Relationship management is a cornerstone of one of the industry’s best kept secrets, Citadel Wealth Management that is emerging from its mantle of seclusion with its new brand identity, says CEO Andrew Möller, as he chats to Leadership from his office, tucked away in the heart of Claremont in Cape Town.
“What we have done is launch a new brand identity and the reason why we did that, very simply was that we are 20 years old and for 20 years Citadel, I believe wore the mantle of being the best kept secret in the financial services industry.”
Möller took up his position as CEO in April 2013. He is the father of a young family and is passionate about work and his family and it is clear that his relationship-centred values are also the core of Citadel’s principles.
These values are important to the company and its re-branding exercise, says Möller. “What we decided to do, is to step out and grow our business more aggressively with brand awareness, which is not something that we have really focused on.
In fact on the contrary we’ve been very subliminal, Citadel was never the brand that you would see (advertised) at the cricket or the rugby and it is not necessarily going to be like that at all.”
According to Möller this direct approach is finding purchase. He explains that Citadel canvassed its client base extensively before making the move to rebrand and thus far the exercise has started to pay dividends for them.
Growing the business holistically, or organically, as Möller describes it, is what Citadel has been doing over the past 20 years, due to the nature and profile of its client base.
“Client loyalty and client-centred values is one of Citadel’s significant differentiators.
We are a business that believes that relationship is key to any business, but particularly, that our core value proposition is building relationships.”
Due to the organic growth of the company and the nature and profile of its client base Citadel has had a very strong growth from referrals. In fact 40% of its annual inflows come from its existing client base.
“Our client retention is incredibly important to us, we have an over 97% client retention rate and we have had that for the last decade. Why this is important is that inflows come from our existing client base, so client retention is very much growth play for us and it is a great source for us to work with.”
As Möller talks, it becomes clear why Citadel, which was started in 1993 has such a loyal client base – a number of the referrals that he speaks of are passed on through families generationally.
“Again we are talking about relationships and family-centred values. We have a family office which is also very important for that type of role where you, provided the client feels it is appropriate, often consult the family — you bring in all the beneficiaries, particularly in estate planning where clients will introduce their next generation into the decision making process, or even just for an awareness of what the client is doing.”
Citadel also take a holistic approach to financial planning by offering a whole solution to clients by giving continuity of advice in the plans it provides. “I think one of Citadel’s main differentiators is our ability to be able to integrate in-house advice that is required for a full financial plan or road map.
“We carry the expertise in-house, traditionally one may find the advice that one receives on a financial plan, or portfolio is very much siloed and you find yourself engaging various professionals to get best advice.”
Möller explains that clients very rarely manage to integrate all of the advice across all aspects of financial planning with one view, which he believes is achievable at Citadel due to the in-house skills set that it provides that range from fiduciaries, to risk, asset and tax management.
Citadel’s holistic approach and philosophy towards client-centred values has seen the company become the first in the wealth management industry to register as a donor advised fund in order to extend their client offering.
“We have a very strong social responsibility programme within the business and evidence of our embracing our social responsibility initiative is the philanthropy offering we started approximately 15 months ago. I am very proud to say Citadel is the first in the industry in South Africa to register a donor advised fund,” Möller says.
Möller explains that a donor advised fund is a structure that facilitates and enables giving — in the broader context, for those people or investors that would not normally do so.
“So what the fund does, it collates an aggregate, so instead of the traditional philanthropy givers being your very high net worth individuals, what this opportunity does, if a client wants to invest, it enables them to give meaningfully and that amount is pooled together with an accredited beneficiary.”
He further explains that the company has the ability to do proper due diligences on various ultimate beneficiaries from a sustainability point of view, so there is a great deal of governance, as well as feedback for clients, due to this process. “Our philanthropy offering is really just evidence to our approach to overall upliftment.”
Durban-born, Möller (47) joined Citadel in 1996 and was initially responsible for the estate and succession planning aspects of Citadel’s and thereafter Deloitte Private Clients’ client base. He joined Citadel’s wealth management division in Cape Town in 2001 and took over the running and responsibility as head of wealth management in 2010. In 2012 Möller was appointed as a director before taking on the mantle of CEO last year. He has over 17 years’ experience in the field of personal financial planning and is a member of the Institute of Certified Financial Planners.
Möller is keenly aware of the changes in the wealth management industry, especially after the global economic crisis in 2008.
He says the challenges have been good for the industry. “What the economic recession did to the industry has been beneficial as it tightened up awareness and brought with it the Consumer Protection Act and legislation requiring fair treatment of customers. There was certainly a time post 2008, and I am generalising now, that trust was broken between the industry and the client base. Since then there has been a concerted effort to rebuild that trust through all angles.”
The challenges for the industry, explains Möller is to make sure standards are maintained right from solutions to advisory level. He believes the onus is on industry leaders to embrace the task of the regulator with appropriate dialogue — to be transparent and overall to rebuild trust between the client bases, potential client bases and investors and between the industries, which have been broken.
In spite of the challenges caused by the recession, the company has had a very good run over the past 18 months and there are positive signs of global recovery as seen in Europe now. “From an industry point of view I think that as a whole it has reacted positively and has embraced what it needed to — there is always work to be done, but I certainly think the level of dialogue has opened up a lot more, which is important to the industry and to the regulator.”
Trends have also changed and Möller says what is close to his heart in the industry as a whole, is that a level of sophistication, not generally seen before has been introduced.
“The level of sophistication that is being introduced and quite correctly so into the client base, has certainly got the attention of all the industry players. The work of the regulator is working. By this I mean that the media, the regulator and other role-players are doing their jobs and they are introducing a level of sophistication to investors that wasn’t necessarily there before.
“Firstly, investors are now much more acutely aware of value added to their portfolios. They are much more appraised of their rights and for me this is proof that the regulator and media are doing their jobs.”
The second trend says Möller is that the industry has changed from a product driven to a solution driven service. “I think it is a very important point — going from the old traditional way of doing business where you would get out and flog a product — now there is a whole engagement with clients before you can actually give them any advice. Understand what their needs are, get the suitability — advice is not just about being appropriate anymore it’s about a suitable product on a bespoke basis.”
The third trend is the role of the regulator in the industry. “This trend is on the increase and the concomitant consequences of this trend are obviously the opportunity across pricing pressures, clients are very much alive and aware of fees that are an issue in our industry and it is not so much the fee, it is the value exchange.”
It is important in South Africa for government to take responsibility towards ongoing education in financial awareness. Möller says that because the wealth management space is becoming increasingly complex government has a very important role to play, via the regulator on educating, on protection and removing barriers to entry for smaller investors, by facilitating entry into financial systems.
“The regulator specifically has a very important role to play as financial education is vital, right from the spectrum of your stokvels (which I believe is a R42 billion industry) through to the highly wealthy.”
Möller has a youthful outlook on life and is constantly learning. Since taking up his appointment as CEO he says he has learnt two things. “You can be with a business for 17 years and you can still have a lot to learn about that business. But the real thing is that leadership is parental, in that whilst it comes with the ability to direct action, it also comes with the accompanying obligation to throw oneself under a bus to protect that child.”
Möller’s advice to people planning a career in wealth management is, “don’t underestimate the power of planning your career, be prepared to work hard, be authentic and have a healthy dose of emotional honesty. If you are people orientated, can form relationships with clients and people in an industry like wealth management, you will be successful.”