For nearly 20 years, Paul Njoki, Head of Wealth Management at Standard Chartered, has been advising and monitoring the wealthy around the world.
He started as a corporate auditor at KPMG and then moved to Bermuda, a playground for the super-rich. There, a client would send $5 million and ask him to invest.
He has also audited hedge funds, mutual funds and audited funds for investment giant Franklin Templeton, which has over $1.5 trillion in assets under management (AuM).
The Standard Chartered wealth management unit, which serves a significant proportion of Kenya’s affluent population, manages over 120 billion shillings of assets under management.
The wealthy have been largely shielded from the pandemic due to their cash and access to capital which has provided them with an array of investment options ranging from global equities, venture capital, real estate and mutual funds. placement – and even gave them the chance to win government tenders. .
A recent report showed that there were some 1,755 people with a net worth of $5 million (566.5 million shillings) or more in November last year with a total wealth of 37.1 billion. dollars (4.2 trillion shillings).
Kenya’s wealthy have various business interests spanning agriculture, transport, manufacturing, clothing and real estate.
In an interview with Enterprise, Paul explained how the wealthy invest, protect and grow their money.
Clear and decisive about their goals
Rich people are clear and know what they want. This allows them to work towards their goals with ruthless focus.
According to Paul, a meeting with high net worth individuals (HNWIs) is always an enlightening moment.
“I go into a meeting room with them thinking I’m clear, but I find they’re even clearer,” Paul laughs.
This sharp focus extends right down to their habits and work ethic.
“They work hard, very hard, most of them are early risers as well,” he said.
Paul adds that they are quick decision makers. After a pitch, they don’t sit around too long with a decision.
They seek advice
Most people don’t have a deep understanding of finance or even the time to research the best financial portfolio.
A financial advisor helps you find the best rates, establish a budget, invest, save and plan your taxes. They simply help you plan your finances and align them with your goals.
HNWIs are not limited when it comes to advising. Most of them have different wealth managers and financial advisers at their disposal and are not afraid to ask for a second opinion.
“There are clients that I walk out of a meeting advising them on, I come across another financial adviser that I know from the industry who is also going to advise them,” Paul said.
He adds that the councils are not limited to the local level but also to the international level. HNWIs also read many financial documents to understand markets and trends.
Diversification was one of the top business trends in 2021 covered by Enterprise.
The pandemic has taught businesses to diversify into other sources of revenue and not rely solely on one arm. Focusing on a single trade can be risky due to unforeseen shocks.
These days, it would be hard to find a company that only focuses on one line.
Constant diversification is one of the strategies employed by HNWIs to increase their wealth and avoid stagnation.
Rather than relying solely on one core business, one can diversify their business using strategies such as mergers or acquisitions and new ventures. According to experts, it helps entrepreneurs reduce fluctuations in income, manage investment risks and achieve consistent returns.
Paul notes that their main sources of income have been hammered and that HNWIs have realized the need to deepen passive income and diversify.
This led them to save, invest in different fields, take out life insurance and seek out financial planners.
“Our advice is now tailored to help clients build safe, passive income-generating portfolios,” he said.
It refers to wealth that is transferred from one generation of a family to another and can consist of assets such as cash, property, stocks, or ownership of a family business.
In the recent past, there have been stories of family empires collapsing due to poor structures of generational wealth transfers.
Such realities make wealthy families aware of the importance of an ongoing generational transfer of wealth. This gives recipients a great advantage in terms of advancing in life or even pursuing an investment journey to build more wealth.
In this way, HNWIs begin to ensure that family wealth is not wasted by bringing their children into the business early so they feel they are an integral part of wealth creation.
Paul notes that most HNWIs bring their children to investment meetings.
“As you advise them, children listen and absorb these things over time,” he said.
Passionate about heritage transmission
HNWIs are always looking to get their house in order just in case.
“If I’m not there, what happens to this money? They ask this question…they are always planning,” Paul said.
As Enterprise has written before, estate planning can help preserve family wealth, provide for a surviving spouse and children, fund your children’s or grandchildren’s education, or leave an inheritance for a charitable cause.
The process involves determining how your assets will be preserved, managed and distributed. It also takes care of your financial obligations in the event of transitions.
Paul also notes that they are transparent in how they handle their money. This means bringing all of their statements to the table. They know that everything they say to their wealth managers is discreet.
HNWIs are open to a variety of investment ideas. It is simply the job of a wealth manager to match them with an investment product.
For example, as an international bank, Standard Chartered helps Kenyans invest globally. One can buy any government bond issued in any market in the world.
Paul notes that individual customers have made money from bonds such as the one issued by the government of Qatar when it was raising money to build world cup stadiums.
They also help them buy shares in companies such as Tesla, Facebook, Apple and Alibaba.
Others are investing in biotech companies and companies such as Moderna and Pfizer that make Covid-19 vaccines.
“Clients are willing to participate in certain products as long as they understand the risk and how it’s managed,” Paul said.
“The only thing we need to do in the Kenyan economy is work harder to rank customers based on their desire to partake in a certain product,” he added.