Go paperless with Calculus Help for call centre agents
E-commerce: Time to go Electronic Momentum’s e-app A world of possibilities
A New Era
Momentum goes paperless with hi-tech help!
financial adviser mouthpiece June 2011
Premier Boardroom
Located at OR Tambo Airport, this new venue offers you relief from the task of finding a meeting space at the airport, or driving through horrendous Johannesburg traffic to reach your meeting venue on time! The versatile boardroom can be used either as a full 20-seater venue or split into two seperate 10-seater meeting rooms. We also offer three different conferencing packages to suit your budget and style.
We look forward to hosting your next meeting! Contact Natelie on 011 390 1080 w w w. c o m f o r t g u a r a n t e e d . c o. z a
contents
16 What is Calculus? 18 Momentum’s e-App 20 E-Commerce
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14 Economy on the upswing 22 Spending time on financial planning 24 Language of regulatory exams 26 Regulatory exam FAQ 28 New benefits for pension funds 30 SARS holds employers liable 32 New benefits for responsible drivers 34 Market commentary on Japan 38 Structured commodity options
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16 F o r ma n y t h e i s s ue o f l a n g ua g e i s n o w b e co m i n g a r e a l co n c e r n a s t h e co n s e q uen c e s o f n ot h av i n g pa s s e d t h e e x a m i n at i o n b y t h e d ue dat e a r e s e v e r e : n o l e s s t h a n b e i n g d e b a r r e d a n d fa c i n g t h e o p t i o n o f f i n d i n g a ne w c a r ee r.
JUNE 2011
contents with a ratio approaching 220%, the debt-to-GDP imbalance in Japan is t wice as bad as that of Greece. In the aftermath of the natural disaster, there are inevitable costs for the government both for rebuilding the affec ted areas and also for boosting confidence in the Japanese stock market.
40 The art of advantage 42 Retirement and severance taxed as one 44 Legal risks for insurers 46 Cyber crime 50 The credit crutch
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52 Earn a better credit reputation 56 Momentum supports local theatre
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Note from the editor
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Foreword: CEO
10 Book reviews 12 Travel guide 13 Taste test
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54 Cutting edge 55 Revved up
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H i g h Dy n a m i c R a n g e i m a g i n g l e t s yo u c a p t u r e e xq u i s i t e ly d e ta i l e d s t i l l s o f h i g h - c o n t r a s t s c ene s . T h e p e r fe c t way to c a p t u r e yo u r v i e w o f t h e w o r l d, t h i s c a m e r a wa s m a d e w i t h f r ee d o m o f e x p r e s s i o n i n m i n d.
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Note from the editor
New Directions Alisea Ann Chetty Momentarily has undergone a revamp and several financial advisers have wrote in to say “Well done”; we thank you for this and we hope that we continue to fulfil your expectations as set out by the 2010 survey.
And so we have come to the end of yet another financial year and we look back on the year that was. Momentum has been successful in its merger with Metropolitan. The newly named holding company MMI Holdings was listed on the JSE, and many more exciting events have taken place. Momentarily has undergone a revamp and several financial advisers have wrote in to say “Well done”; we thank you for this and we hope that we continue to fulfil your expectations as set out by the 2010 survey. Out with the OLD and in with the NEW is our theme for this edition. We embrace the financial year-end and celebrate the new applications that Momentum has available for you. Calculus, e-app and Wealth’s e-Commerce take flight – you can read more on these applications in this edition. In this issue, we also have a strong focus on the language debacle of the regulatory examinations as well as on some frequently asked questions that could deepen your understanding of what will be expected of candidates. Other articles feature fraud in the banking industry and an update on pension funds. In other news Finance Minister Pravin Gordhan says that it is fortunate that the rand is a strong currency right now and therefore helping to cushion the impact of higher international
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oil and food prices. The rand has gained more than 30% against the dollar since the beginning of 2009. Like other emerging markets, strong capital inflows into South Africa in the wake of loose monetary policy in developed countries have been the main driver of the rand’s gains. The manufacturing sector was the hardest hit by a recession in 2009 and although it is on a path of recovery, output levels are still below prerecession levels. The demise of Al-Qaeda leader Osama bin Laden has evoked mixed emotions, with some believing it is a travesty of justice, while others feel this development in the war on terrorism could boost US President Obama’s popularity and secure him a second term. Back home, South Africa’s unemployment rate is the highest among the countries surveyed by Bloomberg, according to figures released by Stats SA. The official unemployment figure is now 25%, one percentage point up from the fourth quarter of 2010. The public sector has been creating jobs while the private sector has been shedding them. While unemployment is on the rise, so too is the petrol price – now at its highest level since mid-2008. Enjoy the read.
Alisea Chetty
Foreword
“It was the best of times;
it was the worst of times.”
Charles Dickens’ words resonate as I think about the financial year that soon comes to an end, the listing of MMI Holdings on the JSE, the royal wedding; Cape Town voted the Best City and many other occurrences that will make history. We have lived through it and so we say this as we enter into a new financial year.
Bertus Visser CEO: Momentum Distribution Services We have lived through it and so we say this as we enter into a new financial year.
The merger in brief: The first quarter of 2011 meant that an intense sequence of decisions had to be made regarding the integration of Metropolitan Odyssey with Momentum Retail. From 1 April 2011 Momentum took management responsibility for the Odyssey staff who we are now proud to call Momentum Distribution Services (MDS) staff. The integration of Odyssey gave MDS the opportunity to expand its footprint and we have opened three new regions: Morningside – Johannesburg, West Riding – Durban and Tyger Valley – Cape Town. The remaining three Odyssey branches – Bloemfontein, Port Elizabeth and Pretoria – were integrated with the current MDS branches that operate in the respective areas. In line with the integration process, we would like to welcome our Odyssey colleague’s who have recently joined Momentum. Going forward the Metropolitan Odyssey range will be replaced by Momentum’s product range, although alterations will be allowed on the Odyssey product range in the meantime. Successes: We have come to our financial yearend and we thank you and recognise all of you for your contribution to Momentum’s success. March was a record month for Momentum, as we made the highest turnover in the company’s history. Thank you to the Employee Benefits team for their
PUBLISHER Bernard Hellberg bernard@tcbgroup.co.za EDITOR Alisea Ann Chetty alisea.chetty@momentum.co.za +27 12 671 8565 MANAGING EDITOR Nicola Weir nicola@tcbgroup.co.za DESIGN & LAYOUT Aneska Meintjes aneska@virtualdavinci.co.za Language Sugnet Kannemeyer Distribution Lebogang Tefo
SALES MANAGER Estelle van der Westhuizen +27 84 821 7257 estelle@tcbgroup.co.za REPRODUCTION Virtual Da Vinci Creative Room +27 12 425 5800 info@virtualdavinci.co.za www.virtualdavinci.co.za IMAGES © iStockphoto.com PRINTING Business Print Centre, Pretoria CONTRIBUTORS TO THIS ISSUE Alisea Chetty, Bertus Visser, Dan Moyane, Cees Bruggerman, Eldette de Bruyn, Pieter Erasmus, Paul Rabenowitz, Louis Vorster, Joubert Matthee, John Duncan,
hard work and achievements in receiving three Professional Management Review (PMR) awards. RE exams: At Momentum we understand the regulator’s objectives where regulatory exams are concerned and fully support their efforts to create a professional industry where consumers benefit from the best possible financial advice. In saying this, MDS has contracted Paul Rabinowitz, a well-known personality in the financial planning industry to train financial advisers and ensure they understand and meet the legislative requirements. His support classes are facilitated by the Sales Academy and coordinated by the MDS regional managers. For more information on training, please e-mail me on MDSCEO@momentum.co.za Conclusion: I would like to thank those financial advisers who never had a relationship with Momentum but contributed to the success of Metropolitan Odyssey. I am looking forward to a new valued business partnership where all parties, you, us and your client will benefit and experience success. To our supporting financial advisers, thank you for your continued support and contribution to the success of Momentum and we are looking forward to the rest of 2011 where Momentum will bring new and more innovative solutions for your clients. Momentum acknowledges the role financial advisers play in the lives of their clients by simplifying their lives, giving expert financial advice to clear up their confusion, with a personal touch.
Bertus Visser
Frank Magwegwe, Mickey Gamble, Hettie Joubert, Helen Soteriades, Bronwyn Burns, Kalyani Pillay, James Klempster AFRICAN SPIRIT MEDIA / TCB GROUP 343 Lynnwood Road, Lynnwood, Pretoria, 0081 Tel: 021 876 3137 Fax: 0866 790 006 mail@tcbgroup.co.za www.tcbgroup.co.za Momentum Head Office: +27 12 671 8911 268 West Avenue, Centurion, Gauteng, 0157 www.momentum.co.za Momentarily is a quarterly publication for financial professionals. This edition of Momentarily will be published on our intermediary website www.mdsonline.co.za and on www.momentarily.co.za. Please note that in this publication, the terms financial planner and financial adviser are used
interchangeably – both meaning a professional who renders investment advice and financial planning services to individuals and businesses. Momentarily magazine is published monthly by African Spirit Media, part of the TCB Group, on behalf of the Momentum Group. Opinions expressed in this publication are not necessarily those of African Spirit Media, the TCB Group, FirstRand, MMI Holdings, the Momentum Group, or any of the subsidiaries of the aforementioned companies, their strategic partners or their clients. Information has been included in good faith by the publisher and is believed to be correct at the time of going to print. No responsibility can be accepted for errors and omissions. No material (articles or photographs) in this publication may be reproduced or transmitted, in whole or in part, in any form by any means electronic or mechanical, including a storage and retrieval system, photocopying or recording without prior written permission of the Editor. Submissions of articles and photographs for publication are welcomed, but the publisher, while exercising all reasonable care, cannot be held responsible for any loss or damage. Please ensure that all material is sent by e-mail to alisea.chetty@momentum.co.za. Copyright © 2011. All copyright for material appearing in this magazine belongs to African Spirit Media, part of the TCB Group, and/or the individual contributors. All rights reserved.
Book reviews
Aerotropolis
The Big Short
By: Greg Lindsay Publisher: Penguin Recommended Retail Price: R220 Available at: Exclusive Books and Kalahari
By: Michael Lewis Publisher: Penguin Recommended Retail Price: R170 Available at: Exclusive Books, CNA and Kalahari
From Dubai to Amsterdam, Memphis to South Korea, a new phenomenon is reshaping the way we live and transforming the way we do business: the aerotropolis. A combination of giant airport, planned city, shipping facility and business hub, the aerotropolis will be at the heart of the next phase of globalisation. Drawing on a decade’s worth of cuttingedge research, John Kasarda and Greg Lindsay offer a visionary look at how the metropolis of the future will bring us together - and how, in our globalised, ‘flat’ world, connecting people
and goods is still as important as digital communication. Airport cities will change the face of our physical world and the nature of global enterprise. Aerotropolis shows us how to make the most of this unparalleled opportunity. The book is a brilliant and eye-opening look at this new phenomenon and gives us a glimpse at the way we will live and conduct business in the near future. Aerotropolis is news from the near future – news we urgently need if we are to understand the changing world and our place in it.
In this visceral tour of the heart of the financial system, Michael Lewis takes us around the globe and back decades to trace the origins of the current crisis. He meets the people who saw it coming, the people who were asleep at the wheel and the people who were actively driving us all off the cliff. How could we have all been so deluded for quite so long? Where did it all start? Was it systemic? Was it avoidable? And who the hell can we blame? Michael Lewis has the answers. No one is better qualified to get to the heart of this labyrinthine
Superfreakonomics By: Steven D. Levitt and Stephen Dubner Publisher: Penguin Recommended Retail Price: R170 Available at: Exclusive Books and Kalahari
story. And no one can make it such an enjoyable ride along the way. While Wall Street was busy creating the biggest credit bubble of all time, a few renegade investors saw it was about to burst, bet against the banking system – and made a fortune. From the jungles of the trading floor to the casinos of Las Vegas, this is the outrageous story of the misfits, mavericks and geniuses who, against all odds, made the greatest financial killing in history.
reaching some astonishing conclusions, Freakonomics helped us see the world through a comple tely original lens.
