Alexander Pope, the great English poet, said, “Histories are more full of examples of the fidelity of dogs than of friends.”
Robert Louis Stevenson said, “You think dogs will not be in heaven? I tell you, they will be there long before any of us.”
Mark Twain said, “If you pick up a starving dog and make
him prosperous, he will not bite you. It is the principal difference between a
dog and a man.”
Men, more so than women, base much of their identity on their professional accomplishments. They tend to have fewer social connections outside of their work, their professional networks, and associated clubs. As such, when they retire, many tend to lose their sense of direction and worth, which results in early death.
People should either invest in social
connections and friendships outside of work, or run a business. The former is accessible to everyone, the
latter is not. As such, we should relook
what we understand about retirement planning.
Retirement planning is no longer about putting money aside, and then
whiling away the time until death. Because we live longer, that time is now
measured in decades. Retirement planning
is about maintaining a desired standard of living while medical costs rise, and
income slowly diminishes. That means
funds must be set aside for extent activities.
I would hate to be a Manulife financial advisor. If Manulife plans can be bought through financial advisors at DBS through a tie-up, it means Manulife Singapore have basically undermined their own agency force. This would likely cause some of their better financial advisors to leave, further affecting market share.
Online meetings can be exhausting.
It is important to have an agenda , and the discipline to keep to
it. It is important to keep to the time
limits.
Climate change will cause a profound impact on our food security. Agricultural areas are at risk from the effects of temperature changes. Changes in ocean currents and temperatures will affect fishing and fisheries. Desertification is a risk for many areas. This means the price of putting food on the table will rise, even as quality may be inconsistent. In the meantime, agriculture commodity markets are expected to do well, because the price of the product will rise.
In 2020, there was a bull run in agriculture commodities which defied expectations and proved immune to Covid-19’s economic and social consequences. People still need to eat, even amidst an epidemic. And people stuck at home tend to eat more. It is true that coffee and cocoa suffered, but grains and oilseeds reached multi-year highs. Even commodities associated with the energy complex, and GDP growth, palm oil and sugar, performed well.
This is easily explained, on hindsight. We know that speculators bought record amounts of agricultural commodity futures in 2020, feeding that price upside. The fiscal and monetary stimulus created a flow of funds out of sovereign bonds, since yields dropped. Investors were looking for alternatives, and agricultural commodities were attractive investment assets. Speculation is part of the reason prices are expected to drive up.
We also owe these prices to the resilient demand of many markets, most especially China, which was stocking up on corn and soybeans. This demand will slowly decline in the coming year, which will lead to some surplus, dampening prices in the near term.
That being said, this surplus will not last long because climate change, and a worsening La Niña and will continue to be a major challenge for farmers around the globe, negatively impacting the availability of agricultural commodities in general. Countries, in order to secure their food security, will continue to drive prices up as they seek to secure adequate supply of these commodities, particularly wheat, corn. and soybeans.
Food security is the key point here.
There will continue to be a scramble for all sorts of agricultural
commodities, and this is expected to exacerbate in time. Speculation will feed that rise, but
speculation creates temporary bubbles.
In the long term, the trend is towards scarcity, meaning rising yields.
Every business, every organisation, every leader, needs a strategic road map. Part of that strategic road map is ensuring that the team has the right capabilities, at every level, to advance the business strategy. The team must also have the capability to execute their part of the strategic plan at every level below them. To arrive at this, there are questions we need to consider, and ask ourselves, at every level, and at regular intervals.
Is our business model relevant?
The business model frames the parameters of the market, and how we approach it. A proper business model defines the demographics we serve, it define the problems and issues we address, and how we generate revenue from it. That being said, we must recognise that the market evolves, and consumer habits change. The business model mist adapt. As such, every now and then, it is important to relook the business model, and ask ourselves if it is still relevant? Does it need to change? In what manner can we offer a better unique selling proposition?
How do we go beyond the unique selling proposition?
