EasyEquities working on life insurance for its young clientele
● EasyEquities, one of SA’s biggest online share-buying platforms, has set its sights on disrupting the traditional life insurance sector, with plans in the next 18 months to launch a new product aimed at its young customer base.
Charles Savage, CEO of JSE-listed Purple Group, which owns 70% of EasyEquities, said the group realised there was a gap in the market after its annual customer survey found most of its subscribers were underinsured.
“They are starting their wealth-creation phase. They are typically young families, but they don’t have life insurance.
“I think there is a massive opportunity for us to launch a life insurance product that delivers insurance at the lowest possible price for South Africans 35 years and younger,” said Savage.
“That is where companies like Discovery grew up, but now their business has matured and it is about servicing guys like me who are 47 and older.
“Because of the youthfulness of our customers — the average age is now 32 — we have an extraordinary opportunity to create a life insurance product that radically disrupts the life insurance game.
“We have the distribution, with 500,000 people on our platform. More than 50% of them are active investors, which means 250,000 active investors.
“If we sell just to a small portion of that, 10% or 20%, that’s a big life business. I think we can do life insurance in a way that delivers all of the easy attributes and also radically disrupts that market.”
Savage declined to elaborate on the details of the planned product, saying he did not want to give away any competitive advantage.
Another sector EasyEquities expects to enter in the next 12 months is the portfoliobacked lending market, but with plans to cater specifically to the neglected retail investor market.
Savage said large investors are able to borrow money for reinvestment based on the value of their existing securities portfolio.
However, smaller retail investors do not get offered this option from stockbroking houses and EasyEquities believes there is an opportunity to cater to them.
“We want to enable lending but we want to do this responsibly,” said Savage.
“So the maximum loan to value will be 30%, so if you have R100 invested we will give you the ability to borrow R30 to avoid clients selling down their investments in cases where they require capital for emergencies, avoiding transaction costs and tax effects.
“We want to ensure there is no overgearing and that the cost of these loans is significantly lower than the average return that equities give you, otherwise the costly overgearing will only serve to destroy wealth.”
Savage said the group’s annual customer survey has also shown it what investment opportunities its clients want access to in the coming years. The overarching theme is that “South Africans want more and more access to global equities”.
“The sad reality about the JSE is that there are fewer investible opportunities.
“There are only 300 stocks to invest in, down from more than 600 [at the end of the 1990s]. Investors are looking for opportunities and there are just not enough opportunities in those 300 stocks. As such we have to get access to more regions.”
With its clients’ appetite for a larger universe of stocks to invest in, EasyEquities recently launched its Australian entity, providing South Africans access to shares in that country. In the coming month the full suite of EasyEquities products and services will be launched to Australians, setting the course for the group’s global expansion.
“I intend to work really hard over the next 12 months to launch more jurisdictions like Europe, UK and Asia,” said Savage.
He said the biggest potential pitfall for South African investors looking to invest in global stocks is that they are unfamiliar with them.
Savage said he advises South Africans to initially focus on global companies that they know something about, such as Apple, Amazon, Alibaba, Tesla, Twitter and Uber.
“All of the stocks that enrich our lives every day, those are the right places to start. Once you are invested you can start reading research and broadening your horizons.”
Capitec widget
The group’s traditional equities platform has recently concluded an agreement with Capitec in terms of which the bank’s new app will give its clients access to the EasyEquities investment platform.
“EasyEquities will be the first widget within the banking app, and the Capitec team has been working on this for over a year and getting this up and running.
“As a Capitec client you will be able to set up and start investing in EasyEquities inside your banking app. It’s in the final internal testing now and our expectation is that it will continue until the end of July. We will go live early in August.”