Their first book Freakonomics: A Rogue Economist Explores The Hidden Side Of Everything was a cult bestseller. It taught us that Freakonomics is at the heart of everything we see and do and the subjects that bedevil us daily: from parenting to crime, sport to politics, fat to cheating, fear to traffic jams. Asking provocative and profound questions about human motivation and contemporary living and reaching some astonishing conclusions, Freakonomics helped us see the world through a completely original lens. Steven Levitt, the original rogue economist, and Stephen Dubner have spent four years uncovering the hidden side of even more controversial subjects, from terrorism to shark attacks, cable TV to hurricanes. The result is Superfreakonomics. It reveals, among other things: why you are more likely to be killed walking drunk than driving drunk; how a prostitute is more likely to sleep with a policeman than be arrested by one; why terrorists might be easier to track down than you would imagine; and, how a sex change could boost your salary. Because sometimes the most superfreaky solution is the simplest.
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Travel guide
Bl i ss o n
Benguerra Island Nestled on Benguerra Island off the warm coastline of Mozambique, amidst pristine white shorelines, coconut palms, tropical weather and spectacular sunsets, lies Marlin Lodge. Marlin Lodge offers seventeen seafacing suites, with direct access to the unspoilt beaches of Flamingo Bay coupled with a host of exhilarating activities and delectable cuisine. It makes for a superb family island destination and is a favourite destination for honeymoon couples. With an abundance of fish species, hard and soft coral and seasonal whale watching, Marlin Lodge provides the perfect adventure for water enthusiasts. Dhow sailing, diving, snorkelling, horse riding, island tours and a beautiful spa means there’s something
on offer for everyone. For more information, please contact Mantis Central Reservations on +27 41 407 1000, e-mail reservations@mantiscollection.com or visit www.marlinlodge. co.za or www.mantiscollection.com. Marlin Lodge is a proud member of the Mantis Group of iconic boutique properties and game reserves.
Emi rates
Takes Luxury to New Heights Moloko Strathavon Hotel Stylish and serene, the Moloko Strathavon is an exclusive boutique hotel in a class of its own and caters for the five star market. As Johannesburg’s ultimate boutique hotel, this secluded serene enclave is close to the heart of the Sandton business district – but it feels a world away. With cutting-edge facilities amidst timeless opulence, the Moloko Strathavon offers a tranquil sanctuary for discerning business and leisure travellers. Thoughtfully designed for guests, whose privacy is of the utmost importance, the suites are warmly furnished, private and superbly placed overlooking the stream. Soothe your senses and refresh your soul at the award-winning Moloko spa or woo your taste buds with the ultimate gourmet experience at our fine dining restaurant. A cigar lounge is also available for guests who enjoy the occasional indulgence. Moloko Strathavon Hotel is the perfect venue for both private and corporate functions. For more information, call +27 11 384 4900 or visit www.signaturelifehotels.com.
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To celebrate the launch of its second daily service from the Mother City, Emirates is offering Capetonians an exclusive complimentary stopover package when they book a First Class or Business Class ticket to any point on the airline’s network of 111 international destinations. From now until 15 June, customers booking a First Class flight can enjoy a two-night stay at either the Armani Hotel, which is located in the world’s tallest building, the 828-metre high Burj Khalifa; or the Jumeirah Zabeel Saray hotel on Dubai’s iconic Palm Island. Business Class customers can choose a one-night stay at either The Address Hotel in Dubai Marina or the Jumeirah Emirates Towers hotel, which is conveniently situated in the heart of the city’s business district. A free 96-hour visa is also included. In addition to the hotel stay, customers staying at the Armani Hotel or Address in Dubai Marina will also receive complimentary fast-track access to “At the Top”, the observation deck on the 124th floor of Burj Khalifa, which offers spectacular views of Dubai. Guests staying at the Jumeirah Zabeel Saray or Jumeirah Emirates Towers will enjoy free access to the Wild Wadi water park.This offer is valid on flights EK772 and EK773 only and can be used on the inbound or outbound leg of trips starting or ending in Cape Town.
Taste test
Coffee Central You walk off the street into the historic brick tobacco warehouse in Cape Town’s De Waterkant district. You see a hissing, stainless steel espresso machine, boxes of roasted coffee, a row of coffee grinders, a barista, a chalked up menu on the wall, and tables of people chatting and sipping coffee. A café? No. It’s the tasting room for Origin Coffee Roasting – South Africa’s pioneering artisan roastery and barista school, and also the home of specialist tea merchants, Nigiro. You’re welcome to treat it as a café, and you certainly won’t be disappointed. Explore new lots from the world’s most illustrious coffee farms; design a personal blend that uniquely suits your palate; discover novel ways of enjoying your coffee (French press, filter, siphon or Turkish style); find out what equipment is best for you and how to get the most out of it. Call +27 21 421 1000 for more information.
Clico Boutique Guest House Launched in June 2006, this chic five-star venue is a welcome haven for business as well as leisure travellers to Johannesburg who wish to be centrally located yet in tranquil surroundings, with the option of delectable cuisine. Clico was recently elevated to five-star status, an appropriate accolade for this chic guesthouse, its conference and events facilities and its delectable cuisine, enjoyed by overnight guests as well as non-resident diners with a penchant for scrumptious food and wine pairing. Clico’s autumn specials include leisure and business overnight packages and start at R950 per person sharing, including a three-course gourmet dinner prepared by resident chef Sean Ackerman, as well as a tasty breakfast. The packages are subject to availability and bookings are essential. For more information, call +27 11 252 3300.
The Grand Dame Voted Top Culinary Destination The Grand Café and Rooms in Plettenberg Bay has been voted one of the Top 20 Culinary Destinations on the Garden Route in the CXpress Hoopenburg Culinary Awards 2010. Based on criteria of consistency, the Grand Café and Rooms was acknowledged for its world-class standards and service excellence. The Grand Café and Rooms was also awarded the title of “Best Café-style Dining”. Judged by intrepid connoisseurs Ann Hadley and François Ferreira (Bailli Délegué of the Chaîne des Rôtisseurs, SA) and their team of ‘ghost’ diners, 30 of the chosen establishments were shortlisted over the period of ten months, taking the standard of service, compilation of menu and wine list, quality of food and general ambience into account. Each eatery was visited at least six times during the year by the two judges or ghost diners who evaluated the facility on how the public would enjoy it, while Anne and François judged more technically. To secure a space at The Grand this summer, call +27 44 533 3301, or e-mail concierge@thegrand.co.za.
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Economy
Light at the end of the tunnel What does the post-World War 2 business cycle data tell us about the longevity of the present upswing, currently some 21 months old and counting (dating it from September 2009)?
A full business cycle is counted from trough-to-trough or peak-to-peak. A trough is reached when a majority of cyclically sensitive economic indicators consulted by the SARB turn positive (and the rate of change in GDP starts to improve). A peak is reached when a majority of such indicators turn negative (and the rate of change in GDP starts to deteriorate). An upswing is counted from trough to peak (the acceleration phase of any business cycle). There have been 15 business upswings since WW2. The average duration has been 30 months, but with huge variability, from as little as 7 months (the very first one!) to as much as 99 months (the very last one ending in November 2007). Three of these 15 business upswings were “long breaths” (44 months in the case of 1961-1965 and 1978-1981, and the 42-month Mandela boom
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following 1993). Each of these ‘long breaths’ followed a prolonged recession period (in which a major political event figured prominently – Sharpeville 1960, Soweto 1976, and the coming of full democracy 1989-1993). Any subsequent recovery strength presumably had a claw-back catch-up aspect to it. A “super long breath” upswing commenced in late 1999 and lasted until late 2007, where the first part was mostly ordinary (following a shock event – the Asian Contagion shock also coming ashore here – offering some clawback potential). This ‘super’ upswing gained new vigour in midlife from 2004 onward, extending it greatly as external conditions turned extraordinarily favourable and households and business alike were tempted into a leveraged boom mentality. Interestingly, all four of these “long breaths” occurred at times when South
An upswing is counted from trough to peak (the acceleration phase of any business cycle).
Text: Cees Bruggemans Chief Economist FNB Image: © iStockphoto.com
Africa benefited hugely from global trends, either high global growth and commodity demand favouring us with strong export demand, export prices and capital inflows (the 1960s); global mayhem favouring us with a massive precious metal price surge (late 1970s); or a combination of these events (19992007); and politically returning to favour internationally, lifting external pressures (mid-1990s). Relatively short business upswings were mostly associated with political interruptions creating uncertainty and inviting business investment pullbacks (1948, 1960, 1976, 1985) or in which excesses/imbalances had not yet been fully addressed (1983 prominently). Such profiling hardly does full justice to the complexity of each and every upswing period, but it does suggest in the case of South Africa which major forces had a hand in many of these cyclical episodes. Politics and windfalls. Prof CW de Kiewiet formulated a dictum BEFORE all these cyclical episodes had shown themselves, basing himself on what had by then been historically observed about the country. According to De Kiewiet (1946), “South Africa advances through political disasters and economic windfalls.” This has yet to change meaningfully, going by events. What light can this post-W W2 history throw on our present upswing, which started in late 2009 following a massive global financial shock and major recession, to which South Africa was a bystander but where the country was nonetheless affected through export fall-off and risk-averse financial behaviour shocking fixed investment? First, one observes the foregoing recession of 2008-2009, creating clawback and catch-up potential, being also features of the 2009-2011 upswing so far. Secondly, one notes remarkable resurgence of the global commodity boom that had also marked the 2000s decade. This was, moreover, accompanied by portfolio capital surges favouring highyield emerging-market destinations (itself a yield hunger driven by rich country reflation policies rather than the private leveraging boom of the 2000s decade – same effect, different origin). So since 2009 one could say South Africa was again getting externally lucky on
two exceptional scores, a repeat of the 2000s decade, namely commodity price windfalls as well as capital flow windfalls. The only real surprise was perhaps the hesitancy with which the country chose to respond to such renewed dissolving of external constraints and the accompanying domestic income boosts. Here one notes the “own goals”, namely electricity supply constraint, the lack of progress in expanding rail export capacity, the regulatory issues around mining rights, the technical manpower shortages in the public sector preventing a sustained infrastructure build-up favouring construction after 2008, the changed credit culture impacting on property and building trade after 2008, and the high labour cost and wage trends undermining competitiveness (especially in the presence of an overvalued currency). One also notes political trends and the uncertainty this may have injected regarding private investment, not to mention the relative lack of state efficiency. Or to state the obvious, a replay of 1999-2007 is in progress, though every cycle is unique and the variability of the post-WW2 period makes one wonder whether simple cyclical markers can truly be identified and used in projecting a new cycle? Following the 1998 Asian contagion shock (levying a rand collapse and prime 25% shock) South Africans were typically shell-shocked, as they were for different reasons in 1960, 1976, 1985 and 1990. Such experiences induce caution, and take time healing. The period since mid-2009 shows all the same symptoms of business confidence having been mauled and taking time to get its bearings, in the meanwhile turning extremely cautious in its fixed investment and manpower plans. Still, observed claw back from recession (exports, inventories) and this time accompanied by strong consumption surges (partly clawback as car replacement normalised, and partly reflecting strong income gains, fiscally supported, export injected and union negotiated) were good enough to keep the economy propelling forward through 2011, if at only a modest pace. That is exactly the story of 1999-2004. Growth modesty. If the global windfalls could continue, private business confidence may recover
sufficiently for it once again to participate more fully in the expansion through increased investment, strengthening and extending the upswing. Except one cannot wish away the present constraints which weren’t there during 2007 (electricity, credit, technical manpower in the public sector) while still facing similar constraints (regulatory issues, state inefficiency, political trends). As my predecessor, Johan Cloete, remarked some 25 years ago, a weak building and construction response makes for a modest economic upswing overall. So the intensity of the continuing upswing may not become exceptional, and it is thus unlikely to outperform GDP potential by a large margin as it did in 2004-2007 (over 5% growth rather than 3,5% to 4% potential growth). But the durability (length) of the upswing could still be extended to quite a remarkable degree, as long as global windfalls keep coming (rather than being reversed) and domestic politics do not initiate yet more own goals. Here one wonders whether global windfalls could still intensify (rich country debt problems, growth fragility, policy support, Asian growth catch-up continuing uninterrupted) while South Africa is prepared to give more support to industrial policy (the New Growth Path). There you have it. The present upswing could suffer an abrupt termination at the hands of global forces reversing our windfalls and turning them into pitfalls, possibly assisted by more political own goals. Or the global windfalls could still intensify, thereby potentially making way for a more intense and prolonged upswing in the “super long breath” class. Or the benefits could keep flowing, we don’t add too many new own goals, but the existing supply and demand constraints are enough to keep this cycle a modest growth performer (3-4%), but potentially also a Hail Mary (a ‘super long breath’, albeit a modest one). I give a low probability to a quick demise (less than 10%), I wish us all to get yet luckier this decade with a further doubling up of windfalls, but think of the events you need to engineer to get that outcome (also less than 10% probability). My main expectation is for a long but modest Hail Mary provided we don’t create too many new own goals. That precludes too many sing-a-longs?
