The world of wealth is ever-changing, yet everlasting. High-net-worth individuals (HNWIs) across the continent are constantly having to keep up with their wealth and the factors that impact it; like the pandemic, rising inflation and the economy’s boom and bust cycles. That is why safeguarding their money is of the utmost importance. For the first time in 11 years, FORBES AFRICA is honoring the keepers of these vaults, who have persevered, come rain, shine or Covid-19. We speak to 10 of South Africa’s experts who specialize in wealth advisory and management services. A common theme: wealth preservation, not only in South Africa but across the continent, is key to the growth of any economy, even as times and trends change.
WORDS AND CURATION: CHANEL RETIEF AND LILLIAN ROBERTS
Art Director: Lucy Nkosi
Photography: Katlego Mokubyane; Assistant: Sandile Mkhize
Studio: NewKatz.Studio by Katlego Mokubyane, Johannesburg
Styling: Katlego Magano of Oak Ave
Outfits supplied by: House of Ole, ZARA, Hugo Boss, Levison, Presidential and Woolworths | Hair & Makeup: Thapelo Letsebe
WHEN ASKED WHAT HE looks for in a wealth advisor, Africa’s youngest billionaire, Tanzanian businessman Mohammed Dewji tells FORBES AFRICA: “I look at the thoroughness of understanding, like [the] understanding of trends, head and tailwinds, fundamentals, and I look for opportunity hunters opportunities that come to you also come to all… the important thing is to make opportunities.”
Whether you’re a corporate titan or a CEO, wealth advisors and managers play a critical role in seamlessly protecting the wealth of high-net-worth individuals (HNWIs), who by definition have liquid financial assets of over $1 million.
Wealth is crucial, and it goes beyond the money.
“When clients can actually appreciate what you bring to the table, and when you have discussions and you tell them things that they weren’t aware of, they realize that you’re the expert,” says Lesego Monareng, Managing Director of KLU Wealth, a wealth and legacy management firm in Centurion, South Africa, “Once you’ve had that good conversation with someone who’s qualified, it really makes a difference. Because then you understand what you’re working for and what you need to be doing with your money.”
Paula Mokwena, CEO & Head of Direct Investments at Fireball Capital, a venture capital firm in Cape Town, South Africa, also adds that there is a greater focus now around ESG (Environment, Social & Governance) practices from both the client and advisory standpoint.
“We’ve seen [this] in private equity. And I think the private equity space has been very good in incorporating ESG principles and best practices into the investment processes and frameworks… And I think South African fund managers are very good at that, from a private equity perspective,” Mokwena tells FORBES AFRICA.
“They don’t just focus on driving economic returns but that in generating those returns and generating those profits, they also are taking the risk of being responsible towards people. From an environmental perspective, how are they taking accountability.”
According to a 2019-2020 report by New World Wealth, people living in South Africa together hold $636 billion in wealth. Furthermore, around $267 billion (42%) of this is held by millionaires (HNWIs). In 2019, the average South African individual has net assets of approximately $11,000 (wealth per capita).
“This is a relatively healthy level when compared to most other emerging markets,” the report claims.
The 2022 Africa Wealth Report, published by London-based Henley & Partners, reveals that South Africa is home to over twice as many HNWIs than any other African country. However, the tiny Indian Ocean nation, Mauritius, has the highest wealth per capita in Africa, at $34,500, due to its status as a financial safe haven, followed by South Africa at $10,970, and Namibia at $9,320.
“Notably, South Africa is home to over twice as many millionaires as any other African country, while Egypt has the most billionaires on the continent,” notes New World Wealth’s 2022 Wealth Report.
Although multiple reports, as well as advisors who spoke to FORBES AFRICA, agree that wealth in South Africa is set to increase, the 2022 Africa Wealth Report estimates that 4,500 HNWIs have left South Africa over the past decade, migrating to places like the United Kingdom, Australia, and the United States. In one stark data point, the report points out that “there are 15 South African-born billionaires in the world, but only 5 of them still live in South Africa”.
This phenomenon is known as investment migration and is a staple in the wealth manager’s toolkit. Several western governments have instituted programs that enable HNWI Africans to migrate to their jurisdictions, with the crucial exchange being citizenship or residence for a set investment amount. It has been growing in popularity for affluent African families seeking more stable environs to continue building their wealth. The receiving governments not only benefit from the investment injection but also address capital and human resource gaps within their borders.
However, this is just the tip of the iceberg for wealth management professionals. There’s a lot more than meets the eye. Their vocation is centered primarily around trust.
