Young black talent key to transforming financial sector
Investment Solutions managing director, Derrick Msibi, does not believe that the board of the Association for Savings & Investment SA (ASISA) will have transformed demographically over the next seven years. This speaks to a broader challenge facing the industry as a whole.
According to ASISA’s 2012 Annual Review, the board is made up of 17 members, with only seven being black. Talking to Finweek in his Sandton office, Msibi said t ransformation i n t he financial services industry should not be judged on the composition of the ASISA board, but rather on the politics i nside t he companies whose heads make up the organisation’s board. Legislation requires that board members must be he a d s o f t he f inancial serv ices comp a ny that operate wit hi n t he ambit of ASISA. This would include mainly insurance and investment companies.
“If we want this industry transformed, we need to begin with the lower levels where it matters most. There’s a wealth of young black talent in financial services but failure by leaders to nurture, develop and equip this talent with leadership skills is a hurdle to transforming the industry,” Msibi said.
Msibi believes that transformation would help restore the much needed confidence in the industry that has been lost due to some high-profile scandals.
These include the much-publicised J Arthur Brown Fidentia scandal, which saw the loss of over R1bn in pension savings, including those of widows and orphans, but in the end Brown was only charged a fine of R150 000 after a very lengthy court case.
Msibi says it is practices such as these that impede the trust and confidence in the industry, which ultimately result in the reduction in investment mandates.
Anecdotal evidence suggests that the industry is missing out on billions of rand due to lack of trust from consumers. This can be drawn from the Old Mutual Savings Monitor July 2013, which shows that savings channelled through to informal forms, colloquially knows as stokvels, have i ncreased f rom an est i mated R38.6bn in 2011 to the current estimate of R45.1bn.
While industry regulators have endeavoured to curb financial losses by introducing rigorous frameworks, Msibi believes that only one of these frameworks − prudential legislation − has worked, further adding that adherence to conduct legisla- tion is still lacking.
Barry Tannenbaum’s R12bn Ponzi Scheme, J Arthur Brown’s Fidentia scandal and Sharemax’s R2.2bn pyramid scheme are just some exampoles that highlight a lack of bona fide conduct.
Msibi says that the current young talent in f inancial services need to be taught more than just the technical skills, they also need to learn about the role humility plays as well. “This will make them realise, among others, that the hopes and dreams of millions of people in the country rests on their shoulders and they must therefore be vigilant with what they do with these people’s money.”
The unwillingness or failure by industry leaders to develop young fresh talent has led to some bright minds leaving the industry in pursuit of recognition in other sectors, notably entrepreneurship.
One of these individuals is CA (SA) holder Andile Khumalo, who spent some two years at Investec Corporate Finance before starting his own finance shop and running it for a brief period, prior to joining MSG Africa Investment Holdings as chief investment officer in 2007. This private equity f irm boasts assets such as Power FM, Capricorn FM and The Jupiter Drawing Room advertising group.
Msibi says leaders need to recognise that the new generation of professionals thrives on recognition, and if industry leaders are unaware of this, it could mean losing the best and brightest minds.