The term “economics” has its roots in ancient Greece. It is derived from two Greek words, namely “oikos”, which means “house”, and “nomos”, which means “law” or “custom”. When combined, “oikonomia” roughly translates to “household management” and concerns itself with the efficient allocation of resources within a household. The first “economists” one might, therefore, argue were not the clever philosophical mathematicians of the eighteenth and nineteenth centuries but rather the ancient stewards who used their expertise of providence to steward households towards prosperity, wealth, health, and happiness.

Over time, economics evolved to encompass a broader meaning whereby it sought to understand and to analyse how societies manage their resources to achieve their goals and to improve their well-being. Economics also became more of a mathematical science and the stewarding skills which it once embraced were all but forgotten. Today, wealth and investment managers try to replicate what the prodigal stewards once did but most fall short because they neglect the independent and holistic approach followed by the experts of old.

Our approach is, however, different: We not only combine wealth and investment management expertise but we do so independently and holistically. In this way, we can truly guide families with providence towards prosperity, which is an all-encompassing term that refers to the wealth, health, and happiness of individuals and their families across generations.

Independent financial advice offers clients unbiased, personalised guidance that considers their unique financial circumstances and goals. This can lead to more informed financial decisions and a more appropriate product and service mix, which, ultimately, leads to more efficient returns in the long term. But independence also leads to increased financial security and greater confidence in one’s financial future, that is, greater peace of mind. Unfortunately, too many clients receive less efficient guidance from advisors who do not offer independent advice but only those products and services of the company that they represent.

Holistic financial advice considers the individual, their family, and even the generations to come. It also considers each one of these from the much broader perspective of wealth, health, and happiness. By addressing these three dimensions together, holistic financial advice aims to improve a person’s overall well-being. This approach acknowledges that financial success alone does not guarantee health or happiness. The key is to find the right balance between accumulating wealth, maintaining physical and mental health, and pursuing a fulfilling and purpose-driven life. In essence, holistic financial advice recognises that wealth is a means to an end, and that end is often health and happiness. It provides a roadmap for individuals to use their financial resources to create a life that aligns with their values, promotes well-being, and, ultimately, leads to greater contentment.

Like the ancient stewards, we aim to provide independent, holistic financial advice to our clients in a way that can improve their wealth, health, and happiness for generations to come. To do this, we partner with the best product and service providers, and offer our clients unbiased, personalised advice in the context of their overall well-being.

The world of finance and investments is often associated with numbers and statistics but the real-world experience looks a bit different with behavioural patterns often playing a significant role in financial markets. Behavioural finance is the study of the psychological influences and biases that both investors and financial practitioners experience when making financial decisions. These influences and biases can explain some of the market anomalies that we observe, such as dramatic moves in stock prices that are unexplained by the numbers and available information alone. Behavioural finance, therefore, attempts to explain why investors make different decisions than would be expected from a perfectly-rational individual that only makes decisions based on facts and sound reasoning. When working with real-world investors, one quickly realises that constructing financial plans based on the ‘optimal solution’ that a perfectly-rational investor would prefer, often leads to suboptimal outcomes as investors struggle to stick to these plans because of their inherent biases. We, as financial practitioners, therefore, have an obligation to educate investors on the various pitfalls that behavioural biases create and, where necessary, adjust our recommendations to accommodate these biases.

One example where a middle ground may be found is when an investor exhibits a bias known as ‘mental accounting’. This bias refers to the tendency of individuals to treat money, which should be seen as perfectly fungible, differently, based on the source or specific purpose assigned thereto. For example, individuals expecting to draw an income from their investment would often take on too little risk in their total portfolio because they tend to choose a ‘safer’ investment to the detriment of long-term performance. To accommodate investors, we often employ the bucket or layered approach to portfolio management, where each financial goal, whether it be income or growth, has its own sub-portfolio. The total portfolio is often less optimal than the perfectly-rational portfolio but the client is more likely to remain invested, leading to a better overall outcome.

