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As a central knowledge portal to the retirement and related industries, EBnet publishes a range of daily articles submitted by a range of industry organisations, experts and contributors. Readers can also comment on and contribute to articles.


How would retrenchment affect your financial well-being

The South African economy is struggling somewhat and the impact of slow growth is now being felt by some companies who have begun retrenching or talking about retrenching employees. It is therefore important to educate yourself about the impact of retrenchment on your financial well-being and what to do if you lose your job. While this is a scary thought, it is always better to hope for the best but plan for the worst. If you are retrenched, you will be entitled to a severance package, of at least one week’s pay for every completed year of continuous employment with your employer. Retirement fund implications Because retrenchment means leaving your employer, you also have to decide what to d

The situation is worse than expected

South African politics is far from dull. The fractures within the African National Congress (ANC) were once again highlighted at the end of July when ANC Secretary General Ace Magashule accused former cabinet minister and ANC NEC member Derek Hanekom of being a charlatan and a wedge-driver.These accusations were sparked by a meeting between Hanekom and the Economic Freedom Fighters (EFF) to hatch a plan to support a vote of no confidence against Former President Jacob Zuma. How does this political circus affect the financial services industry? Speaking at the recently held Momentum Investments Roadshow, Herman van Papendorp – Head of Macro Research and Asset Allocation at Momentum Investment

The small cap conundrum

With so much uncertainty in the markets, it feels like there is no place to hide – especially, it seems, for small businesses in South Africa, raising concern for the outlook of small cap investments. Anthony Sedgwick, Fund Manager of the Nedgroup Investments Entrepreneur Fund addressed this issue at the recent Nedgroup investment Summit – an annual event attended by over 800 industry professionals. “Times have been tough for small businesses and the South African economy as a whole - But it looks like it will remain that way. Periods like this expose the businesses lacking the resources to persevere and we have seen strong recent evidence of this” he says. In spite of that, Sedgwick is opti

Thriving in the digital era: the human touch

I don’t believe anyone will deny that we are in the midst of digital disruption – or that businesses that embrace technology will benefit, while those who do not will lag behind. Technology undoubtedly has the potential to make business more efficient, introduce new business models and broadly stimulate the economy. Despite these benefits being widely acknowledged, there is still an underlying fear that the technology of the Fourth Industrial Revolution – such as AI – will make jobs disappear. That fear is mostly unfounded, as many businesses who have already invested in this technology have seen that it automates repetitive tasks and allows their workers to be more efficient, work more inte

Investors’ guide to the world of online gaming

Following on from the success of the film streaming business model, the meteoric rise of cloud-based video game streaming has breathed new life into the gaming industry, uncovering a wealth of opportunities for investors with a taste for tech. Increasingly sophisticated product offerings have seen millennials progressively choosing gaming over mall trips and movies for entertainment. But, contrary to stereotypical perceptions of gaming as an anti-social activity carried out in dark rooms or dingy arcades, online gaming has become something of a social and cultural phenomenon. Recent advancements in internet speed, which improved by 23% between 2017 and 2018 alone, means that gamers are now a

Are your employees ready for the lifestyle costs of Cancer?

The majority of Sanlam’s 2018 disability claims (25%) were for cancer. Additionally, cancer and tumours accounted for 61% of severe illness claims. 80% of severe illness claims for women were for cancer, 31% of which were for breast cancer and 6% for skin cancer. 45% of men’s claims were for cancer, with 33% of these for prostate cancer. But regardless of the type of cancer and who is affected, one thing is for sure: Cancer is costly in myriad ways. Annually, a hundred million people globally face poverty because of healthcare expenses, according to a recent forum hosted by the World Health Organisation (WHO) and the SA Government on the cost of medicine. A US study tracked the finances of 9

FSCA warns the public against First Cash (Pty) Ltd

The Financial Sector Conduct Authority (FSCA) warns the public against doing any financial services business with First Cash (Pty) Ltd (First Cash). The entity, First Cash is not authorised in terms of the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act) to render any financial advice and intermediary services. The FSCA has received information that there is a person using a fake certificate purporting to be issued by the FSCA. This fake certificate uses the FSP No: 22588 and claims to have been issued by the previous regulator, the Financial Services Board (FSB) on 9 May 2019. This claim is false as the FSP No: 22588 belong to First World Trader (Pty) Ltd, known by its trad

