historical medical records to remove the administrative burden of repeated tests. This has the potential to reduce the turnaround time for an offer of insurance. Digital claims Automation for life insurance claims will not only be the wave of the future, but a client expectation. Clients prefer to use technology platforms to interact with their insurance company rather than speaking on the phone. With this said, technology is also enforcing insurance companies to change the way claims are submitted through digital means, resulting in better customer experience and improving operational excellence. PPS as the differentiator Advisers and insurers need to embrace digital innovation as part of their futurefit business model. PPS is looking at introducing digital application forms and automated underwriting systems that are supplemented by the use of existing member records. PPS is an authorised financial services provider.
WWW.MONEYMARKETING.CO.ZA 5
NEWS & OPINION
31 October 2020
Transformation in SA’s asset management industry
T
he 2020 BEEconomics annual survey, Transformation in South African Asset Management, was released last month. Developed and published by 27four Investment Managers, this is the 12th edition of the report. The purpose of this survey is to map the progress of transformation in the local asset management sector and to showcase the universe of majority blackowned, managed and controlled asset managers across both public and private markets. Here is a summary of the survey’s findings: Black-owned market share • Total assets managed by blackowned firms advanced to R668bn, an increase of 15% from 2019. There are 51 black-owned asset managers across public and private markets. Impact of COVID-19 • Around half of all participants expect COVID-19 to have a negative impact on their bottom-line. Such firms have implemented cost-containment measures, which include reducing marketing budgets, deferring or
cancelling planned investments, placing freezes on new hires, and taking bonus and salary sacrifices. • The pandemic has brought impact investment to the forefront, as many debt and equity recovery funds have emerged to support businesses to mitigate the negative financial consequences inflicted by the economic slowdown. Asset allocation trends and changes in the demand side • Within public markets, just over 60% of industry assets are currently invested in low-risk money market and fixed income products. Exposure to domestic equities has fallen sharply – a reflection of lacklustre performance, low investor confidence, and an economy on its knees. • Investors have become much more discerning and less tolerant of lacklustre performance and high fees, particularly in the case of active fund management. Private markets, prescribed assets and change in regulations • An already weak economy
exacerbated by COVID-19 has left government seeking a new narrative to accelerate an economic recovery. As such, the idea of using prescribed assets to help foster economic growth has resurfaced – packaged in the form of an infrastructure fund to finance strategic projects by combining capital from the public and private sectors, retirement funds, development finance institutions and multilateral development banks. • The resulting growth in appetite for impact investment through unlisted assets may precipitate a change to Regulation 28 of the Pension Funds Act, which currently caps private equity and hedge funds at 15%. Scale and distribution • Black-owned asset managers’ market share of the unit trust industry is now at 9%, represented by 25 firms managing 106 unit trust portfolios. • Greater increase in mergers and acquisitions as companies harness skills, expertise and resources together in a shift towards greater market consolidation.
Record exit activity reported by VC fund managers in SA
W
hile South African venture capital (VC) investors may have seen a significant slowdown in deal activity this year as a result of COVID-19, the local VC landscape experienced record investment and exit activity in 2019. This is according to the newly released SAVCA 2020 Venture Capital Industry Survey, which shows that a total of 38 exits were reported for 2019 – more than double the previous record for annual exit activity, and just over triple the nine exits reported in 2018. Tanya van Lill, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA), says that this record exit activity bodes well for the development of the industry. “Notably, of the 38 reported exits, 50% were reported as profitable, with a total amount of R830.5m returned to investors. Trade sales remains the most prevalent exit route, followed by exiting to other investors,” she adds. Last year also proved significant when it came to investment activity, with 2019 VC investment showing the highest activity recorded to date, both by value and by the number of deals. “This was the second consecutive year that the total value of VC deals exceeded R1bn, with 2019 deals amounting to R1.23bn – a notable increase of 14.8% on the 2018 deals reported (20.9% by number of deals).” This, van Lill says, continued the upward trend in investment activity that started after 2015, when changes were made to Section 12J. “Independent
6 WWW.MONEYMARKETING.CO.ZA
VC fund managers continue to comprise the largest share of active portfolios (38.1%), with Captive Government Funds and, increasingly, Captive Corporate Funds playing a more significant role to fuel the growth of early-stage investments in SA.”
THE INVESTMENT LANDSCAPE REMAINS DOMINATED BY ACTIVITY IN TWO PROVINCES, NAMELY GAUTENG AND THE WESTERN CAPE It is important to note, however, that for this current survey, SAVCA introduced additional data attributes to more accurately differentiate between deals that involve secondary assets (e.g. investments into buildings and land), as well as deals defined as ‘Venture Leasing’. “In both instances, investors are able to hedge investment risk by relying on the underlying value of the asset, and even if the actual business ceases to operate, the original capital invested into such assets can be recovered. “For this reason, survey respondents were asked to reclassify their investment portfolio to ensure the SAVCA VC Survey captures traditional earlystage investments. In future studies, we may start reporting on these numbers, given the significance is has in financing start-ups,” van Lill explains.
ESG • The overwhelming majority of firms agree that the pandemic has once again exposed the fragility of the financial markets and current economic systems, and that a shift of alignment to achieving the UN SDGs is becoming urgent. Socio-economic statistics • The industry currently employs a total of 638 people, marginally down from last year. • There was a marked improvement in the number of firms achieving profitability, as 76% of all firms indicated that they are profitable, up from 68% recorded in the previous year. • Women representation at both ownership and directorship levels continue to disappoint relative to all other sectors within the economy (B-BBEE Commission, 2020).
From a geographic perspective, the investment landscape remains dominated by activity in two provinces, namely Gauteng and the Western Cape. While funding into Western Cape-based businesses grew by 21.8% in 2019 compared to 2018, van Lill points out that Johannesburg was still listed as the head office location for most VC fund managers – marginally higher than Cape Town. In terms of funds under management on a sectoral level, manufacturing accounted for the largest share of active deals (13.8% by value), followed by the food and beverage sector (12.7%) and business products and services (10.9%), despite deals in the food and beverage sector receiving most of the investment in 2019 (14.2%), followed by agriculture (10.9%). Noting that agriculture does not typically feature among the top sectors of VC investments, van Lill explains that recent investment activity by a number of VC fund managers into an AgriTech business has raised the profile of the sector. “This is an example of how sector-based preferences fluctuate from year to year, with energy in 2019 making up a smaller share of VC focus due to the survey’s reclassification of deals involving asset leases.” Van Lill says there is no doubt that the current health and economic crisis will reflect in next year’s results. “However, we can find some solace in this year’s results, which suggest a strong foundation and an overall positive outlook for the VC industry.”
Tanya van Lill, CEO, SAVCA
NEWS & OPINION
31 October 2020
A
mong many other things, the COVID-19 pandemic has presented the world with a fascinating real-time experiment in leadership. Although countries across the world face diverse underlying issues, the pandemic has illustrated how a vast array of different governments have sought to respond to the same problem. An interesting observation has been the correlation between countries led by women and countries that have kept the crisis under control, says Prabashini Moodley, Managing Director, Old Mutual Corporate. “The relative success of women-led countries – Denmark, Finland, Germany, Iceland, New Zealand, Norway and Taiwan — are cited as evidence that women, who make up only 7% of heads of state around the world, are somehow managing the crisis better than their male counterparts.” This observation has been discussed by major institutions from Forbes to the World Economic Forum, and from the Harvard Business Review to the Boston Consulting Group. Research from McKinsey & Company suggests that this may be due to women rating better than men in key leadership capabilities such as flexibility, empathy, collaboration, and the ability to prioritise collective contribution — all characteristics, the research notes, of “traditionally feminine management”. However, says Moodley, concluding that women make better leaders than men is committing what philosophers call the fallacy of the single cause. “This thinking assumes that there is a single, simple cause of an outcome when the outcome may in fact have been caused by a number of jointly sufficient causes,” she says. In Moodley’s view, it’s not a question of women being better than men at leadership, or vice versa, but rather a matter of empowering diverse perspectives. “Having a diverse leadership culture means encouraging plural perspectives, which is the best way of insulating yourself from the potential dangers of a homogenous set of views. Or as McKinsey & Company put it: ‘The participation of everyone’s intelligence becomes the key to success,’ she says. Moodley sees the benefits of diversity and inclusion first-hand in her role at Old Mutual, which has been driving diversity and inclusion hard over the past few years, and made it one of its official values. For example, she says, almost 50% of Old Mutual’s fully qualified actuaries are black, compared to the national average of around 20%.
According to the World Economic Forum, countries that scored high on gender parity in the Global Gender Gap Report 2020, measured in terms of the participation of men and women in society and the opportunities available to each gender, fought the pandemic most effectively. Moodley says the report suggests that in these countries, power is enhanced by the complementary nature of different genders contributing. “Countries that scored high in gender parity and are led by women rank high on the list. The report also shows those same countries rank high when it comes to having women on corporate boards. It, therefore, leads us to conclude that more egalitarian societies are better managed,” she says. Internal research conducted within the Old Mutual Group has also revealed that diversity and inclusion is a major factor underpinning a culture of ‘psychological safety’ for all employees. Moreover, this is a key component when it comes to innovation. “Diversity, in this context, is not limited to gender or skin colour, but is about approaching challenges holistically by considering the full scope of ideas, expertise, and insights from within an organisation,” says Moodley. From that perspective, Moodley is adamant that a culture that values diversity will be both more productive during ‘normal’ times and more agile during times of crisis. “It isn’t just about quotas,” Moodley states. “That would be a massive insult to the very notion of diversity. It is about maintaining a mix of individuals at all levels of an organisation or society, where everyone is empowered to contribute their unique insights to innovate and make the whole stronger. By giving diverse people the authority and mandate to make decisions, organisations will undoubtedly benefit from the richness of diversity within their workforce,” she concludes. “Everybody is subject to unconscious bias, which can deeply hinder progress. The best antidote to this is to ensure that a spectrum of voices is audible throughout your corporate culture – and having women at the helm is often a good indicator of this.”
Prabashini Moodley, Managing Director, Old Mutual Corporate
Supreme Court Justice Ruth Bader Ginsburg
IMAGE: ROB CRANDALL / SHUTTERSTOCK.COM
The benefits of diversity and inclusion
Ginsburg’s death shakes up an already dramatic election
T
he passing of liberal icon and Supreme Court Justice Ruth Bader Ginsburg last month has further shaken up an already volatile presidential election. This is according to Dr Julie Norman, a Senior Teaching Fellow in the Department of Political Science at University College London. In a paper for the London School of Economics, Dr Norman states that Ginsburg’s passing and the anticipated soon-to-come Supreme Court nomination battle, is bringing politics back into the 2020 race in more ways than one. “This election year has already been tumultuous and divisive – but the usual ‘culture war’ fault-lines that have driven polarisation in recent years have been mostly obscured by the simultaneous crises of the coronavirus pandemic, economic stagnation, and racial reckoning. Now, with Ginsburg’s passing, key issues are surging back to the forefront, alongside crucial questions of process and precedent, which will reshape the race for Republicans and Democrats alike.” She believes that the likely tilt of the Supreme Court to a 6-3 conservative majority in the near future has significant implications for a number of issues that have become increasingly relevant in recent decades in US politics, “anchored not merely in questions of policy or ideology, but in conceptions of moral identity”. Of these issues, abortion is one of the most controversial, with several cases coming before the court in the almost fifty years since the landmark Roe v. Wade decision that affirmed a woman’s right to terminate a pregnancy. Although many of those cases placed limitations on reproductive rights, they did not seek to overturn Roe completely. “With the now likely appointment of a conservative justice to replace Ginsburg, however, abortion advocates worry that the court will now have the votes to overturn Roe or weaken it beyond recognition.” Dr Norman says that, in addition, the change in the court’s balance will most likely affect the future of the Affordable Care Act (ACA), with the court set to review the law for a third time this year. The Supreme Court shakeup is also raising new questions regarding process, precedence, and partisanship. “Senate Majority Leader Mitch McConnell’s decision to fast-track a confirmation vote in the Senate – just four years after blocking even a confirmation hearing for Obama’s nominee Merrick Garland during an election year – though not surprising, is setting in motion a partisan battle in the Senate.” With Republicans holding an effective 53-47 majority, Democrats are hoping that some moderate Republicans will remain opposed to seating a justice this close to the election. “But there will be increased pressure on the same senators to double-down on conservative interests and fall in line with the party, underscoring for voters the necessity of party loyalty, even when not in full favour of Trump,” Dr Norman adds. Meanwhile, the prospect of a 6-3 conservative majority court has reignited liberal calls for expanding the court if Democrats retake the Senate. The change in the Supreme Court could even have an impact on the outcome of the election itself. “Indeed, in the unlikely chance that the results of the presidential election reach the Supreme Court, as occurred in the 2000 election, Ginsburg’s absence will loom large, even if her seat is still vacant,” Dr Norman says. Just before MoneyMarketing went to print, President Donald Trump nominated Amy Coney Barrett to the US Supreme Court.
WWW.MONEYMARKETING.CO.ZA 7
NEWS & OPINION
ECONOMICS
Survey reveals COVID-19 stress impact on SA professionals
P
rofmed Medical Scheme’s latest Stress Index Survey has revealed that stress among South African professionals is seriously on the rise. Profmed CEO Craig Comrie says a lot of this can be attributed to the advent of COVID-19, but it really comes down to the fear of the unknown. He says, “Many people have seen their anxiety peaking as they have to wade through so much information and determine what is fake and what is fact. Add to this the known unknowns of this pandemic and the effect of the national lockdown, and you have yourself an incredibly stressed society in general.” Every year, Profmed seeks to understand and benchmark stress among South African professionals. Completed in September 2020, this year’s survey was taken by a sizeable portion of Profmed’s membership base across a variety of sectors, with the bulk of respondents (37%) stemming from the medical industry, which has arguably been under the most pressure. Overall, based on the stress levels recorded in last year’s Index, stress levels have tripled in 2020. Comrie notes that over the years Profmed has seen Stress Index responses drift with the economic and political status of the country. He says that this is a clear indication of how closely connected professionals are to their surroundings. “2020 comes with higher stress levels due to the impact of STRESS COVID-19, not just on the lives of professionals and their families LEVELS but also their livelihoods.” HAVE He adds that it is imperative TRIPLED that the different stress triggers that lead to this increased anxiety IN 2020 are identified. “Over the years, work was always the leading cause of stress. In 2018 and 2019, it was more about financial security. But obviously 2020 has a new contender.” In 2020, the Stress Index has indicated that the biggest fear surveyed among South African professionals is in fact the loss of a loved one, followed by the loss of employment. Comrie says this shows the connectedness between life and livelihoods when it comes to stress. How do professionals cope with stress? Throughout its existence, the Stress Index has shown that there are many professionals who acknowledge stress in their lives and find ways to control it. In 2019, professionals displayed an increase in exercise as the chosen method to channel negative energy and stress. “We have consistently seen exercise playing a far more important role in the lives of professionals in terms of how they deal with stress,” says Comrie. Beyond exercise, previous years showed that going on holiday, speaking with family and friends, and engaging with a mental health professional were the next preferred methods of coping with stress. But then 2020 came along and changed the playing field. “In 2020, the ability to exercise and travel were extremely limited, so increased stress levels indicated that people couldn’t actually do the things they loved to do to work through their stress,” Comrie says. Only 34% of 2020 respondents indicated exercise as their preferred method for dealing with stress. This is down from 59% in 2019. As the pandemic plays such a significant role in
8 WWW.MONEYMARKETING.CO.ZA
our lives, the 2020 Stress Index featured additional questions that directly related to COVID-19. Interestingly, 50% of professionals indicated that their organisations hadn’t prioritised mental health and stress-related support. In fact, 29% said that their finances have suffered during the lockdown, showing that even professionals like doctors and lawyers are not immune to revenue loss. Understandably, 40% of these professionals indicated that they had a rise in negative thoughts during the lockdown period. During, and even after lockdown, 45% were worried about their job security. “We have seen many of these professionals take on a significant amount of debt to keep their businesses and their families afloat. This has impacted their mental health greatly,” says Comrie. Just over 30% indicated that they felt overwhelmed by the media coverage related to COVID-19. “It has been difficult to work through all the information and determine truth from fact and then decide how you are going to proceed based on your assumptions.” According to Comrie, perhaps the most concerning COVID-19 related statistic is the fact that 73% of respondents said they had not reached out to somebody or done anything to help with their stress levels. “This is a major concern for us as a medical scheme. We have actually tried to promote access to mental health professionals so people can better manage their stress levels in a healthier way.” Comrie acknowledges that some of the outcomes of this Index can be attributed to COVID-19, but he says even short-term stresses can turn into long-term conditions that need support. “We have done our best as a scheme to educate people around how to deal with stress in their lives and will continue to do so.” Comrie says The Stress Index provides excellent guidance in how Profmed shapes its products and talks to its members. “We must never forget the severe impact that stress has always played in our lives, especially at a time like this. It is up to all of us to help each other wherever we can so we can navigate our society towards a future where stress doesn’t so negatively impact our lives.”