“One of my philosophies in a client-centric business [is] that everybody needs to make sure that they meet and see clients and understand the client’s pain points because that presents an opportunity,” explains Eric Enslin, Head of Private Banking at FNB Wealth (FNB Private Wealth and RMB Private Bank)
In the past, if you asked private banking clients about investing or insurance, they may associate these offerings with asset management or insurance firms. However, Enslin further explains that these misconceptions within the wealth management and private banking space need to be addressed.
“If we talk about banking and lending…what we should want to change first is when you think about needing to invest or insure, you think about how you need financial advice. The other big fallacy is that it’s only for the wealthy who can get financial advice. Now that is the biggest fallacy because I do think you need that advice when you’re young, so that you can create your wealth.”
“The work that we do does not get much attention, and it’s necessary,” Malulo Nemataheni, CEO of ImPowerX Advisory Services, adds.
“People say spending time on financial literacy is not going to give you money, but it’s necessary, because you can’t do financial planning, we can’t build wealth when people don’t understand the basics, and it is the basics that we need to have covered.”
Right now, what is key is how governments and investors alike must focus on building resilience, especially with volatile markets, emerging asset markets and regulation changes now at the forefront of clients’ minds.
A major part of safeguarding a client’s assets and wealth means keeping it private. Cultural and societal norms across Africa, as well as economic realities, means that, in comparison to developed markets, HNWIs here prefer to keep details about their wealth a secret. While a number of reasons play a role around this reality, the lack of transparency hinders our understanding of the mechanisms of African wealth and even the benefits it has in the economies where it is domiciled. However, especially in South Africa, disclosure rules are quite stringent within this demographic and wealth managers are not permitted to discuss clients’ wealth without their express permission.
The law that ensures this is called the POPIA (Protection of Personal Information Act) and it mandates strict compliance rules as the Information Regulator in South Africa.
“Then the big thing is data as well; being able to aggregate, and collect data, and consolidate reporting across various geographical regions and that’s where our role comes in, essentially, is that [of] chief financial officer to global families. And one of the important things we need to do is collect, gather, aggregate, and report,” says Andrew Ratcliffe, Co-Founder and Director of Private Client Holdings. Marilize Lansdell, Managing Executive for Nedbank’s South African Wealth Management Unit, qualifies this noting that there has been an increase in digital services to clients.
“Especially during Covid, we see a massive uptick in customers [who] usually don’t use digital services,” Lansdell tells FORBES AFRICA. “It’s become a much easier conversation with clients in terms of adopting our online banking, using apps, but at the same time [this] has created a lot of effort in terms of awareness and education to clients around preventing fraud, to help them avoid falling prey to scams and then the importance of cybersecurity.
“It’s tough to stay on top of all the regulations in terms of making it easy for people. I sometimes feel that the issues that regulation is trying to prevent are actually societal issues that we need to address. But [it’s] becoming a financial service provider’s obligation to shape the society in a way and to direct it. And there’s a lot of debate around striking the balance between complying with regulation and encouraging savings and investments.
Although this is a very important element when it comes to protecting clients, New World Wealth have noted in their report that there are helpful factors that could encourage wealth growth in a country. Among these is a low level of government intervention as heavy regulation, particularly in the business sector, creates large inefficiencies within an economy. Government-owned enterprises and parastatals can pose a risk to the ease of doing business within a jurisdiction, take the case of electricity utility, Eskom, in South Africa.
“We consider wealth to be a far better measure of the financial health of an economy than GDP,” the 2022 report states. “In many developing countries a large portion of the GDP flows to the government and, therefore, has little impact on private wealth creation.”
The 10 experts listed by FORBES AFRICA here represent only a fraction as well as a microcosm of what South Africa’s financial advisory and wealth management industry looks like. Not just from a macro perspective looking at assets and portfolios but also from a societal aspect, including factors such as race, gender and even age.
“If you think of our financial environment or [our] financial services, we’re very fortunate in South Africa,” Enslin says. “Now, we often engage with counterparts internationally in the developed countries. And it’s fascinating always to me how in many instances, and not one specific institution, but if you look at our technology, our payments capabilities, the resilience around some of our compliance and legislation around Financial Conduct, and all those types of things, it’s really advanced, in many instances [we’re] on the front foot.”
According to Forbes’ Best-In-The-State Wealth Advisors list 2022, the wealth management population is aging, with studies showing the average age of a financial advisor is 55 years old and one in five advisors are aged 65 or over. According to their estimates, more than a third of the workforce will retire over the next decade. This is not different from this FORBES AFRICA compilation as most of our participants have been in the industry for 15 to 25 years, if not more.
