Advising High Net Worth Individuals
Presenters : Hugo van Zyl , Mathys Briers-Louw
Overview
Wealth should not be confined to a single jurisdiction. In a globalised world, should HNWIs hold wealth in ZAR, USD—or a diversified basket of currencies?
Traditionally, most advisers agree on four pillars of sound investing. William Bernstein’s classic framework—The Four Pillars of Investing—includes:
- Theory (understanding risk and return)
- History (learning from market cycles)
- Psychology (managing behavioural biases)
- Business (understanding costs and industry dynamics)
South Africans often link these pillars with the discipline and global reach of golf legend Gary Player. However, the increasing impact of geopolitical changes—such as the post-Trump era uncertainty in the US—suggests a potential fifth pillar: Political Risk.
In South African financial advice circles, four core principles—echoing the pillars—are commonly promoted:
1. Diversification Across Jurisdictions
The globalised HNWI cannot afford to be jurisdiction-bound. Spreading investments across countries and currencies reduces risk and seizes global opportunities. In this sense, the "fifth pillar" (political risk) becomes the first consideration.
2. Risk vs. Reward
Balancing risk and potential returns is vital. How conservative should one be? Do crypto assets and digital wallets have a place, or should one stick to the tried and tested?
3. Asset Allocation
Sound allocation across equities, bonds, cash, property—and perhaps digital assets—is essential for long-term growth and security.
4. Tax Efficiency and Succession Planning
Effective structures ensure minimal tax leakage and enable smooth wealth transfer. But how do we move assets out of trading entities while retaining control? Could family trusts, asset protection trusts, or even foundations be the answer?
To trust, or not to trust? With increasing global transparency and OECD-led scrutiny of trusts, are they still viable tools for succession planning—or simply misunderstood?
South African Complexity: Exchange Control (Excon) Restrictions
This remains a unique hurdle for South African HNWIs and must be factored into all international planning.
Video Content
1. Succession Planning & Intergenerational Transition
How do HNWIs shift from wealth creation to legacy building? Is it better to hand over cash-generating operations, or share wealth in more controlled ways?
- Identify key stakeholders: family, management, employees.
- Empower younger generations to grow—not just consume—wealth.
- Transition control with clear planning and assurance for ageing founders.
2. Tax Reform, Exchange Control, and Global Transparency
Ongoing reform and transparency mean proactive, agile structures are critical.
- Consider whether to share income, assets, or just opportunity.
- Protect core wealth while embracing change.
3. Diaspora, Mobility & Family Governance
Tax residency, nomadism, sibling rivalry, and complex family trees raise governance questions.
- A family constitution is essential.
- Address cyber risk, brand protection, multiple marriages, and succession with transparency and foresight.
4. Global Expansion: Opportunity or Burden?
International growth brings diversification—but also compliance complexity and operational risk. How should this be navigated?
5. Structures vs. Tax Efficiency
Is it more important to choose the right structure—or to prioritise tax efficiency within the structure that fits?
6. Rethinking Risk vs. Reward in the Modern Era
Do traditional models still apply? Or has digital disruption reshaped how we define investment “reward”?
Competencies Developed
1. Advising the HNWI Holistically
Advisers must understand the life phase of both the individual and their broader family context—be it creation or preservation.
2. Globalised Perspective on Tax and Opportunity
South African rules on wealth origin still apply, but they no longer dominate the strategy. The game is global.
3. Understanding the Diaspora Dynamic
Cross-border families require cross-border thinking—disclosure, planning, and alignment with global standards.
4. Collaborative Advisory Models
No single adviser can meet all the needs of an HNWI family. Collaboration is key to ensuring seamless wealth transitions and strategic growth.