STEPHEN CRANSTON

I usually go to investment conferences to listen to what should be the topic at hand ― the markets. But increasingly these gatherings are dominated by presentations on behavioural finance. Will people claim continuous professional development (CPD) points for financial reasons or for psychology?

Increasingly these events are relevant to both, with just about as many sessions on life coaching as on investment itself. There is more reference to behavioural psychology books by Daniel Ariely and Malcolm Gladwell than to “how-to” investment books by Peter Lynch, Benjamin Graham ― or even Warren Buffett ― at these conferences now.

There is surprisingly very little on the art of salesmanship, which is highly relevant to advisers building a practice, as this is considered a bit downmarket.

Not having been to business school I get irritated by a lot of the phrases MBAs clearly pick up there ― the ones no-one would use in real life, such as “culture eats strategy for breakfast”.

Veteran Investec executive Sam Hackner ― now sadly passed away ― told me he would break china for his client. I got a bit nervous, as we had had our differences ― maybe he planned to smash a plate on my head.

But this was just a high testosterone way of saying he would bend over backwards for clients. More prosaically, that he was prepared to offer a concierge service.

Researching Investec over the past few years for my first and upcoming second book the penny’s dropped about the importance of culture. Successful businesses have passion — what Paul Harris at Rand Merchant Bank (RMB) calls gees ― in Investec’s case it’s more like chutzpah.

Both of these businesses were formed in the 1970s and took on a sleepy banking sector. To use Michael Lewis’ phrase about American Savings & Loans, or thrifts, they had a 363 approach. They would borrow at 3%, lend at 6% and be on the golf course by 3pm. It wasn’t difficult for Investec and RMB ― businesses with formidable work ethics ― to take on the incumbents.

Eventually the incumbents had to catch up. Jacko Maree undoubtedly transformed Standard Bank, first building a strong merchant bank and then rebuilding the retail bank. Barclays, later First National Bank, ended up in the clutches of RMB and became the retail bank to beat.

Absa and Nedbank are the Cinderellas ― not well loved by JSE investors but undoubtedly far more professionally managed than before. As Investec founder Larry Nestadt once put it to me, they are no longer the type of banks where the management sorted out their lunches before they sorted out the work.

Cultures are built from the ground up with simple “rules”. At Investec, for example, then MD Bernard Kantor insisted that the phone had to be answered within three rings. This still applies to the private bank hotline, and clients will get an apology if they don’t meet it.

Investec and RMB had to go the extra mile as they were the outsiders. Investec in particular were called “cowboys” for many years. And for that reason they had to provide a better level of service. Fani Titi, the present Investec group CEO, said he was impressed by how quickly Investec made decisions. At the big four banks, for example, a loan would not be granted until it had gone through a spider’s web of bureaucratic committees.

Investec largely relied on the banker’s nose of CEO Stephen Koseff and his chief risk officer Glynn Burger to approve or reject loans. And now, some years after both retired, the bank has enviably low bad debts.

Investec has also had the benefit of its own values and culture guru Allen Zimbler, now long retired. He was brought in from Wits Business School, where he taught organisational development. Some career bankers’ eyes glazed ― as mine probably would ― at Zimbler’s team-building sessions.

He taught them words such as “process” and “tolerance” and only later, when the cynicism had died down, “culture”. The sessions weren’t primarily about learning the jargon though. Zimbler was a type of relationship counsellor teaching the management team to get on and learn to accept each other’s feedback graciously.

There is no I in “team” has become one of the best worn cliches in management studies. But in my experience, all successful businesses do not have time for arrogance. That’s not the same as insisting on uniformity in chains of command.

Henry Blumenthal, who built up Investec’s local wealth manager, by miles the best wealth manager in South Africa, tells me that the “I” specialists don’t get very far.

Investec Asset Management (IAM) in Cape Town, now Ninety One, always had a somewhat different culture from the bank in Johannesburg. After the frenetic feral environment of Investec proper, going to IAM would seem like stepping into the quiet of a library or a private hospital.

To some extent this reflects the more bookish, Calvinistic style of Ninety One CEO Hendrik du Toit. But it also needs a different skill set to run people’s pensions and discretionary savings with a time horizon of up to 40 years.

But the bank and asset manager share a work ethic and don’t tolerate passengers, who soon get the message that it’s time to move on or find a different role in the organisation that will suit them.

Du Toit always emphasised how little involvement he has with the mothership. However, after the Ninety One unbundling he has become more generous about the contribution of Investec proper to building his footprint.

Ninety One is now a R45bn market capitalisation business in its own right.

• Cranston, a financial journalist, is author of ‘The Mavericks’, a new book about South African fund management.