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Blue Chip Issue 83

  • Text
  • Fpi
  • Hollard
  • Liberty
  • Offshore investing
  • Equity
  • Outsurance
  • Financial planning
  • Financial
  • Financialservices
  • Investing
  • Advisor
  • Planner
  • Momentum
  • Global
  • Coaching
  • Professionals
  • Investors
  • Investments
  • Funds
Blue Chip Journal is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip is a quarterly journal for the financial planning industry. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry. Visit Blue Chip Digital: https://bluechipdigital.co.za/

BLUE CHIP COLUMN How

BLUE CHIP COLUMN How investing is like skiing If you have snow skied before, you know how much effort it takes to get out of bed and hit the slopes for another day. Florbela Yates, head of Momentum Investment Consulting Florbela Yates started her career in 1993 as a consultant at Alexander Forbes. Her career has spanned over several leading businesses offering investment solutions to clients both locally and internationally. Since January 2017, Yates’ role has been as head of Momentum Investment Consulting (MIC) where she is responsible for Momentum Retail’s advisory business. She has a BCom degree (Economics, Business Finance and Marketing) and is a Certified Financial Planner (CFP). It requires a serious commitment to put on your ski boots and meet your instructor despite the stiff joints, bruised shins and exhaustion. And once you’ve started the journey down a slope, there’s no turning back. You must trust that your instructor worked out the best course by considering the weather, your level of skill and your ability to navigate the various challenges, such as visibility and moguls. On a recent ski trip to France, we started one day in sunlight but finished off in a blizzard. Our instructor had foreseen these conditions and took us to the top of the mountain early to tackle the more difficult slopes in good conditions. As the weather turned, he navigated us to easier and wider slopes. Not only did the wider slopes allow for a wider margin of error, but he made us follow more closely and stopped often to check that we were all coping. Those for whom the level of discomfort was no longer palatable, he guided safely towards the nearest chair lift to wait. Navigating investment markets is like navigating the ski slopes. Once you’ve committed to making that investment, a financial advisor can assist to navigate the most suitable course for clients to increase their chances of achieving their investment goals. In determining the most appropriate investment for clients, as investing is personal, the investment time frame, risk tolerance and the expected volatility and liquidity constraints are considered. Financial advisors will consider clients’ personal circumstances including tax status, ability to tolerate market drawdowns, the required real returns as well as the need to invest in one or multiple products. They will also help to adjust investment options as clients’ requirements or timeframes change. Once the investment is made, clients need to trust their financial advisor to monitor the investment and make sure that they stay the course. Because, just as the weather changes, so do investment markets. They will go through cycles – some which make it easier to stay invested and others where you’ll experience some discomfort. In my ski example, the instructor plays an important role when faced with a pupil that wants to bail halfway. The same goes for the financial advisor and their clients: they will guide clients to avoid selling during a downcycle. By exiting then, you lock in the loss. It’s often better to stay invested and consider exiting once the market has recovered. It’s important to partner with experts that are best placed to make decisions based on their skill and understanding of the circumstances. On a ski slope, the rescue teams monitor various conditions. In investment markets, investors need to ensure that they partner with an investment house skilled in managing portfolios. Momentum Investment Consulting has a proven track record of building portfolios that cater to a range of different investment outcomes. Our portfolios are constructed to ensure they are diversified across asset classes as well as investment styles. We work closely with financial advisors to ensure that our portfolios cater to clients’ longer-term outcomes, while catering for maximum drawdowns over shorter time periods. So just as the skier who wants to improve their skill would choose an experienced instructor, clients rely on our investment skill and understanding of risk to help them consistently get to their investment outcomes. In investment markets, investors need to ensure they partner with an investment house skilled in managing portfolios. 20 www.bluechipdigital.co.za Momentum Investment Consulting (Pty) Ltd is an authorised financial services provider (FSP32726) and part of Momentum Metropolitan Holdings Limited and rated B-BBEE level 1.

COLUMN BLUE CHIP Build your brand from the inside out Rob Macdonald, Head of Strategic Advisory Services, Fundhouse Rob Macdonald has held several senior positions in the investment industry. At Fundhouse, he acts as a consultant and coach to financial advisors and develops and facilitates training programmes in behavioural coaching and practice management. Before joining the financial services industry, Macdonald was MBA director at the UCT Graduate School of Business. He is co-author of the book Rethinking Leadership and has consulted, written and spoken widely on a range of topics. Macdonald has a Master’s degree in Management Studies from Oxford University and is a CFP® Professional. Behind every successful business there is a distinctive brand. Think Apple, Amazon, Google and Facebook. This is not just true for tech companies. Coca- Cola, McDonald’s and Nike prove it’s a universal business truth. But it’s probably fair to say that independent financial planning businesses are under-branded. Contrast this with the distinctive and powerful brands of financial institutions and product providers. Recently I have worked with several independent financial planning businesses who associate themselves with these brands to gain credibility by association. Their websites display the logos of the product providers they use when implementing their advice to clients. It’s a bit like Samsung or Adidas showing the brands of all their suppliers on their website. Financial planning businesses do this to build trust and credibility with clients. Many a financial planner has said to me, “Clients will trust me if they see I use brands and names that they know.” The problem is it suggests that you can trust me not because of who I am, but because I use products from brands that you can trust. Not convincing or distinctive. And the next financial planner on a prospective client’s Google search is likely to have the same or similar product providers on their website! While a logo and a name may be important, a brand is so much more; it is the essence of who you are. There is an iconic South African television advertisement from the 1980s about a milk powder called Cremora, in which a man is shown looking for the Cremora in the fridge. He shouts to his wife, “Where is the Cremora?” She shouts back, “It’s not inside, it’s on top!” Brand building is the opposite of this. Brands are built from the inside out. Tony Hsieh, the late entrepreneur who developed Zappos into a billion-dollar online shoe retailer said, “Your culture is your brand.” A brand is an expression of who you are as a business. And it doesn’t happen by accident. The great brands have well thought out strategies which encompass every element of their business and are implemented with rigour. Martin Lindstrom, author of the book Brand Sense, advocates that your brand should appeal to all five senses. We so often think of a brand as a visual concept, but he believes your brand should appeal to touch, taste, sound and smell as well. There are many ways one can do this. What do clients smell when they come into your office? Freshly ground coffee? What do they hear when they phone you? Gentle relaxing music while on hold? What do the documents that your clients receive feel like to touch? Anything distinctive? And of course, what’s visually distinctive about your brand? Lindstrom suggests an exercise called “smash your brand” in which you remove your logo and then ask yourself three questions. Firstly, “What elements of my brand remain distinctive without my logo?” Secondly, “Would my clients recognise those elements?” and thirdly, “What is distinctive for me about my brand that my clients wouldn’t recognise?” Now as a financial planner you may well ask, why bother about building a brand? One answer is because we don’t know which trusted brands will start offering financial planning. Vanguard, the second-largest asset manager in the world already does. Amazon started life as a bookseller, look what it offers now. Coda, the 2022 Academy Award winner for Best Film was made by that well-known film-maker, Apple. Google Financial Planning may not be as farfetched as it sounds. By building your own distinctive and trusted brand, your clients will have less reason to seek the comfort of other familiar brands in the future. The currency of financial planning is trust. Financial planners who leverage other brands to build trust with their clients are building their brands from the outside in. This is like building a house without a foundation. Real trust and real brands are built from the inside out. www.bluechipdigital.co.za 21

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