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WHAT’S INSIDE YOUR OCTOBER ISSUE: DISCRETIONERY FUND MANAGERS (DFMs) Discretionary fund managers are playing an increasingly important role in the advice landscape, helping advisers navigate portfolio construction, manager selection and ongoing investment management. Pg9-11
INFLATION-LINKED BONDS With inflation remaining an important consideration for long-term investors, inflationlinked bonds can provide valuable protection against unexpected increases in the cost of living. We explore how these instruments work, the role of real yields and breakeven inflation, and what advisers need to understand.
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Closing the gap in disability cover By Sandy Welch
Editor, MoneyMarketing
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or decades, employee benefits have provided an important safety net for workers and their families. Life cover, critical illness benefits and disability insurance each serve a defined purpose, helping employees and their dependants cope financially when serious events occur. But between these forms of protection sits a gap that can be difficult to see until someone falls into it. An employee can suffer a significant injury or illness that permanently affects their physical abilities yet still be considered capable of working under the occupational definition used by a traditional disability policy. In those circumstances, the person may receive no disability benefit, despite facing potentially substantial costs and changes to their daily life.
UNIT TRUSTS Unit trusts are still one of the most accessible ways for South African investors to achieve diversified exposure across asset classes and markets. But with an ever-expanding range of funds available, selecting the right solution requires more than simply looking at past performance. Pg14-17
FINTECH Technology is changing the way financial advice practices operate, from artificial intelligence and automation to cybersecurity and increasingly sophisticated digital tools. How can advisers harness these technologies to improve efficiency and client engagement?
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It is this gap that Fedgroup has sought to address with the launch of its inability cover. Walter van der Merwe, CEO of Fedgroup Life, says the idea originated several years ago when the company’s reinsurer introduced the concept to the industry. While there was interest, there was initially little appetite among insurers to develop an entirely new product. Fedgroup eventually decided to pursue the opportunity after researching the South African market and considering international experience. “We focus on people, we focus on our customers, our policyholders,” says Van der Merwe. “We identified that there is an opportunity in disability cover; often it doesn’t pay because of the occupational definition that it has. We felt we needed to address that gap.”
When being able to work is not the same as being unaffected The distinction is important because conventional disability and critical illness products are designed to respond to particular definitions and triggers. Critical illness cover generally pays when a policyholder is diagnosed with a specified illness and meets the relevant medical criteria. Capital disability cover, meanwhile, typically requires a claimant to meet an occupational definition of disability before the benefit becomes payable. Income disability cover provides another layer of protection by replacing income when an individual is unable to work, but it can be expensive and may not be affordable for everyone. This creates a potential protection gap for people who have suffered a meaningful physical impairment but remain capable of performing some form of occupation. The example that helped crystallise the problem for Fedgroup involved a security guard who was injured while chasing a suspect. He badly damaged his arm, shoulder and hand and underwent several operations. Although the injury was repaired, he lost significant functionality in his arm and hand. However, because he remained qualified to perform other roles within the security industry, such as working in a control room, he didn't meet the occupational definition required for a capital disability claim. He had therefore suffered a serious physical injury with lasting consequences, but under the existing definition was not considered disabled. For Fedgroup, the question became whether insurance could respond to the inability itself, rather than only whether someone was ultimately unable to work. “That is where we determined that there is a clear gap where capital disability does not pay,” says Van der Merwe. A different way of defining the risk Inability cover is designed around the loss of specific physical or sensory abilities. The product initially considers the loss of sight, speech or hearing. It then assesses seven physical abilities: walking or climbing stairs; bending or stooping; standing; sitting; the use of one arm; lifting and carrying; and the use of one hand. If a claimant is unable to perform two of these seven physical abilities, the benefit can become payable as a lump sum. Continued on next page
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OCTOBER 2026 // COVER STORY Continued from previous page This represents a different approach to traditional occupational disability cover. Rather than asking whether a person can perform their own occupation or another occupation, the focus is on whether a defined physical or sensory inability has occurred. Van der Merwe says considerable work went into making the assessment process as straightforward as possible. “Instead of requiring specialist medical professionals for every assessment, Fedgroup developed assessment forms for the relevant abilities that can, for example, be completed by a nurse and submitted to the insurer for assessment,” he says. The intention is to provide financial assistance at a point when an employee may need to adapt their life to a permanent change in their physical capabilities. Importantly, the inability does not have to result from a workplace accident. Motor vehicle accidents and illnesses or diseases can also result in a claim, according to Van der Merwe. Complementing existing protection For advisers and brokers, one of the most important considerations is understanding where inability cover fits into an existing employee benefits structure. The product is not intended to replace critical illness, capital disability or income disability benefits. Each addresses a different aspect of financial protection. “Inability cover is definitely not replacing any of the existing cover that’s available in the employee benefits market,” says Van der Merwe. “Critical illness or disease has its place as we understand it.” Instead, inability cover is designed to address circumstances where a person has experienced a significant inability but does not satisfy the more stringent definition associated with capital disability. Affordability is another part of the proposition. Fedgroup’s modelling indicates that, on average, inability cover costs roughly half as much as capital disability cover. Depending on factors such as the industry, salary profile and membership profile, Van der Merwe says the difference could range from around 30% less to as much as 70% less than capital disability cover. That distinction matters because employee benefits are ultimately a balancing act between the protection employees need and what an employer can sustainably afford. Start with the workforce For brokers and advisers, the introduction of another benefit raises an important question: how should they determine whether it's appropriate? Van der Merwe’s answer is to begin with the profile of the employer and its workforce. An office-based administrative business presents a different risk profile from a mining, manufacturing, engineering, construction, agricultural or security business. Fedgroup’s research
specifically examined sectors where employees are exposed to physical work, machinery and other occupational risks. The product is not intended to replace workers’ compensation cover, but rather to address potential gaps in the broader employee benefits structure. The starting point, therefore, should be the risks employees are exposed to and what happens if those risks materialise. Van der Merwe suggests looking across the protection spectrum, beginning with life cover and funeral benefits, and then considering income protection, capital disability, inability cover and critical illness. The precise combination and level of cover will depend on the employer’s circumstances and affordability. “Employee benefits or group cover works on the average,” he says, acknowledging that individual employees, particularly higher earners, may have additional needs that can be addressed through individual products or specific categories within a group policy. Once the appropriate structure has been established, advisers can obtain quotations and work with the employer to adjust levels of cover according to what the business can afford. It is therefore less about adding another product to a benefits menu and more about building a protection structure that reflects the particular workforce. The affordability equation Cost is especially important for smaller and medium-sized businesses, where even modest increases in payroll costs can have an impact. For employees, the issue is even more direct: any additional deduction affects take-home pay. “This is where inability cover would be able to meet a specific need in that it isn’t as expensive as other insurance products,” says Van der Merwe. “And for the employees, who watch every cent that goes into their bank account, any additional deduction off their payroll, off their income, will materially affect them.” A comprehensive benefits package is of limited value if its cost makes it unsustainable for an employer or unaffordable for employees. For advisers, this reinforces the importance of considering benefits as a connected protection strategy rather than evaluating each product in isolation. Rethinking employee benefits The launch also raises a broader question about innovation in employee benefits. Van der Merwe argues that the industry has seen relatively little innovation in some areas over the past several decades. One reason, he suggests, is that insurers naturally focus Walter van on products they already der Merwe offer. Existing products have established client bases, premium income and proven demand, creating less incentive to disrupt established
models. “Why would you disrupt it?” he asks. “I think there’s some inertia in that. You know, why should you pioneer something new if your existing products are serving the need?” But the questions being asked by employers and employees are changing. People increasingly want to understand what their benefits actually protect, why particular benefits are included, and what they are paying for. For advisers, this creates an opportunity to move beyond explaining the mechanics of a benefit and instead demonstrate how each component contributes to a broader protection strategy. The product itself is only part of that conversation. The more important question is whether the benefits package reflects the actual risks faced by the people it is intended to protect.
“The starting point should be the risks employees are exposed to” A message of care Communication will be critical if inability cover is to gain traction. Unlike established products such as life, disability and critical illness cover, a new category requires employers and employees to understand not only what it does, but why it is necessary. For Van der Merwe, the most effective message is one of care. An employer is acknowledging that illness, injury and other life-changing events can happen even when people remain able to work. Providing additional financial protection means employees don't necessarily have to carry the full financial burden of adapting to those events themselves. “For me, the message comes from the caring aspect,” he says. That positioning also highlights the broader role employee benefits can play. They aren't simply financial products attached to a salary package; they can form part of an employer’s response to the vulnerabilities employees face outside the workplace. Will the market follow? Fedgroup says the product is the first of its kind in the South African employee benefits market and that it has not seen a comparable offering internationally in the employee benefits space. A similar concept exists in Germany, but as an individual-market product rather than an employee benefits offering. Ultimately, inability cover doesn't challenge the need for existing disability and critical illness benefits. Instead, it asks advisers and employers to look more closely at what happens between the boundaries of those products. Someone doesn't necessarily have to lose the ability to work altogether for an injury or illness to have a profound financial impact. For advisers reviewing employee benefits, the question is not simply whether an employee is disabled, but whether the protection in place is sufficient when life changes in ways that existing definitions do not fully capture.
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NEWS & OPINION // OCTOBER 2026
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t’s been a particularly busy few months on the conference circuit, and this October issue reflects just how valuable those events are to the financial advice industry. From conversations with industry leaders to thought-provoking presentations and the opportunity to engage directly with peers, conferences provide a valuable window into the issues shaping the market – and often give us insights that simply can't be captured in a press release or report. Several of the features in this issue have their roots in conferences we have attended recently. They have given us the opportunity to take those conversations further and bring you the ideas, trends and practical insights that we believe matter to advisers. Among the topics we explore are the growing role of discretionary fund managers (DFMs) and how they are changing the way advisers construct and manage portfolios. We also look at the expanding pet insurance market and what advisers and their clients need to understand when considering this increasingly relevant form of cover. Our investment coverage includes a closer look at unit trusts and their enduring role in portfolios, as well as inflation-linked bonds and the protection they can offer against unexpected inflation. Technology remains a major theme, with features examining fintech, artificial intelligence and cybersecurity – three areas that are rapidly changing how advice practices operate and interact with clients. While technology offers enormous opportunities, it also brings new responsibilities and risks that advisers need to understand. As always, our aim is to bring you informed perspectives that can help you navigate an increasingly complex advice environment. I hope you enjoy this issue. Stay financially savvy,
Sandy Welch
Editor, MoneyMarketing
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Investment trends to watch closely
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he investment landscape is becoming more complex, not less. AI is making it easier for investors to access information and answer basic investment questions, while the growing convergence of public and private markets is creating a wider – and harder to compare – universe of products. For financial advisers, these changes are raising the bar. The opportunity lies not in competing with technology on the questions it can answer quickly, but in addressing the questions it cannot. According to Tal Nieburg, Managing Director, Morningstar South Africa, speaking at the recent Morningstar Investment Conference, two forces are particularly important: the rapid adoption of AI and the convergence of public and private markets. “AI can answer the many first-order questions pretty simply, pretty quickly and pretty efficiently,” says Nieburg. These include questions such as what to buy, how to allocate a portfolio, and how an investment has performed. “These are what we think of as the 80% questions that AI will often handle well enough for you. However, those questions are not the hardest questions.” The more difficult questions are considerably more personal and contextual: How does this investment fit with everything else the client owns? What risks does it introduce? How concentrated is the portfolio? How does it interact with the client’s broader portfolio, tax structure and objectives? And what happens if investment or political conditions change suddenly? These are the ‘harder 20%’ – and, says Nieburg, they are where advisers can create the greatest value. From information to insight AI is already changing the client-adviser conversation. Clients can arrive at meetings with far more investment information than they had previously, having used AI tools to research funds, markets and portfolio ideas. But greater access to information can also create more questions. For advisers, this means their role increasingly shifts from simply answering questions and selecting investments to interpreting what matters in the context of the client’s entire financial picture. “Your value moves up in the stack,” says Nieburg. “You go from answering questions to detecting what matters, then you go from selecting investments to guiding outcomes.” That shift is particularly relevant as portfolios become more complicated. The public-private convergence The second major force is the growing convergence between public and private markets. Private capital is increasingly acquiring specialist investment management capabilities, rather than building them from
scratch, while semi-liquid structures are opening access to private-market strategies for a broader investor base. Nieburg points to more than $600bn flowing into semiliquid funds over the course of the last year, describing the trend as one that is likely to strengthen. Semi-liquid funds can provide retail investors with access to strategies traditionally associated with private equity or hedge funds, although this access comes with liquidity constraints. For private capital managers, the attractions are considerable: expanding assets under management and fee income, entering high-growth areas such as private credit and infrastructure, building global distribution networks, creating cross-selling opportunities and increasing scale.
“Two forces are particularly important: the rapid adoption of AI, and the convergence of public and private markets” For advisers, however, the growing range of structures creates an important challenge: comparison. When a client asks whether they should have access to private markets, the real questions are more fundamental: What am I gaining? What am I giving up? And is it worth it? A new transparency challenge Greater product choice does not necessarily mean greater transparency. In fact, comparing traditional funds with semi-liquid structures can be difficult because of differences in fees, liquidity and investment structures. Morningstar’s annual State of Semi-Liquid Funds report has examined the sector in greater depth, including one of the key attractions of these products: their potential to generate higher returns. But potentially higher returns can come with higher costs, making meaningful comparisons essential. Nieburg says Morningstar has developed a new fee comparison methodology designed to allow advisers to compare traditional and semi-liquid funds more objectively. The opportunity is not simply to know more than the client or the technology. It’s to ask better questions, identify the risks and tradeoffs that matter, and connect investment decisions to the outcomes the client actually wants. The bar is rising across the industry. For advisers, that may ultimately make the most valuable part of the job even clearer: helping clients make sense of complexity.
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ED'S LETTER
OCTOBER 2026 // NEWS & OPINION
PROFILE
Tiaan Herselman
Head of Business Development at Symmetry How did you get involved in the finance industry – was it something you always wanted to do? My interest began while growing up in Gqeberha, listening to Paul Leonard’s MoneyTalk slot on Algoa FM. We didn't really discuss finances at home, so I found those conversations fascinating and wanted to understand more. I initially considered studying law, but when I discovered the BCom Financial Planning degree at Nelson Mandela University, it immediately appealed to me. It became my first qualification and the starting point of my career. In a lovely twist, one of my early roles involved working for Paul himself, the person I had spent years listening to on the radio. What is one thing that people may not know about you? In 2023, I started a TikTok experiment to understand how everyday South Africans engage with financial content. The account took off almost overnight, with considerable interest in topics such as the two-pot retirement system. Over approximately 18 months, my content attracted more than 10 million views. That reach brought unexpected challenges, including fake profiles impersonating me. But the experience broadened my interest in the relationship between financial education, social media and AI. It also gave me a window into what people really think and feel about money. The comments can teach you as much as the content teaches the audience, and a thick skin certainly helps! What was your first meaningful successful investment? Saving for the deposit on my first car, a Ford Fiesta. I invested in an income fund for two to three years to build up the deposit. To me, that car represented freedom, and the process taught me a valuable lesson about delayed gratification. I even managed to save enough for an aftermarket sound system. At that stage of my life, the size of the speakers mattered more than the size of the engine! What have been your best and worst financial decisions? My best financial decision was committing to a budget and tracking my spending. Knowing where my money was going made a significant difference to my ability to save. Money has a way of finding somewhere to go once it reaches your
bank account, unless you give it some direction. My worst decision was cashing in my first provident fund, worth approximately R22 000, after leaving my first employer. I still regret it. It gave me a real appreciation for people who preserve their retirement savings when they change jobs. My intention is to leave my retirement savings invested until retirement. What are the biggest lessons you have learnt over your career? Be willing to do things that others find challenging, such as public speaking. Developing those skills can open doors and help you grow in ways you might not expect. Keep learning, and approach every room with the assumption that the people around you have something to teach you. That mindset keeps you curious and willing to listen. Finally, embrace change. What advice would you give in terms of offshore investing right now? I would start with the purpose of the investment. What will the money be used for, when will it be needed, and in which currency will it ultimately be spent? If it is intended to fund expenses in South Africa, I would consider carefully how the offshore allocation fits into the investor’s overall portfolio. For a substantial offshore equity allocation, I favour a long horizon – potentially 15 years or more – depending on the objective and the investor’s circumstances. I would also question the motivation. My view is that offshore investing should be driven by diversification and access to global opportunities. A negative view of the rand alone is not a sufficient investment strategy. The investment structure deserves just as much attention as the underlying funds. A local feeder fund, a direct offshore investment and an offshore endowment or sinking fund are options I would assess in the context of the investor’s tax position, estate plan, costs and access requirements. Finally, I would consider recurring contributions where cashflow allows. They spread investment and currency conversion across different entry points and can help
“Helping someone define what they are working towards is such an important part of advice”
build discipline. They do not remove investment risk or necessarily produce a better outcome than investing a lump sum. What finance/investment trends and macroeconomic realities are currently on your watchlist? I am watching the relationship between inflation, interest rates and the sustainability of retirement income. My focus is on what different economic outcomes could mean for clients’ purchasing power and the income their portfolios need to deliver. Globally, I am interested in AI, both as an investment theme and for its implications for financial advice. From an investment perspective, the question I would ask is how much future growth is already reflected in valuations, and how concentrated a portfolio’s exposure has become. Locally, I am watching fiscal sustainability and progress in electricity and logistics reform, particularly whether improvements translate into stronger economic growth. I am also interested in how people find and assess financial information through social media and AI. For me, an important question is how we use these channels to make financial education more accessible while helping people recognise when they need personalised advice. What are some of the best books on finance/ investing that you’ve ever read – and why would you recommend them? One that stands out for me is How Much Is Enough? by Andrew Bradley. What I enjoyed was the opportunity to reflect on what I want money to make possible in my life. It is easy to keep moving the financial goalposts: a higher income, a larger portfolio or the next milestone. For me, the question of “enough” brings the conversation back to the life we want to lead and the freedom to make choices that matter to us. That's also why I would recommend it to financial planners. Helping someone define what they are working towards is such an important part of advice. An investment target becomes far more meaningful when it is connected to a person’s priorities and sense of fulfilment.