Craig Comrie, CEO, Profmed
31 October 2020
GDP set for strong recovery in third quarter
L
ast month, Statistics SA announced that South Africa’s second quarter 2020 GDP data printed at -17.1/-51.0% year-on-year/ quarter-on-quarter at a seasonally adjusted annual rate. While the data came in as expected, this does establish the base for recovery in the third quarter. “I think it’s going to be quite a strong recovery, given the mining and manufacturing production numbers for July,” Johann Els, Chief Economist at Old Mutual Investment Group, told MoneyMarketing. “Seasonally adjusted mining production increased by 20.2% in July 2020 compared with June 2020. The implication of that is if mining stays flat at the July level in August and September, then mining production on a quarteron-quarter annualised basis will be up 220% in the third quarter.” Manufacturing production rose less than mining production, but still increased by 7.6% in July 2020 compared with June 2020. “If it stays flat in August and September, manufacturing production is up 177% quarter-on-quarter annualised in the third quarter,” Els added. “This is a significant rebound.” From the start of the recovery, he forecast a V-shaped rebound – “and I had a lot of pushback with people saying how impossible that would be, but the extent of the lockdown and the halting of economic activity against the easing of the lockdown and economic activity returning, creates a V-shaped cycle.” The agricultural sector remains positive and this is likely to continue as the country has strong maize and wheat crops. “Canola and barley are also up strongly, so agriculture will remain strong throughout the year.” Els’s GDP forecast for the third quarter of the year comes in at +35% quarter-on-quarter annualised, but given the July mining and manufacturing numbers, the potential is for a figure of +40%. “Apart from mining and manufacturing, the other sector staging a recovery is the retail trade sector that was halted during the lockdown but is now easing back up. This sector is linked to the transport sector. Construction is still a bit constrained but should benefit during the level one lockdown.” Els said the sectors lagging are tourism and air transport, as well as financial services as credit extension numbers are still slow. Medium-Term Budget Policy Statement He will be looking out for policy change when the Minister of Finance presents the Medium-Term Budget Policy Statement (MTBPS) this month – as well as updates on planned spending cutbacks. “I think we’ll see and hear more about zero-based budgeting and perhaps the details around the tax hikes, not normally referred to in the MTBPS. This so-called ‘mini-budget’ will attract far more attention and will be far more important than any of the past ones that Johann Els, Chief we’ve seen.”
Economist at Old Mutual Investment Group
ECONOMICS
31 October 2020
“T
Global economic recovery may be shaped like the Nike ‘swoosh’
for sequential growth between 3Q and he shock that the world 2Q, and that's been quite important economy has just for where we've ended up on our experienced has been annual GDP forecast.” devastating, and outside any sort Fitch now expects global GDP of historical experience that we've to fall by 4.4% in 2020, a modest ever known,” says Fitch Rating’s upward revision from the 4.6% Chief Economist, Brian Coulton, in decline expected in the June GEO. the agency’s latest Global Economic “It’s not a big revision, but the Outlook (GEO), presented at its direction is important because this Global Sovereign Conference 2020 is the first time that we're slightly Middle East & Africa, held online last less pessimistic about the world month. economy this year.” In terms of the Official data now shows the extent major economies, the US economy is of the economic dislocation in 2Q20, seen as contracting by 4.6% this year, with world GDP falling by 8.9% yearon-year. Describing this as outside the compared to a fall of 5.6% in the June GEO. Fitch Rating’s range of anything 2020 China growth seen in modern ONGOING SOCIAL forecast is +2.7% peacetime, Coulton points out that there DISTANCING DURING (this was revised in late July at the has been a large THE NEXT 12 TO 18 time of the agency’s variation across MONTHS WILL ALSO most recent China countries. “This sovereign rating variation is quite CONTINUE TO HAVE review) compared closely correlated A LARGE DIRECT to +1.2% in the with the stringency IMPACT ON THE June GEO. and the length of These revisions lockdowns that were MACRO ECONOMY have been partly imposed to cope offset by cuts to the 2020 GDP with the COVID-19 pandemic in the forecasts for the eurozone to -9.0% second quarter. The biggest falls that (-8.0%), the UK to -11.5% (-9.0%) we saw were in India, Spain, the UK and for emerging markets (EM) and France, all countries where there had been very tight lockdown policies excluding China to -5.7% (-4.7%). The latter mainly reflects a big change in place that lasted for a long time.” in Fitch Rating’s India forecast for the The recovery in economic activity fiscal year ending March 2021 (FY21) following the coronavirus-related to -10.5% from -5.0%. recession in March and April has, The pace of the global expansion is however, been faster than anticipated. not, however, expected to continue. “The shocks have been short by This is as the boost from the rethe standards of historic recession opening of economies fades, and as episodes. We find ourselves looking at economic activity and economic data at a much higher frequency than we normally find necessary – over the last few months, we've been looking at monthly, weekly, even daily indicators of economic output. What's clearly coming through is that this was really all about April and March. Essentially, it was a two-month recession in most of the advanced countries.” He explains that some countries, including the UK and Canada, have official measures of monthly GDP – and there are third-party estimates for the US as well, with the data illustrating that GDP had declined precipitously in March and April, but had then recovered quite sharply in May and June. Many indicators across the GEO economies point to a faster sequential increase in GDP in 3Q20 to date than previously anticipated. “We have almost across the board been revising up our growth forecasts
labour market dislocations constrain consumer spending and companies retrench. “We still see the recovery path being decidedly ‘swoosh' shaped, like the Nike logo,” Coulton adds. He sees GDP recovering to its pre-virus level in the US only at the end of 2021, and in the Eurozone not until the end of 2022. What drives his view that the recovery will slow from now on is the expected headwinds in private sector domestic demand. “We think that on the capex side, business investment will slow very sharply. Companies are going to be responding to this huge revenue shock that they've seen by slashing capex. And more importantly, from a GDP perspective, is the labour market shock that we've already seen in North America. We’re going to be seeing this in Europe in the next three or four months and this will keep consumers cautious. We expect unemployment in the UK, Italy, Spain and France to rise quite significantly in the second half of this year.” Ongoing social distancing during the next 12 to 18 months will also continue to have a large direct impact on the macro economy. A significant offset from policy easing is expected. “By June, macro policy easing announcements were already on an unprecedented level, but since then there have been further significant stimulus measures,” he says. “While the massive central bank response in the first half of the year is now easing, this is only because central banks see the financial stability risks having moderated quite significantly
– and while these banks are feeling a bit more comfortable, we think they remain fully prepared to take further action.” Examining risks to the forecast, Coulton says that while economies have been opened, the virus has clearly not been contained and is an ongoing concern. “I think the good news from recent developments is that the surge in virus cases in the US in late June and in Europe from late July have not yet been associated with a sharp downturn in mobility in terms of measurements of footfall in retail. This is perhaps because the response to the virus of late has been slightly different, in a sense. It has been much more targeted, and much more focused on specific geographies and specific types of activity, so that it hasn’t led to the downward adjustment in activity across the board that we saw before.” However, a reversion to full lockdown approaches cannot be ruled out. “If that happened, we could see renewed declines in GDP, although probably not as severe as we saw back in the second quarter.”
Brian Coulton, Chief Economist, Fitch Ratings
IMAGE: IMWALTERSY / SHUTTERSTOCK.COM
JANICE ROBERTS Editor, MoneyMarketing
WWW.MONEYMARKETING.CO.ZA 9
INVESTING FEATURE POSITIONING FOR A POST-PANDEMIC WORLD
31 October 2020
In pursuit of potential
DUNCAN ARTUS Chief Investment Officer, Allan Gray
The most important determinant of investment success is the price you pay for an asset, and valuations for many quality companies are the cheapest they have been for a long time.
A
Significant disparity in global markets There is significant disparity in global markets, and a disconnect between fundamentals and the level of equities. This will only be known for sure with hindsight, but what we do know, is that central bank balance sheets have expanded rapidly. This excess liquidity often finds its way into asset prices. The US Federal Reserve’s balance sheet has increased from US$4tn to US$7tn in response to the pandemic. The disparity can be seen by comparing the performance of US equities to the rest of the world. US markets have hugely outperformed and, in fact, the MSCI All Country World Index, excluding the US, is lower than it was in 2007. While the US market has outperformed, like the ALSI, it has also been driven by a small number of shares. The so-called FAAANM shares (Facebook, Amazon, Apple, Alphabet, Netflix, Microsoft) are up four times (January 2015-July 2020), while the rest of the market is only up 26%. We believe that while they are great businesses, the valuations look
Pessimism presents opportunities It is in times of great pessimism that great value is found. For example, we have done a lot of work on the downside risks and balance sheets of our banking sector. Given their pivotal role in an economy, we know that problems and weakness are going to show up in their loan books. We believe this is more than discounted into the current level of share prices. Our banking system earns higher returns on capital than most developed market banks, which gives our banks a greater ability to absorb increased bad debts. We believe bad debts would have to be three to four times higher than those during the great financial crises of 2009 before wiping out their excess capital buffers. Cognisant of the risks The levels of disparity in global equity markets are extreme by historical standards. Unfortunately, this knowledge does not tell when it is going to change. We are excited by the positioning of our portfolio but are aware of the extraordinary times we as investors and ordinary people find ourselves in. This means that thinking about and managing risk is as important as thinking about returns.
Allan Gray is an authorised ďŹ nancial services provider.
KINGJAMESJHB 3489
bsolute returns from SA equities have been low. The market has underperformed inflation over three and five years and is flat since 2014, and from 2006 when measured in US dollars. This is despite the extraordinary performance of Naspers. The yield on our 10-year government bond is a transparent barometer on how we are doing financially as a country. After the large sell-off in the first quarter to over 12%, the yield has settled back at 9.2%. This is still a very high cost of borrowing if we consider inflation is around 3%. In other words, markets are only willing to lend to South Africa at a real interest rate of 6%. This is a very high cost of capital, partially due to our rapidly deteriorating financial position, which has been exacerbated by the fiscal response to the pandemic and collapsing tax revenues. We expect the fiscal deficit to be over R700bn in 2021. Put simply, South Africa cannot afford it over the medium term. We need strong economic growth that requires strong, sensible leadership to get out of this hole.
stretched. Any kind of mean reversion could result in strong outperformance of the Index.
Die beste tyd wat geld kan koop.
3489_2020_Time. The greatest Investment of all_155x220.indd 1
10 WWW.MONEYMARKETING.CO.ZA
2020/09/11 14:56
Our global footprint delivers personal investment solutions. That’s why we’re oceans apart.
BRAVE/6340/MOM/E
We provide hands-on guidance for your clients’ offshore investments. We partner with you personally and aim to deliver on your clients’ investment goals. Speak to your Momentum consultant or visit momentum.co.za Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
INVESTING FEATURE POSITIONING FOR A POST-PANDEMIC WORLD
INVESTING
MICHAEL ADSETTS Deputy Chief Investment Officer, Momentum Investments
COVID-19: Bump in the road or the end of the road?
T
he widespread personal and economic devastation in the wake of COVID-19 is in the order of magnitude of some of the biggest disasters of the last century. In our hyper-connected and interdependent world, the speed with which the pandemic has affected all of us is unprecedented. The market recovery has also been unusually rapid, especially with the full economic effect not yet seen nor quantified. It is tempting to think that this crisis is different and that economic systems and markets will change irrevocably. The nature of markets is inherently adaptable and we are well aware that there will be winners and losers as companies navigate their way through the current environment. There are also far more unknowns that we just do not have the answers to yet. At best, we can make an educated guess and maintain a sufficient level of flexibility in thought and action to open-mindedly assess how economies and markets will react.
IT FEELS DAUNTINGLY DIFFICULT TO DECIDE HOW TO INVEST YOUR CLIENTS’ MONEY There are a few areas and sectors that are coming into stark focus with big questions about how they will adapt. In the property sector, the role of offices and retail outlets are being re-imagined, especially in the context of the adoption of work-from-home patterns, as well as the potential for the rise of online shopping. This needs to be considered within the context of the economic structure of South Africa. While it may be appealing to think that remote work will become the de facto mode, the reality is that most of the South African population cannot realistically work from home (you cannot mine or build or farm remotely). A similar dynamic would affect retail properties.
Those companies that adapt to the effects of COVID-19 or enable others to adapt should turn out to be the winners. At the moment it looks like the tech companies have been the beneficiaries, with the likes of Apple and Zoom showing spectacular results and returns. Much of the disconnect between markets and economies is being driven by the significant amounts of funding provided by governments around the world, as part of COVID-19 relief initiatives. The net effect of this funding is that the balance sheets of governments are getting bigger, and their sovereign risk is increasing. In South Africa, there has been an extensive bond-buying programme by the South African Reserve Bank and a significant reduction in interest rates. National Treasury has also been issuing significant amounts of bonds, and has approached the International Monetary Fund for a loan; while at the same time, tax collection by the South African Revenue Service has been reduced significantly as a result of the recession. So, while the yields on SA government bonds are attractive, this does need to be evaluated against the increasing risk of these assets. With all this uncertainty, it feels dauntingly difficult to decide how to invest your clients’ money. The best answer, when you are unsure of where to invest, is to diversify your assets and be very mindful that you do not inadvertently build up concentrated risks. Thoughtful and systematic risk management is therefore one of the key fundamentals. This is what we do consistently when we manage assets at Momentum Investments. COVID-19 will not be around forever and, as through countless crises before, the world finds a way to adapt and move forward. There is no reason to believe this time will be different. What we are currently experiencing will pass, and the best approach for financial security in the future is to remain invested.
12 WWW.MONEYMARKETING.CO.ZA
31 October 2020
KIM ZIETSMAN Head: Business Development and Marketing, Laurium Capital
Considering 100% allocation to offshore funds in living annuities – is it sensible?
O
ffshore COMPOSITION OF FTSE/JSE ALL SHARE INDEX allocation limits for institutional investors are 30% for international, and one may make an additional allocation to African investments (outside South Africa) of 10%. This said, living annuities do not need to comply with Source: Laurium Capital, September 2020 Regulation 28, so in theory, retirees could invest 100% of their living annuity offshore in any asset class. However, if your retirement liability is in rand, it is not very prudent to denominate your entire retirement assets in offshore currency, even if it seems tempting right now. Furthermore, many South Africans are not aware of the exposure they have to global markets, merely by being invested in our own South African equity market. Investing offshore provides investors with access to companies and opportunities that may not be available in South Africa, so it makes sense to have some exposure to offshore investments in order to diversify your portfolio. How much to invest offshore and where to invest offshore are questions that advisers grapple with and will be very dependent on the client’s risk profile and investment goals. An important starting point is to understand how much exposure you already have offshore simply by being invested in the South African equity market. The South African equity market, through firms listed on the JSE, has many companies that derive a significant portion of their income from outside South Africa, HOW MUCH TO such as Naspers, Anheuser Busch InBev, INVEST OFFSHORE Richemont, British American Tobacco, BHP, Anglo American, to name but a few. Because AND WHERE TO only a small portion of their earnings comes INVEST OFFSHORE from South Africa, they are not impacted in any meaningful way by the success or failure ARE QUESTIONS of the South African economy. At Laurium THAT ADVISERS Capital, we analyse each company for the proportion of earnings derived from both GRAPPLE WITH inside and outside South Africa. On this basis, currently the FTSE/JSE All Share Index only has 21% exposed to South Africa, 26% to other emerging markets, 3% to Africa and 50% to developed markets – hence, by investing in the South African equity market, investors are effectively fairly well diversified offshore already. In the Amplify SCI Balanced Fund that we manage for Amplify, we also include additional offshore exposure through exchange traded funds that passively track international indices such as the S&P 500, the Euro Stox and the Russell Value 1000 Index. Living annuities are an excellent way to reinvest your retirement savings and to draw an income of between 2.5% and 17.5% per annum. You may also make switches within your living annuity without tax implications. Decisions around asset allocation are an important consideration and the rate at which you draw income from your living annuity is a critical determinant of whether you will be able to sustain your income for the duration of your life. Ensure that your investment portfolio has a well-balanced exposure to growth assets, bonds and cash, locally and offshore, to maximise long-term real returns.
INVESTING
31 October 2020
How might alternatives play a bigger role in investors’ portfolios?
research capabilities, implemented by an integrated global investment team of 70 professionals, with an average of more than 14 years in the industry and just over 10 years with Coronation. As a bottom-up, active investor, we do proprietary research on the available investment opportunities across the world. We then blend the most promising investment opportunities we have identified into resilient portfolios that are tailored to deliver risk-adjusted returns that meet our investors’ needs – no matter how challenging the global environment may be.
Drawing on the breadth and depth of an integrated global investment team Since launching our first global fund, Coronation has built up substantial international investment expertise and
Comprehensive fund information is available in the minimum disclosure document available on coronation.com.
