Intergenerational wealth creation and the process used to - PowerPoint Presentation

Slide1

Intergenerational wealth creation and the process used to develop an investment strategy

June McCabe / Hayden GriffithsSlide2

Overview

Who we are

Creating the right

mindset

How we drive success

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

United Nations. 1987 Report of the World Commission on Environment and Development

Sustainable Development

Tailored Strategic Advice

Education and Development

GovernanceSlide3

A Partnership

Facilitate Maori

economic development – be part of the wealth creation solution

Work with Maori to identify and capture intergenerational aspirations and investment beliefs into an investment strategyA partnership to grow financial services to Maori/Iwi

Investing

in financial

assets

Facilitation,

Coordination,NetworksInvesting in real assets,development spending

Collaboration with others

Investment

and Spending

PlanSlide4

JBWere

(Hayden Griffiths)

Advisory and implementation specialists for investing in

financial marketsHolistic approach to managing wealthInvolved with financial markets since 1840Majority owned by National Australia Bank

Custodian to $7.5 billion of client fundsEnd-to-end service providerTailored bespoke approachClients range from wealthy individuals to large organisations

Sustainable Prosperity (June McCabe)Advisory specialist for sustainable Maori developmentAdvisory roles over 20 years on accelerating Maori economic development

Recent focus on Maori capital markets – how Maori access capital for “collective” developmentsAssist with developing an investment strategy integrating the aspirations of Iwi, Hapu, Marae, Whanau, and individual MaoriCoordinate investment specialists to assist with strategy execution

Notes to the presentationWho we are

Collaboration with othersExtensive networks with others who have complementing expertise that can be drawn on to provide ongoing supportSlide5

Creating the Right Mindset

Anga Whakamua – what does your success looks like?

Four pou approach to measuring prosperity

Importance of investing in financial assets

Growth

Cashflow

Risk

Liquidity

Kaitiakitanga – intergenerational time horizon

Recognising capability

gaps – take a considered approach

Identifying key philosophies and beliefsSlide6

Creating the Right Mindset: What are our goals?

Through interactive discussion and engagement:

Gain

a deeper understanding of Maori/Iwi aspirationsShare our knowledge and expertiseHelp facilitate efficient use of capital to deliver the best outcomes for Maori/Iwi

Encourage development of intergenerational planning horizons for Maori/Iwi.Support the capital development of the Maori economyFacilitate Maori/Iwi participation in the capital markets that delivers:A long-term perspective for sustainable improvement in prosperity

Liquidity and working capital managementStrength and support for direct investment opportunities in the Maori economy

Drive efficient use of capital to deliver sustainable improvement in prosperity for Maori/Iwi

Notes to the presentationSlide7

A consultative approach

Anga Whakamua

Work with you to identify and capture intergenerational aspirations and investment beliefs into an investment

strategy

What we understand

Critical decision facing Maori/Iwi on the productive use of their asset baseWithin each rohe there are varying capabilities, mindsets, and understandings of the challenges of creating wealth

The enterprise development is dependent on the degree of consultation with shareholders and cohesion on their future aspirations, and how the enterprise could deliver on thatFor a variety of reasons there are capability gaps that affect all aspects of progressing enterprise and economic development

Our approach is to navigate through these challenges and derive an investment strategy that meets your needsNotes to the presentationSlide8

How we Operate?

Connecting values and aspirations of the investor with practical guidelines for how to manage the investments

Not a “form-filling” exercise, instead a probing and engaging process for an

“end-to-end” service Draw out core values and aspirations of the investorInvolves iterative discussion with constructive feedback and dialogue

Interpretation and translation into a practical set of guidelines for how to manage the investments (the “Plan”)Aim to establish broad commitment to the Plan among the investor (stakeholders) and everyone else associated with looking after the investments (e.g. Trustees, accountants, lawyers,

advisors, etc.)Key outcomes of the consultation process:CohesionCollective buy-in, a sense of ownership of the strategy

A sensible and practical set of operating parameters documented for everyone’s reference

Initial consultation process

Notes to the presentationSlide9

Kaitiakitanga

A legacy of previous generations

Strong emotional attachment

Frustration and impatience common

Past

Assets are taonga

Future

Prudency and responsibility the

calling

Build on the legacy for future generations

Assets

are scarce vs. demands

Need a carefully planned approach

IntergenerationalSlide10

Significant scope to build investing capability

Encourage Maori/Iwi to take stock of where you are at

Recognise your limitations

Opportunity to learn given time

Plan ahead with this mindset

CapabilitySlide11

The power of compounding growth given time

Time Horizon

221

95

32

33734Slide12

Time Horizon

Achieving the benefits of growth long term requires the right temperament and perspective

Equities dominate conservative fixed income investments (i.e. cash and bonds) longer term

