2 years ago

Blue Chip Issue 78 - Jan 2021

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  • Lifeinsurance
  • Retirementplanning
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INTERVIEW partnerships

INTERVIEW partnerships with financial advisers, and more recently, we started to go back to these roots. And the people who work at Momentum Investments demonstrate this in how we engage with advisers and their clients. By building these lasting relationships with financial advisers, we can improve our understanding of the needs of both advisers and their clients. This enables us to enhance our services and solutions to truly address their personal needs. By building these lasting relationships with financial advisers, we can improve our understanding of the needs of both advisers and their clients. What would be the typical profile of a client considering a guaranteed product? There is no typical profile as it can differ vastly given the circumstances of the client – as it is personal. This is exactly where individual financial advice is valuable as it considers each client’s unique circumstances. However, guaranteed products typically resonate with clients who are on the lower end of the spectrum of risk tolerance or risk appetite. These clients often prefer investment solutions that provide more defined or predictable returns or proceeds. This does not mean that only risk-averse clients should be interested in guaranteed products. We believe that guaranteed income products like life annuities should form part of most retirees’ investment portfolio as it provides a portion of guaranteed income. This guaranteed portion can potentially be earmarked for the minimum income required during retirement for living expenses. This portion of a retiree’s income can therefore be secured with a life annuity, which will then be unaffected by changes in the markets or interest rates. Other types of guaranteed products can be used to diversify a client’s investment portfolio and give a different return profile. The important thing is to consider it in the context of a specific client’s needs and circumstances, which again brings us back to the necessity of individual financial advice. Historically, guaranteed products have often been regarded as somewhat opaque. How are your guaranteed products structured and what is guaranteed? The main purpose of structured products is to provide certainty in terms of benefits or investment returns. It attempts to ‘hide the wires’ of investment complexity, and it should provide simple and easy-to-understand investment proceeds. The investment outcomes of these products should therefore be transparent and clear. Our guaranteed products aim to deliver on exactly this – simple and predictable investment outcomes that provide more certainty to clients. The guarantee offered can either be in the form of a capital guarantee or a minimum return over a predetermined investment horizon. Alternatively, a life annuity – also a form of a structured product – can provide certainty on the level of income that a client can expect over the remainder of the client’s lifetime. Do you offer different types of guaranteed products, and if so, what would the different types be, and their benefits? There is a wide range of products, but I will focus here on two types of products. The one category is where the proceeds of the product are fully guaranteed and predictable. Examples of these solutions include guaranteed endowments and life annuities. Both products provide certainty on the benefits and proceeds that are provided to the invester – either a guaranteed capital return after a five-year period or a predetermined level of income that is payable for life. The second category is where a portion of the benefits are guaranteed, but the client can potentially still benefit from positive market movements over the lifetime of the investment. An example of this is Momentum’s Enhanced Growth Option product where we offer a minimum guaranteed return over a five-year period, even if markets do not perform over this period. A client can also potentially receive enhanced returns if markets do perform well over the investment period. These are therefore structured products that offer the best of both worlds – a minimum capital guarantee if markets perform poorly, but also potentially an improved positive return if markets do provide favourable returns. There is no such thing as a ‘free lunch’, so what are the additional charges that a client has to pay in a guaranteed product versus a conventional market-linked investment like a balanced unit trust? There are typically three types of fees on investment products – administration fees, advice fees and investment management fees. These are equally relevant for structured products and unit trusts. We believe in transparency of fee disclosures as it allows advisers and their clients to make informed decisions. We support the introduction of the Effective Annual Cost (EAC) disclosure in the industry as it requires product providers to illustrate the fees on investment products in the three categories explained above. I’m sure that you would agree that a financial adviser should never advise on something that they don’t understand. How do you ensure that financial advisers who put clients into your guaranteed products understand them fully? I fully support that advisers and clients should make informed decisions – including the choice of investment products. At Momentum, we conduct product-specific training that is a requirement before advisers can support the relevant product range. And because Momentum Investments believes in partnerships, we also make sure that our consultants and product specialists are always available to financial advisers should they need any support on specific aspects of our solutions – whether it is on our guaranteed product range, or any other solution that we offer. 14

INTERVIEW A diverse group of friends (and colleagues) always results in such a rich experience and environment. – Martin Riekert What time do you like to be at your desk in the morning? I prefer to gym or run early in the morning, which means I am seldom the first one in the office. I do, however, prefer to be in the office at least 30 to 45 minutes before my first meeting as this allows me to connect with team members before the day gets too busy. What is your management style? The principles and approaches as described by Nancy Kline in Time to Think really resonate with me – not only how I want to engage on a personal level, but also how I engage with colleagues and team members. Concepts like diversity, active listening and empowering the people around me feature highly in my management style. is developing young talent in our organisation and playing a positive role in people’s growth. I truly enjoy influencing the careers and personal development of members of our team and seeing the impact that leaders can have on others. How has your career created value in your life? I essentially have two careers – my professional career at Momentum and lecturing at the University of Pretoria’s Actuarial Department. My career in the financial industry allows us to enable our clients to achieve their investment goals and dreams. And my lecturing career allows me to grow young talent – something which is very close to my heart. The man behind Martin Riekert Do you want to be liked or respected? I am sure everyone enjoys to be liked, but being respected for me means there is substance and depth behind the relationship. My preference would therefore be respect. Do you read management books? I don’t read many management books. If a colleague has a strong recommendation on a specific book, then I will read the book, but it is seldom my first preference when I look for a new read. What would your key management advice be? Build a strong team – a strong and competent team with aligned values and attitude is an unstoppable force. And make sure this team is diverse in skills and views – diversity truly enables better decision-making. Personal best achievement? Completing a full marathon in five minutes less than my personal target! Professional best achievement? This is a difficult one as there are many ups (and downs!) in a professional environment. But one aspect that often leaves me with a sense of accomplishment What do you love doing the most when you are not at work? I am a big supporter of the arts, so you will often find me in a theatre or at an arts festival. And few things allow me to relax as much as when I am reading a book. What book are you currently reading? Despite my earlier comment on business books, I am currently reading a couple of books on business coaching. And I recently started to systematically read through a number of the literary classics, including 1984 by George Orwell and The Grapes of Wrath by John Steinbeck. Life statement? “Diversity creates a better view of reality”. Embrace diversity and diverse views – not only in the work environment but also in your personal life. A diverse group of friends (and colleagues) always results in such a rich experience and environment. Blue Chip advice? Continuously engage with clients when markets are volatile and give clients comfort that their original financial plans are still relevant and that they should stick to this plan if their personal circumstances haven’t changed. 15

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