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‘You’re a priest, doctor and trauma counsellor’

I only recommend what I’ve invested in personally – Global & Local founder Michael Haldane.

ELEANOR BECKER: Welcome to this Financial Advisor podcast – a weekly podcast where we speak to leading financial advisors. My guest today is Michael Haldane, the founder of Global & Local. Welcome, Michael.


ELEANOR BECKER: Michael, you founded Global & Local 20 years ago. Give us a bit of background into the firm and what it specialises in.

MICHAEL HALDANE: It was officially 1999, but it was actually in 1996. I was 27 and my wife and I had a girl aged a month old, I hated my boss, I had no assets at all and I thought ‘It’s now or never’ and I went out on my own. I knew nothing. I worked at a life company for eight weeks and it folded. What I had learnt was vital: they said ‘We’re the best offer; what we offer, nothing else, and I thought ‘That’s rubbish; I want to offer what the end user wants’. In 1999 I formed a company. Now we have around 40 agencies with companies such as Allan Gray, RMB and offshore we have 18 agencies, and we offer a client what they want. I have five in-house analysts: they look at every single fund, interview the managers and offer what we think is the best. That has over the last 20 years earned us trust and constant earnings.

ELEANOR BECKER: Tell us a little bit about Global & Local’s investment philosophy.

MICHAEL HALDANE: Don’t look at what funds have earned over the last month – look longer. For my parents it was all about working at a company for 40 years, earning enough and then retiring at 65. Now because of medicine, health aids, etc someone might live to 95 and their money runs out at 80. So in the past it was all about entering into options which are considered safe, no risk at all; but now you have to have an average risk. The balance – that’s what we’re all about. We have an element of risk but, as I outlined earlier, we have five analysts, and because of our licence we are able to amend funds online when we have to. That has certainly given us an edge.

ELEANOR BECKER: I think that’s something that many advisors are trying to teach the layman: to look to the long term and balance your risk.

MICHAEL HALDANE: Yes, don’t panic.

ELEANOR BECKER: Especially now with the elections. Given the current low-growth economy in South Africa and the uncertainty surrounding its political and economic future, clients must be on tenterhooks. What are some of the questions that they are asking you? Just how nervous are they?

MICHAEL HALDANE: They are petrified, absolutely petrified. They are asking me ‘where do I buy a gun’, they are asking me ‘Where should I live? What is the best Canada or Australia?’ They are asking me if their pension is safe and they are also asking me about the rand. I answer them and I say ‘Take a deep breath’. This country somehow survives, somehow things work. We have good infrastructure; the Reserve Bank is really independent, it’s doing a great job and the government would be insane to touch any pension money. I also answer them and say that if a couple of things were fixed, the country would change overnight. Education: if you can pass maths with an average grade of 20%, who will ever, ever hire you? Eskom – fix it. Water – clean it. Government – change it, and arrest criminals and put them away forever. It’s quite simple and that’s what we think.

ELEANOR BECKER: Given the extreme nervousness that must be leading clients to bang down your door, how involved are clients in their financial plans? Are they phoning you every second day or do they just pitch for their annual review?

MICHAEL HALDANE: Look, we’ve got probably 3 000 clients and of those it’s a wide mix. Most of them use us because they totally trust us. We SMS them once a month with market updates, email them and update them quarterly and meet with them once a year. So generally they trust us. They use us because without an advisor they would earn less, but we have clients that every day look at the share prices’ unit and they nag the hell out of us. In our industry it’s all about controlling clients’ emotions and that is 80% of my job. [I tell them to] calm down; take a breath; don’t sell because it will bounce. They generally listen.

What happens in SA doesn’t really matter

ELEANOR BECKER: You sound particularly positive about South Africa, which is good to hear. Given that, what opportunities do you see in the local market, if any?

