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Tough environment forces Liberty retrenchment drive

The company says it’s part of the new organisational design.

Financial services group Liberty has embarked upon a retrenchment process that it says is vital to the delivery of the turnaround strategy developed to fix the company.

In response to questions from Moneyweb, a Liberty spokesperson said the retrenchment process is part of creating “a new organisational design that enables us to dedicate significant resources and capacity to our South African business where we have a strong and competitive franchise.

“In addition, it [the redesign] will deliver new ways of working which will put our clients at the heart of all we do, reduce complexity, enhance governance and will also establish a reconnected client, financial advisor, and employee value chain. Our intent regarding this process is to realign our focus and improve the way we work.”

Liberty cannot confirm how many people will be retrenched. The company says this is because consultation is underway and the new organisational design process has not been completed. 

However, according to staff, who are understandably on edge, over 800 people could be impacted by the redesign.

Liberty counters that this does not imply that all will be retrenched. It could be a case of a person’s job function changing slightly or a case of applying for a new role entirely. Actual retrenchments are likely to be far less, but the firm cannot confirm the number at this point.  

While Liberty couches the retrenchments as a consequence of ‘organisational redesign’, it seems simpler to say that the company is not making sufficient progress on meeting the targets set by CEO David Munro earlier this year.

Munro took over as CEO in 2017 following the resignation of his predecessor Thabo Dloti who fell out with the board over the future direction of the group. Dloti’s vision had been to build a pan-African financial services group. While Africa remains an important part of the strategy, Munro wants to fix the core Liberty business first.

Four targets – to be achieved over the next two years – were announced in March as part of this overhaul of group strategy:

  • Value of new business margin: 1-1.5% range
  • Growth in embedded value in excess of 12%
  • Return on equity: 15-18% range
  • Maintain robust capital within target range: 2.5-3x

Considerable work was done prior to this point, and more has been done since then. This included product repricing and rationalisation of portfolios; tight expense management; recognising the customer as a human being rather than a number on a portfolio; improving the performance of Stanlib SA and converting Liberty Two Degrees into a corporate real estate investment trust (Reit).

In August, when the company released its results for the six months to end-June, group FD Yuresh Maharaj noted that the muted economic environment was impacting the company’s growth prospects. “Vat, fuel and utility price increases mean that consumers are under increasing pressure,” he said.

Munro added that while the results reflected a stabilisation of the business “no-one should be fooled that 18% growth [for normalised operating earnings] off a very low base is a laudable thing.”

He added that Liberty is still some distance from where it needs to be, especially given weak new business volumes. Indexed new business sales were 3% down on the prior period impacted by the competitive environment together with the current tough economic conditions, he said. 

Actions taken in 2017 and the first half of 2018 to improve margins and new business volumes, including product changes and repricing, were gaining traction, he said. “The real evidence of our actions will come through in 2019 and 2020.”

However, Liberty is now at the point where the rubber hits the road.

“The only way to meet the targets [that have been] set is to increase sales,” says Adrian Cloete, a portfolio manager at PSG. “If you are not increasing sales and you are not getting your market share back you have to look at your overhead structure. In an economy such as this, it seems that is the likely solution.”

While Liberty will release more information in due course, according to staff, the process will be complete by December.

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There is also frequent chatter online how expensive your RAs are in fees (even compared to the other life insurers), so that will keep customers away Liberty.

And I tried to get life insurance last year, and Liberty had a good product otherwise, but my broker could not get anything even close to “computer support technician” out of your system, and if you can’t get my job description right or even just reasonably close, I cannot support you, what else won’t you get right?

@supersunbird I will concede that Liberty retirement annuities are outdated products and need revision. Liberty’s biggest problem with innovating their investment offering is that they are part of the same group of companies as StanLib. With reference to your occupation description, that simply is not true. There are comparable occupations on their quotation system which can be used to be able to give you a quote, that can then be changed at the acceptance of your policy to show the exact occupation that you want. There are loads of job titles out there for the same job especially now that a lot of companies are moving to politically correct job titles that does not impact the risk associated with it.

Wynand, rather be more explicit; Liberty’s demise started when it became a ‘branch’ of Standard Bank. The Ruck era decimated the company and it has not recovered since then. Stanlib is not a Libam that always returned superior returns. Transferring Bank staff to try and run an Asset Manager did not work!?
Since the Ruck era, all the ‘entrepreneurial spirit’ left to join Discovery. This was initially done intentionally by Ruck to ‘bring it in line’ with Standard Banks management style….pity such a leading edge company of the last century was systematically destroyed by a staid banking institution.

