Finweek English Edition – August 15, 2019

w

e live in a world where we are

assailed by scams. We can

no longer trust emails that

appear to originate from the

institutions we trust the most – our employers and

our banks being at the top of this list.

Our emails are being hacked, our identities

stolen, our bank cards cloned. Most of us have

had some experience of these scams, and they

leave us feeling exposed and violated.

In addition to the scams that are directly

targeted at us, we now find ourselves falling victim

to deception taking place at the corporate level

and affecting the funds we have available for

retirement. Most of us are aware of the happenings

at Steinhoff and Tongaat Hulett, for example, and

the impact on our retirement funds is far from

negligible. Yet we feel powerless to prevent these

corporate scandals because we are simply too far

removed to see these tsunamis coming.

In the midst of all this, we have bitcoin and

other cryptocurrencies, which are being touted as

the next big thing. Is this the means of exchange

we should all be looking to in a rapidly changing

world, or is it just a more sophisticated scam to be

avoided at all costs?

These vulnerabilities are closely

linked to the issue of financial

literacy. If those of us reading

this magazine are at a loss,

what about the plight of

the man on the street

who has no insight into

the world of financial

markets? What can he

do to protect himself

against being taken

advantage of by the

fraudsters who seem to be

waiting around every corner?

‘A sure thing’

In our first article, Sohini Castille of Alexander

Forbes provides us with practical guidelines of

what to look out for when presented with an

investment that is a “sure thing”. Investments

by their very nature encompass a significant

amount of uncertainly, but there are definitive

red flags that can be avoided when making

INTRODUCTION

By Kelly de Kock

collective insight

Saying no to a free lunch

As technology advances, so does the sophistication and prevalence of financial scams,

with many unsuspecting investors becoming victims. Why are so many still falling prey

and how do we protect ourselves?

20 finweek 15 August 2019 http://www.fin24.com/finweek

these types of decisions, and ways to check the

credentials of those involved.

Piet van der Merwe of Momentum provides a

useful “scammer guide” – a checklist of things to

look out for when entering into an investment.

Phiko Peter from Allan Gray turns his focus

specifically to online scams, most notably

those that come to us via trusted social media

platforms. What stands out for me in this

article is that the victims of these scams are

not confined to the financially illiterate. It can

happen to anyone, with the most vulnerable

members of society being those facing

large amounts of debt, financial stress and

unexpected expenses.

What about bitcoin?

On the topic of online scams, the focus shifts

to cryptocurrencies. Is bitcoin just another

one of these scams, but on a much grander

scale? Steven Sidley explains exactly what

bitcoin is and how it works. It is by far the most

understandable version of this that I’ve read, and

gives me some level of comfort around my own

very small bitcoin investment! Steven’s view is

that bitcoin is here to stay, but that those who

want to invest should be prepared for

the volatility of “the world’s most

vomit-inducing rollercoaster” and

should take care to start small

and not bet the farm.

Next, Asief Mohamed

and Tinyiko Mabunda from

Aeon Investments look

at the recent corporate

governance failures,

which are effectively just

another kind of scam taking

place within our corporate

institutions. They tell us that

pensioners have lost over R200bn

as a result of the misrepresentations

from Steinhoff and Tongaat Hulett, a shocking

number which brings to light just how important

it is that the asset managers who we trust with

our hard earned savings do their due diligence

and start to take a more holistic approach to

research when determining the quality and value

of an investment.

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FEEDBACK AND

SUGGESTIONS TO

CABOTA@

AFORBES.CO.ZA.

finweek publishes Collective Insight

quarterly on behalf of the South African

investment community. The views

expressed herein do not necessarily

reflect those of the publisher. All rights

reserved. No part of this publication may

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without prior permission of the publisher.

CONVENOR

Anne Cabot-Alletzhauser

Head of Alexander Forbes

Research Institute

EDITORIAL

ADVISORY COMMITTEE

Kelly de Kock

Chief Operating Officer,

Old Mutual Wealth Trust

Company

Lindelwa Farisani

Head of Equity Sales

South Africa at UBS

Investment Bank

Delphine Govender

Chief Investment Officer,

Perpetua Investment Managers

Monika Kraushaar

Senior Consultant at RisCura

Nerina Visser

ETF Strategist and Adviser

Muitheri Wahome

Financial Services Professional