MICHAEL HALDANE: It’s the most extraordinary country in the world – our economy doesn’t match our market. Four shares represent almost half our market. Naspers owns a company in China, which relies on nine-year-old boys going online every day. Our Top 20 companies of the market represent 60% and of their earnings, most are offshore. So it’s bizarre, but what happens in South Africa doesn’t really matter and offshore funds, emerging market funds have us in the mix. So if there is a fall in the dollar, [US President Donald Trump] has an off day, there’s a fund manager in Houston (Texas, US) who says ‘I have US$500 million, South Africa is underweight, let me buy’. So America in the next 18 months will probably dip and that will actually help us a lot.

Our markets have run hard, so I am advising that there is probably going to be a little bit of a hiccup in the next month or so. But, as I outlined earlier, it’s about the long run.

I love the country. I have no interest in living anywhere else, but it is also very linked to the rand and the rand unfortunately is like a leaf in the wind and if anyone [says they] know where it’s heading they are lying.

ELEANOR BECKER: You hear that a lot. No one can tell where it’s going and your clients expect you to know unfortunately.

MICHAEL HALDANE: In my office on my desk I have a pack of dollars, which are fake, and I have a large ball. If they ask me anything I rub the ball and I say, ‘I can’t tell the future and these [dollars] aren’t real [laughing].’

Offshore investing

ELEANOR BECKER: I love that. Of all the firm’s investments currently, how much would you say is invested offshore and where predominantly?

MICHAEL HALDANE: Of my total book I have offshore probably 40% and that is really balanced – it’s spread across the world. I am underweight in America: Trump makes me uneasy. Last week he had his ten-thousandth tweet, which was a lie. I am also underweight in China. But I am overweight in Malaysia, Indonesia, Vietnam and India because as China grows, their labour becomes more expensive and they have to outsource and it’s happening in their neighbours. In England, right now I am overweight. Brexit is a joke: if it happens or not England will continue and their markets have not really gone down at all. Personally, I am very, very overweight now on the pound. The future, what does that hold? Offshore, as I outlined earlier, probably a dip at the end of next year and at that time we will reweight.  

ELEANOR BECKER: You mentioned that amongst the countries that you are invested in, or overweight in, include Vietnam, Malaysia and Indonesia. How exactly do you get exposure to these [countries]? What instruments do you use?

MICHAEL HALDANE: I use offshore funds; there are 185 000 registered offshore funds in the world and many offshore companies offer them. There are some Asian countries that haven’t got their own funds, so it might be a blend. I, myself, have very itchy feet, so I have travelled to 64 countries in the world. So everywhere that I invest in I have been there and everything that I recommend I invest in first and I only recommend it after at least 18 months of my own money entering in there. So if it falls I also take the pain.

ELEANOR BECKER: What general advice would you share with investors who are interested in venturing offshore? There must be pros and cons to it and there must be pitfalls that they can avoid?

MICHAEL HALDANE: Look, this is where they live. Everyone loves where they live, but of world markets South Africa represents a tiny, tiny amount. Hong Kong of world markets represents so much more than us and it’s tiny. So if you invest offshore, do it gradually; have a balanced mix.

Whatever day you move funds offshore the dollar rate will always be better the next day – you cannot time the rand, it’s impossible. I wish I could but I can’t.

Spread the funds as much as you’re able to. If you are accessing it from SA as an income, be aware that that is the most vital time, because up until then it’s noise. If the rand is at 14 when you sell and it lands in SA you have a month in order that it is entered back in rands, and within that month it might fall 1%…. So generally if I have an offshore client with an income from offshore I advise them to take it annually to avoid fluctuations in the rand. But offshore investments are just the same as here – it’s just a much larger ocean.

ELEANOR BECKER: You mentioned ‘balancing it out’ – would that include getting exposure to emerging markets, as well as first world countries?

MICHAEL HALDANE: We are an emerging market, so my offshore exposure emerging markets are Asia, nothing in Africa and nothing in South America. I think those countries are too fraught with oil issues, corruption, government issues. Asia has those issues as well but they’re more interested in earning money.

