TRANSFORMATION
28 February 2021
MOHAMED MAYET CEO and Portfolio Manager, Sentio Capital Management
Transformation: Investing in the investment industry
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ating agencies have often singled out South Africa’s financial services sector as being both world-class and a leader in emerging markets, even ahead of some developed markets. Specifically, the asset management industry is highly regarded globally due to the calibre and technical excellence of its professionals. However, this ‘first-world financial infrastructure’ needs to be sustainable in order to ensure that this centre of excellence continues to compete at the highest level. What many critics of continued transformation in the sector forget, is that one of the defining features of a sophisticated financial infrastructure is that it is inclusive and diverse and that it drives the development and social agenda of a stable economy. So, when and how do we get there?
also remove the ‘friction costs’ for previously disadvantaged people (especially Africans). These friction costs are the reason why 27four’s BEE. THE BEST WAY TO economics 2020 survey highlights that only 9% of the SA savings and TRANSFORM THE investment pool is managed by black ASSET MANAGEMENT managers and, of this, 90% is sourced INDUSTRY IS TO from large institutional investors. Dig deeper and you will find the stats TRANSFORM THE show even more concentration in ENTIRE VALUE CHAIN the savings pool being managed by a To understand the complex select few. issue of transformation, we need Sentio believes that the best way to understand that it is not a static to transform the asset management concept, it is continuously evolving. industry is to transform the entire Moreover, we need to define what value chain. It’s not enough just transformation means in simple asking clients or institutions to terms (not in complex scores that are invest with black managers, nor is it easily gamed), and what longer-term adequate to just populate the industry transformation means – it has to be with black professionals. To achieve more than just a ‘seat at the table’. this, the following needs to happen: The evolution of transformation in 1. We need to make it easier for the industry should not only reflect smaller firms (who happen to broader society’s demographics, but be1 black managers) to compete Sentio_MM Feb 21_Transformation.pdf 2021/01/21 15:18
without putting the end-client at risk in any way. With technology, and the kind of services available nowadays, this can be easily achieved with better compliance and oversight too. 2. We all need to focus on growing the talent pool in the industry in an unselfish way, recognising that we might not necessarily retain the apprentices we train but that this is an investment in the industry. At Sentio, we take this very seriously and have developed an in-house academy that goes beyond mere internships but rather seeks to find the smartest talent and make them ‘corporate ready’. 3. We need to proactively contribute to the society we operate in through assisting vulnerable groups directly. Sentio works with two women’s groups that, among other things, operate on the ground to provide the unemployed and destitute
educational-based support, feeding schemes, as well as medical and frail care. These communities will produce our future leaders and customers and we need to change our thinking about them. 4. And finally, we need to look at the financial products we sell and their relevance to the broader market. Have we evolved with the market needs or are we still ‘pushing’ our products onto the public? Sentio has an astute product development team that is able to work with our clients to produce innovative solutions for them, utilising our unique AI and machine-learning capabilities. In our view, transformation is not just a tick-box exercise nor a hurdle but rather an economic opportunity for the sector to show its leadership, and we are comfortable and committed to playing our part.
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A majority black-owned asset manager. Sentio Capital Management (Pty) Ltd is an authorised FSP.
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