A simple message back from the future
They’ve taken an angle grinder to a BMW in Mandela Square, put their CEO through a lie detector test and, now, 10X Investments has partnered with comedian Nik Rabinowitz in its latest ad campaign, which banks on comedy to drive home the point that high fees ravage investments over the long term
In the company’s new three-part video series, running online and on television, an older version of the comedian Nik Rabinowitz comes back from 30 years into the future to deliver a few key truths about investing… for the future.
‘Future Nik’ explains to his younger self: “They charge such low fees that we don’t get ripped off and lose 40% on our retirement… we get to retire in style and you can continue doing... whatever it is you do all day.”
The payoff line is: “Don’t lose 40% of your life savings to fees. 10X your future.”
It is simple yet on-point messaging in a tough sector that is notable for consumer apathy and legacy competitors with deep pockets.
Rabinowitz has partnered with 10X on earlier campaigns to alert the public to retirement planning’s ‘elephant in the room’, the fact that savers forfeit a large portion of their investments to unnecessary fees. Earlier videos show him tucking into strangers’ meals in a restaurant and helping himself to shoppers’ groceries at the check-out to illustrate the concept of getting less than you paid for. In another 10X campaign, Rabinowitz and fellow comedian Siv Ngesi informed unsuspecting car rental customers that they were going to ‘carpool’ i.e. share rental cars. The customers were outraged, illustrating 10X’s point that consumers accept daylight robbery in one situation but not another.
The 10X campaigns draw attention to a wider global problem. US senator Elizabeth Warren’s 2015 report, “Villas, castles and vacations”, kicked open this hornet’s nest in America. The report noted that $17 billion was “drained away” by investment advisers who put their own interests ahead of clients’ retirement security.
Declan Hollywood, 10X’s chief growth officer, explains that traditional active managers (who try to pick winning stocks rather than tracking the market) claim that their high fees are justified because they buy better performance but, in fact, 85% of active managers fail to beat the market. Rather than trying to beat the market, 10X tracks the stock market index.
“It’s a false promise they can’t deliver on, which is why we are seeing a shift to index funds globally,” says Hollywood.
This shift is supported when one considers that 10X has consistently outperformed SA’s largest fund managers. Over the 10 years to the end of December 2019 the 10X High Equity fund, in which most clients are invested, delivered an annual return of 11.2%, compared with 10.7% delivered by the industry’s large players (according to the Alexander Forbes Global Manager Watch).
By avoiding the false promise of active management, 10X can keep costs low – total fees are less than 1% ex VAT – and the difference is invested on clients’ behalf. That 1% to 2% compounds over time and can nearly double a pensioner’s savings pot. The challenge, for 10X, a provocateur in a sector presided over by legacy players with deep pockets, is to tell the story effectively so that the penny drops with consumers.
The latest available Nielsen advertising spend data shows legacy players each spending between R43 million and R145 million a year on above-theline media. Being a low-fee operator means 10X needs to make their clients’ money work that much harder for them, according to Hollywood, who says that 10X spends a small fraction of R43 million on advertising.
10X’s founder and CEO, Steven Nathan, adds that unfortunately it’s not always the best product that wins; it can be the one with the most advertising around it.
Faced with this challenge, 10X turned to the producer of the hit online series, Suzelle DIY, Ari Kruger and Sketchbook, to deliver the message about the damage done by high fees.
“Suzelle DIY’s producer gave us a high-quality production on a shoestring budget,” says Nathan.
The real story, though, is not what 10X spent on the campaign, it’s that high fees erode investments. “Consumers are paying for the privilege of brokers selling them the product,” Nathan says.
The fact is that only 6% of South Africans can retire comfortably. The rest either have no plan at all, or an inadequate one. And according to Hollywood, South African investors often fail to take enough interest in their retirement, leaving the planning to intermediaries. 10X Investments does not rely on a broker network to sell its products.
The new video series, 10X Your Future, was conceived and produced during the lockdown. While there is pain ahead, disruptor Nathan sees opportunity to stir interest in retirement savings and build resilience.
“It’s a far more receptive environment than in good times, when we are not as prudent,” adds Nathan. “It’s been an education and a wake-up call for people. It’s such an important area that people pay so little attention to.”