How do you win the Wealth World Cup?

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BUSINESS NEWS AND VIDEO - We will look at similarities between rugby – or a team sport – and the world of investments, and how to select a team and a suitable strategy or game plan to win your own ‘investment world cup’.

Achieving success in any world cup tournament requires, among others, a good coach, a suitable strategy and game plan, a good captain and the right players.

Coach

If the coach is responsible for coaching the forwards and the backs, as well as being the kicking coach and running the administration, the team is highly unlikely to succeed. That is why it is important to involve an experienced coaching and management team in all areas of investment, as there are various essential aspects to consider, such as:

Tax
Composition of your asset allocation for your specific needs
Selection of funds and fund managers, and stock picking
As one individual would not be able to address all the various aspects playing a role in your investment and retirement planning, it is important to consider a team of expert.

Who are the players when it comes to your investments?

We believe the players can be described as the funds or unit trusts the investor selects, and the equities available to invest in, as well as finding the right balance between them.

Looking at the bigger picture, in South Africa alone, there are more than 1 000 different unit trusts to invest in, and offshore there are over 100 000 funds to choose from. From a direct equity investment point of view, over 65 000 listed companies are available offshore, and about 350 are available locally.

So, the number of options available is substantial. One of the biggest challenges for investors and wealth managers is to select the right team for the right game.

This is why you need a specialist to assist you in selecting the appropriate strategy and players.

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How do you select the right players?

It is vital to follow a proper process when selecting players. Considering funds in the cash and bonds category, local equities and offshore equities, we have a process that looks like this:

We are looking for specialist players in specific positions.
In addition, our aim is to select different fund managers with different styles.
In rugby, you need to create a particular game plan depending on the circumstances. Perhaps you anticipated sunny weather, which is ideal for running rugby, and then an unexpected downfall occurs. Then your team must be flexible enough to adapt the strategy and plan. From a risk management and an investment point of view, a sound strategy is to split your funds between different fund managers with different styles.
We obviously also consider the size of the fund managers, as this may impact the liquidity of the fund.
Another aspect of selecting players or funds is considering the fund’s fees or charges.
The final, and perhaps most important, aspect is to constantly monitor and manage the ‘players’ or underlying fund managers.

Where does the captain fit in?

This is where the client’s financial adviser comes in. There are several qualities that make the adviser a good captain:

First, a captain’s qualifications are important. In a complex world of investments that is integrated with factors like tax, various structures and trusts, clients need specialists in these fields.
Another important aspect is a relationship of trust between the client and the adviser, or the captain and the players in the rugby environment. A team will not be successful if they don’t have full confidence in their captain.
Of course, a captain must be able to motivate the team and exert a calming influence when things are not going well and not yielding the returns expected or hoped for.