Stanbic Bank hosts experts to brainstorm wealth managementSebatindira said, planning can begin by consulting with professionals like wealth managers and lawyers to ensure intended beneficiaries are catered for according to one’s wishes. She cited the advantages of trust funds.
Stanbic Bank recently hosted a discussion on estate planning highlighting the importance of wealth management and investing for retirement with the panelists agreeing that the best time to start planning for the future is now.
Allan Muhinda, the Head of Global Markets at Stanbic Bank was the moderator. The panelists were Ruth Sebatindira, Founding Partner of Ligomarc Advocates, Joshua Ogwal, a Partner at the same firm and Tich Makonese, the Head of Insurance East Africa, at Stanbic Bank. Ligomarc Advocates was Uganda’s first ISO certified law firm specializing in financial and corporate law.
Stanbic Bank is the anchor subsidiary of Stanbic Uganda Holdings Limited, and the country’s largest financial institution. Muhinda told invited guests, the discussion is part of a series that the bank will be organizing on different topics to give advice to clients and customers in matters of financial management.
The panelists focused on preparations and tools to ensure accumulated wealth is well managed as one heads towards retirement. They also discussed the challenges associated with safeguarding inheritances.
Leading off with personal experiences of friends who had unexpectedly passed on and left their affairs incomplete, Sebatindira said, planning can begin by consulting with professionals like wealth managers and lawyers. She cited an example of a trust fund that could be domiciled either locally or abroad, but with the sole purpose of financially caring for the beneficiaries as instructed.
She said, “In a nutshell you have amassed a portfolio of wealth that forms your estate. It could be shares, land, whatever that investment portfolio maybe. The question is how do you want your estate to take care of spouses, children and other beneficiaries? Planning for the future should be right now. Get a sense of urgency around the topic.”
Makonese said one of the first rules of investment is having the discipline to save by regularly putting money aside. He said, “Before you even start thinking in what you going to invest in, you got to have the discipline to start. You also must be honest about the things you invest in. Understand the assets that you want to invest in and avoid jumping on board just because all your friends are in it. Find something simple. If you don’t understand Bitcoin, please don’t put your money there.”
He said once the discipline is established, one attains the skills to manage their savings and the multiplication of the money will take care of itself. Prompted by Muhinda to discuss why some large Ugandan business concerns face challenges in leadership from one generation to the next, Ogwal said many founders do not adequately prepare their children for the transition. In other cases, being a ‘one man show’, the owner starts the process too late. He highlighted the need to involve the children early in the business to spot their talents, strengths and weaknesses.
He said, “If you truly want your business to continue beyond you, how quickly are you planning for your exit? What governance structures are you putting in place and what challenges have you identified whether within or outside your family for its continuity? Perhaps you family may not have the talent you need, but once you get people in, how are you integrating them in the business so that you can spend less time in it, and allow it to continue beyond yourself?”
Referring to the tools used in the management of your estate, Sebatindira said the commonest one is drawing up a Will and keeping it updated. “Decide who takes what. This is about your vision and its starts with your Will. But even before you pass on, you can transfer assets to your wife, children and so on, whether it is for tax purposes or to prevent people fighting when you are gone,” she said.
She said another tool is setting up a trust fund which is managed by trustees. However, Uganda’s current laws need to be amended in order for this arrangement to work for the mutual benefits of all concerned. For those who do not leave a Will, the Succession Act legally stipulates the division of all assets.
Sebatindira cautioned on the importance of not drawing up wills when you are in an emotional state and to ensure statutory requirements are followed, particularly pertaining to having witnesses. She said however due to certain cultural and ethical factors, management of trusts in Uganda remains a contentious issue.
Makonese said once the discipline is in place, people should find out what options are out there and attach a purpose to their investments, for instance the university education of a child. He said having a diversified investment portfolio is the most ideal way to also diversify the risk. Having a rainy day fund, easily accessible cash to cater for emergencies, is one form of diversification. Others could include buying government securities, but the investments should be tied to personal horizons in order to accomplish a specific goal. He said long term goals require long term investments.
Makonese said investment portfolios are valuable assets that can be part of an estate and continue to deliver returns even when one has passed on. However, Muhinda when referring to the ‘return objective’, reminded the audience to be realistic. He said age is a major factor. The older you are, the more likely you should be risk-adverse than younger people, because you may not have the time to recoup any losses.