Local Investment Solutions - Finsolnet

By: The Financial Solution Network  09-12-2011
Keywords: portfolio management, Investment Management, Consumer Protection

Local Investment Solutions

The Finsolnet investment solution utilizes the Network's independence and economies of scale to negotiate directly with product providers to:

  • Manage investment expectations more effectively
  • Improve investment performance
  • Reduce the cost of investment administration and portfolio management fees
  • Comply with the requirements of consumer protection legislation (FAIS)

FAIS Compliant Strategies Manage Investment Expectations

These strategies offer investors clear risk and return mandates. Individually or in combination these strategies satisfy every risk profile and comply with the FAIS legislation. When giving advice an IFA selects a strategy, not a fund. The targeted return strategies are:

Return Objective Targeted Return Term

  • Inflation CPIX Plus 2%-3% 24 months rolling average
  • Inflation CPIX Plus 4%-5% 36 months rolling average
  • Inflation CPIX Plus 6%-7% 60 months rolling average

The Network offers these strategies on the full product range for individual and EB investments. This includes discretionary and compulsory investment options.

Investment Management and Administration Outsourced

ABSA Investment Management (AIMS) has been contracted to administer the investment solutions of the Network. AIMS also acts as Investment manager as required by FAIS legislation. AIMS must:

  • Monitor each portfolio manager's compliance to the investment strategies mandates
  • Allocate investments equally amongst the portfolio managers
  • Re-balances the strategies quarterly
  • Prepare a monthly fund fact sheet and quarterly portfolio reports for investors

Portfolio Management Outsourced To Style Differentiated Managers

These strategies are managed by best of breed portfolio managers. The portfolio managers must select their most appropriate fund for each strategy. The portfolio managers currently contracted are:

  • AllanGray
  • Coronation
  • Investec
  • Nedgroup

Reduced Fees Increases investment return:

In a low inflation environment a 1% saving of fees can increase the investment return by up to 25%. The Network has reduced the cost of investment solutions by:

  • Establishing economies of scale by working together
  • Negotiating directly with product providers
  • Eliminating all third party cost rebates

No Initial Fees:

The Network charges no initial fee on new investments. The financial advisor may still charge a planning fee to initiate a new investment. By eliminating the initial fees long-term performance is enhanced.

Reduced Annual Fees:

For investments Up to R1m Greater than R1m Greater than R2.5m
Reduced Administration Costs 0.50 % 0.35 % 0.25 %
IFA administration fee 0.35 % 0.35 % 0.35 %
Network Fee 0.10 % 0.05 % 0.05 %
Total Annual Recurring Fees 0.95 % 0.75 % 0.65 %

Reduced Portfolio Management Fees:

Finsolnet negotiated a reduced portfolio management fee of 1.25% approximately. Some of the portfolio managers will also charge performance fees. These will be based on performance in excess of the mandate and will only be earned if previous high water mark is exceeded. These fees are charged at fund level and will be deducted from performance yields prior to publication.

The portfolio managers will rebate approximately 0.65% of their fee back to the Network. These rebates were usually paid to the administrator.

Fully FAIS Compliant Implementation

The Process:Financial Planner now matches "targeted return strategies" to the Client's financial needs analysis to determine the sustainability of planning initiatives in real terms.

Financial needs analysis : Network developed planning models, that are fully compliant , determine financial and investment priorities:

  • Investor's financial objectives
  • Risk budget
  • Return expectations
  • Time horizon

Determine most appropriate strategy:The Financial Planner fully informs the investor of the mandate of each of the investment strategies. The Investor is made aware of the strategy's parameters, mandate, benefits and risks.

Document the whole process:The Client signs off on each stage of the process. Copies of all documents are filed for future retrieval. AIMS will scan the planning model and any related documents to support FAIS compliance

Investment Solution Applied To The Full Product Range:

The Network offers the investment solution on the full product range of individual and EB investments. This includes discretionary and compulsory investment options such as:

  • Retirement annuities
  • Wrapped endowment
  • Living annuities
  • Deferred compensation

Endowment Wrapped discretionary investments

Investments can be wrapped in an endowment using the Finsolnet investment solution for a fee of 0.10%. As these will also participate in the rebate on funds under administration initial commission payments can be reduced in favour of the longer-term cash flow considerations

Employee Benefits and Retirement funds

The Network facilitates the implementation of Total Cost Remuneration policies to cap employers' employee benefit liabilities. Finsolnet offers the full range of retirement funding options to compliment the Total Cost structuring services offered to employers and employees. Targeted Return Strategies can also be used for employee investment choice.

As the IFA also receives the rebate on the funds under administration for these strategies, fees charged on contributions can be reduced.


The Network's Investment Solution offers substantial benefits to both IFA and Investor:

  • Reduced cost and accountable solutions that are fully compliant with FAIS
  • Equitable IFA remuneration that focuses on annual fees rather than commission

Keywords: Consumer Protection, Investment Administration, Investment Management, investment manager, Investment Solutions, portfolio management, Portfolio Managers,

Contact The Financial Solution Network


Print this page

Other products and services from The Financial Solution Network


Individual Solutions - Finsolnet

To match available financial resources with financial needs for death, disability, employment, retirement and retrenchment in the best possible way; taking into account the effect on disposable income, tax and your estate. It requires continuous fine tuning as personal circumstances, legislation and the available planning options change. Financial planning has to optimise and integrate a number of inter-related financial decisions.


Internasional Investment Solutions - Finsolnet

The Managers have a flexible mandate to use Equities, Bonds, Property, Alternative strategies and Currency to achieve the investment objectives. Finsolnet is a network of independent professionals that combine their resources to develop best practice solutions at a reduced cost. The administration of the International Investment Solution has been outsourced to ABSA Investment Management.


Compliance - Finsolnet

Although the Network is not prescriptive as to the admin system been used, the system's choice proposed to Network associates is the Profida admin and client management programme. The Compliance Officer will be fully trained on the use of these strategies and models to ensure that both the IFA and staff can utilize the solutions in a FAIS compliant way.


Employee Benefit Solution - Finsolnet

Total Cost remuneration policies require individualised retirement fund administration, with individual member accounts, investing in individual risk profiled investment portfolios. To optimise the benefits of Total Cost remuneration, it is essential to implement an integrated process of policy and benefit review linked to individual employee needs.