A: Once we understand you, your goals and what’s important to you – we have a broad toolkit at our disposal in terms of investment approaches and styles we can utilize to implement your portfolio. We are aware of the role costs play in subtracting from investment performance - so aim to utilize an element of low-cost index and passive solutions within portfolios, but as the investment landscape is becoming more volatile, we do also think there is a place for quality active management within portfolios.
We also have access to institutional share classes for different funds to reduce costs, are able to offer bespoke direct share portfolios for clients with larger investment amounts and are strong advocates of using best of breed custodians and portfolios managers, both for local and offshore portfolios.
We also think the offshore and international landscape has a much larger opportunity set available so where it makes sense and is appropriate, we want to ensure our clients are correctly positioned between domestic and foreign assets.
A: We are product and investment agnostic, so we can work with any platform or investment provider. In our experience however, we do gravitate to those providers who we feel offer better service and reporting capabilities. Our goal is to be able to spend as much time with our client's, and not get caught up in unnecessary admin, so there are a few platforms or providers we tend to work with more frequently. We never hold client assets or funds directly.
A: There are a lot of tasks we could do ourselves but which we choose to outsource to experts who can do them for us. Our biggest aim is to give you back more time. Both now, so you can spend more time doing what matters to you and what you believe is important. But also in future, by helping you achieve your financial goals more quickly and with less effort.
Even the best sports people in the world use coaches and experts to help them. So, why wouldn’t you use a professional to help you along your financial journey?
The other big reason is investor behaviour and our inclination to make poor decisions with our investments because we can become overly emotional with money related matters. Research has shown that the average equity investor in the US achieved a return of 4.88% p.a. in the 10-year period ending 2017 when the average return for the S&P 500 was 8.5% p.a. over that same period.
Frequent trading and switching, which leads to buy high and sell low (the opposite of what we should be doing) tends to be the main culprit, which is a function of poor decision making and not having a clear strategy, with someone to hold us accountable for our decisions.
A: The big banks and institutions are driven purely by profit considerations and the reality is that most clients are simply a number with a profit target attached to them. So, you’re always being sold something because that’s how they make money. These legacy type institutions also have high overheads so the minimum thresholds for becoming a client are increasing all the time as the digital and fintech space continues to capture market share.
With Henceforward you have access to all the same capabilities and options, but with the benefit of being treated with the attention and quality of service you generally only find in independently owned operations where client service and care is embedded in our DNA and we don’t have to answer to external shareholders.
Questions relating to Fees
A: No, absolutely not!
Firstly, because we aren’t responsible for managing the money and use investment professionals (e.g., fund managers, portfolio managers etc.) to invest money on your behalf - why should we be rewarded for something that is outside of our control? In addition, if markets go up by 20% - should we be getting a 20% increase for something we had no control over? Likewise, should we be paid less when markets fall by 20%?
Secondly, the remuneration received from this approach is not in any way correlated to the actual work performed or level of serviced provided. Imagine a client with R10 million invested being charged 1% p.a. which equates to R100,000 p.a. in ‘fees.’ Is the advisor delivering work or providing a level of service that justified earning a R100,000 p.a. from that client. In most cases, probably not.
Another client possibly younger and earlier on in their financial journey (but that requires a similar level of work and service) might have R5,000 per month and a lump sum of R500,000 to invest. A 1% p.a. fee is going to generate less than R6,000 p.a. in ‘fees’ - which on the other hand is probably not going to be enough to pay for an advisor’s time or expertise.
Thirdly, it avoids conflicts of interest. Imagine you have money to invest. And you’re deciding whether to invest in property. A lot of advisors might try and talk you out of it because if you buy a property and don’t invest the money with them, they can’t charge a % of the investment. We want to do what’s right for you, not what’s right for us.
That is why we have created a transparent, service led fee model, which is based on the advice and service we provide – not on what financial products or investments we can sell you or manage on your behalf.
We have created a service package for each client segment we service (Family Office, Retiree, Professional Millennial), which is transparent and clear on what you will get and what we will do for you. Within each segment there is an element of customization possible - for example, for someone who wants more face-face meetings (vs. virtual) or whose needs are more complex - we would deviate from the published service fee and create a customised fee to reflect that.
It depends on what method you prefer. Younger clients often prefer to pay via EFT at the end of each month or quarter. Older, retired clients for example might prefer the fee being deducted from one of their investment portfolios because it is effectively pre-tax money, and they have a large enough portfolio to make it more efficient doing it that way. Business owners often like to pay the fee via their company. We’ll find a way that suits you!
A: Yes of course! You aren’t locked into any contract. Our fees are payable monthly or quarterly in arrears – so if you cancelled during a billing cycle, we would issue you with your final invoice to settle the outstanding amount and we’re all done. We’d be sad to see you go but understand circumstances and needs change and any client who choose to end their relationship with us do so with our support and gratitude.
We will aim to keep you on your existing fee structure for as long as possible but as the cost of doing business increases due to inflation, we do of course have to factor that into our fee structure.
We will however guarantee to always keep you on your current fee schedule for a minimum of a 2-year cycle. So, if you join as a client on 1 January 2022 on a specific fee level, we will keep it that level until at least 1 January 2024.
If of course you move to a different client segment, e.g., from a professional millennial to our family office segment – that means a change to the entire service proposition, and we would then upgrade you to the new fee schedule as appropriate. That would also always be discussed and agreed first.
You might also decide to ‘downscale’ because the level of service you need doesn’t require as much ongoing work and service, for example from our family office to retiree segment. So, it can work both ways and is always done in discussion and based on what you need.
Questions Relating to Who You Work With (Client Types)
A: Those are just guidelines and are the categories most of our clients fall into. But if you feel you don’t fit into any of those client segments, feel free to reach out and we can arrange a chat to see if we can work together.
A: Absolutely! We’ve all gotten used to and comfortable conducting meetings via Zoom etc. so we have the infrastructure to be able to conduct virtual relationships and means we can have a relationship and work with you no matter where you are based in the country.
If you did want us to come and see you in person, we would just build that into our fee schedule to reflect that, depending on the frequency of how often you would want us to see you and where in the country you’re based.
A: Not at all. We don’t care about the size of your balance sheet. Our minimum ongoing service package does however start at R2,000 per month so if that isn’t affordable, we may not be a good fit.
A: Whilst we don’t favour or encourage this approach, because achieving our financials and lifestyle goals is an ongoing process and journey – we do sometimes have clients who like managing their own investments and making their own investment decisions but just need help to ensure that they’re on the right track and have a clear strategy to follow to help them achieve their goals.
In certain circumstances we are prepared to adopt this approach. Providing this once-off planning typically takes 3 months and typically covers about 4-5 meetings to do the work in full and to be able to deliver you with your comprehensive strategy or plan.
The fee we charge for this is typically between R15,000 – R20,000. And future work or reviews will be agreed separately and charged for as and when needed.