Wealth management is critical for any successful financial planning to take place, underscoring why people needs guidance of professional to achieve financial independence. Sulaiman Adedokun, managing director, Meristem Wealth Management Limited, who also doubles as the Deputy GMD of Meristem Securities Limited in this interview with Modestus Anaesoronye, looks at activities of the company, planning for retirement, investment opportunities in Nigeria and the economy in 2019. Excerpt:
Sulaiman Adedokun pioneered the establishment of Meristem Wealth Management Limited in 2008 after operating it as a division under Meristem Securities Limited providing advisory portfolio management services to its clients. He is currently the managing director of the company and also doubles as the Deputy GMD of Meristem Securities Limited; a holding company to 5 subsidiaries namely- Meristem Stockbrokers Ltd, Meristem Registrar and Probate Services Ltd, Meristem Capital Ltd, Meristem Trustees Ltd and Meristem Wealth Management Ltd.
Tell us about Meristem Wealth Management and what you do as a company?
Meristem Wealth Management Limited (MWML) is a licensed Fund and Portfolio Manager registered by the Securities and Exchange Commission (SEC). Meristem Wealth Management Limited was established in 2008 as a subsidiary of Meristem Securities Limited; a company incorporated in 1994 to deal in securities trading.
MWML is a full service firm in the wealth management industry. Wealth Management is a comprehensive financial plan/solution that is targeted towards High Networth Individuals and their families for the purpose of helping them achieve life financial goals of wealth growth and enhancement, preservation as well as a smooth transfer to the next generation. Our cardinal focus is therefore about growing wealth, preserving same and transferring it to loved ones. Ours is a holistic solution that covers the financial lifestyle of our various clients. In delivering this service, we provide a whole lot of services that covers the core wealth management, asset and portfolio management, asset tracking and consolidation, goal-based investment management as well as investment advisory services. Our Core Wealth Management Services includes Succession Planning, Estate Planning, Retirement Planning, Legacy and Philanthropic Planning as well as tax planning with a passion to provide life financial peace of mind to our various clients. We are driven by the quest to be the distinct and preferred wealth management services provider with bespoke solutions to our clients.
Our asset management unit has a solid reputation as a highly professional and client-centric fund and portfolio management division in the provision of tailored fund management services to various classes of investors. We have an excellent track record of good performance and professional service delivery.
An attestation of this is the exceptional growth we have recorded in our Asset under Management (AUM) over the years and is currently in excess of N188 billion as at December 2017.
In managing people’s assets, a lot of planning is tilted towards retirement or end of work life. What does planning for retirement actually mean?
Let me start by saying that financial independence at retirement is an objective that every individual should aim for. The ability to maintain a desired lifestyle at retirement without being a burden to family or friends is a satisfying experience and a worthy gift to self after active service years. It is always saddening to see individuals who during their active years were well-off and could afford the luxuries of life but whose financial fortune fall drastically immediately after or some years after retirement. Hence, we see it as important and imperative to educate people on the need to plan for retirement.
To achieve a desired retirement goal, it takes planning, it takes discipline and it needs hand-holding. It involves setting the lifestyle target (financial and non-financial), putting in place the right action plans to achieve the ideal targets and implementing those plans. At Meristem, we guide our clients through these processes so they could retire well and make their life in retirement the best stage of their lives.
Another aspect of retirement planning service we render is succession. This is because who takes over the business wheel/mantle from you could affect your legacy and the quality of your post-retirement days. Succession planning involves assisting a business founder with alternatives/strategies for his business continuity decision at retirement or death. We help identify, develop and ensure smooth transition of the right individual(s) to ensure business continuity.
Many people are confused as to who should think retirement so tell us the appropriate age to start planning retirement?
Retirement planning should start from the time an individual receives his/her first pay check. Retirement planning is never too early, as a matter of fact, the earlier one starts the better. For someone that starts early, he has more years of saving and would require less monthly saving (because of the compounding effect on savings and interest) to achieve a retirement goal than someone that started in his forties or fifties. So it is advisable to start early. Starting early affords the opportunity to save for longer period which reduces the risk of insufficient assets post retirement towards meeting one’s lifestyle goals. It also enables fine-tuning retirement objectives as you progress in your career.
