Smart, sassy – and scarily ambitious: asset management entrepreneur Magda Wierzycka goes for total market domination

This morning an interesting bit of news appeared in my in-box: it was a strategy overview from one of the women I most admire in South Africa’s tough, male-dominated asset management industry, Magda Wierzycka.  

She was announcing the details of how she is going to ensure her company, Sygnia, becomes the largest passive investment manager in South Africa.  For starters, she has fired the first salvo in what could easily develop into a price war in the index tracking fund arena.

Magda is one of those people who has it all: she is stunningly beautiful, has boundless brain power – as her qualification as an actuary attests – and the guts and acumen to make it in a fiercely competitive business sector. She married a man who evidently isn’t intimidated by women who have high earning power and she manages to spend quality time with her family, too. Having all those attributes has a downside: it inevitably attracts much jealousy.

I have been following Magda’s progress closely over the years. I have written about developments in her professional life as well as how she views investing and the industry for a variety of news organisations, from Leadership magazine to Moneyweb.co.za. 

This week’s announcement reminds me of her plans when she became CEO of Sygnia in 2006. Over the past seven years, Magda has built what was a small company with a “happy family feeling” into the country’s second-largest institutional multi-manager. It now has assets under management in excess of R100bn (more than £6bn).

You can read more about Magda’s next steps at biznewz.com, where I’m working with Africa’s top business broadcaster Alec Hogg and a number of other journalists on building an exciting new independent news outlet.  On my blog this week, I’ve posted a piece I wrote about Magda when she announced Phase 1 of Sygnia’s plans to grow in the investment world. I was Financial Services Correspondent for a business and investment news organisation at that time.

If you have any doubt that Magda will achieve her freshly revealed ambitions, I’m sure you will find that this question mark in your head has disappeared by the time you get to the end of this article (see below). What Magda says she does. Her competitors must – to borrow a phrase from journalist colleague Barry Sergeant – be trembling in their socks.  

 

Asset management entrepreneur Wierzycka takes on big guns in R200bn industry. She spoke to Jackie Cameron.

Asset management entrepreneur Magda Wierzycka is set to take on the big guns in the R200bn multi-management industry, she told Moneyweb.

The 37-year-old Wierzycka, who recently made a cool R80m through the R300m sale of a stake in African Harvest Fund Managers to listed financial services company Cadiz late last year, has launched her own financial services group, Sygnia.

Business is already booming since Sygnia’s doors opened in December.

Magda Wierzycka is CEO of Sygnia, a group of six companies.

Staff numbers have grown from 15 to 20. Sygnia is looking for more people to join its team and Wierzycka is contemplating expanding her V&A Waterfront, Cape Town, operation to bigger premises.

Wierzycka nurtured the assets under management of African Harvest from R10bn to R32bn when she was CEO.

Then, Mzi Khumalo’s Metallon decided to sell its stake in African Harvest to free up some cash.

Wierzycka, who initially sold IQuest – a hedge fund of funds business she owned with husband Simon Peile – to African Harvest, kept that operation. It has been renamed Sygnia Asset Management.

With about R4bn under management, it continues to build customised multi-manager funds for pension funds and structure hedge funds of funds.

Also in Wierzycka’s stable is Sygnia Life, which gives the company the opportunity to structure investment products through its life licence.

Sygnia Systems, meanwhile, is an information technology company with a system, Sygnia Platinum, designed specifically for asset managers.

That product, which houses all the software requirements of an asset management company in one integrated system, was seen as a major competitive advantage for African Harvest Fund Managers where it was developed.

The team who created it, however, did not wish to move to Cadiz, hence Wierzycka kept that part of the operation, she said.

Sygnia will market the software to other asset managers.

Wierzycka said this week that after being in long-only asset management, it was time for “something new” in her career.

There was no time to take a break because many staff followed her, a number of whom also moved from Coronation Fund Managers where she was responsible for institutional business before it listed about five years ago, and they needed jobs.

In addition to seeing much more room for growth in the hedge funds of funds space, Wierzycka has her sights set on becoming a major player in the multi-manager arena.

She plans to take on companies like Investment Solutions, Advantage Asset Management, Old Mutual’s Mutual’s SYmmETRY Multi-manager and Sanlam Multi-Managers, who together control about R200bn of the country’s savings.

Wierzycka, an actuary who started her career as an Alexander Forbes consultant, said she believes there is room for a competitor – particularly one that offers greater transparency and lower fees to retirement funds.

“This is a segment of the market where you have very little competition,” she noted.

