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10X Investments CEO Steven Nathan: Clients' ignorance is fund managers' bliss

Sep 09 2018 14:30
Khulekani Magubane

For most retirement fund managers entrusted with the life savings of ordinary South Africans, their clients' ignorance is their bliss.

This is according to 10X Investments CEO Steven Nathan, a business leader who considers himself the proponent of transparency and good, honest business in retirement fund management.

Before one even asks him to comment on the idea of ethical business, it is not hard to tell that Nathan holds the view that a physician should not hold out a vaccine from their patient just to stay in business.

He is one of his own industry’s most vocal critics, speaking his mind on the charges fund managers impose on their clients, whether these be large companies or ordinary employees of the South African workforce.

As far as tough customers go, 10X Investments has been able to claim the National Union of Metalworkers of South Africa (Numsa) as a client and a fan.

The union - recently seen in a long-standing negotiation over wages with Eskom - is no pushover.

Transparency is tops

True to Nathan's mantra, 10X Investments joined in as a partner for online publication Daily Maverick’s annual news and current affairs event in Cape Town, 'The Gathering', in August.

Nathan tells Fin24 that partnering with the publication in bringing the event about was an ideal fit, as 10X Investments stands for "educating ordinary people about the decisions that they make".

"People are often guided to make decisions in the best interests of their advisors. It is about knowing the truth.

"Daily Maverick is all about defending the truth on a macro perspective, and that is critical to making sound informed decisions," Nathan explains.

Not just fees

Nathan says success should be hinged on a superior and cost-competitive service, rather than allowing survival to depend on the fees charged to clients.

"When you pay 3% in fees you pay away half of your real return. The compounding impact is even more when fees kick in. The system does not work well for investors, but it works well for the industry because it pays well," he says.

However, he says imposing industry fees on clients can be justifiable as long as there is a good performance in the fund. Yet, he argues, evidence shows that high fees often mean poor performance.

He further argues against clients not knowing where there money is invested or in which portfolio. 10X investments offers its clients one portfolio with a 10-year track record, he says, benchmarked for performance and competitive fees.

"This is a R6trn industry and most people don't even know if their money is in a good or bad fund," Nathan says.

10X Investments were introduced to Numsa through IT services company EOH, as they union's leaders there had experienced 10X Investments' management of their retirement fund. The investment arm of Numsa were looking for partner to help with the management of the provident fund, Nathan says.

All incomes equal

According to Nathan, the company's value proposition is that it doesn't discriminate on the basis of income. "Everybody gets the same returns because they are invested in the same fund and enjoy low fees," he says. 

10X Investments worked with Numsa to realign their provident fund, and the company is currently training Numsa employees to understand employee benefits with revenue opportunities and investment companies.

"We look after some of the Numsa financial services and funds, like the pension fund, the Numsa investment fund with over a thousand people, including the Isuzu part of the Numsa fund," Nathan says.

The relationship is ongoing, he believes. Many believe the relationship between clients and fund managers is one of trust and fiduciary, he says, "only to find that they don’t see their doctor regularly but expect them to spring to action when they are ill".

Correction: This article was amended at 10:30 on Monday September 10, to reflect that 10X Investments CEO Steven Nathan alluded to paying 3% in fees and not 6% as originally stated. We apologise for the error.  

numsa  |  10x investments  |  fees  |  retirement  |  retirement funds


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