Local Financial Services
- Local investments across a full spectrum of asset classes ranging from cash funds through to equity, property and bond funds and where necessary,
specialised portfolios such as hedge fund products and structures;
- Investment products including retirement funds, preservation funds and structured wrappers;
- Estate planning including wills, trusts and tax affairs;
- Personal and business risk management (including assessment and analysis of existing life policies and benefits).
Offshore Financial Services
- Direct offshore investments utilising either offshore allowances, or, where these have been fully utilised, additional offshore transfers through negotiated asset-swaps;
- Offshore portfolio management of funds held in overseas jurisdictions, including amnistised assets;
- Estate planning and tax guidance, including either establishing offshore trusts or managing/advising your existing offshore trust assets.
All elements of the above services are included in the comprehensive reports provided to our clients. We remain up to date with the constant changes in both legislation and the asset management industry, and the impact these changes have on our clients wealth management strategies.
Wealth Management Process
Our wealth management services are specifically geared towards achieving long-term goals and objectives that have been agreed on at the start of our relationship. In order to establish your long term goals and prepare an appropriate structured plan, we need to establish (amongst others) the following:
- Your current financial and personal circumstances (current investments, assets, liabilities and income potential, as well as an understanding of your family situation);
- Goals and expectations you have in terms of your investment portfolio and current or future income/capital requirements;
- Your personal values in terms of what you expect to achieve with your income and capital expectations;
- Personal expectations in terms of portfolio performance and capital volatility, and your understanding of portfolio and asset class returns;
- Any other issues that may need further discussion.
Having spent time understanding your personal requirements and expectations, and using the information gathered both during the meeting and from the Client Questionnaire which you will have completed, we then prepare a report which will cover the following issues:
- A summary of your circumstances and requirements;
- Assessment of your specific financial goals and expectations in terms of your current assets and projected cashflows;
- Specific recommendations on structuring an appropriate portfolio;
- Cash flow projections based on what we believe are reasonable assumptions regarding long-term portfolio returns and income requirements;
- Identification of any risks posed to your long-term goals (for example, ensuring that any children/dependants or family members have adequate medical aid/life cover);
- Specific issues regarding estate planning, and recommended estate planning mechanisms to resolve these.
Partnering System Providers
Holistic wealth management requires the use of the following service providers:
- Administration services for the provision of products such as retirement funds and living annuities;
- Asset management for the investment of funds into the various asset classes (equities, bonds, property, cash and hedge funds, both locally and offshore);
- Estate planning (wills, trusts and tax advice);
- Risk management (life assurance, including both personal and business risk management).
To provide a truly independent wealth management service where your interests are placed first, we utilise external companies for all of the above requirements. We are therefore able to objectively assess and change, if necessary, the services that these companies provide on our behalf to our clients.
We only deal with reputable companies who have a long-term track record of superior products and/or services. We are aware of new developments in the financial services industry, but remain committed to providing access to service providers that have a proven track-record.
Sterling Private Wealth Fund Manager Selection Investment Principles
Sterling Private Wealth prides itself in partnering its clients with highly respected fund investment management teams, both globally and locally.
The greater Sterling advisory team enjoys over 100 years’ experience in retail high net worth client relationships and strategy, and has vast experience in manager selection, interrogation, and approval.
The core principles of our selection criteria are as follows:
- We favour well respected individuals (not necessarily team or brand related), with in excess of 10 years measurable investment experience;
- We advocate a blend of large managers (size is not necessarily a constraint), and boutique, smaller, flexible, independent managers, upon our approved fund list;
- We do not favour a trading mentality and prefer bottom, up, conservative, margin of safety type approaches;
- It is preferable for our selected managers to display a high degree of downside protection, as we understand the importance of this aspect of wealth planning in our mutual client’s lives. We seek to employ managers who guard against a permanent impairment of capital entrusted to us;
- Our managers need to have a deep understanding of our end investors requirements and needs;
- Low portfolio turnover;
- Reasonable and fair pricing;
- Fund managers with whom we can develop a lasting relationship based on mutual respect, understanding, patience and tolerance.
It is widely known that it becomes more difficult to outperform the benchmark once you have grown significantly as an asset manager, since some of the better investment opportunities might be in smaller and mid-cap shares, during certain cycles. It is a generalisation, but broadly speaking, once asset size becomes an issue, it does become more difficult to outperform (the benchmark). We pay close attention to this issue, hence our blend of larger (and successful long term) and smaller funds.
When faced with a choice from a universe of funds, an investor must make an educated decision as to where he invests his money. There are several factors to take into consideration.
We acknowledge this difficulty, and as a result we make available passive, indexation solutions to our clients in order to complement the active strategies, where appropriate. We furthermore understand that indexation is a guaranteed long term underperforming solution, given the cost of such a strategy.
With hundreds of funds in many fund sectors (and growing), investors are constantly bombarded with information on funds. This information and choice overload can make choosing the right investment manager an overwhelming task.
As wealth managers offering a “best of breed range” of products for our high net worth investors, it is our job to analyse the domestic and global universes, searching for the most appropriate managers to invest our clients’ assets.
This process can be simplified once one identifies the two key goals of fund manager selection which are 1), to find a manager who has the experience and track record to protect your capital against volatile market conditions and 2), to ensure that the manager can grow the real value of your capital over time (i.e. ensuring the value of your money grows ahead of inflation).
The Sterling Group identifies top-tier managers in a variety of asset classes by first articulating a clear and concise point of view with regard to specific investment opportunities. The idea generation and discussion that leads to this important first stage of the manager search process comes from our experienced advisors, senior members of our staff and, often, our clients and approved managers.