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ADVICE FOR ADVISERS // OCTOBER 2026 Olwethu Masanabo
Creating space for better financial conversations
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or financial advisers, understanding a client’s relationship with money can be just as important as understanding their balance sheet. For black South African clients in particular, history, family responsibilities and experiences of financial exclusion can shape attitudes towards wealth in ways that may not be immediately visible. Financial planning is often built around numbers: income, expenditure, assets, liabilities, investment returns and retirement goals. But according to Olwethu Masanabo, FPI Chair and COO of BDO Wealth Advisers, effective advice requires advisers to look beyond the numbers and understand the experiences that have shaped how clients think about money. Speaking at the Humans Under Management conference, Masanabo focused on creating psychological safety for black South African clients – not as a political issue, but as a way of understanding the context in which financial decisions are made. The missing chapter Masanabo argues that conventional financial planning can sometimes make an assumption that is not applicable to every client: that people are starting from a history of accumulated wealth. For many black South Africans, she says, the reality is different. “Financial planning assumes a history of wealth accumulation. Black South Africans came from a history of wealth interruption.” That distinction matters because a client’s financial behaviour doesn't exist in isolation. South Africa’s history of exclusion from the formal financial system affected generations of households, while informal mechanisms such as stokvels provided ways for communities to save, access credit and support one another. Masanabo points out that stokvels historically often had a short-term savings purpose, with money accumulated during the year and spent around December. While these mechanisms served an important function, the transition into a more formal and accessible financial system brought a very different set of products and choices. For advisers, the lesson
is not to make assumptions about how a client should behave with money, but to understand why certain behaviours may make sense from the client’s perspective. When money is about more than money Repeated experiences of financial insecurity can influence the way people perceive risk, security and wealth. Masanabo describes several patterns that advisers may encounter, including a preference for tangible forms of security, an emphasis on immediate needs, and a strong sense of responsibility towards family. This can create a tension between conventional financial planning priorities and the client’s lived reality. A client may understand the importance of retirement saving, for example, but feel that supporting parents, siblings or children must come first. An offshore investment may offer diversification and currency protection, yet feel uncomfortable to someone who associates financial security with having something tangible and close at hand. Then there is what is commonly referred to as “black tax” – financial support provided to extended family. Rather than treating this simply as an obstacle to wealth creation, Masanabo encourages advisers to understand it as part of the client’s broader financial reality. The question, therefore, becomes how these competing priorities can be accommodated within a plan. Psychological safety matters Creating that environment starts with the adviser. Masanabo recounts an experience in which a comment about her relationship with her ancestors caused her to withdraw from a conversation. The issue was not the financial advice itself, but the sense that something important to her had been judged. “We are energy and your energy introduces you before you say a word,” she says. For an adviser, this means being conscious not only of what is said, but also of assumptions and reactions that can influence the conversation. If a client feels judged, they may stop sharing information
– potentially leaving the adviser without the full picture needed to develop an effective plan. The answer, says Masanabo, is to “leave yourself at the door”: approach the client without preconceived ideas and take the time to understand the person behind the financial information. A SAFE approach Masanabo offers a practical framework for advisers: SAFE. • S – Seek the story. Understand the client’s experiences and how they have shaped their relationship with money. • A – Acknowledge context. Recognise the historical, cultural and familial realities that may influence financial decisions. • F – Frame collaboratively. Build the plan with the client rather than imposing a solution. This means finding ways to accommodate competing priorities rather than simply telling clients what they should prioritise. • E – Empower rather than correct. Clients are the experts in their own lives. Advisers can provide insight and guidance without undermining the client’s dignity or sense of agency. This approach also changes the questions advisers ask. Instead of focusing solely on what a client can afford, an adviser might ask: What financial decision would make you feel you had betrayed your family? Or: Where does money create feelings of shame, pressure or fear? These questions can uncover information that a traditional fact-find is unlikely to reveal. Building wealth for the first time Ultimately, Masanabo’s message is about recognising that financial planning is not experienced in the same way by every client. “For many platforms, financial planning is still a first-generation conversation,” she says. “Many clients are not managing inherited wealth. They are creating it.” For advisers, that calls for curiosity rather than assumptions. A client’s financial behaviour may make far more sense once the story behind it is understood.
The FPI recognises the quality of the content of MoneyMarketing’s October 2026 issue and would like to reward its professional members with 2 verifiable CPD points/ hours for reading the publication and gaining knowledge on relevant topics. For more information, visit our website at www.moneymarketing.co.za 6 // www.moneymarketing.co.za
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OCTOBER 2026 // ADVICE FOR ADVISERS
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inancial planning has Old Mutual: Facilitator traditionally of the Integrated been built Behavioural Coaching around collecting Course information. Advisers gather data, analyse income and expenditure, model cashflow, assess affordability and use increasingly sophisticated tools to develop recommendations and construct a financial plan. There is nothing inherently wrong with this approach. But according to the thinking behind a more collaborative approach to financial planning, it may leave significant value on the table. The distinction is subtle but important: Are advisers planning for their clients, or are they planning with them? When the adviser does most of the work behind the scenes, the client can become a passive recipient of the finished plan. The adviser owns the process, understands the numbers and is invested in the outcome. The client, meanwhile, may simply agree to the recommendations without necessarily developing the same understanding or sense of ownership. That can become problematic because the adviser cannot be present when clients make the decisions that ultimately determine whether their plan succeeds. Clients live their financial lives between meetings. They encounter competing priorities, emotional decisions, unexpected expenses and changing circumstances. Understanding those behaviours can be just as important as understanding their balance sheet.
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By Sharon Moller
From information to insight Planning with clients changes the nature of the conversation. Instead of collecting information and returning later with a completed analysis, the client becomes an active participant in the process. They work through the plan alongside the adviser, helping to interpret what the numbers actually mean in the context of their lives. This can produce a different kind of insight. The numbers remain important, but they become more than information about affordability, income or expenditure. They can also reveal patterns of behaviour, assumptions, tensions and competing priorities. A cashflow analysis, for example, may show that a client can technically afford a particular course of action. But it may not explain why they continue to struggle to implement it. That requires a conversation about what is driving the behaviour. There may be fear attached
From planning for clients to planning with them to a financial decision, competing priorities within a family, or a tension between what the client says they want and what they are prepared to do. Asking better questions This is where the adviser’s role can shift from providing answers to creating the conditions for clients to find greater clarity themselves. Powerful questions can open up areas that traditional fact-finding may never reach. • What are you noticing? • What feels uncomfortable? • What could be possible here that we haven’t seen yet? • What trade-offs are you willing to make? And ultimately: What actions would move you closer to the outcome you want? The important point is that the client is answering these questions. The adviser cannot manufacture the answers by collecting more data. The conversation can help clients identify assumptions they may not have previously recognised, confront competing priorities and articulate what really matters to them. In doing so, they begin to understand not only their financial position but also themselves. This matters because the success of financial planning is not always determined by whether the client has the optimal portfolio, whether markets perform as expected, or whether every element of the financial structure is perfectly constructed. Sometimes the biggest obstacle is a conversation that has not happened. It could be a difficult conversation with a partner or family member, a decision the client has been avoiding, or an internal conflict between what they want today and what they say they want for the future. The adviser as accountability partner Financial advisers cannot be with clients every day. They may meet once or twice a year, but the financial decisions that shape a client’s future happen continually. This makes behavioural insight particularly valuable. When clients participate in the planning process, they can recognise their own patterns and take greater ownership of decisions. That ownership can be important when the inevitable challenges arise. A client who understands why a particular plan matters to them may be more connected to it than someone who simply received a set of recommendations. The objective is therefore not to move away from the numbers, but to look at them differently.
Data can provide the starting point for a much deeper conversation. It can help the adviser and client explore not only what is happening financially, but why it is happening and what the client wants to change. Moving beyond the solution For advisers, this requires a change in the question they ask themselves. Rather than starting with “What solution does this client need from me?”, the question becomes: “What does this client actually need from me?” The answer may still involve a financial product, portfolio recommendation or technical solution. But it may also involve a different tool, a more powerful question, a new perspective – or simply enough space for the client to think. Even silence can become part of the adviser’s toolkit. In a profession built around solving problems, stepping back from the impulse to immediately provide an answer can require considerable discipline. There is an understandable satisfaction in finding the solution and demonstrating expertise. From passive agreement to ownership The shift from planning for clients to planning with them ultimately changes the nature of the relationship. Instead of moving through a process in which the adviser gathers information, develops a plan and presents recommendations, the client becomes part of the thinking that produces the plan. That can create greater insight, purpose and connection. Most importantly, the client moves from passive agreement towards genuine ownership. They understand the plan because they have helped shape it, and they become more connected to the actions required to make it work. This doesn't diminish the adviser’s role. If anything, it broadens it. The financial planner remains the technical expert, but also becomes a facilitator, a sounding board, an accountability partner and, at times, the person who asks the question the client has been avoiding. The opportunity for advisers is to recognise that their value lies in helping clients think better about their money, their choices and their future. The next time an adviser sits down with a client, the starting point might be a simple question: What does this client need from me to take the next step? That question can change not only the conversation, but the role the adviser plays in the client’s financial life. Sharon Moller was a speaker at PROpulsion Connect.
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ADVICE FOR ADVISERS // OCTOBER 2026
What clients really want from their financial adviser
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he value of financial advice may be much broader than clients realise – and advisers may need to rethink how they communicate that value. For years, the financial advice industry has tended to explain its value in familiar terms: retirement planning, investment selection, tax planning, wealth management, and other specific financial tasks. But according to Ryan Murphy, Global Head of Behavioural Insights at Morningstar, this can miss a much bigger part of the picture. Speaking at the Morningstar Investment Conference, he said research into why people hire financial advisers suggests that some of the most valuable things advisers do are not necessarily the things investors have top of mind when they decide to seek advice. “Investors overlook major sources of value from advisers,” says Murphy. The challenge, he argues, is that advisers may not be communicating it in terms that resonate. Looking beyond the job to be done Murphy and his team started with a straightforward question: why do people hire financial advisers in the first place? The conventional answers tend to focus on a particular problem – retirement, a windfall, increased income, tax questions or the need to invest. While these are legitimate reasons, Murphy says they represent only a narrow view of what an adviser actually does. To investigate further, Morningstar conducted an open-ended survey involving 623 households currently working with a financial adviser. Participants had chosen their adviser themselves and were paying for the service. Rather than asking investors to select from a predefined list, the researchers asked them to explain, in their own words, why they had hired their adviser. The responses were then analysed and grouped into categories using both human researchers and machine-learning techniques. Importantly, the categories were allowed to emerge from the data rather than being imposed in advance. What emerged was revealing. The emotional side of financial advice Among the strongest motivations were client discomfort, the need for specific financial tasks, behavioural coaching, recommendations from a trusted person, and the quality of the adviser-client relationship. Four of the five leading categories were emotional in nature. For Murphy, this is significant because financial advice is often presented as a primarily financial or technical service. Yet, many clients are seeking something more personal: reassurance, confidence, guidance, and someone they can trust to help them make decisions. Client discomfort was particularly prominent. Investors described feeling uncomfortable
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making financial decisions, lacking confidence in their own knowledge or simply not believing they could make the best decisions themselves. Specific financial needs, meanwhile, were more straightforward. Clients wanted help with retirement planning, annuities, investing, income management, tax and other technical matters. But behavioural coaching ranked highly too – despite investors rarely using that term. Don’t call it behavioural coaching One of the more interesting findings from the research was that clients frequently described the value of behavioural coaching without ever calling it “behavioural coaching”. Investors spoke about lacking the discipline to remain invested when markets were volatile. Others wanted a knowledgeable person to talk through their ideas with, or someone who could help them stay focused on their financial plan. Murphy says this highlights a potential problem for advisers: behavioural coaching is industry jargon. For professionals who work in the field, the term has a clear meaning. For clients, however, it may not mean anything at all. “Jargon pushes people away,” says Murphy, pointing to separate Morningstar research into the drivers of trust. The more expert someone becomes, the harder it can be to recognise which words and concepts are unfamiliar to others – what psychologists call the ‘curse of knowledge’. The lesson is simple: advisers should describe what they do in language that clients naturally understand, rather than relying on industry terminology.
“One of the most effective ways to communicate the value of advice is to put the client’s goals at the centre” Start with the client’s goals Murphy believes one of the most effective ways to communicate the value of advice is to put the client’s goals at the centre. “People become investors to reach their financial goals,” he says. Investing is difficult partly because it requires behaviours that don't always come naturally. People need to delay gratification, putting money aside today for a future benefit. At the same time, they have to commit resources to uncertain markets, accepting that returns come with risk. Goals provide the reason for doing both. For advisers, this means reframing the investment journey around what the client is trying to achieve, rather than focusing solely on products, portfolios or market performance.
Ryan Murphy
Instead of simply saying that an adviser provides retirement planning, tax management and wealth accumulation, the conversation can focus on helping clients achieve their financial goals, providing the education and guidance they need to stay on track, and helping them navigate important financial decisions along the way. The opportunity for advisers For Murphy, the research is ultimately an invitation for advisers to revisit how they communicate, from their websites and marketing material to emails, client conversations and financial plans. The starting point is to ask three questions: • How do we help clients deal with their discomfort around financial decisions? • What behavioural support do we provide? • And what specific financial needs do we help them solve? The answers may reveal that an advice business offers considerably more value than its current messaging suggests. Technology, including artificial intelligence, can even help advisers test their language. Murphy suggests giving AI a piece of communication and asking it to explain the content as if it were being presented to a 12-year-old. The purpose is not to speak to clients as children, but to use simplicity as a filter that strips away unnecessary jargon, acronyms and overly technical language. Ultimately, Murphy argues that the “soft” side of financial advice should not be dismissed as vague or unmeasurable. The ability to understand a client’s concerns, provide perspective, keep them focused on their goals, and help them make better decisions can be grounded in rigorous behavioural science. For advisers, the opportunity is to make that value more visible. The advice may already be there. The question is whether clients can see it.