EQUITY MARKETS ARE HIGH US$ billions
Price index
3 500
3 500
3 000
3 000
2 500
2 500
2 000
2 000
1 500
1 500
1 000
1 000
500
500
0 Jul 20
Feb 19
Apr 16
Sep 17
Jun 13
Nov 14
Jan 12
Aug 10
Oct 07
Mar 09
May 06
Jul 03
Dec 04
Feb 02
Apr 99
Sep 00
Jun 96
Nov 97
Jan 95
Aug 93
Oct 90
Mar 92
May 89
Jul 86
Corporate profits after tax (LHS)
Dec 87
Feb 85
Apr 82
0 Sep 83
Optimised for risk first The investment philosophy of the Fund is the same as our medium-risk global balanced fund but is optimised for risk first. As such, it is invested in growth assets such as equities, real assets (such as infrastructure and property) and equity-like fixed interest income instruments. The balance of the portfolio is invested in assets that offer inflation protection, absolute returns and capital preservation. The Fund is managed to preserve the dollar value of the Fund over rolling 12to 24-month periods. Bear in mind this target is not guaranteed, but investors in
the Fund do get access to Coronation’s 21-year track record of managing global multi-asset class funds. As such, the Fund is comfortably positioned in the top quartile of similar global funds that are available to South African investors over five and ten years, as well as since inception. For the period since launch, the A-class of the fund has delivered a return of 3.9% per annum in US dollars, compared to the per annum return of 0.5% from US dollar cash.
Jun 79
Enter the conservative multi-asset fund In a lower-for-longer interest rate environment, cash effectively yields 0% in the developed world. Thus, if you want to achieve consistent real returns in hard currency but cannot tolerate risk, a better alternative to consider is a well-diversified conservative multiasset fund that is managed with an absolute mindset. Investors who want to incorporate more conservative offshore exposure in their portfolios, while still
achieving reasonable real returns of between 2% to 3% in USD over time, will find this in the Coronation Global Capital Plus Fund. The Fund is actively managed, has a low-risk exposure and is invested across asset classes. While it contains some of our best investment ideas for global growth, it has been moderated for investors with less tolerance for risk. Global Capital Plus is globally unique, given that it is a balanced fund that has dual objectives: delivering a respectable real return while keeping a careful eye on risk. It gives investors access to asset classes that will outperform cash and inflation over time, with a mandate that allows for more than half of the portfolio to be invested in growth assets.
Nov 80
I
nvesting offshore right now may seem like a risky endeavour when stocks are trading at record highs and income investments at record lows. Add a global pandemic to the background, which is presenting a unique inflationary risk, and it’s understandable why investors may be preferring the safety of cash. However, traditionally considered low-risk assets, fixed interest instruments are now exhibiting more downside risk than ever before. For example, approximately 25% of global bonds have negative yields, while a further 65% yield less than 1%, representing a returnless risk. At the same time, the five-month rally in US equities out of a bear market slump has raised concerns that stock markets may have moved too far, too fast to justify their elevated valuations.
An attractive alternative to investing in cash offshore
Jan 78
CHRISTO LINEVELDT Personal Investments Specialist, Coronation Fund Managers
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of June 2020 and may change as
Aug 76
Growth across the alternatives spectrum We may see significant growth in illiquid private markets – these are markets where assets are not traded on an index. Such securities can take longer to buy and sell, hence being defined as illiquid – as well as more-liquid alternative strategies that
subsequent conditions vary. Important information This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. Please be advised that BlackRock Investment Management (UK) Limited is an authorised Financial Services provider with the South African Financial Services Board, FSP No. 43288. Any research in this material has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This material is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. © 2020 BlackRock, Inc. All Rights reserved.
Changing regulations One of the key mechanisms driving this growth is the European Long-Term Investment Fund (ELTIF), which makes it easier for a wide range of investors to invest in infrastructure, private businesses and education facilities, among other initiatives. Insiders feel that ELTIFs could have a similar impact on private markets to the impact the Undertakings for the Collective Investment in Transferable Securities’ (UCITS) had on the hedge fund industry (an investment fund that uses alternative strategies to make a return), which helped more investors gain access to alternative strategies a decade ago.
Oct 73
Technology Many experts expect technology to drive more investors towards alternatives. Technology has a role to play in developing more sophisticated products, increasing transparency and educating investors on the role alternatives can play in their portfolios.
invest in listed equities and bonds. Private markets, such as infrastructure and privately listed bonds, are increasingly seen as sources of income, capital growth and diversification for every kind of investor, from wealth managers to retail customers.
Mar 75
D
ue in part to a steady decline in the number of listed stocks, industry insiders predict that finding returns in traditional markets will become increasingly difficult. As a result, many investors are turning to alternatives to add diversification and greater return potential to their traditional 60/40 (equity/bonds) portfolios. But what else could drive this growth in the years ahead?
S&P 500 Price Index (RHS)
Source: Federal Reserve Bank of St Louis, Bloomberg. Corporate profits after tax exclude Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj)
WWW.MONEYMARKETING.CO.ZA 13
INVESTING
31 October 2020
Investors anticipate Joe Biden election win IMAGE: RON ADAR / SHUTTERSTOCK.COM
There is far less ambiguity for the House of Representatives – 9 in 10 investors (89%) expect the Democrats to retain control of the House, compared to 11% predicting a Republican victory.
S
urvation has conducted a global sentiment survey of investors responsible for assets in US markets, ahead of November’s US elections for the Presidency, Senate, and House of Representatives. The UK pollster surveyed investor views on the likely outcomes of the upcoming elections, and the likely impacts of a range of potential outcomes: combinations of Democratic and Republican control of the White House and Congress. 91 investors were interviewed online across equities and fixed income from 88 companies in 16 countries across the Americas, Asia, and EMEA regions representing $3tn assets under management (AUM) in US markets. Fieldwork was conducted 7 – 21 September 2020.
Perceived impacts of outcomes A Republican clean sweep has the highest net positive impact rating among investors when asked about the impact of various combinations of party control on the US Dollar Index (+19%), US stock market (+71%), and US equities (+43%). According to investors, a Democrat clean sweep of the White House and Congress would have the strongest net negative impact on the Dollar Index (-55%), stock market (-46%), and equity market (-33%).
Likely outcomes 60% of investors surveyed believe Joe Biden will win the Presidential race, while 40% believe Donald Trump will win a second term. Looking at the impact on major industries, investors would consider a Republican clean sweep to be the most positive outcome for most industries (between +17% and +70%) – apart from healthcare (+5). A Democratic clean sweep would be expected to have strong net negative impacts on energy (-67%) and financials (-54%), with no net positive impact expected in any sector. Views are more split on the question of who will control the Senate after the 2020 elections, with 49% of investors predicting the Republicans will retain the upper house, while 43% expect the Democrats to gain the Senate. 9% have suggested that the elections will result in a tie – in which case, the elected Vice President would hold the casting vote in the Senate.
The survey also asked about prospective impacts on companies considered to be in the ESG sector (environment, social and governance) – here, the Republican sweep net impact is considered to be -54%. In contrast, a Democratic clean sweep had a predicted ESG net impact of +54%.
14 WWW.MONEYMARKETING.CO.ZA
Investors concerned about possible contested outcome of US election
A
disputed result in November’s US presidential election is now the numberone concern for investors – even ahead of a second wave of COVID-19 – according to a new global survey. The poll carried out by independent financial advisory and fintech organisation, deVere Group, asked more than 700 clients: ‘What is your biggest investment worry for the rest of 2020?’ A contested US election was number one (72%), the impact of a COVID-19 second wave number two (18%) and the US China trade war number three (5%). The remaining 5% was made up of other geopolitical issues, including Brexit. 735 people resident in the UK, North America, Europe, Asia, Africa, Latin America and Australasia took part in the poll. Of the poll’s findings, deVere Group CEO and founder Nigel Green says, “Investors around the world are beginning to freak about the US presidential election. But not about whether Trump or Biden wins, rather over the looming possibility of a disputed outcome. “President Trump is already questioning the legitimacy of the election, heightening the chances of a contested result and an ensuing constitutional crisis in the world’s largest economy. It’s getting ugly and investors are, rightly, concerned that this will generate massive waves of volatility in the markets, not only in the US, but around the world.” He continues, “Investors are telling us this is their biggest investment worry for the rest of 2020. It is likely that any election-triggered volatility will be highly impactful for maybe only two or three weeks. As always, investors should remain in the market during this time.” Rational investors, Green believes, should be capitalising on any election turbulence. “There are two key reasons why investors should be building up their portfolios in volatile times. The first reason is the long-term benefits: There are many unknowns, but what we do know is that over the longer term, the performance of stock markets is fairly predictable: they go up. “Indeed, for this reason, over a longer time horizon, investing in equities is almost universally recognised as one of the best ways people can accumulate wealth. By not topping up and diversifying portfolios in volatile periods, investors are pushing back the longer-term benefits they could be starting to reap. Why forsake the long-term gains that would be generated on money invested now?” Green says the second reason is linked to buying opportunities. “The see-sawing markets are a chance for investors to put new money into markets at lower prices. A slump in the market means that there are high-quality equities available at more attractive prices.” Green adds that a contested outcome of the US presidential election will almost inevitably send the stock markets into a temporary tailspin – and this is weighing on investors’ minds. “I would argue, they should try and use the volatility to their financial advantage where possible and appropriate.”
SOFTWARE SPECIAL SUPPLEMENT
WHY SELECTING A CLIENT MANAGEMENT SYSTEM IS LIKE CHOOSING A CAR
TODAY’S ADVISER NEEDS AN EFFICIENT, EFFECTIVE, ENDTO-END SOFTWARE SOLUTION TO MEET CLIENT EXPECTATIONS
The system must suit your way of working and it should meet your practice’s needs PAGE 18
Running a financial advice business under current market conditions is complex PAGE 20
THE RED OR THE BLUE PILL? As a financial adviser, you can give your clients the tools to realistically follow their dreams PAGE 17
BROKERTOOLS – A SOLUTION TO HEALTHCARE INTERMEDIARIES’ CURRENT AND POST-LOCKDOWN CHALLENGES Intermediaries need tools only technology can provide to automate the year-end revision process and reduce physical interaction with clients PAGE 22
HELPING OUR CLIENTS #RiseAboveTheRest We pride ourselves on delivering practical, fun and relevant learning experiences PAGE 25
SOFTWARE SUPPLEMENT
31 October 2020
FRANCOIS DU TOIT CFP® Founder, PROpulsion Learning and Technology
D
GUEST EDITOR’S NOTE
ear Reader Regardless of which sector in financial services your business is positioned in, technology cannot be ignored. Too often we see financial services business owners not taking the time to study the needs of their business and establish where technology can play a vital role.
or their competitive edge. I do not agree with this viewpoint. My view is that technology is what enables the business to be more efficient, to communicate better, to have critical data at its fingertips, to move quicker than others and to deliver a truly great customer experience in the process.
The areas in a business to consider Financial and product advice, implementation and servicing are only one part of the business. Many other areas must also be considered, such as revenue management, accounting, payrolls, communication, marketing, compliance, reporting, data analysis and the overall client experience, to name a few.
Seamless integration Often businesses over-integrate, or don’t integrate at all. Different systems are required to run different aspects of the business. This often leads to duplication of work, inefficiency and frustration. The solution is to integrate different systems, so they work together as one. However, this is in a perfect world. The reality is that the more systems you have, the harder it is to integrate them successfully. Not that it can’t be done, though.
The role of technology Many business owners and financial professionals see the technology they implement as their solution
GUY KRIGE Director, Escrow Europe
T
Choosing technology Before any technology and software
solutions can be considered, the business must fully understand its needs and requirements. For example, the needs of a financial services business that offers advice and service across multiple channels (such as medical aid, life assurance, investments, short-term insurance, etc.) are vastly different from a business focusing on one channel only. This is a critical first step. Too often technology is chosen based on price, popularity and ‘userfriendliness’. One system This is the dream for just about everyone. One system that handles and offers everything the business needs. This dream leads many down the path of designing and developing their own system, usually at great cost. Why? Simply because no such system exists. The risk here is that the business loses sight of its core function and value it offers. Many believe that when their system is
completed (hint: it never is) they will offer it to the market and sell it to other firms. However, each business is unique and again the system does not offer everything they are looking for. The stack In a world where flexibility and personalisation are requirements, financial advisers will start to create their own technology stack to suit their unique needs and ways of working. A technology stack is two or more pieces of software that work together seamlessly. Each piece of software in the stack is best-of-breed and fulfils a specialised function. Last thought Technology must fit the business. It must enable the business. It must be an investment, not a cost. Francois du Toit CFP®, Founder, PROpulsion GUEST EDITOR
KEEP CALM AND MANAGE YOUR SOFTWARE RISK
he reality facing companies embracing the current trend to ‘go digital’ is that the same technology also negatively impacts their business continuity risk. ‘Going digital’ is punted to build new routes to market, improve productivity, facilitate a remote workforce and cut costs. But, it also comes with the risk that the supplier of the digital solution could go bankrupt or refuse to support it, severely compromising the company’s ability to do business. The good news is the risk of relying on outsourced tech can be mitigated by THE RISK OF RELYING software escrow. As research ON OUTSOURCED and advisory TECH CAN BE company MITIGATED BY Gartner says, SOFTWARE ESCROW escrow is “a smart and effective component of a business continuity strategy that software licensees can use to protect their mission-critical applications in an ever-changing environment”.
16 WWW.MONEYMARKETING.CO.ZA
This is particularly true of non-SaaS applications; SaaS being the acronym for ‘software as a service’. In terms of a relatively simple escrow agreement, the source codes of the vital software product and related documentation will be deposited with a neutral third party, an escrow agent like Escrow Europe. The escrow agent is authorised to release the materials under the conditions stipulated in the agreement. These could address operational risk, technical malfunction or even the business failure of the supplier. However, if your solution is a SaaS application, in addition to you not having access to the source code, you won’t hold your own data. This will reside with another company, which ‘hosts’ both your data and the application. Also, while the nonSaaS solution is only updated or upgraded a few times a year, the SaaS solution is likely updated on a continuous basis. These differences give rise to a new set of risks, and require a more complex escrow agreement but, the fact remains: escrow remains an elegant solution for mitigating risk in a digital environment.
Do you need software escrow? 1. Determine how many of your applications are licensed, and therefore contain technology or intellectual property beyond your control. If their failure could impact your revenue, productivity and public safety, you need the security that software escrow provides. 2. If you have escrow, ensure it is active software escrow, not passive. For active escrow, the material on deposit is technically verified at least once a year, providing proper reassurance that it is complete, up-to-date and is most likely to be usable. There is no proper check on passive deposits to ensure they are complete and deployable. 3. If you do not have escrow, ask the software provider if they have. If ‘yes’, scrutinise the terms and conditions to ensure that, in the event that there is no answer to the supplier’s phone when you want to place that emergency support call, your business continuity will not be compromised. 4. If ‘no’, insist that the vendor and your company enter into an agreement that protects your interests and investments in mission-critical technology. Insist on an internationally reputable escrow agent.
SOFTWARE SUPPLEMENT
31 October 2020
KOBUS BARNARD AND ANGELIQUE BARNARD, Allegiance Consulting
“Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the notquite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. The world you desired can be won, it exists, it is real, it is possible, it’s yours.” Ayn Rand, Atlas Shrugged.
W
hat is the world your client desires? As a financial adviser, this question should be the driving force behind all your interactions with your clients. We’re all wired differently. It is your duty as a financial adviser to help your clients untangle their wires and articulate where it leads them. Advice that doesn’t use your client’s ideal life as a roadmap, and that doesn’t take their complete current financial position into account, is irrelevant. If you’re going to help your clients plan for their future, you need to understand what that ideal future is, and you need to understand where the starting line is. In a world with a Ad _ Money marketing.pdf 1 2020/09/21 11:08:19 population Avalon upwards of 7.7 billion, cookie-cutting your
THE RED OR THE BLUE PILL?
clients into a financial plan will no longer work. hour workweek and an ocean view Avalon is a goal-based financial planning system from their home office. However, clients that enables lifestyle financial planning. With Avalon, have not necessarily woken up to the fact that if your client can be the informed co-author of their they’re going to live their best life, planning is the plan as you guide them through the trade-offs of their best gift they can give themselves. Without a plan, possible financial decisions in real-time. A client may a goal is just a wish. Without a realistic plan, a goal wish to focus on saving for education, is just an unrealistic wish. As a financial a big purchase, understanding adviser, you can give your clients the AS A FINANCIAL tools to realistically follow their dreams, the implications of their debt, and retiring. Goal-based financial and properly prepare for their future. ADVISER, planning requires a contextual Unfortunately, no one can be told YOU CAN GIVE understanding of the sequence and what the perfect life is. You have to impact of a client’s needs to ensure dream it for yourself. Make your clients YOUR CLIENTS the optimal allocation of resources the co-authors of their plans. Get them THE TOOLS TO for each specific goal in the context of fully invested in the process. Give your REALISTICALLY clients the tools to untangle their own their available resources. Goal-based planning is a financial FOLLOW THEIR wires and see the magic unfold before planning method to help clients: your eyes as you inspire and excite DREAMS • articulate their goals and dreams them. Avalon is the sparkle in your • prioritise their financial goals clients’ eyes as they see their future before them. • find an optimal plan to fund them Avalon is the spark that will reignite your passion • find the optimal plan to protect the achievement for financial planning. of those goals in the context of the client’s current But please, don’t take our word for it. Take financial landscape. the red pill by visiting www.avalon.co.za and registering for your free, no-commitment trial. Clients are caught in a worry-work-eat-sleep You have nothing to lose and everything to gain. matrix, but they are waking up. They want a fourWhat are you waiting for?
