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Investment Indicators - 4 June 2018
In This Week's Newsletter
Rates Review
Investment Rates
Money Market Funds
Top 3 Rates
 
From the Crow's Nest
What is holding millennials back from reaching financial freedom?
 
Your Practice Made Perfect
New Draft Conduct of Business Report
Allan Gray lowers offshore minimums
Who should be the parties to a trust?
 
Regulatory Examinations
FSCA RE Study Material update June 2018
RE Deadline 30 June 2018 - check RE registration date deadlines
Schedules for 2018
 
Careers Platform
Are you hiring? Moonstone offers biggest industry platform for employers
Featured Positions
 
In Lighter Wyn
Tips on having your eyes tested
 
 
 
 
 

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Rates Review
Top 3 rates
 1. Secured Investment Rates
Please note that (G) indicates a Guaranteed and (L) a Linked product. In order to understand the difference between guaranteed and linked rates, kindly click here for an explanation.
 R 100 000
 
 
 
     
  Company This Week Last Week
1 1Life (L) 6.970% 6.820%
2 Clientéle Life (L) 6.950% 6.850%
3 Absa (L) 6.848% 6.480%
     
 R 1 000 000
     
     
  Company This Week Last Week
1 Discovery  (G) 7.124% 7.014%
2 Clientéle Life (L) 7.050% 6.950%
3 1Life (L) 6.970% 6.820%
     
 2. Money Market Funds
  Company This Week Last Week
1 Cadiz 7.790% 7.760%
2 Allan Gray 7.660% 7.680%
3 Coronation 7.610% 7.660%
Please bear in mind that our figures, though based on the actual quotations that you also use, are for information purposes only, and can never replace the official quotation from the product house. In terms of the guarantees, you are requested to clarify the exact extent of such guarantees with the product house prior to advising clients.
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From the Crow's Nest
From the Crow's Nest
What is holding millennials back from reaching financial freedom?
Results of the 2017/2018 Old Mutual Millennial survey shows that better educated, tech-savvy and optimistic millennials – South Africans born between 1982 and 2000 – are more likely to seek financial independence and personal fulfilment, compared to older generations. This is according to Elize Botha, Managing Director of Old Mutual Unit Trusts.

The Old Mutual Millennial survey was commissioned to better understand the financial behaviour of employed Millennials, versus older generations surveyed in the 2017 Old Mutual Saving and Investment Monitor.

It showed that 24% of millennials are currently invested in a unit trust – versus only 2% among older generations – with 57% of millennials saying they invested in a unit trust with the purpose of increasing their net worth (1st) and 47% saying they looked to invest to reach financial freedom (2nd). However, the survey also revealed that 35% of millennials – the first generation to reap the fruits of democracy – were saving money to pay back debt – this number was 13% for older South Africans.

Speaking at the same event, Mapalo Makhu, Personal Finance Coach and founder of financial coaching firm Woman & Finance, said that millennials are facing unique financial challenges that make them susceptible to debt. “Many first-generation middle-class South Africans, millennials are playing ‘asset catch up’ - purchasing appliances and motors vehicles on credit - while caring for financially dependent relatives (other than their children) which creates a tension between the expectations of family and dreams millennials have for their own financial future.”

Research also showed that millennials are more likely to save money – in order of priority – towards travel (37% versus 10%), their education (31% versus 4%), a motor car (32% versus 11%) or starting their own business (23% versus 3%) – than older generations.

“This shift in priorities speaks to the bigger differences in the way millennials and older generations view money and the unique challenges they face,” says Botha. “Complete financial freedom – and the flexibility it offers us to travel, or to be our own boss – comes when the income from your assets exceeds your expenses. Only by reducing debt in tandem with investing in investment vehicles which offer growth assets and returns can millennials hope to reach this goal.”

Makhu agrees and says that unless millennials address their high levels of debt, they’ll struggle to reach their goal of financial freedom and independence. “Whilst not everyone aspires to building financial wealth, becoming financially free is achievable for most people by applying simple principles in a disciplined approach.”

Botha explains the four pitfalls millennials face on their journey to reach financial freedom:

1. HIGH LEVELS OF DEBT

Debt, typically in the form of personal loans, is often used to buy things that will be consumed – like appliances, clothes, or items that tend to depreciate over time. The survey revealed that 64% of millennials – compared to 14% among older generations – had a personal loan and 35% (versus 13%) of their income was spent on servicing the interest on debt.

2. SAVING, RATHER THAN INVESTING

According to the research, an alarming 47% of millennials – nearly half – did not know what a unit trust was. Others, who said that they could further define the collective scheme investment vehicle, tended to have difficulty in articulating their understanding of it. However, almost 61% of millennials in the survey were saving money in a bank account, suggesting that millennials do not understand the difference between saving and investing.

3. KEEPING UP WITH THE KARDASHIANS

The third pitfall is overspending – often utilising expensive credit – to buy the things we absolutely ‘need’ to appear successful. “What people don’t realise is that the real secret to financial freedom is to keep your living expenses as low as possible,” says Botha.

