Beyond pension with your PFA, you need extra financial plans– Meristem boss

Financial planning is critical to achieving your short and long term financial objectives, which entails conscious and disciplined approach to managing your finances. Damilola Hassan, head, Wealth Management, at Meristem Wealth Management Limited in this interview with Modestus Anaesoronye shares her thought on financial planning, importance of planning for retirement, Meristem Wealth Management as a financial adviser and their impact on individual and institutional investors. Excerpts:

Could you tell us about Meristem Wealth Management and what you do as a company?

Meristem Wealth Management Limited is a wealth management company. We provide core wealth management services to individuals and institutions. When I say core wealth management services, Imean financial services that focus on the growth of individual’s finances, the preservation of this finance and ultimately the transfer of this finance and assets generally from one generation to another. As an assets management company, we work with people to manage their investment and advice them so that they can achieve their objectives.

How long has Meristem Wealth Management been in existence?

Meristem Wealth Management was established as a Company in August 2008. Prior to then, it was a unit of asset management department at Meristem Securities Limited. But by 2008 it became a fully fledged company.

In managing people’s assets, a lot of planning is tilted towards retirement or end of work life. What does planning for retirement actually mean?

There are two key words there, Retirement and then Planning. Retirement typically just describe that stage of life when an individual stops active work life, and we must all get to that point either voluntarily or involuntarily. Voluntarily because you have gotten to a particular age where you are required to go out of active service and involuntarily when situations you do not have control over arise. It could be as result of heath issues, downsizing or any other form of loss of employment, may be as result of state of the economy.

Planning in other words involves a conscious effort to put some things in place to ensure that at that point in time when an individual retires, his current life style prior to retirement can be sustained. Planning also involves that, as much as possible things that are within your control can be properly organised in a disciplined and most orderly manner such that post retirement you do not run out of resources to keep your life going. It’s just to ensure that you can still live comfortable as much as you want post retirement even when you are not earning regular income any more.

Many people are confused as to who should think retirement and at what age?

My personal opinion!  The moment you get your first job and begin to earn an income, either as an entrepreneur or an employee, you should start planning retirement.  Whether it’s a reality or not, it is a different ball game. Retirement is usually not a priority for individuals who just started working, but ideally that is what it should be. That is not to say it cannot be started any other time, but the emphasis in starting early is because the earlier you start, the better for you. There is no fixed age as far as you are starting before retirement comes.

If an individual client walks up to Meristem Wealth Management Limited to seek advice in respect to retirement, what would you be offering the person?

We will start by having a one-on-one discussion with the person.  It is not only about, which investment instruments, but it’s also about defining your goals, your financial objectives. What do you want to achieve. We also put into consideration so many other factors-your age, how long have you been working and how many more years are left for you to be on active service. Funny as it may sound, one other important issue we consider is longevity. We try to estimate how long you will live post retirement just to ensure that you can have an idea of how long you want your retirement saving fund to last. I say funny because you do not really have control over that but we try to work within an estimate.

So in terms of product, what products will you recommend for a retirement plan?

There are so many investment products; you could invest in equities, fixed income to provide guaranteed returns, real estate to hedge inflation and also for capital gains. All of these investment assets depend on whom you are as a person, how old you are, what kind of risk you would want to take and to what extent can we have a mix of this.  You will then find that for a younger person who has a longer time before retirement will go more to equities because equities are better for those who have long time horizon because the tendency to earn better return in a cycle of  3-5 years is very high, also the same with real estate. But when you are much older, your ability to take risk is reduced, so we will diminish the emphasis on equities and dwell more on fixed income instruments. That is, investments that have low level of risks and guaranteed returns over the years. All of these like I said is dependent on your age and ability and willingness to take risk.

Must one get a financial adviser to be successful in retirement planning?

Financial advisers can be termed as financial physicians. If I must ask, should one have general physician to maintain a good health? A lot of times, we assume we are fine and we do not go to our doctors for medical checkups until we have symptoms and we have an urgent need to see a doctor. Again you also have another set of people who on regular bases without being sick walk up to their doctor to check if everything is fine and also to know what to do. That is exactly the role a financial adviser plays in the life of an individual to be sure you are on the right part. You could be knowledgeable on what to do but you also want to lean on professional practice to make sure you are doing the right thing. Often times, as individuals we have our primary duties, we have responsibilities and we have jobs that we attain towhich takes a lot of our time. So, we don’t have enough time to properly manage our assets and finances, and in that case, it’s only proper that we engage a professional adviser to step in and manage that aspect of our life to enable us achieve our set goals.

How many clients are you managing their accounts at Meristem Wealth Management?

We have different categories of clients. We have retail end of our services and they are about a thousand clients, we also have high net worth individuals and clients that we offer core wealth management services and we have them in their hundreds, and then we have institutional clients. But typically, for an asset company like Meristem, our strength is not largely on the number of clients that sign up with us but it’s on the total value of assets under management because you can have an individual with millions of dollars that you are managing his assets. So, for us at Meristem Wealth Management we have as at June 2016 total assets under management to the tune of over N90 billion.

When has it become late to start planning for retirement?

Well, I will say it is only late when you have actually retired. I mean, it’s only obvious that you cannot start saving for retirement when you are already in retirement. But as long as you still have time on your hands before retirement, no matter how small the time, you can still do something because you are still better off than someone going into retirement without any plan at all. But ideally, the earlier you start to plan the better for you. Even if you didn’t start early enough, but 15-20 years to retirement, you should have an effective and disciplined approach to it.

Can an individual walk up to Meristem Wealth Management office for advice or counselling on financial planning?

Absolutely!Yes. That is why we are here. Like I mentioned, we have individual clients, we have institutional clients, we have high net worth clients and we also have high ultra-net worth clients; We have retail clients; the‘you and me’ kind of clients where people just walk in for one thing or the other. There is something for everyone. In fact, we also have student clients and we have also floated two mutual funds, where investors can come in with a minimum N10, 000.00 and subscribe. The funds are pulled together and well managed by professionals. So for someone that does not have some much fund to engage Meristem Wealth Management for professional services can come in through the Mutual Funds and still share from the pooledfortunes with shared cost. These funds are open ended and you have investors coming to subscribe everyday while existing investors are also increasing their subscriptions.

Why should someone with an existing pension arrangement may be with a Pension Fund Administrator, still have need for extra financial plan with you?

That is a good question. The pension arrangement with the PFAs is the mandatory one from the Pension Reform Law and that is a beautiful way to save for retirement for everyone that has subscribed. It is mandatory for institutions having up to three employees. Beyond that, individuals should have something they will have control of to a large extent. The retirement planning we offer at Meristem Wealth Management affords the opportunity to take into consideration the individual’s unique circumstances and peculiarities. You are sitting with us and we are having a one-on-one interaction, we are evaluating your income, we are evaluating your existing assets, we are evaluating your liabilities and your obligations, and we are projecting how many more years those obligations will continue to crystallize. We are matching it with the income you are earning from assets if you already have, so that at the end of the session, you can see in black and white what gaps there are to fill. Seeing this gap, we try to find out what you need to do to fill that gap. So, that is the difference because the statutory contribution for pensions will not take into consideration these unique qualities that affect your future. That is the beauty of having an extra plan with an institution like Meristem Wealth Management Limited.

Modestus Anaesoronye