When last were you excited about financial planning? When was the last time that you deeply connected with clients? Change their lives and help them to become the best versions of themselves.
C
Avalon will reignite a passion for financial planning. Avalon is the
M
red pill in the financial services matrix. If you want to wake up from
Y
CM
worry-work-eat-sleep and rediscover financial planning then go to
MY
www.avalon.co.za for a free trial.
CY
CMY
K
WWW.MONEYMARKETING.CO.ZA 17
SOFTWARE SUPPLEMENT
31 October 2020
WHY SELECTING A CLIENT MANAGEMENT SYSTEM IS LIKE CHOOSING A CAR It’s all about finding a system that suits your practice’s needs (a sportscar isn’t much use for a family of five) and is safe and secure, says atWORK’s Group Executive Business Development, Trevor Stacey.
A
dviser forums are awash with discussion of which client management systems and technologies are ‘the best’. I thought I’d share some insights into what is always a complex decision with far-reaching consequences. Selecting a system is a little like shopping for a car. The system must suit your way of working and it should meet your practice’s needs. It’s essential to evaluate any system holistically and not be swayed by one or two snazzy features. (Electric seat warmers never served much purpose in a head-on collision!) Key considerations Systems are becoming more complex by the day and there are loads of issues to consider. Taking my atWORK hat off for a moment, here are a few of the factors I’d be taking into consideration if I were in the market for new software: • Reputation, track record and financial position (especially since COVID-19) of vendor
• What components does my business need and does the vendor offer these tools? • Openness to partnerships with other specialist vendors • Ability to adapt and adopt new services as they become available • Can I use my own branding on the system? Can I customise my reports? • Level of training and support (online chat, email, call centre) offered by the vendor • Ease of use and implementation. Peering ‘under the hood’ Once you’ve found a system that seems to tick most of your practice’s basic needs, it’s time to look ‘under the hood’ so to speak. Just like when you buy a car, the components that you can’t actually see are equally – or often, more – important. • Security When choosing the system that is going to house all your clients’ data, cybersecurity is a massive consideration. But, as we’ve seen
with the recent ‘Experian hack’, cybersecurity alone is not enough to prevent a data breach. True data security can only be achieved through the combination of cybersecurity and system security and integrity. If anything goes wrong, the buck stops with YOU, so it’s absolutely imperative to know that your chosen software partner conducts regular audits and is certified to POPI and GDPR standards. (Also, make sure the contract guarantees you your data back if you ever decide to move on.) • Support and adaptability It’s really important to know how deep your chosen provider’s support mechanisms go. These days, all the best systems use ‘open architecture’ that allows them to partner with third-party data services (AML and KYC services, for example) almost overnight. • Innovation COVID-19 has forever changed the world of business. Does the system you’re looking at offer a client portal, where clients can login to view and sign documents, review their investment portfolios and even hold virtual video meetings with you?
Instead of being beguiled by snazzy features (like a video rear-view mirror…have you ever?), focus most of your attention on the underpinning technology platform. It’s impossible for one company to be good at everything – which is why you need a platform with open system architecture that allows you to plug into the latest risk profilers (FinaMetrica), commission systems, KYC services, and antimoney laundering providers, to name but a few. The long and the short Now we come to the crux of the matter: Is the system easy to use? And will it save you and your clients time and money? The only way to answer these questions, of course, is to give the car a test drive. Contact me on 082 880 9477 to arrange your no-obligations trial of atWORK 6.
Trevor Stacey, Group Executive Business Development, atWORK
THE DASHBOARD OF THE FUTURE Electronic signatures empower a remote workforce.
I
n the long-forgotten pre-COVID world, electronic signature solutions were considered a ‘nice to have’ by many South African businesses. Why not print and hand deliver documents for signature? After all, this is more secure… isn’t it? In a locked-down economy, the value of innovative technology certainly came to the fore as remote workforces endeavoured to ensure that it was business as usual. This was not only convenient, but essential to survival. It was in this environment that the proudly South African technology provider, Impression Signatures, developed a web-based Electronic Signature Dashboard – offering businesses quick access to eSignatures for themselves and their customers, within the necessary legal parameters and incorporating advanced security features. This Dashboard is not only fully compliant with the Electronic Communications and Transactions Act but
WHEN DOCUMENTS CAN BE SIGNED LEGALLY, FROM ANYWHERE, WITHIN A MINUTE OR TWO, THE PRODUCTIVITY BENEFITS ARE LEGION 18 WWW.MONEYMARKETING.CO.ZA
gives users the power to brand their tool and ensure optimum productivity. As the first African member of the global Cloud Signature Consortium, Impression’s digital and cloud signature products meet rigorous cybersecurity requirements and comply with the world’s most demanding electronic signature regulations. “The development of this Dashboard was driven by six key elements, essential to reliable eSignature/ document management: confidentiality, authenticity, accountability, non-repudiation, integrity and availability,” confirms Andy Papastefanou, founder of Impression Signatures. Whether users created the document or received it from another, it can be uploaded to the Dashboard online in virtually any format (PDF, Excel, Word, Image, PowerPoint). It will automatically be converted to a PDF document, ready to sign or send for signing and track. “We focussed on creating a tool that is straightforward, offers instant value and doesn’t require a user guide to operate. It is intuitive and simple, operating on a highly affordable monthly consumption model with no hidden costs,” adds Papastefanou. “Our goal is to help you get to your ‘yes’ quicker, while making the process of sending and signing documents convenient, legal and safe.” Once the user has logged in with Active Directory details, they can track and manage the signing, sending and finalisation of documents in a simple ‘email’ environment. Conveniently, the signee doesn’t
need to install any software, and will simply receive an email with a secure link, allowing them to sign and return the document – immediately. Consent is ensured with Active Directory Integration. “With no limitations to the number of signatures required, users can either send the document to all required signatories at once or set a workflow if the document must be signed in a particular order. The mobile-friendly tool is available on all web browsers,” confirms Papastefanou. Demand for this solution has grown exponentially across the board – from banks to insurers, retailers, government organisations and hospital groups. “In today’s world, it is essential that businesses save both time and resources. When documents can be signed legally, from anywhere, within a minute or two, the productivity benefits are legion,” says Papastefanou. Founded in 2011, Impression Signatures (an iOCO company) is the leading provider of e-signature solutions in South Africa. Our patented approach is locally created whilst committing to making this innovative technology available to the public, enabling true social inclusion to fully realise digital transformation in South Africa. For more information, visit Andy www.impressionPapastefanou, Founder, signatures.com. Impression Signatures
SOFTWARE SUPPLEMENT
31 October 2020
JOHN MC LOUGHLIN CEO, J2 Software
A
nother day, another data breach. South African businesses are becoming more susceptible to cyberattacks and seem to be easy targets for criminals. Data breaches are now a common phenomenon, with Nedbank, Momentum, Lombard Insurance, Experian and Stefanutti Stocks making headline news. Who is the next victim to be made public? The truth is, this is not new – there has been an ongoing spike in cyberattacks that continues to grow from year to year. It is only recently that businesses are being exposed in the media. These publicly known breaches are only the tip of the iceberg. Cybercriminals are successfully infiltrating and taking down systems on a daily basis. Until businesses take proper action, one can expect a continued increase of successful attacks. Many small businesses assume they are too small to be attacked, but the truth is businesses of all sizes are targets. A cyberattack on an SME will often have a devastating effect and possibly mean the end for them. More and more SMEs are targeted as they are often easier to access because little or no attention is given to cybersecurity. Gartner Research predicts by 2024, personal liability will fall directly onto many CEOs for failing to protect systems from cyber incidents. It believes that CEOs will no longer be able to plead ignorance or retreat behind insurance policies. The financial
DATA BREACHES ARE BECOMING MORE COMMON impact of cyber-physical security (CPS) attacks, resulting in casualties to human life, is predicted to reach over $50bn by 2023. Furthermore, poor advice and lack of understanding means that a small business will have a false sense of security, with only the free anti-virus software between them and a cyberattack. Many SMEs do business with larger firms, and this is another reason that the SME is a very valuable target for cybercriminals. Account takeover is rife, and weak passwords, or the reuse of passwords, is a contributing factor. Once an attacker has the credentials, all they need to do is wait. They set rules, forward emails and add themselves to management groups – waiting for the right piece of information to target their victims. We recently discovered, in a pool of over 400 mailbox rules on Microsoft 365, there were four malicious rules configured that scrape for financial information and then forward the information out to a Gmail account. These rules were in place for some time at this company and they were unaware of it. The rules were set using known user credentials and were never checked. Visibility of real and available sources of information provide visibility to combat the growth in cybercrime. We recommend that you get visibility across data, machines, applications and people to understand what is really happening across your environment.
Focusing on the network is simply not sufficient – this is evident with the spate of breaches in the news each day. Businesses must push towards a usercentric approach to security. The users are the ones accessing information and these are the places that the attacker will target. Your network is where your user is. Increased visibility is critical with the remote workforce and changing office landscapes. It’s a myth that cybersecurity is unaffordable, and this misconception is driven by fear. The fact is that some businesses are taking advantage of the lack of knowledge and fear to overcharge their customers. We prefer to remove the ‘fluff ’ and get things done. There is no value is deploying tech for the sake of tech and then not doing the basics. Covering the basics of cyber-resilience will ensure that you can properly maintain, monitor and prevent cyberattacks. Using a combination of proven tools and services, cybersecurity is achievable, whether you are a listed multinational or a family-run business that operates from the dining room. Finally, partner with a reliable service provider to ensure increased visibility and report to stakeholders. Bolster your cyber-defences by running a simple, comprehensive and effective cyber-resilience program.
C
M
J2 Software is a security-focused African technology business founded in 2006 to address the need for effective cybersecurity, governance, risk and compliance solutions in Africa.
Y
CM
MY
TODAY’S ADVISER NEEDS AN EFFICIENT, EFFECTIVE, END-TO-END SOFTWARE SOLUTION TO MEET CLIENT EXPECTATIONS
M
any financial advice practices, no matter their size, face similar challenges: • to deliver the best possible client experience • to provide dependable, high-quality financial planning advice based on accurate data and calculations • to automate repetitive and timeconsuming tasks to improve efficiencies and increase client satisfaction.
efficiency with delivering against increasing client expectations and meeting regulatory requirements,” he adds. “To get this right, financial advisers should have software that helps them manage the entire advice journey – from lead capture to ongoing reviews – as well as engage with clients digitally, and safely store client data and documentation.”
Flexible, configurable and modular Iress has used its extensive experience in To meet these goals, financial advisers financial planning and advice technology need comprehensive financial advice and to evolve its software into a complete and investment management software that comprehensive technology platform. enables them to digitise and streamline Xplan is built to fit different advice their processes, while models and business delivering complete, requirements, as RUNNING A compliant and highwell as being flexible, quality service and FINANCIAL ADVICE configurable and outcomes to the client, BUSINESS UNDER modular. says Barrie van Zyl, Supporting the CURRENT MARKET delivering of advice Head of Account Management for Iress, across the entire CONDITIONS IS South Africa. process, Xplan is COMPLEX “Running a financial scalable to suit advice advice business under current market businesses of any size. Xplan streamlines conditions is complex, with firms business processes and improves required to balance the need for efficiencies in every facet of the business,
20 WWW.MONEYMARKETING.CO.ZA
with all client data and documentation stored in a single system, as well as workflow management capabilities, powerful calculator, portfolio management and modelling tools, and comprehensive reporting. An open ecosystem Iress offers over 450 available integrations, including data feeds, applications, research platforms and gateways. Through Iress Open, Xplan integrates with leading technology and data providers to give advisers choice and flexibility. This includes both standard and custom integrations, enabling clients to determine what makes up their technology ecosystem, with Xplan at the core. Built on user insights To unlock efficiencies for users, a collaborative software design approach is available through Iress Labs. This means that shared user experiences shape the design and development process for future functionality. Built for better advice Delivering a quality client experience
CY
CMY
K
is key, with an increasing demand for digital channels during this time of remote working. Iress’s digital Client Portal allows advisers’ clients to view their real-time consolidated investment and insurance portfolio online, and has recently become an even more important feature for advisers. As a powerful client database and relationship management system, Xplan provides the tools to stay close to clients and help them maximise financial outcomes. Iress’s full suite of financial advice and investment management software provides better ways to track revenue, analyse data, source and compare the right financial products, and deliver quality advice more efficiently. Ready to reduce administration, maximise business opportunities and deliver high-impact advice? Find out how we can help at www.iress.com.
Barrie van Zyl, Head: Account Management, Iress
Built for better advice. iress.com/financial-advice
CAM-1057
From a full suite of advice and investment management software, to better ways to track revenue, analyse data, source and compare the right financial products and deliver quality advice more efficiently, we’ve got financial advice covered.
SOFTWARE SUPPLEMENT
31 October 2020
BROKERTOOLS – A SOLUTION TO HEALTHCARE INTERMEDIARIES’ CURRENT AND POST-LOCKDOWN CHALLENGES Over the past 12 years, Brokertools has established itself as a software provider specialising in medical scheme comparison and quote generation software integrated with a CRM system. Healthcare intermediaries need technological solutions tailormade for healthcare to help them navigate through the potentially challenging times ahead.
