What’s the shift?

Travis Robson (CEO of Trive South Africa) takes a deeper look into meeting the needs of the modern investor.

We aren’t strangers to change. From the market crash in 2008 to the Steinhoff saga, investors have become more desensitised towards change and have adapted to the new world investing order. But what does this mean for an FSP, and how do we stay up to date with the behavioural changes we see in the lives of modern investors?

As CEO of an FSP, I’ve always believed that it’s essential to have a thorough understanding of your business and industry, which allows you to build your business and unique selling points (USPs) around the needs of your target market; something needs to set you apart from the crowd and propel you into the mind of your target market.

To get there, you first need to understand your target market.

Over the years, I have gained extensive industry knowledge through customer engagement and direct research, which led me to identify two key segments: the Alpha Trader and Investing Potential. Using these two categories, we can recognise and meet their needs.

• Alpha Traders are the confident group of investors who constitute the largest trading segment in South Africa. Research shows that this group is not beholden to one broker and that members usually have around 2 – 3 different broking accounts, with a propensity to manage these accounts online. This group is taking control of their investment journey and is no longer relying as heavily on traditional brokers as they did in the past. As a result, these investors have impeccably high standards for the service and do-it-yourself technology their broker provides. Seeing as there is typically minimal relational activity between the brokerage and these investors, they would soon change their broker if their service needs are not being met or if they feel that the commissions and fees charged by the brokerage do not allow them to maximise their investment portfolio.

• Investing Potential is the group of upcoming investors soon taking over or falling into the Alpha Trader group. We identified this group of investors as young, tech-savvy investors with more advanced insight and technology experience as they have grown up with the latest tech at their disposal. As these tech-savvy investors enter the market, their main focus and decision-making factors focus on pricing, quality of tech and a sense of community or partnership with their brokerage.

What Does The Research Show?

This shift in focus waves goodbye to the old tactics of ‘selling’ a product to a ‘customer’. With a wide range of brokers available and communication capabilities at an all-time high, we see the power tables turn in South Africa as consumers now have the final say in whether your product is industry-worthy.

This highlights the massive industry changes that have happened over the years. We currently see that the share dealing market is in a growth phase and are finding new entrants that are disruptive to previous traditional telephone broking environments. While these disruptors might have done a great job of serving as a gateway for new investors, there is still a large portion of investors whose needs aren’t being met entirely.

As the market has grown and segmentation occurred, execution-only broking is experiencing significant growth because increasing investment in digital platforms results in a wider product offering.

However, it’s important to remember that growing market share means growing customer segmentations. Whilst some investors use gateway brokerages to enter the market, they typically outgrow the ‘milkshake and slushie phase’ and search for a more sophisticated product that grants access to a wide range of local and global products at a competitive rate. Encapsulating these features is something that local brokers have either struggled with or offered at such a premium that a large part of the market share is not interested.

Identifying and Meeting The Need

Considering all this information we uncovered during our research, we’ve identified the following as some of the predominant ‘needs’ that the modern South African investor’s focus has shifted to:

1. Next-generation tech that allows the investor to plan, execute and monitor their investments.
   
2. A wide range of local and global products under one umbrella that’s easily accessible through the platform.
   
3. Partnership or a sense of community facilitated by their brokerage makes the investor feel valued and not like just another number in the bunch.
   
4. Trust in a brand with a strong reputation that is monitored and compliant with local laws and legislation.

But how does one practically add value to the modern South African investor’s life with so many different offerings up for grabs?

The simple answer is to understand that their needs are ever-changing and to keep a two-way communication flow between you (the brokerage) and your customer (the investor).

Trive South Africa has tapped into the comms flow in the investment world and built our offering around these four specific needs whilst maintaining healthy and necessary flexibility.

On a practical level, we’ve implemented the following strategies to meet the modern South African Investor’s needs:

• Quality and Functioning of Next-Generation Tech
  Trive SA has partnered with a well-respected third-party platform provider, allowing our clients to access a multi-asset investment platform with a simple interface, quick trading options and web functionalities. Not only does this allow us to offer our clients the benefits of a fully customisable and rich trading experience, but it also empowers them to take back control of their investment journey by allowing them to choose what they would like to see and when they’d like to see it.

• Providing a Wide Range of Products
  In today’s world, the client is spoiled with choice and as such a range of markets and instruments is essential for the client, as they would like to trade all their products on one trading portal with one provider. Therefore, Trive SA provides a one-stop shop for every client’s investment needs. From tax-free savings accounts (TFSA) to over 2800 JSE listed and offshore shares, ETF investment opportunities and leveraged products, Trive South Africa offers it all at highly competitive fees and commissions.

• Investor and Brokerage Partnerships
  Whilst clients from ‘traditional’ brokers still value ‘personal service from the broker’, we also see an uprise in need for partnership amongst younger investors. This may be because high-standard services were inclined to good impressions, thus allowing the customers to repurchase with assured satisfaction and expectations of a similar level of service and information. For example, Trive SA has a whole Sales Trading and Research & Education Team supplying our customers with information and a two-way comms channel, positioning ourselves as their partner.

• Building Trust and Reputation
  As a new entrant into the South African market, we understand that building a solid relationship and trust in our brand will take time and hard work. To assist with these efforts, we have taken every possible step to provide our customers with a credible, FSCA-regulated service. We can also leverage the expertise of a strong holding company, Trive Financial Holdings, based in the Netherlands.

Whilst we believe that we are stepping in to fill the gap and meet the needs of the modern South African investor, we understand that this relationship and development will be an ongoing task that will require a lot of introspection and research to ensure we’re heading in the right direction. But, with our fantastic, diverse team and the global group backing us, we believe Trive is always keeping an ear to the ground and has the resources to adapt with our investment partners.

Learn more by visiting the Trive website here.