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We’ve moved to a more conservative strategy, less aggressive

Long-term investing: ‘We tell clients if you stay invested, you will actually work through those losses and get your gains again’ – Suzean Haumann, financial advisor at Brenthurst Wealth.


RYK VAN NIEKERK: Welcome to this Financial Advisor podcast, our weekly podcast where I speak to leading financial advisors. My guest today is Suzean Haumann, a financial advisor at Brenthurst Wealth in Cape Town. She is in the process of completing her CFP qualification and, besides giving advice on investment matters, she also is a foreign exchange consultant. Suzean, welcome to the show.

Brenthurst Wealth was recently announced as the top boutique wealth manager in South Africa in the 2017 Intellidex Wealth Manager and Private Banking Awards. Does this help you guys to attract new clients?

SUZEAN HAUMANN: Firstly, thank you for having me and hello, Ryk. Yes, it certainly does help us. When you can add behind your name that you are one of the top award winners I think clients have a lot more confidence and they sleep better at night when they know that the company that’s looking after their investments and their life savings is known for the type of quality business that they do and certainly the fact that we are one of the (Financial Planning Institute of Southern Africa’s) FPI’s approved practices.

Together with the Intellidex award I think it certainly gives clients a lot more confidence and it helps us in getting more clients.

RYK VAN NIEKERK: Suzean, how should somebody select a financial advisor? It’s a critical decision, but there are not too many financial advisors who are household names in South Africa. How do you think somebody should go about selecting an advisor?

SUZEAN HAUMANN: Brenthurst goes a long way with marketing strategies, so we are on RSG on Geldsake with Magnus Heystek and that certainly helps people to become familiar with the brand of Brenthurst Wealth. As I said, we are an FPI-approved practice so when clients go onto the FPI’s website or search for a certified financial planner the fact is that even though Brenthurst is small the clients can relate to that, knowing that they’re not going to be just a number. You’ve got a personal relationship with an advisor who knows you by name, they know your circumstances, so I think the clients like that better than the bigger brands, in my opinion.


Brenthurst philosophy

RYK VAN NIEKERK: Brenthurst has indeed performed well. But, Suzean, there are many advisors within Brenthurst Wealth. How does the advice process work? How generic is the advice or, put differently, can you as an individual advisor within this group of advisors put some individual spin on a particular plan?

SUZEAN HAUMANN: Yes, definitely, you can tweak here and there. But Brenthurst uses a holistic philosophy where we have a house view that we’ve got certain funds and certain strategies for certain clients, but you can amend each strategy in relation to a client’s specific life stage, their needs and also their financial goals. But within our house, if you may call it that, what you would get in our Pretoria office versus the Cape Town office and the Johannesburg office will be holistically the same.

RYK VAN NIEKERK: Can you just expand on that? Do you meet every week to discuss trends in the market and to adapt or tweak a bit of that house view? How do you go about doing that?

SUZEAN HAUMANN: We meet on a monthly basis where all the financial advisors will sit around a table via teleconferences and we discuss current market movements, market happenings that may be either macro factors or micro factors. We will discuss certain funds, what we feel about a fund, is it time to look at implementing a new fund into our house view, or is it time to remove a fund because we are not happy with the performance, or the way that the fund manager is moving forward.

Besides the monthly meetings, all our advisors have a two-day strategy workshop every six months where we physically sit in a room around a table and we brainstorm on the way forward for the upcoming six months and then we will also review the past six months: what could we have done better or what will we do going forward.

RYK VAN NIEKERK: How often do you cut and add funds to your house view?

SUZEAN HAUMANN: Ryk, not very often. Our philosophy is a long-term investment. So we will add funds to the portfolio, but it’s very rarely that we actually cut funds. Since I’ve been with Brenthurst, as an advisor from 2012, we actually only removed two or three funds during this whole period and that [has not been] because of the specific funds, but because the sector is not performing the way we would see it contributing to our clients’ investment portfolios. Then we would actually go and rethink the sector, rethink the type of funds that we have in those sectors and maybe taking them out or just reducing allocations to that.

RYK VAN NIEKERK: Can you maybe in a few sentences summarise what the current house view is?

SUZEAN HAUMANN: Definitely: more conservative because of all the market volatility locally and globally, and because of the political uncertainties in South Africa we have moved to a more conservative type of strategy with a bit of an offshore allocation to it, but definitely more conservative and less aggressive than we have been in the past.


Clients have no confidence in SA’s future

RYK VAN NIEKERK: We’ve seen a lot of very interesting and concerning political developments over the last few years and the mindset in South Africa is actually quite negative at the moment. We see it in the business confidence numbers and we see it in investor confidence levels. Are you seeing it amongst your clients too?

