Custom-designed investment solutions drive success
BUILDING long term relationships with clients and the ability to take their specific circumstances into account to tailor an investment solution is critical to the being a consistently successful stockbroker, according to Chris Lemmon, head of Sasfin Private Client and Sasfin Asset Managers.
He says success as a stockbroker is also dependent on: experience, you need to be able to leverage a team that has been through several market cycles; passion, successful managers have to have a love for the markets, it cannot be just a job; drive, the market is a dynamic place, filled with many smart people - to stay ahead requires consistent, repeatable thought processes and modeling.
Lemmon says Sasfin success is reflected in the fact the firm has been a specialist stockbroker for 120 years. He contends that Sasfin’s commitment to putting an investment decision maker in front of a client differentiates the stockbroker in the market .
“They are not sales people, they are investment professionals and we like to combine young and old to get the best out investment decision making; age is just a number.”
Sasfin places an emphasis on being a place of learning in order to create a supportive environment in which skilled investment professionals can work effectively and add value for the firm’s clients.
“Even the most experienced investment professionals learn new things, especially in a culture that encourages open debate, which is constructive and designed to test the investment idea, not to break down an individual.
“That is how everyone continues to learn; we have created a positive, constructive environment where investment ideas can be tested in a culture of striving for excellence, the market is not a nine to five job,” says Lemmon.
He says the trick is to make sure that the freedom allowed to enhance investment decision making, particularly at an individual portfolio level, occurs within a clearly defined framework that ensures any potential risks are adequately addressed within the framework.
“It is always about balancing the scales between investment performance and investment compliance.”
Lemmon says the values and ethics of a stockbroking firm are another key to achieving success for the firm and its clients.
“The value, ethics and culture of the business should be built into its DNA. In a relationship heavy business, this is absolutely crucial for a number of reasons.
“Clients experience it face to face. It embodies, what you do, how you do it, how you engage with your clients and the type of people you employ. It is something that they easily identify with and creates a moat for your business.
“Many financial products can be reengineered by competitors, but you can never replicate a culture. In an environment where you want relationships to cross generations, values and ethics are essential to building long term trust.”
The final component to ensure a stockbroking firm’s success, according to Lemmon, is strong leadership that focuses on creating an enabling environment for a team of investment professionals.
“We believe that leadership revolves around being adaptive. Your leadership team needs to be strong and resilient, but don’t always need to be the loudest voice in the room. It is about creating an environment of excellence and where strong views and opinions can be voiced and then sensibly weighed.
“The leadership team’s job is then to build this into a comprehensive strategy that ensures the business stays ahead of its competitors and gets the best out of its people. In certain instances it requires leading boldly from the front, in others it requires a supportive role in getting the best out of people.”
Lemmon says the local and international economic and investment drivers and strategies in the current investment environment include:
Global political and economic uncertainty that is marked by a low developed market interest rate environment creating an unnatural flow of money to high yielding opportunities globally, particularly in the higher risk, growth emerging markets. These low rates are expected to remain in place for longer than previously expected;
Local currency and political uncertainty;
A low growth environment both locally and globally. In the context of this low growth and QE, business has spent more time on efficiencies in their business than capital expansion, which reinforces the low growth environment in the medium term.
Lemmon says that from an investment perspective, it’s important to focus on companies with strong management who are starting to re-orientate towards investment for growth in the future. One needs to trade cyclical industries with caution in the context of this low global growth environment.