Damilola Hassan is Head, Meristem Wealth Management Limited. In this interview with Goddy Egene, Hassan speaks on how the capital market can attract more investors, and how individuals can successfully plan their estates and ensure businesses live beyond the founders, among other issues. Excerpts:
The stock market is heading towards a positive close this year after three years of decline. How do you feel about this?
It has been quite exciting seeing the Nigerian Stock Exchange All-Share Index rise from 26,000 at the beginning of this year to about 36,000 now. The rebound is largely a reflection of the recovery of the economy going by economic indicators, such as Gross Domestic Product, inflation, the price of crude oil. Investors with keen eyes on the market took strategic positions in the market and are benefiting from such decisions today. Others who were less optimistic have a different story to tell.
Why do you think the market recorded three straight declines, despite efforts by regulators and operators?
The market is driven primarily by forces of demand and supply. Where there is pessimism about the state of an economy, investors’ participation in equities market dry up. I do believe that regulators and operators have a significant role to play, especially when it comes to building investor confidence and creating greater market efficiency. However, these cannot have the desired impact if investors do not find the market attractive enough for participation.
Capital market regulators have introduced initiatives, such as the e-dividends, to reduce unclaimed dividends and direct cash settlement, among others, to encourage more patronage. How would you react to these initiatives?
These initiatives are a welcome development and long overdue. In this day and age where technology is leveraged on to create additional layers of comfort into what we do, electronic payment of dividends is the way to go. More and more retail investors are embracing this comfort and the level of synergy demonstrated by stakeholders in achieving this is commendable. A lot more still needs to be done on enlightenment in order to increase investor participation.
In the past we had wealthy investors and business moguls who owned thriving family businesses, but today not much is heard or known about their investments. Why is this so?
Several factors are responsible for these sad recurring cases of family wealth not crossing the second generation. These may include the absence of: proper business structures, effective separation of ownership from management, business operations and systems devoid of sentiments and the list goes on. For a family business or any business at all to last beyond the founder, there must be deliberate efforts to institutionalise the business and also put in place a proper succession plan devoid of emotions and sentiments.
Developments like this discourage investors who may be wondering what could become of their estate when they are no more. What do you think is the solution?
As the years roll by, an investor, having achieved success in building business empires and acquiring assets, begins to redirect his thoughts from growing such wealth to concerns over how his loved ones can have relatively easy access to his estate when he/she is no more. Arriving at a decision on how best to transfer this wealth depends on a whole lot of factors peculiar to each individual and family. The timing of such decision and the various platforms and options to consider require extensive consultations with professionals who will carefully weigh these options within the investor’s context to proffer solutions. At Meristem Wealth Management, we acknowledge that arriving at a decision on the most appropriate transfer strategy can be quite emotionally-tasking for individuals and rational decisions can be blurred in heavy fogs of sentiment. To aid this thought process for many qualified investors, we have put together a team of professionals to lead discussions on estate planning and wealth transfer. The seminar is scheduled to hold on Thursday 30th of November and will feature speakers with varied experiences in tax planning, estate planning and trust services, law and succession planning. The event is at no fee, as it is our own little way of bringing to the fore issues that should be considered as investors try to navigate the waters of generational wealth transfer.
Apart from the seminar, what other ways is Meristem Wealth Management encouraging savings and assisting investors to grow their wealth?
A lot of people want to save and invest to achieve a certain level of financial independence but key things are missing: lack of adequate information on the choice of investments and credible platforms and partners they can reach out to. At Meristem, we are bridging these gaps by providing up to date market information across asset classes, so that investors can make informed decisions. We are active on social media and have online chat rooms where we constantly engage investors. To address the issue of credibility, we have engendered transparency into the fabric of our wealth management services and this has helped us to gain the confidence and trust of our clients over the years.
How can regulators and operators collaborate more to ensure investors patronise the nation’s capital market for it to properly play its role in the economy?
A lot is already being done to foster this, but there is room for more. Investor education cannot be overemphasised. If the growth we desire is a long-lasting one, it has to be driven by adequate knowledge premised upon market sanctity and integrity. We have seen the regulators wield the big stick in recent times without caring whose ox is gored. The market needs more of this discipline to improve investor participation. Also, market offerings need to be further deepened to encourage increased participation, especially from local institutions.