Beyond the numbers: Rethinking targets and transformation 

Measuring transformation in the asset management industry remains challenging, and not just because different industry reports yield different results. In various reports, discrepancies reflect varying survey sizes and methodologies, data sources, and ideas on how to measure transformation (ownership versus influence over decision-making, for example) – all of this compounded by the vagaries of self-reported data. There is, however, broad agreement that significant progress has been made, but the targets need to be revisited, and the process recalibrated.  

President Donald Trump’s opposition to policies promoting Diversity, Equity and Inclusion (DEI) in the US is seen as unlikely to affect South Africa’s transformation efforts. There is wide agreement in South Africa that transformation is required not just to redress past inequality, but as a driver of stability and economic sustainability. Few would dispute that the persistent skills gap and underrepresentation of black professionals pose risks to the long-term viability of the industry. Given asset management’s critical role in the economy, any failure to transform presents an even greater challenge. As Senzo Langa, Deputy Chief Investment Officer at Alexforbes, emphasises: “South Africa faces a unique and severe inequality challenge,” and this imbalance “can negatively affect economic growth”. 

How are we doing? 

There is clear consensus that the industry’s commitment to transformation is deeply rooted. Since 2007, 27four Investment Managers has provided the investment community with data and intelligence from regular BEE.conomics surveys conducted with black fund management firms. In October 2024, the company launched the 27four DEI Index, a benchmark to measure, assess and promote DEI across the sector, using data from 93 asset managers overseeing R8.42tn in assets.  

The company’s Chief Executive Officer, Fatima Vawda, sees “phenomenal progress” in transformation. She says: “We are very pleased with the level of transformation that has occurred, both at ownership and representation level, but we need to think about other issues.” Noting that the industry has evolved since the economic empowerment codes were put in place, Vawda says the Financial Sector Code, which many use as a benchmark, was “extremely outdated” and called for its replacement with something “more relevant and growth-driven”. She continues, “We need to move beyond these basic targets of ownership and representation, because those have been achieved. We need to talk about the more fundamental issues.” 

Kaizer Moyane, Chief Executive Officer of the Association for Savings and Investment South Africa (ASISA), agrees the targets need to be reset, but cautions that the “right data” is required. He says ASISA plans to commission a study into the skills gap for the sector, which would allow policymakers and regulators to talk about targets that are realistic. “If we can show the real skills profile of the sector, suddenly we’ll be able to have meaningful conversations about what would be realistic as targets.” 

Vawda suggests that a first phase of transformation, representation, has been achieved but deeper, more subtle issues need to be addressed. “A manager will tell the market they have transformed, that 80% of their investment team are black. But when you ask the question, ‘How much of your assets does that 80% manage?’ you find they are managing just 20% of the assets, and 20% of the staff are managing 80% of the assets. Those are the issues one needs to think about,” she says. 

Semoli Mokhanoi, Director: SADC, Mergence Investment Managers, an independent majority black-owned firm, sees progress but says there is still some resistance, often stemming from “unconscious bias, entrenched networks, and traditional hiring practices that favour familiarity and legacy relationships”.  He adds: “There is still bias among gatekeepers regarding the ability of black-owned managers to deliver strong returns, despite evidence to the contrary. They often default to larger, established managers, even when more diverse, black-owned managers demonstrate solid performance.” 

Gender gap 

Agreeing that there had been significant strides in achieving diversity in leadership and investment decision-making, Langa says the latest Alexforbes Transformation Survey highlights a persistent gender imbalance, especially in higher-level positions like CEOs and CIOs, as well as executive and board roles. 

Mergence’s Mokhanoi adds: “Only 18% of CEOs and 16% of CIOs are women. Women tend to occupy more entry-level positions, such as analysts, but face substantial barriers to progressing into senior decision-making roles, like portfolio managers, where 76% of firms report less than 30% women representation.” Vawda agrees the industry needs to think about the role of women, saying that SA’s population is 51% female and 60% of graduates across big universities are women, yet women are unable to progress in the industry. 

“You will find that in a large asset management company, the same number of male and female analysts join the firm, but only men progress to portfolio management roles. Women fall behind and eventually exit the industry,” she says. 

Leveraging strengths to ensure transformation in the asset management industry 

Langa says transformation isn’t just about diversity quotas but about leveraging a diverse workforce’s strengths. “Diverse teams offer varied perspectives, leading to better financial performance, innovation and credibility. The question is no longer why diversity, but how to improve it and benefit from its advantages.” 

Mokhanoi adds, “Clients increasingly seek firms aligned with their values, including diversity, enhancing retention and attracting business. Transformation is both a moral imperative and a competitive advantage.” 

Vawda notes that firms resisting transformation are being penalised. “Institutional investors are efficient in penalising poor representation. Those who haven’t adapted haven’t grown in 10 years, while progressive firms have increased assets under management.” 

She highlights economic growth as crucial. “We really need an economy that is growing to achieve transformation objectives,” she says. “We have seen a lot of independent, black-owned asset managers and women-owned asset managers emerge, and that’s fantastic. The large asset management firms have gone on aggressive hiring sprees to achieve the right kind of profile and demographics. But South Africa’s economy is not growing, so we are not seeing new money coming into the industry in terms of more companies contributing towards pensions, and more individuals saving.” 

ASISA’s Moyane agrees that progress in employment equity is also a factor of growth in the industry or the economy, and that more focus should be on creating an economy that is conducive to transformation. “The focus on growing the number of the designated groupings in companies should be overlaid with the lens of what’s happening in the economy.”  

He adds that transformation in the asset management industry means focusing all energies on dividing the cake. “The focus really should be on creating the opportunities for transformation to happen rather than focusing on whether there’s transformation in a space where the conditions are not conducive for that to happen.” Speaking for ASISA members, Moyane says there’s buy-in from business, as well as at the highest level in government, that the only way is to work together to grow the economy and create jobs. “That partnership, which is in its second phase now, is growing, and business is playing its part in terms of injecting resources, both financial and human capital.”