#63 Bekithemba Mafulela – Transcript

Louis van der Merwe
Welcome to another episode of Financial Planners, South Africa. Today in the studio I have with me Bekithemba Mafulela. Beki is wonderful to have you here. Beki is a chartered financial analyst, a man with a lot of deep thoughts, some that can often provoke extreme comments on LinkedIn as we as we’ve seen, and hopefully today, we can have a conversation about how you started in this industry of financial services, how your journey has been, over the last 21 years, and more recently, how your life has changed. But without spoiling anything, Beki, thanks for being here.

Bekithemba Mafulela
Thanks. Thanks, Louis. Thanks for inviting me.

Louis van der Merwe
We’ve, we’ve had a chat before when kind of we both got super passionate about technology, and how do we how do we deliver advice at scale? And before we jump into those things, can you give us a little bit of a background of how you ended up in a career in financial services? You know, was that always in South Africa? Where did you start to give us that kind of backstory?

Bekithemba Mafulela
No, thanks. Hey. So born and bred in Zim been living in South Africa now, maybe close to a little bit over 10 years? 12 years, 13 years thereabouts? So, yeah, so you know, grew up, admiring, my uncle was an accountant. So I was supposed to be an accountant. And then, and then when I go to university, I almost started actuarial science, and ended up in an economics class, if for some strange reason. So, so my undergraduate is in economics, started off my career as an Investment Analyst, actually. So I’ve actually worked longer as an Investment Analyst that I’ve worked in financial planning. So that’s a bit of fun fact, about me, work now in three countries. I’ve worked in Zim side of my career in Zim before moving to serve South Africa, but also at a short stint as well, in Zambia, in capital, raising more corporate finance work. So it’s been a, it’s been a bit of a journey. And I think, you know, the one time I was chatting to a coach that said, you know, the way things are transitioning now is that of a career, you actually have five different careers altogether, not five different jobs, five different careers. And I think I’m close to actually, to actually achieve in that, because I think every, every time, I’ve sort of changed countries, you know, change professions have tended to do something fairly different to what I’ve seen, I was doing before. So yeah, so that’s, that’s my short journey. In in financial services, you know, sort of 10 years initially as an analyst, and then the last sort of 10 years in financial planning actually started off as a financial advisor, actually, for two and a half years with old mutual. And then six years with Alan gray in the last three years now, with momentum

Louis van der Merwe
became one, I want to chat a little bit about that, that career changing decision, why you went from analyst why you said, Hey, this is not for me into something seemingly similar, but very different.

Bekithemba Mafulela
Yeah, no, so I think it’s more a journey way, you know, like, you know, one, you have a slight change of interest, and you develop new interests as you go. So, so, so I definitely enjoyed, you know, investment analysis work, you know, started off pretty much straight from college. And, and it was good fun, you know, but a lot of spreadsheet work, writing reports, and that sort of thing. And, and I think, you know, just at a point in my career, I just felt I needed a bit of a change, you know, just to show a different side of myself, that are not all about spreadsheets, and number crunching, that I can actually also do a little bit of stakeholder engagement, relationship management. So the last 10 years, you know, sort of moved more to the people side of things and less to the, to the spreadsheets. So I think in a sense, these things are quite complimentary. Because I mean, if you think about our industry, ultimately, you know, we Financial Services is not about one thing, you know, we’ve got investment alpha, which is very important and good advice, alpha now, we’ve got things like gamma or these things that people coming up with in the industry, financial coaching, etc. So I think I think in a sense, I’ve always been fascinated by the industry. And the idea that you can do different things and understand the industry in a much more nuanced, holistic manner. And I think part of that is that curiosity that that sort of leads me to different things is is different opportunities come my way. I love

Louis van der Merwe
that how you’ve said, Hey, I know I can put on my hat as a financial analyst, but let me stretch into these areas. And I think for a lot of people Listening, thinking about financial planning as a career, it might sound very singular, it might seem very like focused, oh, we have to understand our products understand our client needs and deliver a product. But your experience has been a lot more nuanced and a lot more kind of areas that we that we need to explore. Is that what you expected before you made that switch from analyst to old mutual financial planner?