Emotion, serotonin and your financial plan

More than 90% of human decisions are shaped by emotional brain systems that we share with other animal species. “The rational brain constructs narratives in support of what the emotional brain has already decided to do – and we are not even aware of it,” said Baba Shiv, marketing professor at Stanford Graduate School of Business. He was speaking last month about neural networks and how they shape emotions, motivation and ultimately your client’s financial plan at the sixth annual i3 Summit, hosted jointly by Sanlam Investments and Glacier by Sanlam. What does your client fear more: failure or missing out on opportunities? “Your goal as financial adviser is to shape client decisions, both as

FSCA warns the public against an individual who purports to be associated with BVG Financial Solutio

The Financial Sector Conduct Authority (FSCA) warns the public against doing any financial services with a person by the name Mr Christiaan Burger Venter “Mr Venter”, who purports to be a director at BVG Financial Solutions (Pty) Ltd (BVG). BVG is an authorised Financial Services Provider (FSP: 39889). The FSCA was informed that someone is collecting investments from members of the public purporting to be Mr Venter, using the following cell number 067 084 7982 and email address bvgcommodities@sifsim.co.za. Furthermore BVG Commodities has been used through the following fraudulent websites: https://agricommoditiestraders.wordpress.com and https://bvgcommmodities.simdif.com. On these websites

Executive management changes at Sanlam as it embeds its Pan Africa strategy

Sanlam has announced that the Group’s Financial Director, Mr Heinie Werth, will take over a new role as Chief Executive Officer of Sanlam Emerging Markets, the business cluster that is responsible for Sanlam’s businesses across 33 countries in Africa (Sanlam Pan Africa), as well as our other emerging markets business in India, Lebanon and Malaysia. Mr Werth’s appointment is effective from 01 August 2019. Mr Junior Ngulube, who is the Chief Executive Officer of Sanlam Pan Africa, will now take on the role of Vice Chairman of SPA from 01 August 2019. The Group said these executive changes are part of succession planning as Mr Ngulube is close to retirement and support its resolve to execute it

Divorce and your retirement

Divorce can be heartbreaking, and most people will agree that it’s completely overwhelming. It’s not something we plan for, but when it happens, there are many arrangements to be made with regard to dividing your assets as a couple. When couples divorce, their retirement benefits can be divided, just like any other assets in their estate. Divorce will most likely have an impact on your expected retirement benefit and you will need to take that into account in your retirement planning. To avoid any confusion, we’ve compiled a checklist of the important facts you need to know. Fact 1: Legislation makes provision for your retirement fund credit to be shared between you and your ex-spouse if you

A word of caution

Stats SA recently revealed a shocking 3.2% drop in South Africa’s Gross Domestic Product (GDP). This is reportedly the worst decrease in GDP since the same period in 2009, in the wake of the global financial crisis. Regard Budler, Head of Strategic Initiatives at Momentum Corporate said while economists assess the macro impacts, many are left wondering what this all means for their retirement nest eggs. A worrying trend “A drop of 3.2% GDP indicates a worrying decrease in our economic growth – our economy is essentially shrinking. It also means that companies are not growing as much as what we had hoped for and this has an impact for many retirement fund members,” he said. “Our retirement fu

Actively growing your wealth

When it comes to successful investing, there is no goose that lays the golden egg. So, while passive versus active investing is often presented as a simple either/or, in reality there should never be a binary choice between active or passive investment vehicles as the sole solution to your investment needs. This said, it’s important to understand the arguments surrounding passive versus active investing, and why, despite the growing popularity of passive products, there should always be room for active investments in your portfolio: Performance Passive providers often bandy around the statistic of how more than 50% of active managers underperform the benchmark. However, they never quote thei