Andrew Moller, Chief Executive Officer at Citadel, believes that highlighting this industry in the 11th anniversary issue of FORBES AFRICA is important as this will encourage a new, and younger, cohort of advisors into the market.
“I haven’t even mentioned, and I didn’t want to mention, because I’m probably part of it,” Moller says of the industry’s demographic profile, “Because of the age group of advisors, there’s going to be a lot of advisors leaving the industry. According to industry stats, there haven’t necessarily been an influx of new advisors into this industry to necessarily complement and satisfy the outflow of advisors that are going to be leaving.”
For over a decade, FORBES AFRICA has highlighted billionaires and millionaires, rising stars in business, and more recently, we’ve paid homage to Africa’s biggest musicians; the time to spotlight this often closed sector and its players could not have come at a better time, says Delphine Govender, co-founder and Chief Investment Officer at Perpetua Investment Managers.
“It’s actually remarkable that it’s the first time, especially given that it’s Forbes and [when you] just say the word ‘Forbes’ to anybody, they would think of the wealthiest people, it’s very stereotypical,” Govender says. “But it’s interesting that the whole notion of who takes care of people’s wealth hasn’t come up before but that is largely also because the industry has felt almost enigmatic, meaning it’s below the radar. I mean, I didn’t know about it 25 years ago, and a lot of people don’t know about it today.”
From big names, like FNB and Standard Bank, to boutique firms, like Perpetua and Private Client Holdings; the profiles highlighted here have similar qualities. However, the most important is that they have all agreed this is an industry of putting people first.
Editor’s Note: This list follows no particular order and is meant to introduce readers to some of the prominent names in the industry in South Africa.
“They think for a woman to do it, particularly [is] nuts, because you’re not supposed to have a risk appetite of that nature.”
The wealth management and advisory sector in the financial industry have, for a long time, been perceived as an ‘old boys’ club’.
However, Delphine Govender categorically broke the mold as she walked into the NewKatz.Studio in Johannesburg, in September, to take part in this cover shoot. She’s ready to crush any thoughts about women in wealth advisory services particularly those who own their own boutique investment firm.
“The narrative around was that women don’t make it in this industry, not because you have an intellectual deficit, but it’s just because they believe that industry is not suited to women,” Govender says. “Because your clients are mainly men, because all of them are represented by men, whether it’s advisors, we call them independent financial advisors, whether it’s trustees or pension funds, it’s mainly male, whether it’s consultants, you mainly see men in decision-making roles.”
This is why, in her 24 years within the sector, she has aimed to not only break the glass ceiling but to also ensure that other women make it to the forefront as well. After spending almost 11 years at Allan Gray Limited, where she held positions as Portfolio Manager and Executive Director, it allowed Govender to establish Perpetua, with a partner, in 2012.
“I think those [being a Portfolio Manager and Executive Director] also gave me quite good exposure and business acumen, because starting your own investment firm does require a combination,” she adds. “I’m not just being a great investor, you can’t just have the investment experience, because you actually need to build a whole business, you need to find the clients, you need to build a brand, build a team, you need to have a process.”
One might think that the smaller boutique firms may not track the sort of business that the bigger outfits do, but this is a major misconception.
A 2015 study by the American Affiliated Manager Group found that boutique investment managers have routinely outperformed their competition in key areas since the mid-1990s providing investors with superior long-term value, as a result. Not only that but boutiques have outperformed non-boutiques in nine of 11 equity product categories annually by 51 basis points (bps), offering returns 11% greater than competitors over a 20-year period. Additionally, strategies developed by boutiques outperform benchmark indices across the same equity spectrum by 141 bps. In fact, the average boutique strategy outperformed its primary index in nine out of 10 product categories.
For Govender and her firm, the opportunity came when they saw that the world was changing.
“We [asked ourselves]: How [can we]see the client holistically? How do [we] exist to be mission-led, or purpose-led, as a firm? And then I felt that as the client-base evolved to being not just males, and a kind of older generation, but actually more younger generation people, that their needs, their financial needs would be different,” she explains.
“The world was shifting, so a big part of it was saying, there’s an opportunity… but that’s based on a view that the world is going to remain static. I felt that the world was changing. I mean, the nature of our industry is dynamic, we [were] going to see new asset classes, new things to invest in. But most importantly, there was going to be a new mixture in the client-base, and the client-base was going to have very different and evolving needs, it was just not going to be a financial return.”
When embarking on this journey to start her own firm 10 years ago, many of her family, friends and colleagues didn’t quite understand the move.