Bekithemba Mafulela
Not entirely, I think I think I had a sense of the possibilities. But you know, the experience is always slightly different. So So coincidentally, actually, like, a good friend of mine was already a consultant actually came to me, when I was still an analyst, just to understand a little bit more about investment analysis, because they actually wanted to switch from being a consultant into an analyst. And they ended up interested me on actually switching from being an analyst to a consultant. Great. So I think it’s sort of like sort of started off by that just one casual conversation. And I got curious about CSP, and inquired a little bit more about it. And then decided to take the plunge, and study my CFP. So as I think in terms of the, the knowledge, you know, the interest of the industry, it was definitely sort of probably even more than what I expected. But I think in terms of the earning potential of the of the industry, it was probably a little bit oversold to me, what you can earn as a commissioned salary adviser, you know, the story, right. So that part was a little bit of baptism of fire. But I think I’ve got no regrets because I think I learned a lot about the industry. My time as a financial planet, it odd mutual, and just grew from that from from advice, and then went into consulting thereafter.

Louis van der Merwe
Now that you mentioned that, I must share a story with you, I went for an interview with one of the insurance companies, I’m not going to mention any names. And the person interviewing me said that I can guarantee after your first month, you will earn more than what your dad is making. And I thought to myself, how on earth do you know what my dad’s making? It could be very easy, or it could be near impossible. And like you said that it can easily be be oversold this kind of layer of you can earn as much as what you can, right?

Bekithemba Mafulela
Absolutely. I think that’s one thing. For me, I think we need to be a little bit more more modest, as an industry overall to to young people. You know, in terms of the the potential to end, you know, run your own practice, I think it’s a lot harder than what a lot of young people might perceive, you know, joining the industry, you can certainly do well, but it does take a little bit of time, you know, to build up a practice to have the knowledge, the skills, the networks, you know, the confidence to actually do as a financial adviser. So I think I think that part of part of the story, we can definitely do better as an industry overall, to prepare young people and to manage the expectations as they join the industry. So agree

Louis van der Merwe
with you, Beki, do you have a sense of what the advice space looks like in them? Do they also strive towards Certified Financial Planner status is, is it right for people to seek out professional advice in that market?

Bekithemba Mafulela
Good question, Louis. I think I think it’s much smaller than South Africa for sure. So I mean, if you look at CFA, CFP, Chatto, the CFP professionals rather, globally, South Africa, I think has got the seven the highest number of CFPs in the world. And almost the bulk of all the CFP is on the African continent. So I think CFA is much more popular in zoom than than CFP. So I mean, I was the first person to actually start the study, start my CFA and completed in Zim and I never heard about CFP there. Now, I only found out about CFP when only when I came to South Africa. So I think I think CFA is much more prominent in in Zim so the advice industry in Zim is still quite small. It’s more really more driven by sort of more sells product salesman type thing, which is still a challenge here in South Africa as well. I think we do have that sort of mature industry where a big chunk of the industry is still quite advisable is to quite product late, but also, you know, moving towards an advice lead with you know, with qualifications like and, and competencies like CFP, you know, playing a role. So, I think in zoom, it’s still very, very small, more product sells insurance, sort of cells and that sort of thing. And not so much. You know, advice. I think unit trust and zoom are quite tiny. So when I started off my career in in Zim, I worked for a stock broking firm before I joined an asset manager And unit trusts were very small than in fact, share portfolios in zoom were more prominent than then unit trusts. So that probably tells you the size of the industry itself.

Louis van der Merwe
Did I? Did I get that right? Were you one of the first charterholders in them as a CFA analyst?

Bekithemba Mafulela
That’s my that’s my, my claim to fame. So I was actually the first person to complete the CFA actually based in Zim.

Louis van der Merwe
That is wonderful. I mean, it’s definitely you’re planting the flag saying, Hey, we professionally professionalizing investment management and advice, and it’s definitely something to celebrate.

Bekithemba Mafulela
Yeah, no, I guess.

Louis van der Merwe
Yeah. Part of this makes me think that we have a benefit, right, sitting in a emerging market that we a lot of people say we’re maybe five or six or seven years behind what’s happening in America, what’s happening in the UK? What’s happening in Australia, both in terms of technology and advice and the way we engage with our clients. What’s your take on that? Do you think it’s accurate? Do you think there’s a benefit being here? Or are we kind of in in some cases, maybe leading the change?

