I spent the first eight years of my career in data analytics for retail banks. I loved it — there’s nothing quite like a good cup of coffee, an Excel spreadsheet with huge amounts of raw data, and a pair of headphones.
In 2018, at the age of 34, I changed careers and entered the wealth management industry.
Since then, I’ve worked with clients and invested through different market cycles.
Along the way, I’ve picked up a few principles that I keep returning to, and they continue to guide the way I approach my work today.
Here are four of them:
1. Alpha (outperformance) is overrated
I’ve sat through countless fund manager presentations where the story is always the same: we have the strategy that consistently outperforms the market. Our solution is the secret sauce.
My sense is that 99% of managers believe their solution is superior. They have the best process, the best portfolio, the most durable strategy.
The truth is that fortunes have been lost chasing alpha (so the data tells us). I understand the desire to beat the market, but an obsession with alpha is dangerous. It often leads to unnecessary risks, constant portfolio changes, and a short-term mindset.
The only benchmark that really matters is this: are you on track to reach your goals?
2. Client education is the best form of risk management
Risk management comes in many forms: diversification, asset allocation, hedging, rebalancing, and so on. All of them matter.
But one of the most effective risk management tools is client education. If you understand how markets work — the cycles, the crashes, the recoveries — you’re far less likely to make poor decisions under pressure.
In every major crash I’ve witnessed, the best strategy has been to sit tight and let the portfolio do its job. The hard work is done upfront in building the plan. If that’s done properly, the portfolio can weather turbulence. It’s behaviour, not markets, that usually makes the difference.
3. The retirement income framework is universal. The application is personal.
Every client’s life is unique — family, geography, aspirations, lifestyle needs, and income. These are the variables we’re solving for.
But the underlying framework for building and drawing from an income portfolio is universal. I came across Jaco van Tonder’s research in my first year in this industry, and I’ve used it ever since. It provides a rule-based, unemotional way to make retirement income decisions that is backed by rigorous quantitative work. It is also really simple to use.
Working within a framework like this means we can view funds, products, and structures as tools to serve the strategy — not as the strategy itself.
4. Simplicity beats complexity
Complexity can impress and create the sense that something is special. But in practice, the more complicated a financial plan or portfolio becomes, the harder it is to stick with.
Simple strategies — when they’re clear, structured, and well-explained — tend to work better over the long run. They also benefit from less fee drag.
Charlie Munger put it well: “Simplicity has a way of improving performance through enabling us to better understand what we are doing.”
If you can’t understand it, should you really be doing it? And will you stick with it during turbulence? The best results come from following a simple, durable framework.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. MatthewM@gravitonwm.com
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