In addition, the idea is for Sygnia to offer customised multi-manager solutions to pension funds. “With customisation, we don’t squeeze the underlying managers,” Wierzycka said of the way fees are structured.

The aim is to produce better performance, through a combination of a better selection of managers and lower fees.

Sygnia also offers structures that can give retirement funds the risk-return profile of hedge funds without pension funds falling foul of legislation, she said.

Wierzycka is hunting for an additional investment professional to join her team, someone who has been a portfolio manager and knows the right questions to ask other fund managers.

Empowerment will also have to be addressed, she said.

For now, Wierzycka said she is enjoying that “happiness club” feeling that comes with owning a small business where everyone enjoys working together.

Clearly she has her sights set on building a massive organisation because, as she says, a successful multi-manager business requires volumes.

Her competitors should be quivering in their boots. If anyone knows how to attract flows to an asset management company it is Wierzycka.

Glamorous, blonde and undeniably astute, she is known as a master of marketing. The flip side of this is that all these traits, together with her wealth, leave some decidedly green with envy.

She also has a keen understanding of the financial services sector, not least of all that it is one of the most lucrative industries where basis point fees translate into “humungous amounts of money”.

Leaving nothing to chance in her new venture, Wierzycka has hired a London advertising agency to design Sygnia’s logo and help develop its brand.

“We wanted something fresh, modern and that would appeal to institutions and bodies around the world,” she said.

No doubt, the financial services industry is going to be seeing and hearing a lot more from Wierzycka.

* This article about Magda Wierzycka was published by Moneyweb.co.za. You can find the original article here.

Why property beats retirement annuity fund investments

Buying a House From Savings (Photo credit: Images_of_Money)

Thinking of putting money into an RA? Here’s a reason I invest in property instead.

 

Every year, taxpayers are besieged with calls and letters from life assurers and other financial service providers encouraging last-minute investments in RAs (Retirement Annuities) as the tax year draws to a close. However, your financial wellbeing is likely to be better served by spending what you have available on property.

The financial services industry marketing machinery is hard at work, emphasising how you can save. I’ve fallen for this hype before.

Several times in fact, so I have money tied up in the RAs of various life assurers and private investment company Allan Gray. Years of watching how my investment returns in these RAs have fared over the years have converted me to an RA sceptic. I would rather ignore the tax deduction and invest any money I have for long-term savings requirements in property.

Barring my Allan Gray RAs, the returns have been abysmal. This is because of the obscene costs life assurers deduct from your savings when you invest with them and during the life of your investments. My Allan Gray RAs have benefited partly from the fact it did not deduct any intermediary commissions when I entered the investments directly.

Life assurer Sanlam deducted the maximum commission amounts, even though there was no adviser, and pocketed that difference for itself. My R10 000 and R40 000 RAs created in the early 2000s with Sanlam are still worth less than what I put into them today.

Not even the investment skills of Sanlam’s highly qualified, highly-paid asset managers have been enough to bring the amounts back to the R50 000 that I invested a decade ago.

Maybe those RAs will turn positive by the end of the next decade or the one after, when I might like to retire? Certainly I’ve lost faith in those RAs being anything more than dud investments.

My only consolation is that I’ve discovered this rip-off approach by the companies who set themselves up as the custodians of our nation’s savings, the people who tell us they know better than we do how we should invest our own money, early enough in my working years to come up with a fresh strategy to, hopefully, build enough money for my retirement.

At a property auction, I was reminded, yet again, of why property – particularly do-it-yourself investing in bricks-and-mortar- can be so rewarding. There, I saw a friend cash in his R50 000 or investment (deposit plus costs) in an Atlantic Seaboard, Cape Town rental flat he bought in the early 2000s.

He walked away with about R2m in his back pocket, after tax was paid and the remaining mortgage settled. During the course of his investment, a tenant effectively paid the costs for him.

There are many more residential property investment success stories like this among my circle of friends. Provided you buy at the right price, in the right area, hold property for at least five years and don’t dip into the equity by remortgaging for things other than property, it seems it is very difficult to go wrong. You can do it yourself, probably better than any highly-paid investment professional could do any investing for you.

The RA tax perk is probably well-intentioned. With South Africa’s poor savings rate and most people impoverished in their retirement, it may be the responsible thing for policymakers to keep this tax benefit in place. Unfortunately for the nation’s savers, the financial services industry has on the whole abused this perk and turned it into an advantage only for its managers and operators rather than its clients.

