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So who is keeping your adviser’s emotions in check?

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Beware emotive, knee-jerk financial advice that can destroy value

Emotive, knee-jerk reactions seldom ever work out well. Especially when it comes to investing. Picture: 123RF/KURHAN

After all, advisers are human and subject to the same emotional drivers their clients face. Two emotive issues South Africans are facing today are those of offshore vs local markets, and whether a policy of prescription will apply to retirement funds. SA’s fiscal position has been deteriorating over the past decade, so it’s entirely possible that prescription had been considered before 2017.

The maximum limits imposed only appear to be a problem in terms of offshore exposure, and many funds are way below the 10% that can be invested in the rest of Africa. It may be possible that retirement funds could entertain whatever proposal comes forward. A more prudent approach may be to stop contributing for now and save those funds until February 2021. If it looks like prescription is progressing, then take those funds and invest them where you see fit. If, however, prescription is off the table, the tax benefit is still there for the taking.

 

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