Blue Chip Issue 96

BLUECHIPCOLUMNMaking

BLUECHIPCOLUMNMaking succession planning a successSuccession planning remains a top priority for advisors in South Africa and globally.Florbela Yates, ManagingDirector, EquilibriumFlorbela Yates is the head ofEquilibrium in the MomentumMetropolitan group. Equilibriumis an independent discretionaryfund manager that partners withfinancial advisors to help themenable their advice outcomes.Equilibrium brings balance toan advice practice by deliveringservices and investmentsolutions to help clients achievetheir defined investment goals.While the ageing advisordemographic, typically in theirlate 50s to early 60s, is oftencited as a primary driver, it isonly part of the story. Advisors of all agesand backgrounds share a common concern,which is to ensure their clients are well caredfor after they retire or exit the industry.Advisors often form deep, multigenerationalrelationships with their clients,extending to their children and extendedfamilies. This bond fuels their desire to securea reliable successor who can maintain thesame level of care and trust. As a globaldiscretionary fund manager (DFM) andmulti-manager, we work with a diversegroup of advisors who differ in age, expertiseand goals. Some want to retire or sell theirbooks, while others want to grow their assetsorganically or are looking to buy anotheradvisory business. Whether they aim toretire, sell their books or grow their practices,succession planning is a universal concern.Our approach begins with ensuring thatthe advisor’s investment offering is cleanand scalable. Using specialist (asset class)building blocks means that we use the samefunds across all portfolios. This creates hugeefficiencies, often resulting in lower feesand means that advisors get to know theunderlying funds well. It’s easier to hand overa “clean” book to a successor – making it easierto get their buy-in, explain the offering andvery importantly, often results in a higherprice-earnings ratio multiple being appliedto the practice. Advisors deserve to be wellrewardedfor the work they have put intobuilding successful practices.Not all advisors intend to sell their books;some simply want to free up time. In theseinstances, they may be looking for someoneto join the practice and take over some ofthe clients. Again, a “clean” book makes thisprocess straightforward, especially whentransitioning a smaller, manageable numberof portfolios rather than dealing with dozensof varied underlying funds.For those looking to grow their books,building similar portfolios across multiplepractices can streamline buy-and-sellagreements, making consolidation easierover time. Over time, it’s a matter ofconsolidating what is already in practice asimilar underlying solution.Additionally, streamlined investmentpractices offer other benefits – using thesame advice tools, same LISP platforms, sameunderlying manager as well as reducingrisk and administrative burden relatedto licensing, compliance and reporting.Faster turnaround times and improvedreporting enhance the quality of clientcommunication, helping clients stayinvested and better reach their financialgoals. It also means that our advisors startto work smarter – not only harder.Removing admin and compliance burdenfrom advisors results not only in efficiencybut also cost and time savings. In manyinstances, not only do advisors now havetime to focus on interests outside of work,but often they land up offering additionalservices like investor days and behaviouralfinance analysis to their clients.And for advisors on both extremes of thespectrum – those selling and those lookingto buy books – now have time to activelylook for these opportunities. We can assistby trying to match them to providers whosejob it is to focus on consolidation, furtherfacilitating seamless transitions.At Equilibrium, we bring improved balanceinto your financial advice practice to enableyou to do what really matters – spendingmore time with your clients and buildingyour business.To find out more, visit eqinvest.co.za.Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07) is an authorised financial services provider (FSP32726) and part of Momentum Group Limited, rated B-BBEE level 1.18www.bluechipdigital.co.za

Empathy: tonic ortoxic for client relationships?COLUMNFinancial planners have the privilege and challenge of often dealing with clients in emotional turmoil.BLUECHIPRob Macdonald,Independent ConsultantRob Macdonald has heldseveral senior positions in theinvestment industry. He is anindependent consultant andcoach who also develops andfacilitates training programmesin behavioural coaching andpractice management. Beforejoining the financial servicesindustry, Macdonald was MBAdirector at the UCT GraduateSchool of Business. He is theauthor of the book The 7 Pillarsof Financial Health and is coauthorof Rethinking Leadership.Macdonald has a Master’sdegree in Management Studiesfrom Oxford University and is aCFP® Professional.Death, divorce and retirement arejust some of the life events thatcan trigger profound emotionalresponses from clients. This makesthe ability to be empathic a key skill forfinancial planners to develop. Yes, it is a skill.The reality is some people are more naturallyempathic than others, but the good newsis that we can all develop empathic skills.The bad news is that empathy has got a badrap in 2025, from none other than Elon Musk.In conversation with Joe Rogan earlierthis year he said, “The fundamental weaknessof Western civilisation is empathy…” Heeven suggests that empathy could destroycivilisation, an extraordinary perspective. YetMusk is not alone in his view. Trump 2.0 hasseen an onslaught on the virtues of empathy.The Right Rev Mariann Budde, the EpiscopalBishop of Washington at Trump’s inauguration,implored the new president, “In the name ofour God, I ask you to have mercy upon thepeople in our country who are scared now.”This triggered negative responses from variousChristian podcasters such as “Do not committhe sin of empathy” (Ben Garrett) and “Toxicempathy” (Allie Beth Stuckey). US pastor JoeRigney recently released a book entitled: TheSin of Empathy: Compassion and its Counterfeits.In contrast, social scientist and authorBrené Brown in her book The Atlas of theHeart refers to empathy as “the mostpowerful tool of compassion” and highlightsthe findings of researchers that empathy helpsinterpersonal and ethical decision-making;enhances short-term wellbeing; strengthensrelational bonds and allows people to betterunderstand how others see them.Like financial planners, medical professionalsoften deal with people experiencing extremeemotions. Various pieces of empiricalresearch show the importance of empathyto healthcare outcomes and suggest thattraining can improve individuals’ empathy.Research by Prof Helen Riess of HarvardMedical School and founder of Empathetics,a business dedicated to empathy training formedical professionals, indicates that patientoutcomes are improved when they aretreated by clinicians who have been trainedin empathy. This training is critical becausethe one potential downside of empathy incaring professions is “compassion fatigue”. Toprevent this, being able to feel “with” someonerather than “for” them is an important empathicskill to learn.Riess has studied the neuroscience ofempathy, and discovered that empathy isnot just a “soft” skill, but that humans arehardwired for empathy, and that our verysurvival depends on it. But Riess’s experienceof shadowing doctors who had poor outcomeswith patients highlighted a lack of emotionalconnection with their patients; they were,“Going through the review of symptomslike chest pain, shortness of breath, edema,swelling, but nothing about connecting withthe human being that these symptoms belongto.” Riess observes, “It’s really fascinating thatin medical school, we don’t really learn muchabout emotion at all and yet it is the mostpowerful driver of whether you’re going tohave trust in a therapeutic relationship.”Trust is also the most powerful driver offinancial planning relationships, which makesemotional connection with clients nonnegotiable.Brené Brown believes, “Empathyfuels connection,” which suggests that justlike healthcare professionals, it is imperativethat financial planners develop empathyskills. Being empathic is a tonic for peoplewho seek help from the two most importantprofessions of the 21 st century, healthcare andfinancial planning. The good news is that nomatter what one’s aptitude is for empathy,we can be trained to develop the skills thatpotentially will make a life-changing differenceto client outcomes. www.bluechipdigital.co.za19