27four Investment Managers Aren’t Afraid Of The Big Boys

27four Investment Managers Aren’t Afraid Of The Big Boys

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Entrepreneur spoke to founder Fatima Vawda about how she managed to build the company into a business with a turnover of R80 million in less than a decade.

Vital Stats

  • Player: Fatima Vawda
  • Company: 27four Investment Managers
  • Turnover: R80 million
  • Established: 2007
  • Visit: 27four.com

Key learnings

  • Build your brand and build your reputation. These really matter if you want to grow your business.
  • Don’t chase every opportunity. Diversification is risky. Think carefully about how you want to grow.
  • Service is key. Pay attention to the details. Be organised. Finish what you start.
  • Hire the right people, and then give them room to grow. Reward them handsomely.

The financial services sector can hardly be described as under-populated. In fact, it is a space dominated by some very prominent players, so starting up a business in the industry isn’t easy.

“Getting clients isn’t hard when you work for a big organisation,” says Vawda, who started out in a large corporate. “Brand counts for an awful lot.”

For Vawda, however, the prospect of sticking to the corporate track and making her way up the ladder didn’t appeal. She wanted to start her own thing.

Of course, this was a tremendous gamble. After 11 years in the industry, Vawda could have landed a safe and lucrative position within a large company. Instead, she founded 27four, rented office space in Rosebank and pushed all her savings into the business. It was a huge gamble.

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But the gamble paid off. In less than a decade, 27four has grown to a company of more than R80 million in annual turnover and assets under discretionary management of a whopping R23 billion. How did it happen? Vawda credits the following:

1. Having a great reputation

“If you want to build a great business, you first need to work for great businesses,” says Vawda. “I worked hard for eleven years, gaining knowledge and building a reputation before striking out on my own.”

Moreover, working in an industry allows you to network and identify business opportunities before you even start your own company.

“You need to leverage your connections when building your business,” says Vawda. “I left the companies I worked for on good terms, which meant that I could go back and do business with them.”

In fact, Legae Capital, where Vawda worked prior to starting 27four, was eventually acquired by her company.

“You also need to put yourself out there,” says Vawda. “You need to position yourself as a thought leader. 27four is involved in some industry or community event virtually every week of the year. We spend a lot of time and money marketing the company, all with the aim of creating a brand that people recognise, respect and trust.”

27four has even entered into a relationship with Soweto TV, through which it sponsors a weekly investment show called Money Moves with 27four Investment Managers, which aims to improve financial literacy.

“We’re not afraid to take a stance and be seen as activist investors,” says Vawda. “Even our name is derived from the date of South Africa’s first free election. We want to play an active part in improving South Africa, and that goes a long way in defining who we are. It helps position our brand.”

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2. Finding (and owning) a niche

“Even though there were already a lot of players in the industry, I believed there was a gap in the market for a smaller player. Financial services were concentrated in the hands of a few corporates who couldn’t really offer a personalised boutique service,” says Vawda.

“Moreover, I realised that there was very little transformation taking place within the financial services industry, so I thought there was an opportunity for a company that could help facilitate transformation.”

So, one of the first offerings from 27four was a black asset-manager incubator programme that provided large asset owners with a risk-managed solution that could assist in transformation while keeping risks low. It is an area in which 27four is still a leader today.

The company has grown significantly since inception, but its product offering has remained fairly simple.

“Growth doesn’t necessarily equal diversification. You just confuse the client by making your offerings too complex. It is tempting to chase every opportunity that comes your way, but you need to fight it. Our aim is to stay focused on what we’re good at. However, we also want to grow market share and improve our penetration,” says Vawda.

“If you want to scale your business, you need to be able to provide new clients with the same level of service you offered when you were just starting out, so our focus is on developing the processes and systems needed to roll our offerings out to more people. Reporting to five clients is not the same as reporting to 5 000.”

27four-Investment-Managers

3. Hiring (and rewarding) the right people

It goes without saying that, as a business grows, you need to take on employees who will be able to provide the same level of service to clients that you do personally. This isn’t always easy.

“We make it attractive to work here. We offer a market-related salary, as well as other rewards in the forms of equity and bonuses. Our employees also get to travel internationally quite a bit. It’s important that the team travel to global conferences. We aren’t making widgets. Our business is intellectual in nature, so being on top of the latest developments is important. We always need to expand our knowledge.”

27four aims to attract two kinds of people. “It’s crucial that you attract the right people. Not everyone wants to work in a smaller company. Some prefer the corporate path.

“We look for people who have had the same sort of path that I did — who started out in a corporate organisation where they gained knowledge and experience — but who are now looking for a smaller environment where it’s easier to take part in making strategic decisions. Then we also look for new people who are smart and educated, but who can join us at a young age and do some learning here.”

Importantly, Vawda actively aims to make the organisation as diverse as possible. “If you want to be relevant and truly understand your client, you need a team that reflects the diversity of the larger society. This is especially important in a melting pot such as South Africa. If you don’t transform and embrace the nature of the environment in which you operate, you will become irrelevant.”

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4. Offering great service

It goes without saying that it’s important to offer good service, but it is worth pausing to consider what that actually means. Most companies claim to provide great service, but how many actually back up this claim with proper action?

“So much of so many businesses actually comes down to servicing clients,” says Vawda.

“It is the foundation of a lot of business. For me, this comes down to paying attention to the details. Many companies fail because they don’t get the basics right. You need to finish what you start and always be organised.

“Every day at 2pm, an email goes out to the whole company that simply asks: Have you connected all the dots? It reminds everyone to follow through and provide a great service at all times. Turnaround times need to be swift. Since the company started, we haven’t lost a single client, and we’re incredibly proud of that. It means that we offer a service we can be proud of.”

Jul 6, 2016
GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.