OCTOBER 2026 // DFMs
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he couple wondering Executive Director, whether they MitonOptimal can finally retire. The business owner investing the proceeds of a lifetime’s work. The client who needs a calm conversation when the headlines turn ugly. These people have you: someone who knows their story, understands what matters most, and is there for them and their families. We believe advisers deserve that kind of relationship too. This is why MitonOptimal exists: to give independent financial advisers confidence and peace of mind in the investment work behind their advice; to know them, their client base and their business; and to be there to assist with the hard conversations. While we believe in supporting advisers, we do not believe a DFM should replace the adviser’s investment proposition, dilute the identity of the advice practice, or come between the adviser and their client. Our role is to strengthen what the adviser already does well. We bring the research, manager selection, strategic and tactical asset allocation, portfolio construction, implementation and ongoing investment oversight. The adviser brings a deep understanding of the client’s circumstances, objectives and behaviour. Together, those strengths create an advice proposition with real substance. At MitonOptimal, we pride ourselves on our independence. Being owner managed matters because it gives us genuine freedom of choice. We are not tied to a product house, a particular investment style or a narrow range of instruments. Our expertise extends across the broader investment universe,
By George Dell
Your clients have you. Who have you got? “Our service a practice’s philosophy, client and proposition. In both proposition brings base cases, the advice practice technology and keeps its identity and the relationship remains personal support client with the adviser. together to help What makes a DFM partnership work is what advisers streamline happens on an ordinary their practices” Tuesday when an adviser needs
allowing us to select and combine the most appropriate strategies and structures for each portfolio. Our team brings long-standing experience across South African and offshore markets, indexation, hedge funds and ETFs, all useful diversifiers when constructing robust portfolios. Our service proposition brings technology and personal support together to help advisers streamline their practices. Technology improves access to information, portfolio visibility, implementation and reporting, while our team remains available to answer questions and help resolve issues. It makes the investment journey simpler and more efficient for both the advice practice and its clients. The same thinking shapes how we work with advice businesses. Our Core Model Suite provides access to a disciplined investment process without imposing an asset minimum. Our Tailored portfolios allow us to build an
investment solution around
an answer, a clear explanation or help resolving an implementation issue. It is having access to people who understand the portfolio and accept responsibility for the decisions behind it. For more than 25 years, MitonOptimal has built adviser relationships in this way. Our Best Servicing Award at the 2025 Citywire South Africa DFM Awards mattered to us, but the real test is whether advisers feel supported, confident and better equipped for the next difficult client conversation. So perhaps the question is not simply, “Who manages the money?” It is: “Who helps you carry the responsibility?” Your clients have you. You have MitonOptimal.
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Delivering peace of mind for over 25 years 021 689 3579
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MitonOptimal South Africa (Pty) Ltd, registration no. 2005/032750/07, is an authorised Financial Services Provider (“FSP”) with license no. 28160.
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DFMs // OCTOBER 2026
Four ways DFMs can help advisers deliver real value
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inancial advisers have a wide range of discretionary fund managers (DFMs) to choose from. As advisers continue to refine their value proposition, increasing By Max Mojapelo Executive: Business compliance and Development Solutions regulatory demands at PPS Investments have made it less efficient for many to implement asset allocation decisions on behalf of their clients. A skilled DFM can help address this challenge by supporting advisers with appropriate investment solutions that align with each client’s needs and circumstances. Four factors can meaningfully differentiate one DFM from another and shape the value advisers deliver to clients:
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Ownership structure and independence of the DFM The ownership structure of a DFM, whether owned by another corporate entity or independent, will make a difference to the outcomes of a client’s financial plan. Many may describe themselves as independent
because they do not own an asset manager or an investment platform. However, the truest form of independence is where there is no structural separation, where the full benefit realisation ultimately flows to the same end client. In practical terms, this reduces the risk of conflict, whether the focus is on investment outcomes or profitability.
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Ensuring access to skilful asset managers The construction of portfolios, investment philosophy and process all serve their purpose and require levels of skill. There are DFMs that will talk about identifying skilful asset managers, although struggling to truly quantify what this means, resorting to qualitative rationale such as ‘research’ or it being ‘a bit of an art or science’. The nature of South Africa’s equity market, compared to US markets, is largely inefficient, rewarding less skilful asset managers as asset prices always go up after time. Unfortunately, this also allows them to hide behind time.
“Is this DFM my investment team or merely a service provider providing investment services at a price?”
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Delivering real investment returns For an adviser, value creation for the client’s portfolio is crucial in today’s economic environment. The question an adviser should ask is whether the DFM is focused on preserving the client’s value of money. If not, the client will be the poorer for it over time. The litmus test for advisers and their clients should be: • Are you actually preserving the purchasing value of my client’s money over time? If you are not doing that, I shouldn’t hire you as a DFM. • In addition, for each level of risk, are you able to provide a little bit more than CPI plus two, three or more percent? From our perspective, returns should first and foremost preserve the purchasing value of money over time, and above that, compensate the client for the level of risk being undertaken within the portfolio by not just generating profits but also long-term value. We define a skilful manager by being able to consistently deliver the generation of alpha, the axis return over a benchmark of 2% to about 3% over a cycle. This is a fundamental factor from a manager research point of view. Again, we try to sweat as much of the capital that our owners trust us with and try to generate not just profits for them but long-term value. Should this prove difficult, we will consider a passive offering or portable alpha offering taking the diversification ratio, information ratio and others into account to ensure a smooth return profile where we are solving with a particular client in mind. This can consist of a combination and varying levels of allocation, based on the liability pool, the risks or specialised needs such as Shariah compliance.
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Disclaimer: The information, opinions and any communication from PPS Investments Group, whether written, oral or implied are expressed in good faith and not intended as investment advice, neither does it constitute an offer or solicitation in any manner. Furthermore, all information provided is of a general nature with no regard to the specific investment objectives, financial situation or particular needs of any person. It is recommended that investors first obtain appropriate legal, tax, investment or
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Image: Getty Images
Service differentiation counts Financial advisers should evaluate DFMs on their service differentiation by asking: Is this DFM my investment team or merely a service provider providing investment services at a price? An investment team develops highly specialised, tailored solutions by bringing the value chain closer or into the adviser’s practice, and contribute to business growth. There’s a huge difference between this and a service provider.
OCTOBER 2026 // DFMs
Building investment solutions around adviser needs
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or advisers, the potential benefit of a Discretionary Fund Manager (DFM) extends beyond investment selection. By taking on elements of investment complexity, governance and portfolio construction, a specialist partner can give advisers more time to focus on business strategy, financial planning and client conversations. These are all areas in which PortfolioMetrix has considerable experience, but the company is reluctant to be defined simply as a DFM. “PortfolioMetrix was established as an asset manager at a time when traditional assetmanagement models were being challenged by a changing investment environment,” says Edden Kift, Head of Partner Group, SA, at PortfolioMetrix. “Its emergence in the DFM market reflected a growing recognition that advisers needed more than an expanding range of investment products.” As investment markets became more complex and specialised, the need was increasingly for solutions that could help advisers manage that complexity while allowing them to focus on financial planning and their relationships with clients. Today, PortfolioMetrix works with advisers in a variety of ways. For some firms, it acts as an integrated strategic investment partner, combining portfolio management, governance, technology and implementation. Others use the business to build and manage their centralised investment propositions, while some simply select individual PortfolioMetrix unit trust funds based on their investment merits. The common thread is not the structure of the relationship, but the problem it is designed to solve. Combining investment depth with adviser insight PortfolioMetrix argues that its key differentiator is the combination of genuine assetmanagement capability with a business built around the needs of advice firms. There are established asset managers with significant investment expertise and DFMs with a strong understanding of advisers, but the combination of the two is less common. The starting point, therefore, is the business need, says Kift. “We then design the portfolios and determine which exposures are required and how best to implement them,” he says. “Depending on the mandate, this can involve specialist active managers, passive or systematic exposures, direct securities or a combination. The approach is deliberately engineered rather than simply being conventional multi-management.” Outsourcing is not an all-or-nothing decision One misconception PortfolioMetrix encounters is that engaging a DFM necessarily means handing over the entire investment function. Its model is deliberately more flexible. “A comprehensive discretionary relationship may
make sense for one advice firm, while another may need help with governance, a specialist investment capability, technology, a custom range or even a single fund,” says Kift. “Rather than starting with the question of what should be outsourced, PortfolioMetrix believes advisers should start by identifying the problem they are trying to solve.” ‘If we can improve an outcome, we begin there,’ is the philosophy. If a broader relationship develops from that starting point, that is positive, but a narrower relationship can be equally legitimate. Building capabilities rather than a collection of products PortfolioMetrix now manages more than R130bn across South Africa, the UK and Europe. Rather than thinking primarily in terms of a product range, the business describes its offering as a series of investment capabilities that can be applied to different mandates. These capabilities can be used across multiasset or single-asset mandates, through model portfolios, bespoke mandates, onshore and offshore collective investment schemes and EU-domiciled UCITS funds. The same investment capability can therefore serve different purposes. An adviser may appoint PortfolioMetrix to manage an entire investment proposition, while another may select a specific fund or mandate to complement an existing range. ‘Products are ingredients,’ is the underlying philosophy. What advisers really need from a DFM “We are careful not to suggest that every adviser needs a DFM,” says Kift. “Instead, we argue that every adviser needs a coherent, governed and scalable investment proposition. Access to investments is rarely the main challenge. The more difficult questions are which investments belong in a portfolio, which risks are worth taking, how different exposures should be implemented and how the various components work together.” For an advice firm, attempting to replicate the infrastructure required to answer these questions can be costly and time-consuming. A specialist partner can potentially absorb some of this. Technology that supports advice Technology is another part of the proposition. While advisers have access to a growing number of sophisticated technology platforms, PortfolioMetrix believes its advantage lies in developing tools around the investment and advice process rather than treating software as a standalone solution. WealthExplorer™ and PMX Edge are designed to help advisers understand, compare and communicate portfolios, align investment risk with the advice process and apply a
Edden Kift
consistent investment framework across their firms and client relationships. The objective is not to replace adviser judgement or create another layer of technology to manage, but to support better conversations and more scalable advice. Fee pressure raises the bar The DFM market is also facing increasing pressure on fees. Kift believes this makes differentiation more important rather than less. A specialist model needs to combine personal engagement with institutionalquality investment capability, technology and operating discipline. Trying to offer highly customised, high-touch service while competing aggressively on headline fees can be difficult to sustain. For advisers, the more important question is therefore whether a DFM partner delivers value beyond the fee: improving investment outcomes, reducing complexity, strengthening governance and freeing up adviser capacity. Recognition across markets PortfolioMetrix’s awards provide recognition across both sides of its proposition. In South Africa, the business has received investmentperformance recognition through awards including the Raging Bull, News24 FundHub and Profile Unit Trust Awards. In the UK, it has been recognised for DFM and model portfolio services, as well as areas including client engagement, technology, risk profiling, communications and reporting. Raising standards in the DFM market As regulation of the DFM sector becomes tighter, Kift says higher standards, greater transparency and more meaningful comparability should ultimately benefit advisers and clients. “Historically, the barriers to entry into the DFM market have been relatively low, while governance and reporting around model portfolios have not necessarily enjoyed the same degree of standardisation as the collective investment scheme environment,” he explains. A discretionary mandate carries significant responsibility. Advisers and clients should expect genuine investment capability, robust governance, appropriate conflict management, strong operational infrastructure and a defensible way of demonstrating outcomes.
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INFLATION-LINKED BONDS (ILBs) // OCTOBER 2026
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oneyMarketing spoke to Jaco-Chris Koorts, Portfolio Manager at Sanlam Investments Multi-Manager, about inflation-linked bonds (ILBs) and why they make sense in a well-rounded portfolio today. With inflation remaining an important consideration for long-term investors, what role do inflation-linked bonds play in a diversified portfolio, and where do you see their greatest value for investors today? Unlike nominal bonds, inflation-linked bonds (ILBs) carry an explicit inflation protection in the sense that their cashflows are adjusted upwards or downwards in line with the headline Consumer Price Inflation (CPI) index.
As such, whereas nominal bonds carry the risk of the buying power of their cashflows being eroded by inflation being higher than expected, there is no such risk for ILBs. To answer the question of whether or not there is value in ILBs for investors today, one has to understand the concept of breakeven inflation. The break-even inflation rate is the difference between the Nominal SA Government Bond Yield and the ILB Real Yield. At the time of writing, the Nominal SA Government Bond Yield was around 8.9% and the ILB Real Yield was around 4.2%, which means that break-even inflation was around 4.7%. ILBs will outperform nominal bonds if the actual inflation rate is above this rate. The question therefore becomes a subjective call on the likely future inflation rates. Although South Africa’s headline inflation rate peaked at 5% in June, it has come down to 4.3% in July, and making a definite call on the future inflation rate is very difficult in the current macro-economic environment.
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How should advisers think about the tradeoff between the inflation protection offered by inflation-linked bonds and the potentially higher nominal yields available from conventional government bonds? Despite the defensive characteristics of ILBs, they are not risk free. This is mainly because they have a high modified duration and thus bring high volatility with them into a portfolio. Because many benchmark government ILBs have long durations (2038, 2046, and 2050) and relatively small real coupon rates, their modified duration is high. This means that if yields on these securities push up, ILBs tend to experience sharp capital drawdowns, and vice versa.
South Africa’s inflation outlook has changed significantly in recent years. How do changing inflation expectations affect the attractiveness and pricing of inflation-linked bonds? As mentioned previously, whether or not ILBs offer attractive value depends on the breakeven inflation calculation. With break-even inflation standing at around 4.7% in the current yield environment, we see this is much higher than the newly-adopted 3% inflation target of the South African Reserve Bank (SARB). Given the SARB’s historic credibility to keep inflation under control, coupled with the fact that ILBs will outperform if actual inflation is higher than this rate, it looks at first glance as if the easy money in ILBs has been made. However, in the context of the current macro-economic environment where high oil prices are pushing inflation higher, it is not impossible that inflation uncertainty elevates the relative attractiveness of ILBs as an investment option.
What are the key risks or misconceptions advisers should be aware of when considering inflationlinked bonds for clients, particularly in terms of real yields, duration and capital volatility? ILBs are not risk-free and carry a high modified duration and therefore high volatility. Another factor to keep in mind is that ILB adjustments use historical CPI data, which is typically lagged by approximately three months in practice. Therefore, during sudden, sharp spikes in inflation, the inflation protection does not kick in immediately. An adviser thinking about adding ILBs to a client’s portfolio must therefore prepare the client for this short-term volatility. Although an ILB guarantees purchasing power at maturity, its price path along the way fluctuates based on prevailing real interest rate movements.
“An adviser thinking about adding ILBs to a client’s portfolio must prepare the client for this short-term volatility” For retirement investors who need to protect their future purchasing power, how can inflation-linked bonds complement other income-generating and growth assets within a retirement portfolio? For retirees navigating living annuity drawdown strategies, the main threat is sequencing risk compounded by inflation risk. Sequencing risk is the risk of market downturns exacerbating the eroding effect of income withdrawals. Inflation risk is the risk of inflation eroding the buying power of a retiree’s income. Real assets, such as equities and property, are expected to provide inflation-beating returns over time. However, the returns come with volatility. The most effective way of reducing volatility is by adding diversification to a portfolio. However, it has been shown that during times of extreme market stress, the correlations between nominal bonds, equities, and property trends towards one, i.e. volatility reduces when you need it most. On the other hand, ILBs have historically provided structural diversification during these times. Looking ahead, what do you think advisers should be watching in the inflation-linked bond market, and under what conditions could these instruments become particularly attractive to investors? It is extremely hard to time any type of market, and the market for ILBs is no different. This is made even more difficult by the fact that ILBs are a specialist asset class, so in general it is best to leave this to the professionals. The most practical scenario to look at is likely the emergence of stagflationary (high inflation, low growth) signals. If global supplychain disruptions or energy shocks push local inflation higher while economic growth slows, equities and nominal bonds may face pressure, positioning ILBs as a potential safe haven.
Image: Getty Images
Inflation-linked bonds and why they matter
OCTOBER 2026 // INFLATION-LINKED BONDS (ILBs)
Protecting purchasing power in an uncertain world
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ith inflation remaining Senior Manager an important Research Analyst at consideration for Alexforbes long-term investors, inflation-linked bonds (ILBs) can play a valuable role in diversified portfolios. Their primary appeal is their ability to help preserve the real value of investors’ capital and income when inflation rises more than expected. We are operating in an environment characterised by heightened uncertainty and volatility, driven by factors such as geopolitical tensions and supply-side shocks. Recent geopolitical tensions, including conflict in the Middle East, have contributed to higher oil prices and renewed inflationary pressures. In this environment, ILBs can provide diversification when inflation outcomes differ materially from market expectations. Their greatest value is therefore not simply during periods of high inflation, but when realised inflation exceeds what is already reflected in market pricing. This is where ILBs can provide protection that conventional nominal bonds cannot.