The Sterling Group’s research team is responsible for identifying investment managers that are able to profitably invest in a manner that is consistent with The Sterling Group’s overall view of the markets and investment thesis. These investment opportunities are sometimes very specific–such as identifying a tactical opportunity -while other times opportunities are more broadly defined and best expressed, for example, through a low-cost, fundamentally-based index solution.
While statistical and quantitative review of the universe of potential managers is an important and necessary component of this part of the process, The Sterling Group’s research team also spends significant time determining whether managers are approaching their investment opportunities in a way that is efficient and appropriate for the specific needs of our clients. In doing so, the research team ensures that structural characteristics such as investment terms, fees, and liquidity constraints are given thorough consideration early in the process.
The output of this early stage of research yields a short list of skilled managers, from which the research team proposes a number of candidates for selection as an approved manager that can be utilized in client portfolios. This stage of the research process includes intensive due diligence on the manager (both internally and relying on Fundhouse research), from both an investment and operational standpoint.
The Bottom Line
The industry of evaluating mutual funds and their managers has grown as fast as the mutual fund business. There’s an overwhelming amount of information available to investors, but there are ways to simplify the process and evaluate the manager based on credentials, experience, process and performance in various market cycles.
The Sterling Group Client Offering: Differentiation and Positioning
The Sterling Group views itself as reasonably unique in that it operates broadly as a focused partnership. All 6 client facing advisors are equity participants in the business and their commercial success is intrinsically linked to:
- The success and growth of their client’s assets, above inflation, over time;
- A satisfied and content high net worth client base that will refer like-minded, quality clients;
- A growing and glowing reputation, where each participant in our business understands that, as a smaller business, our integrity and good standing is all we have to ensure continued and long-standing business success;
- We do not have the luxury of the brand marketing ability that a big bank or insurer has to withstand horrific client abuse, losses, and mis-selling;
- Our good name is paramount and the protection of this integrity critical;
- This drives our behaviour.
Every portfolio within The Sterling Private Client Group is custom-built to suit the specific needs of each client. We offer an array of equity and fixed-income funds, globally and locally, including separately managed accounts where necessary, collective investments and other investment vehicles.
In addition to having our own dedicated portfolio strategy team, we have access to our specialist investment management team, at Counterpoint Asset Management. After a thorough review and analysis, your personal Wealth Manager will help determine the appropriate mix of investments for you.
Our comprehensive process takes into consideration your objectives, risk tolerance, cash flow needs, special constraints and tax situations, among other factors. We then re-balance your portfolio in line with both the market and your changing needs.
Here are some of the benefits of our unique and proven portfolio management process:
Customized risk management
Portfolios are constructed with the appropriate balance of stocks (for long-term growth) and bonds (for income and reduced volatility), according to your individual situation and time horizon.
Our Multiple Portfolio Manager System ensures that portfolios have an appropriate blend of several different investment styles, taking full advantage of market cycles. A natural bias towards capital protection, however, exists.
Real-time asset allocation
Funds and or/Stocks are selected using a bottom-up process that looks for companies with the most favorable long-term fundamentals, without regard to geography or the near-term market outlook.
Alignment of interests
Wealth and Asset management is our only business. Protecting and prudently growing your wealth is our sole mission. If you do well, we do well.
Transparency of holdings and results
We provide regular reporting of all holdings and results, including access to account information 24 hours a day on password-protected client websites.
All assets in the The Sterling Private Wealth Group, both equity and fixed-income portfolios, as well as other holdings, are fully liquid.
Proven after-tax results
Winning by Not Losing
- We protect capital first and then seek upside opportunities;
- We help avoid emotionally-based investing mistakes – including our own;
- We establish a sensible investment policy and stick to it;
- We carefully manage fees, taxes and other costs.
Concentrating in Our Best Investment Ideas
- We believe great managers are rare and the best are often hard to access;
- We concentrate only in high conviction managers demonstrating sustainable differential advantages;
- We think like investors and not consultants.
Demonstrating Intellectual Integrity and Leadership
- We express conviction in our ideas only after fully evaluating the relevant data and performing the appropriate analyses;
- We inform and educate through our market commentary, published articles, industry speeches and participation;
- We provide our clients with clear and unambiguous recommendations;
Is your Relationship with Counterpoint not an issue in terms of Conflict of Interests?
Firstly, let us state that it is, of course a conflict.
We do not hide from this fact, but rather embrace it. We see this partnership as critical to improving the research capability and investment insight of The Sterling Group, and indeed our clients. Our relationship is clearly disclosed and explained to clients.
Less than 10% of our client’s assets are exposed to Counterpoint funds. If performance justifies, in the long term we would like this number to be closer to 30%. The Counterpoint Team improve our asset allocation thinking, Macro investment view and knowledge base.
The above position still positions us as a broadly open architecture business, with a core range of solutions to which we are inextricably linked. We see this as an enhancement and a differentiator from competitors.
We charge an initial once-off fee on the placement of new funds where appropriate, and a recurring advisory fee paid from your investment accounts under our management. These fees are based on a percentage of the investment value.
All fees or commissions earned are fully disclosed and agreed upon up front. Where we utilise companies for once-off or ad-hoc professional services (for example, wills and estate planning) we shall assess your requirements and then request a written quote from the relevant company for your consideration before proceeding.
We do not charge performance-based fees, as we do not believe that this approach aligns the clients objectives with those of the wealth management company. We provide appropriate advice and guidance on the management of your portfolio, but ultimately your wealth management strategy is reliant on the individual asset class returns as well as the performance of the underlying fund manager.
We have yet to see a practical performance-based fee structure for wealth management that utilises suitable benchmarks and offers financial benefits to both the client and the advisory company. Most advice-driven performance fees are one-sided!