Nearly 24 years ago, Kenny Rabson joined the Discovery Group. As a young actuary, he knew that joining Discovery would open many doors of opportunities to do things differently. Discovery was young and disruptive with its shared-value model, something that resonated with him.
Looking back, he got more than he bargained for as he played an instrumental role in the evolution of Discovery’s shared-value model. In 2000, he began his Discovery career as a founding member of Discovery Life, which included its Group Risk Benefits business, in charge of research and product development. He was promoted from research and product development and became Deputy CEO of Discovery Life and Group Risk Benefits, positions he held until 2016, when he exited the Discovery Life business.
When Discovery decided to pursue its next ambition of building a tied-agency force and an investment business, Rabson became a founding member of Discovery Invest in 2007. In 2015, he took over the role of CEO of Discovery Invest and Discovery Employee Benefits, with the notion of launching Discovery Umbrella Funds, which materialized in 2018.
He was also the driver behind the launch of Cogence, the discretionary fund manager (DFM) that the group launched in August 2022 as a partnership between Discovery and BlackRock. From January 2024, Rabson has moved out of Group Risk and Umbrella Funds to focus on Invest and Cogence.
When Rabson co-founded Discovery Invest, he and his team’s primary goal was to build Discovery’s shared-value model to promote the savings culture in South Africa and address the chronic lack of retirement provision in the country.
We spent years trying to understand the behavioural biases that prevent people from saving for retirement. We realised that the retirement gap was far bigger and more uncertain than most people realised, and that while the industry’s focus was on fees, these behaviours had a much bigger impact than anything else, – says Rabson
The Discovery Invest team has identified several behavioural biases that lead to inadequate savings in retirement.
Many of these are controllable, and the team have designed products and incentives over the years to address those biases.
Discovery Invest’s antidote to this pandora box was financial incentives – called investment boosts – that would encourage people to start saving early, save more each year, and keep their money invested for longer. Discovery Invest introduced its shared-value investment offering in 2015.
A statistical analysis recently performed by Discovery Invest’s actuaries has shown that these boosts have a significant influence on clients’ investment decisions and are, often, the biggest predictor of whether a client will stay on track with their retirement savings or not.
“Since the launch of our shared value retirement offering in 2015, we have seen an increase in additional contributions to our clients’ retirement savings. We also see that clients who receive boosts have a much lower drawdown rates from their living annuities,”
– Rabson.
In line with this thinking, in 2020, Discovery Invest launched its offshore offering. The incentive this time was a currency enhancer – a world’s first. “The currency is certainly one of the biggest drivers when making decisions about going offshore,” says Rabson.
Discovery Invest also now has one of the most popular structured notes programs, and many tranches have paid investors 100% gross return on investment after five years.
“Our focus over the last 2 years has been the digitalisation of our operations and we have been launching software quarterly to enable advisors to transact online. This is a journey, but we hope to break the back of it in 2024.” -Rabson
Through all these initiatives, Discovery Invest has grown its assets under management and administration to just under R150bn and has become one of SA’s fastest-growing active unit trust investment managers. Discovery Invest also offers a wide range of funds managed by leading local and international fund managers, and Rabson believes its runway is only getting longer.
Rabson reflects, “Our focus over the last 2 years has been the digitalisation of our operations and we have been launching software quarterly to enable advisors to transact online. This is a journey, but we hope to break the back of it in 2024.”