“I got a lot of questions like why would you leave a large, fantastic established brand where you are a director, where you are a portfolio manager, where you’re prevailing over a huge amount of assets to, ‘why would you leave that amazing wicked [job] to do something [so] risky,” Govender recalls. “They think for a woman to do it, particularly [is] nuts, because you’re not supposed to have a risk appetite of that nature.”
Adding to that, Govender was pregnant with her second child at the time and did not tell anyone until her farewell speech at the firm.
“But I wanted to also be upfront that I was actually planning to start my own firm, I wasn’t just leaving because I was having a baby although that’s okay, too. But the interesting thing was [that] when I was going around to meet prospective clients, being six or seven months pregnant [many] thought, Is she okay? How can she be pregnant, how is she going to be like a business owner?’”
But this has only added to her experience in empowering young women in not only entering the financial services industry but also in safeguarding their own wealth.
“Increasingly, the biggest shift is that the clients are now going to women and younger people,” Govender explains. “I’m the last bit of Gen X, and I’m now a woman who built up my own wealth by staying in a business and then left to start my own firm to be an entrepreneur who hopefully, over the long-run, will build up more wealth. There are more people like me.
“Women are going to be accounting for the growing proportion of the high-net-worth clients because of who they are. Their wealth is going to continue to grow because now women are actually in key jobs, like CEOs, founders and entrepreneurs,” she says.
“These families are intelligent, and so is their money. And the money goes where the opportunities are, and the families often follow.”
He’s a prolific mountain biker, kite surfer, surfer, fly fisher, and also a wealth advisor with 20 years in the industry for almost 30. While in military service, he realized a tertiary education would set him apart from the rest.
Now, the company he co-founded oversees a team of 110, managing an excess of R10 billion ($577 million) worth in assets.
The transformation from a small accounting and tax practice into a full-service multi-family office has been a highlight of Ratcliffe’s career. In 2017, Private Client Holdings was recognized as the ‘Best Adviser Firm’ in South Africa by The International Adviser Best Practice Adviser Awards. Since then, the firm has won even more awards. Ratcliffe was recognized as one of the top 100 Most Influential Advisors Globally by International Adviser in 2020. The following year, Private Client Holdings was acknowledged as a top boutique wealth firm in South Africa by Intellidex.
Backtracking to the early days, he remembers filing tax returns, drafting wills, winding up estates, giving financial advice – all while trying to keep up a social life as a young man. He says it takes a decade of learning before you have the conviction of your own advice, as it is a vast and humbling subject.
Notable assets that the company currently has under management run across private equity, both local and offshore, commercial properties, lifestyle assets such as game farms, yachts, collectible art and cars. Also under their care are a variety of assets, conventional and unconventional, with a minimum investment threshold starting at $1 million. Their ideal client invests at $10 million.
He says that while South Africa has its challenges, the country still has a middle-income class that is steadily moving towards high-net-worth.
“If we want to get our growth back on track, we need to basically attract foreign direct investment or rebuild as much infrastructure, things like the rolling stock and the railway networks.”
Simultaneously there is also immigration, or families choosing semi-gration – moving to areas such as the Western Cape. He says they are also leaving South African shores in search of more tax-friendly jurisdictions, opportunities as well as popular residency and citizenship programs.
“These families are intelligent, and so is their money. And the money goes where the opportunities are, and the families often follow.”
Another trend Ratcliffe is seeing is the move towards digital currencies, known as cryptocurrencies, and alternative asset classes. Embracing technology is just as fundamental now to his advice, he adds.
“There are a myriad of other options now available and becoming more mainstream, but like anything – buyer beware. There’s got to be a good reason to have it as an asset class in one’s portfolio.”
Ratcliffe believes that digital currencies are quite dynamic and will take various iterations, in future, with many false starts, happy investors but tears along the way as well.
Private Client Holdings have a number of corporate social investment initiatives across s education, environment, and exercise. They support REAP, a rural education access program, helping previously disadvantaged students through tertiary education. They also partner with Greenpop, who’ve planted 177,000 trees over the last 12 years. They also get involved in multiple exercise projects such as UCT cycling, at the University of Cape Town, and a development program in Masiphumelele, also in Cape Town, providing life skills and mentorship to young people – beyond learning how to ride a bike.
Ratcliffe says they are seeing a demand for doing the right thing; clients’ values also feed into their ethos and advisory process, with a shift towards ESG and being mindful of issues like climate change. To implement ESG strategies; he explains they’ve sought out the best fund managers in the market, mainly from a global context, and are skilled in constructing portfolios suited to individual and family needs.