What are your expectations for the Nigerian stock and bond markets this year, given it’s a pre-election year?
My expectation is cautious optimism. Historically, the Nigerian financial markets are usually greeted with high volatility and panic sell pressure across all asset classes. However, in the midst of this volatility lies an opportunity for savvy investors’ especially long term investors.
While we note that the performance of the Nigerian bourse was not encouraging in the first half of the year, we expect H2:2018’s performance to be driven by increased bargain hunting activities following several periods of profit taking, as prices of counters have fallen to attractive prices. We expect that the 9-Month financial scorecards will provide better direction on expected full year performances, thus the expectation of impressive results at this period should drive the market’s performance. Also, the largest telecom operator in the country is set to be listed on the floor of the Nigerian Stock Exchange by the end of September 2018 and this should result in significant inflows into the market and we expect this to positively impact other counters as investors consider other value stocks for investment. Finally, the newly introduced multifund structure by PenCom which allows PFAs increase their exposure in the equities market should drive market activity in the second half of the year.
However, given that it’s a pre-election year, increased economic and political instability usually experienced in this period may continue to drag foreign portfolio investment (Foreign portfolio investment in the Nigerian equities market averaged 47 percent of total FPI in the first four months of the year). Furthermore, the recent spate of attacks and ethnic clashes in various parts of the country may place Nigeria’s country risk even higher.
I expect a better performance of the market in the second half of the year despite the downside risks typically faced during pre-election periods.
With respect to the bond market, the recent hike in the US Fed rate makes it imperative to maintain an attractive domestic yield environment. As such, we expect rates to remain relatively high in the short term. Furthermore, the lower risk advantage of investing in the fixed income space should continue to drive investors’ interest in the Nigerian fixed income market.
The government is expected to raise Eurobonds as part of its plan to source cheaper debt and restructure its debt portfolio to accommodate more foreign debt. We expect such auctions to remain oversubscribed, given that it should be offered at higher rates than what is offered in other economies.
Where do opportunities currently lie for investors trying to adjust to lower yields of 10 percent in government treasury bills?
During periods of low interest rate, it is natural that one will have to consider other investment vehicles, both traditional and alternative. Equities is one of the options especially stocks with good fundamentals that are able to harness growth stories within their industry. Also there will be increased consideration for real estate because the lower interest rate environment would mean that the return on real estate might be attractive enough if it covers the illiquidity premium. Non-interest yielding investments with good return are always a consideration for ethical investors. There are also structured investment products in naira, dollar and pounds with attractive returns. Low interest rate environment is never a reason to stop investing because there are several other investment options.
What is your outlook for the Nigerian economy in Q2 after a less than expected turn out in the first quarter, which though saw growth of 1.9 percent, though a decline quarter on quarter?
My outlook is for a slightly stronger growth for Q2:2018 hinged on improved growth outlook in the non-oil sector. During the period, the manufacturing PMI indicated an expansion in manufacturing activities throughout the quarter, while the stable exchange rate and lower inflation figures also support the higher growth projections for the economy. Also, given the Government’s increased attention towards the agricultural sector, through the various agricultural policies and support funding programs, I expect improved activities within this space to drive non-oil sector growth. The high oil price environment (oil price reached a high of USD79.80pb in May) and relatively stable oil production levels should also drive growth in the oil sector in Q2. The higher growth expectation is however expected to be modest, given the untimely passage of the 2018 budget.
You are currently managing clients assets in excess of N180 billion, what does this mean for the company?
It underscores the confidence of our clients in our offerings, service and the value we create on their investments. We believe that value creation, transparency and confidentiality are essential to our clients and our management of the assets is based on this tripod. The consistent and exponential growth of our asset under management attest to the value creating relationship we have with our clients. We are a constantly evolving company and our institution is structured to always deliver the best-in-class products and services to our clients. We believe that every satisfied client becomes our “unpaid business developer” who will refer at least 2 other potential clients to us which in turn adds to our growth success story. We do not intend to rest on our oars because we will continue to be a client focused company that creates wealth and add value to our clients.
