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The Value Discretionary Fund Managers Add During a Time of Crisis

It’s times like these that highlight the role business partners play, and where the partnership approach and flexibility of a discretionary investment manager (DFM) really comes into its own, explains Stephen Backhouse.
3 min read

At the time of writing, it’s early April 2020.* The world is in a crisis. Global COVID-19 cases are over 1.5 million with over 80 thousand deaths; an estimated three billion people are in some sort of lockdown worldwide, the global markets have taken a beating, and a global recession is unavoidable.

Back home in South Africa things are not looking much better. Our COVID-19 cases are approaching 2000 – and it’s still early days. The FTSE All-Share Index is down 23% year to date, and we’re all sitting at home getting used to a new normal.

The risk of writing these types of articles a month before they are published is that all the stats above will be outdated and irrelevant, but I’m confident that the challenges we currently face will remain the same.

Over the last month or so, wealth managers have had to make drastic and urgent shifts to how they run their advisory practices, service and communicate with concerned clients, look after their staff, and deal with a host of other challenges.

It’s times like these that highlight the role business partners play, and where the partnership approach and flexibility of a discretionary investment manager (DFM) really comes into its own.

The one thing I’ve picked up during the last few weeks is how DFMs are proactively engaging with their clients – and I’m not talking about mass communication or webinars on in-house portfolios I’ve seen from some industry players. But rather a more personalised and client-specific approach.

Analytics, for example, has gone to the extent of understanding through which digital mediums their wealth managers prefer communicating. For example, is it Microsoft Teams, Skype, Zoom, WhatsApp, or email? They also send out daily updates to all their wealth managers that summarise key events or trends and have set up bi-weekly interactive webinars that their wealth managers can call into where they speak about their solutions, markets, and trends.

PORTFOLIOMETRICS (PMX) has engaged in a one-on-one basis with all wealth managers and para-planners to make sure they are receiving the PMX updates and winning the digital battle, to find out if they have any burning issues, and if they are generally okay. PMX has also put out various opinion pieces to support wealth managers in the practical application of the challenges their clients are facing.

Lastly, Morningstar has also reached out to all their wealth managers and has hosted various interactive market and trend webinars. Morningstar has the benefit of being part of a large global organisation with over 300 investment professionals worldwide and has produced content across a broad spectrum of topics such as market timing and navigating investing during COVID-19. They have also put together specific client templates to assist wealth managers when communicating with their clients.

These are just three examples of where DFMs have the flexibility, scale and resources available to sift through the noise for one continue to produce a consistent investment performance while offering real value-added services to wealth managers and the end investor. In a time of crisis, it’s clear that these types of partnerships are invaluable.

*As stated above, the risk of writing articles like this before they are published is that the facts and figures become outdated very quickly. By now we know that the world is closing in on 10 million COVID-19 cases and 100 000 cases in South Africa (compared to the 2 000 in April). We also know that markets have corrected since the initial sell-off, but volatility remains.

What does remain consistent is finding the right business partners for the good times and the not so good times, and that is what this article to trying to highlight. If you want more information, please feel free to give myself or your INN8 business development manager a shout.

**Sound familiar? This article was published in the May issue of MoneyMarketing.

Written by

Stephen Backhouse

Stephen Backhouse

A strategic relationship specialist with over 13 years’ experience in the asset management and platform industry, Stephen is responsible for Strategic Relationships at INN8. He holds a deep knowledge of investment products and a sound grasp of local and international markets and trends.