10X CEO Steven Nathan in a recent ad.
  • Investment group 10X claimed its local fund manager competitors "might" lie in an ad.
  • Its CEO takes a lie detector test in the ad, which also features oblique references to Investec, Coronation, and Prudential.
  • The advertising regulator has found the ad to be disparaging, and ordered that it be scrapped in its current form.
  • For more stories, go to BusinessInsider.co.za

Investment group 10X has been ordered to withdraw an ad that "disparages" its competitors.

The ad, which was used in social-media campaigns, starts with this statement:

“Most retirement companies wouldn’t want you to watch this, for good reason. Because why should the truth get in the way of a good story? Whether it’s a man planting trees besides a river [an apparent reference to a Prudential ad campaign], a kid waiting years for the perfect date [a reference to an Investec campaign] or a blind doctor earning the trust of his community [a Coronation campaign], it’s all a distraction, isn’t it?”

In the ad, 10X CEO Steven Nathan takes a lie detector test, and says: “Would the CEO in charge of your retirement fund take a test like this?”

10X has been taking on its competitors in a similar way for many years. Its main selling point is that its products simply track the market and that it doesn’t use expensive fund managers to choose investments. Its fees are below 1% - lower than those at traditional asset managers.

The banner of the ad reads: “Numbers don’t lie. But your fund manager might.”

Prudential Investment Managers filed a complaint against 10X with the Advertising Regulatory Board (ARB), objecting that the ad is “disparaging” and implies that all other retirement fund CEOs lie.

In its defence, 10X denied the ad suggests all fund managers lie (it used the word “might”), but said some fund managers around the world have been shown to behave less than ethically. Also, it said, it was trying to show that while other financial service providers have to use “narrative devices and metaphors”, 10X can demonstrate its advantages with “objective maths”.

10X believes it is simply highlighting a weakness in the industry, it said.

In its ruling, the ARB said 10X is free to advertise the absence of fund managers, but went too far in this case.

“It is also true that fund managers have been known to lie. So have doctors, lawyers, car salespeople and municipal clerks. It cannot be said that fund managers lying is an inherent weakness in the investment industry. Many consumers would also have had good experiences with honest fund managers who were able to guide them in the right direction.”

The ARB rejected the argument that the word “might” makes a material difference.

“In the context of the banner, the implication is that fund managers inevitably lie,” it said, and found the statement disparaging.

Given that 10X obliquely referred to Investec, Coronation, and Prudential campaigns, the ad also doesn’t imply that “some nameless competitor might at some point have tried to obfuscate the truth, but that very specific advertisers have done so”, said the ARB. 

10X was ordered to take down the ad, and also any other material carrying the claims in the same context.

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