Getting the most for retirees
‘Clients can check the status of their portfolios at any time over the Internet’
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