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The culture catalyst for advice-adviser and adviser-provider relationships

22 May 2024 Gareth Stokes

Culture is an important underpin for both adviser-client and adviser-provider relationships, so it is surprising the topic does not feature more prominently on annual financial services provider (FSP) roadshow programmes. It was thus refreshing to find a culture-focused presentation front and centre on the first day of the PSG Financial Services 2024 Digital Conference.

Refreshing perspectives

The programme, held under the Reimagine South Africa theme, offered the audience a refreshing perspective on a range of topics. Mahesh Cooper, COO at asset manager Allan Gray, introduced his talk on organisational culture with reference to South Africa’s ailing state-owned electricity producer, Eskom SOC Limited. More specifically, he referenced a speech delivered by then Eskom CEO, Andre de Ruyter to the Johannesburg Mining Indaba, early 2020. PS, De Ruyter had delivered the keynote address to the PSG Conference just moments earlier, covered by your writer in ‘Electricity and healthcare: lessons entering and exiting SA’s dual crises’

In the 2020 speech, De Ruyter reportedly said: “Our organisational culture will sink the business if things did not change, irrespective of the investment made to develop plans and strategies; none of these will amount to anything if we do not have the right business culture”. He made some important observations including that organisational culture cannot be transformed overnight, and that there was no ‘silver bullet’ to address culture-related shortcomings. These comments will resonate with those among you who have worked in a toxic work environment, though toxic workplaces and poor corporate culture are not always synonymous. 

“Defining organisational culture is not an easy thing, partly because it differs from company to company, but we know it exists and we know it impacts organisations and their people both positively and negatively,” Cooper said. This writer enjoyed his analogy of culture as a type of gravity, or an invisible force acting between people who are drawn together for a common purpose. “Culture and gravity are both relative and dependent on your point of view, and they are both subconsciously influential,” he explained. In short: just as gravity shapes our physical reality; culture influences our decision making and perceptions, at work and at home. 

Multiculturalism, blessing or curse?

The ensuing conversation on the bottom up versus top down cultural ‘programming’ that each of us is subjected to was intriguing; but it was difficult to immediately link it back to business, generally, and to the advice profession in particular. It made more sense to fast forward to what many see as the country’s blessing and curse: its multiculturalism. “I often wonder whether business is harnessing the full potential of multiculturalism, and whether firms think enough about how corporate culture interfaces within our multicultural society,” Cooper said. 

For some fast-track insights on the topic, he suggested readers try a book titled The Culture Map by Erin Meyer. An important observation was to assess cultural differences with an open mind. Cooper used a German versus American example to illustrate differences in how cultures interpret negative feedback. In short, Germans are used to receiving direct negative feedback whereas American managers ‘pad’ negative feedback with positives. If an American manager gives a German employee three positives and one negative during a review, one leaves the session thinking “I have read him the riot act” and the other, “yeah, I have three positives, only one negative”. 

 “We see the value of personality differences to such an extent that we test for it; should we not be thinking about culture in the same way?” Cooper asked. It seems intuitive enough; but if you test for culture your risk stereotyping individuals. He then shared a truth that can be tough to onboard: “The easiest way to ignore culture is to declare a state of meritocracy [or a company where] each individual succeeds based on his or her own merits, ability and talents; you are on your own”. It turns out meritocracy needs alignment, and alignment needs an understanding of the differences between people that goes beyond personality to include culture, upbringing and values

An emerging inter-generational challenge

After dwelling on how difficult it can be to maintain and restore corporate culture through external systemic shocks like pandemic, the presentation turned to the emerging inter-generational challenge that firms face. Any local advice practice or FSP will be familiar with the challenge in hiring someone from Generation Z because an under-25-year old, probably fresh from Varsity, has an entirely different world view. “Each generation is influenced by external factors like where they grew up and their initial working environment; but for me, Gen Z has generational differences that transcend culture,” Cooper said. 

Some quick Googling plus mental arithmetic suggests there could be up to five different generations present in a large corporation at any time, including the silent generation; baby boomers; generation X; millennials and the aforementioned Gen Z. Cooper revealed that older generations are loyal to their managers and team whereas Gen Z are loyal to the experience: “Their work motivations are very different, they are more likely to subscribe to the quiet quitting culture”. And it gets worse, with traits like anxiety and fragility as a consequence of the systemic environment in which the generation was raised. 

Finally, and it took a long time to get here, the discussion on culture turned into tangible benefit for financial advisers and planners. It turns out that each generation has a totally different approach to finance and investing too. American brokerage and investment firm, Charles Schwab, conducted an inter-generational poll in which it asked for a response to the statement: “I am extremely confident when choosing investments”. Boomers and Gen X are not confident picking investments; but 58% of millennials are, and those in later generations even more so. 

Gen Z favour Yang over Buffett

“You need to think about this as you look to attract younger clients; Gen Z are five times more likely to use social media for financial advice,” Cooper said. He shared the example of a 24 year old financial influencer, Humphrey Yang, who boasts more than four million followers on TikTok, and whose posts have been liked or shared over 50 million times. Chillingly, Gen Z trusts this ‘finfluencer’ more than they trust Warren Buffett. “Culture lives, and it is everyone’s responsibility,” concluded Cooper. “Leaders have to live the values of an organisation and be aware that their behaviour drives the culture there. Like gravity, you ignore culture at your peril”. 

Writer’s thoughts:

Generalisations can be dangerous; but they are useful in segmenting your client base and fine-tuning your acquisition and servicing strategies. Is your advice practice succeeding in attracting Gen Z clients, or are you leaving them for the so-called ‘finfluencers’? Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.

Comments

Added by Roxann, 22 May 2024
Change is good but at the same token it needs to be kept in line with the legislature to remain above board in respect of compliance. Gradually incorporating change and also the approach of pitch and presentation, plays a vital role. This is important, has the older generation runs out the newer generation takes over, they need to be cognizant of the fact we still have the mature group of clients along with the new generation. The advice practice can definitely succeed even with millennials, just by adapting to the culture, similar social and economic structure of the group and incorporating this in the current advice tick boxes. The world is ever changing, and systems need to be modified to keep afloat.
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