Discovery Invest and the disruptive evolution of shared value

How a model for unlocking and sharing value in life insurance has created South Africa’s fastest-growing investment provider.

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Discovery’s headquarters in Sandton, Johannesburg, South Africa, were designed to encourage motion and connection.

Our teams at Discovery Invest are celebrating: We have just ticked over the R100-billion mark in assets under management.

This important milestone is evidence of the success of an investment offering that adds boosts to the value of clients’ investments as a reward for adopting healthy lifestyle and financial behaviours.

I am incredibly proud of the work done by the disruptive pioneers at Discovery, which has brought us, and our clients, to this point.

So how did we get here?

Interestingly, it might be said that the answer to this question lies in a solution developed nearly two decades ago – in an entirely different market.

When I took up the position of Co-Founder of Discovery Life in 2001, we were presented with a challenge: How do we inspire people to be healthier?

By solving this problem, we have been able to join our clients on an incredible journey that has established Discovery Life as the world’s most innovative life insurer.

When I took up the position of CEO of Discovery Invest in 2015, we were presented with the very same challenge: How do we inspire people to be healthier?

And, by solving this problem, we have been able to join our clients on an incredible journey that has established Discovery Invest as South Africa’s fastest-growing investment provider.

Curious, isn’t it?

Of course, I am talking about two different health-related goals. In the space of life insurance, our core purpose is to help people achieve their best physical health. In the space of long-term investing, our core purpose is to help people achieve their best financial health.

Yet when the goals are so similar, perhaps unsurprisingly, so too is the solution.

The answer: Shared value.

A versatile and effective problem-solving model

At the core of everything we do at Discovery lies the shared-value model.

The model works by unlocking the future economic value that is created when people adopt the right behaviours to realise their ideal long-term goals. It achieves this by translating that future value into behavioural incentives that are felt as both immediate and tangible.

When the purpose of a business is aligned to the goals of people, this creates a perfect win-win situation.

In life insurance, the goals are ideal health and a longer life. When achieved, this creates economic value in the form of lower-than-expected insurance claims. This value is translated into incentives, such as reduced life insurance premiums, that reward healthy lifestyle behaviours.

In investing, the goals are improved financial health and freedom in retirement. When achieved, this creates economic value due to larger and more stable funds. This value is translated into incentives; such as boosts to clients’ investments to reward healthy financial behaviours.

Yet the hallmark of shared value is not simply in creating a win-win situation for business and clients, but also a win for the broader society, in which they both flourish.

Kenny Rabson - Discovery Invest CEO
Kenny Rabson, CEO of Discovery Invest

By aligning the core business purpose with the needs of clients, which are reflected in grand social challenges, it is possible to create a win-win-win situation.

There are four physical health-related behaviours that lead to the diseases that cause the most preventable deaths worldwide. Early and preventable deaths in society is unquestionably a major social challenge.

If you can inspire people to eat better, exercise more, reduce their alcohol consumption and reduce their smoking, you can solve the problem at the macro-level by influencing behaviour at the micro-level.

As it turns out, there are also four financial health-related behaviours that lead to the long-term investment outcomes that result in most South Africans having inadequate savings for retirement. A vast number of retired people unable to support themselves financially is unquestionably a major social challenge.

A quirk of this problem of poor financial health is that it is exacerbated when you solve for the problem of poor physical health. As people live longer lives, which is the current trend, they will spend a greater portion of their lives in retirement, meaning they need more savings from their years spent working, to fund the time when they aren’t.

So, if you can inspire people to live healthier lives as well as to invest more, for longer, preserve their savings when switching jobs and withdrawing responsibly in retirement, you can solve the problems at a macro-level by influencing behaviour at the micro-level.

Discovery Invest has achieved its traction by deploying shared value to address these behaviours. Powerful boosts to the effective value of investors’ funds reward the right investing behaviours and have proven remarkably effective at helping clients stay on track to meet their long-term investment goals.

We then boost, by up to 50%, the effective income that retirees receive from their savings, provided they are both physically healthy and they withdraw from those savings responsibly. This helps ensure that our clients can live their longer, happier, healthier lives.