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The dawning of a new investment age

Dr Amlan Roy, Head of global Demograph Dr Amlan Roy, Head of global Demograph
Glacier by Sanlam and Sanlam Investments recently hosted the 2016 Investment Intel conference, a thought-leadership event where local and international experts explored pertinent investment industry matters.
 
This year’s event was framed within the context of the Global Goals for Sustainable Development – a set of goals that aim to end poverty, fight inequality and injustice, and tackle climate change by 2030. The event was held at the Cape Town International Convention Centre on 6 May, attended by financial intermediaries, following a similar panel held two days earlier - the i3 SUMMIT in Johannesburg.
 
Glacier CEO Anton Raath highlighted the challenges in front of us – weak economic growth globally, and the vast socio-economic problems locally. The world is in a constant state of flux and it is against this turbulent backdrop that we need to guide clients. 
 
The Global Goals for Sustainable Development looked at economic, social and environmental issues in an integrated way, focusing on people, the planet, prosperity, peace and partnership. Much of the talk at the Investment Intel stressed the importance of the people aspect – with respect to financial services in particular.
Stephen Archer, a global business and economic analyst explained how forecasts often get it wrong – because economic forecasting ignores too much of the real behaviour of people. Emotional beings can’t be computed into numbers.
 
Wonga.com co-founder Jonty Hurwitz addressed delegates on how the financial services industry is being changed by technology, but highlighted once again the importance of human emotions.
 
“The subject of money runs deep,” he said.
 
“Emotion does run deep in investment management.”
 
According to Jonty, the rise of the robo-adviser is about the dream of capturing how future generations will deal with money. In his view, the need for advice won’t disappear because essentially, it’s emotions that need managing. 
 
Equally, the need for communication will remain.  But the way in which we communicate with investors will change. He showed advisers present how they can use social media to drive client engagement, using emotion as a key differentiator.
 
He said that the industry is facing the biggest wealth transfer in history, from Generation X to the Millennials, presenting an opportunity for advisers to engage with a younger audience. “Clients need to feel held and looked after,” he said. “We’re in the business of emotions.”
 
Dr Amlan Roy, Head of Global Demographics and Pension Research at Credit Suisse, stressed that retirement is not dead, merely different. “Older people need to be active, exercise, practice good nutrition and have interests,” he said. According to Amlan, we consistently underestimate longevity and for this reason a better understanding of longevity by combining different approaches is important.  Additionally, life-long learning is important so that people can have second, and even third and fourth careers. The industry needs to develop new solutions for clients and better approaches to understanding longevity.
 
Roland Rousseau, Head of Barclays Risk Strategy Group, believes investors essentially need three things: excess return after costs and inflation; acceptable costs; and a return without excessive risk. Continuing in a similar vein to previous speakers he stated that investment management is about keeping clients content in difficult times. He believes there’s a bright future for active risk managers, rather than active return managers.
 
The day ended with a panel discussion comprising Danie Meintjes, CEO of Mediclinic International, Michael Mark, CEO of Truworths International, and Sisa Ngebulana, CE of Rebosis Property Fund.
 
According to Michael Mark, Truworths is attractive to foreign investors because of South Africa’s high percentage of young people. In 10 years this will be the growing emerging middle class, whereas in Europe this emerging middle class is shrinking.
 
Danie Meintjes explained how modern surgery makes it possible to do more for people, with less infrastructure. Today people spend less times in hospital and recover more quickly. This is because new technology makes surgery safer and less invasive. Our ability to treat older people more safely is much greater than it was five or ten years ago.
 
Sisa Ngebulana concluded by saying that, when faced with tough times, it is important to focus on one’s core business and to do things right.
 
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