Common mistakes with retirement savings

ELEANOR BECKER: Just taking it back to an issue that we see a lot here, people are either not saving enough for retirement or they are making incredibly short-sighted decisions. What are the most common mistakes that you see investors making with their retirement savings?

MICHAEL HALDANE: For the first 25 years of their marriage it’s all about Jane and Andrew: putting them through school, varsity, whatever and they don’t save anything, it’s left too late.

If you are under the age of 35, put away 10% [of your salary]; up until age 50 it’s 15%; from 50 to 60 it’s around 20%. From 60 years and up, unfortunately it’s too late. I have clients in their 80s who are still working.

I have a simple theory, models out of the window. I ask every single client what is in the bank at the end of every month – take half of it and save it. If it’s in an RA (retirement annuity), pension, the bank, whatever it is put it away, because if you don’t you are going to spend it.

I hit it into their heads over and over and over: investment is not an expense. You’re are going to get it back and then some. But if you don’t put it away you can have a second house. You can have an awesome car but you can never retire.

ELEANOR BECKER: What are some of the key lessons you have learnt about serving clients in the industry over your 20 years? You’ve been through the dot-com crisis, the global financial crisis, a lot of volatility locally – I’m sure you have learnt a lot.

MICHAEL HALDANE: The most vital thing is everyone is the same: they have the same needs, the same wants and they are emotional animals and if their investments are falling they rant and rave, and we have to be calm them and give them the best advice always. My largest thing that I have learnt is never listen to your accountant, lawyer or doctor about investments. Never listen to your friend, never answer an email, which says ‘I will earn you a guaranteed 20% per year’. If it sounds too good, don’t do it and I tell everybody it’s about constant earnings, don’t follow the buck.

ELEANOR BECKER: So those conversations around the braai on the weekend are not the way to go?

MICHAEL HALDANE: And it happens so often, it’s unbelievable. People are so easily swayed and it’s their entire life. I don’t get it.

Trust and relationship: essential for advisors

ELEANOR BECKER: In today’s age where most information is a click away … why is having a financial advisor necessary?

MICHAEL HALDANE: There’s so much information, there’s so much noise, what does it mean? It’s our job to analyse it, make it simple and let them know. Just an insurance policy, an investment contract to understand what it means is impossible and we have to be there to say this is what it actually means, the good, the bad and the ugly because investment companies often put the most vital points right at the end. Also, it’s all about interviewing managers, researching and finding out what’s the best. On the internet you will find a product, someone offers it and says ‘this is the absolute best there is’ but there are maybe 100 other options.

Finally, the most vital thing about an advisor is that word ‘advisor’: you’re a priest, a doctor, you are their trauma counsellor and they tell you everything. In half an hour you know their history, you know about their kids, their third wife, the second car, everything and you have to keep that secret from everybody forever. So it’s about that trust and relationship that you can never have on the internet.

ELEANOR BECKER: Lastly, what is the best and the worst financial advice that you’ve ever received?

MICHAEL HALDANE: The worst is invest through life companies. The worst is look at this fund, it’s done so well in the last six months, just put everything in there. The worst is low fees is the only way and ignore the returns.

The best is never put your eggs all in one basket. Even if you have a fantastic fund I often have someone say ‘but this fund has out-earned these funds so much more’ and I say ‘but it might not next month’. Diversify. If you’ve earned a profit it’s going to fall one day, take the profit, lock it in and do not panic when markets are falling.

At the end of 2018 the markets crashed, everyone panicked and I said, ‘hang ten’. This quarter we have just had I think is the best since 2007 and if they had exited they would have lost huge money.

Sometimes it’s best to cut your losses and move on. I have so often heard, ‘oh, it’s a great share I heard about it on the radio, he’s a lekker oke’. But you’re down 50%. So yes that’s my opinion.

ELEANOR BECKER: That was Michael Haldane, the founder of Global & Local.


Michael Haldane

Global & Local The Investment Experts



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