By Lindiwe Billie
Weighing inflation protection against nominal yields For advisers, the choice between nominal and inflation-linked bonds requires more than simply comparing headline yields. The relative attractiveness of the two depends largely on the relationship between expected inflation, real yields and the inflation already priced into the market. A key measure is the breakeven inflation rate, broadly the difference between nominal and inflation-linked yields at the same maturity. It represents the market-implied inflation rate at which expected returns from the two instruments are broadly equivalent, although it can also reflect factors such as liquidity and inflation risk premia. If inflation exceeds the breakeven rate, ILBs tend to outperform nominal bonds, all else being equal. If inflation remains below the breakeven rate, nominal bonds are likely to deliver better relative returns. Nominal bonds typically offer higher nominal yields, but they do not provide direct inflation protection. During an unexpected inflation shock, they can therefore come under pressure, while ILBs can offer greater protection. In a lower and more stable inflation environment, however, ILBs may be less attractive relative to nominal bonds, particularly where breakeven inflation is already high. “For advisers, the practical question is therefore not which instrument offers the higher headline yield, but whether the inflation priced into the market is higher or lower than the inflation they expect the client to actually face,” says Lindiwe Billie, Senior Manager Research Analyst at Alexforbes.
A changing inflation landscape South Africa’s inflation-targeting framework changed materially in 2025, when the country moved from the previous 3–6% inflation target range, with the SARB focused on a 4.5% midpoint, to a 3%-point target with a tolerance band of plus or minus one percentage point. A lower inflation anchor has implications for both inflation expectations and the relative pricing of nominal and inflation-linked bonds. As inflation expectations decline, nominal bonds can benefit from lower required inflation compensation, while the expected CPI-linked accrual on ILB capital becomes lower. This does not automatically make ILBs unattractive. Instead, it changes the relative-value assessment. Investors need to consider real yields alongside breakeven inflation and their own expectations for future inflation. An ILB can remain attractive where real yields are compelling or where the market-implied inflation rate is low relative to an investor’s assessment of future inflation. Advisers should therefore monitor breakeven inflation rates and compare these with their own expectations when assessing the relative value of nominal and inflation-linked bonds. Understanding the risks One of the biggest misconceptions about ILBs is that inflation protection makes them inherently low risk. While they provide protection against inflation over the long term, they remain exposed to changes in real yields. If real yields rise, ILB prices can decline. Investors who sell before maturity may therefore realise capital losses despite benefiting from inflation accrual over the holding period. “The inflation linkage provides an important degree of protection against changes in the price level, but investors remain exposed to mark-to-market volatility,” says Billie. This distinction is particularly important for investors who may need to sell before maturity. Duration is another consideration. South Africa’s inflation-linked bond market is concentrated in longer-dated securities, resulting in a relatively high-duration profile. Relatively small movements in real yields can consequently result in significant price volatility. Advisers should therefore be careful not to view ILBs as a purely defensive allocation without considering their sensitivity to movements in real interest rates. Liquidity risk is also relevant. The ILB market is considerably less liquid than the nominal government bond market, with wider bidoffer spreads and lower trading volumes. The investor base is relatively concentrated, with liability-driven investors such as pension funds
and insurers typically buying and holding these securities. While this creates stable structural demand, it can reduce secondary-market activity and make larger trades more difficult to execute efficiently. A role in retirement portfolios For retirement investors, protecting future purchasing power is particularly important. Retirement portfolios typically combine equities, property, cash, nominal bonds and other growth and income-generating assets, each serving a different purpose. ILBs can complement these assets by providing protection against inflation and helping preserve the real purchasing power of retirement savings. They may be particularly relevant for investors whose future liabilities are linked to the cost of living because they provide a closer relationship between portfolio returns and changes in the price level. They can also provide diversification during periods of unexpected inflation, when conventional nominal bonds and some other asset classes may come under pressure. Their role should therefore not be viewed simply as an income allocation. ILBs can form part of a broader real-return and liability-matching framework within a retirement portfolio. What advisers should watch Looking ahead, advisers should monitor geopolitical developments and inflation dynamics, particularly while global conflicts remain unresolved and markets continue to price potential inflation shocks and secondround effects. The interaction between real yields, breakeven inflation and changing inflation expectations will remain central to assessing the relative attractiveness of ILBs. Liquidity conditions are also important given the market’s relatively small size, concentrated investor base and lower trading volumes compared with nominal bonds. ILBs become particularly attractive when real yields are compelling and marketimplied inflation is low relative to an investor’s expectations for future inflation. They can also provide significant diversification value when inflation uncertainty and volatility rise. Ultimately, the case for inflation-linked bonds rests on their ability to protect investors from an outcome that conventional bonds cannot directly hedge: inflation turning out to be higher than expected. For advisers, understanding that distinction – and balancing inflation protection against realyield, duration and liquidity risks – is key to determining where ILBs may fit within a diversified portfolio.
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UNIT TRUSTS // OCTOBER 2026
Nobody ever asks you to justify simplicity – that does not make it free
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By Seeiso Matlanyane
Head of Equities at Prescient Investment Management
omplexity often unfairly and quite selectively carries the burden of proof. Think about this: nobody demands an explanation of how their iPhone works before agreeing to use one, and thankfully so because had we held to that standard we would all still be talking into
tin cups joined by string. In asset management, the rule runs the other way. Introduce an instrument that takes a paragraph to explain, and you will be asked, quite properly, to justify it. Leave a client’s money in a structure that is simple, familiar and quietly inferior, and nobody asks anything at all. The industry has made it comfortable to avoid scrutiny by doing what every other manager is doing, however inefficient it happens to be. There is a reason that asymmetry persists, and it is worth pointing out. Simplicity is a hedge that is often not in the client’s favour. A manager who underperforms conventionally is judged unlucky, while one who underperforms unconventionally is judged reckless – the professional consequences of those two verdicts are vastly dissimilar. The incentive to stay with the crowd is understandable for the fainthearted manager; however, it flies directly in the face of the client who did not ask for a simple portfolio but instead asked for an outcome. To avoid being misconstrued, I truly think simplicity is a genuine virtue. It is easier to explain, administer and audit, and there is real value in a portfolio whose moving parts you can count. All I wish to point out is that it is not free.
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When a manager declines a tool that would have reduced risk or cost for the same objective, the manager’s decision is paid for by the asset owners in foregone return, quietly compounded over years, and it sadly never appears on any report as a cost – omissions never do. If that sounds like an argument for pushing at the edges of what is permitted, it is very nearly the opposite. The regulation has been on this side of the debate for years. Board Notice 90 allows instruments to be “included for purposes of efficient portfolio management with the aim of reducing risk, reducing cost or generating capital or income for a portfolio with an acceptable level of risk”. It then draws clear and firm boundaries around this; these instruments may not gear the portfolio and must always be fully backed by assets the fund already holds. European UCITS regulation uses almost identical language. Two regulators in two jurisdictions reached the same conclusion, that complexity in the service of efficiency is legitimate, and here are its limits.
“Investment managers are not bystanders to their clients’ outcomes” The question was therefore never whether these tools are permissible. It is why, 12 years after permission was expressly granted, so much of the industry still declines to use it. I understand that permission does not impose an obligation and would not pretend otherwise. I do believe professional standards impose a responsibility that the law does not, much as they distinguish a bystander from a lifeguard. Someone who walks past a drowning swimmer has broken no law, whereas a trained lifeguard has – having accepted the duty on taking the
job and being handed the equipment for it. Investment managers are not bystanders to their clients’ outcomes. We hold a fiduciary duty, we are handed the tools, and the rulebook tells us plainly what they may be used for. To state this plainly to avoid incorrect conclusions, I firmly believe that complexity mixed with incompetence is a dangerous risk and avoiding it is prudent. However, complexity that is understood and delivers better outcomes but is declined anyway because explaining it is inconvenient, is simply a charge levied on the client for the manager’s comfort and convenience. None of which argues for cleverness for its own sake. An instrument nobody in the business can price or explain has no place in a client portfolio, whatever its theoretical merits. The test is never whether something is complicated, but whether, net of every cost and risk it carries, the client ends up better off. Sometimes the honest answer is that it does not. Where it does, and the same exposure comes at lower cost or the same return at lower risk, declining it needs a better reason than being difficult to explain. Which turns the usual question around: not “why are you using this?”, but “why aren’t you?”. After all, if our job is not to solve complex problems on behalf of our clients, what exactly is it? Disclaimer: Prescient Investment Management (Pty) Ltd is an authorised Financial Services Provider (FSP 612). The information in this document is provided for general information purposes only and is not intended to constitute financial advice (as defined in FAIS), investment advice, a recommendation, or an invitation/offer to issue, sell, subscribe for, or purchase any financial product. Any views or opinions expressed are those of the author (unless otherwise stated) and may change without notice. Past performance (if referenced) is not necessarily indicative of future performance, and no guarantee is given as to future returns. While reasonable care has been taken in preparing this document, no representation or warranty (express or implied) is made as to the accuracy, completeness, or fairness of the information, and Prescient Investment Management (Pty) Ltd and its affiliates disclaim liability for any loss, damage, cost, or expense (whether direct, indirect, or consequential) arising from reliance on this information. This document may contain proprietary material and is protected by copyright law. For more information visit www.prescient.co.za
OCTOBER 2026 // UNIT TRUSTS
Growth or stability? Finding the right balance
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nvestors have never had more access Portfolio Manager, 1nvest to information, investment choices and market commentary. Yet, despite the endless flow of insights and opinions, one question continues to matter most: is my portfolio positioned appropriately for my goals? In periods of uncertainty, successful investing is often less about finding the next winning asset and more about building a portfolio that can withstand different market environments. Markets will rise and fall, headlines will come and go, but the right blend of growth and defensive assets can help investors stay invested through changing conditions. That is why asset allocation remains one of the most important decisions in investing. Balanced funds are designed to simplify this decision. By combining equities, bonds, property and cash within a single portfolio, they provide investors with a structured approach to managing risk while pursuing long-term financial goals. At 1nvest, the conversation is intentionally simple. These two balanced unit trust funds, the 1nvest High Equity Balanced STANLIB Fund and the 1nvest Low Equity Balanced STANLIB Fund, are built on the same low-cost, index-tracking investment philosophy. The difference comes down to a single question: how much equity exposure is appropriate for the investor?
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By Ahmed Motara
Building resilient portfolios in an uncertain world Today’s investment landscape is shaped by multiple forces. Geopolitical tensions, changing interest rate cycles, rapid technological developments, and ongoing market volatility continue to create uncertainty for investors. At the same time, South African investors have greater access to global markets than ever before. While this creates valuable opportunities for diversification, it also introduces greater complexity. Investors must decide how much exposure to allocate to local and offshore markets, growth assets and defensive assets, and how much risk they are willing to take in pursuit of their objectives. Research has consistently shown that longterm investment outcomes are influenced significantly by asset allocation decisions. While short-term market movements often attract attention, the strategic mix between equities, bonds, property and cash can have a meaningful impact on how portfolios behave over time. The objective is not to predict exactly what markets will do next. It is to build portfolios that are positioned to navigate a range of possible outcomes. One philosophy, two investment journeys Many investors assume that selecting a balanced fund means choosing between
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different investment approaches. Within the 1nvest Balanced Unit Trust Fund range, that is not the case. Both the High Equity and Low Equity Balanced Funds are built using diversified index-tracking building blocks. Both provide exposure across multiple asset classes and regions. Both follow a transparent, rulesbased investment process. Both are rebalanced semi-annually to maintain their strategic asset allocation targets while helping to minimise unnecessary trading costs. The difference lies in how much equity risk investors choose to take. For investors seeking long-term growth The 1nvest High Equity Balanced STANLIB Fund is designed for investors who prioritise long-term capital growth and are comfortable accepting market fluctuations along the way. By allocating a greater portion of the portfolio to equities, the fund provides broad exposure to South African and global listed companies across multiple sectors and regions. This exposure gives investors access to long-term growth opportunities while reducing reliance on any single company, sector or market.
“Research has consistently shown that long-term investment outcomes are influenced significantly by asset allocation decisions” The portfolio also includes allocations to bonds, listed property and cash, helping provide balance and resilience during periods of market stress. For investors with long investment horizons, such as those saving for retirement or other future goals, higher equity exposure has historically been associated with greater longterm growth potential. However, investors should expect periods of volatility and be prepared to remain invested through market cycles. For investors prioritising stability The 1nvest Low Equity Balanced STANLIB Fund follows the same investment philosophy but places greater emphasis on reducing risk and limiting portfolio volatility. The fund lowers equity exposure and increases allocations to more defensive assets such as bonds, listed property and money market instruments. Investors continue to benefit from broad market exposure across local and global markets, but with a portfolio structure designed to deliver a smoother investment journey. This approach can be particularly relevant for investors approaching retirement, those with shorter investment horizons, or individuals who
place greater value on stability than maximising growth potential. While growth remains an important component of the portfolio, the overall asset mix is designed to provide greater protection during difficult market conditions and potentially more moderate drawdowns when markets are under pressure. A practical solution for changing investor needs One of the advantages of the 1nvest Balanced Unit Trust Fund range is consistency. Investor needs rarely remain static. A younger investor may prioritise growth, while the same investor later places greater importance on preserving accumulated wealth. As personal circumstances evolve, portfolio risk requirements often change too. The 1nvest Balanced Funds allow investors to move along the risk spectrum without needing to adopt an entirely different investment philosophy. Whether choosing higher or lower equity exposure, investors remain within the same low-cost, index-tracking, rulesbased framework. This can make portfolio conversations simpler and more transparent. For investors, it provides a clear link between risk tolerance, investment objectives and portfolio construction. Keeping the focus on what matters In an industry often driven by forecasts, predictions and short-term market noise, successful investing continues to be built on a few enduring principles. The 1nvest High Equity and Low Equity Balanced STANLIB Funds are built around these principles. Both provide transparent access to diversified markets through a low-cost, indextracking approach. The key difference is the level of equity exposure an investor selects. Whether investors prioritise long-term growth or a smoother investment journey, the 1nvest Balanced Unit Trust Fund range provides a practical way to align portfolio risk with investment goals while remaining invested through changing market conditions. Disclaimer: 1NVEST Fund Managers (Pty) Ltd is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (Licence No. 49955). STANLIB Collective Investments (RF) (Pty) Ltd is a registered Manager in terms of the Collective Investment Schemes Control Act, No. 45 of 2002. Please refer to the MDD on www.1nvest.co.za for full details of the funds.
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UNIT TRUSTS // OCTOBER 2026
Why unit trusts are the building blocks for long-term investing With unit trusts remaining one of the most accessible ways for investors to gain diversified exposure to different asset classes, MoneyMarketing spoke to two key players in unit trust investing, PSG Wealth and Allan Gray, to find out more about what role they believe these investment vehicles should play in an investor’s portfolio today. Why are unit trusts so important to investors? Adriaan Pask, CIO at PSG Wealth: For most investors, unit trusts are the most sensible foundation of a client’s savings. They are easy to use and can span multiple risk appetites, regions and investment styles. They can also be utilised across multiple compulsory and non-compulsory products. Information about unit trusts is freely available and they are regulated, offering investors peace of mind. Daniel van Andel, Head of Platform and Adviser Proposition at Allan Gray: Unit trusts are the backbone of South Africa’s retail investment industry for good reason. They are well regulated, easily portable, operationally and tax efficient, and cost-effective at sufficient scale. Under the current tax and regulatory framework, these advantages remain difficult to replicate. South African investors face a wide and growing choice of unit trusts. How should advisers assess and compare funds beyond simply looking at historical performance? Pask: Choosing funds based solely on past returns is not advisable. It’s important to understand the nature of the fund, the skills of those managing it, the assets it may hold, the investment process and the return profile it can exhibit given the underlying risk and return dynamics. Without a thorough understanding of these factors, it is impossible for investors to make an informed decision. Van Andel: While past performance is no guarantee of future returns, a strong longterm absolute and risk-adjusted track record remains an important marker, provided there is reason to believe the manager is well positioned to continue delivering. Advisers who remain closely involved in fund selection should look beyond the return itself to understand how it was generated: whether the investment philosophy and process are sound and repeatable, whether the manager has remained disciplined and true to their approach through different market environments, and whether there is sufficient depth and continuity in the investment team. The rigour of the research, decisionmaking and risk-management processes is equally important.