Bekithemba Mafulela
So I actually coincidentally actually did a podcast with, with Derek and Adam on their podcast a couple months ago, actually, in September. And that’s actually one of the topics we’re talking about to say, you know, is, is the US? Because it’s the biggest market necessarily leading in everything in the industry. And I think I think the conclusion from that podcast was that not necessarily. So I think I mean, by far, the US is obviously the biggest financial advice, you know, market in the world. But I think there’s a lot of things that we also doing quite well here in South Africa, as well, and potentially on the advice leads in our story, we not we’re not seven years behind, potentially, if not already at PA, you know, I think our industries are equally nuanced. There’s still quite a bit of the product lady, the advice, lead, etc. So that’s, I think, at a global level, South Africa is actually quite a sophisticated market. There’s a lot of things that we do in here that are as good as any you see around the world. But there’s also a big part of our market as well, that still needs quite a lot of work. I think one of the things that I mentioned in that podcast is that if you look at it, at an industry level, we’ve got over over 100,000 people that call themselves some sort of a financial advisor, financial planner, wealth manager or salesman, right. And a very small percentage of that is actually CFPs, or what I would call like an advice led approach. So so so there’s the very good, you know, in our local market, but there’s still also quite a lot of the average and quite a lot of the of the industry that still needs to do quite a bit of catching up. So it really depends on the segment, really. So you can’t almost define the whole market as one sort of, you know, homogeneous composite, because it’s actually not it’s a lot more nuanced than that.

Louis van der Merwe
That’s crazy. And it sounds like we are evolving. And we’re saying, hey, pots, pockets of the market needs attention. You mentioned a word the advice lead. And I recently heard one of the salespeople from an insurer, talk about advice, lead sales. Are we on the right track with advice lead sales? Or is that? Is that not part of the problem? What’s your take?

Bekithemba Mafulela
Yes, and no, I think I’ll be a little bit controversial, right? Because I think we all selling, right, I think I think sometimes there is almost like, like holier than thou approach way we kind of like want to judge what other people are doing and assume that we are doing better than everybody else. I think I think ultimately, if we’re honest with ourselves, we are selling, even if it means yes, you’re selling yourself. Right. You know, you’re selling even that advice led approach itself. Right. So I think the word sell in itself, sometimes is unnecessarily stigmatized, right? I think it just depends what you sell in and how you do it, and the ethics and the integrity that you go about, you know, your sales process. So So I think because of just the the negative effects that a lot of salespeople read on the industry, and the negative consequences on clients, the word sell in itself is become almost like a dirty word. Right. But I think it’s not necessarily always, you know, the idea of selling itself a bit thin, but I think often it is done in a bad way. Or maybe we should be thinking more about marketing, I don’t know, as opposed to selling. But certainly I think all of us are either sort of Marketing something, you know, whether it’s marketing advice, late approach or coaching way of advising clients or a much more client centric approach? I think in the States, for example, there’s been a lot of conversations around, you know, financial advisors, fiduciaries, for example. Right? Because if you’re a fiduciary, you know, it’s a notch higher than being a financial adviser. Because a fiduciary, someone who literally puts their another person’s interest above their own. Right. So So that’s, that’s, that’s a whole new game of client centricity altogether. So I tend to sort of not get sort of too caught up with terms and words, but more with integrity, ethics, exactly how you do it. And the outcomes that you get for your clients, Vicki, I

Louis van der Merwe
want to bring it a bit closer to home and you’ve recently expanded your family, if you had to leave a note for your wife and child to say this, this is the guidelines to go and look for a financial planner, or advisor, if I’m no longer there, what’s on that list? Does fiduciary make the cut? Is it necessary? Or what’s on your list?

Bekithemba Mafulela
I think fiduciary is not realistic in South Africa for at least the majority of the industry, right? I mean, I followed the conversation in the states a little bit, so I can’t speak about it with any level of authority. But I think if you look in the South African context, I think we gotta fix the basics before we try and use big words like fiduciary, because at the end of the day, the role models for me, and the incentives at an industry level is much bigger challenge and a much of his problem to solve for. Because I mean, if you look at the sort of 100,000 odd people that are, you know, doing some sort of, you know, sales or marketing in the industry, a big chunk of them are not paid a salary. They’re paid commission, right. So realistically, how much of a fiduciary can one be? If you’re in commission, and you start on zero every month? I don’t think it’s going to work very well. Right. So So I think if we cut out the conflicts in the industry, and align the clients interest with the remodels, that is going to do much more good to the industry than sort of getting worried about fiduciary, and all of these sort of things. Because I think ultimately, the conflicts in the industry are much bigger problem than what you call yourself. Really.

Louis van der Merwe
Okay, so we know, fiduciary is not on the on the list, it’s at someone that’s remuneration is aligned with with the client, but what else is on that guide for your for your family,

Bekithemba Mafulela
I think just fine, like just finding the best way for them to to be able to meet the goals that they want to, they want to meet, right. So I think if you also I suppose it depends as well, which perspective are you coming from? Are you? Are you asking the question more from a perspective of a client? Or, or from a perspective of the example that I want to leave my daughter? No, no.

