Building trust & using the power of networks

1. Building trust & using the power of networks “Lessons from the first 1000 days of a black investment manager in South Africa” Mothobi Seseli MA. Econ (Econometrics), IODSA Cert Dir. Managing Director

2. Talk agenda • What is trust ? • About my organization • Building a trusted presence

3. What is trust ? • Relationship of reliance (Source: Wikipedia) • Complete confidence in a person or plan; be confident about something, certainty based on past experience, to show confidence in a person by entrusting (him) with something. Assured anticipation; dependence upon something future or contingent, as if present or actual; hope; belief, Assured resting of the mind on the integrity, veracity, justice, friendship, or other sound principle, of another person; confidence; reliance; (Source: Arc dictionary – free online dictionary)

4. Who can we trust ? or who do we trust ? Who do we develop easier functional “trust” based relationships with? • Those similar to us, generally • Those we “know” well – maybe family & friends • Those we share something in common with e.g. grew up together • RSA (perhaps unique) - from overseas – the developed world, for e.g. USA, UK • Well developed brands Is this always the case ? Maybe ? Do these always serve you well ? Or not ? e.g. Tannenbaum scandal

5. But……does trust matter ? Source: Edelman Trust Barometer

6. About my organization • The picture / long term goal / take advantage of opportunities • positive role modelling / serve clients well / create relevant investment products / create wealth / a different spin on transformation • Great team (education & experience), sound investment process & risk management • Our values – thoroughness, reliability, honesty, integrity, respect for self & others and good ethics.

7. About the Asset Management Industry – the Manager Universe

8. What have the challenges been ? • Limited product track record • Consultant endorsement • Market resistance / inertia – new company • Poor brand awareness / reputation • Lack of large financial resources relative to established competitors • Very hands off approach in most quarters - GT Ferreira’s story • Stereotyping - what do you know about money management • Size of opportunities tend to be smaller • Mistrust • Relationships & networks

9. Have we been successful? We have had moderate success and are going to be more successful going forward! April 2005; Zero clients, zero clients assets under management & 6 staff members June 2006; Some 35 client mandates, >ZAR 6bn in AUM & 15 staff members Moderate initial success; Legal compliance Education and experience of team members Strong BEE credentials Reputations of certain team members Good product There are many moving parts

10. How are we developing trust ? • Commit to a plan & execute it! • Two powerful stories / messages • 1) Build brand awareness Embracing media - radio / print examples • 2) Living your values - turned client business opportunity down & this has become my fiercest supporter to date • 3) Community responsibility - critical; empathy • 4) Presence at industry fora - interact with decision makers, build a reputation and seek • to influence perception – because this is key • 5) Building a network Socials and professional gatherings & with “different stakeholders”Work at creating enough shared experiences to inform otherwise; • 6) Regular communication

11. Building trust (contd) • Trust is multi dimensional, which dimension do you focus on ? • What are the critical issues in building trust ? • (Source: M Pirson & D. Malhotra, “unconventional insights for managing stakeholder trust, 2008 Harvard Business School working paper) • 1) express genuine concern for your well-being • 2) you are trusted because of competence • (managerial effectiveness & technical competence) • 3) value congruence • 4) perceived as having integrity • 5) transparency

12. Media….February 2007 Source: The Sowetan, Argon Asset Management website

13. Thinking about Communicating ? Source: Edelman Trust Barometer

14. Actual Return Perceived 1999 Performance* Performance** Net Sales Janus #1 #1 $36 Bln Fidelity #35 #2 $14 Bln The Vanguard Group #37 #3 $14 Bln Blackrock #8 #48 $ 0.005 Bln What about reputation ? In today’s world perception is reality • Fund managers can no longer rely on “we build it and they will come”; there is a need to be more customer-driven • Third party distribution also suggests the importance of branding to both distributors and end-users. * 1999 total return for a representative sample of the company’s funds, as measure against other funds with similar strategies, using asset - weighted figures ** Based on survey of 4,700 U.S. households conducted by Financial Research Corporation and Market Facts, Inc. The gap between awareness and reputation causes brands to be weak!

15. More about reputation – what impacts on it ? Source: Edelman Trust Barometer

16. Interesting insight ?........ Source: Edelman Trust Barometer

17. In concluding….. • How does business take these lessons forward ? – question our views and their underpins more, seek to challenge those convenient truths we have / hold, sincerity in our engagements; better emotional intelligence • Ultimately the organizations that succeed are those that manage their stakeholders effectively and from positions that are compliant with their value systems. • Self mastery / comprehension is vital - be absolutely clear about you, your passions, your interests – Recognize your limitations and work at them. Seek to develop your own unique value proposition which influences your competitive advantage. • Identify champions and “trigger pullers” - those that will champion your cause. • Your values are critical, they anchor you • Engage, create the shared experiences that hopefully “derisk” you and “make you human”