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For advisers who prefer to outsource some or all of this responsibility, there is now a broad range of multi-manager and DFM solutions in the market offering dedicated manager research, fund selection and ongoing portfolio oversight. How have changing interest rates, inflation and market volatility affected investor demand for different types of unit trusts, and which categories are currently attracting the most interest? Pask: According to ASISA, South African Multi Asset portfolios remain firm investor favourites. These funds are typically well diversified across geographies and asset classes, making them generally less volatile than equity markets. South African Multi Asset portfolios attracted R138bn of the R227bn in net inflows for the 12 months to the end of June 2026. In the second quarter alone, these portfolios attracted R39bn in net inflows. Van Andel: Recent years have reminded investors how quickly macroeconomic conditions can change. Periods of elevated inflation, shifting interest-rate expectations and heightened geopolitical uncertainty have increased the focus on risk and portfolio resilience. We continue to see demand for income and interest-bearing portfolios, supported by the attractive and relatively consistent returns on offer and their perception as lower-risk investments. While often justified, it is worth remembering that volatility and risk are not synonymous.
“They are easy to use and can span multiple risk appetites, regions and investment styles”
Risks such as credit and liquidity, for example, may not reveal themselves through day-today price movements in the same way. Financial advisers are also incorporating offshore investing more systematically into their advice processes. As a result, demand for offshore funds has become more consistent, although there are still signs of short-term behaviour influenced by recent market performance and movements in the exchange rate. We have also seen renewed interest in multi-asset funds, particularly balanced funds. Stronger local market returns have likely contributed, but the trend is encouraging for long-term investors. Skilled multi-asset managers have the flexibility to exploit opportunities across asset classes, geographies and individual securities as valuations change. Diversification is often described as the only free lunch in investing, and multi-asset funds remain a simple and effective way for investors to access a diversified portfolio of local and offshore assets.
Cost remains an important consideration when selecting an investment. How should advisers balance fees against factors such as investment expertise, active management, risk management and long-term performance? Pask: Our philosophy is to look at returns, risk and fees in a holistic way, and we seek to build client solutions that are sympathetic to all three factors. Low cost is good, but if you find managers that generate outperformance after costs while reducing risks, it would be illogical not to place a preference there. The balance is always a function of the implicit trade-offs in the prevailing market.
Image: Getty Images
Van Andel: The more commoditised a product becomes, the greater the focus on fees. We have seen this play out in overseas markets, where intense competition among passive managers has driven fees towards zero as index exposure has become increasingly commoditised. Active management, by definition, should be different. If an active manager consistently delivers a portfolio that looks much like the index, investors may be better served by a lower-cost index alternative. Where a manager has the capability to outperform, however, the more relevant measure is performance after fees rather than the fee in isolation. Fees should still represent value for money, be fair, and align manager and client interests, while allowing managers to continue investing in the people, research and processes required to deliver long-term performance.
Daniel van Andel
What are some of the common misconceptions investors have about unit trusts, and what role can advisers play in helping clients understand the risks, time horizons and expected outcomes associated with different funds? Pask: In general, unit trusts as products are well understood by investors. The industry does quite a lot to engage with clients and keep them informed, so I would not say that we see common misconceptions on our side. That said, advisers should still play a dominant role in making sure clients use the most suitable unit trusts for their specific circumstances. There should be clear alignment between client needs, risk appetite and investment horizon versus that of the fund. Van Andel: One common misconception is that all unit trusts carry similar levels of risk. In reality, there can be significant differences between equity, balanced, stable, income and money market funds, each designed for different investment objectives and time horizons. Another is that past performance is a reliable indicator of future success. Investors are often drawn to recent winners or discouraged by periods of underperformance. Yet, many successful long-term strategies will inevitably look uncomfortable at times, precisely because they invest differently from prevailing market trends. Some investors also hold numerous unit trusts in the belief that more funds necessarily mean greater diversification. The appropriate number depends on the nature and mandates of the funds held, but beyond a point, adding more funds is unlikely to meaningfully improve diversification or expected returns. It can instead create unnecessary complexity and overlapping exposures, and result in investors paying for active management while receiving something that looks like the market. Advisers play a critical role in setting realistic expectations: helping investors understand the likely range of outcomes, matching funds
Adriaan Pask
to appropriate objectives and time horizons, and reinforcing the importance of remaining invested through market cycles. Selecting the fund is often the easier part. The harder – and arguably more valuable – role is coaching investor behaviour and helping clients stay the course through inevitable periods of underperformance. Looking ahead, what trends do you expect to shape the unit trust industry, and where do you see the most interesting opportunities for advisers and their clients? Pask: We expect growth in the multi-asset space to continue. ETFs and hedge funds are growing off a low base, and we also see a wider set of offshore funds entering the market. Van Andel: We are living through a period of particularly rapid technological change. Innovation has the potential to reshape how clients invest, enabling greater access, efficiency and personalisation. The jury is still out, however, on whether greater personalisation will consistently produce better client outcomes than the relatively standardised but effective unit trust solutions available today. Looking at the underlying investments, there are signs of private markets moving into the mainstream as providers and investors seek to broaden the opportunity set. Private markets offer new possibilities, but also introduce different considerations, particularly around liquidity, valuation and transparency. It will be interesting to see how these assets are packaged within or alongside publicmarket investments, where frequent pricing, liquidity and ready access to trading have long underpinned the system. Lastly, in a world where information and processing capacity abound, and investors increasingly expect instant answers, professional guidance may become more important rather than less.
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INVESTING // OCTOBER 2026
Share portfolios to strengthen your advice process
Which clients should invest in a share portfolio? Share portfolios are most relevant for clients who have the experience, financial capacity and long-term outlook required to benefit from direct exposure to listed markets. Highnet-worth and sophisticated clients are often well-positioned to incorporate share portfolios into their overall wealth strategy. These clients typically have substantial assets, allowing them to diversify appropriately while maintaining exposure to specific investment opportunities. A share portfolio can also be suitable for clients with a genuinely long investment horizon. Long-term investors are generally better placed to navigate short-term market volatility while remaining focused on achieving their broader financial goals. Another scenario in which share portfolios may be particularly valuable is managing a client’s concentrated positions. In these cases, a tailored portfolio solution can help manage concentration risk while preserving exposure to potential growth opportunities. A share portfolio could also be a consideration for clients seeking growth aspirations with downside protection through appropriate portfolio construction and investment management. However, share portfolios are not suitable for every client. Share portfolios are generally less appropriate for investors who are chasing short-term performance, have relatively small portfolios, or do not fully understand investment risk. These clients may benefit more from other investment solutions that better align with their objectives, risk tolerance and investment knowledge.
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Your role as adviser While Momentum Securities provides specialist share portfolio solutions, the financial adviser remains central to the client relationship and advice process. We believe in the value of holistic financial advice. This means guiding clients based on their overall financial circumstances, including tax considerations, liquidity requirements and risk profile. A share portfolio should form part of a broader financial plan rather than being viewed in isolation.
“The key is understanding which clients are likely to benefit from a share portfolio” Momentum Securities works alongside advisers to complement this process. The portfolio management team provides specialist investment expertise while advisers continue to play a critical role in understanding client needs and ensuring investment decisions remain aligned with long-term objectives. The relationship is collaborative. Momentum Securities manages the client relationship and investment process together with the adviser, helping ensure clients receive both professional portfolio management and comprehensive financial advice. What we offer Momentum Securities provides access to a broad range of listed market solutions and portfolio management capabilities. Clients
can invest in listed shares, exchangetraded funds (ETFs), derivatives, structured products and bonds. Portfolio management options include bespoke solutions, discretionary managed portfolios, advisory portfolios and self-managed portfolios. Additional service capabilities include asset administration, tax-free savings accounts, securitiesbased lending, custody and settlement services, and share portfolio management. For clients seeking global diversification, Momentum Securities’ relationship with Swissquote provides access to offshore investment platforms through a local portfolio manager relationship. Solutions include individual offshore accounts, asset swaps and tax wrapper structures. How clients can access share portfolios Share portfolios can be accessed directly through Momentum Securities, including execution-only, advisory and managed solutions, as well as via tax-free savings accounts. They can also be incorporated as a personal share portfolio component on investment platforms like Momentum Wealth and Momentum Wealth International. Advisers may further consider a coresatellite approach, where broader wealth management solutions remain focused on the client’s investment objectives while local and offshore share portfolios provide targeted exposure to listed markets. Ultimately, successful implementation begins with identifying the right client and their respective investment needs. By combining holistic financial advice with Momentum Securities’ specialist investment capabilities, advisers can help clients access tailored share portfolio solutions that support their long-term goals. For more information on Momentum Securities, visit our website at momentumsecurities.co.za. This article does not constitute financial advice. Please consult one of our qualified portfolio managers before investing in any product. Momentum Securities (Pty) Limited is an authorised financial services and credit provider. Registration number: 1974/000041/07 / A member of the JSE Ltd / FSP license number 29547 / NCR CP 2518.
Image: Getty Images
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s clients’ financial needs become more sophisticated, many are looking beyond traditional investment solutions for greater flexibility, By Martin Riekert control, and access CEO of Momentum to listed markets. Securities Share portfolios can play an important role in helping clients meet specific investment objectives, but they are not suitable for everyone. For financial advisers, the key is understanding which clients are likely to benefit from a share portfolio and how to incorporate these solutions into a broader advice process.
OCTOBER 2026 // INVESTING
Young investors are in unchartered financial territory
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oney management has never been By Adriaan Pask more generationally CIO, PSG Wealth divided than it is today, with access to markets, information, and investment products expanding at an unprecedented pace. While previous generations typically relied on a narrower set of asset classes that included listed equities, bonds, and property, younger investors today are entering a financial ecosystem defined by choice, speed and complexity.
Image: Getty Images
Greater access and choice Investment markets are more accessible than ever before, and younger clients now have exposure to instruments and strategies that were previously unavailable, or that were only accessible to institutions and high-net-worth investors. The range of investment options has also expanded meaningfully. Alongside traditional asset classes, investors now have access to cryptocurrencies, initial public offering (IPO) participation platforms, various types of exchange-traded funds (ETFs) and, increasingly, private market investments. These developments have broadened the investable universe, and with it, the range of potential client outcomes.
“Investment markets are more accessible than ever before, and younger clients now have exposure to instruments and strategies that were previously unavailable”
Variety adds complexity The expansion in investment options introduces a material increase in complexity and risk. Greater choice does not automatically translate into better outcomes. In many cases, it increases the likelihood of highly fragmented portfolios, unintended concentration risk, exposure to assets whose valuation dynamics and liquidity profiles are not fully understood and, consequently, client outcomes that may differ meaningfully from expectations. By way of example, cryptocurrencies are innovative investments, but they remain highly volatile and structurally different from traditional asset classes. Similarly, IPO participation and thematic investing can encourage narrativedriven allocation decisions that may not be grounded in longterm fundamentals. Research by JP Morgan found that the range of outcomes among non-core real estate, private market assets and hedge funds is materially wider than those of more traditional large-cap equities and bonds. This while also showing that traditional large-cap equities typically outperform the newer generation of asset classes. From that perspective, the research suggests that more optionality has inadvertently reduced risk-adjusted returns for investors significantly. This emphasises the view that one must prioritise the long-term reliability of an asset’s ability to achieve the required client objectives over the short-term novelty that is often presented by newer offerings.
Intergenerational differences in decision-making The way investment decisions are formed has also evolved. For many younger investors, portfolios are increasingly influenced by digital platforms, social sentiment and real-time information flows, rather than traditional adviserled frameworks or long-term research cycles. While new technology improves engagement and responsiveness, it can also shorten investment horizons and increase behavioural volatility. Older generations, by contrast, tend to rely more heavily on structured and proven processes shaped by them having experienced multiple market cycles. This often translates into a stronger emphasis on capital preservation, income generation and disciplined asset allocation. While this approach can sometimes be slower to incorporate high-frequency innovation, it generally supports more consistent long-term risk management. Options must therefore be weighed against the risks of overexposure to complexity, reduced transparency, and behavioural decision-making biases. New investment ideas should not be adopted in isolation While new investment options hold opportunity, they should be evaluated through the lens of a broader financial planning framework focused on achieving specific outcomes. At the same time, it is important not to dismiss innovation as speculative by default. When appropriately understood and positioned, newer asset classes and technologies can enhance diversification and improve long-term portfolio efficiency. The objective is not to limit access, but to ensure that access is matched with appropriate guidance and risk awareness. Investors and advisers can build portfolios that are not only more adaptive to change, but also more resilient across cycles. In an increasingly complex financial landscape, that balance will be central to building sustainable, intergenerational wealth.
Public and private manager dispersion Based on returns from 4Q15 - 4Q25*
*Manager dispersion is based on annual returns over the ten-year period ending 3Q25 for core real estate. Manager dispersion is based on the ten-year internal rate of return (IRR) ending 3Q25 for: private Credit, Non-core Real Estate, Private Equity and Venture Capital. Source: JP Morgan
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PRIVATE CREDIT // OCTOBER 2026
Emerging Market private credit: A new frontier for investors
Financing demand is outpacing traditional capital Five structural shifts are helping shape the next phase of emerging market private credit. The first is the continued demand for financing. Rapid urbanisation, energy transition, digitalisation and infrastructure investment are creating substantial capital requirements, while regulatory capital constraints are limiting traditional bank lending. This is creating opportunities for specialist private lenders to provide longer-term and more flexible financing. “The growth we’re seeing in emerging market private credit isn’t being driven by one factor,” says Nazmeera Moola, Chief Commercial Officer, Private Markets. “Financing needs are growing at the same time as institutional investors are looking beyond developed markets for new sources of return and diversification.”
A more nuanced view of risk Emerging markets have traditionally been associated with higher risk. However, greater transaction data, a longer track record and increasing investor experience are allowing institutions to assess risk more selectively. Private credit is not a homogenous asset class. Emerging market transactions can offer characteristics that may strengthen lender protection, including lower borrower leverage, senior-secured structures and robust covenant packages. Some transactions are also governed by English or US law. “The perception of emerging market risk has not kept pace with reality,” says Alper Kilic, Head of Alternative Credit. “Investors need to look beyond the label.” He points to conservative capital structures, collateral packages, and covenant protections as important features of the market. Financing the real economy Another distinguishing feature is where the capital is being deployed. While developedmarket private credit has become heavily concentrated in areas such as sponsor-backed software and services businesses, emerging market private credit continues to finance infrastructure and other assets supporting economic growth. Of Ninety One’s 90-plus completed transactions, around a third supported infrastructure and real assets, including renewable energy, digital infrastructure and telecommunications. The firm deployed US$500m through the Emerging Africa and Asia Infrastructure Fund, including financing for Egypt’s first sustainable aviation fuel production facility. It also completed its first transaction in Oman, providing a senior-secured project
“This is creating opportunities for specialist private lenders to provide longerterm and more flexible financing”
finance loan alongside the IFC for a solar-grade polysilicon manufacturing facility. In Latin America, 12 transactions were completed across Brazil, Chile, Colombia and Mexico, spanning renewable energy, data centres, agricultural cold storage, mining and microfinance. These transactions demonstrate the breadth of opportunities available as emerging economies require increasingly sophisticated forms of long-term capital. Access remains critical Greater institutional demand does not necessarily mean easier access. Emerging market private credit remains highly dependent on specialist origination networks, local relationships and the ability to assess opportunities across different jurisdictions. Ninety One’s 60-strong team reviewed close to 1 000 opportunities during the period, while average transaction sizes were around US$23m. Leverage remained at 3–4x, indicating that larger transactions have not necessarily come at the expense of underwriting discipline. The firm also completed its first transaction exceeding US$100m as Mandated Lead Arranger. “Access remains one of the biggest differentiators in emerging market private credit,” says Kilic. “Our long-standing relationships with international investment banks, regional financial institutions, development finance institutions, local governments and corporates enable access to a broad range of opportunities.” A broader role in global portfolios The final shift is perhaps the most significant: investors are increasingly looking beyond North America and Europe when constructing private credit portfolios. Emerging markets offer geographic diversification alongside structural financing demand, potentially stronger lender protections and less competition among private lenders. For institutional investors, this can broaden the opportunity set while providing exposure to the financing of infrastructure, energy, technology and other areas of longterm economic growth. “Emerging market private credit is at an inflection point,” says Moola. “Investors are no longer viewing it as a niche allocation, but as a strategic part of global private markets portfolios.” The challenge now is not simply recognising the opportunity, but accessing it through managers with the specialist knowledge, local networks and underwriting capabilities required to navigate increasingly complex emerging market transactions. [1] 2026 Industry Data & Analysis – GPCA [1] Private credit in emerging markets surges to record, industry group says | Reuters
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merging market private credit is entering a new phase of growth as institutional investors look beyond developed markets for attractive risk-adjusted returns, stronger lender protections and greater portfolio diversification. The asset class attracted a record US$22.3bn in deployment during FY2025, almost 40% above the previous record of US$16bn set in 2022. The increase reflects growing institutional interest in emerging markets as investors seek new sources of return while financing demand continues to rise. Ninety One manages US$8.4bn in Alternative Credit strategies. Between January 2025 and June 2026, the firm reviewed close to 1 000 investment opportunities, completing more than 90 transactions across 28 countries and deploying over US$2bn across renewable energy, digital infrastructure, logistics, transportation, industrial projects and corporates.
