Liberty Holdings, the insurance and investment group controlled by Standard Bank, is hoping that using new digital tools to augment the almost 13,000-strong intermediary network it uses to distribute its products will help it win back market share it has lost to asset managers and rival companies in recent years.
Johan Minnie, Liberty’s group executive for client and advisory services, says this “augmented human process” will allow it to automate between 70% and 80% of the administrative functions of the financial advisers it relies on to distribute its products, thereby allowing them to spend more face-time with clients.
Liberty has 2,200 financial advisers serving its core retail-affluent market, 800 consulting at workplaces and 650 Standard Bank financial consultants selling its products via the lender’s branch network. The company, in which Standard Bank has a 53.6% shareholding, also has relationships with about 9,000 independent financial advisers, roughly a third of which Minnie describes as “loyal supporters of Liberty”.
“We want to position ourselves better through the digitisation of our business,” Minnie told Business Day in an interview. “But the way we want to do it is not only to target clients through a digital process but to continue targeting clients through a human process, though an augmented human process. The idea is to have digital tools augmenting the advisers so they can engage face to face and focus more on relationship management and client needs.”
Minnie says Liberty has spent “hundreds of millions” of rand in the past few years to build new technological tools such as its Stash investment app, as well as in streamlining and simplifying its products in an effort to win back market share. This comes as rivals like Momentum and Santam embrace new digital tools to adapt to a post-pandemic world and attract younger tech-savvy customers. At the same time, asset managers are increasingly rolling out lower-cost passive investment products in an effort to win customers increasingly sceptical of investment fees.
Liberty’s core client base occupies what Minnie calls the middle-market and retail-affluent segments. The typical middle-market client is between 35 and 45 years of age with a household income of between R22,000 and R40,000 a month while the retail-affluent market comprises individuals are usually 45 years of age or older with monthly household incomes greater than R40,000.
Minnie says Liberty’s share of its core middle-market and retail-affluent client base used to be close to 30% but this has declined to below 20% as asset management firms like Allan Gray and Ninety One have used their investment platforms to lure more middle- and upper-income clients looking for more cost-effective options to traditional broker-sold investment products. Nevertheless, Minnie says Liberty will remain “an unashamedly intermediated business” despite it embracing new technology.
“The insurance and investment business is still a human business — people still like to talk to people,” he says. “The moment people have accumulated some wealth — it looks like the number at the moment is around half a million rand — then all of a sudden the computer isn’t good enough any more. It’s almost as if at that amount of money they want to engage with an individual.”
Part of the reason Liberty plans to continue focusing on the middle-market and retail-affluent segments is that it does not see the lower-income emerging market as a big avenue for growth given that the government is facing increased pressure to trim its wage bill. Minnie believes it will be tough to win business in that highly contested lower-income market from dominant players like Old Mutual at a time when the government’s wage bill is unlikely to grow.
“When we look at the average payslip for a government employee, whether it’s a nurse, a policeman or a teacher, you will see there are already six, seven, eight policies going off the payroll system,” he says. “We're not sure from an ethical perspective that adding another one is the right answer.”
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