SUZEAN HAUMANN: Definitely, clients have been exceptionally anxious over the last 18 to 24 months’ performance. They are worried about the outcome of further downgrades possibly and the ANC elective conference in December, where the new leader will be elected. Clients are definitely more anxious and more negative towards South Africa in particular. You get a lot of clients who come to you and say ‘I want to take all my life savings offshore because I have no confidence in South Africa going forward’. So yes, definitely, clients are very, very anxious about what is going to happen.

RYK VAN NIEKERK: What do you do when a client says ‘I don’t have confidence in the future, please take all my money offshore’?

SUZEAN HAUMANN: Well, that is specific to a client’s situation. If that client is still living in South Africa and they need to earn an income in South Africa, that’s physically not possible. You can’t take a client’s money all offshore: it’s very risky; it’s a long-term investment. You can incorporate a higher offshore allocation in the local portfolios by using asset swap funds, but it’s your job as an advisor to educate your clients and to calm them and to say there is still opportunity in South Africa, even though the general feeling is negative. But you can build in protection for them to calm the nerves with offshore allocations.

RYK VAN NIEKERK: Suzean, you are in a business where you need to plan for the long term, and then you have clients who sometimes get very emotional [from] political developments in the short term and that has the potential for some differences of opinion. Has this ever impacted the way you provide advice or the way you communicate to clients?

SUZEAN HAUMANN: The way you provide advice to them no, because we’ve got a long-term view. We educate our clients to not make sudden, emotional and sometimes irrational movements within their portfolios, because of short-term volatility. We would tell them and we reiterate that for their long-term goals the best for the client is to stay invested, not taking your money out in low points in the market because you will then realise losses. If you stay invested you will actually work through those losses and get your gains again. How we communicate with clients – you’ve got one or two clients who demand more frequent communication but – within Brenthurst we send out weekly market updates and we send out monthly newsletters. We found that calms the clients and they also know what is happening, what they can expect and they know that Brenthurst is looking after their portfolio.


Brenthurst’s focus on offshore allocations  

RYK VAN NIEKERK: I’ve seen those communications and it is pretty good. But markets also have performed quite well, not only in South Africa but also internationally and most people invested in the stock market should have smiled over the last year or so, despite the political noise we are seeing.

SUZEAN HAUMANN: Correct, as you know, Brenthurst is quite focused on offshore allocations and that did have a negative effect on some of the portfolios due to the rand strengthening. We’ve seen the rand strengthen significantly over the last 12 to 18 months. I think year to date, if I’m not mistaken, the rand strengthened 5% against the US dollar and Brenthurst does favour the US dollar-denomination funds in correlation with other world currencies. If you look at overall performance, the JSE has done for the last five years 76.8% versus the S&P 500, which has done 198%. So it is quite significant growth. Different asset classes have struggled over the last year, so that’s why we also tend to use diversified portfolios, so that when certain asset classes underperform there are other asset classes that can draw up clients’ portfolios … to give them better growth over a rolling three- or four-year period.

RYK VAN NIEKERK: South Africans are very emotive people and it is really a bad idea for emotion to drive an investment decision, especially if the decision is based on short-term market movements. Suzean, what is your advice to clients? How do you think clients can empower themselves to deal with this?

SUZEAN HAUMANN: Ryk, we are not fortune tellers: we do not time markets and we can’t predict events. Yes, we know what is coming but we can’t predict the outcome. So we educate our clients to use well-diversified portfolios and also to use a longer-term view, because in the short term there is just too much volatility to call a market and make any investment calls on a short-term period. So that’s our job: to educate our clients to not make short-term movements, stay invested and stick to your long-term goals.

RYK VAN NIEKERK: So the more volatile it becomes the more long term your focus should be.

SUZEAN HAUMANN: If a client comes to you with a 12- or 24-month focus, then yes you would put them in a cash-like investment; you won’t put them in the market, [or] give them exposure to equities because equities are too volatile. But there are a lot of clients who want to pull their money as soon as volatilities come into play and then we must speak to them and take them back to their initial goals, their initial investment horizons and work towards that. That is our job, to calm them in that instance. But yes, if volatility comes into play don’t move money from equities into cash-like and bond-like investments. Stick to your plan and keep to it.

RYK VAN NIEKERK: Stick to your plan. Thank you, Suzean, for your participation today.

SUZEAN HAUMANN: Thank you, Ryk, and thank you to the listeners.

RYK VAN NIEKERK: That was Suzean Haumann, she’s a financial advisor at Brenthurst Wealth.

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