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Electronic solutions
What is
Calculus?
Calculus is the Latin name for a small stone that was used for counting in ancient times but at Momentum it refers to applications that simplify the life of anybody in the call centre and also the lives of intermediaries by calculating just about anything. The creation of Calculus: Quite some time ago, an agent in the call centre when receiving a query from the client would have to go to the actuarial department where the actuaries first had to consult their spreadsheets, before sending the answer back to the agent who would then be able to contact the client. This whole process was tedious and time-consuming, which gave birth to the concept called Calculus. Freek Kruger felt the time was right, and based on the business concept of
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providing service par excellence, Werner du Plessis was brought on board, and from then onwards, the hits just kept on coming! The design of the Calculus applications is based on frequently asked questions that involve various calculations and takes into account that agents in the call centre do not have the information at hand, and yet they have to provide awesome service. Because Calculus applications also record inefficiencies, constant improvement of the various Calculus
Freek Kruger felt the time was right, and based on the business concept of providing ser vice par excellence, Werner du Plessis was brought on board, and from then onwards, the hits just kept on coming!
Text: Eldette de Bruyn Actuarial Liaison Officer Momentum Retail Service Image: Š iStockphoto.com
applications is catered for. Since agents use the applications, statistics and levels on which to base improvements are also available. Where do I find Calculus? Calculus can be found on MDSonline. It is required that you log on with your
username and password. Then you need to perform a client search. Once you have performed the client search, you will be routed to the screen below. On the righthand side, there is a “drop-down menu” which indicates the applicable Calculus applications per policy number.
Calculus is an independent system that provides you with past occurrences on a specific contrac t at the press of a but ton!
What is Calculus? After selecting an application, Calculus will retrieve the required information and display the result requested, for example:
Ever wondered where to start when you have to dig and delve into mounds of information and your client is patiently (more probably impatiently) waiting for a response from you? Calculus is an independent system that provides you with past occurrences on a specific contract at the press of a button! Calculus does not replace any of the current work procedures and queries still have to be referred to the relevant Client Contact butborders crucial SinceCentre, open information, relevant have been theto a conversation with your client, hallmark of is readily available and easily globalisation, accessible.
any at tempt to
Why would intermediaries be interested in Calculus? Do some of the following queries seem familiar? • What is the fund value of my contract? • Please provide the portfolio growth on my policy. • How does my portfolio (RMB) compare with Allan Gray for example? • Explain Recurring growth vs Single Premium growth. • Current and historic fund values on my contract? • Which costs were deducted when an
alteration was processed? • What was the impact of the alteration on my contract? • How were the current values derived at? • Confirm the fees that were deducted over a specific period. • Confirm the total invested amount. • How was the commission account built up? The Calculus applications will assist in providing this information while you are in discussion with your client, and could even assist in making informed decisions in terms of actual facts and figures that are available online.
The required input fields reverse this trend are self-explanatory and the of the last 20 years information will enable you could potentially immediately and accurately to important decisions bemake hugely regarding a contract, while you damaging for are advising your client.
world economic
Information prospecthat ts.previously had to be requested from Actuarial can now be accessed via mdsonline or the Intranet, on any of the available Calculus applications. Calculus applications are designed to gather the pertinent information, to make sense of the loads of information, to populate specific fields per application, and they create a sensible PDF that the call centre agent can send directly to the intermediaries or clients.
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The world of
Electronic solutions
possibilities! The ultimate benefits of Momentum’s e-app! Lengthy application forms have long been a bugbear of the insurance industry. But at Momentum those irritations have been removed by the e-app. The days of faxing forms or scanning information are over. Myriad’s electronic application tool, known as e-app, is a resource that was created to submit new business electronically, saving you time and effort. This is a great opportunity to streamline your new business and acquisitions process.
The e-app tool makes it extremely easy to complete and retrieve your client’s application information. In a few minutes, you can complete the required fields, save the information and submit it. Should you not have all the information you need to complete the online tool, you will be able to save your incomplete application form and retrieve it at a later stage. An incomplete application form cannot be processed. Since October 2010, Momentum has been receiving new business applications for Myriad via our online functionality. After a cautious start, this added functionality rapidly gained popularity, to the extent that for March 2011, 25% of all submitted Myriad new business was captured online. A large portion of this online capturing occurred in the Momentum branch network, and many financial advisers are starting to notice the benefits of e-app in the quicker acceptance of policies and, in receiving their underwriting requirements sooner. The usage has escalated to over 2 000 applications per month. Incentives Yes, e-app is possible, and with the launch of tele-underwriting on 1 February 2011, this presented the perfect opportunity to combine the benefits of both offerings and experience a hassle-free acquisition process. E-app is the gateway to tele-underwriting and only cases submitted electronically will enjoy the benefits of tele-underwriting.
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How? Tele-underwriting gives you the opportunity to submit a shortened electronic application (minus all medical questions) and upon submission, the teleinterviewers will contact the insured life (at a suitably agreed time) and obtain all the answers to the medical questions. Upon completion of the “interview”, the new business case is submitted electronically and the normal new business process takes over. The utilisation of both functionalities in tandem will extract maximum value. So, what are the benefits of e-App? Instead of being tied down by admin, the marketing adviser and branch support staff can now focus on adding valuable functions that will complement your practice. This means: • a faster turnaround time for new business processes; • improved quality if captured correctly; • a permanent online record for all quotes, and an applications backup; • it is a flexible tool for multiple users; • information can be saved and edited at any time; • reduced administration and clutter; • options to import or create a quote online; • once off capturing of clients’ information; • impeccable ease of submitting business anywhere;
• immediate underwriting of cases upon submission; • there is no need to request a policy number from branches. All of this works hand-in-hand with our communication tool Inform. This keeps you informed every step of the way. The way forward Myriad electronic application is the forerunner of many products that will become available for online electronic submission of new business. This will soon become a reality in everyone’s life. While we introduce these new functionalities that we honestly believe can make your practices more efficient and effective, we fully respect your right of choice. At Momentum we value the support of our loyal financial advisers and we will not be prescriptive in how you choose to submit your business. If you want to use the opportunity to experience firsthand the workings of e-app, you can contact a Business Development Manager: Electronic Solutions, marketing assistant, marketing adviser or the MDSonline helpdesk. All you need is access to MDSonline and the possibilities exist. We are committed to ensuring accurate e-applications and protecting your privacy while developing technology that gives you the most powerful and safe online experience.
Avoid the pitfalls capturing the e-app can pose E-app issue
How to correct
Capturing medical questions
• Make sure that every field under medical questions is completed or else the system will not validate. • If the client did not complete all the medical information on the application, click on the question mark icon and the system will make the field “unknown”.
Adding a second medical condition under a medical question
Select “yes” when prompted on additional impairments.
Cannot load residential address
Use the correct postal code.
No MA connected to financial adviser
Do not delete the MA on the e-app. Ensure that the correct MA is allocated.
Beneficiary
Please do not load a beneficiary of proceeds (the person who will be getting the money when the life insured dies) as a beneficiary of ownership.
Beneficiary as estate
Load the life insured as beneficiary but select Estate as the relationship.
Client’s first name
Please only fill in the first name of the client. Do not add the second or third name. Ensure that you put in the correct initials.
Business overheads protector
• The client must be a juristic person to qualify for this benefit. • Ensure that you select the correct tax status for the client when first creating the client.
Duplicate clients
• Always search for the client on Momentum’s database before capturing. • Ensure you “select” the existing role on e-app instead of creating another person with the same details.
Client’s names spelt incorrectly
Always type the correct spelling of the client’s first name and surname. Use the – (hyphen) for double-barrelled surnames.
Unable to find a company on Momentum’s database
When doing the search, change client type to “legal entity” first.
Bank details
If the branch you selected does not validate, try using the universal codes.
Since Oc tober 2010, Momentum has been receiving new business applications for Myriad via our online func tionalit y. After a cautious start, this added func tionalit y rapidly gained popularit y, to the extent that for March 2011, 25% of all submit ted Myriad new business was captured online.
Text: Alisea Chetty Editor Image: © iStockphoto.com
JUNE 2011
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Wealth
e-Commerce Wealth goes from manual to electronic with AutoApp. Phases 1 and 2 now available. Easier business processes have made a significant leap forward with the introduction of two of the three automated new business projects. The old manual process now steps aside to let the electronic one take over.
Phase 1, brought the following new developments: Automation of the PPcontract number allocation process This means that financial adviser practices can now generate their own Wealth contract numbers online against which to deposit money, allocate clients and as reference for new applications. No more misallocation of funds or duplication of contract numbers is possible. Automated indexing and online submission of documents Documents do not have to be faxed and e-mailed to Wealth. They can now be attached directly on MDSonline and made available to Wealth and the financial adviser online immediately. No more follow-up is necessary.
fees, incomplete fund names, et cetera. The electronic application form can be saved and edited later in order to add missing information. This means no more time is lost when information is transcribed from one document to the other. What will Phase 3 bring? Phase 3 is in the development stage at this very moment. This final phase will allow the direct capturing and validation of applications. Paper use will drop dramatically, our efficiency will improve and our drive to be more eco-friendly will also move up a notch. The transformation of Wealth e-Commerce continues‌
Phase 2 is in the process of being rolled out: Automatic transfer of all the quotation data directly to the correct application form. From now on there will be no more outstanding requirements for licences,
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Text: Louis Vorster E-Commerce Momentum Wealth Image: Š iStockphoto.com
Wealth feature
Time is
money How much time do consumers spend on financial planning?
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I recently had my quarterly meeting with my financial adviser and ever since I have been thinking about how much time people spend on financial planning, after the normal monthly task of paying the accounts. My research included rereading the international bestseller The Millionaire Next Door (by Thomas Stanley and William Danko), which led me to a recent survey where 1 000 US consumers were asked, “Besides paying your bills, how
much time do you spend each month on financial planning (for example setting out your household budget, deciding on how much to save and the type of savings vehicle to use, planning for retirement, et cetera)?” This survey revealed that on average, 57% of the targeted consumers set aside a miserly five minutes a day or 2,6 hours per month* for financial planning. The detailed results are shown in the graph below.
Time per month spent on financial planning percentage of consumers
60% 50%
54%
40% 30%
36%
20% 10%
7%
0% <1 hour 1-5 hours
1%
2%
6-10 hours 11-20 hours > 20 hours hours per month
*2,6 hours per month = 156 minutes per month/30 days per month = 5,2 minutes per day.
The more time spent planning, the more money you make Research by the authors of The Millionaire Next Door shows that there is a positive correlation between the amount of time spent on financial planning and the household net worth. According to the authors, “financially prudent” households spend 8,4 hours a month, or 100 hours a year, planning their saving and investment decisions. The households that spent more time planning eventually amassed more than five times the net worth of those families that devoted less time. While the 8,4 hours per month may seem like a lot of time for most consumers, there is no doubt from the survey that 2,6 hours is way too little when compared with the amount of
time the average consumer spends watching television, surfing the internet or playing video games. Given the complexity associated with personal financial planning and general poor financial literacy, it is not surprising that consumers are spending very little time on financial planning. But it does not have to be this way. With professional financial planning advice, I find that I am encouraged and motivated to spend more time on my financial planning as a result of the regular interactions with my financial adviser. The challenge for financial advisers is to convince consumers who are spending very little time on their financial planning that the solution is to seek professional financial advice and that there are significant long-term benefits in doing so.
T h e c h a l l en g e f o r financial advisers is to convince consumers who a r e s p en d i n g v e r y little time on their financial p l a nn i n g t h at t h e s o lu t i o n i s to s ee k p r o fe s s i o n a l financial advice a n d t h at t h e r e a r e significant longt e r m b enef i t s i n d o i n g s o.