Louis van der Merwe
So the the type of person you’d want your daughter and your wife to work with? As an advisor? Like, what,

Bekithemba Mafulela
as a client as a client? Yeah, so I think I think it has to be somebody who takes a coaching way of of advising the client, I think you’ve got to empower the client. Because Because I mean, advice is good. But for me, I’ll probably Dow back to steps before advice. Right. So the way I look at the industry now is that we we the advice led approach is what we need to end with, not what we should start with. And what I mean by that is that I think I think things like financial literacy, helping clients to understand the different options, almost a bit of a conversation for understanding, and then a conversation for possibility before a conversation for action. I think often we run too quickly into prescribe into clients, what they should do with their money, what they should invest, what product they should buy, etc. I think all of those things are important, but I think I wouldn’t start with them. So I’ll probably say, if someone is not a coach, or taking a coaching way of advising you, probably not the best, if I can summarize it that way.

Louis van der Merwe
That I’m wondering if Rob McDonald is listening to this, but I’m sure he’s smiling as he is. He’s listening to our conversation because that is one of the things he always talks about. If you haven’t yet had coach training, in your opinion, where does an advisor or financial planner start? Because it can seem like a completely different career. In fact, a lot of people do this as a living as as coaches. Sort of so

Bekithemba Mafulela
I think I think that the idea is not to be a coach is a noun but to be a coach as of right. And I don’t think that takes a mask. Same amount of effort to do that. So I mean, myself, I’m not a coach, but I do like a coaching approach. So I mean, I did a six month course with UCT. That hopefully gives me some credibility to use coaching. But without, you know, stretching, as far as calling myself an actual coach, I don’t think I’d be able to earn a living as a coach, but I think I can certainly understand, like empowering conversations for clients. So what I’ll probably I mean, like, I mean, I’ve worked with Rob, you know, for many years, I mean, you mentioned, Rob, you know, we’ve done beautiful coaching programs, both Alan gray and momentum, I think, you know, which I thought were very good programs, I think part of that is to find something that is easily accessible, you know, reasonable cost for financial advisors, that have been actually doing, you know, a sells, or just an advice, only approach to start incorporating coaching into their, into their, into their value proposition without necessarily going as far as calling themselves a coach as well. So I think there’s a balance there, it’s a little bit of a blend, it’s somewhat nuanced, if I can, if I can call it that. So is

Louis van der Merwe
this more client experience the client is experiencing being coached, then you saying, hey, I can now put on my coaching hat and, Mr. Client, I’m a, I’m a better advisor, because I can use coaching in the process.

Bekithemba Mafulela
I think it’s just a way of being because I mean, you know, coaching, when when you start off the coaching journey, you know, it can feel like it’s a technique or its method, etc. But if you truly, truly understand coaching over time, it actually changes who you are all together, it becomes a way of being it’s not like, it’s not some sort of other method, or whatever you use. So I mean, earlier on it, it can be that, you know, but I think ultimately, when you really embed coaching, in your approach, you fundamentally change almost everything about yourself, not just from professionally, but even in your personal life as well, Becky, you’ve

Louis van der Merwe
now worked with a lot of different advisors during your different roles. And when you think about the people that you look up to their advisors and financial planners, what stood out for you, in terms of what made them so successful, just on your level?

Bekithemba Mafulela
I think it’s a it’s an ability to have true empathy and care for the client, and make it less about yourself. But but more about, it’s up to you, if that makes any sense. You know, because I think I think the one thing that’s quite unfortunately common in the industry is that we like talking about stuff that we understand. And we like sort of talking about ourselves, and, you know, our products, industry, and blah, blah, blah. But I think most people actually don’t really care that much, as much as we care about these things, right. I think I think people care about very simple things. You know, what’s going to happen with their families, or their families protected? Are they going to be financially secure, they’re going to be healthy, are they going to be happy? You know, and I mean, you know, more more to us, you know, my later part, you know, in the industry, I think those sort of softer, things have become much more interesting to me, than, you know, like, you know, the hard things that we talk about in the industry, investment of returns, etc, etc. I think some of the stuff, you know, come in at a global level, I mean, the work, for example, that people like Luminator doing, and Santi and his team in dividends, I think speaks to that, that almost evolution of the industry towards, you know, helping clients to live their best lives, as opposed to talking about the industry. So I think the advice is that I really, like advice that each creatively get that distinction. And I think they just naturally connect better with clients still use all the knowledge the the industry, you know, jargon, no jargon, Industry Insights, rather. But do it in a very simple way to clients that just connects with people at a very human level,

