The second largest institutional multi-manager company in South Africa has indicated that all its products in the new offering are priced at 0.4 per cent per annum, including VAT.
“It’s a question that everyone has been asking us – how can we afford to do it at 0.4 per cent per annum. We are prepared to accept lower margins, which gives you an idea of how high margins are in the financial services industry,” Sygnia’s chief executive officer Magda Wierzycka told CNBC Africa on Monday.
“We believe that our systems are of such quality that we can enhance the efficiency of what we do behind the scenes, so it’s going to cost us less, and we have no legacies – we don’t have an existing book of assets or book of clients that we would upset by virtue of launching cheaper products.”
Sygnia recently announced the launch of its retail market offering, which has been touted as a game changer. The offering aims to change the cost structure of savings for South Africa’s individual investors.
“We’ve mostly based ourselves in the institutional space and we’ve offered services to the retirement fund industry. We think the time has come to do two things: to expand into the retail market, in terms of what Sygnia offers, and to maybe shake up the financial services industry a little bit,” Wierzycka explained.
“There has been a huge amount of focus on costs and fees of investing, inaccessibility of investing. We thought we’d do something different, hence our retail offering, which is priced at this revolutionary price of 0.4 per cent per annum.”
The company currently has assets under management in excess of 100 billion rand and Wierzycka insisted that Sygnia has all the necessary systems in place for the retail market.
“In terms of us accessing the institutional market, a lot of it has been based on the fact that we own a systems development company. We have developed fairly revolutionary administration software and we have spent the last three years amending the software in such a way that it can cater for the retail market,” she said.
“What we are known for is a very strong administration system. We’re fairly confident that our systems for the retail market are in place. If you watch that space we are also set to revolutionise financial advisory platforms in South Africa in the near future.”