Future of Wealth Management

Prepared by: Magnus de Wet

Date: 21 June 2018

Event: Objectway / MCI Breakfast briefing

Introduction

• Did you know? • By the year 2020, 50% of wealth will be in the hands of Generation X and

Millennials

• As much as 50% of wealth will transfer between institutions as it changes hands of generations

• This presentation attempts to answer: • Why is wealth transferring between institutions?

• What is Wealth Managers doing to retain wealth during this transfer?

Why is wealth transferring?

• Demographics are changing • Aging population

• Increase woman investors

• Increased competition

• Regulation

Quick recap on generations

Millennial

Generation gap?

What are the needs of the new investors?

• DIY Investing

• Outcomes based investing

• Socially responsible investment (SRI)

• Algorithm selected investments (Robo-Advice)

• Big data investments (Robo-Advice)

• Digital interaction and communication

• Lower fees

• Tax efficiency

*Digital wealth management platforms satisfies the needs above…

Tax efficiency

• Tax loss harvesting • Example: Before fin year end, sell SNH and NPN…

• Utilising your annual tax free capital gains allowance of R40k • Example: Before fin year end, sell NPN and realise profit…

• Rules! • “Bed and Breakfast” rule

• if you dispose of shares at a loss and buy back those shares within a 45-day period on either side of the disposal, you must disregard the loss

• Capital gain tax • Shares must be bought as a capital asset (long-term dividend-producing investment) and

not as trading stock…

Increased competition

• Incumbent Wealth Managers • In-house development : ABSA, Sygnia • Partnering and collaborating with digital platforms:

• Bizank – Anchor • Advicement – EasyEquities

• Open APIs – Any provider that complies to specification • Tax calculators, robo-advice models, projections

• Pure Digital Wealth Management Firms

• US: Betterment, Wealthfront, Motif • SA: OutVest, iTransact, NMRQL

• Non-financial players

• US: Google • SA: Vodacom, MTN

Digital wealth management platforms criticism

• Not all clients are tech savvy

• Solutions are not personalised enough

• Does not cater for complex holistic tax, trust and estate planning

• It’s never been tested in a real market crash

• Takes no accountability

• It is not really independent

• It does not look at all investment options in the market

Enter the hybrid model

Traditional advice

- Not a good understanding of personal finance

- Require direct human interaction - Complex personal finance structure

with trusts, tax and estate planning - Not tech savvy - Paper onboarding and comms - Not cost sensitive - Time constrains

Hybrid advice

- Good understanding of personal finance

- Require human interaction for the more complex items and to test ideas

- Tech savvy enough to use robos for the standard investments

- Online onboarding and comms - Cost awareness - Time awareness

Robo-advice

- Good understanding of personal finance

- No direct human interaction required - Simple personal finance structure or

too small portfolio for advisor - Tech savvy - Online onboarding and comms - Cost sensitive - No time constrains

Future of Wealth Management

Thank you

• Proud to be associated with Objectway and MCI

• Digital partners you can trust

• Providing digital tools catering for the future of wealth management

Contact information: Magnus de Wet | 011 234 6570 | magnus@vistawealth.co.za

www.vistawealth.co.za

End – thank you

Vista Wealth Management is a juristic representative of Intrepid Capital, an authorised Financial Services Provider, Licence No. 48507

Unit Trust Investing Stockbroking Insurance

Retirement Discretionary

RAs

Preservation

Living Annuity

Local

Offshore

Endowments

Tax Free

Local

Offshore

Share-based Loans

Personal/Business

Life/Keyman

Income protection

Disability

Dreaded disease

Buy/Sell

Offshore

Bank accounts

FX Conversion

Treasury

Investing