Young black tal­ent key to trans­form­ing fi­nan­cial sec­tor

Finweek English Edition - - INSIGHT - Tandisizwe Mahlutshana

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.

Der­rick Msibi

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