“It’s a big job, and it requires a lot of attention, a lot of focus. empathy, care and listening. I think that’s something that is often glossed over. It’s not a mechanical process. A lot of it is almost being like a counselor and a coach and listening very carefully to the needs and the wants and the fears and the dreams of your clients.”
“I think the ability to help clients transact optimally and to use both sides of their balance sheets optimally to create and sustain wealth is the ultimate value add.”
Hailing from the city known for its idyllic beaches of the Golden Mile in Durban, Sizwe Nxedlana tells FORBES AFRICA that his aspirations in entering this industry, 17 years ago, was to “improve the financial position of as many households as possible and creating prosperity as a result.”
To date, his achievements are all linked to his goal of helping people thrive and prosper.
“I derive a lot of energy from the feedback we receive from clients,” Nxedlana says. “Over the years, we have embraced an advice-led philosophy that is more holistic and integrated for our clients. We have been able to shift towards optimizing clients’ balance sheets and unlocking enormous value as a result because we have mature banking solutions. The fact that this advice along with the products that fulfill the advice can be provided on a digital platform with or without assistance has meant we are able to reach more people.”
In 2018, according to BusinessTech, FNB Private Wealth was in the top five in the Euromoney’s list for best private banks and wealth managers in South Africa for the categories of commercial banking and innovation.
All of this stems from Nxedlana and his team’s deep understanding of the trends and themes he has seen happening in the South African investment and wealth space. Trends including the growth in deposits, an increase in offshore diversification and increased interest in the stock exchange were all important talking points during this exclusive interview with FORBES AFRICA .
Commenting on these trends, Nxedlana noted that growth has been a key theme for the industry.
“I would say the biggest trends I have noticed over the past few years include consistent strong growth in deposits into cash and near cash investments despite low interest rates. Secondly, an increase in offshore diversification. Third, there has been growing interest in the stock exchange, especially during the pandemic. Fourth is the increasing interest in passives, alternatives especially among wealthy and in ESG-linked products,” he says.
Environmental, Social and Governance, ESG for short, is an investment methodology that takes into account a variety of factors outside of the bottomline and views capital as a conduit for social good. It has gained prominence in the developed world but is now a feature of more mature financial markets, such as South Africa, on the continent.
“ESG issues are becoming a major influence in how portfolios are being constructed which overtime have positive outcomes for society, environment and improve governance. However, one of the big initiatives we have embarked on is to use our digital platform to provide clients with the ability to buy and finance solar energy. This will reduce carbon emissions and improve certainty of supply which is particularly helpful in the South African context.”
Despite the risks that the Covid-19 pandemic has introduced into the economy, Nxedlana remains positive above the upward movement that the industry has seen so far.
“Despite persistently weak economic growth, we have continued to see strong upward migration of clients from middle income into affluent and this trend over time has also increased the number of high-net-worth (HNWI) clients that we have. Weak GDP growth has not stopped this,” he explains. On trends further down the line, the industry is sure to continue adapting to not only client needs but the unique market innovations that are now defining the wealth management services sector. These, Nxedlana sees as opportunities for business growth and expansion for the industry, in general.
“Clients have assets and liabilities. They also transact locally and internationally. I think the ability to help clients transact optimally and to use both sides of their balance sheets optimally to create and sustain wealth is the ultimate value add. I think the industry will move in this direction of integrated financial services glued together by integrated advice provided through a platform with or without assistance.”
Finally about this edition of FORBES AFRICA, this industry veteran believes that it will open more doors not only into what was formerly a closed door sector but one with plenty of untapped potential.
“I think integrated financial advice and wealth management that is done well can unlock enormous value and significantly improve clients’ lives. However, the industry can seem inaccessible and intimidating to many. More communication and education about this can only be helpful,” explains Nxedlana.
“Gone are the days where you arrive at a meeting with the calculator.”
For Andrew Moller, it’s all about being different.
The start of his 30-year career shows this clearly. After completing a law degree he went backpacking through Europe, a trip that was intended to last for a number of days, and ended up becoming a year-long adventure.
It was only when he returned to South Africa that he decided that he needed to find a job.
“I bumped into a mate of mine in 1994,” Moller recalls. “He worked at Old Mutual at the time. He said ‘what are you up to?’ I said I need to go quickly get my CV printed because I am looking for a job. And he said to me, ‘I’ve just handed in my resignation five minutes ago, why don’t you go there?’”
Following that five-minute conversation, was the beginning of Moller’s three decade-old career in financial services, an industry that he is very passionate about.
“I think I’ve been very fortunate, having been with Citadel now for 27 years,” he says. “To have had a front row seat and having experienced the growth of this business; from this tiny little business that was launched for want of a better word in 1993, to where we are today in 2022.”
