Get­ting the most for re­tirees

‘Clients can check the sta­tus of their port­fo­lios at any time over the In­ter­net’

Finweek English Edition - - Verso financial services -

WHEN VERSO FI­NAN­CIAL SER­VICES be­gan ad­min­is­trat­ing re­tire­ment funds, it no­ticed that bro­kers seek­ing higher com­mis­sions were tar­get­ing many fund mem­bers. That was a par­tic­u­larly acute prob­lem be­fore the pass­ing of the Fi­nan­cial Ad­vi­sory & In­ter­me­di­ary Ser­vices (Fais) Act – as Fin­week of­ten wrote about – and still per­sists to­day de­spite the more strin­gent leg­is­la­tion in­ter­me­di­aries have to work un­der.

Verso’s con­cern was that re­tire­ment fund mem­bers were of­ten pre­sented with the wrong in­vest­ment ve­hi­cle for their needs and that tax im­pli­ca­tions weren’t con­sid­ered or were in­cor­rectly ap­plied. The re­sult was that much of the hard work and dili­gence of re­tire­ment fund trustees was be­ing un­der­mined. Trustees had se­cured at­trac­tive in­vest­ment re­turns for mem­bers be­fore they ex­ited the fund – only to have the ben­e­fits of that un­done through poor fi­nan­cial ad­vice.

Such con­cerns led to the es­tab­lish­ment of Verso In­vest­ment Ser­vices as an im­par­tial fi­nan­cial plan­ning ser­vices com­pany. MD Nico Burger says Verso In­vest­ment Ser­vices is specif­i­cally de­signed to ad­dress the unique fi­nan­cial needs and per­sonal cir­cum­stances of each of its mem­bers.

“The out­stand­ing po­si­tion­ing of the com­pany un­der Sec­tion PF 86 of the Pen­sion Funds Act gives us an im­por­tant role to play,” says Burger. “That sec­tion of the Act states that when mem­bers re­tire out of a re­tire­ment fund the trustees must ad­vise those mem­bers on how to in­vest their money and the tax im­pli­ca­tions. If the trustees de­cide to ap­point us we ad­vise mem­bers on those is­sues.”

That in­cludes a full range of ser­vices of­fered to mem­bers while they’re still with the fund and when they re­tire, in­clud­ing: • Re­tire­ment plan­ning, such as in­di­vid­ual needs anal­y­sis, risk pro­fil­ing, as­set al­lo­ca­tion, long-term cash flows and pro­vid­ing the right in­vest­ment struc­ture and prod­ucts. Fi­nan­cial anal­y­sis, in­clud­ing death and dis­abil­ity anal­y­sis, as­sist­ing mem­bers on mak­ing the right choices con­cern­ing risk op­tions avail­able in the fund and pro­jec­tions to re­tire­ment and ad­di­tional re­tire­ment pro­vi­sions. In­come tax, where a mem­ber’s tax is min­imised be­fore and af­ter re­tire­ment, and the out­sourc­ing and fa­cil­i­ta­tion of in­di­vid­ual tax re­turns. Es­tate plan­ning, such as the draft­ing of wills and the set­ting up of dis­cre­tionary trusts. port­fo­lios at any time on-line sim­ply by us­ing a PIN num­ber emailed to them by Verso.

In­terneu­ron Multi-Man­ager is a small in­vest­ment man­age­ment com­pany that fo­cuses on ab­so­lute re­turn port­fo­lio man­age­ment. As ab­so­lute re­turn funds are meant to be able to pro­vide pos­i­tive re­turns re­gard­less of whether the stock mar­ket is go­ing up or down, the fund there­fore at­tempts to pre­vent large cap­i­tal losses over the short term and yield at least real re­turns or higher over the medium to long term.

Burger says some third par­ties are also us­ing In­terneu­ron Multi-Man­ager, mainly bro­kers. Verso is also cur­rently in dis­cus­sion with a listed South African com­pany that’s con­sid­er­ing buy­ing into the mul­timan­ager.

Verso In­vest­ment Ser­vices has ob­tained the sole right to pro­vide fi­nan­cial ad­vice to the mem­bers of two of SA’s largest lo­cal author­ity pen­sion funds. Burger says that the Cape Joint Re­tire­ment Fund and Cape Joint Pen­sion Fund cur­rently have more than R7bn as­sets un­der man­age­ment.

“Due to the sav­ings en­vi­ron­ment, where re­tire­ment fund rules have to be care­fully stud­ied be­fore any fi­nan­cial or in­vest­ment ad­vice can be of­fered to mem­bers, clients can feel con­fi­dent that we have the ex­per­tise to en­sure they get the max­i­mum ben­e­fits from their fund on the date they re­tire.

“Fur­ther­more, Verso In­vest­ment Ser­vices uses its unique multi-man­age­ment in­vest­ment port­fo­lio sys­tem to struc­ture the funds so that they’re com­pletely trans­par­ent to both the client and the fi­nan­cial ad­viser. And clients can check on the sta­tus of their port­fo­lios at any time over the In­ter­net.”

Burger says its var­i­ous ser­vices are also of­fered to clients be­fore re­tire­ment while they’re still mem­bers of the re­tire­ment fund.

It’s of­ten pointed out that the ma­jor­ity of re­tirees don’t have enough money to main­tain the lifestyle they en­joyed while work­ing. Start­ing to plan for re­tire­ment at a younger age makes mem­bers aware of that and Verso In­vest­ment Ser­vices can ad­vise on ways and prod­ucts to se­cure suf­fi­cient money at re­tire­ment.

Burger be­lieves Verso has de­signed the per­fect model to cater for the im­por­tance of in­de­pen­dent ad­vice when mem­bers leave the rel­a­tive safety of their re­tire­ment fund. “The in­de­pen­dent fi­nan­cial ad­vice and re­tire­ment plan­ning we of­fer is in a dis­cre­tionary en­vi­ron­ment. In­vest­ment port­fo­lios are avail­able on all linked ser­vices providers in South Africa but mainly In­vestec or In­vest­ment So­lu­tions are used. Verso also uses their sub­sidiary com­pany In­terneu­ron Multi Man­agers to man­age port­fo­lios for clients on the above men­tioned plat­forms. We have con­trol over the mul­ti­man­agers so we can squeeze down as­set man­age­ment fees for our clients.”

Clients are able to ac­cess their in­vest­ment

Verso has de­signed the per­fect model to cater for the im­por­tance of in­de­pen­dent ad­vice. Nico Burger

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