02/11/2012 – On Tuesday this week I think I unintentionally upset or offended a senior partner at a large brokerage business as I put a stop to their attempt to push a client into meeting with them, in an attempt to secure the client’s investment business. They wouldn’t tell him how they came upon his phone number either. I went and looked to see if their website revealed the investment managers or funds that they used and found the same international asset managers that I use for international unit trust funds listed amongst their offerings. Except that they had over 100 for a client to attempt to choose from.
You see behind any and every formal publically offered investment structure or fund, there can only be the same asset classes, or things for the unit of currency to actually own on the back end of the transaction. These being cash, bonds and varying forms of debt instruments, property and then shares of companies. Property and company shares could both be either listed or non-listed, the latter of which shouldn’t be used. Stuff like gold and cattle and tank containers can be satellite’s to someone’s portfolio and should be directly and personally owned. So no-one can say we can give you something that someone else can’t give you. They could say we have probably chosen asset managers better than someone else, or we probably match the function or mandate of a fund manager to the client’s needs better than another advisor. But they can’t offer you different underlying instruments. There just aren’t any others to offer. And I never pay attention to structured products – there’s always a condition or a cost associated or something I don’t quite understand and then I don’t use Hedge Funds. I will however listen to a new asset manager to hear if they appear to manage and choose investments in a better way. But I still say no to more than I say yes to when I get the calls. And I’m not going to easily allow another company to be a conduit for client’s money; I’m still waiting patiently for final transfers away from two companies from the past who messed this up a bit.
Then big brokerages think they will offer better solutions or service or advice than a sole proprietor like me. They come along and say we have over 800 client who have chosen this or that so therefore we must be good and better than you. When in reality, it is us that has recommended something to a client who, understandably so, probably knows no better, like the doctor-patient thing again. And in order to sustain bigger businesses they usually charge more than us simple guys can.
Let’s take the Rockland Targeted Development Investment Fund into which the Telkom and two mining Retirement Funds invested. An unlisted, fixed property piece of sand dune land, which was over-sold and where the Telkom fund has now lost tens of millions of Rands. So who advises the Telkom pension fund? The answer was in the newspaper. I would bet that the well run balanced funds of the three excellent asset managers that I use in my retirement annuity, will outperform the complex Telkom pension fund!
Ok, I got that out of me. Shame, the guys from that large brokerage happened to get into my space on a day when I had already been frustrated by another non-productive visit to the Master’s office around a Trust issue. An office to which I have decided never to go to again. Post will have to suffice from now.
09/11/2012 – The Consumer Price Index is a basket of things, goods and services, that is supposed to represent what is typically bought by the average household. There are about 400 items in this basket that Statistics South Africa manages and controls. Our local newspaper reported this week that some items leaving this basket were samp, viennas and frozen vegetables but amongst things joining it were feta cheese, vodka, hot chocolate, filter coffee, bricks and cement, energy saving light bulbs, tablet computers and hair extensions. Interesting changes. Especially the last one. Indicative, I assume, of a growing wealth amongst woman. The Vodka has me confused but the tablet computers I’m not surprised by.
16/11/2012 – I got given the following comment two weeks ago by a man, who is not a client and over the age of 60, when asking for advice and options for retirement: “For whatever reason, I will not have enough investments to see us through our retirement. Most of my equity is tied up in my home.”
The first part is answered by not saving enough and not saving from early enough and then secondly, our residential homes should not be viewed as a source of retained equity, unless there is a very large amount of excess value that is easily released one day through a very probable sale when downgrading to a smaller / retirement place. But it’s still not a place where you want to grow your equity either.
There was no ‘quick-fix’ answer for this gentleman, who was also not keen to downgrade his home. So the ‘retained equity’ is therefore never realised. A similar comment was made to me by another retired lady a while back; ‘We lost a bit on the sale of our house but we’ve made it up now as our retirement home seems to have grown nicely in value’. I said that they’d never realise that value now as they live in the house. ‘Yes, I suppose so.’ She said.
30/11/2012 – I continue to learn that it is small things that bother and hold up the process of winding up or being able to gather all information pertaining to an estate. Who has taken over the cell phone? What happened to the TV? Has the TV licence been dealt with? Waiting to find an original share certificate. (A unit trust portfolio seems to remain easier to deal with than the direct share portfolios.)
I also continue to learn about managing relationships as a Testamentary Trustee. We are beginning to move towards what will simply be the more conservative and correct rather than emotive decision on many things, so that we remain objective with minimal recourse.
On a different note, it has been nice to see one of the more ‘boutique’ asset managers that I have been including in client’s portfolios over the past few years, convincingly outperform the so called dominant asset managers recently. Enough time has now passed for us to see that our strategy of fund splitting across three sound asset managers has in many cases yielded both good and the desired results without adding additional cost layers.