D
espite the recent easing of the COVID-19 lockdown, many of the virus-induced societal and work-related changes will continue long after the pandemic has passed. At this time of the year, healthcare intermediaries have the immediate task of informing each of their members about the available medical schemes and options for the following year, analysing their needs, providing FAIS compliant advice, collecting their option change forms, and submitting them to medical schemes. And all of this has to be done in the shadow of the still virulent virus that limits the physical interaction normally required for this purpose. At the same time, intermediaries need to continually generate new business, and reduce their expenses, in an increasingly competitive environment. Brokertools has the tools to help your business adapt to the new work environment, automate the year-end renewal process, produce FAIS compliant medical scheme comparisons instantly, generate new leads, and streamline your business processes to enhance your profitability. The Year-End Revision Wizard With the annual year-end revision (YER) upon us, and a limitation of physical interaction required by corporates and individuals, intermediaries need tools only
INTERMEDIARIES NEED TOOLS ONLY TECHNOLOGY CAN PROVIDE TO AUTOMATE THE YEAR-END REVISION PROCESS AND REDUCE PHYSICAL INTERACTION WITH CLIENTS
technology can provide to automate the year-end revision process and reduce physical interaction with clients. Brokertools has developed the Year-End Revision Wizard, which makes the annual YER process easy to do at the push of a button. It is fully FAIS compliant and more efficient than can be achieved with a personal consultation with an individual or a group of people. For the past five years, the innovative Year-End Revision Wizard integrated into the Brokertools CRM has been used by brokerages to communicate with their members electronically, providing them with online scheme information and enabling them to find the best option and submit their option changes electronically. This has proved to be highly cost effective in areas where brokers have clients in outlying areas, reducing the cost of travel and, now, reducing the need for in-person consultation. How the Year-End Revision Wizard works • You may want to inform your clients that, due to the limitations on physical contact and travelling, you intend doing the YER in this manner and explain the process. • The YER Wizard is part of the Brokertools CRM. Once your clients are loaded on the CRM (import EPR reports from the Schemes) – as soon as the 2021 scheme benefits information is available – it is easy to select clients, including groups, and send a link by email or SMS to each client using the bulk mail function on the CRM. • Clients who receive your FSP branded link can simply click on it to compare their current option with the 2021 option, compare upgrade or downgrade options among the permitted schemes, and submit their option and scheme choice for 2021. • In addition, should the client opt
22 WWW.MONEYMARKETING.CO.ZA
to also complete the needs analysis to assist with the option choice, the YER Wizard employs advanced scheme benefit intelligence to make a recommendation, using information such as: • Budget for contributions • Preferred in-hospital reimbursement rate • Preferred out-of-hospital benefit structure • Non-CDL conditions prevalent • Member benefit importance ranking for 2021. • Furthermore, an algorithm is applied that rates the option benefits, financial and demographic information to recommend the most benefit-rich option within the parameters set by the member in the needs analysis. The system is designed to recognise that group clients may have the ability to select between multiple schemes and that you may wish to retain individual clients on their current scheme. • Clients who complete the option choice process receive an email with: • A FAIS compliant PDF option change letter on your letterhead • A statutory notice • Record of advice • A comparison between their current and chosen option • An application form or option change form, depending on their choice • Any brochure or document you selected to attach when sending out the bulk SMS/emails. • When the final date for option changes approaches, clients who have not yet completed the YER process receive reminder emails/ SMSs with the link. • You also receive a detailed report indicating who completed the process and what their choices were, together with links to the generated documentation. This report is then submitted to the various schemes to affect the option changes. Medical Scheme benefit comparison and quotation software A core element of providing FAIS compliant advice, both for the year-end review process and for prospective new members, is the ability to compare all suitable medical scheme options to enable members
to make the most appropriate choice. The benefit comparison and quote tool is integrated with the Brokertools CRM, enabling the following: • Compare any open medical scheme option, including several restricted medical schemes • Medical scheme, gap cover and primary care comparisons • Member needs analysis that identifies the most appropriate product given the member health profile • FAIS compliant individual and group quotations • Contribution calculator calculates contributions, LJPs, prorated savings and add-on savings products • Actuarially sound Benefit Richness tool lets you unlock the value of each medical scheme option for your clients • Intelligent Group Quotes where products are compared based on cost, benefit structure and Benefit Richness • All quotations and supporting documentation, including emails, are stored on the Cloud, as per legislative requirements • The CRM tool enhances efficiency in dealing with queries, records of advice, members and corporate clients, making communication and delivering on promises effortless • Output documentation such as quotations and record of advice are customised per FSP, displaying their branding and letterhead • Share bulk or individual communications/newsletters with corporate and individual clients • Document repository for brochures and forms on all schemes, gap and primary care products. Brokertools is easy to use, with intuitive navigation, a training manual, and both online and telephonic user support. Web Needs Analysis – generating qualified leads and transforming into an online business Digital technology is available to help transform a brokerage into an online business. Brokertools has developed the Web Needs Analysis (WNA), an interactive lead generation tool that can be used to replace physical sales. This feature
SOFTWARE SUPPLEMENT
31 October 2020
can be placed on your website and social media platforms, with completed needs analyses from prospective clients sent directly to the intermediary via Brokertools CRM for follow-up consultation. COVID-19: transforming to work smarter More people than ever are working from home and this trend will continue long after the pandemic has passed. Using Brokertools to form the core of their consulting infrastructure, brokerages can confidently deploy employees to work remotely, having secure remote access to client data. Additionally, the CRM system contains all of the broker’s client records, queries and communication templates, enabling uninterrupted service and continued professional client relationships. The CRM is ideal to track sales leads and queries to manage employee productivity, and also has capabilities to help streamline work processes. Many
compliance-related processes are taken care of automatically by the Brokertools CRM system. However, intermediaries should continually train employees on FAIS and POPI compliance policies and procedures, to instil a compliance-centred work culture that becomes second nature. About Brokertools The various Brokertools applications were developed by a team with over thirty years’ experience in the healthcare intermediary sector, with team members having had in-depth exposure to the workings of both the intermediary and medical scheme environments. The system and applications were specifically designed for healthcare intermediaries with compliance in mind. FAIS, POPI, CMS and TCF regulatory requirements have been integrated into every step of the advice process. The Brokertools software has become the industry benchmark, used by a national base of
intermediaries ranging from large corporate to SMME healthcare intermediaries. Currently, approximately 45% of all principal medical scheme members in South Africa are administered by intermediaries using Brokertools. Collectively, intermediaries using Brokertools service 2 815 057 medical scheme beneficiaries, and 467 820 queries were logged and resolved by intermediaries in the past year. A total of 377 006 FAIS compliant quotations have been done on the Brokertools system in this period. With all the core functions that brokers perform integrated into one system, Brokertools provides a comprehensive one-stop solution, ideally suited to address compliance, the upcoming YER, and the unfolding scenarios during and after COVID-19. The brokerage of the future will be redefining client touchpoints, using the web needs analysis, automated year-end revisions, online applications and digital platforms such as medical
MYCYBERCARE BUNDLES PROVIDE TOTAL CYBER-PROTECTION
A
s businesses increasingly move towards digitalisation, it brings with it a plethora of opportunities for cyber-attackers. The predominant serious cybersecurity issues that organisations face are credential phishing, viruses, malware, ransomware, DDoS attacks, BEC/wiretransfer fraud, account takeover, malicious or unsafe apps (cloud and mobile), SQL injection, and manin-the-middle attacks. Similarly, consumers face a continuously expanding range of cyber-attacks as hackers become more sophisticated and devious in their approach. “We find that often two predominant reasons exist for lax or non-existent cybersecurity,” says Simon Campbell-Young, CEO of MyCyberCare. “The first is budgetary limitations. However, while it may seem judicious to save money on security, even just one breach can seriously harm an organisation or an individual. Secondly, a lack of knowledge of bespoke protection can lead to system updates being for the most part absent. The solution is a cybersecurity bundle that provides extensive and inclusive coverage from cyber-attacks.” MyCyberCare works hand in glove with security software developers and insurance companies to develop cybersecurity SECURITY bundles that adhere to the SOFTWARE stringent requirements of insurance policy ON ITS OWN procedures that IS NO LONGER claims stipulate the use of SUFFICIENT security software. “We have bundled TO THWART together a number of our ATTACKS own locally-developed
solutions with third-party software that we represent in South Africa. Taking the specific cybersecurity requirements of both the business sector and the consumer into consideration, we can now offer a comprehensive bundled solution that includes our MyCyberCare fully regulated insurance solution, Cybercare4U product warranty, MyCyberDNA monitoring, MyCyberTraining products, together with Bitdefender and McAfee security software,” says Campbell-Young. “Security software on its own is no longer sufficient to thwart attacks. Global security software vendors are already shifting towards the monitoring solutions that form a large part of the MyCyberCare offerings, specifically in the form of MyCyberDNA,” he adds. MyCyberDNA adds an extra layer of protection to typical antivirus software. The software includes a personal cybersecurity score and report, scamprevention training and awareness, support, device vulnerability protection, stolen and leaked ID monitoring, threat alerts and vulnerability scanning across all SME protection plans, and three of the four personal and family protection plans. Additional functionality, such as router vulnerability protection, digital footprint management and custom intelligence, is provided on some or all of the personal and family protection plans. The SME protection plans also include multi-device protection and simulated attacks. The Cybercare4U product warranty (R10 000 per annum) covers fraudulent online purchases, phishing scams, fraudulent in-app purchases, fraudulent EFTs and virus attacks, and includes cyber-bullying trauma support, legal assistance and ID theft mediation. The signed agreements that MyCyberCare have
scheme member and employer portals. The technology will free up the broker from the administrative burden, with more time to dedicate to proper specialised advice. In the emerging new business landscape, healthcare intermediaries embracing specialised software such as Brokertools will be optimally positioned to provide professional advice, manage their workforce productivity, and be effortlessly POPI and FAIS compliant. You can visit the website www.brokertools.co.za for more information and to schedule a demo. Brokertools can be contacted at 012 665 3899.
with both the Bitdefender and McAfee brands allow them to embed their cyber-insurance bundle with these offerings and take this new bundled offering to the SA consumer and SMMEs. Bitdefender antivirus solutions are available for home users with packages available for PCs, MACs, iOS, Android or multiple platforms, and for businesses from SMMEs through to large enterprises. The McAfee internet security cloud-based threat analysis solution provides ransomware protection, safe web browsing, performance optimisation, password management and multi-device protection. McAfee Total Protection is an antivirus package with a two-way firewall with McAfee NetGuard™, a vulnerability scanner, WebAdvisor, Shredder, Quick Clean, security for mobile devices, online advice from security experts, anti-spam, password management, File Lock and Safe Family. “Underpinning all of these software offerings is MyCyberTraining, which provides users with complete cyber-awareness content in short-format videos. The fully automated cyber-training platform includes real-world scenarios showing techniques, tactics and schemes that hackers are currently using to jeopardise your cybersecurity. In this training campaign, we explain how to avoid email scams, ransomware, unintentional data leaks, travel and public Wi-Fi incidents,” says Campbell-Young. The MyCyberCare bundles are available for purchase either off-the-shelf at major retailers or online. For more information contact MyCyberCare, +27 (0)83 633 7947, info@mycybercare.com, www.my-cybercare.com.
Simon CampbellYoung, CEO, MyCyberCare
WWW.MONEYMARKETING.CO.ZA 23
SOFTWARE SUPPLEMENT
31 October 2020
GENASYS UNVEILS NEW LOOK
G
enasys Technologies has undergone an external brand refresh as part of its strategy to continue the global expansion of its operations and further cement its place as a leading insurance technology provider in South Africa. The company has deep roots in the South African market but is still in the early phase of its global expansion. “Based on the maturity of our processes and products, we are poised for rapid growth in other parts of the world,” says founder and CEO Steve Symes. “Genasys will continue to be an insurance technology provider that leverages the best of established and new entrants through the early adoption of Nocode and an Open API architecture, with the solidity of a proven platform,” says Symes. The rebrand includes an overall new modern look: A redesign of its logo and the company website, strengthening and simplifying the company name by dropping ‘Technologies’, to just be known as Genasys going forward, and consolidating its product offerings under the Genasys umbrella. In line with the company moving to become a global role player in the insurance technology sector, Genasys is also merging its South African and UK websites, which now exists under the URL www.genasystech.com.
THE COMPANY HAS DEEP ROOTS IN THE SOUTH AFRICAN MARKET BUT IS STILL IN THE EARLY PHASE OF ITS GLOBAL EXPANSION “The Genasys refresh comes at a pivotal time for insurance around the world, as the pandemic has accelerated the adoption of insurance technology by the global insurance industry, who are in a rush to streamline their operations and stay relevant,” Symes explains. “Insurance technology providers are no different. We have to remain nimble, or Agile, to stay on top of our game and offer our partners the tools to grow and streamline their processes and enhance their digital sales capabilities.” Customer of One South African-born Genasys has undergone various transformations in its 23 years of operations. The name Genasys is a portmanteau, a blend of the words “generating systems”, but the company started doing business as Gen-A-Sys CC. “From the outset, we approached systems development with a Computer Aided Systems Engineering (CASE) mindset, which starts with design and generates code,” says Symes.
There were other insurance platforms available in 1997 but the critical design element for Genasys was a client-centric model. “The single-view-of-customer across all classes of insurance business is widely used today, but at the time most systems were policy-centric,” Symes explains. Genasys’ first product was called Customer of One, which emphasised the importance of customercentricity. The company’s first three customers were an insurer, a broker, and an underwriting management agency (UMA), or managing general agent (MGA) as it is known in other parts of the world. “Based on the quick uptake by South African insurers, we knew we had something different,” says co-founder and Chief Technology Officer Craig Olivier. The first years are critical for any company. Genasys went through a period of intense growth and balance, says Symes. “We quickly learned that business was not only about developing systems but also hinged heavily on building and sustaining relationships,” he says. “We were also acutely aware of growing pains and preferred controlled growth rather than implode under the pressure of precipitous growth, which has been many a company’s downfall.” “As our clients got bigger, our product and services had to keep up and mature rapidly, while we ensured that we did not lose the agility of a start-up,” says Olivier. On being Agile Agile, in its truest sense, means to be able to move quickly and easily. In recent years, the technology sector has annexed the word to mean the frequent reassessment and adaptation of plans. “We were agile before it was a thing,” says Symes. In 2016, the company decided to go international and opened its London office in 2018, with current Managing Director Andre Symes relocating to the UK full-time to oversee their UK operations. “In the last two decades, we have implemented many changes in the company – some more noticeable than others – to continue delivering value to our partners. This latest move is another step in the evolution of Genasys, in which we aim to expand into new territories, gain market share in existing territories, and further enhance our partner agreements,” Olivier adds.
24 WWW.MONEYMARKETING.CO.ZA
Steve Symes, CEO, Genasys
JOHAN VOSLOO CEO, Commspace
WHY INVEST TIME IN HIGH-LABOUR LEGACY TOOLS?
A
sk yourself in a nutshell: why do you invest so much time and energy in high labour legacy tools like Excel? The answer is likely somewhere in the region of… • It’s cheap and accessible • It’s familiar and convenient • I haven’t time to learn something new • Er… now that you mention it, I’m not entirely sure. Now think about your end game. Are you looking to right size your book? Diversify your offering? Maybe you’d like to become part of a larger FSP outfit? In all cases, revenue intelligence will be the key insight that will allow you to make it happen. Commspace wants to give you the time back and provide a wider-angle view while it’s at it. The side-by-side shows it’s really no contest: Excel
Commspace
Audits & version history
Doable, though you’ll have to do the grunt work constantly. It won’t volunteer to do it for you, only showing the ‘now’.
Standard issue. It’ll keep the breadcrumb trail of activity live and accessible, for the entire usership, in its sleep.
Scalability
Type ‘scalability’ into a cell and it’ll likely crash.
Born for scale. Say ‘scalability’ around it, and it’ll probably jump on you, tail wagging. It’s raring to go.
Real-time integrations
Nothing to see here.
Primed and ready for real-time integrations with many in place, and more in the works.
Dashboards & visibility
Low visibility with painful info-sharing.
Live, active dashboard views for multi-user, labour-free visibility and sharing.
Usability & convenience
Seems convenient until suddenly it’s not, as spreadsheets become monstrous and unmanageable.
Powerful functionality that stays lowcomplexity. If you’re cloud literate and even if you’re not, you’ll get up to speed in no time.
Commspace will give you back the bandwidth you crave: • Instantly and autonomously tracked, single-click commissionloading that’s intelligently allocated. • On-demand answers via rich analytics, fully-branded reports and smart integrations for smarter, more detailed dataflows that will give you a clearer picture of what’s going on. • Geared for individual, single office or multi-group operations for an integrated, ‘grow with you’ approach to business development and scaling. Digital Revenue Management truly is today’s viable escape plan for those who want to finally break free from institutionalised thinking.
SOFTWARE SUPPLEMENT
31 October 2020
HELPING OUR CLIENTS #RiseAboveTheRest PROpulsion Learning and Technology was founded by Francois du Toit in 2015. Initially known as Francois du Toit Consulting and Technology, the business rebranded this year to align its value proposition and vision with the future. What we do PROpulsion serves financial professionals like financial planners and advisers, accountants, tax practitioners, bookkeepers, broker consultants, and paraplanners – as well as the businesses that employ them. We offer training, learning content and technology specifically developed for financial professionals and the individuals and teams that support them. The PROpulsion podcast is a free resource where guests that have valuable stories to share with financial professionals are interviewed. It is our sole purpose to help and support the continued growth of financial professionals and assist them in building forward-looking and sustainable practices. Our training We pride ourselves in delivering practical, fun and relevant learning
experiences. Learners can immediately apply what they’ve learned. This is what makes PROpulsion unique. We deliver training in a variety of formats: • Self-paced online learning – learn at your own pace, at any time, choosing what you want to learn, when you want to learn. • Live online refreshers – attend live online sessions designed to fully refresh your knowledge and skills on several financial planning topics in the shortest amount of time. • Webinars and courses – webinars are short and online, while courses are deep dives into specific financial planning topics. Courses are offered both face-to-face and online. • Tailored training sessions – we customise sessions according to your needs. Our content We design, create and produce
all our own content. The content covers all areas of financial planning and several soft skills, practice management and technology. Our content is: • Licenced – we retain ownership and rights of the content, but allow clients to use our content, saving them time and money. • Used on your own internal LMS – all our online content can be hosted on your own internal Learner Management System, in line with the licensing agreement. • Approved for CPD – all our content meets the CPD approval criteria and can be approved and administered by the client if they so require. • Sponsored – we brand our content with the sponsor’s branding and offer these programs for free on our online learning platform. We also create bespoke content on behalf of sponsors, when required. Our technology Technology is at the centre of PROpulsion and we have a passion for staying on top of the latest developments.
We offer: • The Tax Tool – niche software developed by us to enable financial advisers, accountants and tax practitioners to identify risks and opportunities for clients from their annual tax assessments. This is also a very handy tool when it comes to investment and retirement planning. • ESET Security – PROpulsion is an approved partner and offers consultation and product implementation to protect your IT infrastructure and data. • Consulting – we offer guidance and recommendations on technology solutions for our target clients. Our mission Our mission is simple: Help our clients #RiseAboveTheRest. For more, please visit www.propulsion.co.za
Francois du Toit CFP®, Founder, PROpulsion Learning and Technology
Learning
Content
Technology
Online or face-to-face Self-paced or live Including CPD
License our content Host on your own LMS Sponsor our content
The Tax Tool ESET Security Partner Consulting
Visit www.propulsion.co.za
WWW.MONEYMARKETING.CO.ZA 25
RIGHT PLATFORM?
Ever wondered if the investment platform you’re on is the right fit for you? At INN8, we’ve created a purpose-built platform, inspired by you, the wealth manager. PURPOSE BUILT. Adviser inspired. quazar.co.za • INN8/RP/003
www.INN8.co.za.