Another common behavioural trait exhibited by both investors and financial practitioners is ‘herding’. It is very common for individuals to ‘follow the herd’ when making decisions, which often leads to irrational behaviour and asset bubbles. History is full of examples of this phenomenon and, admittingly, it is very difficult to swim against the current, especially if you must do so over an extended period. We, as financial practitioners, must build controls into our processes to avoid making the costly mistake of comfortably following the herd to avoid being different. Advertisers have gained enormous reach through online marketing in recent years, which increases the risk of investors succumbing to this bias because they have the perception that ‘everyone’ is investing in this new product, increasing the feeling of FOMO (fear of missing out).

The list of behavioural biases that impact investors is extensive. We believe that the perfectly-rational solution, although theoretically optimal, might not be the correct recommendation for all clients in reality. It is, therefore, important to properly understand and identify biases that investors exhibit, educate clients and, if necessary, manage behavioural biases for the ultimate benefit of investors.

Theoretically, it is not difficult to grow an economy. But practically, it is a nightmare to execute. Although there are many ways to approach economic growth, I would like to focus on the collective ideas of improving the ease of doing business and facilitating sound money. Overall, these collective ideas can encompass most of what is needed to sustainably grow the South African economy. However, knowing what to do, or even how to do it, is not as important as knowing why you are doing it. We should have more capitalist collectivism and less bureaucratic collectivism.

Improving the ease of doing business
The ease of doing business is everything that is needed to start and to run a successful and sustainable business. It has nothing to do with the traditional idea of government support, and everything to do with guiding, gearing, and getting out of the way of entrepreneurs. Governments should only guide and gear industries that have a high multiplier, that is, those that generate wealth and, consequently, more jobs. Importantly, these industries must have export discipline, meaning that they must be able to compete internationally. Also, guiding and gearing should only be for a set period. The South African textile industry is, therefore, possibly the worst industry to support.

Why is it important to first create wealth and then to employ more people? And why is it important that businesses, and not governments, create jobs? Because businesses employ people in the most effective manner, not governments. Businesses create more out of nothing and employ out of excess. Add export discipline and businesses are forced to invest in technology and in their people in a way that enables them to compete internationally. Governments do not compete, they simply impose, and because they do not compete, they never learn the skill of wealth creation, and because they do not create, they employ out of lack. Then there is also the lack of pricing signals that is missing in the government sector which makes it almost impossible to effectively allocate scarce resources.

Practically, to improve the ease of doing business means to fix Eskom, fix our railways, get rid of employment equity policies, and pull the teeth of unions. But it also means protecting private property rights and allowing for free trade. How do you do this? By building momentum through doing small things right to build confidence that can lead to larger victories. It starts with keeping the streets clean, and it ends with an education system that can compete with the best in the world.

Facilitating sound money
Sound money is the two-fold working of healthy fiscal and monetary policy that creates an environment that is conducive to growth. In terms of fiscal policy, this means effectively spending on capital and spending less on current expenditure (salaries and grants). Capital spending includes, but is not limited to, infrastructure, education, and healthcare. Sound money also means not wasting money and being accountable for every cent that is spent. Furthermore, it means guiding and gearing industries that need the support to create the wealth that can later be distributed from the self-interest perspective of collectivism. In terms of monetary policy, it means creating a stable price environment without reducing consumer confidence.

Economic growth all starts with the correct ideology
Economic growth all starts with the correct ideology, or else you will lose yourself along the way, much like the government did during the Zuma era. Our current ideology must lean less towards bureaucratic collectivism and more towards capitalist collectivism. Because our ideology is incorrect, private property rights are not protected like they should be to incentivise and facilitate the wealth-creative process of entrepreneurship.

However, the idea of collectivism is important because government should channel the efforts of capitalists (entrepreneurs) towards those industries that generate the greatest sustainable returns, that is, those that have the highest multipliers in a way that benefits all stakeholders. Moving to a collective self-identity, like the Rainbow Nation that we had under Nelson Mandela, will come naturally as government wins back the confidence of its citizens.