Text: Frank Magwewe Momentum Wealth Image: © iStockphoto.com
JUNE 2011
23
Regulatory exams
Language of regulatory exams
may trip you
The introduction of the FAIS Act on 30 September 2004 started a new era in professionalising the financial services industry. It is only now, however, with the introduction of the regulatory examinations in Board Notice 106, that industry practitioners will really feel the impact of FAIS. The new competency requirements imposed by the FAIS Act bring in a new era of individual responsibility for every key individual and representative, which will ensure that â&#x20AC;&#x2DC;the primary responsibility for competence vests in the individual, and that they have an obligation to develop and maintain their professional competence, relevant to the nature of their work and professional responsibilitiesâ&#x20AC;&#x2122;1.
Now that the level 1 regulatory examinations are under way, financial planners are encountering a number of challenges. For some, the greatest challenge will be language. This is both the language of the law, as well as the language of the examinations. The language of the law is an issue more easily dealt with. After appropriate training and many hours of study, reading the FAIS Act and the relevant subordinate legislation prescribed and which is required to pass the examination, this should not be an obstacle to understanding and insight.
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That is, however, if English is your first language. For many the issue of language is now becoming a real concern as the consequences of not having passed the examination by the due date are severe: no less than being debarred and facing the option of finding a new career. Due to an outcry by the financial services industry, the Financial Services Board felt compelled to address the issue of languages in FAIS Circular 02/20112 where they stated, “If the regulatory examinations are made available in another language such as Afrikaans, then it follows that they must also be made available in all of the official languages.” They followed this up with the publication of a document entitled Additional Information on Regulatory Examinations, dated 8 April 2011. Here they once again state that the examinations will be made available in English only. On the very same day, the Financial Intermediaries Association (FIA) held workshops with the FSB and in a press release dated 8 April, the FSB announced “that candidates who wish to enrol for the examination in Afrikaans, should be afforded the opportunity to do so.” According to the logic expounded in circular 02/2011, if Afrikaans is being made available, then it follows that the examinations should be made available in all the official languages. This, however, has inexplicably not been done and Afrikaans is currently the only alternative language being considered by the FSB. It is likely that due to additional languages being offered, the cost of the examinations will increase in future. For those who want to write in Afrikaans, this is certainly a victory, but it is uncertain whether those whose mother tongue and/or business language is another of the official languages will cope with the textual subtleties that exist both in the law and in the multiple-choice questions they will face in the examination. What planners who want to write in Afrikaans should consider is the following: 1. While the FAIS Act is available in Afrikaans3, the subordinate legislation is available in English only. The
subordinate legislation is the ‘meat’ of most of the provisions of the FAIS Act with the important board notices relevant for the examinations being, among other things: a. Fit and proper requirements, including the board notices on CPD and supervision. b. The qualifying criteria contained in board notice 105 are only in English. c. The general code of conduct. d. The rules of the office of the FSP Ombudsman. e. The requirements regarding professional indemnity and fidelity insurance cover. 2. Thus while candidates will be able to study the FAIS Act in Afrikaans, many important provisions contained in the above board notices form a large part of the criteria for the examinations. 3. It is unlikely that the Inseta material or other commercially available publications on the FAIS Act will be translated into Afrikaans. That being said, the only study material that every candidate should be studying for the examinations is the actual legislation and not only summaries or commentaries on it. 4. When studying in one language, it is often difficult to ensure that the same words and concepts used in the law in that language can be expressed with the same meaning and nuances imputed to them in the examinations. The FSB has emphatically stated that the cut-off date for the regulatory examinations is to remain the end of 2011; however it appears that those who choose to write in Afrikaans will have an extended period within which to do so, but this remains unannounced as at the time of writing.
Text: Paul Rabenowitz CFP®, Registered Fiduciary™ Image: © iStockphoto.com
Due t o a n o u t c r y by the financial s e r v i c e s i n d u s t r y, the Financial Se r v i c e s B o a r d fe lt c o m p e l l e d t o a d d r e s s t h e i s s ue o f l a n g ua g e s i n FAIS C i r c u l a r 02/20112 where t h e y s tat e d, “ If t h e r e g u l at o r y e x a m i n at i o n s a r e m a d e ava i l a b l e in another l a n g ua g e s u c h a s Af r i k a a n s , t h en i t f o l lo w s t h at t h e y m u s t also be made ava i l a b l e i n a l l o f t h e o ff i c i a l l a n g ua g e s .”
S2(2) BN 103 Dated 23rd February 3 http://www.moonstoneinfo.com/Morpheus/documentlibrary/644.pdf 1 2
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Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ &AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ& AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ &AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ& AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ &AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ& AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&A All the Q&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q &AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ& AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ packaged for candidates Regulatory exams FAQ &AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ& What are “Regulatory Examinations”? The new AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A • The determination of fit and proper requirements for financial services providers requirements Q&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A (Board Notice 106 of 2008) has led to the introduction of the “regulatory examinations”. have a significantQ&AQ&AQ These examinations form part of the competency requirements for representatives, impac t on the &AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ& key individuals and sole proprietors. financial services • The new FAIS fit and proper requirements were published in Board Notice 106 of industry because A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&A 2008 in October 2008. all key individuals • The new requirements have a significant impact on the financial services industry Q&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ and representatives because all key individuals and representatives are now obliged successfully to are now obliged complete regulatory examinations based on their roles and the categories and &AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ& successfully subcategories (financial products) they are responsible for. to complete AQ&AQ&AQ&AQ&AQ&A • These regulatory examinations form Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A part of the competency requirements, and regulatory consist of two levels: Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ • Regulatory examinations level 1: examinations based • This regulatory examination deals with the regulatory framework and is on their roles and &AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ& compulsory for all individuals in the financial services sector. The content of this the categories and examination focuses on the applicable legislation, for example, the Financial subcategories they AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&A Advisory and Intermediary Services Act (FAIS), Financial Intelligence Centre Act
ins and outs
(FICA), FAIS General Code of Conduct, FAIS Regulations, and so forth. • There are different variations of this examination depending on whether the individual concerned is working in a Category I, II, IIA, III or IV environment, and whether the individual is a key individual or a representative. • Regulatory examinations level 2: • The level 2 regulatory examinations apply only to representatives. These examinations are “financial product-specific” in nature and cover the knowledge and skills required for a representative giving advice and/or rendering intermediary services on a specific financial product.
are responsible for.
When do I write these regulatory examinations? To determine when you have to write the regulatory examinations, you need to know what the date of your first appointment is, because this will determine when you have to write the examinations.
26
If you have been authorised, approved or appointed as a sole proprietor, key individual or representative between 2004 to 2009, then you have to:
• complete the level 1 regulatory examination by 31 December 2011, and • complete the level 2 regulatory examination by 31 December 2013.
If you are a sole proprietor applying for authorisation from 2010 onwards, then you have to:
• complete the level 1 regulatory examination immediately/at the time that you apply for authorisation for an FSP licence, and • complete the level 2 regulatory examination within six years of authorisation.
JUNE 2011
Text: Alisea Chetty Information: Financial Services Board Image: © iStockphoto.com
Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ &AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q& AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ &AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ& AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ &A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ& AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ If you are a key individual applying Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ& • complete the level 1 regulatory &AQ&AQ&AQ&AQ&AQ&A T h i s r e g u l at o r y for approval as a key individual from examination before you apply for approval e xQ&AQ&AQ&AQ&A a m i n at i o n AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A 2010 onwards, then you have to: as a key individual. deals with the • complete the level 1 regulatory r e g u l at o r y Q&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ If you are a key individual who also examination before you apply for approval framework and is acts as a representative, then you as a key individual, and &AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ& compulsory for have to: • complete the level 2 regulatory a l l i n d i v i d ua l s examination within six years of approval. AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A in the financial • complete the level 1 regulatory ser vices sec tor. Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ examination within two years of the date that you have been appointed as &AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ& If you are a representative appointed a representative while you work under from 2010 onwards, then you have to: supervision, and Q&AQ&AQ&AQ&AQ&AQ&A AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A • complete the level 2 regulatory examination within six years of approval Q&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q while you work under supervision. &AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ& What happens if I fail the examination? you fail the examination at your first attempt, you can reregister to write the AQ&AQ&AIfexamination Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&A again. There is no limit on how many times you can register and write an Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ examination, as long as you pass the examination before the due date. Do I have to write the regulatory examinations in a &AQ&A Q&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&AQ&A Q&AQ& specific sequence? Transitional period: AQ&AQ&AQ&AQ&AQ&AQ&AQ&A People who fall in the transitional period would have to complete the level 1 regulatory examination first, because the deadline for this examination is 31 December 2011. Then they can complete the level 2 regulatory examination, and the deadline that applies to these examinations is 31 December 2013. New entrants from 2010 onwards: This group of people has two years from the date of first appointment to obtain the level 1 regulatory examination, and they have six years from the date of first appointment to complete the level 2 regulatory examinations. There is no specific sequence in which they have to complete the examinations, as long as they have completed them by the due date.
Where do I write these regulatory examinations? The regulatory exams are being developed and delivered under the direction and management of the FSB. Four examination bodies have been appointed to assist with the development of the regulatory examination questions and the delivery on a national and international basis. The approved examination bodies are as follow: • Financial Planning Institute (FPI): http://re.fpi.co.za • Leselo: http://www.leseloexams.co.za • Moonstone: http://www.faisexam.co.za • SAIFM (South African Institute for Financial Markets): http://www.regulatoryexams.co.za The registration process to enrol for the examinations is explained on each of the websites of these examination bodies. Please refer to their websites for specific details regarding registration requirements. Arrangements can be made to accommodate FSPs who are situated overseas. For more information on how to register for an international examination, please contact the examination bodies directly.
JUNE 2011
27
RMB
Pension fund investors
can benefit from recent regulatory changes The recent passing of the revised Regulation 28 caters better for new financial instruments (including derivatives) and makes provision for investments in hedge funds and private equity. It also offers additional protection to pension fund investors through more categories within asset class classifications, which will better manage fund risk through the associated limits on asset holdings. This is complemented by the Consumer Protection Act (CPA), which grants consumers statutory rights. It demands that firms provide clear and understandable marketing material that would empower consumers to make informed decisions about purchasing. It is also proposed that Collective Investment Schemes (CIS) will be allowed to offer living annuities. This will mean increased competition and hopefully lower fees for living annuity investors. More good news is that from March 2012, increased tax benefits will be allowed for employee pension fund contributions. This will mean significantly increased tax-free savings for employees. Revised Regulation 28 caters for new investment instruments The National Treasury released the final version of Regulation 28 with the budget in February and it will be effective from 1 July 2011. The new regulations provide more investment flexibility to pension funds and cater better for the current reality. There has been a considerable increase in the use of derivatives and credit instruments since the enactment of the previous regulation in 1989. The Act provides for more categories within asset classes to enable better management of portfolio risk within the associated limits. This
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is particularly relevant in the fixedinterest space where credit instruments are increasingly utilised. Additional positive developments include the introduction of allowances for hedge funds and private equity investments by pension funds. This should give pension fund investors the benefit of increased diversification. Unfortunately the new provisions increase the administration and compliance burden but the benefits and protection provided to pension fund investors will outweigh the costs. Increased offshore limit for pension funds will provide more diversification The budget in February increased the offshore limit from 20% to 25% for pension funds. This makes increased diversification feasible for investors. The timing also appears favourable with the rand viewed to be overvalued on a trade-weighted basis Consumers now have statutory rights protecting them The CPA was made public on 29 April 2009 and sets out consumersâ&#x20AC;&#x2122; rights in statutory form. It acknowledges the vulnerability of many SA consumers with high levels of poverty, illiteracy and other forms of social and economic inequality. Businesses had to adjust their trading practices to comply. Marketing material has to be simple and describe the nature of investment products in a way that the average consumer will easily understand. Violation of the CPA will not be treated lightly and there is provision for hefty penalties for noncompliance. Collective Investment Schemes (CIS) to offer living annuities The government recently proposed that CIS should be able directly to
Pension fund investors stand to benefit significantly from recent changes to regulations concerning the Pension Funds Act governing pension funds and increased allowances for offshore investments. provide living annuities to clients to improve competition. Living annuities do not offer the same protection to pensioners as a life annuity provided by a life company and therefore do not need the same capital requirements. This may reduce living annuity costs; however, pensioners need to obtain advice before selecting living annuities as these vehicles do not protect pensioners from living longer than their money lasts. Increased tax benefits for employee pension fund contributions From March 2012 all employees will be allowed to deduct up to 22,5% of their total taxable income for a contribution to retirement funds up to a maximum of R200 000. This is part of an ongoing proposal to bring provident funds in line with pension funds and retirement annuities. Employer contributions will no longer be tax-free and will be treated as a fringe benefit in the employeeâ&#x20AC;&#x2122;s hands, encouraging the move to employee contributions which will simplify the structure of salary packages. This allows employees contributing to pension funds and retirement annuities significantly to increase their tax-free savings. Employees contributing to provident funds can now receive the tax benefit in their hands. This move will also allow people who find they are underfunded for retirement to increase their retirement savings in a taxfriendly manner.
