Magnus Heystek explains his assault on SA’s post-RWC euphoria

Many in the financial services sector would prefer that independent advisor Magnus Heystek had never been born. The former financial editor and founder of Brenthurst Wealth enjoys ruffling powerful feathers, using facts to puncture the facade created by billions spent on carefully crafted marketing campaigns. He's at it again this week, warning that the Springbok Rugby World Cup euphoria – which he fully participated in – should not distract the national attention away from serious financial challenges that loom ever larger. Not exactly the most liked canary in SA's economic coal mine. But surely one of its most valuable. – Alec Hogg.Well it's a fireball of note. Magnus Heystek joins us now. We got a cracking story that you've just written on Biznews. I don't know whether you realise, but you still have it from your days in journalism – what you write about absolutely hits what the public want to read about – it seems we get tens of thousands of people who log into Biznews to read the articles that you write. Your latest one, which has just gone up on to the site now, is in the same vein. But there were a few things in there that we'll talk about, but what really intrigued me was you sitting in the front row of a presentation from a clerk from Coronation, who then flags you off and didn't even see you there. Now you're not a little guy..___STEADY_PAYWALL___.Yeah. Good afternoon Alec. It was just one of those things. Normally these seminars take place in Jo'burg, Pretoria and Cape Town. We go to the Jo'burg one and for some reason I happened to end up in the Cape Town presentation of this particular speaker and I was sitting there in the audience and he just proceeded to have a go at me..So he knew you were there?.He didn't realise I was there and he just quietly slunk away after the talk. I wanted to have a chat to him but he disappeared. He runs a local fund management company which was not been doing well and obviously there must have been some withdrawals so he felt a bit irritated by this. It was quite a surreal experience..Read also: Magnus Heystek: Sunshine journalism won't change SA's investing reality.Yeah, it's one thing for people to have a go at you while you're not in the room but if you're sitting in the front row it's a little difficult. I guess that also shows you that you've hit some very raw nerves within the asset management industry. You also talk about Old Mutual for instance saying that South Africa's stock market is gonna be the best performer of this year, they're going to need a little miracle to get that right..Yeah indeed. I was very surprised when in January or February they went on a road show proudly saying SA is going to be the top investment market for the next five years. So far as we see, we're up 6%, overseas markets are up 20-30% – and I'm talking about dollar returns not even Rand returns – so we are already way behind in the investment race but it's a bigger story than that. There should be a definite separation between asset management companies and financial advisors, especially Independent Financial Advisors (IFA). And we know, you and I come from a background where most of the advisors were agents who worked for the big financial companies and you have to sing the company's song and if you don't tell a lie, you get booted very quickly. Independents need to be independent and you need to get up and say I don't believe your story and I need to advise my clients differently. I think that's part of the problem – a lot of IFAs are now starting to say we're going to do our own research and not just take the material from the marketing departments of these large companies – it's sometimes quite embarrassing to see what they write in an effort to keep or maintain the business..But it's not just them, it's almost like there's a conspiracy where the people in certain media outlets repeat those press releases – and the public get told – you make the mention of Old Mutual. It comes out with a statement where it talks its own book and then that appears on the front page of websites as though it is fact. It feels like it's just a whole big shell game and there's only one loser and that's the people who actually put the money into these organisations..Yes, quite correct and unfortunately it's also a reflection of the very precarious state of journalism and financial journalism in particular. You've been in the media for a very long time and you know the numbers and I have great sympathy for a lot of the media outlets whether print or Internet driven. There's just not enough margin to put a financial journalist on a good story and let him take three or four days on it. To a certain extent, even more reason for your adviser to step into that role and try and get to the truth as far as investment returns are concerned. And I feel very strongly about that..So what happens to you now you're in the position of being an independent. You are pointing out issues that concern you. Like the guy from Coronation, like Old Mutual and you go public with it. Do you get any any kickback from the organisations?.I'm not very popular on Golf day lists, but some of the more serious guys will phone and make an appointment, sit down and have a one on one chat and then we have a debate about it and get to the facts. But some people just slam you and have a go at you on the Internet. The easiest thing in the world is to create a false social media account to have a go at Alec Hogg or Magnus Heystek and there's nothing you can do about it. It's part of the game. You just have to believe in your viewpoint or the story that you've written and just live or die with it, you can't defend yourself every time someone has a go at you..Read also: Heystek and Hogg on future of SA: For better, for worse? Have your say!.We had Bell Pottinger, I think we learnt and our skins got a little thicker after that one. Magnus, the theme of your story, the thrust of your story though, is the Rugby World Cup victory. It has given us in South Africa the sense of euphoria which is masking some underlying problems that we are about to hit..Correct. It was just a stroke of extreme luck that we had the medium term budget, then we had Moody's on the Friday and then on the Saturday we had the World Cup win. Everything was relegated to the back pages. I enjoyed it as much as everybody else, but having read the medium term budget, plus Moody's commentary, plus commentary from other analysts like Ann Bernstein and some others, you realise it's not a joke anymore. There were some numbers in the Budget speech which simply just shocked you to the core. The first one was the paragraph statement that the country's debt will escalate from R3trn to R4.trn in three years. As I point out that's a thousand days from now. That's a massive number and you don't understand where this comes from. But we do know what the implications are going to be. Interest costs on our debt three years from now will probably overtake social welfare housing and of course education, healthcare etc. It'll be the number one item in our budget. We need to budget 15% of our income to repay our debt and that's called a debt spiral. That concerns me. That's been totally swept under the under the carpet and I spend more time than most reading, analysing, watching TV, listening to commentators and this thing just quietly disappeared and I think part of it was because the Rugby World Cup was the focus. These things will come back and bite us in the next three to four months unless the ANC pulls out some dramatic turnaround in fiscal policy. If not we are really in serious trouble..So what do you do about it as a private investor?.You've got to sit down and take responsibility, you've got to sit down with your assets and investments – with either an adviser – and say how do I protect myself, my family, what can I do within my portfolios that I can move into defensive positioning like cash, or high income funds, or maybe get some more offshore exposure? It's quite surprising how much you can do. I think a lot of investors think that once they've committed to some kind of a strategy or investment product that they have to ride the storm until the end, but you don't need to. If your money is in pension funds and provident funds and especially a preservation fund, you can do a tremendous amount because there's no CGT (Capital Gains Tax), there's no cost. Yet people just simply live with it and say theres nothing I can do, but theres a lot you can do. Sit down with your advisor and protect yourself. I've been writing about this for a long time. My own personal assets in South Africa are mainly in cash and have been so for a long time and my growth investments have been offshore in equity markets where I've been having very good returns and also in our practice. We've also been advising our clients where can we protect your overall assets and liabilities and that's what people need to do.

Magnus Heystek explains his assault on SA’s post-RWC euphoria

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