There are, generally, three kinds of market leadership: greatest overall innovation, lowest overall cost, and best customer intimacy. Depending on the area of market leadership we choose, that is the foundation of our unique selling proposition. In the sole focus on the generation of revenue, businesses often forget about the intermediate and supporting processes, which lead to this. That is part of our branding and goodwill. To go beyond the unique selling proposition is to consider how these attendant processes add or detract from our market leadership. This is especially important in an age of activist consumerism.
How do we encapsulate the company ethos?
In this context, the ethos is the characteristic culture and values of the company, which we manifest in our vision and mission, our attitudes, our interactions with stakeholders, and our strategic direction. As a business grows and expands, we sometimes lose sight of this, the spirit that brought founders together, that kept key personnel invested in the vision, and customers and clients identified with. It is important to take periodic stock, and ensure we have not moved away from this. This annual reflection is important to the continued existence of the business.
Who do we take as role models?
We are, inevitably, influenced by others around us. However, we must be careful about who we take as our role models. We look at values and philosophy, and they must be congruent with what we believe in before we consider following them in anything. There has to be a balance from learning and imitating, and adherence to our core values. We then look at processes, actions, and outcomes we can imitate and assimilate.
What are economic and political developments we can
take advantage of?
A business should always remember that the world is dynamic. It would be foolish to assume the market will be the same as it was. Part of management is to keep an eye on economic and political developments, and project how these developments would affect the market, and to position ourselves to take advantage of that before the rest of the market has moved. This also requires investing into a business intelligence network. We should regularly ask these questions, and not be sucked into the here and now at the expense of the future.
These are fundamental questions every business should have a habit of
asking themselves, at regular intervals to sharpen competitive edge.
The following is an article from the Sunday
Times, on the 03rd June 2018.
It talks about the misbehaviour of financial services consultants. The cases are over, but there will always be
new cases. Like any industry, there are
exceptional professionals, and there are those who are less than ethical. The following article has a checklist that is
useful for any person considering financial products, and engaged in active
financial planning. The checklist is
meant to be a guide. A financial services
consultant is still required.
Government policy, economic development, and global politics has contributed to the growth of wealth management in Asia, and in Singapore, in particular. The global pandemic, the last year of the chaotic Trump administration, and the realities of climate change, coupled with a more assertive China, has driven growth in the industry, and the movement of funds, and the growth of family offices in Singapore.
The wealth management industry is expected to grow, and be one of the main drivers of growth for the economy. According to the World Wealth Report, high net-worth (HNW) wealth in Asia-Pacific rose 7.9% in 2019. This was despite a global economic slowdown, international trade wars, and geopolitical tensions. The number of high net-worth individuals (HNWI) also grew 7.6% over the same period. Those numbers are expected to be bettered in coming years.
One of the major recent developments is the transfer of wealth from Hong Kong to Singapore. Where previously, Hong Kong’s geographical proximity to China was an advantage, it is now a major liability. For many HNWIs, having their money under Chinese control is uncomfortable, and constitutes a major political risk. Furthermore, Hong Kong is no longer the sole gateway to China. Shanghai is a major financial centre in her own right.
The recent events in China, from the protests, to the Chinese crackdown, to the fallout in terms of Hong Kong’s special status, has made transacting from the city expensive, and risky. The Chinese government is actively discouraging large movement of funds out, which further makes investors nervous. It is only natural that HNWIs are looking to diversify their risk, and Singapore is the obvious choice.
In fact, problems in Hong Kong, and with the wider trade conflict between China and the United States have actually enhanced Singapore’s reputation as a stable, neutral, strategic haven. It helps that Singapore is in the centre of Southeast Asia, one of the major growth regions of the world. Indonesia is expected to become the fifth largest economy in the world by the end of the decade. Vietnam, Thailand and Malaysia are expected to benefit from the shift of light and low technology manufacturing from China for cost and strategic reasons.