Global stocks: when bad is good

Why do risky assets like stocks sometimes respond positively to bad economic news? It feels intuitively wrong. After all, any indications that the global economy is slowing suggests that the pace of earnings growth will ultimately start slowing too. Lower equity earnings growth suggests lower valuations because the price of an equity is simply the present value of all its future earnings. The key to the “bad is good” puzzle lies in how present values are determined. It’s not just about earnings but it’s also about the rate at which those earnings are discounted back to the present. The higher the discount (or risk free) rate the lower the present value of the earnings stream. It’s entirely p

South African Investors Need to Fall Out of Love with Equities

South Africa’s equity market capitalisation equates to more than 200% of the country’s gross domestic product (GDP), the highest proportion in the world and a level that is simply not sustainable. That’s the view of Stanlib’s Chief Economist, Kevin Lings, who was one of the guest speakers at the Allan Gray Investment Summit 2019 in Cape Town on Monday 22 July 2019. “South African investors are in love with equities - we kind of think it’s the only place to be,” says Lings. “This fixation cannot last. South Africans investors need to embrace different asset classes.” Lings says that while South African equities have underperformed in recent years, especially when compared to US stocks, their

How you can choose financial freedom

Remember those rebellious teenage years when you couldn't wait to get out of your parent's house to be independent and do what you want? An increasing number of grownups have not lost that rebellious streak. According to Jaco Prinsloo, Certified Financial Planner at Alexander Forbes, increasing numbers of adults across the globe are attempting to achieve financial independence at a younger age, allowing them to do what they want when they want. Financial independence is the freedom of not having to worry about working or being dependent on anyone else for your income. So, what is the easiest and quickest way to financial independence? 1) Do the maths: The first thing you must do is calculate

Will the COFI Act be effective in the regulation of commercial umbrella funds?

The retirement industry has seen a number of important shifts over the past few decades, with the shift from DB pension funds to DC provident funds most probably having the biggest impact. The current shift is a shift to commercial umbrella funds. The Financial Sector Conduct Authority (FSCA) is committed to the consolidation of retirement funds and the majority of small, medium and increasingly large employers have transferred to, or are in the process of transferring to, commercial umbrella funds (for all the right reasons). However, there is currently no clear supportive umbrella fund legislation, nor is there industry consensus on the most appropriate and desirable management structures

Successful recoveries on Municipal Councilors Pension Fund

The Financial Sector Conduct Authority (FSCA) is pleased to report that the curators of the Municipal Councilors Pension Fund (MCPF) have successfully recovered R120 million excluding VAT that was paid for vacant land. This amount represents the full purchase price which MCPF paid to Isago@N12 Development (Isago) for the land. The property was valued at approximately R70 million at the time of the sale. Following an investigation by the FSCA in 2017, it requested the MCPF be placed under curatorship to look into investment irregularities, maladministration and mismanagement of funds by the Principal Officer. This application was granted by the North Gauteng High Court and the MCPF was placed

South Africans are not saving adequately towards their retirement

It’s Savings Month and South Africans are not saving adequately towards their retirement. Further contributing to this dilemma is that the South Africa's Group insurance market has reached a tipping point. For many employers, group risk fees rose by upwards of 50% over the past few years as a result of a deterioration in claims experience across the industry. Increased group risk fees means that on inclusive cost arrangements, this reduces the available portion of the contributions left for retirement investment. The 2019 Sanlam Benchmark survey highlights a combination of contributing factors including: Economic stagnation - over the last 10 years SA has experienced higher unemployment, low

Four investment myths, busted

There are many commonly held beliefs when it comes to investing. Not all of them are true. This is according to Tamryn Lamb, Allan Gray’s head of retail distribution, who will be speaking at the upcoming Allan Gray Investment Summit in July. One of the agenda items at this year’s Summit will see three seasoned investment professionals guiding attendees on how to become better investors by avoiding some of these common mistakes and seeing through the myths. Below Lamb busts what she believes are the some of the most common investment myths. Myth #1: If it is too simple, it won’t work “One of the most common mistakes that investors make is underestimating the power of simplicity. Simple method




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