Nazmeera Moola
OCTOBER 2026 // PRIVATE EQUITY
Private equity looks beyond the macro noise
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rivate equity entered 2026 against a backdrop of considerable uncertainty. Expectations of lower interest rates had supported a more constructive outlook, but geopolitical tensions, changing inflation expectations and broader market volatility complicated the picture. For investors, the challenge is determining how to price risk when the economic outlook remains difficult to read. Dino Zuccollo of Westbrooke Alternative Asset Management says the firm was relatively bullish on private equity towards the end of last year, when the consensus was that interest rates would continue falling and market conditions would become more supportive. The firm responded by increasing its focus on private equity, including raising a £75m private equity fund in the UK and adjusting some of its South African mandates. Then the environment changed. “We typically don’t love to invest in times of material macro uncertainty, because we just find that it is very difficult to price risk,” says Zuccollo. “If you don’t know what the future holds, it’s very challenging to know exactly where you want to invest and what the risks are.” The beginning of the year was therefore relatively quiet for Westbrooke, despite substantial capital commitments available to deploy. Zuccollo says there are now signs of greater stability, although the outlook remains uncertain. Finding opportunity in the mid-market Westbrooke specialises in mid-market private equity, a segment Zuccollo believes can benefit when larger providers of capital become more cautious. “When there is dislocation in the market, like there is at the moment, what you often find is that the very large providers of capital pull back,” he says. With fewer large buyers competing for businesses, mid-market investors may have greater scope to negotiate with sellers and structure transactions at more attractive valuations. This is particularly relevant in the UK, where Westbrooke sees a structural imbalance between the number of businesses available and the amount of private equity capital targeting them. The firm focuses on businesses that can be substantial by South African standards but are still considered part of the mid-market in the UK, with EBITDA of up to £10m, or roughly R220m to R240m depending on exchange rates. The opportunity, however, is not simply to buy a business and wait for its value to increase. More than a passive investment Zuccollo describes Westbrooke’s approach as one of active ownership, with the investment team working alongside management to improve the underlying business. This can
include professionalising the organisation, developing its strategy, optimising its capital structure and financing arrangements, and identifying who might ultimately acquire the business. “We’re not just a passive allocator of capital,” says Zuccollo. “The model is to come in, help a business, professionalise, drive their strategy, work out who’s going to buy their business in the future, optimise their capital structure and financing arrangements.” If you find the right business, your return is not going to be driven by the macro, Dino explains. “What you want is a business that you think will be able to perform in the economic environment that you have – but if you can get your hands dirty and you can roll up your sleeves, there is every potential for you to outperform the market in a material way at this level.” The trade-off is scale. A hightouch mid-market model cannot necessarily deploy capital at the same pace as a megamanager. “We’re never going to get as big as the mega managers and we’re okay with that,” says Zuccollo. “We’ve built this business in a different way.”
“The answer is not to ignore liquidity but to manage it through appropriate portfolio construction” Rethinking liquidity For South African investors, one of the biggest barriers to private equity remains liquidity. Private equity is typically a five- to sevenyear investment, with no cashflow during the period. That can sit uneasily within a wealthmanagement environment dominated by platforms, collective investment schemes and products that can be traded relatively easily. Private equity investments are generally valued every three to six months rather than daily. While less frequent pricing can obscure some short-term volatility, Zuccollo argues that the unlisted nature of the investment can also encourage a longer-term approach. The answer, he says, is not to ignore liquidity but to manage it through appropriate portfolio construction. “You can still have the liquidity in the other bucket,” he says, cautioning advisers against concentrating too much of a client’s portfolio in private or illiquid investments. Zuccollo also challenges the traditional reliance on a 60/40 portfolio of equities and bonds, arguing that the relationship between the two asset classes has changed in a higher-inflation, lower-growth environment. Private markets, he says, can broaden exposure beyond the
Dino Zuccollo
listed universe and provide access to businesses investors would otherwise struggle to reach. The importance of local knowledge Accessing private markets brings another consideration: manager selection. Zuccollo says having people on the ground in the markets where investments are made is critical. Westbrooke currently focuses on South Africa, the UK and the US, where it has established teams and local knowledge. For advisers, due diligence should therefore extend beyond the underlying investment. Understanding a manager’s local capability, track record, alignment and ability to influence the businesses it invests in is equally important. A changing South African picture South Africa presents a somewhat different picture. The country has experienced a prolonged period of weak economic growth and investor pessimism, but Zuccollo says sentiment has started to improve, helped by developments including the formation of the Government of National Unity, easing loadshedding and a stronger rand. Yet there is a distinction between improved sentiment and improved economic activity. “Even though there’s a lot of positivity, I don’t think we’ve seen that translate yet economically at the underlying asset level into a significant change,” he says. For private equity investors, that means patience remains important. Improved confidence does not immediately translate into completed transactions, capital flows or stronger underlying businesses. Zuccollo describes the broader private-equity outlook as “highly uncertain”, although more certain than it was six months earlier. His preference is for investments where returns are not driven entirely by macroeconomic conditions, but where managers have some ability to influence the outcome. “I wouldn’t want to be an investor where the performance of my portfolio over the next 18 to 24 months is driven by macroeconomic factors alone,” he says. For advisers considering private equity, the focus is therefore on understanding the role of illiquid assets within the broader portfolio, assessing managers’ expertise and alignment, and ensuring clients have an appropriate investment horizon.
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FINTECH // OCTOBER 2026
Where the return on advice technology actually comes from
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I adoption is racing ahead. Whether it pays off for a financial services business depends on the less visible work underneath it. By Jen McKay Any financial Linktank services business deciding where to put its technology budget this year faces an easy temptation and a harder question. The temptation is artificial intelligence, which has arrived in South African advice practices faster than almost any technology before it. The harder question is whether the money already going into technology earns a return. The 2026 State of Advice technology report, Linktank and Hadeda’s annual study of advice practices and their technology, suggests that for many businesses it does not yet. Adoption has outrun the fundamentals Sixty-four percent of advice professionals now use AI tools in some form, most of it inside the practice. Two years ago the figure was 23 percent, a rapid rise for a sector with a long record of slow technology adoption. Yet 70 percent of practices have not fully digitised their business processes, and more than half still operate in a mixed paperand-digital environment. A business layering AI on top of partly manual processes is buying capability it cannot yet fully use. Advisers already know where the value sits Asked which categories of technology are worth investing in, advisers point first to the operational core. Financial planning tools and CRM or practice-management systems are each rated worth investing in by 77 percent. AI tools are rated worth investing in by 56 percent, up from 34 percent a year ago, so the appetite is real and rising, but it still sits behind the systems that actually run the business.
“A business layering AI on top of partly manual processes is buying capability it cannot yet fully use”
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Spending is steady, so direction matters The money is there to address this. Forty-four percent of practices expect to increase their technology investment over the coming one to three years, and a growing minority, 13 percent, now commit 30 percent or more of their revenue to technology. The question is therefore less about how much to spend and more about sequence. For most businesses, a rand spent connecting existing systems and cleaning the data that runs through them will do more for the return on their AI than a rand spent on another tool.
Respondents could choose more than one category, so the figures do not sum to 100. The pattern is nonetheless clear. Advisers value the systems that hold the client relationship and produce the advice at least as highly as the newest tools, and they are right to, because that is where most of the day-to-day return on technology is earned. Integration is where the return is won or lost The most persistent finding in this survey predates AI entirely. Asked to name their greatest technology challenge, 54 percent of advice businesses point to the lack of integration between their systems, and integration has topped this list every year the survey has run. Only 20 percent report a high level of integration across the tools they use. The cost of poorly connected systems is paid in re-keyed data, in errors, and in the client-facing hours those tasks consume. It also caps the return on everything else, because a planning tool, a CRM or an AI assistant can only be as good as the data flowing into it. Fixing integration is less visible than adding a new tool, but it does more to determine whether the newer tools deliver what the business paid for.
Governance protects the return There is one more reason to attend to the foundations, and it is about protecting the return rather than earning it. Among the businesses using AI, three in four have no formal policy governing how it is used, which points to an industry taking on the tools far faster than it is managing their risks. Writing a policy costs almost nothing and should not wait. Being able to evidence good governance over time – showing where client data has gone and who is accountable for an AI-assisted output – depends on the same integrated, well-run systems that make the tools valuable in the first place. What it means for the year ahead For a financial advice business, AI repays those ready to use it and disappoints those who are not. The 2026 findings suggest readiness is mostly a matter of the operational work that rarely makes headlines: integrating the stack, finishing the move off paper, and being able to trust the data. The businesses that do that first will get the most from every technology rand they spend this year, AI included. Jen McKay is a director of Linktank and Hadeda. The 2026 State of Advice Technology report is available at hadeda.co.za. Linktank and Hadeda produce it independently each year. It is privately funded and vendor-neutral.
OCTOBER 2026 // FINTECH
Independence shouldn’t require a compliance department
T
he FIC Act does not exempt a smaller advisory practice from its core obligations simply because it has fewer people or clients. Where a practice By Niclaas Roets is an accountable CEO atWORK institution, it still needs a documented Risk Management and Compliance Programme, appropriate customer due diligence, screening, record-keeping and a risk-based approach to compliance. For an independent adviser, much of that responsibility often sits with the adviser, key individual or a small operations team rather than a dedicated compliance department. That means more time spent verifying clients, assessing risk, screening, reviewing information and maintaining the records needed to
demonstrate what was done. And the cost of getting it wrong is not theoretical. In its 2025/26 Regulatory Actions Report, the FSCA recorded administrative penalties totalling R2.8bn across 76 individuals and entities, up from R119.8m a year earlier. The more instructive cases for advisers are the smaller FIC Act sanctions: R5.39m across several FSPs in June 2026, R1.7m against Harith General Partners, and R710 000 against QuickTrade. These were not findings that the firms themselves had laundered money. They were findings relating to failures in the processes and controls designed to prevent financial crime. That distinction matters. An inspection is not simply about whether an adviser believes they know their client. The practice needs to be able to demonstrate how its RMCP was applied, what due diligence was performed, what screening took place, how the client was risk-rated, and what supporting records were retained. In other words, compliance needs to be both performed and visible. That is the problem atFICA was designed to address. Integrated into the atWORK environment, atFICA supports client identification and verification, sanctions and Targeted Financial Sanctions screening, risk assessment, due diligence reporting and ongoing monitoring. It helps practices bring these activities into the
client workflow rather than treating compliance as a separate administrative exercise. Because the process sits within the client environment advisers already use, screening, risk assessment and supporting records can form part of onboarding and ongoing client management. For smaller practices, this is where technology can make the biggest difference. The goal is not to replicate the structure of a large compliance department, but to make the right processes easier to follow consistently and easier to evidence when required. Technology does not replace the practice’s RMCP, compliance oversight or professional judgement. The practice remains responsible for those decisions. But it can reduce manual administration, improve consistency and make compliance activity more visible. South Africa’s AML obligations are not becoming simpler. Independent practices need practical systems that help them meet their obligations without turning compliance into a full-time administrative function. Independence should not require a compliance department. It should require a sound process, applied consistently, with the evidence to prove it. atWORK is a South African adviser software provider. atFICA is integrated into the atWORK platform and supports structured client due diligence, screening, risk assessment, reporting and ongoing monitoring.
www.moneymarketing.co.za // 23
FINTECH // OCTOBER 2026
The weakest link may be closer than you think By Sandy Welch
Editor, MoneyMarketing
The human factor At the heart of many cyberattacks is social engineering, where criminals manipulate people into providing access, information or authorisation rather than attempting to defeat sophisticated technical security systems. Phishing is one of the most common examples. It can arrive via email, SMS or even a phone call. The messages are designed to appear legitimate and encourage the recipient to click a link, open an attachment or provide sensitive information. The attack may be as simple as an SMS claiming that a parcel is awaiting delivery and asking the recipient to pay an outstanding fee. The link takes the victim to a fraudulent website designed to capture their card details. For financial services businesses, the threat can be considerably more targeted, says Hogan. “Spear phishing involves research into a particular organisation or individual and the creation of a more convincing, personalised attack. When someone falls victim to spear phishing, the fraud has a high probability of succeeding,” he explains. “The objective is not necessarily to steal money immediately. Often, the first goal is simply to obtain login credentials.” When an email account becomes the gateway Once criminals gain access to an email account, they can potentially monitor communications, identify relationships and gather enough information to impersonate a client, supplier or
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“Cybersecurity needs to become part of everyday business processes rather than something considered only after an incident” colleague. One particularly damaging form of fraud is business email compromise (BEC). Consider a familiar scenario. A client meets with a financial professional and mentions that they need an invoice paid. Later, an email arrives containing the invoice and payment instructions. The problem is that the client’s email account has already been compromised. “The fraudster may have created email rules that automatically redirect particular messages containing words such as ‘invoice’, ‘bank details’ or ‘payment’ to an account controlled by the criminal,” says Hogan. “The legitimate recipient never sees the original email. The fraudster then alters the banking details on the invoice and sends it on.” The document may look entirely authentic. Even converting it to PDF doesn’t necessarily make it secure. “Advisers should not assume that a PDF or password-protected document cannot be manipulated.” The result can be a payment made by a legitimate business, from a legitimate account, based on apparently legitimate correspondence – but ultimately into a fraudster-controlled account. Passwords remain a fundamental weakness The first line of defence is therefore remarkably basic: protect access to your email and other critical systems. Poor password practices can make this significantly easier for criminals. Reusing the same username and password across multiple accounts means that if one set of credentials is compromised, other accounts may also become vulnerable. “Use unique passwords of at least 15 characters and, because remembering numerous complex passwords is impractical, consider using a reputable password manager,” says Hogan. “A password manager stores passwords securely and means users only need to remember the master password. It can also help employees
avoid the temptation to reuse passwords across systems.” Password length matters particularly when it comes to mobile devices. Short passwords can potentially be cracked very quickly using readily available technology. Password phrases – a memorable sentence rather than a short sequence of characters – offer a practical way to create longer credentials. Make verification part of the process The lesson for financial advisers is that cybersecurity needs to become part of everyday business processes rather than something considered only after an incident. Staff should understand what phishing looks like, be cautious about unexpected attachments and links, use unique passwords, and protect access to email accounts with appropriate additional authentication where available. Most importantly, businesses should have clear procedures for verifying changes to payment instructions. This is particularly important in an advice environment, where the relationship of trust between adviser and client can itself be exploited by criminals. A fraudster who has gained access to an email account can potentially see historical conversations and use that information to make subsequent communication appear entirely credible. Cybercrime therefore doesn’t always look like an attack. Sometimes it looks like an ordinary email from someone you know. Cybersecurity is everyone’s responsibility The most important shift may be in how businesses think about cybersecurity. It’s tempting to regard cybercrime as a technical problem that belongs to the IT department. But social engineering deliberately targets human behaviour, such as convenience, familiarity, urgency and the assumption that an apparently legitimate communication can be trusted. For financial advisers, the stakes are particularly high. A compromised email account can potentially expose confidential client information, while a fraudulent payment instruction can result in substantial financial losses. “The good news is that some of the most important protections are relatively straightforward. For advisers and their teams, recognising that human vulnerability is part of the threat landscape is the first step towards reducing it,” says Hogan.
