Financial Mail - Investors Monthly
PUTTING POWER IN THE HANDS OF INDIVIDUALS
Purple Group wants ordinary people to have assets rather than debts, and the confidence to grow them, writes Johann Barnard
Using the analogy of golf clubs having lost the cloak of exclusivity that was previously maintained through strict dress codes and antiquated attitudes to attracting paying customers, Mark Barnes suggests the consumer-driven world order is shaking up financial services.
Disruption is something that the chairman of Purple Group embraces.
This has been demonstrated time and again, starting with the acquisition in 2007 of GT247, which has been built into one of the leading retail online derivatives platforms in the country. This disruption was taken further last year when the group launched EasyEquities to cater to a much larger, potentially lucrative market.
Technology, Barnes says, has allowed people to gain access to knowledge which has given them the confidence to invest.
“It’s all about the focus on the individual. The individual has been empowered by technology — we carry our lives around on a small device and control the world from it. And that must be the case in equities too,” he says.
“We can marry advice, wisdom and strategy with an every day, every second trading interaction. If your money is with an asset manager you might get a report every month — today, that’s just not good enough.”
An extension of this approach to wealth accumulation is Barnes’ quest to overturn individuals’ indebtedness. He says South Africans have been conditioned to manage their liabilities rather than their assets.
“Very few people focus on the other side of the balance sheet, which is as important, if not more. And the only way you really start looking after money is once you’ve got it.
“We need people — the broad population — to start accumulating assets,” he says.
This is a mission that the EasyEquities platform supports, not only through its user-friendly interface but through innovations such as its fractional share rights, which enable even the smallest investor to buy a portion of a share commensurate with his or her budget.
EasyEquities is but the final tile in a puzzle that Barnes and his team have been piecing together over the past five years to provide the group with new sources of untapped revenue, particularly annuity revenue.
This is a position supported by the Emperor Asset Management business, which promises true annuity income through its expanding range of products.
Given the growing stability that the group’s structure provides, Barnes sees no need to expand the business beyond its current thrust.
“We’re an investment and trading house accessible to everyone and we’ve priced ourselves cheaply to get to those people. There’s enough growth in the space we’re operating in, in a differentiated market, for us not to look elsewhere,” he says.
“There’s an increasing annuity element to our earnings profile. So my big focus is how to increase the proportion of our income that is risk-free, and that means growing our clients.
“And the marginal client acquisition cost (using technology) is so much lower than it used to be in the good old days of stockbroking.
“So it’s about client acquisition, increasing the annuity nature of our earnings profile and broadening access to a market that has been fairly protected from broad-based participation up until now.”
This is good news for individual investors.