Strategic Investors: Profiles of investors with strategies to consider.
Magda Wierzycka, CEO of South African asset manager Sygnia Group, commands a rapt audience in her home market, across sub-Saharan Africa and in markets worldwide. After a childhood spent in an Austrian camp for refugees from Poland’s communist government, Wierzycka built one of South Africa’s best known names in the continent’s financial sector by leveraging her actuarial skills with the latest technology.
A frequent critic of corruption and mismanagement in South Africa’s ruling African National Congress (ANC), she came under fire herself in August 2018 when, after 13 years, she shut down Sygnia’s hedge funds, denouncing the model as one that became a management-fee racket. She spoke with Karma Network Contributing Editor Michael Moran about that decision, the importance of technology as an investment tool, and prospects for her adopted country.
Michael Moran: Do robo-advisors pose a threat to the jobs of human financial advisors?
Magda Wierzycka: We are the first company in South Africa to launch an official robo-advisor and our experience has been that it’s a supplement to the provision of financial advice, rather than a replacement.
So, in this space of ‘soft industrial revolution’ and technology taking over from humans, I think that there are certain professions where the human touch will always be required. And as much as robo-advisors were initially devised as a replacement for financial advisors, the reality, and what we have discovered from a behavioral perspective, is that investors, for as much as they will play with financial models, when it actually comes to making their financial decisions, want a human being to look them in the eye and say, “This is the right choice. This is the right investment decision.”
So I think that robo-advisors will never replace the real financial advisors. Just as in medicine, where the moment you feel sick, you Google your medical center. But if you really are in pain, you want your doctor to tell you everything will be okay, that you are in safe hands. Just the very fact that they are stroking your hand and saying, “It’s okay. I’ll be here to take care of you,” is incredibly valuable and I don’t think it will be replaced by a machine.
Similarly with robo-advisors, when it comes to financial affairs and significant wealth management, I think people will always want someone to sit there alongside them, and guide them in making the final decision, or at least tell them it’s okay.
So what we’ve done with our robo-advisor is we’ve actually made it available to financial advisors in South Africa to embed it into their own website, so their clients can use it as a tool. And then, when it comes to making the financial decision, they can phone a real-life human being and have a conversation based on having played around with the robo-advisor as a model.