Disrupting the financial services sector
Speaking at a Heavy Chef event in Johannesburg recently about her life and business success, Sygnia CEO Magda Wierzycka advised never look at imitating what a competitor was doing, as it constrained one’s thinking. Rather, she suggested, design your own products or services – those that make sense to you.
The more you look at what competitors are doing, the more you will try to emulate their activities, she said. “Don’t push yourself into areas where there is already significant competition; instead, look for areas where competition is least.”
Wierzycka founded Sygnia, a financial services company that provides asset management, stockbroking and administration services, with the intention of disrupting the financial services sector. “We researched the financial services sector and looked for what we could do differently. Financial services is typically an industry that uses jargon to disguise the high fees it charges. We decided to simplify our offering, use plain English, provide full disclosure when communicating with clients and potential clients, offer lower fees and be totally transparent.”
The big take-out: Asset management company Sygnia was launched with a market disruptor business strategy. Speaking at a Heavy Chef event recently, CEO Magda Wierzycka advised businesses not to imitate what competitors were doing as this acted as a constraint.
She said research into the financial services industry revealed third-party management, essentially the sale of pre-packaged solutions.
At the time there were only two players in that space. “We decided to expose all their fees, be very transparent about the fees we were charging and offer customers greater choice than they were being given,” said Wierzycka. “We realised that most clients were not financial experts, and really appreciated that we communicated in plain language without trying to confuse them with industry jargon.”
Since launching in 2012, Sygnia has grown its assets under management and administration to R174bn and has R14bn in unit trusts. The group has over 600 institutional clients and more than 6,000 individual ones.
Playing the role of disruptor in the financial services industry, Sygnia accepted it would never be able to compete with the major players in the sector as far as marketing budgets were concerned. However, listing on the JSE enhanced the group’s brand awareness. “The media are interested in the views of a listed company, and this gives us the opportunity to publish quality educational content,” said Wierzycka, adding that for a listed company there were endless opportunities for public relations.
The advantage of being an innovator, rather than an imitator, she said, was that your brand was not fighting for market share. Given current economic conditions, businesses could not rely on the economy growing for growth, which is why Sygnia targets competitors in order to grow the business, she said.
A game changer in the financial services industry, she said, was technology. “You can’t afford not to be abreast of the fourth industrial revolution.”
On the topic of politics, she said Business SA was not doing enough to fight corruption and had been silent for too long. For its part, Sygnia had established a money market unit trust and was donating its management fee to organisations fighting corruption in SA.
Wierzycka said she was optimistic about the country’s future. “Things might have to get worse before they get better, and the economy might have to suffer more, but SA has a proud history of activism,” she said.