Text: John Duncan Technical Marketing Manager RMB Unit Trusts Image: Š iStockphoto.com
The new regulations provide more investment flexibilit y to pension funds and cater be t ter for the current realit y.
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29
Group benefits
South African
Revenue Service (SARS) now holds employers liable
The legislative landscape has changed significantly with the introduction of the Consumer Protection Act and the Protection of Personal Information Bill, which both greatly affect how companies communicate with their clients.
It is a positive step towards improving the ease with which we can communicate with the members, making sure that we follow the spirit and the letter of the communication policy guidelines in PF130, which our trustees take very seriously.
Text: Helen Soteriades Head: Communication Momentum BenefitsAtWork Image: Š iStockphoto.com
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Circular PF No 130 issued under the Pension Funds Act already stipulates that we must communicate with retirement fund members regarding fund information and their benefits. Our own research also shows that members want frequent and simple communication about their benefits from the insurer. With all of this in mind, the FundsAtWork umbrella fund trustees welcome the latest SARS requirement that employers must provide personal details of their employees/members. It is a positive step towards improving the ease with which we can communicate with the members, making sure that we follow the spirit and the letter of the communication policy guidelines in PF130, which our trustees take very seriously.
So what does this mean for employers who belong to retirement funds? Simply put, the employer has to provide the necessary information to the administrator every month. They now simply need to provide us with their latest tax files which will contain all the required fields. As well as being a requirement, there are many advantages in receiving membersâ&#x20AC;&#x2122; personal details. Besides improving our ability to communicate with members, the most obvious one is the speed with which Momentum can pay a claim. We investigated our claims statistics and can confidently say that we paid claims where we had all the information beforehand more speedily.
Background to the SARS requirement for personal information FundsAtWork has been communicating with our financial advisers and employers over the past months about the SARS requirement that all employers/ retirement fund administrators/life companies submit personal data of their employees/members to them. SARS has amended the format of the IRP5s and it is now compulsory by law to submit the required data on the IRP5s and the EMP501 declarations, and employers will be held liable for noncompliance.
How can you help? These requirements are communicated to all employers and funds. It will be helpful, however, if you can also remind your employers about the urgency of compliance and explain the additional benefits to them. We would like to assure you that the information will only be used for the intended purposes. No one will interfere with your invaluable role with the clients. If you need any further information, please contact your marketing adviser or specialist marketing adviser.
Short-term
New product benefits
Responsible and safe drivers
Momentum Short-term Insurance has developed an opt-in alternative for clients seeking comprehensive vehicle cover. Momentum Responsible Driving is aimed at clients who feel that they are safe and responsible drivers, and therefore eligible for premium benefits and discounts.
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“By opting for Responsible Driving, policyholders in no way compromise their comprehensive cover. This is just an additional way of measuring and rewarding responsible drivers,” says Pieter Erasmus, Head of Marketing, Sales and Distribution, Momentum Shortterm Insurance. According to the Road Traffic Management Corporation Traffic Report for 2009 (www.arrivealive.co.za) the biggest contributing factors in fatal accidents were excessive speed, totalling 35,40%, as well as people losing control in sharp bends which contributed to 27,99% of these accidents. The following criteria measure responsible driving behaviour for the new product: • driving less than 15 000 km per year; • staying within the speed limit; • not driving through corners at excessive speeds; • not braking or accelerating harshly; • seldom travelling at night. While insurance products based on telematics are not new in the South African market, these have focused mainly on distance travelled, and in some instances, on the area and time of day. Momentum Responsible Driving has taken this one step further. By fitting a sophisticated Tracker Skytrax device – which incorporates GPS and accelerometer technology – to the client’s vehicle, it is possible to obtain detailed information on distance driven, time of day, acceleration, braking and cornering forces. All these factors can determine the driving style of an individual driver, and knowing this will enable the intermediary to provide more competitive premiums for low-risk clients. There are three different device options and the device can simultaneously act as a regular tracking device, should the client choose this option. The client signs an independent 36-month contract with Tracker and this monthly premium can vary between R55 and R199 – depending on the services to which the client subscribes. As with any other tracking device, Momentum Short-term Insurance would have to obtain the client’s consent before the information provided by the telematics device can be used for claims purposes. Erasmus explains: “We believe that responsible and safe drivers will welcome this new technology as a means
to prove that they drive responsibly. The objective is to determine risk and premium more accurately, not to find another way for repudiating claims.” Responsible Driving clients will be able to monitor their own behaviour online, by logging on to the Responsible Driving website with a username and password. Here clients will see their performance compared with the average of clients with the same product. Momentum Short-term Insurance will also send clients a monthly report, containing this data. In this way clients will be able to identify reckless or aggressive driving habits that they might have. Premiums are guaranteed for 12 months and will be reviewed on the anniversary of the policy. They will then be adapted according to the data received from Tracker. Clients who drive responsibly could possibly receive a reduction in their premiums, while drivers with this product who exhibit irresponsible behaviour could expect an above-average upwards adjustment in their premium. Erasmus thinks that the ultimate saving for a responsible driver could be up to 20% of the premium. In conclusion Erasmus says: “Although deteriorating road conditions and increased congestion contribute to the large number of accidents and deaths on our roads, speeding and reckless driving remain a significant contributing factor. We believe that in the medium to long term, by rewarding responsible and safe driving, our Responsible Driving product could have a positive effect on the sustainability and affordability of vehicle insurance. This technology takes the proven methodology of individual underwriting one step beyond its current application. We like to think of Momentum Responsible Driving as individual underwriting ‘on steroids’, as it gives individuals greater power to determine and influence their own premiums. This innovative solution confirms Momentum Short-term Insurance’s position as one of the up-and-coming vehicle insurers in the country.”
Text: Pieter Erasmus Short-term Insurance Momentum Image: © iStockphoto.com
We believe that in the medium to long term, by rewarding responsible and safe driving, our Responsible Driving produc t could have a positive effec t on the sustainabilit y and affordabilit y of vehicle insurance. Telematics refers to any integrated use of telecommunications and informatics, also known as ICT (Information and Communications Technology). Hence the application of telematics is any of the following: • The technology of sending, receiving and storing information via telecommunication devices in conjunction with effecting control on remote objects. • The integrated use of telecommunications and informatics, for application in vehicles and with control of vehicles on the move. • Telematics includes but is not limited to Global Positioning System technology integrated with computers and mobile communications technology in automotive navigation systems. • Most narrowly, the term has evolved to refer to the use of such systems within road vehicles, in which case the term vehicle telematics may be used.
JUNE 2011
33
Market commentary
Japan Outsmart the disaster by clever investing
Despite the human impact of the earthquake and tsunami, the tragic event may provide new impetus for Japanâ&#x20AC;&#x2122;s economy and additionally, scope for judicious investors to benefit from opportunities in the Japanese equity market.
Text: James Klempster CFA, RMB Asset Management International Image: Š iStockphoto.com
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On 11 March 2011, an earthquake of magnitude 9.0 occurred off the north eastern coast of Japan. This was the largest earthquake ever recorded in this country and Prime Minister Naoto Kan immediately stated that the nation was facing its sternest test since World War II as it was tackling the aftermath of an earthquake and tsunami as well as a protracted nuclear crisis. Thus far nearly 14 000 people have died, with another 14 000 unaccounted for. In
the weeks following the catastrophe, Japanâ&#x20AC;&#x2122;s mettle has been further tested by a number of large aftershocks, but the majority of concerns remain centred on the ongoing nuclear crisis. In order to provide a degree of perspective, many commentators have emphasised that the affected regionâ&#x20AC;&#x2122;s economy is about the same size as that of the area hit by the Kobe earthquake in 1995. These comparisons are of limited use, however, as it is likely that the short-
JUNE 2011
35
Market commentary
term economic impact of the recent earthquake will be greater than that of 1995 due to the significant disruption of road networks, power plants and other infrastructure over a wide area that was principally caused by the tsunami. Although the scale of the damage is clearly massive, it remains difficult effectively to quantify the longer-term impact of the earthquake. Particularly interesting is the potential for supply chain disruption and the effect that this will have on broader production schedules. The much lauded ‘just-intime’ production and intelligent supply chain management processes produce incredible efficiency gains for producers, but it can leave them vulnerable if the supply of a particular component is disrupted for any significant time. It would only take the unavailability of a relatively minor component to prevent delivery of the goods: for example, you cannot ship a car without a door mirror. Nuclear risks The Fukushima nuclear power plant has experienced three explosions since the earthquake and tsunami struck last month. The blasts were caused by a build-up of hydrogen gas rather
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than the nuclear material directly. Tens of thousands of people have been evacuated in order to form an evacuation zone that is 20 km in radius around the plant and additionally there is a voluntary exclusion zone which extends a further 10 km in diameter. In the meantime, it is imperative to continue to cool the reactor and it is this which is proving difficult. The operator, Tokyo Electric Power Co (Tepco), aims to reduce radiation leaks in three months and to cool the reactors within nine months. Furthermore, the utility has stated that it plans to cover the reactor building. The radiation levels in the sea near to the reactor are posting readings 1 000 times the legal limit and occasionally far higher spikes are recorded, such as the 6 500 times measured on Friday 15 April. Tepco hopes that by moving the plant to “cold shutdown”, it could allow the tens of thousands of families evacuated from the area to return home as soon as possible. The nuclear crisis has recently been upgraded to seven on the international nuclear and radiological event scale which ranks it, in terms of severity, equal to the Chernobyl disaster of 1986.