Here are some key factors why Singapore is the most attractive place for HNWIs.
Government Policy
The Singapore government has consistently introduced policies, over the last few quarters, to enhance compliance and streamline the regulatory framework. MAS has also introduced the variable capital company (VCC) structure, which is every attractive for family offices and funds. Further initiatives we expect to see include a digital currency, and further policy measures to attract UHNWIs, funds, and family offices to Singapore.
Tax Regime
Singapore has one of the lowest personal income tax rates in the world. Singapore has no capital gains, and no estate tax. The tax system is consumption based, not income based. Tax laws are transparent and compliance is aligned with the highest international standards. There is a good balance between discretion, and transparency. Singapore is as close to a tax haven any place can get, without actually crossing the line. With the use of trust structures and distinct legal entities, tax liability can be further mitigated. This makes Singapore a very attractive place to park funds.
Financial Connectivity & Openness
Singapore is a major financial centre. Almost every major bank, financial institution and insurer is present here. There is a depth of talent to service the industry, from consultants, lawyers, bankers, accountants, asset managers, compliance officers, actuaries, financial advisors, and many more. Singapore is open to foreign talent. The country is cosmopolitan. The connectivity allows funds to be moved quickly and efficiently into or out of the country. Singapore’s investment rating for her sovereign debt is also AAA. There is a Global Investor Programme to facilitate relocation to Singapore.
In light of the above, it is very attractive to open a family office in Singapore to park and manage funds. Singapore has already been successful in attracting some of the wealthiest individuals in the world. For individuals with enough assets, they can open single family offices (SFO), a family office to service a single family. In the process of opening a family office, there are key considerations that need to be addressed. They are as follows:
1. What is the objective of the family office? This determines the structure, among other
things.
2. What sort of assets will the family office manage? This affects the compliance, and other
legalities. This also influences the
people to be employed, and the size of the team.
3. What is the investment strategy, investment horizon, risk profile,
and investment mandate? This determines
the operational structure, and the overall strategy.
4. What are the licensing requirements?
What are the incentives such as tax incentives and fee rebates that the
office would qualify for? This also
considers exemptions.
5. What are the operational requirement of the family office? This determines the physical layout of the
office, the sort of media connectivity, the size of the team, and the sort of
skills required to run the family office.
6. What sort of risk would the assets and the family office be exposed to, and how can they be mitigated? This determines things such as risk management and insurance coverage.
It is when these considerations are addressed, that we can have a
conversation about actually setting up a family office in Singapore.
On the 24th June 2020, AIA Singapore, in conjunction with Ernst & Young, released a report on the insights into High-Net-Worth Individuals (HNWIs), specific to their views and adoption of insurance solutions for wealth management. The intent was to identify specific challenges that HNWIs faced, and proposed insurance solutions to address these challenges.
Firstly, it must be said that wealth management is a process that encompasses many areas of asset management besides investment, from risk mitigation, to legacy planning. This encompasses many areas of a person’s life, including his family. Wealth management is as much sustainable living as it is growth across generations.
Increasingly, instead of getting the advice of multiple disparate entities and persons across disciplines, HNWIs have increasingly realised that they are better served choosing one financial consultant team, which includes people versed in areas from tax mitigation, to insurance, to investment. This is more efficient, and allows these individuals to plan discreetly for the long term. The modern consultancy team, such as Equinox GEMTZ, handles many aspects of the client’s portfolio and assets. They include the following:
Wealth Protection
Wealth protection is about identifying risks, from political exposure, to legal claims, to critical illness, to loss of life and the consequences of these. Wealth protection is about ensuring risks do not lead to the loss of wealth, or at the very least, mitigate it. This includes both life insurance and general insurance. This includes structuring an entire insurance portfolio, and creating legal contracts to assign beneficiaries, to assign portfolios to distinct legal entities, to creating lasting powers of attorney, to even advising on the will and trust structure.
