Investment Management Firm’s Success Starts With Values
I just got back from an amazing two weeks in South Africa, where I spoke at the Seamless Africa Conference, interviewed people like today’s podcast guest, Nomi Bodlani from investment management firm, Allan Gray and then explored the history, politics, beauty and wine of the region.
(If you are curious, you can see my photos and video clips from Cape Town and surrounding regions here.)
Nomi Bodlani is the Client Experience Team Lead at Allan Gray. The company was founded in 1973, and has been hugely successful. The founder of this investment management firm, Allan Gray, is now one of the richest men in the world. The firm itself is the largest privately-owned asset manager in South Africa, according to Forbes, with $35 billion in assets.
What impressed me about the company is that from the start it has been values-driven and customer focused. Over and over again in our interview Bodlani talked about how the values (or what I call the Promise in the 3P Profit Formula) have been used to guide decisions at the firm.
Values Are Clear, Explicit & Guide Decisions
The core values, says Bodlani, are for the firm and its employees to be:
- client focused
- individually accountable
- independent minded
- performance driven
- long-term oriented.
Employees Train on Values & the Technical Side
New employees in this 1,000 person firm undergo extensive training on the values as well as the technical aspects of their jobs.
During their first three days of training they hear super-hero stories about extraordinary lengths investment management front line and other staff have gone to in order to solve client problems or exceed their expectations.
The company has also chosen to keep its set of investment products simple. Keeping things simple makes it easier for staff and clients to understand and choose the right vehicles for their investment goals.
It is just too easy for companies to get carried away with new products and features. When that happens, their staff can’t reasonably be expected to know and understand them all, let alone explain them to clients. Often that can lead to the downfall of companies, as many a high-tech entrepreneur has learned the hard way.
Allan Gray has avoided that trap, although, admittedly it does mean that they are not on the cutting edge of new products or whizz bang website technology.
On the other hand, the solid relationships between the company, its investment managers and its clients meant that “our clients still trusted us even though our website didn’t look like the others they saw.”
Think About The Why
In training, employees are taught to consider how every aspect of what they do, no matter what part of the organization they work in, has an eventual impact on customer satisfaction.
Even something as mundane as making sure they get the client’s name and contact information right isn’t just a checklist item: if you get something wrong, it could mean that the client doesn’t get what they are waiting for, or that their privacy is violated because somebody else gets their mail.
In other words, some of the tiresome chores that seem “dumb” aren’t actually pointless. But the flipside to that is that you need to be constantly reviewing that list of rules or tasks to make sure procedures that don’t benefit customers haven’t crept in.
Cross-Training & Investment Advisor Turnover
They don’t expect their investment advisors to stay in client service for more than 1 to 2 years. After that, explains Bodlani, they plateau in their learning. So the firm replaces about 80% of these front line staff every year, of which 70% go into other areas within the business, such as financial analysis or new product development.
That means that the service orientation permeates the organization, because so many of them come from the key client facing part of the business.
This internal growth approach has likely also made it easier for the firm to have a collaborative culture. Before launching new products, for instance, cross-departmental teams do intensive “what if” exercises so they can map almost all possible customer journeys and lower the risks of things going wrong.
Performance Evaluations Based on Customer Satisfaction
Not surprisingly for an investment management firm, they are driven by data.
The company tracks customer satisfaction, and it is a significant element in evaluating staff performance.
That said, Bodlani admits that one of their challenges at the moment is making better use of the mountains of data they have access to.
For instance, they want to find out what behaviors clients typically exhibit before deciding to switch an investment. Since they believe in the value of long-term holding strategies, knowing what to look for in client behavior (i.e. predictive analytics) would let them educate clients about the value of holding at the very moment when that knowledge would be most relevant to the client.
Think Long Term
One of Allan Gray’s core principles was to always think long-term. In 2015 he transferred control of the firm to a foundation, where the profits are to be devoted exclusively to philanthropy.
Explaining the move in a letter to staff he commented that “the perpetual nature of the Foundation empowers the executives to focus entirely on doing what is in the best long-term interests of clients, free from the short-term pressures that third-party ownership can bring.”
A sad, but realistic, acknowledgment that, so far at least, most investors still think short-term, which explains who so many other investment advisors and their firms have made disastrous decisions.