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How does one then select the right advisor and firm?
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market indicators
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- The FTSE/JSE All Share Index (-3.0% in ZAR, +4.0% in USD) was not immune to the global volatility
- Developed markets declined after Britain controversially voted to leave the EU, dragged lower by the UK’s FTSE 100 index (-4.1% in USD) and European bourses (-3.4%)
- Global emerging markets (+4.0%) outperformed global developed markets equities (-1.1%) which fell on the unexpected UK vote to exit the EU
- Precious and industrial metals prices, notably gold (+8.5%), gained on heightened uncertainty
- Global bond yields declined on expected central bank stimulus and deflation while South African bonds also rallied (All Bond Index +4.0%)
- Slowing inflation and considerably improved terms of trade have moderated expectations for future South African interest rate increases
- Global uncertainty, rising South African growth risks and elevated political risks ahead of municipal elections pose significant threats to investors’ capital
- US economy and equities (+0.3%) remain a beacon of strength
- US equity markets (+0.3%) outperformed global markets given US firms’ rather limited exposure to the UK economy compared to European peers
- European financials were at the heart of global fears and a large contributor to UK (-3.6%) and European (-4.4%) equity losses
- Soft commodity prices including wheat (-7.5%) and corn (-7.9%) declined markedly
- US 10 year treasury yields fell back to 2012 lows after the Brexit vote jeopardised global growth
- The US Dollar strengthened against the Euro (-0.2%) and pound (-8.2%) – but weakened against the Japanese Yen (+8.1%) and Swiss Franc (+2.1%)
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'too many people think that economics is a subject that should wait until university level. but it can't wait that long'
― robert duvall
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editorial
words by michael haldane, managing director
Dear Friends,
Welcome from a mild Johannesburg winter and on a 27-degree Cape Town day – strange as it is…
We’ve had a very torrid one month - we have gone from the pits of Buckingham Palace gloom to the top of the Eiffel Tower.
England is leaving the European Union (EU) and everybody panicked and the Pound against the Dollar lost 8% in one day and the world fell apart. Less than one month later, the English stock markets are back at the levels they were at pre – June 23rd and the Pound has started to strengthen against the Dollar. Interestingly enough though - not a peep from the British Royal family.
In the world of Investments and finance, there’s just one rule – there are no rules. Investments are made on emotions and sentiments more than fact. Always wait it out; that a pragmatic sensible investor. If you are the fifth recipient of a WhatsApp message, you think it’s fact, but this was a rumour. You then take that message that Barclays Bank is in trouble to a hundred of your friends, within half hour it has fallen 30% - and that is exactly what happened.
Our thinking on Brexit and the EU is a little bit different from anyone else's. The English farmer who had a hundred cows and saw immigrants working in his fields, and saw buses driving past his farmlands saying, 'Leave the EU and 350 million Pounds will be saved…' has woken up to the realisation that all of the facts that he saw were false. But England can’t change back now! They have a new lady Prime Minister – the first since Margaret Thatcher (and she curtsies very well in front of the Queen as well). In my own opinion, Margaret Thatcher was the best Prime Minister that England has ever had. She destroyed the trade unions in England and allowed it to flourish. This new English Prime Minister, who interestingly enough was against England leaving the EU, might prove to be equally as good.
England has also proposed a bold move: that in the next year they could drop their Corporate Tax rates to 15% and even to 12.5%. Right now they’re at 20%. The average Corporate Tax rate in Europe is at 23%. When this happens, a company in Barcelona, Amsterdam, or in Paris might say, 'I can save 8-10%% in Corporate Tax if I open up offices in England'. Watch this space.
England out of its ignorance might have actually done a very good thing and in the next five years we might see the total disintegration of the EU and all of those countries flocking to join a new economic power block around England. England, when they sign Article 50 in the next two years, will need to sign new trade contracts with more than 180 countries - 80 of which they used to rule. Now isn’t that interesting? So, tea from India might be cheaper, roses from Holland might get more common and Harrods may continue as the icon of rich shopping the world over.
I believe that this has created a new power in the world and will enable trade to flow better and give greater import & export solutions to many countries. Where does this leave South Africa? In exactly the same place. Our problems are still there.
South Africa is in the eye of the storm right now. We are in a calm because the eyes of the world are on England. A bit like in the Lord of Rings when an attack is made on the gates of Mordor to draw the eye of Sauron away from Frodo and Sam. In our version, the eyes of the world are on Westminster and the latest terrorist attack and not on Nkandla. This will change and could quickly. South African local elections are coming up next month. In municipalities, joint local governments where parties like the EFF (Economic Freedom Front) and Freedom Front could rule a local area together – that’s going to be fun.