Part of wealth protection is to create firewalls to sandbox specific threats to the client and his assets. This also includes legal avenues of tax mitigation, addressing specific threats in areas that may involve security consultancy, and maintaining a business intelligence network. Much of wealth protection is understanding where the threat is coming from. Wealthy individuals have powerful friends, but also powerful enemies.
It is obvious that such clients require comprehensive insurance coverage for death, disability, critical illness, accidents, and many forms of exposure. These normally require high net worth policies, sometimes tailored, and corporate solutions plans for key personnel. There are even insurance policies used to create a golden handcuff to secure talent for the long term.
Liquidity Management
Liquidity management is about ensuring that business entities and the entire network, both the client as an individual, and major business interests, remain solvent in the event of untoward developments. This also means putting in place policies that cover loss of income, and able to cover debt that the estate or any entities may incur. The insurance policies are meant to address long-term debt.
Retirement Planning
Most individuals eventually hope to transition from work to retirement, or at the very least, hand over aspects of the business to an heir or heirs. This requires planning for specific income goals to maintain a standard of living, and mitigating the financial risks of getting older.
Legacy Planning
Finally, people ultimately want to be remembered for something that matters. This may involve creating a vehicle, such as a testamentary trust to distribute the estate over a period of time, or even across generations. This also involves considerations of tax exposure, political exposure, and beneficial relationships. This is estate planning on a larger scale. There are HNWIs who want to establish endowments for education, the arts, or some form of charity.
In consideration of the report, we note several things.
1. 90% of HNWIs in Singapore leverage on insurance for wealth and legacy
planning.
2. 70% of HNWIs in Singapore have insurance that comprises more than 10%
of their wealth and legacy planning.
3. 86% of HNWIs in Singapore own medical or critical illness insurance plans.
4. 96% of HNWIs in Singapore believe that retirement planning is an
important part of their wealth management.
5. 48% of HNW entrepreneurs in Singapore have business wealth protection via a range of insurance products.
The wealthier the individual, the more aware they are that insurance is
an important component of risk mitigation, retirement planning, and legacy
planning. These numbers are well in
excess of average people. With the
increasing number of family offices and funds setting up in Singapore, this
area of the finance industry is expected to grow exponentially in coming years.
Authority is the moral or legal right of control, specific to a domain. Influence is the power to have an effect on people. They are not the same. It is conceivable, indeed common, that a person would have authority by virtue of an appointment to a position, bit have no influence to effect any agenda. Authority without influence is impotent leadership.
The modern work place is not a command-type environment where influence is directly commensurate with authority. That is how the military is run. The corporate environment is a collaborative one, with flat management structures, and a multitude of stakeholders, the internal and external clients. In such an environment, the ability to influence carries further than any perceived authority.
Whilst people do recognise that, it does not mean they understand how to acquire that influence, and may, in their efforts, diminish their personal branding, and damage their credibility. Influence is not gained by engaging in petty politics, creating personality cults, or engaging in strictly transactional relationships. Influence is built by building a fortress of certainty in a landscape of uncertainty. People are better able to relate to known quantities.
This begins with having the correct values, and exhibiting those values. Popularity is not a value, and not necessarily commensurate with influence. A person could be well-liked, but discounted on account of many factors. A person of influence is able to appeal to the other, and bring them to their side of the table, he is people-centric in his discussions with an emphasis on the other. People open up when they feel others are genuinely interested in them. This means influence starts at the door of service.
Influence is built on direct personal relationships that are not transactional in nature. This allows us to create rapport, and connect with people at a deeper level. It is based on credibility, integrity, and mutual respect. This carries over regardless of the power dynamic of the relationship, since people want to be validated. When people are validated, they have a stake in the maintenance of the relationship, and this is what interpersonal influence is built on.