Image: Getty Images
W
hen most people think about cybercrime, the image that comes to mind is often a hacker in a dark room, armed with sophisticated technology and attempting to break through an organisation’s defences. But according to Kevin Hogan, Head of Fraud & Risk, Investec Bank, that picture misses one of the biggest vulnerabilities facing businesses today: their people. Speaking at the Morningstar Investment Conference 2026, he said: “Everyone assumes that it’s the guy in the hoodie sitting in the basement. This is not true. In 99% of all intrusions, you have helped the fraudsters get in.” For financial advisers, who routinely handle sensitive personal information, financial records and instructions involving substantial sums of money, this is an important warning. Cybersecurity is a real business risk – and increasingly one that requires everyone in the organisation to understand how fraudsters operate.
OCTOBER 2026 // FINTECH
Your client has one life. Why should their advice come in pieces?
“M
y mother is moving in with us.” One sentence can change a household budget, a home, a retirement plan and a family’s priorities. By Kobus Barnard Life does not respect CEO, Allegiance the boundaries between Consulting financial products. Neither should the advice. Products accumulated over decades do not automatically add up to a coherent plan. The connection must be the client’s story: what matters, what is changing, and what they hope to achieve. Their goals and dreams are the true north. Their Contextual Financial Identity is the foundation. Intelligence, connected That is the future we are building with Avalon, Ariel and Dreamzter®, an intelligent ecosystem connecting aspirations, financial reality, advice and action. AI is not an accessory to this ecosystem. It is central to what it is becoming. The opportunity extends beyond a separate conversation with a large language model. It is intelligence connected to relevant client context, financial modelling, relationships and the work needed to deliver on decisions. Advisers should not have
to repeatedly assemble confidential information in disconnected conversations. The ecosystem should provide the context, permissions, continuity and safety. Ariel brings this intelligence into the adviser’s world, helping explore possibilities, ask better questions, identify relevant needs and turn understanding into action. The promise is not simply faster administration. It is greater capability. That capability needs appropriate permissions, clear rules on data use and retention, dependable calculations and human oversight. Connected intelligence must support regulatory responsibilities, not obscure them. In this symphony, the client’s story is the music, the adviser the conductor, and AI, financial modelling and client context the orchestra. A bigger role, not a smaller future Consolidation and commoditisation raise an uncomfortable question – if products, and even elements of advice, become widely accessible, where does that leave the adviser? Our answer is not to build a future that depends on AI remaining limited. It is to equip advisers to accomplish more as intelligence becomes more powerful. The adviser’s value need not depend on personally producing every answer. It can lie in bringing intelligence, judgement, relationships and accountable action together around a client’s life. For the family
welcoming their mother, the question is not simply which product to buy. It is how to make room for her while protecting their own future. Products then acquire purpose – i.e. protection helps safeguard the family’s story – while investments become meaningful steps towards the future they want to build together. The future is bright We see two connected opportunities for growth in the verticals, i.e. meeting more relevant needs within existing relationships, and the horizontals, i.e. serving more clients without losing the personal connection. Deeply personalised advice at scale is an ambition worth pursuing. Independent advisers should not have to choose between independence and support. Corporate advisers should not have to choose between specialist expertise and a connected client experience. Growth need not come at the expense of meaningful advice. It can become the result of it. Saying the adviser will still matter is a defence position. The adviser will become a super adviser with Artificial Intelligence-driven technology and enablement. You do not merely have a future despite AI. With the right ecosystem, AI can help you build a better one. Together, you and AI can become a super team, united by one purpose: placing the client at the heart of every decision and action in your practice. You are no longer waiting for the future to make room for you. You are creating it. Please note that the article was created by Kobus Barnard and polished with the assistance of Artificial Intelligence.
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www.moneymarketing.co.za // 25
FINTECH // OCTOBER 2026
By Francois du Toit
Founder and Director, PROpulsion
H
Choosing your approach to AI and what to look out for
ow you bring AI into your business should, or will, depend on the size of that business. A three-person practice and a national firm can both benefit from AI, but they should not go about it the same way. I am keeping a keen eye on two things: small firms building tools they cannot maintain, and large firms building tools they could have bought. Start with the tools you already have If you run a small or medium-sized practice, you have two good starting points, and neither involves nor requires building anything. The first is the AI assistants you can buy off the shelf, such as Claude, ChatGPT, Gemini and Grok. For a modest monthly fee, your team gets help with drafting, summarising, research and meeting preparation. Pay for the business version. Why? Business plans generally come with stronger commitments about how your data is handled, and free versions often do not. POPIA applies to every piece of client information you put into any tool, so carefully read the terms before your team starts pasting in client details. The second is the software you already use. Your CRM (customer relationship management system), your planning software, and your email and office suite are all adding AI features. Your data is already there. The access controls are already set up. The supplier is responsible for keeping it running. Ask your suppliers what is available now and what is coming in the next year. For many firms this is the simplest place to start. Be careful with self-hosting Open models are AI models you can download and run on your own computers. In other words, the AI runs in your office or your own cloud environment. The benefit is that client information never leaves your environment.
ASCEND
It also takes work. You need the right hardware, someone who can set it up securely, and someone who keeps it updated as the models change. A poorly secured server in your office is a bigger risk than a well-run service from a large provider. Can anybody in your business explain how the setup is protected? If the answer is no, you are not ready to self-host. If the idea still appeals, work with a specialist and get the support agreement in writing. Bigger businesses can build, with care Large advice businesses have development teams, budgets, and enough volume to justify building in-house tools and hosting their own AI. They also have their own data, and that is where a custom tool can do things no general product can. Yes, building your own can pay off, but it can also drain money and attention for years. Most large firms will do better building on top of existing models, with a specialist partner, than starting from scratch. Decide what kind of business you are Are you a technology business that delivers financial advice, or a financial advice business that develops some technology? Answer that honestly before anyone writes a line of code. I have built software myself, including Taxspace and more than a hundred AI automations for financial planning work. What did that teach me? Launching a tool is the easy (and fun) part. The feedback and requests from users never stop, and some of them meant rebuilding a tool completely. The technology underneath changes all the time too, so the maintenance never stops. Ever. With AI, someone in your team can produce a working tool in an afternoon. Building has become cheap, but owning it is still expensive. Every tool you build becomes a permanent
line in your budget and a permanent claim on somebody’s attention. Before you build anything, answer five questions: • Who will own this tool, and who takes over if that person leaves? • What skills does it need, and do we have them? • What will it cost to maintain every year? • Where does client data go, and who has checked the security? • What work will our people stop doing while they build it? If you cannot answer all five, buy or partner instead. Where the opportunities are Small firms can move fast and a small team can agree on an approach on Monday and have everyone using it by Friday. Medium-sized firms are well placed to partner with specialists and adapt existing products to the way they work. Large firms can build on their own data, as long as they fund the maintenance as seriously as the build. Whatever your size, the same practices apply. Start with a problem in your business and then look for the tool. Write a short AI policy so your team knows what may and may not go into these tools. Train your people, because a tool is only as useful as the person using it. Keep a qualified person responsible for checking anything that reaches a client. And insist that you can export your data from any product you use, so you are free to change later. Your clients pay you for advice. Choose the AI route that gives you more time for that work. Stay curious! Du Toit believes that when financial planners build great practices, they change lives at scale. He also believes we must grow the entire profession so that everyone benefits. That is why he founded PROpulsion, where he helps planners grow through community, events, and expert resources. He hosts the weekly PROpulsion LIVE show on YouTube with over 325 episodes. Visit www.propulsion.co.za.
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OCTOBER 2026 // FINTECH
Understand AI before trusting it
A
rtificial intelligence is moving rapidly from something that once seemed futuristic into an everyday workplace tool. Yet, as adoption grows, so does the need to understand what sits behind the technology – and where its limitations lie. “Before you can understand where the risks lie with your tool, before you can properly make maximum use of the tool in the most appropriate and responsible way, you need to understand what it can do, what are the limits, and what are the no-go areas completely,” said Azhar Aziz-Ismail, AI Training and Development Lead, Practice Innovation at Baker McKenzie, speaking at the 16th Annual FISA Conference sponsored by Hollard Court Bonds. Aziz-Ismail, a disputes lawyer by background, works in AI and practice innovation at the global law firm. He argues that one of the most useful ways to understand AI is simply to use it – provided it is done responsibly and appropriately.
Image:Supplied
The black box problem It’s important to remember that AI doesn’t operate like conventional software, which follows predefined instructions. AI systems learn from data and can generate new content based on patterns and predictions. This distinction becomes particularly important with large language models (LLMs), which underpin many of the generative AI tools now being used in business. One of the challenges with LLMs is that they can behave in ways that aren’t always predictable. They are probabilistic rather than deterministic, meaning there is no fixed sequence of rules guaranteeing the same type of response every time. This creates several familiar problems, including hallucinations, where AI produces information that sounds convincing but is incorrect. There is also the problem of bias. Models are trained on data, and the quality and characteristics of that data can influence their outputs. Users therefore need appropriate safeguards and should not assume that a confident-sounding answer is necessarily correct. Not all AI tools are the same Another important distinction is between open and closed AI environments. Open tools may draw on information available across the internet, while closed systems operate within a defined body of information. For professional applications, particularly
where accuracy and jurisdiction matter, understanding where an AI system is getting its information becomes critical. A South African professional asking an AI tool to conduct research, for example, may need to specify that it should focus exclusively on South African law. This is particularly important because AI performance is uneven. Systems may be highly effective at summarisation, translation and basic drafting, while struggling with more complex reasoning or research. Aziz-Ismail referred to this as “jagged intelligence” – the reality that AI can be very good at some tasks and considerably weaker at others. The risks behind the efficiency Greater efficiency doesn’t remove professional responsibility. In fact, the faster AI can produce an answer, the easier it may become to overlook mistakes. One of the biggest risks is over-reliance. Professionals can become accustomed to trusting AI output in much the same way they may begin to skim the work of a junior colleague once confidence has been established. Aziz-Ismail argued that every important output needs to be checked against a reliable source, including citations, names and references. AI can produce an answer that looks authoritative, complete with a footnote or citation, while the underlying information is wrong. A confident presentation doesn’t make an answer accurate. There are also concerns around confidentiality, intellectual property, legal privilege, data privacy and cybersecurity. Simply paying for an AI tool doesn't automatically make it secure. Professionals need to understand where data is processed, who can access it, whether inputs are retained or used for training, where servers are located, and what contractual protections apply. For organisations handling sensitive information, enterprisegrade tools may offer greater controls, but users still need to understand the terms and limitations of the technology.
Keep the human in the loop For Aziz-Ismail, the dividing line is between augmentation and abdication. Augmentation means AI performs part of the work while a human reviews and takes responsibility for the output. Abdication occurs when AI generates an output that reaches the client without appropriate human oversight. “The difference is not immediately visible in the document,” he said. “It’s only visible in the process that sits behind it.” That distinction is particularly important in financial and professional services, where advice involves judgement rather than simply retrieving information. Aziz-Ismail suggested a traffic-light framework. Green tasks can include drafting, summarising, information retrieval and translating technical language into plain English, provided the output is reviewed. Amber tasks involve analysis and comparison, where verification should be explicitly recorded. Red tasks involve professional discretion, advice and final sign-off – areas where human judgement remains essential. Four questions can help determine where a task belongs: Is judgement involved? Can the output be verified against a trusted source within a reasonable time? Whose data is being used, and is it lawful to put that information into the tool? And would you be comfortable signing the resulting work in your own name? If the answer to any of these questions is no, greater human oversight is required. Governance matters Organisations need governance around AI. That means using approved tools, recording review steps, training staff, supervising AI use and assigning responsibility for each tool. For client-facing businesses, it may also mean considering appropriate AI provisions in engagement terms. As Aziz-Ismail put it, the question is not whether AI should be used, but where it should be used, how it should be used and where humans must remain firmly in control.
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INSURANCE // OCTOBER 2026
A
s pets increasingly take on the role of family members, South Africans are becoming more conscious of the financial implications of caring for them – particularly when illness or an unexpected accident results in a significant veterinary bill. For financial advisers, this creates an opportunity to broaden conversations around risk and protection. Pet insurance may not traditionally feature alongside life, disability or household cover, but for clients who regard their pets as dependants, it can form part of a broader discussion about managing unexpected financial risks. According to Nathan Mengel of Fursure Pets, two key trends are driving demand for pet insurance: the humanisation of pets and rising veterinary healthcare costs. “Pets are increasingly treated as family members, not property or simply pets,” says Mengel. “That shift is sharper among millennials and younger generations, many of whom are delaying or forgoing kids and putting pets in that role instead.” As the emotional importance of pets has increased, so too has spending on their care. Owners are increasingly prepared to invest in treatment that might previously have been considered unaffordable, while wanting the reassurance that they can provide the best possible care if something goes wrong. At the same time, veterinary medicine has become considerably more sophisticated. Specialist surgery, diagnostic imaging, cancer treatment and rehabilitation are increasingly available, but advanced treatment comes with a price. “A simple accident can easily run from R12 000 to R25 000, and most South African households can’t absorb that as a surprise cost,” says Mengel. Understanding what the policy actually covers One of the biggest challenges, however, is ensuring that clients understand what they are buying. Pet insurance is often assumed to work in much the same way as comprehensive medical aid, with the expectation that the insurer will simply settle any veterinary bill. That isn’t generally the case. “Most owners don’t read their policy documents before they claim,” says Mengel. “They don’t check what’s excluded, and they don’t understand the difference between a per-claim limit and an annual limit until they’re mid-claim and hit the ceiling.” Routine expenses such as vaccinations, deworming, sterilisation, dental care and tickand-flea treatments are generally excluded unless a policy specifically provides a wellness benefit. Pre-existing conditions are also generally excluded, while waiting periods apply to new policies. The distinction between annual limits and individual
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Compare the claim, not just the premium Marco de Agrela of Fursure Pets says pet insurance should be assessed according to what happens at claim stage, rather than simply comparing monthly premiums. “Pet insurance should be compared on what happens when you claim, rather than simply what it costs each month,” he says. This means looking at the annual limit, individual treatment limits, excesses, waiting periods and exclusions. Advisers should also encourage clients to investigate how policies deal with pre-existing, hereditary and congenital conditions, chronic medication, diagnostic tests, dental treatment and routine care. There are also practical questions that need to be asked. Will the owner need to pay the veterinarian upfront and then claim reimbursement? Are there limits on particular operations? Does the pet’s breed or age affect the cover? What happens if the animal develops a chronic condition? And, perhaps most importantly, how much could the client still be required to pay out of pocket following a claim? “These can differ significantly between products,” says de Agrela. For advisers, the role is not necessarily to help clients find the cheapest policy, but to simplify what can otherwise be a confusing decision and help them select cover that is both appropriate and sustainable. “In many cases, having some suitable cover is better than having no cover at all,” he says. Start with the financial risk A useful way for advisers to approach the conversation is to start with the potential financial shock rather than the premium. De Agrela suggests asking clients whether they could afford an unexpected veterinary bill of R20 000, R30 000 or more. “That helps determine how much risk the client can afford to carry themselves and how much should be transferred to an insurer,” he says. The answer can then inform discussions around premiums, limits
and excesses. A client may be comfortable paying a higher monthly premium if it provides greater protection against a significant veterinary expense. Another may prefer a lower premium but need to accept a higher excess and greater exposure to costs at claim stage. The numbers matter. A 20% excess on a R30 000 claim, for example, would leave the client responsible for R6 000. The objective is therefore to find a balance between affordability and meaningful protection – ensuring that the premium can be maintained while the excess remains manageable in an emergency. Advances in treatment are changing the claims landscape The increasing sophistication of veterinary medicine is also influencing the types and costs of claims. “More advanced medical equipment is coming to the market. It delivers better care, catching issues earlier – but it comes with a cost,” says de Agrela. Mengel says two areas seeing increased claims are lumps and bumps, as well as specialist surgeries such as hip replacements. For pet owners, access to these treatments can mean better outcomes for their animals. For insurers, however, the increasing availability and cost of sophisticated veterinary interventions has implications for claims and, ultimately, the cost and structure of cover. This reinforces the importance of advisers understanding the detail behind petinsurance products rather than treating them as a simple, low-cost add-on. Protecting the decision to provide care Ultimately, the purpose of pet insurance is not to ensure that an owner never has to pay a veterinary bill. Rather, it is about managing the financial risk associated with an unexpected and potentially substantial expense. For clients who regard their pets as members of the family, the financial consequences of an accident or serious illness can be significant – not only because of the cost involved, but because the treatment decision may have to be made under pressure.
