Seek best advice in tough times
WhiLE high net worth individuals may appear to be relatively immune to the turbulence in South Africa’s markets they do in fact potentially stand to lose the most – unless their wealth is properly managed. Therefore, for an increasing number of HNWIs wealth preservation and wealth creation are largely about finding the right professional advice.
However, for savvy investors with positive balance sheets or access to cash resources these same turbulent conditions provide unusual opportunities for wealth creation.
Investors have become concerned about their portfolios since the start of the current market correction: on closer inspection of their portfolios many have found it’s littered with a mess of stocks that did well during the bull market – new Alt-X listings and every flavour-of-the-month sector that individually might have been good, speculative investments but which didn’t amount to a plan for volatile times. Since the correction, it’s those very stocks that have borne the brunt.
Some of the old-time brokers, such as Sasfin Securities deputy MD David Shapiro, say it’s getting strong interest from clients migrating from small investment boutiques and wanting to deal only with experienced advisers.
Research by Investment Solutions at the height of the bull market revealed the average experience of fund managers, and even their bosses, had declined alarmingly to less than five and 10 years respectively.
Shapiro says: “There’s a proliferation of people out there selling product. If you’re in this business – whether in client relationship or fund management – you need a broad understanding of what drives the global economy.”
However, Investec Private Clients CEO Henry Blumenthal says unless you’re with a small investment boutique, the experience of the individual portfolio manager isn’t para- mount. It’s the brand and house investment process that’s more important, he says, with individual fund managers actually having very little personal discretion.
BoE Private Clients MD Vince Boulle stresses the importance of sound debt management and advises investors who may be increasingly unable to support their debt obligations to approach their banks for assistance. “Given the high cost of debt it’s essential that investors caught up in the current debt cycle manage their way out as soon as possible.
“It’s always important to be completely honest with your bank, as it’s very often in a position to assist. For example, by extending the period of repayment of a mortgage or converting the terms to an interest-only arrangement on a temporary basis. In the worst case scenario – for example, cutting your losses by selling a property at a lower price – may be the best solution over the long term.”