These relationships can be leveraged upon, and that is how influence is exercised. We give favours so they can be called in. This trading of favours has no exact value to be pinned down, since the value of a favour varies according to need and consequence upon the individual. To maintain, and grow, that relationship, it is important hat effort and help is recognised, people are appropriately thanked, and the integrity of the arrangement made sacred. This is a demonstration of personal integrity and values, which enhance credibility. This functions as an influence multiplier overtime through the creation of goodwill.
These favours and acts of collaboration are built on specific commitments, with clear objectives, so that success or failure is clear, preferably measureable and quantifiable. This is especially pertinent when working in a hybrid environment. This requires communications which are of high structure, and high substance. High structure communications are communications which are scheduled, have a specific agenda, and have measureable and quantifiable outcomes. We know when to meet, virtually or physically; we know what needs to be addressed; we know by when it needs to addressed; we know the preferred outcomes; and we know who is going to do what. A high substance communication is one that is relevant, has content, and focused, with all the necessary information required to get the job done.
The nature of such communications is not to speak or correspond a lot, but to do so effectively, which means being direct, but respectful. This requires establishing a clear timeline and roadmap, with explicit ownership of each part of the project, and a concrete deliverable. There are definite lines of communication, and clear checkpoints where the team checks back on each other, both top down, and across teams, so that the process can be evaluated, and issues addressed, and a change of direction effected as necessary.
Effective management requires an ability to explain and persuade, not command. Hierarchical relationships work when there is a clear hierarchy of responsibility, but does not translate well when working with talent. Talent requires nurturing and convincing. This necessitates a balance between an appeal to emotion, and an appeal to logic. One cannot predominate the other. People need to feel invested in the team and the project, which is the appeal to emotion. People need to see clear outcomes, and project the rewards of success, which is the appeal to self-interest through logic. This requires a lot of due diligence and fact find on the part of the team leader.
Finally, our success in growing and exercising influence works when we support
people, and facilitate their success. People
must feel that they have achieved something, and that they earned their
success. If we were to make it overt
that we facilitated it, we breed resentment and dissension. At the very worst, it would be seen as
stealing another person’s glory. This
has to be sincere. When we add value to
people, they instinctively know, and most people are inclined to give something
back. And those who are ungrateful
should be proscribed, and set aside.
This is how we grow influence, and exercise authority, regardless of titles
and position.
The lockdown and other social distancing measures have demonstrated a need for a need type of leadership, one that is increasingly multimodal, especially when we are now utilising hybrid work models. A post-pandemic world is not going back to the way things were, because people have changed their habits. People and companies have learned that it is possible to complete routine transactions from home, and coordinate across even countries. This hybrid work style is here to stay, because there is little incentive to go back to what is was before.
This means that effecting effective leadership in this new hybrid work model requires skills that are beyond traditional team leadership. In addition to the skills that require direct management, leaders in this new paradigm must be able to coordinate, to management, to lead remotely. There is a heavier emphasis on communication through the written word, and other forms of media.
Tasks are of two main types. One type of tasks involves independent work, often of a routine, clerical nature, such as administrative tasks, reports, correspondence, and analysis. These are tasks that can be done virtually. Even some aspects of coaching, and mentoring can be done online, and done effectively. The other type of tasks are the ones that involve a combination of experiences, an integration of different facts, a dialogue on goals and outcomes that involve the entire team. Complex problem solving, inculcating a specific culture of values, and managing conflicts are best done physically, not virtually.
Part of leadership now, is recognising which tasks belong to which area. The following are specific types of tasks that would be better done physically, because they involve presence and nuance that cannot be replicated over a video call. Perhaps, as society evolves, we will be able to perform more of these tasks virtually, but we should never discount the power of a physical meeting. That human touch still has a place.
The first is forming and maintaining collaborative relations, through networking, bonding, and connecting at a deeper level. Trust and a shared understanding is better cultivated though shared experiences, such as a meal, or a bonding exercise. The second is any form of shared learning to stimulate innovation, and knowledge integration. People need a time and place to open up to each other in a non-threatening physical environment, and certain social activities facilitate this. The third is building a strong group identity and shared culture. This is done through shared experiences and social activities with that goal in mind. And the forth is built on the other three, which is to provide a vision, a shared purpose, and a sense of loyalty to the collective. The foundation of this is in direct interaction. The implications of these activities on new leadership models are profound and evolutionary. What we have previously no longer suffices, and new methods of management and leadership must be developed.