With almost R80 billion ($4.6 billion) assets under management, what has remained important for Moller in his extensive career at Citadel have been the conversations regarding wealth transfer or multi-generational wealth.
“The new beneficiaries over the next 10 or so years of this wealth, that’s been created over the last 20 or 30 years, potentially have very different value systems and are looking for very different outcomes from their investments,” Moller says.
In his analysis, investment asset managers have had to consider clients’ value systems into their investment strategies. The big focus now is going to be on aligning with that investment strategy not only as an advisor but also preparing to have a competitive edge.
“It has been shown statistically, that when wealth moves from one individual to another, let’s just use the example of a parent to a child, or a trustee to a beneficiary; 80% to 90% of those recipients change advisors.” Moller explains. “Now what that’s going to do for the industry is that it’s going to increase competition, it’s going to make competition in the industry a hell of a lot more prevalent. [This is] because, as this wealth transfers, the potential for [new] advisors, to conserve the business and retain the client, [will mean] that the competition is going to be higher.”
Performance and fees are important elements for Moller. However, in his opinion, what is really going to be the driving force for new competition is how ESG practices come into play. This is why he is excited to see FORBES AFRICA highlight this industry.
“You are putting the spotlight now on wealth managers, what are my immediate reactions to that? Well, it’s incredibly positive,” he says. “And it’s incredibly fortuitous, the timing couldn’t be better. Because traditionally, the wealth managers have competed on very staid metrics of performance and fees and the new generation that is now inheriting the wealth, the wealth managers that want to be competitive in that environment are going to have to be competitive and a whole lot of other points.”
In addition to ESG, it is going to be about behavioral finance, which is what Moller calls “the right brain of financial planning”.
“Gone are the days where you arrive at a meeting with the calculator. And throw in a couple of digits, numbers and say, ‘come and be my client, I can get you 5% more or I can save you 5% in fees’. That isn’t cutting it anymore. Now, you got to show them what the experiential is, like where you invest in, what is your ESG policy? Where’s your impact investing?
“Talking a bit to my own hand, thankfully, this is not new to Citadel. If you go back and you look at the history of Citadel, we’ve only ever competed on client-centricity. We’re a client-centric business.”
With a keen competitive drive to give the client what they want, Moller offers some words of wisdom as he speculates on what the next generation of wealth advisors will look like.
“I think that the relationship that you are trying to build with your client nowadays needs to be unpolluted. And one of the first bits of advice that I would give any wealth advisor coming in is to invest and resource up the tech and the IT part of your business.”
“Our generation is ready to bring more prosperity to countries on the continent.”
Montjane’s whole mantra has been not just about celebrating her success but celebrating those who mentored and led her to her current position.
“The big thing for me is just understanding that I am where I am, because other people made sacrifices. For me, that gives me access to things that I have now,” Montjane says to FORBES AFRICA. “And therefore, I have a very strong sense that our generation, our job, is ready to bring more prosperity to countries on the continent. While the generation before us was about personal freedoms. I’m very clear that I’m part of the next chapter of the movie, which is really about prosperity.”
When reflecting on her journey, Montjane splits it up into two. The first being when she first entered the industry in the early 2000s, she says, was a crucial time of learning where she was well-equipped with sponsors, partners and mentors to guide her through.
“The second part of my career was to let go of [all] that [and]… to stand on your own two feet,” she jokes. “It has been about learning to be an adult, to be career-independent and being the pillar for other people.”
Because Montjane’s job is to take care of the entire pyramid from millionaires to billionaires, a constant trend she has noticed is that clients have unique needs but it all comes down to looking after their wealth.
“If you ask me, what keeps them awake at night, it’s this issue around the loss of wealth or volatility of wealth,” Montjane says. “Issues around the deterioration of mental health, as well as physical health, issues such as climate change, economic and political stability are a factor. But I’m convinced that a vast majority of them, if you ask them, is the financial well-being of their children. It is about their children being able to take what they’ve done and move it to the next generation.”
“Never a boring day”
After having almost 10 years of experience in the financial services industry, Tania Theron decided to join her husband, Duncan, when he decided he wanted to start their own boutique independent investment consulting and wealth management firm.
“In 2010, my husband decided that he wants to start his own company as he’s also in the consulting investment industry,” Theron says to FORBES AFRICA. “He’s always been in the financial services [and] advisory business. And then at that stage, I decided to take the leap of faith and join him in the business. At first, as a chartered accountant to focus on the financial side, I decided that I’ll write the relevant exams, and I [was] going to advise private clients.” And although Theron has spent 12 years at Gray Swan, it has not been without its challenges, this ‘go-getter’ says she feels fulfilled in the financial industry. She has a pedantic discipline and organized work ethic and, according to Gray Swan, her clients find her a delight to work with as every task is performed effortlessly and she implements and executes transactions while you have a worry-free investment experience.
