11 months ago

Blue Chip Issue 86

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Blue Chip Journal is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry. Visit Blue Chip Digital:


BLUE CHIP FINANCIAL PLANNING | Legislation We are hopeful that the Regulator will indeed take the principles of proportionality into consideration as highlighted in COFI and the FSR Act to reduce the impact on smaller FSPs. An informed response to COFI, after processing all the facts and gaining perspective, will be far more valuable and constructive than any quick, emotional reaction. Seek first to understand... Responding to COFI – calling all Key Individuals! As we get closer to the implementation of COFI, this is an important message to all Key Individuals (KIs) – those who are accountable for managing and overseeing the activities of everyone in the FSP. Don’t react! Respond. Don’t simply outsource COFI to your compliance officer(s). If you do, COFI will become yet another compliance conversation when it is a serious business consideration. Although I have a deep and authentic respect for the role of compliance officers and sincere appreciation for how many competent compliance officers do their best to assist FSPs, if you (as the KI) do not take extreme ownership of the essence of COFI, your business will be compliance driven instead of business driven in a compliant way. There is a significant difference between the two approaches. In my journey as a practice management and compliance consultant over the years I have seen countless businesses that have been crippled by a compliance-driven approach and with COFI it has the potential to get even worse due to the volumes and complexity the legislation. If you want your FSP to be business driven, rather than compliance driven, you will have to take the lead in the COFI conversation. By all means take your compliance officer(s) along on the journey, but you will have to be the leader who creates order in the regulatory overload, and even “chaos” for some, by breaking up the components of your FSP into small pieces and prioritising them. This is going to be a time for you to make sure that your business is built on a sound foundation. If you have a solid foundation, you can build or rebuild anything on it. If you have a weak foundation, I am afraid you will find yourself in serious trouble at some point. I believe that COFI will force everyone back to the proverbial drawing board. The illustration below will provide a helpful point of reference as it provides an executive summary of all the key building blocks of your business that are necessary to be successful – under any laws. COFI will force you to take a step back and re-evaluate your current business philosophy, culture and processes. It is not simply going to be business as usual. My advice: Prepare to succeed under COFI. The fundamentals of practice management for representatives. Credit: Anton Swanepoel 40

KEEP IT SIMPLE “As dealing with change becomes a regular activity, leading it becomes a skill to hone, an internal capacity to master.” – Arnaud Henneville INVESTMENT | Multi-asset funds BLUE CHIP One thing we can all be certain of is change and investing is no different. Managing this flux, and dealing with risk in a portfolio is a differentiating tactical factor among institutional money managers. Large, sophisticated, offshore institutional money managers, like endowment funds, have been using multi-asset or multi-strategy mandates as the core building blocks in their portfolios to address these challenges of change. The three key reasons for this are: firstly, there is better mandate flexibility across asset classes; secondly, leaving the asset allocation decisions to professional money managers operating in the financial markets at the “coalface”; and lastly, asset allocation switches taking place within a multi-asset fund also saves clients unnecessary costs which are associated with their capital being switched from one fund to another when an asset allocation change is affected. Adopting this strategy to manage change has seen both the multi-asset equity and multi-asset income categories grow to become the largest ASISA product categories in the local market. These categories are also the most diversified, allowing a very broad range of instrument exposures, both locally and offshore. In the multi-asset equity space these include equities, fixed income, property, commodities, cash and portfolio hedges, while in multi-asset income it includes a broad range of fixedinterest instruments with varying interest rate risks. Visio Fund Management was founded in 2003 as a multi-asset fund manager. The team is adept at handling change and managing multi-asset funds. Visio’s success has been recognised by the firm having been awarded Citywire’s “Best Mixed-assets Aggressive Manager” for performance over the last three years. The team’s key operating tenets since inception have been, “Keep it simple”, “Capital preservation is key” and “Be good citizens”. These solid strategies can be applied to any scenario to bring change. Speak to us. We love what we do, and we’d like to do it for you. Craig French, Product Specialist, Visio Fund Management

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