Intergenerational wealth creation and the process used to develop an investment strategy

June McCabe / Hayden Griffiths

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Overview

Who we are Creating the right mindset

How we drive success

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” United Nations. 1987 Report of the World Commission on Environment and Development

Sustainable Development

Tailored Strategic AdviceEducation and Development

Governance

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Who we are

A Partnership

• Facilitate Maori economic development – be part of the wealth creation solution

• Work with Maori to identify and capture intergenerational aspirations and investment beliefs into an investment strategy

• A partnership to grow financial services to Maori/Iwi

Investingin financial

assets

Facilitation,Coordination,

Networks

Investing in real assets,development spending

Collaboration with others

Investmentand Spending

Plan

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Creating the right mindset

Creating the Right Mindset

• Anga Whakamua – what does your success looks like?

•Four pou approach to measuring prosperity

• Importance of investing in financial assets

GrowthCashflowRisk Liquidity

•Kaitiakitanga – intergenerational time horizon

•Recognising capability gaps – take a considered approach

Identifying key philosophies and beliefs

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Creating the right mindset

Kaitiakitanga

• A legacy of previous generations

• Strong emotional attachment

• Frustration and impatience common

Past• Assets are taonga

Future• Prudency and responsibility the calling

• Build on the legacy for future generations

• Assets are scarce vs. demands

• Need a carefully planned approach

Intergenerational

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Creating the right mindset

Significant scope to build investing capability

• Encourage Maori/Iwi to take stock of where you are at• Recognise your limitations• Opportunity to learn given time• Plan ahead with this mindset

Capability

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Creating the right mindset

The power of compounding growth given time

Time Horizon

22195

32

1

10

100

1,000

10,000

100,000

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

United States Long Term Total Market Returns

US Equities

US Bonds

US Cash

US Inflation

33734

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Creating the right mindset

The Role of Financial Investments within Maori Assets

• Financial assets provide very important characteristics that complement directly held real assets

Dispersing concentration risk (improve resilience of investments longer term)− Concentrated exposure to specific businesses within a region leaves a portfolio of assets vulnerable to

inevitable tougher conditions in these areas− Financial assets can substantially reduce this concentration risk by investing across industries and

regions globally

Liquidity and cashflow (facilitate short-term liquidity and on-going drawdown requirements)− Financial assets provide funding flexibility when there is limited cashflow and lack of divestment options

exist across direct investments

Source of growth (important that asset base grows faster than value erosion from inflation) − Investment in financial assets, particularly listed equities (shares), an important source of growth

complementing direct investments

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How we drive success

A considered and disciplined approach

How we drive success

Prosperity

Assets

Investing and

Spending Plan

• Looking after capital highest priority• Portfolio perspective to managing assets• Diversification, liquidity, and cashflow important

• Value measures other than wealth important• Development spending a separate decision making process

to management of assets

• Intergenerational planning horizon• Documented values, purpose, and operating guidelines• Adequate risk-adjusted returns a must• Sustainable drawdown (live within your means)

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How we drive success

Key Objectives

• Encourage a long-term focus

• Formulate a robust structure

• Enhance governance and soundness of decision making

• Entrench performance and accountability across a broad set of measures (4 pou approach)

• Benefit to JBWere with advising on financial assets

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How we drive success

• Overarching strategic guidelines

• Covers investments in real and financial assets, and drawdown for spending

• JBWere modelling expertise

• Foundation for determining long-term risk, return, and drawdown capacity

• Specifically for investments in financial assets

• JBWere specialist advisors/managers for investment in financial assets

• Nature of service tailored to suit preferences and requirements

Consultation

Engagement

Feedback

Ongoing Relationship

Developing the Plan for Investing and Spending

Formulating the approach

Statement of Investment Policy and Objectives (SIPO)

Analysis and discussion of appropriate asset allocation

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How we drive success

Comprehensive Bespoke ServiceManaging Financial Investments

Transaction Execution Custody

Separate Legal Entity

• Portfolio construction and maintenance

• Buying and selling of investments

• Settlement of transactions

• Safe holding of investments

• Administration and reporting

Non-Discretionary – Investment Committee approves every transaction from Adviser recommendations

Discretionary – investment decisions are delegated to the external Manager/Adviser

Investment decision making can be:

and/or

Board of Trustees/DirectorsInvestment Committee

Dedicated JBWere Portfolio Management Team

Investment Advice / Management

• The Board / Investment Committee deal directly with a dedicated JBWere Advisory Team.

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How we drive success

Investingin financial

assets

Facilitation,Coordination,

Networks

Investing in real assets,development spending

Collaboration with others

Investmentand Spending

Plan

Summary

• Engagement, consultation and feedback• Strategy development• Formalising a plan for execution• Managing investments in financial assets• Co-ordination and networking across a

wide range of expertise

Our value proposition