Louis van der Merwe
does that only come with experience? Or is there a shortcut? I’m trying to think of younger advisors that have joined the industry that kind of can think of that just intuitively kind of grasp that and did it? And it doesn’t really come to mind? It seems like that comes with experience and understanding. But I might be wrong,

Bekithemba Mafulela
I think yes. And no, I think I think sometimes it just comes from your DNA. Because, I mean, you could have someone who was quite young, but they just have a caring gene. Right off the bed. Right. And, and I think also just your personal confidence as well, because I think I think a lot of the industry doesn’t teach the right things first, we cannot teach, you know, like product and sales and that sort of thing. Right? So So there’s an element of the industry over that we need to change that, that our industry is ultimately about people, right and not so much about our products. So I think part of the problem is this is just the the whole industry incentives, the, the whole industry dynamics all together. But I think as you get older, obviously you get more confident, you try a lot of things, and you see, you suddenly know what doesn’t work, you know, so it becomes much easier to kind of, like, try new things and see what would work better. But I wouldn’t necessarily think that it’s something that that that you have to be experienced, because sometimes you can be experienced in the wrong thing. You know, sometimes I find it, that even the people that have been in the industry 30 years, I’ve been trying to teach them a coaching way of advice and good luck, right? So. So it’s I don’t think it’s an age thing, I think it’s more of a human thing, that we just need to, you know, cultivate more in the industry and be more intentional around it.

Louis van der Merwe
I love that cultivating that caring gene and kind of if you naturally show up as a caring person, why then do we have so many older male advisors, who I think it doesn’t always naturally come easy to be caring? You know, I’m just thinking that oftentimes women tend to show up a lot more caring. Why hasn’t that changed? The key? Or is that the remuneration model problem,

Bekithemba Mafulela
I’ll be a little bit controversial is just use one word Commission’s is changing, it’s changing. Now. Unfortunate law industry is very sales driven, going back to the auto sales thing now. Right. And I think this is sometimes, you know, the, the not so inclusive part of the commission model, because I think it naturally lends itself to much more confident, you know, people tend to be more Mel more older, right? Because, I mean, if you’re a young person, it’s not a sort of great role model. So I mean, I started off, you know, as a furniture advisor, and the one thing that was tough for me was the right model. Right. And, and I think at a, at a very human level, I do, like, empathize with everybody sort of under five years in the industry, you know, the role models are not great. I think, as an industry overall, if we could come up with with much more, you know, sort of sustainable remodels, I think it’ll really help for the industry to to be a little bit more balanced, you have more diversity, whether from a, from a race, gender, age, social class perspective, etc. Because I think with with the reward that we’ve got now, it just, it just naturally excludes a lot of people,

Louis van der Merwe
what would have have to happen for that to change? Because it seems like we’ve been talking about this for 510 years, and very little has changed. Like, it doesn’t feel like there’s an urgency, especially from the bigger businesses, you know, it’s easy to make a change in a small business and offer someone a salary, but in your mind, what would have to change for, for these businesses to conform, other than from a regulatory perspective and being forced.

Bekithemba Mafulela
So I think, unfortunately, we’ve probably exhausted all regulatory angle to drive the change. In fact, in fact, regulation is becoming a burden on advice practices, and unsustainable cost and compliance and all of those things. Right. I think it goes back really more to to self regulation. Right, I think I think more to ethics, and the purpose and the ethos of the industry overall. Right. And you can’t regulate Ethel’s ethics and ethics and integrity, like those things, you just can’t regulate them. It’s not, you know, like, you’re probably gonna end up having, you know, too much regulation, or together. Right. So it’s a difficult one, Louis, I think we, we, we need to, we need to promote the industry in such a way that we try and find win wins, we align what is ultimately in the client’s best interest with what is also in the interest of the financial advisors and the different product and service providers out there. And I think the product and service providers need to lead the way because they probably have the most amount of resources and leverage to make the changes. But from what I see so far, I think they’re busy with other things.

Louis van der Merwe
What are the what are those things without giving us too much insight?

Bekithemba Mafulela
I think it’s just not in their commercial interest to really make the changes that are impactful for the broader for the for the better good of the industry overall. And I suppose that you almost need disruption. I mean, this is one of the things that was chatting with with Derek and Adam. When I did the podcast about You know, leading financial advice, that the firm’s that truly want to lead with financial advice would need to change the right models, right. And it’s going to be tough for them earlier on. But I think if the first sort of big entity that figures out how to do that one, you know, is probably going to be able to disrupt the industry in ways that that will fundamentally change the entire landscape.

