Moral compass - JSE MAGAZINE

Moral compass

Magda Wierzycka, CEO of Sygnia, on how being an industry disruptor is a driving force behind the company’s success

Moral compass

In her own words, Magda Wierzycka, CEO of Sygnia, is very vocal about her values. ‘This has brought its own level of publicity and controversies, but all Sygnia staff know what we believe in and stand for.’ The impacts of Wierzycka’s publicly contentious challenges have certainly not affected the performance of the company, she says.

‘Published 31 March this year, our financial results are the best that Sygnia has produced since inception in 2006,’ she says. ‘The growth has come from an ever-increasing move from actively managed investment products to passive propositions by largely retail investors, as well as from a range of diversified services offered by Sygnia to its clients.’

The highlights that confirm Sygnia’s growth include revenue of R308.1 million, up 34.4%. Profit before tax and finance charges at R139.5 million, up 92.1%. Profit after tax of R91.3 million, up 106.6%. Basic earnings per share of 64.1 cents, up 111.6%. And headline earnings per share of 64.1 cents, up 102.2%.

Wierzycka acknowledges that the JSE has played a role in this excellent performance. ‘The true value of being listed is the visibility and brand recognition that it brings,’ she says. ‘At Sygnia, we believe there is a greater level of trust associated with financially transparent companies, and there is much more press and investor focus than on private companies, which is invaluable when one tries to market a company in an overcrowded financial-services space.’

Overcrowded it may be but, despite COVID-19 conditions, Wierzycka says the industry continues to be profitable. ‘The sector is extremely flexible and has been able to adjust to new, constrained working environments better than most. High levels of sophistication and automation have meant that working from home was a minor problem, while the ability to charge fees through the crisis was maintained.’

Challenges and opportunities are seemingly endless in the sector, both globally and locally. On a negative scale, Wierzycka highlights the domestic economic environment. ‘The depletion of savings due to job losses means the savings pool in South Africa is not growing. We are in an investment universe that is shrinking and this, unfortunately, is unlikely to reverse in the short term.

‘On the positive side, the sector offers many opportunities to disruptors who aim to attract clients from competitors. Low fees, transparency, clear communication, innovation and a moral compass provide us all with opportunities for growth.’

And this is what Sygnia has really tapped into. Its asset management skills are spread across a range of products and platforms for retail and institutional investors. ‘Our differentiation comes from a focus on providing the lowest management fees in the industry while still delivering top investment performance across product ranges. We’ve also positioned Sygnia as an innovative supplier.’

Proof of innovation is the Sygnia umbrella retirement fund, SURF, launched in 2016. It charges one fee for investments, administration and consulting; is some 60% cheaper than its closest competitor; and, within four years, has grown to be the seventh-largest umbrella fund in the country, with 450 participating employers, she says.

In many ways, the high management fees prevalent in the country over the past two decades is what gave Sygnia its opening to become the second-largest multi-management company in the country, and one of the top two passive managers.

It is also the largest provider of non-commodity ETFs. Its investments derive from the US, the UK and locally, and Sygnia has administered assets worth around R216 billion for more than 900 institutional investors and 40 000 retail investors.

‘We’ve certainly earned our reputation as a financial services disruptor,’ according to Wierzycka. ‘The focus on low-cost investing has been enabled by Sygnia’s focus on developing leading-edge technology solutions, and more comes from our entrepreneurial culture, consumer advocacy and product innovation. We were also quick to move from active investing to passive strategies, which is the trend internationally.’

There is also the management style that Wierzycka employs. She says she embraces consultative democracy. ‘However, to qualify to have a “vote”, a Sygnia employee has to be hard-working, outspoken, passionate and a natural team player. No task is too small nor too menial, and every top manager must multitask.’ She also encourages her teams to problem solve and ‘fight the outside world … we do not fight with one another. People either love or hate our style’, says Wierzycka. ‘There is no middle ground.’

Neither is there contentment in complacency for Sygnia’s growth. It is firmly focused on attracting clients away from larger competitors, and on international expansion. ‘Our 10-year plan is to grow Sygnia into one of the largest financial services companies in the country.’

By Kerry Dimmer