The R300m pathway: building toward Category II in our own right

Growth in financial services is often presented as something aggressive. Asset gathering targets. Quarterly milestones. Production league tables. Acquisition headlines. The vocabulary of the industry has, for a long time, rewarded scale over substance.

Some businesses choose a different path. Slower. More deliberate. Built around infrastructure rather than activity. That is the path we have intentionally chosen.

We currently operate our discretionary investment work under a Category II Discretionary Fund Manager partnership. It is a properly governed, institutionally credible arrangement. It works well for our clients today, and it will continue to work well while we build.

In parallel, we are building toward holding our own Category II licence in our own right. That is the longer arc behind a great deal of what we are doing operationally — and it is the reason the firm is structured the way it is.

It is worth being honest about why this matters at all. A Category II licence is not a marketing label. It is a regulatory permission to make ongoing investment decisions within a governed mandate, on behalf of clients, without going back for instruction on every transaction. It carries real fiduciary weight. It is also a different operational standard — investment committees, formal mandates, documented decision frameworks, independent oversight, evidenced suitability, and a level of compliance infrastructure that most independent advisory businesses are not built to carry on their own.

That last point is the heart of it. The reason so few independent firms operate as Category II DFMs in their own right is not ambition. It is infrastructure. The standard required to do this properly — and to do it sustainably — is significant. It is also expensive, slow to build, and impossible to fake.

We have set ourselves a clear internal benchmark for when it becomes appropriate to apply for the licence in our own name. Approximately R300 million of advised, discretionary-style assets is the threshold we have chosen — not because the regulator requires that figure, but because it is the point at which we believe the economics, the governance load and the client-base maturity all justify carrying the licence and its responsibilities directly.

Below that level, the honest answer is that operating under an established Category II partner is the better outcome for clients. They receive the same investment governance, the same mandates, the same oversight — but supported by an institutional balance sheet and an operational depth that a smaller firm cannot credibly replicate alone. Pretending otherwise would be a vanity decision dressed up as a client decision.

Above that level, the calculation changes. The infrastructure can be carried. The compliance burden becomes proportionate. The investment committee, the mandate documentation, the independent oversight, the operational separation between advice and discretionary management — all of it becomes something the firm can sustain over decades, not just stand up for an audit.

We are deliberately taking the longer route to get there. Building advised assets carefully. Onboarding clients we genuinely want to serve for the long term, rather than chasing volume. Strengthening governance, compliance, operations, technology and reporting in stages — so that when the licence does sit in our own name, nothing about the client experience has to be reverse-engineered to support it.

There is a quieter reason for the patience as well. The independent advisory landscape in South Africa is being reshaped by COFI, by consolidation, and by a steady shift away from product distribution toward genuine stewardship. The firms most likely to remain credibly independent in ten years' time are the ones building proper investment governance now, not the ones improvising it later. We would rather arrive at that standard early and unhurriedly than be forced to assemble it under pressure.

None of this changes anything for clients today. The current discretionary partnership is institutional, governed, and working as it should. The investment committee process, the mandate construction, the oversight and the reporting all sit within an established Category II structure. Clients are not waiting for us to build something — they are already benefiting from something that is built.

What is changing, quietly and over years, is the foundation underneath the firm. The intention is not to grow for the sake of growing. It is to make sure that when the firm eventually operates as a Category II DFM in its own right, it does so because the infrastructure, the assets, the clients and the governance all genuinely support it — and because doing so makes the client experience better, not because it looks impressive.

We think this is a more honest version of how a serious independent firm is built. Not in headlines. Not in acquisition announcements. In quiet, deliberate infrastructure decisions that compound over a long enough period to actually matter.

That is the path we are on. We are happy to take our time on it.