Investec is growing its financial adviser network to bolster its investment offering for young professionals who are still building their asset bases.
The niche bank and wealth manager has traditionally pinned its wealth and investment strategy on established high net-worth clients with liquid investable assets of R3m or more. Now it aims to tap into the 60,000 or so younger professionals within its SA client base of 92,000 who are still in the wealth accumulation phase of their professional life cycle rather than the wealth management stage.
To achieve this it is building a new offering called My Investments in its private banking business, which will target the young professional clients that it sees as its “cradle to grave base” which will in time feed into other client franchise in the broader group.
Investec started expanding its team of financial advisers in mid-2021, and has so far assembled 21 life and investment advisers, a number that Cumesh Moodliar, the bank’s new head of its SA private client franchise, says it hopes to “double or triple” in the next two to three years.
While the bank will retain its traditional Wealth and Investment offering targeting clients with R3m or more to invest, the new My Investments solution will give young clients access to selected local and international investments through the Investec online platform and its refreshed app, with additional support available through the expanding financial adviser network and its global client support centre.
“Wealth and Investment retains and builds on its focus, but we’re also building on a nascent business called My Investments. We’ve got more than 60,000 clients from our existing private banking client base that we think could benefit from this offering,” Moodliar told Business Day.
“Once clients move from the wealth creation phase of their lives to the wealth management phase, they naturally transition to our established, well-recognised Investec Wealth and Investment business. Many of our young professional clients — what we call our cradle-to-grave base — are not there yet. That’s one segment whose investment needs we feel we can better serve by integrating them into the Investec ecosystem.”
‘Deep specialisation’
Moodliar says the bank’s growing financial adviser network is core to its belief in what he calls “deep specialisation” which will see the advisers partner with its private bankers and wealth managers to better serve clients. By contrast, rival FirstRand’s private banking offering — which it rolls out through FNB and RMB — is looking to broaden the skills base of its private bankers so that they’re able to offer integrated advice across banking, investment, wealth management and estate planning.
“We don’t want a talking, dancing, singing banker who is a jack of all trades and can juggle banking, investments and life advice,” says Moodliar. “We want specialists.”
Moodliar says Investec believes its high-end private banking and wealth management offering is nowhere near saturation point despite SA’s sluggish economy and the continued emigration of high-income individuals.
“We can still acquire new clients within our targeted customer segments, he says. “We believe we can scale up and grow significantly within our core target market.”
One way it plans to do that is to bank more corporate market clients who qualify for its services but who don’t realise it. Investec is visiting large corporates, particularly those listed on the JSE or those with a long track record of stability, to sign up what it calls the “young professional segment” clients that aren’t necessarily employed in its professional base of doctors, lawyers and accountants but who still meet its broader qualifying criteria.
The young professional segment is defined as individuals younger than 30 with a university degree who earn R600,000 a year or more at a preferred employer, a listed or established corporate. For individuals older than 30 the income threshold rises to R800,000 or more.
“There are a lot of potential clients employed at large corporates that qualify to bank with Investec but many are unaware that they qualify to bank with us,” says Moodliar.
Investec is also refining its qualifying criteria for the IT segment which it sees as a rapidly expanding node in SA. Dubbed programmable banking, the offering targets IT professionals who meet its earnings criteria but who don’t necessarily have a four or five year degree.
“We realised we were missing a huge segment of the market so programmable banking was a way to allow the techies entry into our offering,” says Moodliar.
Another potential growth segment for Investec is one where it has been present for some time: entrepreneurs. The bank’s qualifying criteria here are somewhat different in that it doesn’t require a university degree or affiliation to a professional employment body but instead requires that clients have a net asset value of about R10m — excluding the value of their business — with additional earning power of about R2m a year.
Investec is grappling with structural changes in its client base due to emigration and semigration, with the latter largely involving clients relocating to the Western Cape, the Natal Midlands and parts of the Eastern Cape such as the St Francis Bay area. While the bank already has a presence in growing “Zoom Towns” such as Knysna, George, Pietermaritzburg and Stellenbosch it says it will soon be announcing further expansion of its presence in the Cape winelands region.
“We’re seeing an incredible increase in people moving there,” says Moodliar.
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