The transformation of the financial industry is a polarising topic, with varying views held on the matter.

My interest in the topic started just over 20 years ago when Old Mutual Investment Group decided to create in-house BEE measurements for the stockbrokers that we trade with.

I created the chart below in 2003 as my first attempt at designing a measuring tool. Thankfully, things have improved since then as technology has advanced over the years.

We have always been intentional about getting stockbroking firms to transform in a meaningful way. This chart highlights how far back our transformation journey began and demonstrates us “leading by example” compared with other investment managers. According to JSE data, local BEE brokers currently have a market share of around 5%, while the percentage of the market value of trades we allocate to BEE brokers is 57% (YTD - at date of publication).

Empowering brokers

In our industry, the main requirement for an “empowerment“ broker is to be 51% black-owned and most local brokers can meet that requirement. However, there is always room for improvement and, as a trading desk, we have started partnering with these local brokers to grow the pool of black and female staff in the market.

For our part, we insist on our coverage (or contact person) being black, irrespective of seniority. We are happy to walk the journey with young professionals starting out at stockbrokers’ trading desks. We see it as an opportunity to provide career-building exposure to black talent who may not otherwise have had the opportunity. Stockbrokers usually assign their most senior traders to large accounts and the younger traders cover the small accounts – who never get exposure to bigger clients and large trades. This is often the reason why the same, more experienced traders keep getting hired, as brokerage firms believe their clients will only deal with seasoned brokers.

In terms of the international houses, we feel that despite them only having satellite offices in South Africa, they can still contribute to the transformation of the local financial services industry by training and growing the pool of empowered black and female professionals. Over the past three years, we have achieved our most significant milestone in this area. Among the five international houses (JP Morgan, Citigroup, UBS, Merrill Lynch and Morgan Stanley), we have transitioned to now having our main coverage comprised of 40% black women and 40% black men with ongoing efforts to transform further.

As a desk, we have been intentional in our engagements with stockbrokers and have been the most vocal when their actions contradict our transformation agenda.

We always champion the appointment of empowered professionals from historically marginalised groups, with a special emphasis on women – as the stockbroking industry has always been defined as a male-dominated industry (not helped much by movies such as Wolf of Wall Street). We are making small gains with these endeavours, but it remains firmly on our radar.

Over the past five years, we have more than doubled the percentage of our commission paid to blackowned stockbrokers and it now accounts for around 40% of all commission paid by Old Mutual Investment Group. While our competitors do not publicly disclose this figure, we believe that we have the highest percentage in the market.

In addition, our allocation in rand terms has remained roughly the same over this five-year period. This has meant that we are paying less to other brokers in the market.

We remain unwavering when it comes to our transformation agenda. And with things like “gender lens” investing now gaining traction, we are going to put more emphasis on female representation within stockbroking.

We have shared our side of the transformation journey within stockbroking, and in the following interviews you will get some insights from a few of those brokers we engage with.

Explore the full Transformation Report here.