The first role is that of a multimodal coordinator. This is the ability to manage the flow of work, the tracking of activities and tasks, and the integration of outcomes to a dynamic timeline. Much of this is virtual, and there is an element of mentoring virtually. The ability to think quickly, and act dynamically is important because a virtual work environment often involves coordinating across time zones. This sort of leadership skill requires trust both ways since members are seldom physically in proximity. The downside to this is that there is a danger that leader who are less than equipped fall into either micromanagement, or the extreme of losing control due to a perceived lack of interest in subordinates. We are all familiar with the type of leaders who keep their team on an endless series of online meetings, going through report after report.
The second role is that of an initiator, a sort of font of inspiration, stimulation, and innovation. This is a cheerleading role, which involves building trusts across many vectors, and fostering an environment where members feel safe enough to share their thoughts and ideas, no matter how seemingly outlandish. Somewhere in the realm of the ridiculous, may be the next great idea. The challenge here is for the leader to not dominate the conversation, and allow others to grow into their role, including making mistakes.
The third role is the traditional role of coaching and mentoring, with the added mandate of being able to do much of this virtually. Whilst there is a focus on helping people achieve peak performance, it is important that they feel valued and trusted, which requires building their self-esteem and keeping them connected to the team. The emphasis of this role is less on the logical aspect, and more in emotional intelligence, and understanding some of level of psychology. People still need to feel connected and motivated, even across oceans.
The final role is that of actually being a leader, a focus of the team to represent them when we negotiate, exercise influence, and build strategic relationships. This is the ability to bring all the previous points to bear for a strategic goal, while making ground tactically, a roadmap to that goal. It involves the ability to get all stakeholders involved, and committed; it involves convincing them that we represent their needs and interests; it involves the ability to advocate and cohere eloquently, both physically and virtually.
Ultimately, the foundation of all this is built on legitimacy. That legitimacy is only achieved when there is trust and a sustained connection. While we need to delegate tasks and manage expectations, the team still needs to feel empowered to exercise initiative, and trusted to keep to their end of the bargain. Without that trust, all this falls apart into micromanagement hell or chaos. Central to all this is the ability to communicate.
These are skills that are replicable and scalable, meaning that when it
is mastered at a lower level of management, it can be applied at a high level,
and refined over time. Leaders must
recognise that the strength of their team depends on them empowering them, and
supporting their growth. We are looking
at facilitation, the application of emotional intelligence, and motivational
skills. When they can do they, they will
thrive and be effective managers in a post-pandemic world.
In the last year, we hear, among Toastmasters, and people considering joining a Toastmasters club, that they hesitate to renew, or join the club, because meetings are online. Some clubs are apologetic about this, and appeal to loyalty, altruism, or an appeal to emotion to get members involved. This is ineffective. That is now how people function. We appeal to self-interest.
We have to be cognisant, first and foremost, that the post-pandemic world has fundamentally changed the way we conduct business, the way we interact with each other, the way we connect. Meetings are conducted across borders virtually, and that requires specific skills we may not feel necessary in a physical meeting. There is a greater sense of intimacy in that distance when we are speaking on video. The audience has an opportunity to see much of our facial expressions up close, and that affects how they react to the message.
Toastmasters, as a programme, is effective
in granting members constant opportunities to refine their presentation, their
speeches, their interactions across the medium of virtual meetings. It affords access to a diverse audience to
familiarise ourselves with the intricacies of communication across cultural
boundaries. Those are benefits and
advantages that cannot be understated in a post-pandemic economy. It is a competitive advantage we cannot
afford to disregard.