Economic opportunity Before the ear thquake, Japan’s economy was in a stable position. Japan’s longer-term issues, however, have been well documented: most notably the unfavourable demographics, negligible GDP growth, little or no inflation (and at times deflation) and outstanding public debt which is a multiple of GDP. Indeed with a ratio approaching 220%, the debt-to-GDP imbalance in Japan is twice as bad as that of Greece. In the aftermath of the natural disaster, there are inevitable costs for the government both for rebuilding the affected areas and also for boosting confidence in the Japanese stock market. The rebuilding required now will reduce the likelihood of a much-needed fiscal consolidation in the short term. Overall, the earthquake has caused significant humanitarian hardship, but it has also had a significant economic impact on Japan. Although no direct extrapolations should be made from the aftermath of the Kobe earthquake in 1995, it does provide a useful reference point. An optimistic scenario is that this catastrophe will spur rebuilding and reinvigorate economic activity in
the affected regions. History suggests, however, that to be too bullish on an economic recovery is unwise: the experience after Kobe suggests that a V-shaped recovery supported by a rapid upturn in demand driven by government-funded rebuilding work in the affected areas is unlikely. At the same time, a slump in the domestic economy caused by the earthquake seems overly pessimistic. The Bank of Japan (BoJ) has confirmed that it will supply significant amounts of liquidity to stabilise the markets. The need for political unity may also benefit the ruling party, whose recent attempts to pass the budget for 2011 have proven difficult as a result of opposition. It is reasonable to assume that the Japanese economy will experience difficulties in the short term, but these pressures, while significant, should not be disastrous. In 1995, for example, the reduction in economic activity was temporary, with production transferred to alternative sites. Although production fell by 2,6% in January 1995, it had recovered to predisaster levels by March of that year. One reason that this event is dissimilar to the Kobe earthquake is the impact on key infrastructure. It is this which may result in a more severe short-term impact on the economy in this instance. Importantly, the physical damage to ports in the north of the country does not include any major trade hubs and other ports should substitute for any lost capacity. Japanese companies in general are at a very low capacity and in the long run, these events may prompt the creation of a leaner economy. Of the car manufacturers, only Toyota and Nissan are located in the north, and neither has been severely affected. Equity markets The impact that this event will have on the stock market is difficult to predict. In the Kobe aftermath, the Nikkei fell by 8% over the course of the first five days, before rallying by 5% during the next ten days. In the days following the recent earthquake, the Japanese market fell by nearly 20% before rallying by about 10%. Subsequently, the Japanese market has range traded and remained sensitive to updates of news flow. One positive for the markets is the size of the BoJ’s interventions. Prevailing economic conditions and the equity markets have a natural
resonance with one another, but it should not be assumed that challenging conditions for one necessitate problems with the other. In 1995 the equity market fell by between 15 and 20% in the months following the disaster. We believe that the market has a number of differences today compared with 1995, including both fundamentals and valuations. For example, the current PE ratio is about 17 times earnings, whereas in 1995 PEs were at 40 times earnings. Furthermore, today’s price-to-book ratio is 1,25, whereas in 1995 it was over 2. There is likely to be a boost to infrastructure and related industries, but some insurers who have not properly underwritten their exposure could be affected. The yen The ongoing issues in Japan would not intuitively seem to be a catalyst for a stronger yen. In the immediate aftermath of the earthquake, the currency did rally but this strength has ebbed subsequently. The disaster brought forward the prospect of government intervention, with the US expected to be more accommodating of BoJ intervention in the foreign exchange (FX) market. Other factors affecting the yen include: i. the impact of events on business and consumer confidence, ii. lower Japanese investment in foreign assets, iii. the acceleration of profit repatriation by Japanese companies, iv. lower foreign direct investment (FDI). Japan is the world’s largest foreign creditor and its borrowing is mainly funded domestically. In the short term, many expected a significant repatriation of offshore funds, which was probably the driving force behind the short-lived yen rally. In a longer-term view, the Japanese government would prefer the yen to weaken (as has been their policy stance of late) given the impetus that this should bring for exporting industries. Overall, therefore, despite the human impact of the earthquake and tsunami, we believe that the tragic event may provide new impetus for Japan’s economy and additionally, scope for judicious investors to benefit from opportunities in the Japanese equity market. Our thoughts are with the people of Japan at this difficult time.
Japan is the world’s largest foreign creditor and its borrowing is mainly funded domestically. In the short term, many expec ted a significant repatriation of offshore funds, which was probably the driving force behind the shortlived yen rally. Sources: Bloomberg, Nomura, Goldman Sachs, Financial Times, Polar Capital. April 2011
JUNE 2011
37
Wealth
The Momentum structured commodity
option series
The Momentum Structured Commodity Option (SCO) matured on 3 May 2011. In structured product terms, the investment was “in-the–money” at maturity, meaning that the basket of commodities experienced positive growth over the investment’s measurement period. This growth was approximately 7% over the three-year investment period. As the product description indicated, if the commodities basket experienced any positive growth, investors would receive a minimum return of 40% after all fees, but before taxes, where applicable. The SCO has thus outperformed the FTSE/JSE Top 40 Index by approximately 39% and the FTSE/JSE RESI Index by approximately 57% over the comparable period. So what was the rationale at the time and why should you have bought the SCO? The SCO offered investors access to a diversified basket of actual commodities
with 50% exposure to energy, 15% exposure to precious metals and 35% to base metals, all priced in rands. Investors would receive a minimum of 40% growth on their money invested should the basket of commodities perform positively over the investment term. If the basket of commodities showed a return greater than 40%, investors would receive the actual return of the basket. If the performance of the commodities basket was negative over the investment period, investors would receive 100% of their capital back. Graphically this can be illustrated as follows:
Commodities behave differently to shares because of the disconnec tion be t ween the company share and the ac tual commodit y that the company produces.
200%
Return at Redemption
180%
160%
140%
120%
100% 0%
20%
40%
60%
80%
100% 120%
Market Return
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140% 160%
180%
200%
Text: Mickey Gamble Structured Products and Annuities Momentum Wealth Image: © iStockphoto.com
The blue line represents the payout profile of the SCO, while the dotted line represents the potential return of the underlying commodities basket. So, as a South African investor, why would you buy the underlying commodity instead of a share in a company that mines, produces, manufactures or sells commodities (such as Anglo Platinum or Sasol for instance)? Well the answer is simple; with these shares comes the associated red tape of buying any share, such as company mismanagement, company debt, union and labour unrest and government policies to name but a few. All these issues affect the share price and may do so negatively. By purchasing the direct commodities, you cut away this red tape and gain access to the actual asset driving the asset price. Commodities behave differently to shares because of the disconnection between the company share and the actual commodity that the company produces. This leads to a low to negative correlation between commodities and typical shares. Thus the inclusion of commodities in a portfolio allows for more efficient portfolio construction. In addition, by investing in commodities through a structured product, you are able to take advantage of certain market economics like backwardation and built-in capital protections, something which should never be overlooked in any well-diversified portfolio. In fact capital protection has become so common that its importance is often overlooked in portfolio diversification. During the market crash of late 2008 and early 2009, for example, the FTSE/JSE Top 40 Index lost roughly 45% of its value. It was no small thing to able to recover 100 per cent of one’s capital subsequently and in fact the FTSE/JSE Top 40 Index had just returned to its initial level when the SCO started. Structured products with capital protection are therefore attractive to investors with clearly identified maximum loss limits.
But what about backwardation on certain commodities and how does Momentum exploit this to your benefit? Basically, backwardation means that the spot price of an asset (the current price) is higher than the expected future price (a price at some point in future). Momentum is able to exploit these parameters to optimise the protection offered to investors and to allow investors to participate in a minimum return of 40% even if the commodity basket has only performed slightly positively. While the mechanics to achieve this are complicated, investors only need to concern themselves with two simple outcomes. Firstly, if the commodity basket is positive, then an investor will receive a minimum return of 40%. If the basket experiences a negative return over the period, then investors will receive their capital back and they will have hedged 100% of their investment. To answer the question, “Why should you have bought into the SCO product?” it is clear that the product would appeal to investors who: 1. Want to diversify their portfolio, 2. Want access to uncorrelated assets that improve their portfolio’s risk / return profile, 3. Believe that commodities have fundamental growth opportunities that are linked to world energy, food and consumption demands, and 4. Want to protect their capital in absolute terms, in case of unforeseen events. While the SCO has often been the topic of heated discussion, the benefits as a component within a well-diversified portfolio are clear: • it allows you access to the actual commodity without the red tape of a share, • it provides 100% capital protection after all fees, and • it provides for a minimum return of 40%, even if markets are only slightly positive.
So, as a South African investor, why would you buy the underlying commodity instead of a share in a company that mines, produces, manufactures or sells commodities? Well the answer is simple; with these shares comes the associated red tape of buying any share, such as company mismanagement, company debt, union and labour unrest and government policies to name but a few.
JUNE 2011
39
Asset management
The art of
advantage 40
JUNE 2011
Advantage Assets Managers, a multi-manager and investment platform business, within MMI Holdings, recently launched the innovative Advantage Factor Series of Investment Portfolios.
The key themes kept in the forefront while developing this range were flexibility, simplicity, transparency, diversification and competitiveness. The range can be summarised as follows: • The Target range – low tracking error, low cost, risk-profiled portfolios. • The Classic range – specialist asset managers combined in risk profiles with a tactical asset allocation overlay. • The Enhanced range – the same as the Classic range but with alternative investments included. • The Flexible range – traditional balanced mandates where the managers make the asset allocation calls and with some alternative investments included. The Factor Series caters for multiple risk profiles within each range, suitable to the lifestaging needs of retirement funds and individuals. While currently offered through linked life policies for retirement funds at this point only, unit trust versions will soon be available too. A lot of effort was spent weighing up the benefits of incorporating alternativeinvestment strategies (fund of hedge funds and fund of private equity) within the Factor Series, where appropriate. These modern and traditional uncorrelated portfolio alternatives now form part of the product range. This is in line with recent changes to retirement fund regulations, allowing for such strategies, and showing that alternative investments are accepted as being valuable strategies for investors to consider. Advantage has mandated FRAIM to manage the alternative-investment strategies with
the portfolios. FRAIM is the alternativeinvestment provider in the MMI Group and has established itself as a leader in this field during the past years. FRAIM’s empirical research, along with its rigorous qualitative analysis underpins the company’s investment process. Advantage manages about R46 billion, on behalf of corporates, retirement funds and individuals. The Factor Series is the cornerstone to Advantage’s multimanager offering. In addition, Advantage also creates custom-made solutions for consultants, brokers and large retirement funds through a partnership model which includes access to a leading suite of technological web-based tools, called www.alphalabsuite.com, which consists of: Alpha-liabilities – the most powerful retirement fund analysis and retirement scenario calculators available in the industry. An intuitive wizard guides you through the setup of your retirement fund-specific calculator by uploading member information from your desktop or data drives. The interface allows you to set retirement fund-specific parameters for retirement age, salary increase assumptions, expected portfolio returns, lifestage scheme, inflation returns and annuity information. Individual member retirement health projections and statements are then automatically generated. Alpha-assets – a powerful assetmodelling tool. The interface allows you to set specific return objectives and then determine the optimal asset
A lot of effort was spent weighing up the benefits of incorporating alternative-investment strategies (fund of hedge funds and fund of private equit y) within the Fac tor Series, where appropriate. allocation to meet these objectives. Risk is minimised through a focus on maximising probability of success while containing any downside versus the target over various time horizons. Alpha-insights – an in-house proprietary investment manager database, where all ongoinginformationregardinginvestment managers is captured. This information would typically include investment risk/ risk attributions, fund fact sheets, meeting notes and Advantage’s assessments of the strengths and weaknesses of each mandate offered by the investment managers. A unit trust version is currently under construction. These tools were developed over the past 12 months, and have revolutionised the multi-manager market, with, for the first time, innovative technology being put in the hands of advisers to better service their clients. This is in line with Advantage’s business concept of partnering with, rather than competing with, its distribution partners.
Text: Leon Greyling CEO Advantage Asset Managers Image: © iStockphoto.com
JUNE 2011
41
Two taxed as one Taxation of retirement fund lump-sum benefits including severance benefits
FundsAtWork
42
JUNE 2011
SARS has confirmed that the “severance benefit ” definition will be added to the new rates of tax in the next Taxation Laws Amendment Ac t. Taxation of severance benefits In the 2010 Budget Speech the Minister of Finance stated that retirement fund lump-sum benefits and retrenchment lump-sum payments (“severance benefits”) are now treated equally. Various changes to legislation resulted in an implementation date of 1 March 2011. This was for these types of benefits that accrue on or after 1 March 2011. A new definition for severance benefit has been inserted into the Taxation Laws Amendment Act No 7 of 2010. This relates to the payment of lump sum benefits to employees who lose their jobs • due to medical disability; • because their employer ceased conducting business; or • due to retrenchment. The intention was that the R30 000 retrenchment exemption would be aggregated with the R300 000 tax-free amount payable from a retirement fund upon retrenchment. However, this was not included in this Amendment Act. SARS has confirmed that the “severance benefit” definition will be added to the new rates of tax in the next
Text: Hettie Joubert Legal adviser: FundsAtWork Momentum Image: © iStockphoto.com
Taxation Laws Amendment Act. They didn’t add it in the previous Taxation Laws Amendment Act because the Minister only announces the rates in February of each year. This means that if the member’s severance benefit from an employer is R400 000 and a tax directive is applied for, the tax-free amount would be R315 000 and the remaining R85 000 will be taxed according to the tax table. At the same time the member becomes entitled to a retrenchment benefit in terms of the fund rules. The total lump sum from the fund will be taxed as the tax-free amount of R315 000 was exhausted by their severance benefit from their employer, taking into account the aggregation principles. The SARS system is already giving effect to the above. Revised tax rate table From 1 March 2011, government h a s i n c rea s ed t h e t a x-free l u m p sum benefit upon retirement from R300 000 to R315 000. The revised rates for the taxation of lump sums upon retirement and severance benefits are set out below.
Taxable income from lump sum benefits
Rate of tax
Not exceeding R315 000
0% of taxable income
Exceeding R315 001 but not exceeding R630 000
R0 plus 18% of taxable income exceeding R315 000
Exceeding R630 001 but not exceeding R945 000
R56 700 plus 27% of taxable income exceeding R630 000
Exceeding R945 001
R141 750 plus 36% of taxable income exceeding R945 000
JUNE 2011
43
Legal
Not taking action holds legal consequences for an insurer, Joubert Matthee explains the ins and outs of exclusions.