Louis van der Merwe
So let’s, let’s carry on with this idea of you had to start that business that’s going to disrupt the industry. And who do you get on your team in terms of people like what what do you offer someone? And how do you price that? Does it look like traditional advice?

Bekithemba Mafulela
I think it’s not, it’s not, I think it won’t be like a big fundamental shift in terms of the way advice is dispensed, and the processes, people following the technologies, you know, all of that, I think a lot of that is actually, you know, going well, I think it’s just the, the, the the rim model, to the extent that it fosters diversity, inclusion, and it fosters that caring gene that we were talking about earlier on. Right. So it’s more than incentives really, that, you know, and unfortunately, it will, it will take a bit of a balance sheet to do that. But one has to have faith, that is you, if you fundamentally changed the role models, and to get the right people because you still have to solve for, you know, good work ethic, and, you know, and all of those other things, because then you know, you still have to be productive as a business and have a good return on your capital, and investment. So it’s a lot of, you know, loose ends to manage well, I’m not suggesting for a second, that it’s easy, because I mean, if you’re running a business, you still have to report to shareholders and, you know, return on capital and return on shareholders, funds, etc, all of those things are equally important. But so it’s also, you know, leaving to the ethos of the of the industry as well, that we proclaim that we, we ultimately do things that are in the best interest of our clients. So that balance between getting a good return for shareholders, and also making sure that we attract, you know, a more diverse and committed group of financial advisors, and we give them the platform and the resources and the ability to be successful. It’s really an easy one. But I think if you can solve for all of those moving dynamics, I think you probably on the right path.

Louis van der Merwe
I like that it’s not, it’s not easy, but they could be a simple solution. But no one’s saying the implementation is easy. When you think about things outside of financial services that are inspiring you or that you use from to inspire how you look at financial services, like what what industries motivate you, the most, or which are the ones that you learn from the most.

Bekithemba Mafulela
So that’s I’m quite passionate about SMEs and social entrepreneurship. Right. So I mean, if you look at a much more broader economy level, whether you look at the NDP, you know, 2030, from a local perspective, or the SDGs, from a global perspective, you know, things like financial inclusion, inclusive growth, decent jobs, etc. Right? I mean, SMEs, will have to pay a very, very big part in that. I mean, if you look at South Africa, for example, I mean, we’ve got it were a very slow, slow growth, you know, small, slow growth economy. I mean, I think, I think at last count, we less than 2%. And, and probably, you know, depending on which economists you listen to, we will probably even go into even, you know, less than 1%, potentially, right? So, so the growth is very small. But then the big companies are also not employing a lot of people either, right? So, so if you look at best estimates, 80 to 90% of new jobs will have to be created by small to medium enterprises, right. And I think those businesses often are created with a much more bigger purpose, and, and ethos than just trying to make a profit. Because often, if you’re a small business in your incentive, or the reason you go into businesses to make a profit, you’ll probably be part of the 80% that actually fell, right, in the first instance, because a lot of small businesses fell. So I think I think small businesses is a big passion of mine because of the ability to create, you know, significant number of decent jobs, especially considering South Africa with a higher rate of unemployment, particularly with the youth, I think, at the moment, probably running over 50% of youth unemployment, you know, between sort of people between 18 to 35 years. So that’s that’s a significant problem that we’ve got. And I think if you tally up What we need to do with SMEs and also, you know, with social entrepreneurship as well, which is the concept of actually, you know, using market systems to drive growth, but actually not just focusing on making profits only. So in other words, you know, you know, the business has to have a higher purpose than just, you know, profit incentive. So I think those two things, for me are something that I’m very passionate about. And I think, you know, is the future not only for South Africa, but the rest of the continent? I think,

Louis van der Merwe
often we see in that space, people lean more towards banking or transactional things. I haven’t come across a lot of disruptors in terms of their advice space, do you think there’s a gap?