Also in local news is that the corruption charges against Jacob Zuma have been re-instated (I think there are over 800 of them). Does this mean that after August the knives will be out for him? Could he lose the Presidency? Will Cyril Ramaphosa wear the King's new robes?
And lastly, we have all of the world’s rating agencies looking at South Africa. If we are further downgraded by the end of the year, that simply means that for our Government to get finance they would have to shop in interesting places. If interest rates are higher ,the costs are then handed onto us and inflation goes up.
It is a lovely country and I wouldn’t want to live anywhere else, but as I always recommend to all clients – don't emigrate your body, emigrate your Rands.
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http://www.washingtontimes.com/cartoons/
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spotlight
choosing a financial advisor
words by louis venter, ifa & technical analyst
'Respect is earned. Honesty is appreciated. Trust is gained. Loyalty is returned' - Anonymous
If one thinks of the words 'trust', 'risk' and 'my money', then the heart immediately starts beating faster and a sense of lightheadedness and a shortness of breath envelops you in what can only be described as a state of panic. Considering that our media regularly reports on yet another failed banking institution, investment scheme or even a well-known television personality involved in unruly financial dealings, then this is understandable.
There are so many financial advisory firms and advisors available today that selecting the right partner and or products for your specific needs may appear to be an impossible task.
So how does one then select the right advisor and firm?
The key in selecting an advisor is to understand that the advisor will become your partner. The first tick would be to decide whether your 'partner' does in fact fit with your persona and whether you can trust him. Giving someone your trust is like giving him the key to your life. Quantifying trust is simply impossible. In our experience we have noticed that a strong knowledge base and having a good ear goes rather far in gaining a person’s trust.
Working in a highly-regulated industry can be exceptionally difficult, especially when product developments don’t always evolve as fast as client needs' do due to certain red tape scenarios. This should actually be seen as a protection factor. Since introducing the Regulatory Exams, many advisors and brokers have thrown in the towel simply because they have become complacent in their businesses and do not wish to 'school' themselves in changing times. Having a qualified and knowledgeable advisor is thus crucial in making that all important decision.
Retirement portfolios, as an example, can be very complicated mainly because of certain regulations within the Pension Funds Act. Certain fund strategies, for example, are not allowed in these portfolios; but with careful fund selection and capital allocation, an investor in these products can still earn very competitive returns without breaking the rules. There is a rumour that these investments usually underperform discretionary portfolios and that the last five year term of these portfolios could potentially double any underlying capital. This is simply untrue and reflects a severe lack of knowledge and expertise from the advisor or broker dealing with the product.
Regular feedback and communication are elements that any investor should see as a non-negotiable. In today’s uneasy markets, where fear and uncertainty lead to highly-speculative portfolio structures and investment strategies that are built from an emotional reaction, it is important to have the correct and relative information before embarking on a path of potential destruction. Full disclosure regarding fees and potential earnings are also factors to consider, and again our team is rather transparent on this front.
At Global & Local, our clients are able to benefit from a pool of intellect and experience. Not many financial advisory firms can boast having a technical team that continuously analyses the prevailing market environment, thus allowing the advisors the opportunity to obtain related market information at a glance, which in turn can be applied sensibly when having a client meeting.
Our team of Independent Financial Advisors (IFAs) are licensed to give objective and independent advice on a wide range of investment and retirement products, local and offshore, and are able to guide you through the various options and benefits of personal risk cover; be it income protection, life cover, disability cover and critical illness cover that will fit a particular profile or fill a specific need. These advisors are highly skilled and do work under the mentorship of seniors that have been in the industry in excess of 15 years and who have in their own right achieved very high academic qualifications.
Our IFA team will be giving us some insight into certain products and solutions in future publications and we look forward to your comments and questions.
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http://www.dailyinfographic.com/11-frugal-habits-of-the-super-rich
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contact us
Global & Local
investment & retirement specialists
175 barry hertzog avenue, emmarentia, johannesburg 2195
t | +27 11 486 2500 f | +27 11 486 2915
admin@globallocal.co.za
www.globallocal.co.za
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not based in johannesburg?
visit one of our other branches
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67 somerset road, greenpoint
t | +27 21 418 0553 f | +27 21 418 0891
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126 rose avenue, lenasia
t | +27 11 854 1351 f | 086 671 9294
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