Blue Chip 95

The highs and lows of

The highs and lows of financeGOLD TO HIT ALL-TIME HIGHSGold’s seemingly unstoppable surge is likely to push prices to freshall-time highs, with global financial advisory and asset managementgiant deVere Group now forecasting the metal to hit 300 pertroy ounce before the end of the second quarter of 2025. Nigel Green,CEO of deVere Group, comments, “With tariffs being expanded, tradepolicies zigzagging and concerns over inflation and an economic slowdownintensifying, capital is flooding into gold as a trusted store of value.“Geopolitical flashpoints also continue to reinforce gold’s appeal.The ongoing conflict in Ukraine, renewed instability in the MiddleEast and mounting tensions in the South China Sea are contributingto a risk-laden global landscape. Central banks across the globe areaccelerating their gold purchases, signalling a profound shift ininternational reserve strategies.”The People’s Bank of China has now increased its holdings for thefourth consecutive month, a trend mirrored by other monetary authoritieslooking to mitigate currency risks and geopolitical exposure. With the USdollar’s dominance being increasingly questioned, gold is emerging as theprimary asset of choice for sovereign reserves.Adding to the momentum, China’s latest financial reforms are expectedto unleash a tidal wave of fresh demand. In a landmark shift, Beijing hasapproved a pilot programme permitting insurers to allocate assets intogold, a move that aligns with the country’s broader strategy of diversifyingaway from US dollar-denominated assets.With China’s central bank already aggressively increasing its goldreserves, this new policy opens the floodgates to further institutionalinvestment, injecting fresh capital into the market and reinforcing themetal’s long-term upward trajectory.The safe-haven metal’s rally is no longer just a reflection of short-termuncertainty; it’s underpinned by a fundamental reordering of financialpriorities at the highest levels.IMPLEMENTATION OF THE RMCPThere have been material amendments to the new Chapter 4 ofGN 7A, which guides the board of directors (the accountable institutionis a legal person with a board of directors), senior management(an institution without directors) and persons holding the highestauthority in accountable institutions regarding their obligations inrelation to the Risk Management and Compliance Programme (RMCP)of an accountable institution as set out in the Financial IntelligenceCentre Act, 2001 (FICA).GN 7A reflects amendments relating to an accountable institution’sRMCP, including:Responsibilities. The board of directors, senior managementor other person(s) exercising the highest level of authority must: (i)approve the RMCP after consideration of the overall risks and riskappetite of their business, which responsibility cannot be delegatedto any other entities within the institution; and (ii) ensure complianceby the accountable institution and its employees with the provisionsof FICA and its RMCP.Culture of compliance. The entities who are solely responsiblefor the effectiveness of the RMCP will be held accountable if it isinadequate. An example provided in GN 7A is when a supervisorybody conducts an inspection and identifies a version control issue.This occurs when, say, a financial service provider (FSP) updates itsapproved RMCP but doesn’t obtain board approval for the revision.The board’s omission constitutes non-compliance with its obligationsunder FICA.Risk identification. The RMCP must be drafted accordingly foreach business. Practically, the RMCP should inform the reader ofhow the business will comply with FICA. A risk-based approachis fundamental for accountable institutions to ensure that theyadequately manage the risks associated with money crimes. Thisapproach involves assessing inherent risks (the risk exists beforecontrols are applied) and residual risks (the level of risk aftermitigation measures were implemented).Group-wide RMCPs. GN 7A notes that accountable institutionsmay implement a group-wide RMCP. However, if accountableinstitutions elect to implement a group-wide RMCP, it must specifywhat does and what does not apply to the different entities withinthe group.GN 7A underscores South Africa’s efforts to strengthen its antimoneylaundering and to address the Financial Action Task Force’scriterion of South Africa’s outstanding deficiencies. For example,GN 7A now prescribes that the development of new products, services,delivery mechanisms, practices and technologies must be coveredunder the accountable institutions’ risk assessment.By Webber Wentzel12 www.bluechipdigital.co.za

