In my daily interactions with financial advisers, it is evident that the search for the perfect investment platform in South Africa is a top priority. The platform, basically a piece of technology that facilitates investment, not only needs to deliver certain functions, but it also needs to evolve over the long term alongside the changing investment goals and financial aspirations of clients.
When looking for a trading platform in South Africa that is right for your clients, what then are the boxes that need ticking? In my experience, there are a number of important things to look out for...
In financial services, a great service offering is key. Having a local presence that delivers excellent service is even better. Nothing is more frustrating than trying to resolve a client query and struggling to even get a hold of someone to assist you, particularly when dealing with far flung locations that may also be in different time zones and with different native languages.
Product and service offering
Having a variety of products and services is what separates an all-in-one investment platform from bog-standard platform services. The more comprehensive platform providers tend to have tax efficient offerings to assist clients in building up their overall wealth.
Furthermore, you should consider a platform that does not limit the underlying assets that users can purchase. Choose a platform that can access unlimited funds, investment structures and allows you to buy shares to ensure that you are not restricted to what you can buy for your client. You also want to be able to trade those assets at your desired price without having to monitor the stock markets – this is why market and limit orders are a must-have function. The ability to make trades immediately is important too in order to make the most of a price at a given time.
When you set out to open an account, the transition between investment platforms can often be tricky and off-putting. To make this process as smooth as possible look for a platform that allows you to move your assets via an asset transfer from a different wrapper, platform or life bond at no costs.
Don’t we all want an investment provider that does not charge an arm and a leg whilst still managing to tick all your boxes? Platform fees are extremely competitive in the offshore space and it is worth taking the time to seek a provider that offers everything you need. It is imperative that you find a suitable platform where the fees are completely transparent. This way you are able to be clear with your client about the costs involved and any additional related ancillary fees.
Tax implications are a big consideration when choosing a jurisdiction in which to hold your assets. There are a number of offshore jurisdictions to choose from and the regulations vary. One example of an offshore jurisdiction often considered by investors in South Africa is the Isle of Man, where there is relatively low income tax and no capital gains tax. From a South African tax perspective the Isle of Man is tax neutral.
It can often be very frustrating and time consuming to finalise and regularise inheritance. Having a platform that provides multiple account ownership - in other words, joint accounts - makes this process much easier, as the account will automatically be left to the surviving owner(s) of the account.
In terms of technology, a platform should allow you to access your data via an API Rest or SFTP data feed. It should also provide a user-friendly portal that you and your client can access to manage the portfolio in a seamless manner. This would include the ability to trade the underlying portfolio online without the need for paper based dealing forms.
Another point to consider is whether your chosen platform provider has a local presence. Why? Firstly, it brings more comfort knowing that you can visit the office or pick up the phone to call your key contact who is in same time zone as you. Secondly, the tangibility of a local office brings comfort to investors as they can see for themselves where their hard-earned money will be going and who will be dealing with it.
Lastly, and very importantly, a platform should allow you freedom of choice. This choice can come in many forms but ultimately, it should allow you to control the why, how and what around your client’s investment. Look for a platform that is 3rd party and DIM agnostic that has no restrictions on your client’s capital, such as exit penalties or restrictions on contributions and, most importantly, one that is open architecture in terms of the underlying asset classes you wish to invest in.
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Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security or to make a bank deposit.