Bekithemba Mafulela
So that sort of advice purse is a very interesting one. So. So I mean, if you look at the different research that has been done in South Africa, South Africa is probably one of the there’s a reason why South Africa is good is one of the most unequal societies in the world, we’ve got one of the highest generations in the world 95% of assets in this country are controlled by the top 10% of clients, and families. You know, so it’s a very skewed right. So I think from from, from that perspective, if you’re a good financial advisor, and well qualified, and there’s a lot of very good financial advisors in South Africa, you know, you know, yourself being one of them, you know, and, and I think you’re doing a great job and so many other financial advisors in South Africa. But I think, you know, if you look at the dynamics of the market, it just lends itself more to focusing on the top 10% of clients. Because then, you know, if you look at the sort of that middle, the middle market, right, I mean, it’s got significant income, I think about 30 to 40% of the income, no, but in terms of assets, it’s got almost no assets at all. So I mean, that’s a tough market to service, especially considering the dynamics, you know, in the structural dynamics of our industry overall. So, so I think that’s the theme. That’s why we’re not getting a lot of disruption. Because if you’re a good financial advisor, you probably end well without having to disrupt anything. Right, and the disruption that we need to see, you know, will probably have to come from the people that are doing well already, that actually go and target a different clientele altogether. So for example, the professionals that earn a good living, or in a good salary, but actually I’ve got very little assets in I think, in the US, for example, they’re starting to think about like, subscription models for advisors, an example. I mean, that’s a tough one, I don’t I haven’t seen anybody doing it with any level of scale in South Africa. So stuff like that. I think that’s the sort of disruption that we need, you know, but I can’t see it happening from any of the big players that are doing well. It’s just not in their commercial interest to do that.

Louis van der Merwe
Here would almost be like an incubator and say, Okay, let’s, let’s test this and see, like you said, social responsibility, lets it give back instead of running the business purely for profits, because the urgency is not the day to change the existing business models, because most most people in those spaces don’t feel that it’s broken, right. Yet. The future clients are saying this model is not built for us.

Bekithemba Mafulela
Absolutely. Because I mean, it’s almost a disconnect. Right? Or misalignment of sorts. Because I mean, they’re doing well, because I mean, like there’s a lot of good advisors, I mean, like yourself, you know, you’re doing well. And you don’t necessarily servicing the client who can’t afford your services. I don’t know if you get I’m trying to say, yeah, so. So there’s a big chunk of South Africans that need good financial advice, but they don’t have a lot of assets, you know, for the Aum model, which is the dominant model in South Africa. I think you’d agree with me on that, right. You know, and then you got all of these clients that need advice, but firstly, they don’t want to pay for it. Because they don’t understand why they should pay for it. So that’s another complexity on its own. Right. You know, I mean, my young brother, you know, who’s who’s a lawyer, you wouldn’t necessarily think that he needs a financial advisor, right? I mean, it’s got to be a hard sell for a financial advisor to go to him and say, all you need to pay me like 1000 rounds per hour for financial advice. Right. So that’s, that’s the other complexity that we’ve got in the industry. So the sort of hourly rate or return or fee for advice model, I think the those are those models are good models in theory, but I think actually scaling them is a lot harder than it sounds. And I think that’s the fundamental challenge that we’ve got in our industry.

Louis van der Merwe
The other assets under management model It’s so convenient because you don’t have to follow up on invoices, you don’t have to chase people that are not paying. And like you’re saying, Why? Why fix something that’s not broken in the eyes of the business owner yet the clients need to be serviced. So some are thinking, maybe advice has become too expensive. Maybe we need to figure out how to make advice cheaper, and distributed amongst more people so that there’s a bigger benefit, and of what some of the US companies have done through group coaching, right to have a group of people that are going through the similar challenges, like, imagine a fitness bootcamp for clients, and we have a financial planner hosting it and doing this fitness bootcamp and and getting paid yet, we don’t really see that in South Africa. Not that I know of.

Bekithemba Mafulela
Absolutely. I think that’s a good point. I mean, the other thing is also technology as well, right? Because, because if you think about, about about three COVID, the cost of distribution is this, it just doesn’t make any sense. It’s not going to work to actually have any model outside the Aum model. Because, you know, so you find that the Commission model and the Aum model, actually have got much better margins for the high cost of distribution that we had pre technology and pre COVID and all the digital adoption that’s going on right now. But I think now with technology, you know, you and I can have a conversation right now without any incremental cost to our household costs, because then I’ve already paid for my, for my Wi Fi, right. So I didn’t have to drive around, come and meet you and spend money, that sort of thing. So I think I think I like what you say, in around group coaching, you know, it’s almost a little bit of group education, because the reality of the matter is that a lot of professionals, they actually need more financial literacy and education than they need financial advice. Right. So they will need financial advice, once they get that piece, you know, sorted first. So, so if you look at it as sort of like what we offer in the industry, you know, from financial, you know, financial literacy, and then benefit counseling, I think the benefit constant legislation was actually quite a good thing for the industry, in terms of reaching more people that need, you know, that sort of in between education and advice, but can’t quite afford advice, because often the benefit counselors actually own a bit of a model, and are more likely to give, you know, members in a better financial literacy and education. without incurring, you know, unsustainable costs, because if you’re a financial advisor, even given financial literacy, and education, is also expensive as well, it’s not really going to work for you, if you got like low margin clients. So So I think we got to harness technology, we got to think about this thing, you know, in ways that are scalable, like group coaching, for example, good financial literacy platforms, I know, for example, assists, he started a platform for financial literacy, that is neutral of all products, and that sort of thing. And I think those sort of initiatives, you know, are what we need to do at an industry level to actually be able to help more people without disempowering advisors that are doing very well, but actually create more spaces for more inclusivity more, you know, new advisors, young advisors that can, you know, work with, with clients that pay less margins, you know, because I mean, like, if you’re going to help young people, Louis, you probably have to charge a lot less and work a lot harder. Or it doesn’t sound like a good value proposition for an established advisor with with a billion of AUM already under, under under advice,

