Pack up your Troubles in your Old Kit Bag …
With the recent 100th year commemorations of Armistice Day – the end of a most horrific period of destruction and devastation in Human history – childhood memories of two great songs of that era came flooding back. “It’s a long way to Tipperary” and “Pack up your troubles”. For those receiving this newsletter electronically – you may be able to click on this link – turn up your sound volume – and enjoy some hearty nostalgia as the music plays … https://www.youtube.com/watch?v=FsynSgeo_Uo
It also occurred to me just how relevant those old songs are to our present circumstances here in South Africa. We have endured over a decade of shameful mismanagement, rampant corruption, pervasive crime, broken education, health, security, tax collection and Public services – with the poorest of the poor feeling it more than any other sector of our Society.
It’s all too easy to slip into a state of anger, stress, anxiety, negativity and possibly even depression – especially if you follow the daily onslaught of negative media pronouncements. None of that helps though, on the contrary it impacts our health and just makes everything feel worse … even to the extent that we become blind to the positive changes, as embryonic as they may be, to a better life for all in the future.
Yes … it is still “A long way to Tipperary” [that prosperous rainbow South Africa we all wish for] but we have no chance of getting there unless we “Pack up our troubles in the old kit bag … and SMILE, SMILE, SMILE”!
What’s all this got to do with investing … ???
Well, think about it … investing is all about the future – whether you are saving for retirement or in the post retirement phase of needing forward cash flows for your sustenance. The theme songs of this newsletter are particularly useful because of their underlying philosophies – the first … “a long way to …” inspires patience and perseverance – while the second … “Pack up your troubles …” implores putting aside troubles and moving forward with positivity. These are important ingredients of successful investing – and of course very valuable life skills in general.
However, on their own, these triple P’s don’t translate into a sensible investment strategy. You need expert guidance in selecting investment solutions from a bewildering range of product providers, both locally and abroad. Our business was launched in October 1996 [22 years ago] and in May 1998 [20 years ago] was constituted as the company – Finlaw Consulting SA (Pty) Ltd – which looks after our clients today. Our focus from day one has been to use a combination of legal and financial expertise to develop sustainable investment strategies for clients.
Why “legal”? – simply because so many laws impact on the process and outcomes of investing that, without a sound understanding of the statutory and contractual world in which we operate, we would be at a distinct disadvantage. We have, for example, unpacked the intricacies of many complex, often “structured”, products over the years which have, at first “blush”, promised amazing [if not impossible] “guaranteed” returns … only to find that they were designed by institutions for the benefit of institutions and not for the investing clients. There have been many – but here are a few – “Supreme Bond”, “Masterbond” and “ShareMax”.
Instead of employing inhouse actuaries and investment analysts [at enormous cost], we subscribe to Morningstar, the leading Independent International Research company which has over 5,200 employees in 27 countries and covers 621,370 investments. Most of the reputable Fund Management Companies here in South Africa and abroad make use of Morningstar Direct, the same research product we use. We are among a few South African independent investment advisory firms that subscribe for their top end research which, while expensive, is of significant value to us. It gives us direct access to their highly detailed analyst reports on investments and the benefit of their fund rankings on performance, consistence, risk and sustainability. The tools they provide allow us to drill through to the underlying investments chosen by Fund Managers so that we can blend uncorrelated products together to diversify holdings and management styles. For example, there is no point in us selecting 2 balanced funds if they are both invested in much the same shares, bonds, cash instruments and listed properties.
Perhaps most important of all is the fact that the research is independent – so we place no reliance on the marketing material, TV adverts and “glossies” put out by the investment product suppliers. Neither are we unduly influenced by the many product supplier seminars and workshops we attend every year. If issues they raise prick our interest – we return to our offices and evaluate them against the independent research available from Morningstar. We treasure our independence and have turned away offers from the big corporates to buy our business knowing that this would not be in the interests of our clients.
We build our client investment strategies using our legal and investment expertise through a disciplined process we have developed over the years. Once in place we seldom need to make changes to the blended products – doing so only when we believe it is absolutely necessary, or where a client’s circumstances have changed. Please remember that we [Finlaw] do not manage the underlying investments [shares, bonds etc] within the products. Our expertise is to identify fund managers who are consistent performers in their product category relative to other managers in the same category. So – even if Finlaw disappeared – your investments and the strategy we have devised would not be impacted in any way. Going forward you would of course need to engage new advisors for further guidance – and this requires no more than a letter of appointment in favour of the new advisor firm.
The fact that it is so easy for us to be “fired” and replaced with minimal initial impact on the client is precisely what keeps us on our toes in our efforts to serve our clients.
We hope this peek behind the scenes of our processes has been interesting and has distracted you from the local and global turmoil out there. We remain as level headed and balanced in our approach as ever. We have no intention whatsoever of “disappearing” and on the contrary continue to invest heavily in our business to thrive with our clients in the decades ahead.
In early 2019 we will begin the process of updating to the latest high-tech Client Relationship Management systems to complement our inhouse bespoke database system for monitoring client portfolios. We take our responsibility to secure and protect client confidential information very seriously. These new systems will add additional layers of protection and help us keep our records up to date.
We take this opportunity to wish all our clients the very best for the Festive Season. It is a time to be jolly – so you now know what to do … start singing those tunes – or at least hum them 😉! We also wish Jane Peattie all the best as she moves to the North Coast of KZN in the New Year to take up a new and exciting employment opportunity there.