4. NOT DEFINING YOUR VALUES

“Without a clear goal most people will find themselves spending rather than saving,” says Botha. “Every person is unique, and our relationship with money is often complex. An understanding of your intrinsic values is also essential to find the resolve to achieve financial freedom. When we’re working towards something that’s important to us, we’re often more willing to work harder to reach our goal.”

We created a consumer friendly PDF copy of this article with savings tips and advice which you can download and share with your clients.
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Your Practice Made Perfect
Your Practice
New Draft Conduct of Business Report
The Financial Sector Conduct Authority (Authority) intends to replace the current compliance reports with the proposed Conduct of Business Report (COBR) that was published for public comment on the official web site of the FSCA.

The proposed COBR was necessitated by the changing regulatory landscape and the focus on outcomes based regulation and proactive supervision. It further seeks to address the inefficiencies created by requiring providers, regulated in terms of other laws administered by the FSCA, to submit the same information more than once to the FSCA.

The COBR was first published for comment on 6 December 2016. Due to the extensive changes made to the first draft of the COBR, the Authority deemed it necessary to publish the COBR for a second round of public consultation.

Interested parties are invited to submit written submission on the proposed COBR to thiropathy.moodliyar@fsca.co.za by 18 July 2018.
  • Click here to download the Invitation to Comment

  • Click here to download the new Draft Conduct of Business Report

  • Click here to download the Annexures for the report.

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Allan Gray lowers offshore minimums
In case you have missed it, Alan Gray recently announced that they will be reducing the barriers to entry for South African investors who want to invest offshore by significantly reducing the minimum amount required to invest via their offshore investment platform.

Earl van Zyl, head of Alan Gray’s product development team pointed out that it is important for investors to maintain a well-diversified portfolio, which includes offshore exposure above what local South African funds are generally able to achieve. As a result they have lowered the minimum lump sum investment of their off shore platform from US$10 000 to US$1 500.

Click here to view the detail on the Alan Gray website.

Allan Gray will be presenting at the Allan Gray Investment Summit in Cape Town and Johannesburg on 17 July and 18 July 2018 respectively. To find out more, visit www.investmentsummit.co.za.
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Who should be the parties to a trust?
Corné Nunns of Millers Inc.explains the legal definition of founder, trustee and beneficiary of a trust following the example of John that decides to create a family trust for the benefit of his immediate family and future generations to come. He is then informed by a friend that she has heard in the media that the estate owner (being John) cannot be the founder of the trust if he is also to be appointed as a trustee and he may also not be named as a capital beneficiary. She then suggests that she should be the founder of the trust that John wishes to create.

Click here to for a detailed explanation in order to better understand the different parties to a trust.
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Regulatory Examinations
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FSCA RE Study Material update June 2018

The May edition of the FSCA FAIS Newsletter contains a summary of events since the publication of Board Notice 194 of 2017 (the “Fit and Proper” Board Notice) which came into effect on 1 April 2018 and impacted on the RE 1 and RE 5 regulatory exams.

The “Fit and Proper” Board Notice contains amended qualifying criteria for these two exams, resulting in amendments to both the exams as well as the study and preparation material.

Updated Study Material

There are two sets of material which can be used for preparation purposes:

  1. The Preparation Guide for RE1 and RE5 which is available at https://www.fsca.co.za/Regulated Entities/Pages/LR-FAIS-Amendments.aspx and

  2. The legislation itself. The Preparation Guide refers to the relevant sections in the Act and subordinate legislation that must be studied.

The Preparation Guides are invaluable as they stipulate the content of the exams, in that they seek to explain what the examination questions will be testing. All examination questions are based on the content as set out in these Preparation Guides. In addition to the above, the Preparation Guides map out exactly where a candidate can find the relevant information in the legislation. The format that is used to provide this information is as follows:
 

TASK QUALIFYING CRITERIA REFERENCE / MOTIVATION
The task describes what the candidate must be able to do in respect of the legislation. The qualifying criteria refer to the knowledge that a person must have to perform the task in column 1. In this column the reference to the actual legislation is provided – if you read the particular section of the legislation, then you will have the required knowledge as referred to in column 2.

Every question in the question bank for all the regulatory examinations is based on the “qualifying criteria” (or the knowledge column) as explained above. The questions MUST be linked to these knowledge criteria otherwise it may not be included in the examination as an examination question.

It is important to read the actual legislation. One cannot expect to be tested on legislation without having read the legislation. By reading the legislation you will get used to the definitions, terminology and the manner in which the legislation is drafted. Please be advised that the same terminology and approach is used in the examination questions. The questions must be technically correct in that the correct legislative terms must be used at all times. Reading the legislation will help you to interpret the questions correctly.

Training Manuals

The FSCA does not endorse any training manuals as it has made available the tools needed to assist candidates to prepare for the examinations. Not all training manuals are alike as their authors are not legislative experts, or may have interpreted legislation incorrectly, or might not have covered all the information that will be covered in the examination (i.e. not all the qualifying criteria are covered in the training manual).