Long-term insurers want to define as closely as possible the extent of the insurance companyâ&#x20AC;&#x2122;s legal liability to claimants. The most convenient way to do this is by including a clause in the policy contract that exempts the company from liability in given circumstances. The cost of accepting the risk of liability and insuring against it may render the risk cover out of reach for the insured life. As such, a compromise is reached where an exclusion affords substandard risk candidates cover by excluding unacceptable risk factors. Two scenarios may arise where the insurer will be out of pocket for risk it intended to exclude. Firstly, where
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the insurer safeguards its liability by introducing an appropriate exclusion and then fails to rely on it, and secondly, knows that there is a substandard risk, but fails to introduce an appropriate exclusion. An exclusion clause determines who gets what when a risk event occurs; even if it is nothing. It can be compared with an antenuptial contract in marriage, which determines the entitlement of the parties if things go astray. Inevitably, there will always be an aggrieved party. The realities to which an insurer is exposed are clearly demonstrated by our courtsâ&#x20AC;&#x2122; approach in the following reported cases.
In the recent matter of Mutual & Federal Insurance Company Ltd v SMD Telecommunications CC, the court had to interpret the application of a personal accident policy. The insured enjoyed cover in the event of disability or death caused ‘solely’ and ‘independently of any other cause’ by violent, accidental, external and visible means. The court had to determine whether disability or death caused by pre-existing infirmities was excluded by interpreting the clause excluding cover for ‘any occurrence consequent upon any pre-existing physical defect or infirmity’. The deceased, the former chief executive officer of one of the litigants,
sustained orthopaedic injuries in a motor vehicle collision. Seven months later, he died. His death was precipitated by a plaque rupture which caused a myocardial infarction (a heart attack). The court held that if parties intended to exclude pre-existing infirmities, it should be unequivocally stated in the policy. Although the court conceded that the insurer could have been successful in relying on the exclusion clause to deny liability, its failure to impose the exclusion earlier prevented it from denying liability at a later stage. The narrow interpretation of exclusion clauses is also evident from the approach adopted by the court in the matter of Classic Sailing Adventures (Pty) Ltd v The Representative of Lloyd’s. The court concluded that if liability is intended to be excluded, it should be incorporated in the terms of the contract, notwithstanding that facts which an insurer knows or ought to have known, need not be disclosed by the applicant for insurance. In 2005 The Mieke, a motorised yacht owned by the insured, sank off the coast of Mozambique and became a total loss. At the time of the loss, The Mieke was insured with a syndicate of underwriters at Lloyd’s. The insured claimed the value of loss in the sum of R10 million. Among other things, the insurers alleged that there was material nondisclosure of the fact that the skipper of The Mieke (one Hennop) was not properly qualified to serve as skipper. The underwriters admitted that they knew that Hennop had not been certified to skipper The Mieke as it was implied in the precontractual correspondence between them and the insured. The underwriters had been informed that Hennop’s qualifications had not been accepted by the South African Authorities (SAMSA). This meant that the underwriters had been put on guard and they could have ascertained the full picture by making the necessary enquires had they so wished. They failed to do so and it could therefore not be said that the insured misrepresented
Hennop’s qualifications. The decision confirms a previous decision in Trust Bank Bpk v President Versekeringsmaatskappy Bpk where it was held that an insurer, through its conduct, can waive its right to a full or more detailed disclosure by the insured of material facts. The principle in that case, which was confirmed and applied by the court in the Classic Sailing Adventures case, is that an insurer under certain circumstances will be deemed to have waived its right to material information. Insurers must evaluate the information provided by the insured and if more information is required, ensure that it is provided. Where the insurer is in possession of information that could affect the risk, it should note the information on the policy and take appropriate action by introducing an exclusion.
Insurers must evaluate the information provided by the insured and if more information is required, ensure that it is provided. In the event of a claim, the first action required from an insurer will be the consideration of exemption of liability through the operation of an exclusion clause in the policy contract. These basic procedures will ensure in the words of Henry Miller: “In this age, which believes that there is a shortcut to everything, the greatest lesson to be learned is that the most difficult way is, in the long run, the easiest.”
Text: Joubert Matthee Head: Litigation and Legal Risk Momentum Retail Image: © iStockphoto.com
JUNE 2011
45
Cybercr me targeting SA Banking Clients
The South African banking industry has the most developed banking system on the continent. The banking system in this country is, by and large, on par with that of most of the developed world. Our banking industry is also among a few that has always been operating in an advanced regulatory environment. How the industry fared during the global financial industry crises that started in 2007 is testament to this.
Text: Kalyani Pillay SABRIC CEO Image: Š iStockphoto.com
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Feature: Banking crime
That said, however, our country’s banking industry has its own challenges, among which is how the banks can effectively foster an agreement with government and other stakeholders on the Financial Services Charter ownership issues. In addition, the question of ensuring universal access to banking services will always remain a burning issue, despite the successful collaboration of the banks and the Post Office in the implementation of the Mzansi account – at least in so far as the retention of these clients in the system is concerned. Organised cybercrime targeting South African (SA) banking clients is one of the most pressing issues at the moment. Bank-related organised crime is a phenomenon many banking institutions throughout the world face. In SA, a major challenge for the banks and the South African Banking Risk Information Centre (SABRIC) is that many of these crimes exploit the vulnerabilities of bank clients, since the advanced security systems of the banks are a deterrent to the perpetrators. From common scams such as ATM card fraud to internet fraud, organised syndicates seem bent on siphoning money from unsuspecting bank clients with scams that are becoming more and more sophisticated. Phishing Phishing is one of the most problematic of the types of organised cybercrime scams targeting SA bank clients. By exploiting the internet’s borderless nature, criminals continue to dupe bank clients into providing sensitive personal information that these criminals then use for fraud.
The faceless nature of the internet also provides cybercriminals with their desired anonymity. From any corner of the globe, they are able to solicit unsuspecting bank clients’ information through phishing spam e-mails. According to the RSA AntiFraud Command Centre, the majority of phishing websites (57%) targeting SA banking clients originate in the United States, followed by Canada (12%). Cybercrime perpetrators create specific phishing sites which they use to distribute the spam e-mails. As a preventative measure, the SA banks have deployed financial and human resources for the purpose of detecting and shutting down the phishing websites. The banks have also invested significant financial resources in educating clients not to provide their banking details when asked to do so via these e-mails. What bank clients should do is to ignore any such e-mails as the banks will never ask clients for information such as bank card PIN numbers and other personal information, especially via e-mail. Phishing incidents have been rising exponentially in South Africa since the last quarter of 1999. Between January and September 2010, 12021 phishing sites were detected and shut down by the four major SA banks: ABSA, FNB, Nedbank and Standard Bank. The truth, however, is that the perpetrators of these scams are able to create new phishing sites as soon as the banks shut down existing ones. This has been an ongoing cycle for some time around the globe, forcing financial institutions and law enforcement agencies to seek alternative solutions for this hard-toinvestigate crime.
Phishing sites detected / Shut down 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0
2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Industry
Bank-related organised crime is a phenomenon many banking institutions throughout the world face.
TIPS to avoid falling victim to phishing • Ignore e-mails that appear to be from your bank and that request your personal details. • Remember that no bank will ever ask you to confirm or update your account details via e-mail. • Never follow a link on a mail to access your bank’s webpage. • Access the webpage using the web address that you were given when you signed up for internet banking and confirm that you are on a secure site. • Do not save your internet banking password on your desktop. Never provide your online ID, password or PIN to anyone, never write them down or share them - not even with a bank official.
12021 Phishing website shut by SA Banks in 2010
JUNE 2011
47
Feature: Banking crime
TIPS to avoid falling victim to phishing and other personal information theft scams • Avoid doing internet banking in public areas such as internet cafés, or on any computer that can be accessed by people you do not know. • Do not leave your computer unattended after you have entered your internet banking password. Always log off or sign off at the end of a session and change your PIN and passwords frequently. • Place sensible transaction limits on your accounts. • Ensure you have the latest anti-virus software applications loaded on your computer and make sure that you download all security patches to your operating system in a timely fashion. • Only provide your credit card details to reputable companies. • Store your personal information in a safe place. Never use internet cafés for internet banking. • Keep computer passwords secure and change them frequently. Install firewall anti-virus protection software on your computer. • Don’t carry more personal documentation on you (such as ID, passport, credit cards) than you actually need. • Pay for goods and services electronically – don’t send cheques in the mail if you can avoid it. • Keep a record of your accounts that are sent via mail. If they do not arrive for any given month, follow up with the postal service or company where you hold your account. • Before discarding any private documentation shred it or tear it into very small pieces. • Never discard a computer, or any other device, that stores personal information.
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The main challenge posed by the current generation of phishing e-mails is that they look more authentic, and the scams are also coined around believable circumstances, which often make the scams difficult for bank clients to detect. Perpetrators of these crimes have also become smarter as they are now enticing bank clients to compromise their banking information with promises of rewards. Reputable institutions such as the South African Revenue Service and other privately owned businesses are often used to mask the identity of the criminals and their scams in this regard. Smishing Smishing involves the theft of personal banking information of bank clients using cellphones. The same modus operandi deployed in phishing is used by perpetrators of smishing scams. SMS text messages are usually sent to bank clients containing plausible stories, prompting bank clients to compromise their sensitive banking information such as internet banking passwords and PINs. The most common of these SMS text messages that have been observed in South Africa are disguised
The same modus operandi deployed in phishing is used by perpetrators of smishing scams. SMS text messages are usually sent to bank clients containing plausible stories, prompting bank clients to compromise their sensitive banking information as notices of competition prizes where bank clients are requested to phone a specific number to claim their winnings. Once a client responds in this manner, the perpetrators instruct him or her to provide banking information, which is then used to commit fraud. Given that reputable companies are used to disguise the identity of the perpetrators, it is advisable for bank clients always to verify the validity of the SMS messages with these companies using their listed numbers, which they can obtain from institutions such as Telkom or via an internet search.
News feature
The credit
crutch If you came of age in the days when banks dished out credit cards like roadside pamphlets, you were probably raised to believe that cash was king and that living on credit would only lead to the depths of debt. But effective use of credit can actually be an essential tool in wealth creation. South Africans have developed such a reputation for spending on luxury lifestyles and status symbols that debt has become a national concern. Credit may well be a liability, but one needs to distinguish between good and bad credit – and if you leverage it correctly, you can ensure a financially sound future. Kay Geldenhuys, Property Finance Processing Manager at Ooba, explains ways you can use credit to your advantage. “Most consumers are surprised to learn that credit cards can also be a source of good credit, if used wisely,” says Geldenhuys. Your credit card can be used to build a positive credit risk profile – without which you will not be able to build on your investments. Of course, this only holds true if you make sure that you repay the full outstanding balance at the end of each month, otherwise the exorbitant interest rates
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of your credit card will quickly counter the interest you can earn. The most notable type of good credit is investing in property in an area that indicates sustainable capital growth. “Even with the property market showing clear signs of recovery and prices continuing to rise, it is still one of the best investments,” says Geldenhuys. “However, you must understand that property is a long-term investment, not a ‘get-rich-quick’ scheme, and you must be willing to hold on to your property through the dips and troughs such as we have experienced in the last few years,” she cautions. Renting is tantamount to flushing your cash down the drain – or at least contributing to someone else’s bank account without gaining the property asset. Instead, obtaining a home loan to finance a purchase and paying off a small portion each month should see your own property appreciate over time. This introduces the next type of good credit: capital acquisition. Capital acquisition includes investments in machinery, equipment or property, from which you can derive income. “Credit for these assets makes you wealthier, it is only credit borrowed from the bank for luxury purchases like a top-end car that makes you poorer.” If necessary, debt consolidation can
also improve your financial capacity. If you have accumulated too many accounts that are in arrears, the access facility on a home loan can be used to pay off the debt. “Your home loan rate is much cheaper than the finance rates of your retail or instalment sale accounts.” The trick lies in not using those cards until the previous debt is paid off, otherwise you will find yourself going round in circles. Finally, Geldenhuys suggests paying a greater instalment on your credit facility than the minimum amount required by the bank, to ensure that you attain your wealth creation goal as quickly as possible. For example, assuming that your interest rate is 10%, a lump sum of R20 000 deposited into a million rand bond will save you R118 576 in interest over the loan period. This means you will save more than five times the original amount as well as cut your repayments to 18,8 years on a 20-year bond. The bottom line: there is wealth to be made and saved if you use credit and manage debt without being foolhardy.
