Pur­ple Group wants or­di­nary peo­ple to have as­sets rather than debts, and the con­fi­dence to grow them, writes Jo­hann Barnard

Financial Mail - Investors Monthly - - Special Report: Purple Group -

Us­ing the anal­ogy of golf clubs hav­ing lost the cloak of ex­clu­siv­ity that was pre­vi­ously main­tained through strict dress codes and an­ti­quated at­ti­tudes to at­tract­ing pay­ing cus­tomers, Mark Barnes sug­gests the con­sumer-driven world or­der is shak­ing up fi­nan­cial ser­vices.

Dis­rup­tion is some­thing that the chair­man of Pur­ple Group em­braces.

This has been demon­strated time and again, start­ing with the ac­qui­si­tion in 2007 of GT247, which has been built into one of the lead­ing re­tail online de­riv­a­tives plat­forms in the coun­try. This dis­rup­tion was taken fur­ther last year when the group launched EasyE­quities to cater to a much larger, po­ten­tially lu­cra­tive mar­ket.

Tech­nol­ogy, Barnes says, has al­lowed peo­ple to gain ac­cess to knowl­edge which has given them the con­fi­dence to in­vest.

“It’s all about the fo­cus on the in­di­vid­ual. The in­di­vid­ual has been em­pow­ered by tech­nol­ogy — we carry our lives around on a small de­vice and con­trol the world from it. And that must be the case in eq­ui­ties too,” he says.

“We can marry ad­vice, wis­dom and strat­egy with an ev­ery day, ev­ery sec­ond trad­ing in­ter­ac­tion. If your money is with an as­set man­ager you might get a re­port ev­ery month — to­day, that’s just not good enough.”

An ex­ten­sion of this ap­proach to wealth ac­cu­mu­la­tion is Barnes’ quest to over­turn in­di­vid­u­als’ in­debt­ed­ness. He says South Africans have been con­di­tioned to man­age their li­a­bil­i­ties rather than their as­sets.

“Very few peo­ple fo­cus on the other side of the bal­ance sheet, which is as im­por­tant, if not more. And the only way you re­ally start look­ing af­ter money is once you’ve got it.

“We need peo­ple — the broad pop­u­la­tion — to start ac­cu­mu­lat­ing as­sets,” he says.

This is a mis­sion that the EasyE­quities plat­form sup­ports, not only through its user-friendly in­ter­face but through in­no­va­tions such as its frac­tional share rights, which en­able even the small­est in­vestor to buy a por­tion of a share com­men­su­rate with his or her bud­get.

EasyE­quities is but the fi­nal tile in a puz­zle that Barnes and his team have been piec­ing to­gether over the past five years to pro­vide the group with new sources of un­tapped rev­enue, par­tic­u­larly an­nu­ity rev­enue.

This is a po­si­tion sup­ported by the Em­peror As­set Man­age­ment busi­ness, which prom­ises true an­nu­ity in­come through its ex­pand­ing range of prod­ucts.

Given the grow­ing sta­bil­ity that the group’s struc­ture pro­vides, Barnes sees no need to ex­pand the busi­ness be­yond its cur­rent thrust.

“We’re an in­vest­ment and trad­ing house ac­ces­si­ble to ev­ery­one and we’ve priced our­selves cheaply to get to those peo­ple. There’s enough growth in the space we’re op­er­at­ing in, in a dif­fer­en­ti­ated mar­ket, for us not to look else­where,” he says.

“There’s an in­creas­ing an­nu­ity el­e­ment to our earn­ings pro­file. So my big fo­cus is how to in­crease the pro­por­tion of our in­come that is risk-free, and that means grow­ing our clients.

“And the mar­ginal client ac­qui­si­tion cost (us­ing tech­nol­ogy) is so much lower than it used to be in the good old days of stock­broking.

“So it’s about client ac­qui­si­tion, in­creas­ing the an­nu­ity na­ture of our earn­ings pro­file and broad­en­ing ac­cess to a mar­ket that has been fairly pro­tected from broad-based par­tic­i­pa­tion up un­til now.”

This is good news for in­di­vid­ual in­vestors.

All pic­tures: MARTIN RHODES

Pur­ple Group chair­man Mark Barnes.

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