Complaints received by the FSCA in respect of the regulatory examinations include:

  1. The examination included questions that were not covered in my training manual;

  2. The questions in the examination did not resemble the questions in the mock exams;

  3. I obtained 100% for every mock examination, but when I wrote the regulatory examination I failed – there must be something wrong with the examination;

  4. I know the training manual off by heart, but I still fail the regulatory examination.

In each of these examples, the candidate does not question whether the training manual is complete or accurate, and whether the mock examination questions were accurate and reasonably in line with the real/ actual examination questions. Candidates conclude that the training manual and all the mock questions are correct, and therefore it is the regulatory examination that is problematic.

It is therefore very important that all FSPs, key individuals and representatives satisfy themselves that the training provider they use has the required skills and expertise, that the training material that is provided is 100% accurate and complete (in line with the content provided in the FSCA Preparation Guide) and that the mock questions are not sub-standard.

Enquiries

Queries related to the exams can be addressed to the two examination bodies or alternatively to FAIS.Exams@fsca.co.za.

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RE Deadline 30 June 2018 - check RE registration date deadlines
The table below indicates who has to successfully complete the RE 5 by 30 June 2018.
 
Representatives’ DOFA RE 5 Deadline
30/06/2015 – 31/12/2015 30/06/2018
01/01/2016 – 29/06/2016 30/06/2018
30/06/2016 – 31/12/2016 30/06/2019

DOFA refers to your date of first appointment. For instance, if you were appointed on 1 September 2015, you actually have two years and nine months in which to pass the RE 5 for representatives

Unfortunately, time is now running out for those who are compelled to pass in less than one month.

  1. Remember that bookings close about two weeks before the actual exam, for logistical reasons.

  2. In order to write before the DOFA deadline (last exam in June on the 29th), candidates should register by 14 June 2018.

  3. IMPORTANT: It is the responsibility of the candidate to make sure that he/she is registered for the correct examination, date, time and venue.

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2018 Schedules updated

Please note
: Registration cut-off is 11 working days before date of exam.
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Careers Platform
Are you hiring? Advertise your position on Moonstone’s Career Platform
Careers Platform Packages

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Our audience is relevant and industry specific: individual and corporate advisors and brokers in the following financial sectors: iInvestment, Risk, Healthcare, Banking, Retirement, and Insurance.


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Featured Positions
  • 2 x Marketing Assistants: HIC Underwriting Managers Pty Ltd, Bedfordview - We are looking for two assistants to manage the relationship between the Portfolio Manager and Broker. Must be able to work under pressure and be deadline driven. Read More

  • Claims Administrator: Cooke Fuller Garrun, Kloof, KZN - The ideal candidate should have at least 5 years experience in Commercial and Personal claims and must be FAIS qualified. Read More

  • Para-Planner: Carrick Wealth, Johannesburg, Durban and Cape Town - The Para-planner will be responsible for researching and analysing products to present recommendations to clients based on a thorough financial planning process. Read More

  • Financial Advisor: Universal Life Brokers, Randburg - Candidates must have at least 5 years experience in the long term insurance industry and in possession of a NQF5 qualification in financial planning. Read More

  • Experienced Financial Advisers: Centered Financial Solutions Pretoria / Centurion - Top franchise with the most comprehensive product range that included risk, investment, RA, short term & medical aid looking for dynamic financial advisers. Read More

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In Lighter Wyn
In Lighter Wyn
Tips on having your eyes tested
Before you see your optometrist, you will have to wait in the waiting room surrounded by outdated copies of every magazine imaginable. This is where you will discover the true meaning of the word "patient".

Eye test 1Once you have found the chair, the optometrist will slip a pair of heavy metal glasses on you that look like they have been knocked together by the local blacksmith. Whatever your optometrist tells you, these are not the latest in high fashion.

The eye test itself starts when you are asked what the lowest line on the eye chart is. Don't waste time by saying "Printed in the UK". Rather say "What eye chart?" The optometrist will then slide a number of lenses into your special metal glasses and keep asking you whether it is better with this one or that one. This is just to wind you up - they are all exactly the same!

Eye test 2Remember, the phrase optometrists hate most is "they are much of a muchness". Say this once too often and they will send you home with a pair of glasses that make you see round corners, and when you complain they will tell you that all glasses are "much of a muchness"!

Optometrists also like to ask whether the circles are clearer in the red box or the green box. This is no time to tell them you are colour blind! Just make a choice and go with it.

Eye test 3At some stage the optometrist will want to   take a closer look at your eyes. While he is staring into your eyes, its important to maintain eye contact, even if you get the unpleasant impression that your entire skull is empty, and he is thinking "oh my, there is absolutely nothing in there!"

If your vision needs correction, the optometrist may discuss the benefits of contact lenses over spectacles. You will find this very hard to believe as he/she smiles wearing the latest designer frames.

Finally, you will walk out of there with new glasses and crystal-clear vision, and suddenly see that your job, home and family are nothing like you imagined!
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