On the 1st of April, NFB reached an incredible milestone as it celebrated its 40th anniversary. The business has evolved from humble beginnings in the Eastern Cape, to a national presence today, and is considered one of the leading independent wealth management businesses in South Africa. As one would expect, in 40 years there has been a lot of corporate activity – organic growth, acquisitions, mergers, divestments, joining an Alt-X listing, and more recently a management buyout resulting in the business being 100% management owned. The business started a standalone Asset Management business in 2004, which has continued to rise to new highs and was recently awarded the Morningstar SA Asset Manager of the Year at an awards ceremony held in Cape Town last month. 

NFB is, at its core, about people. We currently have an amazing staff complement, with an average staff tenure of almost two decades, and have had the privilege of working with some very special and talented people along the way, many of whom remain in the industry, or as friends of the business in their retirement. Our institutional partners go to great lengths in providing the depth of support for our advisor and client needs and the relationships have been built on decades of trust and service. The ability to work with industry leading companies and their excellent management teams adds value to our business and most importantly, to our clients. Then of course, we have incredible clients. 

Without our clients we don’t have a business. We are grateful for the support and confidence that our clients have shown us over many years. It is gratifying to see the tenure of relationships – be they staff, institutional partners, or our clients. Many of these relationships go back decades and speak to the essence of the business.

We are also privileged to have one of the four founding partners of the business, Mike Estment, as our Executive Chairman. Mike, with the support of his wife, Lisa, has been the key driver of the NFB story, leading it through some incredible times – both good and challenging, into what has become a very successful business today. Importantly, Mike understood that for a business to succeed over time, it needed to have genuine depth and a long-term succession plan as core to its strategy. Mike was visionary in adapting the business to the changing financial services environment, changing it from a finance brokerage (National Finance Brokers) into the fully-fledged Wealth Management Business it is today. Mike, on behalf of NFB, our institutional partners and clients, congratulations on this remarkable achievement – NFB’s story is something you and Lisa should be very proud of.

40 years is remarkable if one considers the nature of the business, and what has happened in South Africa and in global markets. Let’s pause to think of the magnitude of just some of the events which NFB has navigated through: 1987 global stock market crash; the turbulent end of apartheid (including sanctions) in the late 1980’s & early 1990’s and the transition to democracy in 1992; the Asian/ Russian financial crises of the late ‘90’s; the Dot Com crash in the early 2000’s; 9/11 (2001); the global financial crisis in 2008-2012; the COVID crash of 2020; and then the inflation/interest rate spike of 2022. We find ourselves in troubled waters once again – the Tariff Wars as the Trump administration upends the global trade order. 

When in the middle of a crisis, it is natural to feel that “this time it is different” or that this is the inevitable “end of days” or “existential” event. While the nature or cause of a crisis varies, markets come through the other side. Pullbacks are a feature of markets – if one looks at the data, pullbacks of >10% (using the S&P500) are not uncommon at all, and in many cases, the market can still deliver positive outcomes for the year notwithstanding this. There have been 30 corrections since March 2009 of more than 5%. Of these, 10 were larger than 10%, 4 exceeded 20%, and 1 was more than 30%.  

As a business, we realise that one of the key roles and differentiators of our advisors is to be side by side with our clients through the difficult periods, making sure that they are well positioned going in, and that they hold the line through market volatility.

The nature of the current crisis is so fluid (and unprecedented) that it is not worth venturing views on the Tariff Wars in this piece. From the time of writing to the time of being read, it is highly likely that the information available has dramatically changed and consequently so too circumstances. In the words of an esteemed fund manager that we deal with “what may be a rational decision today, in these markets and political climate, may be an irrational one in a week’s time…”  

What we can say is that NFB, with our client’s support, has successfully navigated 40 years of market ups and downs, and there are a few takeouts from this experience set that we can lean back on in times like this: 

• One needs to be aware that the headlines in media are designed to sell clicks and views and are consequently often sensationalised. In addition, given how polarised the world is around Donald Trump, it is difficult to find impartial commentary (it is biased in one way or another). This can create fear and cause investors to do the worst thing they can possibly do – panic.
• In a well-defined investment strategy, the risk that has been taken should be commensurate with your ability to absorb volatility and downturns. Where clients have aggressive positioning, it is because they have the “volatility budget” that allows for this – this is to say that their time horizons, or personal circumstances allow them the ability to absorb volatility. For clients who are reliant on their portfolios for income or who are nearing retirement, we are typically far more defensively positioned. It is improbable that such clients would have seen anywhere near the volatility that markets have seen and media focuses on.
• In most instances, what clients are seeing in their portfolios will be quite different from what is happening at market level. This is because we typically have diversified strategies within portfolios. This is to say we do not have a binary position whereby everything is contingent on the equity market (or a specific equity market’s) performance. In many instances, we will see multiple asset classes, alternate investments, currency diversification, active as well as passive management, and liquidity positions.

NFB’s 40 year journey has traversed many peaks and troughs in markets, and so maybe it is appropriate that as we start the next chapter, we are faced with challenging markets. As a business, we realise that one of the key roles and differentiators of our advisors is to be side by side with our clients through the difficult periods, making sure that they are well positioned going in, and that they hold the line through market volatility.