INVESTING
31 October 2020
Satrix lists two new ESG ETFs on JSE
I
ndex tracking pioneer, Satrix, has listed two new ESG ETFs on the Johannesburg Stock Exchange (JSE). This brings their ETF offering to 20 ETFs in their 20th birthday year. These ESG funds invest in companies that score highly in terms of environmental, social and governance (ESG) factors in their decision-making and daily operations. The two funds are the Satrix MSCI EM ESG Enhanced ETF and the Satrix MSCI World ESG Enhanced ETF. “We are encouraged by South African investors requesting access to companies that do good in the world and act in the best interest of the planet and its inhabitants,” says Helena Conradie, CEO of Satrix. “As a business with a long-term mindset, and a business that cares about people, bringing two ESG products to the JSE meant we could align our own purpose with that of our clients.” Sustainability is the umbrella term for ‘doing good’. Investing sustainably protects the planet, respects its people and other species, and guides company boards to do better for everyone. Satrix and BlackRock bring investors more than index-tracking Accompanying last month’s ETF launch was a virtual conference focusing on sustainable investing titled Who cares, wins. It was co-hosted by Satrix and BlackRock iShares, the world’s largest provider of index-tracking funds, as part of their ongoing IndexMore initiative. This is an educational collaboration between Satrix and BlackRock. The collaboration steps up to provide investors with information on more than just index-tracking. Previous IndexMore conferences covered the topic of ‘Megatrends’, such as technological break-throughs, climate change and resource scarcity, rapid urbanisation, demographics and social change, and economic power shifts. Speaking at the conference last month, Conradie provided some background to its theme. It all started in 2004 when the then secretary-general of the United Nations, Kofi Annan, wrote to more than 50 CEOs of major financial institutions, inviting them to find ways to integrate environmental, social and governance matters into capital markets. A year later, the term ESG was coined when Annan’s request led to a report called Who cares, wins. What this report made clear was that incorporating ESG into companies makes good business sense and should lead to more sustainable markets. Also speaking at the conference, Nersan Naidoo, CEO of Sanlam Investments, pointed out that the UN gave businesses a roadmap for the type of world that should be left behind to coming generations, when 193 countries
signed and adopted the 2030 United Nations (UN) Agenda for Sustainable Development, with the UN estimating that the global gap to implement the 17 sustainable goals ranges from US$3tn to a staggering US$5tn annually. This is the size of the gap companies need to fill to ensure a sustainable future. ESG ensures good investment practices ESG is one of the components of sustainability and specifically focuses on how the areas of environmental, social and governance affect a company’s operational efficiency and future strategic direction. ESG metrics measure how efficiently companies incorporate these principles and have gained popularity in past years. COVID-19 has only seen these practices accelerate. While ESG measures fall under the umbrella of sustainable investing, they do not pertain to new modes of investing like green or impact investing. Rather, they are measures to calculate how companies are progressing in their environmental efforts, such as mitigating climate risks, managing natural resources scarcity, pollution and waste; social efforts, such as labour issues, product liability, data security and stakeholder opposition; and governance efforts, such as board quality, diversity and effectiveness. ESG businesses show resilience through economic storms Incorporating sustainability considerations into investment research and portfolio construction processes can enhance long-term risk adjusted returns and portfolio resilience. Even before the COVID-19 crisis, governments, businesses and investors were beginning to reassess certain personal and community values. It is possible to measure these values and intentions by incorporating ESG metrics into the investment process. Studies are now starting to reveal that companies that focus on measures like job satisfaction, the strength of customer relations, and the effectiveness of a company’s board exhibit resilience through all market cycles. Do ESG principles compromise performance? Thomas Fekete, head of Strategy and Products for Sustainable Investing at BlackRock, debunked the myth that ESG means a compromise in investment returns on the Who cares, wins virtual platform. In fact, the opposite is true. When constructing their ESG ETFs, BlackRock evaluates which ESG factors will enhance performance relative to the parent indices. He stated that not all ESG factors are material and, although BlackRock has approximately
3 000 data points on each company, they only include factors that affect company performance. This is about one-fifth of the 3 000 data points. Fekete reminded delegates that climate change is a substantial investment risk. If humans continue to use fossil fuels and the population continues to rise at the current rate, we are heading for a world with mounting costs and profound economic damage. Fekete said that the data received in 2020 is demonstrating the ability of sustainable indices to outperform their parent indices – 81% of sustainable indices have been able to do this during the COVID-19 crisis. During the conference, Naidoo pointed out that ETF issuers like Satrix have a responsibility to create products that align investors’ money with their values, that provide a measurable output of the impact their investments are having, while at the same time making sure investors’ financial goals are achieved. That is precisely what Satrix’s two new ETFs aim to do. The Satrix ESG funds provide US dollar exposure As with all Satrix ETFs that accept the local currency from investors but provide offshore exposure, the new Satrix ETFs feed into existing international ETFs. The Satrix MSCI EM ESG Enhanced ETF feeds into the iShares MSCI EM ESG Enhanced Ucits ETF, and the Satrix MSCI World ESG Enhanced ETF feeds into the iShares MSCI World ESG Enhanced Ucits ETF. South Africans can conveniently invest rand into these two funds while enjoying exposure to a US dollar-based index. Investors need to bear in mind that, as with all offshore investments, they are exposed to exchange rate risk - performance will be positively affected if the rand weakens against the dollar, and negatively affected if the rand strengthens. Both are total return ETFs, which means all dividends are automatically reinvested.
MSCI World ESG Enhanced ETF meets both needs. The MSCI World ESG Enhanced Focus Index is derived from the MSCI World Index and includes large and mid-cap companies across 23 developed market countries. The index is designed to maximise exposure to positive ESG factors while reducing the carbon equivalent exposure to carbon dioxide and other greenhouse gases, as well as their exposure to potential emissions risk of fossil fuel reserves by 30%. The index also aims to maintain risk and return characteristics similar to those of its underlying market capitalisation weighted index, the MSCI World Index. The MSCI World ESG Enhanced Focus Index currently holds 1 490 company stocks, in comparison to the 1 601 in the MSCI World Index. The iShares ETF into which the Satrix MSCI World ESG Enhanced ETF feeds holds 1 317 of these. The largest holdings currently are Apple, Microsoft, Amazon, Facebook, Alphabet (Google’s parent company), Nividia, salesforce. com, Johnson & Johnson, and Procter & Gamble. Two-thirds of the fund is exposed to US-listed stocks. Access to emerging market ESG companies For investors who want more emerging market equity exposure in their portfolios with strong ESG factors exposure, Satrix launched the Satrix MSCI EM ESG Enhanced ETF. The MSCI Emerging Markets ESG Enhanced Focus Index slightly downweights China when comparing it with the index from which it is derived, the MSCI EM Index. It also up-weights the exposure to financial stocks. The top stocks in this ETF currently are Alibaba, Tencent, Taiwan Semiconductor Manufacturing, Samsung, Meituan Dianping, Ping An, Naspers and China Construction Bank. The largest exposure is to China, currently 40% of the index.
Access to developed market ESG companies Investors who require developed market equity exposure, and who have a desire to invest responsibly, will find the Satrix TABLE 1: COMPARING SATRIX MSCI WORLD ESG ENHANCED AND SATRIX MSCI EM ESG ENHANCED ETFS
Helena Conradie, CEO, Satrix
Source: Satrix
WWW.MONEYMARKETING.CO.ZA 27
INVESTING
31 October 2020
MEL MELTZER Director, Platinum Portfolios
Thank you for being patient
T
he tectonic movements that are re-shaping our world today at an ever-increasing speed are described by author Thomas Friedman in his book Thank you for Being Late: an Optimist’s Guide to Thriving in the Age of Accelerations.* To make sense of this environment, Friedman examines accelerating technological change, or the impact of Moore’s Law, as well as globalisation and climate change. All three are speeding up and impacting on every aspect of our lives. He believes that we should purposely ‘be late’ in order to pause and appreciate the era that we’re passing through and to reflect on its prospects and dangers. The world is indeed changing faster than most of us can understand. It’s only a decade ago that the first iPhone came onto the market, and today we can see how meteorite hit the earth in the Libyan this completely revolutionised the desert, creating glass. Seeing and mobile industry. Through devices experiencing glass gave people the idea like these, we have information and the possibility of re-creating this at our fingertips. Investors have material. The limits and capabilities had to adapt to this fast-changing of glass were experimented with, environment, with most of the leading to the creation of clear glass, changes being positive – now we eyeglasses, microscopes, telescopes, have access to better information, cameras, fiberglass, laser beams, and we can participate in results fibre optic cables. Fibre optics are the presentations live across the world, backbone of the Internet that today and the Internet of Things is enabling provides investors with access to us to make better investments. information at super-fast speeds. In another book about lifeWe as fund managers and investors changing innovation, How We Got have access to information that we to Now: Six Innovations That Made couldn’t dream of a few years ago. the Modern World**, Steven Johnson In fact, one could argue that we can explains six innovations that have now manage money much more changed the world: glass, cold, effectively due to the advancement of sound, clean (water), the Internet. time and light, and In this fast-changing IT’S OUR VIEW world, investors should explores how these building blocks have be cautious, as speed THAT A BIG led to technological in decision making COMPETITIVE and investing can lead breakthroughs that ADVANTAGE have changed our to losing money fast. lives. Johnson’s themes It’s our view that a big TODAY IS of innovation are very competitive advantage PATIENCE consistent with the today is patience, as statement made by everyone has access to Sir Isaac Newton, “If I have seen a similar information. Investors who little further, it is by standing on the have patience and a clearly defined shoulders of giants.” process will do well in the long term. Johnson’s first chapter on the history The basic formula for investing of glass is fascinating. Today we live in has been around since 600 BC, when a world of glass. Our dwellings, office Greek storyteller Aesop said in one spaces, cars, smartphones – most of of his fables, “A bird in the hand the things we own and interact with is worth two in the bush” – and – have been enabled because of glass. this proverb applies to investors of It is very hard for us to imagine a today. The King of Investing, Warren world without it. However, there was Buffet, had this to say about Aesop, a time when the world was without “Investing is about laying out a bird glass, until – according to scientists – a now to get two or more out of the
28 WWW.MONEYMARKETING.CO.ZA
Beware of imbalances in the gold market
A
INVESTING IS ABOUT LAYING OUT A BIRD NOW TO GET TWO OR MORE OUT OF THE BUSH bush. The keys are to only look at the bushes you like and identify how long it will take to get them out.” Today’s markets seem like a drunken party of euphoria. In the US during the lockdown, day trading replaced sports betting as millennials used the Robinhood app to trade their favourites higher and higher, not wanting to miss a beat. Everyone thinks they can leave before midnight, but they are all trading in a room in which the clocks have no hands. Regardless of the technological advances made, what Aesop said still applies: investors are advised to stick to a clearly defined process when making investment decisions. The most difficult ingredient of investing is that of patience, in other words, waiting for the right opportunity to invest. As John Paul Getty said, “It is possible to make money – and a great deal of money – in the stock market. But it can’t be done overnight or by haphazard buying and selling. The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator.” *Published by Farrar, Straus and Giroux, 2016 ** Published by Penguin Publishing Group, 2014
lthough HarmonyGold reported a R850m loss for the financial year ended in June 2020, it has announced that it expects to report a profit in FY 2021 when the full benefit of record-high rand gold prices filter through to its bottom line. This is as the gold price continues to soar during the COVID-19 pandemic, with investors seeking refuge from the damage done to the markets. Precious metal producers have seen surging profits, despite the impact of the lockdown on production. However, Old Mutual Investment Group warns of the role of imbalances in the market leading to unwinding prices, with global growth expected to improve – off a low base – over the next year. “Relative to growth sensitive assets, a recovery in global growth from low levels sets the foundation for gold to underperform other commodities,” says Zain Wilson, MacroSolutions Strategist at Old Mutual Investment Group. “This would also be true for gold shares’ performance relative to cyclical commodity shares, as well as relative to shares linked to the global industrial cycle. He points out that, as we move further out in time, uncertainty increases. “History has shown us that global growth, inflation and monetary policy regimes are the most important determinants of the long-term trend in gold prices. We have also learnt to keep an eye on rigged prices – such as fixed gold prices in the 1970s and dollar pegs in the 1990s – as these allow the accumulation of the large imbalances, leaving those prices vulnerable to a rapid unwind,” says Wilson. “The timing of these catalysts is unforeseeable, but the risk and reward skew becomes increasingly more unfavourable as imbalances build. Unwinding of such bubbles is not a storm we would want our clients to be caught in.” The Old Mutual Balanced Fund continues to have some exposure to both gold commodities and gold shares as a counterbalance to holding no global bonds, but Wilson points out that the total gold exposure remains below their long-term benchmark weights.
INVESTING
31 October 2020
ALBERT BOTHA Head: Fixed Income Portfolio Management, Ashburton Investments
I
t has become quite a challenge for South African investors to source real returns. Both local equity and property have disappointed over the last five years and now that the repo rate has dropped to 3.5%, cash in a bank account is also becoming increasingly punitive. This lack of returns in the cash and money market space due to low interest rates globally has forced investors to look for returns elsewhere, as we know that two of the primary considerations within asset allocation is risk tolerance and return requirements. The situation in the US, Japan and German markets has been further exacerbated by the anaemic returns available in their local bond markets. With the current 10-year yields in the US, Japan and Germany at 0.71%, 0.023% and -0.4767% respectively, investors in these markets went looking elsewhere for yield. Investors in South Africa are
Creeping up the curve
likely to do the same. In August, the subtle changes. STeFI Call Deposit Index returned The lower the return estimates are, 0.3% (3.61% annualised) – and the more valuable an additional 1% while this is significantly higher in yield becomes. When call rates than what one would expect in were averaging 6.5%, earning 7.5% Europe, for many local investors it on a money market portfolio may seems somewhat anaemic. not have seemed worth the extra Over the last three years, we hassle. However, if you are expecting have seen that the 3.5% from call, interest-bearing suddenly the THE LOWER THE category has grown 4.45%* annualised its assets under RETURN ESTIMATES yield earned by management the Ashburton ARE, THE MORE (AUM) significantly, Money Market increasing R273.6bn Fund in August VALUABLE AN vs the multi-asset becomes much ADDITIONAL 1% IN category up only more attractive. At YIELD BECOMES R130.7bn (ASISA). the same time, there This is even more are existing clients apparent when one considers that of in money market portfolios also that R130.7bn within the multi-asset looking for additional yield, and for category, R105.4bn was from the them the 5.93%* annualised yield that income category. Interest-bearing the Ashburton Stable Income Fund and income categories saw an AUM returned, also in August, is equally increase of R379bn. This trend is appetising. (*Source: Morningstar; likely to continue, with a couple of returns are net of fees and annualised)
This theme, where clients take one or two steps up the risk curve to help them attain their financial goals, is going to be a driving force in our local market for some time. The low-risk money market and enhanced yield funds are likely to benefit from clients moving away from cash and call accounts, while at the same time losing AUM to other portfolios that can offer higher potential returns. One of the most interesting spaces for the next 12-18 months will be the multi asset-income space, where the current potential upside relative to cash yields are the highest in over 20 years. The differential between bond, property and inflation-linked bond yields relative to cash has never been this high. The current low-rate environment is expected to continue forcing investors to change allocations and, given that, combined with a persistent demand for higher returns, investors will be creeping slowly up the risk curve.
Mauritius now even more attractive for investors
M
auritius has created a range of incentives that will effectively make it cheaper and easier than ever for investors and expatriates to live and work in the country, including reduced minimum investment limits and extending residency permits from three to 10 years. The changes, announced in the Mauritian national budget on 4 June 2020, have been designed to encourage foreign talent and investment to boost the country’s economy. They will see existing residency permits and related procedures simplified and extended, and more flexibility provided in terms of investments. Sovereign Trust consultant Ralph Wichtmann says one of the highlights of the new measures was the reduction of the minimum investment required to acquire an occupation permit as an
investor – and live in Mauritius as a non-citizen – to $50 000 (R867 000), from $100 000 (R1.7m). The validity of an occupation permit has also been extended from three to 10 years, and the spouses of occupation permit holders will no longer require a separate permit to invest or work in Mauritius. The holders of occupation permits will also be allowed to bring their parents and dependents under 24 to live in Mauritius. Work and residence permits will be combined into one document; people who have held a residence permit for three years will be allowed to apply for permanent residence; and permanent residence permits will be extended from 10 to 20 years. Wichtmann says the Mauritian government’s decision to allow occupation permit holders to buy up
to 2 100m2 of land for residential use within smart city schemes, subject to certain conditions being met, was a “major concession”. Previously, non-citizens could only buy homes in schemes specifically designated for foreign buyers. “The changes to the requirements for the various permits and acquisition of land are clear incentives to make Mauritius more attractive to prospective investors, talented individuals and expatriates wishing to base themselves in Mauritius,” says Wichtmann. South Africans looking to acquire immediate permanent residence in Mauritius by investing in a property scheme will also benefit, with the minimum purchase price being reduced from $500 000 to $375 000. This permit is valid for an initial 10 years and is renewable for as long as the investor owns the property. However, an important change that investors need to be aware of is the fact that the Mauritian Solidarity Levy will be applied to all Mauritian residents, and not just citizens, says Wichtmann. The Solidarity Levy is an additional 25% tax on qualifying
THE MAURITIAN GOVERNMENT ALSO ANNOUNCED SEVERAL CHANGES FOR COMPANIES BASED IN MAURITIUS income exceeding MUR3m per annum. However, the amount payable as a Solidarity Levy cannot be greater than 10% of the qualifying income. The Mauritian government also announced several changes for companies based in Mauritius, including an eight-year tax holiday for companies that manufacture pharmaceutical products, medical devices or high-tech products, provided the company started operating after 8 June 2017.
