Momentum calls for investment industry to put clients first

Steven Schultz, Group head of Investments and Savings Marketing at Momentum.

Momentum Group head of Investments and Savings Marketing Steven Schultz has called for a fundamental mindset shift in the investment industry, from an obsession with past performance to delivering on client goals.

“Clients don’t measure success in terms of outperforming generic stock-exchange indices, but in terms of meeting their real needs — be it to educate a child, put a deposit down on a home, or perhaps to buy a new vehicle,” he said.

Schultz was speaking at the launch of the Momentum Outcome-based Investment approach at the Sandton Convention Centre. Addressing an audience of financial advisors, he said that Momentum’s Outcome-based Investment philosophy was about understanding client needs and their risk appetite and then ensuring consistent investment delivery and maximising the probability of meeting those specific client needs.

In calling for investment advisors to embrace the global trend towards outcome-based investing, Schultz noted that of all the investment variables, advisors and clients often tended to neglect are the factors they can control — risk, cost, time and investor needs. “Then we go and spend all our time worrying exclusively about past investment returns, which ironically is the one thing that we simply cannot control.”

He said it was extremely tempting for investors to obsess over past performance, but in reality that is often of little use in predicting future returns or in formulating an appropriate investment strategy.

“The investment community must change the conversation away from merely past performance to building dynamic solutions that utilise a structured approach to portfolio construction,” he said. “We need to build intentional strategies that incorporate the optimal asset allocation, selectively blend investment styles and finally implement the appropriate investment mandates, whether active or passive.”

At the launch, Momentum unveiled a new range of outcome-based solutions that are purpose built to help clients achieve their investment goals — focusing on the example of funding one’s retirement, considering that people are now living longer. The new strategy involves linking products within the Momentum Financial Wellness Framework to Multiply, their wellness and rewards programme, and maximising the accumulated benefits towards retirement products. This can add years to the retirement period that a client can comfortably fund, without having to produce more income.

Earlier at the launch event, Danie van den Bergh, Head of Momentum Brand and Marketing, described how, for instance, Momentum Multiply benefits, Momentum Health returns, and Health Saver resources could be reallocated to a client’s retirement annuity to create up to an additional 30 years of retirement capital.

To enable this new client-centric framework, the company unveiled its Financial Wellness Simulator, software that allows an advisor to enter client details like Multiply status, Healthy Heart score and number of Active Dayz™, and then map their journey to financial wellness. The simulator will indicate how many additional years have been added to retirement provision.

The simulator incorporates any discounts the client qualifies for, future values, premiums and cash-back benefits, then maps them against the client’s unique retirement goals and highlights any possible gaps they may face on their journey to financial wellness. “It’s an innovative solution that gives a preview of your client’s financial future,” said Van den Bergh.

He pointed out that while Financial Wellness Simulator could be used to realise client’s individaul retirement goals without any added expense, in general it did require a measure of financial courage. “Clients must have the financial courage to admit they can’t afford to buy an extravagant house, or that they need a smaller car.”
Van den Bergh said that people needed to change behaviour and implement the right solutions. He said healthy client-advisor relationships were at the heart of consumers’ journey to financial wellness and realising their personal outcome-based investment goals. “It all starts with the appointment of a financial advisor,” he said.

The launch saw Momentum unveil 17 new Outcome-based Solutions that have been purpose-built to cater for various client needs — be it capital protection, income, real growth with protection or long-term capital growth — using a numberof blended asset classes and active and passive strategies. The 17 portfolios are managed by 82 investment professionals with a combined 808 years’ collective experience and R315bn under management.

To clients, Schultz said the message was simple. “Stay the course. Don’t try to time the market. The truth is that you can’t pick the next best-performing asset manager, so rather focus on utilising a well diversified portfolio that is capable of maximising the probability of meeting your needs and remain invested.”

He also announced a new fee structure for Momentum Wealth. The company is repricing platform fees to create a new industry-leading platform cost structure, comprised of four components. It eliminates FundShop fees, simplifies and reduces platform loading fees, broadly reduces tiered fee scales, and offers further reductions on Momentum’s Outcome-based Solutions.