“I think in this space you never have a boring day,” Theron says. “Most of the time, you cannot plan your day, or you’ve got it planned, and then it turns out otherwise.
“You learn that the financial services industry is changing, too. The markets are getting more volatile by the day, so it’s very interesting. Also, relationships change. With clients, we get so involved with their lives. You get to know them and what’s happening in their lives.
Theron has noticed when dealing with her clients and with HNWIs in general, that there have been an increase in what she dubs ‘Black Swan Events’.
This Theron intimates is from the book by Nassim Nicholas Taleb, former Lebanese-American options trader turned essayist, of the same name which addresses patterns he’s observed in the investment industry and its unpredictability which have had severe and negative consequences.
“We have seen these increases in black swan events [caused by] various reasons [such as] pandemics, wars and climate change. Clients’ portfolios are diversified. And as such, on the one hand, it sounds like such a cliche but, on the other hand, it’s become so much more important. Risk management is also still extremely important.”
“It’s a way of giving back and ensuring that we’ve got more people who engage in this process as well, so we can see what wealth creation is as black people.”
Raised in the township of Inanda, in eThekwini located in the heart of metropolitan Durban, Luthuli has been in wealth management for nine years now.
After graduating, she landed an internship at the government treasury department. She wasn’t challenged enough, so she sought a graduate program with Sanlam.
“I did not know about the financial planning industry in South Africa, it’s not a huge thing that gets advertised,” Luthuli explains. The graduates did a formal qualification in Wealth Management,” she says.
This ignited her passion for financial planning – she says not much conversation about wealth preservation happens in black communities. Luthuli used social media to engage in financial literacy, leading to her being headhunted by NBC.
At the time, they were looking for young financial planners to work with retiring members, and it was a good place for her to learn about the retirement process and estate planning.
By this stage, she knew this was what she was meant to do so she continued on with her studies. Eventually, she received a postgraduate diploma in financial planning and a master’s degree in commerce.
Enticed by the idea of having her own practice, guidance from the company as well as the proposal that it be an advice-driven framework, she moved to PSG Wealth and got her CFP qualification. In 2019, Luthuli began her own practice. It was a tough process given that it was a relatively young business during the pandemic.
“I can say I’ve done a job well! If I can just be easy on myself because I’ve built almost R70 million ($4 million) assets under management within the space of three years, and during that time, people were not keen to invest [and] they were withdrawing.”
In 2018, she was awarded the Diversity Scholarship Award by the Financial Planning Institute (FPI). Luthuli has also volunteered through the FPI 123 program, doing financial literacy. For three years she has been speaking about financial planning on the community radio, Gagasi FM, a popular station in KwaZulu-Natal. She’s also a part-time lecturer at the University of KwaZulu-Natal, in the financial program.
“It’s a way of giving back and ensuring that we’ve got more people who engage in this process as well, so we can see what wealth creation is as black people.”
Luthuli says she’s noticed two trends within the industry. One is that younger people are working hard, aggressively investing and building wealth. The other dynamic, she claims, is harder to spot but is prevalent among those who have already made their wealth.
“They live in fear where either they don’t want to invest more, or they’re withdrawing some of their wealth, looking at the option of immigration, and looking at how they can sort of protect [wealth].”
It’s a mixed bag. Luthuli notes that while some see opportunities, others worry about recovery. However, those who have lived through more volatile times are more relaxed.
Engaging with clients, solving problems
For this interview with FORBES AFRICA, Eric Enslin rushed from the office to his home office at Waterfall Country Estate in Johannesburg. As the afternoon fades, Enslin takes us through his journey in the wealth management sector, one that has taken nearly 30 years to this point.
“I’ll keep my age away,” Enslin laughs. “But I’ve [spent] all my life in financial services, and also in the First Rand Group in many forms. What’s exciting for me is that I was there when RMB Private Bank got its first client!”
Enslin thinks back to when RMB had a bell in the office. It would ring with each new client.
“Eventually, it was too noisy because the bell was sort of constantly ringing,” he laughs “So we had to stop that. “I also remember being part of Exco and we said, ‘every time we’re going to reach a billion-rand payout in our lending business, the old Exco will sit down, and then all the staff can take clippers, and they can cut our hair’. But then eventually, the business was growing so fast, and we’re doing so well that our hair couldn’t grow out, so then we stopped that too!”