Ralph Wichtmann, Consultant, Sovereign Trust
WWW.MONEYMARKETING.CO.ZA 29
EMPLOYEE BENEFITS
31 October 2020
CRAIG ABBOTT Co-Head, Institutional Discretionary Fund Management, RisCura
Looking for an umbrella fund? Watch out for leaks!
I
ncreasingly, trustees are choosing to pass on the burden of managing their own standalone pension funds by enrolling their members in umbrella funds. With the many advantages of looking towards an umbrella solution, there remains the question of how tailored an investment portfolio can be, relative to the cost. Independent financial advisers who focus on employee benefits should be aware of the following: Excessive investment choice With such a wide array of investment portfolios available to employees and IFAs on umbrella platforms, how do they make the choice best suited to their members? How, and on what basis, are they able to differentiate between investment houses, other than relying on past performance, which is not always an indicator of future performance? Often, less is more. Do members really need access to more than two or three funds, possibly with life staging built in? In the famous ‘jam experiment’, researchers Sheena Iyengar and Mark Lepper offered shoppers different selections of jam. On day one, six kinds of jam were on offer. The next day, there were 24 kinds to choose from. While the second test brought more customers into the shop, the first test resulted in more sales. The smaller selection resulted in 12% of customers buying jam, while the larger selection resulted in only 2% of customers buying jam. This is known as the paradox of choice. Even though we think offering choice will be appealing to buyers, the reality is that buyers find too much choice debilitating. The same is true for too much investment choice. Best of breed managers Often, using a balanced fund offered by an investment manager who is strong in one asset class, say equities, but less adept at investing in fixed income, results in diluted returns. Having a quality equity manager paired with a specialist manager on the fixed income side can be to members’ advantage. However, manual intervention to rebalance the asset allocation and the cost implications as you add on specialist managers, can become overwhelming for IFAs when attempting to blend managers.
Blending and style IFAs may try to blend what they believe is the best of the available portfolios for a client. All too often, it happens to be brand names that either have the same or a similar investment style, which results in duplication of certain stocks or styles, ultimately detracting from performance. Understanding the style of a manager, and how they contribute to the overall portfolio, is key to understanding how they will perform in a phase of the market cycle and complement the overall makeup of the portfolio. Asset allocation is key to performance and blending, in terms of trying to get the correct asset class mix, is complex. Finding alpha in unusual places As the world continues to change, so too should your investments. A good investment house should always try to provide growth through diversification, whether through new or additional asset classes, or broader geographic exposure, or finding untapped or new markets for clients. China, for example, has seen exponential growth and will possibly see more in the next few years, yet we are limited in terms of selection under many umbrella structures. In a well-designed asset allocation portfolio, exposure to a market such as this can have an enormous impact over a period. Active vs passive Even as the either/or debate rages on, the reality is that sometimes neither is the most appropriate solution on its own. Often passive managers are used to reduce costs, but you may have to give up on alpha. Active, on the other hand, can be expensive and, in uncertain markets, underperformance of the benchmark does not sit well with clients. Having a strategy that incorporates both active and passive in the portfolio make-up will help reduce costs, while allowing you to build on specialist managers that can go beyond just the index to attain alpha. If you are thinking of moving to an umbrella solution, consider an alternative investment portfolio that allows for a complementary mix of specialist managers with different styles, active and passive options, as well as access to different geographical markets.
30 WWW.MONEYMARKETING.CO.ZA
Exploring new business frontiers with employee benefits
A
s you evaluate new opportunities for your business, employee benefits can be a game changer, and your existing client base may be ripe with opportunities. Tapping into relationships with individual clients who are business owners or decision makers could allow you to make a real difference in their business. Bolstering those relationships and increasing client retention can help you future-proof your own business and, ultimately, improve insurance and retirement outcomes for a positive socioeconomic impact. Getting started and finding an employee benefits provider Nashalin Portrag, Head of FundsAtWork at Momentum Corporate, says the right provider can help you gain a solid understanding of employee benefits to make it easier for you to expand your business into this space. When choosing a provider, look for the following: • An employee benefits provider who is in touch with the needs of changing workplaces, and has research and data-interpreting capabilities to provide insights that help you offer your clients solutions that add value beyond cost-efficiencies • Innovation – combining insights, expertise and technology to optimise experiences at every touchpoint • High levels of flexibility and choice that enable tailored solutions. Portrag adds that some leading umbrella funds partner with financial advisers through programmes that support and reward them for helping their clients get greater value from their employee benefits through combinedsolution value propositions. Licensing requirements and legislation Although the employee benefits industry is highly regulated, it is easy to enter the market. Currently, these are the applicable licences required to sell employee benefits solutions: The Financial Product Licence required Sector Conduct Insurance-only employee Long-term Insurance Authority has made benefits subcategory B1 (No 1.3) extensive changes to the Policyholder Group retirement benefits Pension Fund Benefits Protection Rules (No 1.7) (PPRs) prescribed Bundled group benefits – Both licences above by the Long-term retirement and insurance Insurance Act. The benefits combined amended PPRs Other group benefits, Health Services Benefits incorporate the such as health solutions (No 1.16) principles of Treating Gap cover products Short-term Insurance: Customers Fairly to Personal Lines (No 1.2) ensure that insurers offer products that meet clients’ and their employees’ needs, keep them informed of their benefits, and provide sufficient and correct advice. Analysing potential employer clients’ needs Various factors around clients’ businesses are relevant to the types of employee benefits they may want to provide. As a financial adviser, you will have an active role in helping employers balance the cost of benefits, while offering the choices that employees want and need in a changing world. There are certain factors to consider that provide a thorough picture of employers’ varying and specific needs when advising them on group benefits for their employees. In short, these include: • The sector in which the employer operates • What benefits to offer - appropriate insurance cover, retirement savings, healthcare cover, and employee and employer rewards programmes. Portrag concludes, “While 2020 hasn’t been easy for you or your clients, employee benefits can help you secure group business and unlock further opportunities with your clients’ employees as individuals. This full circle of recurring business means a group scheme client is a potential client for life.”
Nashalin Portrag, Head: FundsAtWork, Momentum Corporate
Give your business new momentum
Your clients wear many hats. One moment they’re making personal decisions about their loved ones, and the next, professional decisions for their business and employees. 2020 hasn’t been easy – for them or for you. How can you make a real difference in their lives and businesses, future-proof your own business and move forward on your journey to success? When you partner with the right employee benefits provider, it’s a lot easier than you may think.
Explore new frontiers. Contact your Momentum Corporate specialist. momentum.co.za
Momentum Corporate
Momentum Corporate is part of Momentum Metropolitan Life Limited, a registered or licensed insurer, authorised financial services provider (FSP6406) and approved credit provider. Momentum Metropolitan Holdings Limited is a Level 1 B-BBEE insurer.
HEALTH FEATURE MEDICAL AID SCHEMES IN 2021
31 October 2020
The quest for true value in a post-COVID-19 world Selling healthcare is now more challenging than ever.
S
elling medical scheme benefits to younger healthcare consumers, particularly if a loyalty programme promising a number of attractive extras were part of the deal, used to be pretty straightforward. Life has, however, changed in the past number of months and so have the values of most South Africans. In a post-COVID-19 world, the need for quality healthcare cover has shot to prominence and, going forward, decisions made when it comes to buying healthcare cover will be based on an entirely different set of rules. “Financial pressures following a worldwide recession, job losses and reduced working hours have seen many people, particularly younger individuals, tightening their belts while focussing on essentials, including accommodation, food, healthcare and education, while reducing costs such as entertainment and other leisure activities,” notes Josua Joubert, chief executive and principal officer of CompCare Medical Scheme. “Recent research has shown that many younger individuals are moving back into their parental homes to reduce their expenses. Not only is everyone looking for better value at a more acceptable price, but better healthcare outcomes are seen as being all-important. Furthermore, research has shown that millennials, who will make up 75% of the world’s workforce by 2025, care more about health and other benefits than previous generations. They are also technology-driven and, where possible, would prefer online consultations with healthcare professionals – and we already offer this service at CompCare.” Younger people who still mistakenly assume that
it is safe to go without healthcare cover should note that a National Financial Capability study conducted in the United States has revealed that millennials collectively have more medical debt than elderly baby boomers. This indicates that millennials are also vulnerable to health events. “Affordability issues are a growing challenge in the private healthcare sector. In the light of current cost pressures being reported globally, affordability challenges are a fact of life for individuals the world over. People are hard pressed to find lasting value when it comes to the delivery of affordable healthcare, particularly in the current financial climate. “In times of uncertainty, one of the greatest attributes that any medical scheme could offer its members is the ability to innovate to such a degree that value can be created from even the lowest of healthcare budgets. Everyone is looking for a low-cost option that is not only affordable but also sustainable, and we believe we have developed a solution that more than fulfils this need,” asserts Joubert. Healthcare actuary and managing director at 3ONE Consulting Actuaries, Carl Yssel, adds that since its introduction to CompCare’s product suite in 2017, UniSave has fast become one of the most popular products on offer in that price range and market segment. “Appealing to young members, the option includes unlimited hospitalisation, and a medical savings account set at the maximum permissible level of 25%. This out-of-hospital flexibility has seen the option grow significantly since inception, while maintaining a positive financial performance. Given these good results, the scheme continually focuses on enhancing benefits and securing the lowest contribution increases possible.
Budgeting for 2021 will be challenging for medical schemes: HFA
F
or medical schemes, budgeting for 2021 will be challenging, says Lerato Mosiah, CEO of the Health Funders Association (HFA). “The uncertainties around the trajectory of the COVID-19 pandemic and the treatment and prevention requirements mean that schemes will need to make provision for managing the disease and any arising clinical complications. “Scheme reserves have also been negatively impacted by the struggling economy and difficult investment markets, and schemes must take this uncertainty into account when pricing contributions into the future.” Mosiah adds that protecting
members, both through providing adequate benefits and through ensuring that contributions remain affordable, is going to require that medical schemes navigate carefully through this complex time. The unprecedented pressure on consumers brought on by the COVID-19 pandemic prompted a quick response from medical schemes who rallied to grant financial and other assistance to their members. “I applaud the medical schemes industry for their speedy response to finding ways to assist their members through this difficult time, while still maintaining compliance with the very tight regulatory framework that
SCHEME RESERVES HAVE ALSO BEEN NEGATIVELY IMPACTED BY THE STRUGGLING ECONOMY AND DIFFICULT INVESTMENT MARKETS 32 WWW.MONEYMARKETING.CO.ZA
“Based on 3ONE’s benefit richness modelling, UniSave provides value in excess of its contribution point. Our research has shown that, while the industry average richness fluctuates between 80% and 100%, UniSave is positioned well above the average, at 103.3%. Combined with a low price point, the option is highly competitive,” notes Yssel. GRAPH 1: BENEFIT VALUE INDEX BY PLAN
CompCare is not only conscious of the importance of keeping healthcare affordable and accessible, says Joubert, but seeks to facilitate the delivery of topquality care. Packaged to adapt to the individual needs of every medical scheme member, CompCare is highly focused on providing service excellence at a price that is right,” he adds.
governs the funding industry. “From as early as March, members with a confirmed diagnosis of COVID-19 were assured that their tests and treatment for the disease would be funded in full.” For medical schemes, this meant allocating unbudgeted funds for extensive testing and treatment, including the often-prolonged funding of high-cost, lifesaving treatment in hospital. Assisting members to stay safe and adhere to infection control measures also meant the rapid implementation of coverage for additional benefits like virtual consultations with health service providers and funding for extra personal protective equipment (PPE) in hospital, as well as isolation facilities. “Together with hospital groups, schemes closely monitored the utilisation of high-care and ICU hospital beds with a view to redirecting their members to facilities with available space when necessary,” Mosiah says. South Africa’s extended lockdown resulted in severe financial hardship and a complete or partial loss of income for many medical scheme members. “Many medical schemes structured innovative ways, within regulatory
Josua Joubert, CEO and Principal Officer, CompCare Medical Scheme
parameters and within scheme rules, of accommodating members who were struggling to pay contributions due to an interruption in their earnings. “While some schemes permitted members to utilise their accumulated savings to pay contributions, others offered payment concessions to SMMEs. Schemes focus on providing a range of plans to meet medical and affordability needs across their membership, and members are always encouraged to consult their financial advisers to find an option best suited to them and to enable them to retain cover,” she adds. HFA is a representative organisation for medical schemes, administrators and managed care organisations. Through its members, HFA represents 53% of all medical scheme principal members in the country. For information, visit https://www.hfassociation.co.za/
Lerato Mosiah, CEO, Health Funders Association
HEALTH FEATURE MEDICAL AID SCHEMES IN 2021
31 October 2020
Cancelling your medical aid should be a last resort It’s the time of the year when medical aids launch their plans and costs for 2021 – the time to make important decisions to ensure that you and your family have access to quality healthcare. The ‘open season’ for medical aids gives you the opportunity to reassess your medical needs and affordability for the year ahead. It’s an important but sometimes difficult decision. Tough economic times The last six months have made it even more difficult. When your income is threatened, reduced, or in the worst-case scenario has dried up as a result of the pandemic, deciding where to spend and where to save becomes critical. In circumstances such as retrenchment, or periods of reduced employment, it may be tempting to consider quick-fix solutions and take a break from your medical aid. “But,” says Lee Callakoppen, Principal Officer of Bonitas Medical Fund, “we strongly advise against this. “South Africans are facing many challenges during this tough time and we are aware of the financial implications the lockdown has placed on everyone,” says Callakoppen. “The pandemic has put a spotlight on the need for quality healthcare and having medical aid will ensure you get exactly that.” Healthcare costs are high - always about 5% more than inflation and now, more than ever, South Africans will find these costs prohibitive. For example, two weeks in intensive care could cost around R392 340 and in a general ward it’s around R99 201. The alternative is public healthcare.
network options. In addition, it is strongly advised that you consider benefit richness against your contributions. Some tips from Bonitas when deciding on health cover: Read the small print It’s important to read all the information about the plans, so that you understand exactly what is covered and what isn’t. Have a look at your healthcare costs over the past 12 months, including: • What you spent on day-to-day healthcare expenses • Was anyone admitted to hospital? • Did you need to visit a specialist? • How often did you visit a GP? • Do you have any chronic conditions? • How much was spent on dentistry, optometry and overthe-counter medicine? • Did you use up your day-to-day benefits and/or savings in the year? • How much did you pay in copayments and/or deductibles? • Also consider once-off costs
Getting advice Callakoppen says, “Deciding on a medical aid plan needs to be an empowered decision. It is imperative that the decision you make regarding you and your family’s health is balanced against the benefits you require and affordability. Medical aid plans can be confusing, which is why it’s important to compare the various options and benefits to ensure you find an option that works for you and your dependants. For people who have a broker, this should be the first point of call to help you make an informed choice.” Buying down is a consideration, or looking at network options that offer marked savings. The Bonitas Select Plans, for example, are priced 15% cheaper than non-
34 WWW.MONEYMARKETING.CO.ZA
that won’t come up again soon (childbirth) and those likely to come up again (such as flu). Age impacts your decision • If you have young children, select an option with enough child illness benefits • Check the maximum age of child dependents • If you’re older, select a plan that provides sufficient inhospital cover in the event of hospitalisation, and that covers chronic conditions. Day-to-day detail Medical aids are not-for-profit and belong to their members. For this reason, they have to ensure they contain costs for the benefit of all their members. So it’s important to look at the day-to-day benefits carefully. Additional benefits Ask what extra benefits might be available that could save significantly on day-to-day expenses. These could include: Preventative care benefits, ranging from basic screenings (blood pressure, cholesterol and BMI measurements) through
to mammograms, pap smears and prostate screening. In some cases this extends to maternity programmes, dental check-ups, flu vaccinations and more. Look at virtual care options on your medical aid and what value you get from them. Ensure affordability of the plan When comparing different medical aid options, consider all the costs involved before you make your final decision, such as: • Monthly contributions - as a rule of thumb, should be around 10% of your monthly income at an individual or household level • Generally, the lower the cost of the option, the fewer the benefits available to the member regarding medical treatment, healthcare providers and medications. Comprehensive medical aid or hospital plan? • A medical aid plan covers members’ healthcare costs, in and out of hospital, such as treatment and medicine – as well as simple day-to-day benefits and hospital cover. The plans have set limits for specific benefits and costs are covered according to the rules of the medical scheme and the member’s option. • A medical aid hospital plan provides you with basic, yet important medical cover. Hospital plans differ from scheme
HEALTH FEATURE MEDICAL AID SCHEMES IN 2021
31 October 2020
DECIDING ON A MEDICAL AID PLAN NEEDS TO BE AN EMPOWERED DECISION to scheme but in essence this plan – regulated by the Council for Medical Schemes – includes cover for all your required in-hospital procedures and check-ups. So when you are admitted into hospital for a planned procedure or due to an accident or illness, your expenses are covered, within the limits set by your particular plan. You are responsible for your own day-to-day medical expenses (such as visits to the doctor, specialists and medicine). Remember hospital insurance is a completely different animal to a hospital plan. Hospital insurance is not a medical aid but rather provides you with cash benefits that are paid to you while you are in hospital due to illness, an accident or intensive care of convalescence. You are able to use the money however you please, to cover your medical expenses or daily household costs. But your medical bills are for your account. Co-payments Medical practitioners and hospitals often charge more than medical aid rates. This means medical schemes seldom cover the entire bill. A copayment refers to the outstanding portion of the account, for which you will be responsible. A copayment varies from one medical scheme to another and is sometimes not necessary if you use a DSP or network hospital. The medical aid can pay between 100%-300% of the medical aid tariffs, depending on the plan you are on. Bonitas offers a wide range of plans, including traditional, savings, income-based and hospital plans. Virtual care on the up The pandemic has introduced us to a ‘new normal’. One of the noticeable changes in the healthcare landscape is how members have engaged differently with their healthcare practitioners and medical aids. Virtual care has become an accepted norm, locally
and internationally, paving the way for a new era in access to healthcare. This is supported by members’ expectation of innovation and accessibility, with technology being a key driver. To address this, Bonitas increased the use of technology between members and schemes with WhatsApp and the self-help portal. The good news is that virtual care is being made available to members across all Bonitas plans in 2021. In addition, we are introducing two new plans, driven by technology, intelligence and innovation that offer coordinated virtual care initiatives. Which option is best? Callakoppen recommends you complete a quick personal healthcare needs analysis to help you determine the level of cover you need. The interactive Bonitas website allows you to compare up to three plans at a time to help you make a considered decision about the medical cover you need. Key questions to ask yourself include: • Does my medical aid offer additional benefits that are paid from risk rather than savings or day-to-day benefits? • Does my medical aid offer alternatives like virtual GP consultations, chronic medicine delivery and online antenatal classes to deal with the concerns posed by the lockdown?
