The overlooked value of taking sufficient risk
Investments must be tailored to people’s circumstances and individual aspirations
Client engagement is rarely found in the world of investing. Sure, investment companies want your money, but not necessarily your interest. And just how invested are they in the wellbeing and understanding of your risk profile, portfolio and personal investment goals?
This is a question Charles Savage, CEO of Purple Group, believes requires answering. It stems from his own experience. “I don’t believe the investment industry has played fair for a long time, and while this is changing thanks to technology, competition and new regulation, it is my view that there has been a disproportionate sharing of wealth creation that has done more to enrich the asset managers and their shareholders than the clients they serve.”
He recollects his own experience of being advised in his mid-20s to adopt a moderate risk approach, only to discover a decade later that this had resulted in his portfolio underperforming inflation. This “lost decade”, he says, is not an uncommon occurrence for the majority of South African investors hoping to build a safe retirement.
“Too many South Africans waste two, even three decades, then get to retirement and are forced to take more risk. Unfortunately the thing that dissipates risk most effectively is time, and what you’ve lost most of when you’re 60 is time.”
The lesson from his personal experience has informed his philosophy to wealth creation, which lies at the heart of the Purple Group’s approach.
A comparative newcomer to the market, the group has grown considerably from Mark Barnes’ investment company, JSE-listed Purple Capital.
The group has undergone a metamorphosis over the past 10 years that culminated just over a year ago in a name change to Purple Group.
This transformation has been marked by the acquisition of the GT247.com online trading platform in 2007 and the creation of Emperor Asset Management and GT Private Broking. The most recent addition to the stable is EasyEquities, a platform created to empower all investors to take charge of their own financial wellbeing.
Savage says the composition of the group positions it to cater for the broad market — from the novice investor through to active derivatives traders, with its private broking and asset management businesses providing more traditional investor services.
“The period from 2008 to 2010 was about stabilising the ship, then through to this year we have focused on building a differentiated retail financial services group focusing on providing services to the mass affluent market,” Savage says.
He explains that this terminology recognises people’s desire to accumulate wealth, irrespective of their age or income group. “It could be a person who is 18 or 80, but still trying to accumulate wealth. A key attribute they have is the capacity to take risk,” he says.
He considers this appreciation of an individual’s unique circumstances and risk appetite to be one of Purple Group’s big differentiators, as its various services enable investors to tailor their investments based on their particular circumstances.
“In many instances, South Africans have been sold less risk than they require, and worse than that, less than their risk profile can absorb,” he says.
And Gary van Dyk, Purple Group’s chief financial officer, adds: “The risk that comes with not taking enough investment risk is the risk of retiring with too little money.”
Purple Group CEO Charles Savage.