Maybe the finance minister should consider revising the RA perk this year, allowing others who save outside the financial services industry – like in property – to benefit from such tax perks too. Or, perhaps he should somehow penalise the life assurers, asset managers and other intermediaries who wipe out any of the tax perk’s benefits through their hefty charges? After all, it is not in the nation’s interests for ordinary South Africans to be falsely lured into thinking that offerings like RAs will massage their savings and keep them comfortable in retirement.

By Jackie Cameron.

This is an edited version of an article published by South African media company Moneyweb.co.za three years ago. My Sanlam RAs still aren’t looking any prettier today. I was inspired to republish this piece after I received a marketing e-mail from Sanlam today, urging me to invest with them. 

Do you have a happier RA investment tale to share? Or an angle on property you think deserves a thorough airing? Write to me, a business and financial journalist, at jackiecameron.uk@gmail.com, or comment on this article.

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Mum, please buy me a snow leopard

English: A snow leopard (uncia uncia). (Photo credit: Wikipedia)

Landlord’s insurance, washing detergent, endangered animals: is it fair, or economical, to punt these on prime-time children’s television? 

CENTRAL SCOTLAND: There’s an old adage in marketing circles that goes something like this: get them while they’re young and they’re yours forever. The UK’s advertising fraternity has evidently taken early adoption strategies to a new league of silliness.

This was brought home to me when, soon after we signed up for a comprehensive satellite TV package following a long entertainment drought in China, six-year-old Tim asked me what landlord’s insurance was. Erm, where did he hear about the concept?

On Cartoon Network, during one of the many commercial breaks punctuating the exciting adventures of Ben 10 and his alien aliases. My first reaction was: Whew, thank goodness Tim hasn’t broken through the parental controls and made it to the adult viewing section.

Then, I wondered: what on earth would make a company decide to spend money flighting an ad designed for financially sophisticated adults on a daytime kids’ channel?

I figured the insurance company’s media planners must have ticked the wrong box or got a free ad slot among the cartoons. Ben 10 is a firm favourite among five- to 10-year-old boys, not many of whom are going to rush over to their parents to beg for landlord’s insurance ‘for less than £1 a day‘ — surely?

Perhaps I’ve got it wrong and Tim isn’t actually alone in his fascination for landlord’s insurance. Making the investment in air time worthwhile for the insurer, there could be thousands of Ben 10 fans nagging their parents for this type of cover.

Little boys all over Britain could be probing their parents on whether their own families have decided to invest in second properties and then protect their bricks-and-mortar assets with this niche cover. They could be just as enthusiastic about landlord’s insurance as they were about joining the Ben 10 teams of boy builders working on getting into the Guinness World Book of Records, at St Enoch Square in Glasgow or the other eight shopping centres around the UK.

Clearly, targeting children to get to parents’ pockets through TV is an effective strategy for many products. I plead guilty, for example, to popping a specific brand of laundry detergent  into the shopping trolley on the say-so of my eight-year-old, Nick, who told me he’d heard it was particularly good at removing stains from grubby children’s clothes.

‘300 washes out of every bottle, Mum,’ he said authoritatively about a liquid dishwashing soap also advertised on TV. He was very pleased to see that specific brand nestling among the groceries.

I draw the line at sponsoring a snow leopard, however. Call me uncompassionate, but I didn’t succumb to Tim’s pleas to contribute funds towards one of the mere 35 that allegedly remain on earth.

Yes, even endangered animals have inveigled their way into the many cartoon TV commercial slots. For a modest sum, our family could save the leopards and receive a fluffy toy in the post, implored Timmy.

I tried to explain that none of the money we would donate would make it to saving these beautiful creatures. After all, someone had to pay the staff hired to collect the money and make the toys — and that’s before we’ve even thought about the costs of producing and broadcasting a TV commercial.

But dear little Tim wasn’t buying my arguments. ‘By the time I’m 20 they’ll be extinct,’ he said sadly, as though it would be all our fault and using a new big word he’d picked up courtesy of the save-the-animals people.

‘Mama, please, please let’s sponsor a snow leopard’, he implored. I felt my resolve weakening, but only just a little before Tim was confronted with yet another new financial possibility courtesy of children’s daytime TV.

‘You can get these at Sainsbury’s,‘ he said, perking up. He called me over to the telly to look at a new range of plastic Spiderman paraphernalia.

Landlord insurance providers may know something I don’t when it comes to targeting their advertising at an appropriate audience. But they’ve got one thing right — young boys are highly receptive to what they see on TV, even if their parents don’t fall for the spin.

Write to jackiecameron.uk@gmail.com, or share your comments about this issue by hitting the ‘leave a reply’ button.