What will the consequences be for members if they cancel their policies? Unfortunately, members who resign from the Fund are unable to access healthcare benefits. There are strict rules and regulations governing the medical aid industry in place to protect both members and the financial sustainability of medical schemes.
start of the pandemic. And even though waiting periods apply as normal, with a 12 month’s exclusion cause, COVID-19 is considered a Prescribed Minimum Benefits (PMB) and is covered immediately. “COVID-19 has highlighted the fact that good health is precious and has forced us all to consider this as a priority over other concerns,” says Callakoppen. “We should never compromise our health.”
Cancelling your membership This should be your last resort. If you do cancel, try to rejoin or join a new scheme within three months otherwise the new scheme can impose: • A three-month general waiting period • A 12-month exclusion from cover for any existing medical condition • Late joiner penalties on all people over 35 years of age.
www.bonitas.co.za
Why a broker is important Brokers know the details of the different plans and schemes, which means they can help match you with the best medical cover. COVID-19 retrenchments and reduced salaries mean professional advice is even more important as we go into 2021.
Lee Callakoppen, Principal Officer: Bonitas Medical Fund
First timer? Callakoppen says that Bonitas has seen a marked increase in queries about joining the Fund since the
WWW.MONEYMARKETING.CO.ZA 35
2020 asked a lot
from your clients,
now it’s your turn to get answers. This year has tried, tested and tolled us all beyond our imagination – and your brokerage is probably no different. In times like these, affordably protecting the health and wellbeing of your clients is more important than ever. So before recommending a medical aid solution that’s not Fedhealth, you need to ask yourself (and the other medical aid providers for that matter): “WHY?”
WHY is it only Fedhealth that allows members to “switch off” paying for day-to-day benefits until they actually use it?
WHY should anyone pay for the most expensive option the entire year, simply because something unforeseen MIGHT happen? Fedhealth members can upgrade their option at any time only when they need to.
WHY is it only Fedhealth that gives their members the choice to pay 25% less for their medical aid if they don’t plan on having elective surgery in the year ahead?
WHY does only Fedhealth allow their members the choice between a FIXED repayment for their day-to-day benefits that means no admin for them, OR a FLEXIBLE system where they can transfer the funds as and when they need them and only pay for what they use?
WHY is it that only Fedhealth provides their members with unlimited network or nominated GP visits so they can see their doctor as often as is needed?
WHY is it only Fedhealth that gives their members the choice to save 11% every month if they use Fedhealth’s impressive network of world-class hospitals?
WHY is it only Fedhealth that allows their members to pay child rates for financially dependent children up to the age of 27, instead of just 21?
When you realise that other medical aids can’t answer these questions, isn’t it time you ask yourself why Fedhealth isn’t the first recommendation you make to each and every one of your clients, each and every time?
Switch your clients to Fedhealth now for the ultimate control and affordability.
0860 002 153 | fedhealth.co.za
HEALTH FEATURE MEDICAL AID SCHEMES IN 2021
31 October 2020
JEREMY YATT Principal Officer, Fedhealth
A truly customised medical aid defined by detail
T
wo years ago, Fedhealth launched the revolutionary flexiFED range, together with the MediVault system. While this remains a first and only for the South African medical aid market, we’ve now refined the details and polished the mechanics. With meticulous attention to detail, we are proud to announce that in 2021 the Fedhealth product is refined like never before… and DEFINED BY DETAIL. 1. The evolution of MediVault The MediVault was created as a much-needed alternative to a stagnant savings model that hasn’t changed in decades. The old-school savings model is essentially a compulsory loan, which forces members to pay for day-to-day benefits, whether they use them or not. With MediVault, the amount of money a member spends and repays for day-to-day benefits is voluntary and at their discretion. They only pay for what they use. What’s different in 2021? We’ve realised, however, that people differ. While some prefer the savings and control of the flexible MediVault repayment system and will happily deal with the minimally increased admin to reap these benefits, others prefer simplicity and familiarity. The most significant change to our MediVault system in 2021 is an introduction of our new, but familiar, ‘FIXED’ repayment system. This system will provide members with the option to use their MediVault exactly like they’re used to, with a traditional medical savings account (MSA). The simplest way to describe the difference between these two options is that FLEXIBLE members manage their own product to maintain control over their expenses, while FIXED members prefer the Scheme to manage their medical aid in return for simplicity and convenience. 2. Create-your-Aid: The perfect balance of control, affordability and flexibility
True customisation is more important than ever. 2020 has affected every household differently and, while spending ability is down for most South African households, medical aid has moved up the list of priorities for most. Where the Fedhealth product in 2021 truly differs, is that life stages serve only as the foundation of each flexiFED product, on which every single member can then customise their medical aid product down to the last detail. Our newly developed Createyour-Aid process allows you to determine your clients’ ideal option. The Create-your-Aid process is completed over four steps: Step 1: Choose your level of risk cover Step 2: Choose your risk cover discounts Step 3: Choose your day-to-day repayment structure Step 4: Choose your level of day-to-day benefits STEP 1: Choose your risk cover This process starts by selecting the most appropriate flexiFED option based on your client’s life stage. • flexiFED 1, which is perfect for young and healthy single people and couples • flexiFED 2, best suited to starter families • flexiFED 3, for young and still growing families • flexiFED 4, perfect for mature families looking for complete, all-round cover.
CUSTOMISATION IS THE WAY OF THE FUTURE The great thing to always keep in mind about Fedhealth is that we allow members to upgrade their option at any time of the year in case of a lifechanging event such as a pregnancy or dread disease diagnosis. So your client can choose the option they need right now… and upgrade later if they need to.
38 WWW.MONEYMARKETING.CO.ZA
Also remember that all flexiFED options include unique benefits (such as unlimited network GP visits and female contraceptives) as part of the risk cover. Regardless of which flexiFED option they choose, your clients will have access to all of these, which means their day-to-day benefits will last longer. STEP 2: Choose your risk contribution discounts The second step is to choose the flexiFED variant and subsequent discount it has to offer. FlexiFED options have three variants: • ‘Any-Hospital’ flexiFED options offer full cover at any private hospital, except flexiFED 1, which is by default a network hospital option • GRID variants offer full private hospital cover at network hospitals and reduce a member’s contribution by 11% • Elect is an excess option that offers full cover at any private hospital with a R12 500 co-payment for elective surgery, in exchange for a 25% discount on the member’s monthly contribution. STEP 3: Choose your repayment structure Some people are happy to do a little extra admin if it saves them money. For others, convenience, predictability and simplicity reign supreme. If a member selects the FLEXIBLE repayment option, they simply transfer funds from their MediVault to their Wallet as and when they need to pay for day-to-day medical expenses. These funds are then repaid over 12 months. The FIXED repayment option is medical aid as you and your clients currently know it. A member is
allocated an amount upfront at the beginning of the year, or pro-rated if they join after January, and that MediVault allocation is automatically transferred to their Wallets to use during the year. They then pay the same, fixed contribution that includes both their risk and MediVault portions every month – exactly like every other medical scheme with an MSA. STEP 4: Choose your level of day-to-day benefits With Fedhealth, affordability is in the hands of our members. We provide ample access to day-to-day benefits, and your clients then decide how much or how little of it they want to use. • The FLEXIBLE repayment structure offers the most flexibility, and the member chooses exactly how much of their MediVault allowance they want to use throughout the year. To calculate the total monthly Fedhealth contribution, they simply divide the amount they intend to use by 12, and then add the risk cover amount. • The FIXED repayment structure is much simpler, and the member does not have to calculate anything. This works like any other medical aid with an MSA. Customisation is the way of the future. In a world where so many factors are beyond our control, Fedhealth is proud to offer a product utterly unique to the South African market. Whatever matters most to an individual – be it control, simplicity or affordability, as it is for most – the flexiFED range delivers and exceeds these individual demands. Switch your clients to Fedhealth. Call 0860 002 153 or visit fedhealth. co.za to find out more.
EDITOR’S BOOKSHELF
31 October 2020
SEVEN VOTES: HOW WWII CHANGED SOUTH AFRICA FOREVER RICHARD STEYN If a mere seven more MPs had voted with Prime Minister JBM Hertzog in favour of neutrality, South Africa’s history would have been quite different. Parliament’s narrow decision to go to war in 1939 led to a seismic upheaval throughout the 1940s: black people streamed in their thousands from rural areas to the cities in search of jobs; volunteers of all races answered the call to go ‘up north’ to fight; and opponents of the Smuts government actively hindered the war effort by attacking soldiers and committing acts of sabotage. World War Two upended South Africa’s politics, ruining attempts to forge white unity and galvanising opposition to segregation among African, Indian and coloured communities. It also sparked debates among nationalists, socialists, liberals and communists such as the country had never previously experienced. As Richard Steyn recounts so compellingly in 7 Votes, the war’s unforeseen consequence was the boost it gave to nationalism, both Afrikaner and African, that went on to transform the country in the second half of the 20th century. The book brings to life an extraordinary cast of characters, including wartime leader Jan Smuts, DF Malan and his National Party colleagues, African nationalists from Anton Lembede and AB Xuma to Walter Sisulu and Nelson Mandela, the influential Indian activists Yusuf Dadoo and Monty Naicker, and many others. FOREIGN NATIVE: AN AFRICAN JOURNEY BY RW JOHNSON
BOOKS ETCETERA
Sanne Blauw travels the world to unpick our relationship with numbers and demystify our misguided allegiance, from Florence Nightingale using statistics to petition for better conditions during the Crimean War, to the manipulation of numbers by the American tobacco industry and the ambiguous figures peddled during the EU referendum. Taking us from the everyday numbers that govern our health and wellbeing to the statistics used to wield enormous power and influence, The Number Bias counsels us to think more wisely. HOW TO BE A BUDDHIST MILLIONAIRE 9 PRACTICAL STEPS TO BEING HAPPY IN A MATERIALIST WORLD MATT JARDINE Matt Jardine, martial arts teacher and entrepreneur, has spent 20 years seeking the answer to one of life’s ultimate conundrums: how can we lead an authentic, spiritual and creative life in a relentlessly money-centric world? In this insightful book, he brings together Buddhist teachings, spiritual lessons and the advice and experience of a variety of experts and professionals – from a Paralympic athlete to a West End musical star and a city banker – and presents nine practical lessons to help us all discover our passion and make it pay. With a light touch, he dispels the deep-rooted fears and limiting beliefs that hold us back, and forces us to question the very foundations of our lives and what really matters. How to be a Buddhist Millionaire teaches us that money doesn’t have to be a dirty word, and that if you search for happiness rather than the pot of gold, success is more likely to follow.
In Foreign Native, RW Johnson looks back with affection and humour on his life in Africa. From schooldays in Durban – fresh off the aeroplane from Merseyside – to later years as an academic, director of the Helen Suzman Foundation and formidable political commentator, he has produced an entertaining and occasionally eye-popping memoir brimming with history, anecdote and insight. Johnson charts his evolution from enthusiastic, leftleaning Africanist to political realist, relating the episodes that influenced his intellectual worldview, including time spent among the exiled liberation movements in London during the 1960s, a sojourn in newly independent Guinea and more recent forays into Zimbabwe. There are wonderful stories, some hilarious, others filled with pathos, about the multitude of characters – Harold Strachan, Tom Sharpe, Ronnie Kasrils, Helen Suzman, Frederik van zyl Slabbert, among many others – that he met along the way. Perceptive, critical and full of verve, Foreign Native is leavened with a deep humanity that makes it a pleasure to read.
SUDOKU ENTER NUMBERS INTO THE BLANK SPACES SO THAT EACH ROW, COLUMN AND 3X3 BOX CONTAINS THE NUMBERS 1 TO 9.
THE NUMBER BIAS: HOW NUMBERS LEAD AND MISLEAD US SANNE BLAUW It is not an overstatement to say that numbers dictate the way we live our lives. They tell us how we’re doing at school, how much we weigh, who might win an election and whether the economy is booming. But numbers aren’t as objective as they may seem; behind every number is a story. Yet politicians, businesses and the media often forget this – or use it for their own gain.
SUBSCRIBE TO
GET A 12-MONTH SA SUBSCRIPTION FOR ONLY R494! (SA postage only, including VAT)
EDITORIAL EDITOR: Janice Roberts janice.roberts@newmedia.co.za LAYOUT & DESIGN: Julia van Schalkwyk SUB EDITOR: Anita van der Merwe
ADVERTISING ADVERTISING SALES EXECUTIVE: Mildred Manthey Direct: +27 (0)11 877 6195 Cell: +27 (0)72 832 5104 mildred.manthey@newmedia.co.za
DISTRIBUTION & SUBSCRIPTION Felicity Garbers felicity.garbers@newmedia.co.za
PUBLISHING TEAM GENERAL MANAGER: Dev Naidoo PUBLISHING MANAGER: Sandra Ladas sandra.ladas@newmedia.co.za PRODUCTION MANAGER: Angela Silver angela.silver@newmedia.co.za ART DIRECTOR: David Kyslinger
MANAGEMENT TEAM CEO NEW MEDIA: Aileen Lamb COMMERCIAL DIRECTOR: Maria Tiganis BRAND STRATEGY DIRECTOR: Andrew Nunneley CHIEF FINANCIAL OFFICER: Venette Malone CEO MEDIA24: Ishmet Davidson © Copyright MoneyMarketing 2020 Published by New Media, a division of Media24 (Pty) Ltd.
Contact Felicity Garbers
Email: felicity.garbers@newmedia.co.za Tel: +27 (0)78 758 6227
JOHANNESBURG OFFICE: Ground floor, Media Park, 69 Kingsway Avenue, Auckland Park, 2092 Postal Address: PO Box 784698, Sandton, Johannesburg, 2146 Tel: +27 (0)11 877 6111 | Fax: +27 (0)11 877 6198 HEAD OFFICE: New Media House, 19 Bree Street, Cape Town, 8001 Postal Address: PO Box 440, Green Point, Cape Town, 8051 Tel: +27 (0)21 417 1111 | Fax: +27 0)11 877 6198 newmedia@newmedia.co.za
Printed by
, a division of Novus Holdings
Unless previously agreed in writing, Money Marketing owns all rights to all contributions, whether image or text. SOURCES: Shutterstock, supplied images, editorial staff. While precautions have been taken to ensure the accuracy of its contents and information given to readers, neither the editor, publisher, or its agents can accept responsibility for damages or injury which may arise therefrom. All rights reserved. © MoneyMarketing. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, photocopying, electronic, mechanical or otherwise without the prior written permission of the copyright owners. © MoneyMarketing is not a financial adviser. The magazine accepts no responsibility for any decision made by any reader on the basis of information of whatever kind published in the magazine.
WWW.MONEYMARKETING.CO.ZA 39
POST
DISORDER
Without this bit it’s just the chronic aversion your grandma has to sending birthday wishes via anything but snail mail.
The middle matters. Skilled financial advisers like you are not optional. You are a critical part of connecting what we offer, with what graduate professionals need. Visit pps.co.za or contact the regional office in your area.
PPS is a Licensed Insurer and Financial Services Provider.
