Climb­ing the heights

‘Our ex­cep­tional growth was proof that clients are look­ing for more’

Finweek English Edition - - Focus on verso financial services -

WHILE ES­TAB­LISH­ING its op­er­a­tions and test­ing the re­tire­ment fund ad­min­is­tra­tion mar­ket, Verso made some in­ter­est­ing ob­ser­va­tions con­cern­ing the state of the in­dus­try, says group CEO Christi Franken. “We found that our ex­cep­tional growth was proof that clients are look­ing for more.”

An in­dus­try long char­ac­terised by ap­a­thy and dis­in­ter­est found a new and grow­ing con­sumerist voice around two years ago as prac­tices, long re­garded as stan­dard, were ex­posed as grossly un­fair to the peo­ple they were meant to serve – re­tire­ment fund mem­bers.

“In South Africa we find our­selves in a new era, where boards of trustees and fund mem­bers are far more in­formed than in the past,” says Brenda Penny, se­nior di­rec­tor of le­gal and tech­ni­cal ser­vices at Verso Fi­nan­cial Ser­vices. “Ac­knowl­edge­ment of that pub­lic aware­ness is to be given to the me­dia and even the Pen­sion Funds’ Ad­ju­di­ca­tor, who is con­stantly high­light­ing is­sues that have a fi­nan­cial ef­fect on mem­bers and which, though they may have be­come in­dus­try prac­tice, aren’t ac­cept­able and can’t be al­lowed to con­tinue.”

But Verso is well po­si­tioned in that en­vi­ron­ment. Its em­pha­sis is on unique and ex­cep­tional ser­vice that ex­tends be­yond tra­di­tional clients of ad­min­is­tra­tors – the boards of trustees – to the in­di­vid­ual fund mem­bers. “It’s a ser­vice that can’t be bought any­where else,” says Franken.

Verso Fi­nan­cial Ser­vices over­seas re­tire­ment fund ad­min­is­tra­tion and group ben­e­fits of­fers im­par­tial fi­nan­cial plan­ning ser­vices to fund mem­bers prior to and af­ter they re­tire. And there’s Verso Health, in­ter­me­di­aries pro­vid­ing pro­fes­sional ad­vice and plan­ning of med­i­cal aid cover (see more de­tailed in­ter­views with the MDs of th­ese core busi­nesses in this sur­vey).

Verso also runs um­brella funds for smaller clients seek­ing re­tire­ment sav­ings pro­vi­sions. Franken says those funds are among the most mod­ern prod­ucts avail­able, not only in terms of mod­ern tech­nol­ogy but also in the choice the funds of­fer clients to se­lect in­vest­ment man­agers and where to place risk ben­e­fits.

“Th­ese aren’t like the old tra­di­tional um­brella funds of­fered by the in­sur­ance com­pa­nies, where all ser­vices were of­ten done in-house. With ours the ad­min­is­tra­tion is with Verso – but the client can de­cide (with ad­vice from Verso on ap­pro­pri­ate funds and prod­ucts) who is go­ing to man­age the in­vest­ment, while the risk ben­e­fits can be placed with some­body else.”

Franken says other fea­tures of the um­brella funds are to­tal trans­parency of costs and no early ter­mi­na­tion or exit penal­ties, as some other funds charge.

Penny says it’s part of a global trend but per­haps has­tened in SA due to re­cent cor­po­rate scan­dals and re­tire­ment in­dus­try ex­posés. So eth­i­cal stan­dards for com­pa­nies are be­com­ing in­creas­ingly im­por­tant. “Se­nior man­age­ment is al­ways un­der pres­sure to pro­vide good fi­nan­cial re­sults for their share­hold­ers, but that shouldn’t be at the ex­pense of the com­pany’s val­ues, ethics and morals.”

She says that’s par­tic­u­larly true con­cern­ing pen­sion funds, which are in fact mem­bers’ “trust monies”. “Ser­vice providers need to be hon­est, trans­par­ent and show in­tegrity at all times. We live in a world where er­rors do hap­pen. My ex­pe­ri­ence has been that if you’re hon­est with a client the sit­u­a­tion will be un­com­fort­able. How­ever, you’ll gain that client’s trust for the fu­ture.”

For that rea­son, Penny says, Verso staff es­tab­lished a list known as “Our Val­ues” that are ap­plied in deal­ings with col­leagues and clients.

Verso did dis­tin­guish it­self when the bulk­ing de­ba­cle was at its peak. While a num­ber of ad­min­is­tra­tors that hadn’t been di­rectly fin­gered by the Fi­nan­cial Ser­vices Board were keep­ing their heads down, Fran- ken went on record to clearly state that Verso didn’t bulk clients’ bank ac­counts and didn’t agree with the prac­tice.

He also pointed out that Verso was able to se­cure more favourable in­ter­est rates with banks due to the num­ber of in­di­vid­ual fund ac­counts placed with the bank and be­cause there was of­ten re­lated com­pany busi­ness with the same bank. In that way ad­di­tional in­ter­est from the bank ac­crued di­rectly into the re­tire­ment fund ac­count.

“We pro­posed guide­lines to the Fi­nan­cial Ser­vices Board on other prac­tices that might prej­u­dice clients. I think some­thing pos­i­tive came out of bulk­ing – the re­al­i­sa­tion among some clients that you can’t get all ser­vices through a one-stop shop but need spe­cial­ist ad­min­is­tra­tors.”

That’s where Verso has po­si­tioned it­self, and Franken feels it’s summed up by say­ing: “We’ve looked at the top and in­stead of find­ing it over­crowded we were sur­prised at the few who had reached It. The top fairly begged for more to climb its heights.”

The top fairly begged for more to climb its heights. Christi Franken

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