Seek best ad­vice in tough times

Finweek English Edition - - Private Banking -

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.”

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