Text: Bronwyn Burns Financial Features Writer Image: © iStockphoto.com
Feature: Debt
r e t t e b a f l e Earn yours
n o i t a t u p e r t i d e cr
Text: Bronwyn Burns Financial Features Writer Image: Š iStockphoto.com
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The debt figures in South Africa are frightening: some 47 per cent of credit users have overextended their credit cards or fallen more than three months in arrears of business, house and car loan payments. It seems that many people choose to avoid the reality of their financial situation.
Yet understanding how credit scores and risk profiles work is the first step to financial freedom. Without a good credit risk profile – which is determined by how you manage your debt – banks will inevitably decline your application for a bond, car loan, business venture capital or any other form of credit. A credit score is the calculation of positive and negative factors on your credit report that aims to predict how likely you are to honour your credit commitments in future. This rating is calculated by independent credit bureaus, such as TransUnion or Experian, and is often used by financial lenders to identify the risk and in making impartial decisions about granting you credit. Each credit bureau has its own scoring system but they typically evaluate your credit risk on five factors of debt management: payment history, the amount of money you owe, the types of credit in use, new applications for credit and length of credit history. Experian, for example, makes use of the Delphi credit score, which is calculated by a computer programme that takes all your credit profile information and converts it to a simple three-digit number. The Delphi score ranges between 0 and 750 and the higher the figure, the more likely you are to meet your credit commitments in future. Once you have been branded with a bad credit rating, it can be a massive challenge to get rid of that reputation. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score. A credit score looks at many different
pieces of information and takes a fair view of both positive and negative information. Lenders like to see a mix of debt beyond credit cards. A house bond, car loan and store accounts show you handle your money. When you apply for credit, the credit bureau makes a note of the enquiry on your record. Too much activity on your account will make potential lenders nervous. Statistically speaking, someone seeking a lot of credit in a short time is inherently riskier than someone who establishes new accounts over time. You also have to prove that you have not taken on more than you can handle and can continue to make payments on time. While your credit score is important, lenders look at many things, including your income, your expenses, how long you have worked at your present job and the kind of credit you are requesting. And certain information, such as having the same job or address for a few years, indicates that you are more stable. A credit score takes into consideration all these categories of information and the importance of any factor depends on the overall information in your credit report. The bottom line is to get a copy of your credit information from the various credit bureaus three to six months before you apply for any form of finance, or even if you are not intending to seek a loan, simply do so to ensure that everything is in order. These can usually be obtained without charge and once you know where your rating is in the eyes of creditors, you can take the necessary steps to get your record, and your reputation, back on track.
Once you have been branded with a bad credit rating, it can be a massive challenge to ge t rid of that reputation.
Six strategies to improve your credit rating 1. Never use more than your available credit limit and keep your debt as low as you can – your credit close to its limit. 2. Ensure your loan payments are made on time and for the correct amount. 3. If you want to apply for a bond, open a couple of store accounts and be sure to pay these accounts on time – this can dramatically increase your rating. 4. Avoid credit cards from financing companies because this will affect your score negatively. 5. Do not make too many credit applications in a short period to avoid being viewed as a higher risk. 6. Make overdue accounts a priority and if you have problems repaying debt, make alternative arrangements with your creditor.
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Cutting edge
Virgin Oceanic Explores Earth’s Final Frontier Seventy percent of Mother Earth’s surface is covered in water, yet we know more about the moon than we do about our deepest oceans. In yet another ground-breaking initiative under Virgin’s multi-faceted “Branded Venture Capitalism”, Richard Branson intends to change all that with the Virgin Oceanic Five Dives project. The project is a series of ocean expeditions to the bottom of the five deepest trenches in the world, beginning with an attempt on the world record 35 911 foot dive to the Pacific Ocean’s Mariana Trench – the deepest point on earth. The dives will be performed using the Hawkes experimental prototype DeepFlight Challenger submersible – a submarine more akin to an aircraft in the way it manoeuvres than a traditional submarine because it glides on wings and uses positive buoyancy. Constructed from extremely strong, lightweight materials such as titanium, carbon fibre and quartz, the DeepFlight Challenger submarine will need to resist 1,000 atmospheres as it plumbs the lowest points on earth.
iPad 2 Arriving Soon The iPad™ 2, the next generation of this magical device for browsing the web, reading and sending e-mail, enjoying photos, watching videos, listening to music, playing games, reading e-books and much more has now been launched. The iPad 2 features an entirely new design that is 33% thinner and up to 15% lighter than the original iPad, while maintaining the same stunning 9,7-inch LED-backlit LCD screen. iPad 2 features Apple’s new dual-core A5 processor for blazing fast performance and stunning graphics, and now includes two cameras, a front-facing VGA camera for FaceTime® and Photo Booth®, and a rear-facing camera that captures 720p HD video, bringing the innovative FaceTime feature to iPad users for the first time. It is available in black or white, and introduces the innovative iPad 2 Smart Cover in a range of vibrant polyurethane and rich leather colours. Recommended prices range from R4 399 for the 16GB iPad, up to R7 599 for the 64GB model with Wi-Fi.
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Express Yourself with Nikon’s D5100 Nikon’s latest release, the D5100, is a high-performance D-SLR designed to stimulate your creative side and help you create still images and movies like no other. The swing-out variangle monitor combines with the camera’s D-movie function to enable unique shots from any angle. Still images or movies can be shot using a special effect to add a sense of magic. High Dynamic Range imaging lets you capture exquisitely detailed stills of high-contrast scenes. The perfect way to capture your view of the world, this camera was made with freedom of expression in mind. The new features of the D5100 include a 16,2 megapixel DX-format CMOS image sensor, a 7.5 cm 921k-dot vari-angle LCD monitor with wide-viewing angle, the Special Effects mode and the D-Movie feature that allows you to capture full (1080p) highdefinition movie clips. Contact your nearest Nikon dealer for more details.
Revved up
A New Era of
With the Concept A-Class, Mercedes-Benz is presenting a car that might have come from another planet; its evocative design expresses a concentrated dynamism, with its long bonnet, low silhouette and slim window areas. The car’s sporty appearance is given particular depth by the interplay between lines and surfaces. The wind and the waves, as well as aviation engineering, were the sources of inspiration for its designers. On the front end, the brand logo appears to be surrounded by a starry sky. Where there are usually apertures or louvres, the radiator grille consists of numerous metallic silver “dots” on black stems. This theme is also reflected in the design of the wheels. A very special effect is created by the lights of the Concept A-Class, as the innovative full-LED high-performance headlamps repeat the starry sky motif with numerous lighting points. The technical highlights include a new, turbocharged four-cylinder petrol engine, a dual-clutch transmission and a radar-based collision warning system with Adaptive Brake Assist.
Mercedes-Benz
Maximum Power,
Zero Emissions With a track record including the time-honoured Z-series and the extraordinary GT-R supercar, Nissan’s credentials for producing affordable sports car exotica is without equal – which makes the company’s latest showing even more exciting. The ESFLOW is a two-seater, with two electric motors each driving a rear wheel. It will hit 100 km/h in under five seconds and run 240 km between powerpoints. The ESFLOW was created by Nissan from scratch and so Nissan’s designers have been able to place the power train and batteries in the optimum positions to benefit the car’s handling and performance. The ESFLOW is not an existing internal combustion engine vehicle that has been adapted to run on electricity, but a sports car that’s been designed from the outset as a zero-emission vehicle. Power cells are incorporated in such a way that they benefit the ESFLOW’s strength and poise, instead of diminishing them. Indeed, unlike a conventional fuel tank, batteries do not get lighter as they provide energy, so the car’s weight distribution remains constant throughout a drive. For more information, visit www.nissan.com
Minimalist
HarleyDavidson Lean as wire, hard as iron and dark as a tar road at midnight, the new Blackline motorcycle is a Harley-Davidson Softail model pared to the bone. Those who know and adore Harley-Davidson’s range of motorcycles will be pleasantly surprised to know that what appears to be a factory-customised Harley is now available ex-factory. Key features of the 2011 Blackline include new Powertrain styling, where the Powertrain is finished in gloss black powdercoat on the rocker box covers, the crankcase, the outer primary cover, and the transmission side cover. The derby cover and timing covers are chromed, as is the state-of-the-art rigid-mounted, counterbalanced Twin Cam 96B V-twin engine with electronic sequential port fuel injection, rated at 125 Nm of torque. Aboard the Blackline, the rider hugs the frame on the lowest two-up seat ever offered by Harley-Davidson, and reaches high for new Split Drag™ handlebars that bolt right to the top triple-clamp. The 6-speed cruise drive transmission also enhances the riding experience. The manufacturer’s suggested retail price for the Blackline models is from R195 000.
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Momentum news
Momentum supports local theatre
Momentum is sponsoring two uniquely South African cultural events; “Coming Home”, a jazz-gospel cantata composed by Isak Roux and “Stuur Groete aan Mannetjies Roux” a musical drama on the theme of the timeless classic by Laurika Rauch.
From Left: Dan Moyane, Head of Branding and Communications Momentum; Laurika Rauch, who inspired the music for local drama, “Stuur Groete aan Mannetjies Roux”, sponsored by Momentum; Mannetjies Roux – Rugby legend; Kutlwano Masote, conductor of “Coming Home”, Jazz-Gospel Cantata and Danie van den Bergh, Momentum Brand Manager.
“We are so proud to be able to offer our support in promoting and celebrating the rich talent we have in South Africa. These two productions not only exemplify excellent execution but also represent rich cultural diversity and authentic creativity, both locally and globally inspired. As a company that strives to make cultural diversity one of our strengths, we can appreciate how this diversity comes together with such entertaining and vibrant success,” says Dan Moyane, head of Branding and Communications for Momentum. Coming Home is a jazz- gospel cantata, first performed in South Africa in 2008 with music by Isak Roux and conducted by Kutlwano Masote. “I am pleased to be bringing this production to life again and am grateful to Momentum for the opportunity,” says Masote. Asked about the production, Masote says “Coming Home” is based on old traditional spirituals. As a cantata suggests, it is more than just a vocal composition with an instrumental accompaniment. It has a depth that brings together elements of the African-
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American Spiritual, which has its roots in Africa, as well as the Zulu choral tradition of Isicathamiya (exemplified by the music of Ladysmith Black Mambazo). “These elements of praise singing and music as a vocal expression of social coherence are all fundamentally African and inspired Isak Roux to compose a work that seeks to bring the spiritual back to its ancestral home Africa,” says Masote. “Coming Home” is narrated by renowned actor Sello Maake Ka-Ncube and features the soprano Sibongile Khumalo accompanied by a choir and orchestra with uniquely African sounds. Stuur Groete aan Mannetjies Roux is a first-of-its-kind Afrikaans Broadwaystyle musical created by Chris Torr. Stuur Groete aan Mannetjies Roux follows the journey of self-discovery of a school girl who goes to visit her aunt and uncle on their Karoo farm. The name of the production is taken from the uncle’s obsession with the legendary rugby try of Mannetjies Roux in Bloemfontein in 1962. Producer Johan Badenhorst says the music of Laurika Rauch is renowned
in the Afrikaans community and we are proud to partner with Momentum to take her music to an even wider audience. “Like Mama Mia, which paved the way by adapting great music to a heart-warming narrative, we think that ‘Stuur Groete’ will resonate equally well with audiences countrywide.” “Coming Home” will be performed nationwide from August 2011. “Stuur Groete aan Mannetjies Roux” will premiere at the soon-to-be-completed Atterbury theatre in Pretoria on 20 May 2011. After a three-week run, the show will move to Cape Town’s Artscape Theatre (20 – 26 June), then to Johannesburg’s Emperor’s Palace (27 June – 10 July) and will conclude in Bloemfontein at the Sand Du Plessis theatre (11 – 27 July). Tickets to both performances will be available through Computicket.
Text: Dan Moyane Branding and Communications Momentum Image: © Momentum