Martin Riekert, Executive Head of Retail Investments at Momentum Investments
Remaining relevant in a world that is experiencing constant disruption has become a key challenge for any financial service provider. According to Martin Riekert, Executive Head of Retail Investments, this truth is particularly felt in the investment sector.
Riekert highlights the term ‘creative disruption’, which he says was coined by Austrian Economist Joseph Schumpeter in 1942. This was defined as a ‘process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, and incessantly creating a new one’.
Riekert believes this is a perfectly poised metaphor for what the investment industry is undergoing in the current climate. “When we treat economics as an organic and dynamic process that constantly mutates, we can see that it is in stark contrast to traditional economic models that always strive to seek equilibrium,” he says.
Riekert says contemporary investors must continuously change and evolve in order to find continuous equilibrium lest they be the ‘old ones’ who are destroyed. “As the word ‘destroy’ implies, there will be winners and losers as part of this process. Anyone that commits themselves to the old ways of working will ultimately be left behind, and those entrepreneurs that are continuously evolving will be the winner.”
Disruption is absolutely snowballing according to Riekert. He says cycles of innovation have been exponentially increasing over time. In order for investors to remain relevant in this space, it is now an imperative to form part of the disruption.
“As creative disruption implies, it’s not just the disruption you need to face from outside your operation, but disruption should actually come from within.”
In the investment industry, Riekert points to a few disruptions that need be recognised. The first he calls ‘post-pandemic’, but he pointed out that it should be called ‘post Putin’ because the war in the Ukraine summarised the chaos in the world just as well as Covid-19 ever could.
Other disruptions he mentioned include a digital disruption, investment innovation, regulatory burden as well as evolving behaviours and demands of investors.
This is why Riekert says he is not surprised to see more and more financial advisers and independent investors are partnering with discretionary fund managers to help them navigate this incredibly complex world full of disruptions.
In South Africa, Riekert describes our regulatory changes as a unique challenge that continues to burden. “In the next few years, the incredible increase in change and scrutiny from the regulatory space is not going to slow down. We anticipate more changes coming which will continue to increase the cost and complexity of investment as a service. We have no choice but to find ways to better deal with this.”
Diving deeper into behaviour as a disrupter, Riekert says there is a big misalignment between what investors want and financial advisers deliver. How does the industry respond and remain relevant among all these disruptions?
At Momentum, Riekert says the business is staying ahead of these disruptions by reinventing and growing by directly addressing the abovementioned disruptions and enhancing the relationship Momentum has with its financial advisers to help them overcome and assume control of disruptions.
“To stay relevant and be ready for the disruptions around us, financial advisers should find an investment solution partner that can empower them to navigate this complex landscape, adopt digital capabilities to operate at the pace of innovation, and embrace behavioural economics as driver of success,” concludes Riekert.
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