Medical aid and financial adviceWHY MEDICAL AID ALONE IS NOT ENOUGHMany consumers struggle to navigate the complexities of themedical aid landscape, which can lead to unexpected expenses andgaps in cover. This is where financial literacy becomes critical andwhere brokers play a key role in helping individuals understand theproducts available and how they can choose the right combinationof medical aid and gap cover to meet their individual needs.Financial literacy is a crucial yet often overlooked aspect ofhealthcare decision-making. Financial literacy refers to an individual’sability to understand and manage their financial resourceseffectively. When it comes to healthcare, this means being able tonavigate complex medical aid policies, understand benefits andexclusions and make informed choices about cover.The medical scheme tariff or medical aid rate is rarely whatprocedures and treatments cost. It is simply the rate at which a medicalaid scheme reimburses healthcare providers for services rendered toits members. This tariff is set by the medical scheme itself and variesdepending on the plan and provider agreements. The reality is thatmedical specialists often charge well beyond these tariffs, sometimesas much as 500% of the medical aid rate, leaving patients withsubstantial shortfalls.This is where gap cover becomes essential. Gap cover bridges thefinancial gap between what medical schemes pay and the actualcosts of private in-hospital healthcare services. Even comprehensivemedical aid plans come with limitations, such as co-payments forspecialist consultations or caps on certain treatments.Brokers provide invaluable financial advice tailored to each client’sunique circumstances. It is essential to consider budget constraints.The best plan is only effective if it remains affordable. Brokers helpclients strike a balance between comprehensive cover and financialsustainability. Understanding limitations related to a client’s existingcover allows brokers to recommend suitable gap cover products thataddress specific shortfalls.Financial literacy in healthcare is about empowering individualsto make informed decisions that protect them from financial strain.Brokers serve as indispensable guides, helping clients navigatecomplex medical aid structures, identify potential shortfallsand secure the right combination of medical aid and gap cover.By enhancing financial literacy, brokers contribute to a moreknowledgeable and financially secure consumer base.By James White, director of sales and marketing, TurnberryManagement Risk SolutionsANCHORED IN ADVICEFor those of us who have flung ourselves into the rewarding butrapidly shifting ocean of financial advice, it’s generally because we’redrawn to helping people chart their course across vast and oftenunpredictable waters. We act as captain, offering the tools, supportand advice to keep the ship steady, helping them navigate life’sstorms while journeying towards their destination. Before decidingto join our stable, the financial advisors we chat with cite commonchallenges as the key drivers behind their desire to move. Thesegenerally are:Navigating the career currentsFinancial advisors (FAs) often face challenges in aligning their careergoals and personal needs, particularly when they feel a lack ofsupport from their Financial Services Provider (FSP). Many FAsstruggle with limited opportunities for professional development,mentorship or recognition, leaving them feeling undervalueddespite their contributions. FAs are often restricted to selling anarrow range of products or tied to commission structures thatdon’t account for changing client needs or market conditions, whichlimits their ability to grow or diversify their income.As FAs are generally only qualified to sell certain categories ofproducts, clients need to seek advice from other specialists shouldthey require something that is not part of that FA’s wheelhouse.In-practice problemsFAs often grapple with complex systems and time-consumingprocesses tied to compliance. Demystifying these intricate systems isoverwhelming, slowing productivity and limiting their capacity to growtheir practices. A lack of adequate technology to manage their practicesfurther exacerbates these challenges. Without access to modern,integrated systems, FAs face difficulties in streamlining administrativetasks, client communication and performance tracking, ultimatelyimpacting their ability to deliver the best possible service to clients.Value perceptionFAs face significant challenges in meeting client needs due to limitedofferings from their chosen FSP. This affects their ability to providetailored, impartial financial advice, leading to gaps in solving clientspecificproblems. This limitation can undermine client trust in theFA’s recommendations.It is critical that FSPs look at what FAs both want and need and theninnovate like crazy. It is important that FAs work with providers whooffer the necessary support so they can focus on doing what they dobest – advise.By Danie van den Bergh, head of acquisitions, MomentumFinancial Planningwww.bluechipdigital.co.za13