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A goal is a dream without a plan

26 February 2019 Jonathan Faurie

The Raging Bull Awards play an important role in the investment industry because they provide insight into the country’s top performing companies. Momentum scooped three awards at the 2019 Raging Bull Awards and challenged the dominance of traditional winners. FAnews spoke to Sonja Saunderson, Chief Investment Officer at Momentum Investments, to gain more insight into the current investment industry

How important is professional advice in the current financial services industry? 

There is a proverb that says: a goal is just a dream without a plan. Professional advice is crucial in the current state of the industry. 

A financial adviser can be very helpful during major life changes such as retirement, marriage, saving for your children’s education and buying a car. A plan will help you prepare for these occurrences with a greater peace of mind. In the current economic climate, there are many uncertainties. A financial adviser can give perspective and help you make the right decisions. 

Even people who don’t have a lot of money can consider a financial adviser as it can add a lot of value in the long term. Currently, financial adviser fees are very transparent and can be discussed upfront. 

What are some of the most common mistakes people make when it comes to investing? 

  • Emotional investing. Don’t let emotions derail your investments and your long-term financial plans. It is easy to get caught up in hype and buy or sell investments at the wrong time;
  • Not having a plan and poor discipline. It is important to have a plan, get professional input into it and not abandon it when things are not running as smoothly as you thought they would;
  • Chopping and changing investments based on short-term experiences. Never focus on the short-term experience. You need to invest with an appropriate time horizon in mind and judge success on a logical and meaningful long-term basis; and
  • Following the crowd. Many investors who follow fashionable trends in investing may find that their fees are stacking up as they jump from one fad to the next. A better approach is to have a well-crafted strategy and diversify by investing in different kinds of assets like shares, bonds and cash as well as local and global funds to avoid the risk of putting all your eggs in one basket and losing money. 

What role does communication play in the relationship with a client? 

Communication is very important. However, asset managers can do more. 

The industry needs to come together to give insight and tell investors about market and industry changes and occurrences in a way that they understand. 

Using plain language is legislated worldwide. In South Africa, it is part of Treating Customers Fairly (TCF). The more informed investors are, the more they are likely to understand their investments, make the right decisions and trust advisers. 

How do advisers manage client expectations when it comes to returns?

Social media and the internet provide access to a lot of information on investments and the market place. However, too much news, information and choices can be confusing and overwhelming.

A professional financial adviser can help present this information in a logical and concise manner that is in line with the client’s objectives. Financial advisers who stay in contact with their clients prepare them for any changes and teach them not to panic, and trust in the way forward.

Advisers also give guidance about legal and tax considerations. Knowledge is power; therefore, informed clients will feel in control of their finances and not be pressurised to make rushed decisions when markets are volatile or in a slump. 

Are the days of black box products over? 

Yes; most investors play an active role in their investments, which is wise. 

The era of consumerism and social media has ushered in transparency and value-for-money requirements like never before. As an asset manager, we need to make sure that every investor is given individual attention and that products are suitable and fit for purpose. 

Although South Africa is lagging the global space, our legislative environment has made significant strides in this regard over the past couple of years. This makes it easier for the industry to make sure that our advice and product practices meet the needs of individual investors.  

Editor’s Thoughts:
The role of the adviser can never be understated or undervalued. How are you adding value? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

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