Momentum Advisory Service, the linked product subsidiary of financial
services company, Momentum, has renamed itself Momentum Wealth and has
expanded into the top end of the sophisticated small to medium-sized
pension or provident fund market, with the aim of giving members personal
choices.
Momentum Wealth has entered the growing market of personal, customised
portfolios for employees.
Trevor Strydom, responsible for marketing at Momentum Wealth, says a
qualified financial adviser advising a company with 30 employees could
create 30 different investment portfolios based on the particular needs of
each individual employee. All costs - projections and values - are fully
transparent and specific to each employee. In effect, wholesale group
investment business can now be dealt with on a retail business level.
Momentum Wealth is using its existing system, which services 100 000
clients, to offer investment choice across a wide range of mainly unit
trust funds on a real time basis.
Momentum Wealth`s individual investment products have allowed individual
investors to choose from a wide universe of unit trusts and other
investment products. These options are now also available to employees of
pension funds on exactly the same basis.
Strydom says the company originally took on the appearance of a linked
investment company, but `it was strategically formed to rewrite the rules
of the pensions, life assurance and linked industries from the outset. From
the start all systems were developed in-house with the aim of catering for
the product enhancements now being rolled out.
`Momentum Wealth`s computer systems were built to its own specifications
with individual choice as a cornerstone in mind. Its communication systems
have also been designed in-house rather than bought off-the- shelf. Again,
the criterion is instant response to personal customer needs.`
Another new development is the opportunity to use multi-manager funds at an
individual employee level. This allows the individual to invest directly in
specific risk-profiled funds with asset managers at a discounted price that
was previously only available to large pooled group investment portfolios.
Strydom says: `Our approach solves the problem currently faced by employee
benefit consultants and administrators. How to enable sophisticated
employees to understand and become involved in what is, in most instances,
the biggest investment of their lives. In this day and age people want to
be in control of their own financial destiny.
`The shift to defined contribution funds places the investment risk
squarely with the individual. Individuals are therefore demanding greater
understanding and involvement. Obviously they will need the assistance of a
personal financial adviser in determining their individual risk profiles
and investment choices.
`The individual employee faces a very specific risk - a risk of receiving a
lower pension than expected if retirement funding investments
under-perform. Employees are interested in and want to be informed about
their own personal investments and understand the reasons for performance.
They want to understand how their investments are constructed and want to
monitor returns regularly.`
On top of this, Strydom says retirement fund managers have always faced the
daunting task of creating an investment strategy to suit a diverse group of
individuals containing risk-junkies of 25 and risk-averse grandfathers of
62.
With the new Momentum Wealth products it will now be possible to design
personal investment strategies for anyone from a 23-year-old male
risk-taker, a 38-year-old female with children and two 55-year-old men.
The 23-year-old, self-confident male wants high returns and does not mind
running high risk. He will want to put money offshore, won`t be afraid of
specialist funds and may look at IT and financial services. He won`t be
averse to using a relatively new firm of asset managers. This profile can
be matched precisely, with retirement contributions apportioned accordingly.
The 38-year-old female with children is into her high-earning years. She`s
not yet cautious, but has little time to plan. She needs the reassurance
that her money is being well invested by highly skilled, hands-on managers.
A possible option would be to channel contributions into relatively
aggressive wrap-funds run by top performers - with regular support and
review from a knowledgeable intermediary.
The serious-minded 55-year-old male is five years from retirement and has
worked to pre-set time-horizons. He`s happy with his investment performance
to date.
He owns interest-bearing instruments and a portfolio comprising cash,
perhaps a balanced fund and guaranteed fund. If there`s value in the market
and equities look the place to be, he will consider putting 20 percent of
contributions into more aggressive funds as the profile may already tend
toward conservatism.
Strydom says: `Personal investment choice not only liberates the individual
employee. In this sophisticated end of the market it also liberates
trustees by allowing employee benefits consultants and financial advisers
to assist each individual member of a group.`