Image: Getty Images
The growing case for pet insurance
treatment limits is particularly important. A policy may advertise a substantial annual benefit, but still impose a much lower limit on a particular procedure or diagnostic test. This is where advisers can add value by helping clients look beyond the monthly premium and understand how the policy is likely to respond when it matters most.
OCTOBER 2026 // INSURANCE
Why peace of mind requires more than insurance
A
Image: Getty Images
s the risks facing South African households and businesses become increasingly interconnected, having insurance By Willem Coetzee remains important, CEO of Zenith but it is no longer by Western enough on its own. Fire, theft, vehicle accidents, liability exposures, cyber incidents and weather-related damage do not always occur in isolation. A power interruption can damage equipment and halt operations, while severe weather can cause water damage, disrupt transport and place further pressure on strained infrastructure. One incident can therefore trigger several losses. Insurance provides an important financial mechanism to help clients recover after an insured loss, but it cannot prevent an accident, stop a fire from starting or keep a business operating after serious disruption. A policy may fund recovery, but it cannot replace lost time, halted operations, damaged client relationships or the personal stress that often follows a major incident. Genuine peace of mind therefore requires appropriate insurance cover supported by practical, proactive risk management and sound broker advice. Risk management begins with a written plan that identifies potential risks, assesses their likelihood and possible impact, and sets out the measures required to prevent or mitigate them. Although risks cannot always be eliminated, clearly defined precautions, mitigation measures and response procedures can make losses less frequent or less destructive. Protecting households from avoidable losses For households, effective risk management requires practical measures such as maintaining electrical systems, addressing maintenance issues before they escalate and ensuring appropriate security and fire protection measures are in place. Vehiclerelated risks can similarly be reduced through consistent security and maintenance practices, secure parking, defensive driving and insurerapproved tracking or telematics systems where appropriate. Risk-aware households recognise that sensible precautions protect more than property. Personal safety is always one of the most important outcomes of effective risk management.
Risk management is critical for business continuity For small, medium and micro enterprises (SMMEs), the effects of a loss can be particularly severe because cashflow, stock, equipment and trading continuity are closely connected. A fire, flood, theft or liability claim can interrupt operations at a time when a business is least able to absorb the financial impact. SMMEs should therefore consider risk management an essential part of business continuity. This means taking practical steps to protect operations, reduce vulnerabilities and improve the business’s ability to respond to disruption. Physical damage is only one part of the risk. Businesses must also consider whether they will be able to continue operating, meet their commitments and maintain relationships with customers and suppliers following a serious disruption. Larger businesses may have more resources but also face greater complexity, as dependencies across sites, suppliers, employees, customers and contractual obligations can turn one incident into wider operational disruption. Risk planning should therefore promote employee risk awareness, establish clear emergency procedures and include contingency planning. Insurance cover should also be reviewed regularly as part of the risk management programme to ensure that it remains aligned with the business’s risks and provides appropriate financial protection. Making losses less frequent and less destructive A useful way to prioritise risk management is to distinguish between incidents that happen often and those that occur less frequently but can cause serious damage. Frequent losses, such as minor vehicle accidents, theft from vehicles or recurring water damage, should be analysed to identify and address their underlying causes, thereby reducing how often they occur. Less frequent but severe events, such as fires, major storm damage, liability claims or significant business interruption, require measures that can prevent the event where reasonably possible and limit the damage if it still occurs. Early detection of emerging hazards, such as fire, enables a timely response and the effective use of appropriate firefighting equipment, helping to contain damage. Clear, well-understood response procedures reduce confusion and support swift action, protecting both lives and property. Effective risk management therefore addresses frequency and severity by preventing recurring losses and limiting the impact of major events.
“Brokers can draw on valuable knowledge of the risk mitigation requirements applied by different insurers” The adviser’s role extends beyond placing cover Advisers can draw on valuable knowledge of the risk mitigation requirements applied by different insurers. They also gain practical insight from their clients’ claims and the circumstances that caused or contributed to the loss or damage. A broker can help a client understand the risks they face and suggest possible prevention or mitigation measures. A properly defined risk management plan enables the broker to present insurers with a well-understood and responsibly managed risk when negotiating quotations or renewal terms. Better risk management does not guarantee lower premiums, as insurance pricing depends on several factors. However, reducing avoidable losses and demonstrating responsible risk management can support long-term insurability and support negotiation for better terms of cover. Risk management should not be viewed as a technical add-on or something considered only after a loss. Meaningful peace of mind comes from a working partnership between the client, broker and insurer. The client manages the risk, the broker provides guidance and structures the solution, and the insurer provides financial protection when an insured event occurs. In an increasingly interconnected risk environment, this partnership gives households and businesses the best chance of avoiding preventable losses, limiting disruption and recovering sustainably when something goes wrong.
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RETIREMENT // OCTOBER 2026
Two-pot has lifted the tide – but will it be enough for retirement?
The retirement challenge remains The underlying problem is significant. Most retirement fund members are projected to achieve replacement ratios in the region of 20% to 50%, while only a small proportion are on track for what could reasonably be described as a comfortable retirement. Chennels illustrated the issue through the example of ‘Dave’, a 50-year-old retirement fund member contributing a net 7% of his income after costs. Before two-pot, if Dave repeatedly cashed out his retirement savings when changing jobs, his projected net replacement ratio could have been as low as 16%. With two-pot, even if he continues withdrawing his available savings each year until retirement, that outcome could rise to around 39%. If Dave receives help to address the reasons he is withdrawing and changes his behaviour, his projected replacement ratio could increase further, to around 51%. That is a substantial improvement, but it still falls short of the 75% replacement ratio that would provide a much stronger retirement outcome. To reach that level, Dave would need to increase his net contribution rate from 7% to 12.5% – a significant behavioural challenge. This is where the real retirement conversation begins. Understanding who is withdrawing Discovery’s analysis of two-pot behaviour provides insight into who is accessing their savings. Younger members, particularly those in their 30s, have higher withdrawal rates than older members. Chennels pointed to the financial pressures that often characterise this
30 // www.moneymarketing.co.za
stage of life: raising children, buying a home, paying school fees, and trying to Guy Chennels improve living standards. Income also has a significant relationship with withdrawal behaviour. Lower-income members withdraw at considerably higher rates than higher-income members. Yet when financial wellbeing is considered alongside income, the picture becomes more complicated. Discovery’s data suggests that how people manage their money can be as important as how much they earn. High-income individuals who manage their money poorly can have substantially higher withdrawal rates than lowerincome individuals who manage their finances well. This highlights the importance of financial capability and behaviour alongside income when considering retirement preparedness. The link between financial and mental wellbeing Chennels argued that retirement savings cannot be viewed in isolation from broader wellbeing. Discovery’s data indicates a strong relationship between mental and financial wellbeing. People experiencing high emotional stress are four times more likely to make poor financial decisions, while people experiencing financial distress are 2.5 times more likely to report symptoms such as depression, anxiety and sleep problems. This can create a vicious cycle: financial stress affects decision-making, poor decisions worsen financial circumstances, and deteriorating financial circumstances contribute to further emotional stress. The same dynamic appears in retirement savings. Members at higher mental wellbeing risk have withdrawal rates around 1.7 times those of members at lower risk. For retirement funds and advisers, understanding these underlying pressures could therefore be critical to changing behaviour. What is driving withdrawals? Two-pot withdrawal activity initially surged when the system was introduced, followed by further spikes around the start of new tax years. However, Chennels distinguished between firsttime withdrawals and habitual withdrawals. After the initial introduction of two-pot, first-time withdrawals settled into a relatively consistent pattern, suggesting that some members access their savings when a particular need arises. A second group, however, appears to be structurally dependent on accessing every available opportunity to withdraw. These habitual withdrawers tend to act when the new tax year opens and another opportunity becomes available. There is also evidence of a potential word-of-mouth effect. Members
making their first withdrawal in March 2026 did so at more than twice the normal rate. Chennels suggested that conversations among peers may contribute to this behaviour, with people hearing that others are accessing their two-pot savings and concluding that they should do the same. The result is a powerful behavioural dynamic: what others do can influence an individual’s perception of when and why they should access their savings. The real pressure is often debt The reasons for withdrawals reinforce the broader financial pressures facing South Africans. Cost of living is the dominant driver, with many withdrawals effectively reflecting an inability to make ends meet. Only around 1% of withdrawals were attributed to emergencies, while travel accounted for a significantly higher proportion. Debt is another major factor, and Chennels also highlighted the rapid growth of gambling in South Africa as another emerging threat to financial wellbeing and retirement outcomes. If retirement funds want to improve long-term outcomes, they need to understand and address the financial pressures that cause members to access their savings in the first place. From access to better outcomes Two-pot has undoubtedly improved the retirement landscape, but flexibility alone cannot solve South Africa’s retirement savings problem. The challenge is both structural and behavioural. Members need help addressing the underlying financial pressures, particularly debt, while also being encouraged and supported to make better long-term financial decisions. Discovery is responding through initiatives designed to address both sides of the equation. These include tools focused on financial management and debt, as well as a contribution optimiser designed to use behavioural principles to encourage members to increase their retirement contributions gradually. The company is also developing an intervention aimed at addressing gambling, recognising it as an increasingly important threat to financial wellbeing. For advisers and retirement funds, the lesson is broader than two-pot itself. Improving retirement outcomes requires looking at the whole financial life of the member rather than treating retirement savings as a standalone product.
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or all the debate around South Africa’s twopot retirement system, one uncomfortable statistic continues to loom large: only around 6% of South Africans are estimated to reach retirement with enough money to maintain a comfortable standard of living. For Guy Chennels, Chief Commercial Officer: Corporate & Employee Benefits at Discovery Limited, this statistic raises a bigger question. Two-pot may have fundamentally changed individuals’ expected retirement outcomes, but has it done enough to move more people into that elusive 6%? Speaking at the recent IRFA conference, Chennels described two-pot as a “rising tide that lifts boats”. It has given retirement fund members greater flexibility and, even where behaviour does not change, can improve projected retirement outcomes. But the extent of that improvement depends heavily on what members do with the additional access to their retirement savings. And that, he argued, requires looking beyond the withdrawal statistics to understand the financial and behavioural circumstances behind them.
OCTOBER 2026 // RETIREMENT
Retirement planning is about more than money addressing retirement planning well before a client approaches retirement.
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hile often framed around products, legislation, investment strategies and drawdown rates, retirement planning is, for the client, far more fundamental. It’s about having confidence that their money will last, that they will not become financially dependent on others, and that they can live with dignity throughout retirement. “Retirement financial planning is not a financial outcome, it’s actually a human outcome,” says Zaheer Bhikha, Executive Head of Product Development at Glacier by Sanlam. “It’s about ensuring, with our tools, our systems, our advice framework and products, that we are instilling confidence for clients.” That confidence is becoming an increasingly important part of the retirement challenge. Closing the confidence gap The Sanlam Benchmark Survey points to a significant gap between what people know about their retirement savings and how confident they feel about their ability to fund retirement. Engagement with retirement savings has increased substantially, with member engagement reportedly rising by about 83% following the introduction of the two-pot retirement system. Yet 68% of individuals say they would contribute more towards retirement if they could. The difficulty is balancing a long-term savings objective with immediate financial pressures. Housing costs, debt, education expenses and the general cost of living can all compete with retirement contributions. The confidence gap does not disappear at retirement. According to the survey, at least 40% of retirees within their first five years of retirement are unsure whether they have enough assets to sustain themselves for the rest of their lives. Meanwhile, 88% want certainty that their income will be guaranteed for life. For advisers, this highlights the importance of SUBSCRIBE TO
Decisions made long before retirement The financial decisions made throughout a person’s working life can have a significant impact on their eventual retirement outcome. Buying a home, upgrading a vehicle, taking on debt or changing spending patterns can all affect the amount available for retirement. Yet retirement advice often comes surprisingly late. The Benchmark Survey indicates that clients engage with financial advisers about retirement planning only around 20 months before they retire. “That’s a problem,” says Bhikha. “You save for 35 to 40 years and go and speak to a financial adviser 20 months before you retire.” By then, many of the important decisions have already been made. The survey also indicates that 43% of retirees enter retirement with outstanding debt, creating additional pressure on their retirement capital. The result can be a difficult trade-off between maintaining an accustomed lifestyle today and preserving sufficient income for the future. The pressure on retirement income This tension becomes particularly evident in the drawdown decisions retirees make. Most annuities sold in South Africa are living annuities. Bhikha points to guidance indicating that a sustainable drawdown rate for many retirees is around 4.5% to 5%, depending on age, while the average drawdown rate is approximately 6.6%. The gap matters because drawing income at a higher rate may provide more money in the short term, but increases the pressure on retirement capital over time. For advisers, simply telling a 60-year-old client to reduce their spending may not be realistic. Financial behaviour and lifestyle expectations have been established over decades. “This is why when you engage, you need to engage quite young,” says Bhikha. “You are able to develop habits easier when you’re younger.”
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AI can support advice, but not replace it Bhikha sees technology and advice working together rather than competing with one another. AI can summarise information, build models, identify risks, provide prompts and help advisers execute tasks more efficiently. But there are aspects of retirement planning that require human judgement and empathy. The adviser’s role therefore remains central, with technology providing the infrastructure to support better decisions and more efficient implementation. As Bhikha puts it, the future of retirement planning is not about choosing between AI and advisers. It is about using both to help clients make better decisions and achieve the outcomes that matter most to them.
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or financial advisers, platforms are increasingly becoming the infrastructure through which advice is delivered, investments are managed and clients experience their entire financial lives. That shift is being driven by rising compliance and technology costs, increasingly sophisticated client expectations and a growing demand for simpler, more transparent ways of managing wealth. For advisers, the right platform can remove administrative friction and create more time for what matters most: advice and relationships. For Standard Bank Group, this is at the heart of its investment strategy. The group is bringing together its banking, investment, wealth and platform capabilities to create a more integrated proposition for advisers and their clients. “The true advantage of Standard Bank lies in its extensive relationships with millions of South Africans through our banking services, giving us a deep understanding of their financial needs,” says Duncan Wattam, Head of Standard Bank Investments. Alongside this reach, the group has specialist advisory teams, including: Wealth and Investment, Standard Bank Financial Consultants, Liberty Advisory Partners and Stone House Capital, supported by our investment manufacturing capabilities businesses, including STANLIB, Liberty Investments, Global Markets, 1nvest, Melville Douglas, Stockbroking and INN8 Invest. “The ambition is to connect these capabilities through a single advisory relationship, giving advisers access to a broader range of investment solutions, specialist strategies and discretionary services, through our on- and offshore platforms,” he says. Platforms as the backbone of advice Wattam describes platforms as “the backbone of the investment world”, providing a secure
environment where investments can be held, viewed and managed. For advisers, a well-designed platform can take much of the administrative burden out of managing investments, while for clients, it can replace a fragmented collection of statements, accounts and providers with a consolidated view of their financial position. But building this infrastructure is complex. It requires significant investment in technology, funding and scale, as well as the ability to serve a large client base. Standard Bank believes its scale gives it an advantage. “We are creating local and global platform capabilities where advisers can concentrate on providing advice without worrying about paperwork, while clients enjoy a unified view of all their financial accounts, including banking and investments, in one accessible location,” says Wattam. The scale behind this ambition is significant. Standard Bank’s Investment and Asset Management business manages and advises on R1.8tn in assets and has 50 years of investment management experience. Simplifying a complicated investment journey The growing importance of platforms comes at a time when the financial advice industry itself is undergoing significant change. Wattam identifies a few major shifts. The first is consolidation within the advice industry, as rising compliance and technology costs make it increasingly difficult for smaller firms to manage every aspect of their businesses independently. This is creating demand for partners that can provide infrastructure and technology while allowing advisers to remain focused on their core role. The second is a change in client expectations. Consumers are increasingly less receptive to being sold products and more interested in advice that reflects their individual circumstances. Continued on next page
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By Sandy Welch
Tomorrow’s retiree will live differently The retirement landscape is also likely to become more complex as longevity increases. Advances in medical treatment and technology are allowing people to live longer, potentially extending the period that retirement savings need to support. At the same time, retirees face investment markets that can experience significant shocks and a financial environment that is increasingly difficult to navigate. Technology will also play a greater role. The assumption that older clients are uncomfortable with digital tools is increasingly outdated. The Benchmark Survey indicates that around 91% use WhatsApp and 93% use digital banking. For advisers, this creates an opportunity to use technology to make retirement planning more accessible and responsive.