Equities while having better long-term prospects, also are a bumpier ride along the wayBalancing the needs and wants of those of today with those of tomorrowDrawing down from investments to fund spending now will significantly impact growth potential longer term

Building the legacy

Notes to the presentationSlide13

The Role of Financial Investments within Maori Assets

Financial assets provide very important characteristics that complement directly held real assets

Dispersing concentration risk (improve resilience of investments longer term)Concentrated exposure to specific businesses within a region leaves a portfolio of assets vulnerable to inevitable tougher conditions in these areas

Financial assets can substantially reduce this concentration risk by investing across industries and regions globallyLiquidity and cashflow (facilitate short-term liquidity and on-going drawdown requirements)Financial assets provide funding flexibility when there is limited cashflow and lack of divestment options exist across direct investments

Source of growth (important that asset base grows faster than value erosion from inflation) Investment in financial assets, particularly listed equities (shares), an important source of growth complementing direct investmentsSlide14

A considered and disciplined approach

How we drive success

Prosperity

Assets

Investing and Spending Plan

Looking after capital highest priority

Portfolio perspective to managing assets

Diversification, liquidity, and cashflow important

Value measures other than wealth important

Development spending a separate decision making process to management of assets

Intergenerational planning horizon

Documented values, purpose, and operating guidelines

Adequate risk-adjusted returns a must

Sustainable drawdown

(live within your means)Slide15

Key Objectives

Encourage a long-term focus

Formulate a robust structure

Enhance governance and soundness of decision makingEntrench performance and accountability across a broad set of measures (4 pou approach)Benefit to JBWere with advising on financial assetsSlide16

Overarching strategic guidelines

Covers investments in real and financial assets, and drawdown for spending

JBWere modelling expertise

Foundation for determining long-term risk, return, and drawdown capacity

Specifically for investments in financial assetsJBWere specialist advisors/managers for investment in financial assetsNature of service tailored to suit preferences and requirements

ConsultationEngagementFeedbackOngoing Relationship

Developing the Plan for Investing and Spending

Formulating the approach

Statement of Investment Policy and Objectives (SIPO)

Analysis and discussion of appropriate asset allocationSlide17

Determining what is achievable and within risk tolerances

An important component for the SIPO … determine the right priority across the investment objectives of :

Safety

- against permanent loss of capital, often the result of undisciplined investor behaviour Income -

cashflow needed to fund expenditure requirementsGrowth - in capital ahead of inflation to increase the spending power of assets over timeAlways relating back to total portfolio of assets

Safety

Income

Growth

Lower

Higher

1st

2nd

3rd

Priority

Notes to the presentationSlide18

Statement of Investment Policy and Objectives (SIPO)

Notes to the presentation

Specifically for Investments in financial assets

Are a complement to direct investments in real assets, providing dispersion of concentrated risks, liquidity, cashflow, and growth

Investments in financial assets outsourced to external expertiseA SIPO stipulates for the external advisor/manager parameters for how these investments in financial assets are to be managed

This SIPO links into the overarching Investment and Spending Plan.Slide19

Developing the Plan for Investing and Spending

Document of overarching guiding principals and parameters for operation

Capture what is important – values, goals, checks and balances

Attaches purpose and relevance to what is otherwise a mechanical process

A common reference for stakeholders and all involved in the process of managing assets and distributionEnsures that everyone is “reading from the same page”

aligning effort to achieve common goals longer term Promotes a structured, consistent and organised long-term plan of actionWhere relevant, links into other specific documents (e.g. Trust Deed, Treasury Policy, Investment Policy (SIPO) for investing in financial assets, etc.)“Operating manual”, provides guidelines on how to operate and make investment and spending decisions

Goals and objectivesTotal portfolio approach, asset allocation, risk, liquidity, and cashflow management

Drawdown Policy for spending - impact on prosperity (four pou value pillars) Notes to the presentationSlide20

Comprehensive Bespoke Service

Managing Financial Investments

Transaction Execution

Custody

Separate

Legal EntityPortfolio construction and maintenance

Buying and selling of investmentsSettlement of transactions

Safe holding of investmentsAdministration and reporting

Non-Discretionary

– Investment Committee approves every transaction from Adviser recommendations

Discretionary – investment decisions are delegated to the external

Manager/Adviser

Investment decision making can be:and/or

Board of Trustees/Directors

Investment Committee

Dedicated JBWere Portfolio Management Team

Investment Advice / Management

The Board / Investment Committee deal directly with a dedicated JBWere Advisory Team.Slide21

Investing

in financial

assets

Facilitation,

Coordination,

Networks

Investing in real assets,development spendingCollaboration with others

Investment

and Spending

Plan

Summary

Engagement, consultation and feedback

Strategy development

Formalising a plan for execution

Managing investments in financial assets

Co-ordination and networking across a wide range of expertise

Our value proposition