Only about 3%-5% of Alexander Forbes's clients had retail solutions with the group, which offered savings, investment and insurance products, CEO Andrew Darfoor said. By partnering with 50 qualifying IFA practices, to which it would give access to its clients, intellectual property and investment platform, Alexander Forbes hoped to penetrate this customer base, he said.
Alexander Forbes, the country's largest administrator of stand-alone pension funds, has undergone a number of leadership and business strategy changes over the past year, including the appointment of Darfoor in August 2016.
It posted a 3% rise in operating profit for the year to March, a far cry from the 10%-12% annual growth targeted in its five-year business transformation strategy, Ambition 2022, which it unveiled in June. Retrenchments, weak economic growth and increased competition in the umbrella fund administration space have hurt it.
The group has also struggled to diversify beyond its businessto-business model, centred on providing companies with retirement fund solutions, and sell retail products to the individuals in these funds. "We tend to speak to our clients only when they retire or leave their jobs, but we want to encourage our 1-million members to make smarter financial decisions," Darfoor said. "If I had all the money in the world, I would build distribution."
A relative outsider in SA's financial services sector, Darfoor headed Canadian insurer Sun Life Financial's international arm before joining Forbes.
The IFA partnership meant that Alexander Forbes would handle all back-office functions, such as legal and compliance, for these practices, while giving them leads for their front office, Darfoor said.
These advisers would be given access to its investment products at institutional prices.
IFAs, who are battling with increased regulatory costs, will no doubt jump at the opportunity. Many have sought homes at large financial services firms. Last week, PSG Konsult CEO Francois Gouws said the company was attracting advisers with larger books of business due to rising regulatory costs. As with the Alexander Forbes proposition, PSG Konsult enables advisers to use its platform without having to forego their independence.
It would not be expected of the IFAs to sell Alexander Forbes's products, said Darfoor. "That is a risk we're prepared to take. Once they realise what we have, we are convinced they will bring clients over."
Criteria for IFAs wanting to partner with Alexander Forbes included the breadth of their proposition and client base, he said. Alexander Forbes had a number of lower-income clients that it hoped to reach.
It would also need to be comfortable with the quality of advice, and would place certain rules of engagement around how IFAs contacted clients, said IFA executive Anton Kok.
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