Louis van der Merwe
we’ve seen quite a few advisors saying, Yes, we’re going to earn an income from 90% of our clients and 10% of the clients, we’re going to service at maybe a zero cost kind of a, let’s give this back in terms of bolding South Africa. And I think there’s, there’s merit in those type of business models. But at the same time, you don’t want to devalue that advice. But it is interesting having these conversations saying what needs to change for that we see the banks playing into these spaces, and maybe they are moving into the territory of the life insurance, and maybe there’ll be a massive fight between banks and insurers for for that advice base.

Bekithemba Mafulela
Yeah. So I think it’s, I mean, it’s quite interesting, though, from a legislative perspective, because you see, a lot of the banks now are moving into this two tier model, mostly because of legislation. So I mean, if you go back sort of, like 10 years ago, there was, you know, I think the legislative environment was quite confusing, you know, it multiproduct it like you’re to start the other products in the markets. I mean, it was completely impractical. Right? And I think, I think way the industry is going now with the two tier model, where you either independent financial adviser, or you sort of like a tide advisor? Right. So I think it’s making it much easier. And in see a lot of banks now are splitting their distribution into independent and then and then sort of tied. So it’s going to be interesting how that dynamic plays out, as well, because I think it’s good, it’s going to have a material change on distribution in of the industry. And I’m also curious to find out what, if any, it might impact REM models in the industry overall. So there’s a lot of planes that need to learn there, that that we probably need to watch and see what happens.

Louis van der Merwe
Where will you be spending most of your time and energy? When what what’s the future holding for for Becky, if there’s anything that you can share with us? So is that still a work in progress at the moment?

Bekithemba Mafulela
Yeah, that’s a good question. I think it’s a work in progress. So I’m taking a bit of an extended sabbatical from from corporate life. You know, I might come back, I might not come back. It all depends. But I suppose you know, the thing is that whatever I do, I want to do something that’s going to have impact and help, you know, as many consumers as possible. I mean, just from a skill perspective, that’s likely more to be to be b2b, you know, helping other financial advisors, I mean, I’ve been an advisor myself, and I’ve been a consultant now for, you know, almost close on 10 years. So, so I’m probably, I’m probably sort of more leaning towards b2b to be able to have scale, and support the advice advisor community to be able to do a better job for their clients and, and leverage, you know, technology, you know, the other stuff that we’re talking about in the industry, you know, but but for now, I’ll probably just want to, you know, take some, you know, slip a little bit more of a little bit shorter and slip so, so I’ll probably take a bit of a break and, and recoup a little bit. And then maybe in the new year, you know, sort of apply my mind a little bit more specifically to what I need to do,

Louis van der Merwe
Beki, I can see how passionate you are for serving these clients, clients that need access to advice but also doing it at scale and making an impact. It is refreshing to do that. I want to just thank you for being here today and your contribution to our market and what you’ve done. It’s it’s been wonderful to Jetty

Bekithemba Mafulela
now. Thank you for inviting me in for the opportunity to share with the advisor community

Louis van der Merwe
brilliant and all the baseline catching up on that sleep. It does get better, but the roles change. You’re gonna be running around very soon trying to trying to keep them alive.

Bekithemba Mafulela
Absolutely. Thinking about now is like how do I balance you know, the work and, and vinified and all of that so, yeah, shall we okay,

Louis van der Merwe
there’s a reason father is the first thing on your LinkedIn profile and I take my hat off to that.

Bekithemba Mafulela
Nothing is the most important for me at the moment, that’s for sure.

Louis van der Merwe
Absolutely. Thankyou Beki.