Typical SA way of doing business. Make more people unemployed, at least I keep my R20 mill bonus/incentive.
That is why there is NO BUSINESS IN SA.

your are absolutely spot on…..companies can’t indefinitely retrench workers just to survive.Workers are the backbone of a business.If you remove a worker you are also removing “spending money” out of the economy. Government must get their gat in rat now and help business SA.

Yes, top management gets to keep all their perks but they fire the people actually doing the work – Fire the top management – Its their poor strategy that lead to this!

This isn’t a South African problem…. Its a global problem …!!

I am getting worried about my RA’s at both Liberty and Momentum!

You can choose your own funds on their platforms, you dont have to use their in-house asset managers. Send in a query and ask for a list of what is available.
Momentum has quite a lot. Liberty, not so mich, but there should be some allan gray, prudential, investec, etc options available.

Or you can do what i did which was to make my liberty RA paid up and transfer the funds to another provider.

Many thanks, but I am on pension already!

This was utterly predictable. Their roadshows are cringeworthy with all the rah rah and sales schpiels. It’s all about “sales opportunities” and not what is best for the clients. Many independent advisors have turned their backs on Liberty. They are living in the old era of selling products to make profits and commission, rather than concentrating on offering the best service and solutions for clients. The likes of Discovery are gobbling up market share with their innovation (love them or hate them).
Anyone still taking out old “life” RA’s with companies like Liberty and Momentum really need to do more research. Contact the FPI and look for a certified financial planner in your area to set up a unit trust based RA rather. Be careful of penalties on life RA’s as the life companies hit you with big penalties if you halt premiums or transfer to another company. Get professional advice – it will serve you well for the future.

I decided to take the hit on penalties when i made my life RA’s paid up. It is a lot, but I am much happier running my own RA using a investment platform.

One of the things i would love to see change with retirement products is that providers arent allowed to pay brokers upfront commissions. That I believe is why so many people still end up with inferior and highly costed life RA’s.
There is no other logical explanation for it because they certainly offer neither benefits not better returns.

Daviddebeer, your first paragraph should be music to all and advocated to new entrants

They been running on the same antiquated model since inception, long overdue for change. The reason I pulled out all my funds 20 years ago.
Medical insurance was also a disaster at that stage, another prompt to exit. Returned a medical cheque with a note for the CEO to buy sweets for his grand kids…☺

Liberty is SCUM! My late family member had a policy in someone else’s name. That family member was poisoned by his wife. Liberty awarded the policy to the killer instead of the named person in the policy. That person went onto to killing 2 more people before fleeing the country. That is how liberty life operates. It doesn’t matter who you think the policy is meant for – Liberty will overrule anything as long as they get their cut. #Libertymustfall

The moral of the story? Taking out life-insurance can be detrimental to your health!

…..and avoid thinking Liberty, Sanlam etc have your well being first

They don’t…

to Sensei moral of the story? Taking out life-insurance can be detrimental to your health!

after 40 years of hard work, a man retired with R5,000,000,00 which he gained through courage, diligence, skill, devotion to duty, thrift, efficiency, shrewd investment….and the death of an uncle who left him R4,999,999,50.

Doesn’t sound right. Liberty like every insurer is governed by all sorts of laws including FAIS. they cannot simple overrule a beneficiary nomination unless there was a legal reason to do so. And if you are unhappy with the decision an insurer makes, you can complain to the Ombud who will investigate on your behalf.

Couldn’t agree more.

Liberty are going “to put the client at the heart of everything they do”. What was Liberty doing beforehand? Putting the client last???
Now, Liberty will retrench 800 staff.
How on earth is the client going to get a better sevice with 800 less people.
THIS JUST DOES NOT MAKE ANY SENSE.
Bonuses should be paid on “putting the client at the heart of every they do” not for retrenching people.
LIBERTY YOU ARE DISGRACEFUL.

@Beerandgolf… maybe you could read the article again? It doesn’t say Liberty will retrench 800 staff.

I did, “over 800 people could be impacted by the redesign”.
What’s your interpretation – They are all going to be promoted?

Who is the ‘client’ at Liberty? Is it the 1. Shareholder or 2. Broker or 3. Policyholder?
According to those that worked there, they STILL have not decided who is more important!?? Maybe this is why they are struggling today?
P.S. dont tell me it is obvious, viz. it’s the Policyholder, because their actions don’t support this? Just look at the fees they charge their Policyholders compared to their Competition, and one can deduce that the Policyholder’s interests are LAST!!??