Undoubtedly, Enslin’s experience has given him perspective on all the changes that occurred since within the industry, The most consistent element, however, has been how customer-centric the space has remained throughout the years.
“I get my passion from engaging with clients, helping them solve problems and celebrate their successes [even] through difficult times,” he adds.
“That’s what private banking has always been about. It’s about relationships and problem-solving. I think that has also moved on to think of technology and platforms. The customer will always ask,’ how [can] you help me to be more efficient?’”
‘Increase in wealth in people 35 years and older’
Marilize Lansdell’s father was a lawyer. He dedicated much of his time to pro-bono work, leading to the odd fish left on the patio in lieu of payment. She spent a lot of time in the office as a child. Naturally, with his example, she leant towards pursuing a career in law.
However, as a law graduate, she realized she was more interested in financial planning. Naturally,she went into banking. After gaining experience in the financial services, she settled into wealth management, over the last decade .
“It’s not very different from law,” she reflects. “You look at the details, do technical analysis and have multiple perspectives.”
An early career highlight was being admitted as an attorney. Second, was her appointment as CEO of PSG Wealth. Her next milestone, and challenge, was joining Nedbank.
After renowned South African artist, Irma Stern who was also a HNWI passed away in 1966, Nedbank was tasked with looking after her estate. This led to the recent public auction of her art. As an ardent lover of the arts, Lansdell was happy to be a part of something where a local artist raised so much interest – and money – R37 million ($2 million) was raised and the auction was attended by over 5,000 people.
Notably, the ultra-high-net worth set in South Africa has been shrinking, with Lansdell’s department tracking the rapid migration of funds closely. Often wealth managers within this band are looking after HNWIs, which can also include large foundational and philanthropic clients with assets worth R300 million ($17 million). The smallest investors start around R10,000 ($576). This range can be a challenge for providing services, says Lansdell.
“As soon as interest rates go up in the inflationary cycle, we see increased investing. We see clients more and more inquiring about investing for a sustainable future.”
Property trends, in response to Covid-19, have also changed with people using spaces for dual purposes, as well as semi-gration within the country coupled with greening efforts following the adoption of alternative power supplies.
HNWIs have been diversifying away from local commercial properties many of them looking offshore for more lucrative opportunities. Lansdell adds there is a change in traditional attitudes towards retirement with executives selling their shareholdings to diversify portfolios. Large family businesses have also been sold as the younger generations carve out their own path.
In addition, there’s been an increase in wealth in people 35 years and older, something she thinks is due, in part, to higher salaries.
“What we’ve noticed as well is that many of the younger client base of last year has actually terminated their formal appointments and are starting their entrepreneurial businesses – creating their own worlds.”
This she has observed in her own children who are now being taught entrepreneurial studies, starting at a much younger age than she did.
“I think it’s all geared around teaching people to make use of the opportunities and grow.”
“This has become [more of] a hobby than a job for me.”
Carel Basson, an avid golfer originally from Malmesbury in the Western Cape province of South Africa, started out much differently from the atypical wealth advisor. He was intent on becoming an auditor, combining it with an LLB, working as attorney for seven years.
To date, he’s been at Alexander Forbes for 19 years.
“The rural areas and everything that goes with it has always been very important. I always try to keep in contact with the way I grew up. I believe it’s part of me. Having studied at Stellenbosch and, now still working in Stellenbosch, I love it. It’s a stunning town. Hopefully, I’m a part of the furniture. You get to know a lot about people.”
Basson says they work with a range of clients. From the grandchildren who have a million worth in assets under management to the client with hundreds of millions. His firm currently has in excess of 300 clients.
“But we really get to know the clients quite well and I think that’s very important to get to know the person, understand his wishes and get to know the family. This has become [more of] a hobby than a job for me. Honestly, I can’t see myself retiring from this.”
Basson says a lot of his work is similar to his days as an attorney where he would have to become an expert in the matter at hand. He finds it exciting to understand what makes people tick in different industries.
He summarizes the trends by saying that ultra-high-net worth clients tend to be immigrating – along with the majority of their wealth. However, he’s quite optimistic about South Africa’s opportunities, explaining that offshore investors would not be investing if they didn’t see it as a footprint into Africa or the opportunities therein.
“So, I think those people are still here. And they’re building up their wealth, because they believe there’s still more to be made in Africa. I think for me, that’s just my experience, I think there is a distinction between people having made money and people still accumulating money.”
Basson says private equity is on the uptick adding that savings has been a problem for the normal worker who is part of a pension fund due to high inflation.
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