All the local fund managers are in the commodity business. They select the same basic instruments, repackage it, and market it to the same client base. They are competing with one-another in a commodity business. For a commodity producer to be competitive, his overheads must be the lowest. You can only obfuscate and hide the real cost of your product for so long. People will find a way to determine the real price of your product. Then they will select the producer who offers the lowest price. This will put pressure on margins and force overheads down. They try to hide the fact that they are commodity producers by using fancy packaging material, in an effort to distinguish themselves from the competition. The client also pays for the packaging and marketing.

The share price of Coronation halved since 2015. It looks like the price-graph of a platinum producer.

‘All the local fund managers’? I’m not sure about that. We have some world class fund managers in this country. You can describe just about any industry using the ‘commodity’ concept. If you believe asset managers and their products are commodities then you have the choice of selecting the lowest cost provider (probably a passive manager). If so what’s the problem?

I’ve been associated with Liberty for 29 years. I’m proud to have represented them for 29 years, still going strong. Yes, like any large company they need to re-look at structures and expenses. Yes, it’s painful. (I know a number of people directly affected by this). And yes, like in any large company, Liberty has ‘passengers’ that go to office to do a day’s ‘work’. I can think of one or 2 staff members at Liberty that should have been fired long ago- you get those in any large organisation.- you see that a lot in SOE’s and in Government departments. I have had many heavy arguments with Liberty staff about service delivery. So in my opinion, however painful- this was necessary. Liberty is doing this in a sensitive manner, and with great respect towards every individual. I remain proud to be associated with the Greatest Insurance Company on the African continent- Liberty Life.

….I suppose you don’t get many invites to parties

No surprise whatsoever that the chickens are coming home to roost at Liberty.

It’s been a long time coming, but what goes around, comes around. Karma, you know …

My personal experience has been that Liberty is one of the most unethical and dishonest companies I’ve ever had the misfortune to deal with. And that comment fully extends to their subsidiaries!

When a company is rotten ethically, the ONLY place to look, is at the top c-level suite. And the board.

This greedy echelon organize multi-million Rand bonuses at their clients’ ultimate expense, and have made Liberty products exorbitantly expensive compared to modern competition (like Sygnia).

I removed all my funds from Liberty, advised my family to do same, and will NEVER again consider them, or any financial-advisor company (of which there are too many) that similarly employs slime-ball salespeople looking for naive victims to gouge.

I feel the same about Sanlam – Don’t trust these big companies – They are unaccountable to their customers and don’t have your best interests at heart.

I buy the shares, not the policies. Policy holders are at the end of the queue. Exec. management salaries and bonuses come first, then shareholders returns, then staff wages, then brokers’ commissions and lastly, policy holders interests (if there’s anything left). Like the banks scam their customers (Capitec excluded), insurers scam their policy holders.

I am going to “gooi n klip in die bos” which will probably attract some neagtive comments, but I cannot seem to recall similar outrage when Impala announced its intention to fire 13,000 employees?

Then the comments were mostly along the lines of government being to blame, that it is the way a market economy works, machines will take over low skilled jobs and it is up to the miners to upskill themselves. If memory serves there were even a Milton Friedman quote in there – all very laissez faire/neo-liberal economy.

Now Liberty wants to fire presumably more skilled employees and the MW comment section could be mistaken for the Young Communist League’s blog. All about how fatcat managers are exploiting the poor. I am just waiting for somebody to lead us into singing the Internationale!

Not expressing an opinion either way, just observing how when people closer to our income/class/maybe even race are affected our views seem to change from when it is black manual labourers that are affected.

Maintained my policies with Liberty for 20 years plus. Come retirement I had to descent into hell to wrest my money from Liberty and transfer to 10X – my best investment decision ever. I am now in full control of my investment. Avoid the old-style behemoth life companies. Avoid financial advisors. Check out the disrupters like 10X.

As for retrenchments, it is inevitable. Big corporations in their quest to be politically correct and BEEE compliant are staffed to the hilt with the cream of South Africa’s broken education system.

The best of Liberty’s sales force have already jumped ship. The only ones remaining are the lazies who prefer to lie around on golf courses waiting for their fat monthly renewal commission to pay out.

The YTD loss for L2D is -16.17%.

I bet you the leadership of the listed entity and those managing the specific assets still get a bonus.

Liberty conned its investors in its founding memorandum.

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