The recent launch of an “advice partnership” between an employee benefits entity and Alexforbes is more than a strategic initiative – it’s a statement to FSPs that Alexforbes is eager to build strong relationships with independent advisers.
In July, Citywire reported on the advice partnership between Ascor Corporate Solutions and Alexforbes, distinct from the typical joint ventures or franchise models often seen in the financial industry.
Unlike the usual franchise setups, where institutions push for brand consistency and control, this partnership allows Ascor to maintain its independence. This means Ascor is not a tied agency and can collaborate with other service providers. Compliance and regulatory responsibilities remain solely with Ascor, which appoints its own key individuals.
For its part, Alexforbes offers access to its institutional advice frameworks, insights, analytics, and intellectual property, empowering Ascor to deliver top-tier advice to its clients. In return, Alexforbes benefits from Ascor’s growth through a revenue-sharing model.
The launch of this advice partnership model is just one element of Alexforbes’s broader strategy to enhance its services to IFAs.
Since its establishment 89 years ago, Alexforbes has focused primarily on refining its direct consulting business across various sectors. Although this focus remains essential to its business, Alexforbes has now expanded its strategy to serve a broader segment by working closely with select IFAs.
Leading this initiative is Duane Naicker (pictured), the head of Retirement Solutions at Alexforbes.
Naicker explains that transitioning Alexforbes to a more collaborative approach involved significant reflection and introspection for the organisation. Ultimately, the decision was made that for more people to achieve better outcomes, Alexforbes needed to support IFAs in providing their best advice.
He says to navigate this shift, critical questions needed to be asked:
- What steps did Alexforbes need to take?
- What were the pain points for FSPs?
- What aspects of the industry or other products did they find frustrating? How could their lives be made easier?
- And, most importantly, how could he articulate the value proposition that’s meaningful for FSPs in such a way that they were happy to take that to their clients?
“So, ultimately, the independent adviser becomes the client. That’s the big pivot from seeing a board of trustees or a management committee as the client,” says Naicker.
He shares working with a wide range of clients, from the largest funds to the smallest advisers, “rewired his brain to an extent”, giving him a different outlook on the employee benefits landscape.
Working with a diverse range of personalities, including talented entrepreneurs and former corporate executives who had launched their own businesses, made him realise just how dynamic the space is, “which led me to go down this route within Alexforbes”.
“We think there’s an opportunity for Alexforbes to work closer with the independent market, and, hopefully, we can attract more of those FSPs to use our products and services and recommend such to their clients.”
Accessing a broad range of markets
It also makes a lot of business sense. If you compare the big product houses in South Africa – Old Mutual, Sanlam, and Momentum – Alexforbes has the second-largest set of umbrella funds.
It has two sets of funds: the Alexander Forbes Retirement Funds (AFRF) and AF Access Umbrella Funds (AF Access). These funds are geared for different distribution channels. AFRF, the larger of the two, is supported by Alexforbes’s direct consulting base. AF Access, launched in 2010, primarily serves the intermediated market.
Currently, the latter holds about R18 billion in assets.
“The question that we could ask ourselves is, should that have not been R100bn by now, or R50bn. And that’s where we need to get to,” Naicker adds.
He notes that Alexforbes needs broader distribution to reach markets not accessible through its direct channels.
At present, their retirement business is positioned with advice frameworks aimed at larger schemes – Alexforbes consults to 65% to 75% of the JSE’s top 100-listed companies.
“While this is significant, we found that our models might not necessarily work well for the SMME sector.”
Naicker believes that partnering with intermediaries who are better positioned to serve these markets aligns with the business’s overall strategy. He notes that independent FSPs do not solely work with SMMEs.
“They access a broad range of markets that we may not reach, such as the organised-labour market or SMMEs where we might not have significant traction. We want to be exposed to these markets via intermediaries. This, in turn, helps grow our members under administration and our assets under management.”
Building trust and value
Naicker says Alexforbes aims to position their offering and engagement strategies with intermediaries in a way that demonstrates clear value and aligns with their needs.
“It talks to the fact that we share the same DNA – best advice. It talks to the brand of the organisation. It talks to the way we interact and engage with those independent intermediaries for them to want to do business with us, and for Alexforbes to help those partners to succeed,” says Naicker.
Outlining Alexforbes’s strategy for enhancing its market position and building relationships with FSPs, he says the organisation’s goal is to engage directly with FSPs, understand their pain points, and address them effectively.
He adds Alexforbes is also exploring sponsorship opportunities to increase its visibility in the market.
Ultimately, he asserts, it comes down to trust.
“It comes down to us building meaningful relationships and partnerships with intermediaries and closing any trust deficits there may be,” he says.
Bolstering intermediary strategy with strategic acquisitions
Naicker acknowledges a common concern among FSPs when partnering with large consultants: the fear of client cannibalisation. To address this, Alexforbes has established two distinct distribution divisions – the direct retirement consulting force and the intermediary unit – as part of its strategy to better align with the intermediary market.
Last year, Alexforbes acquired a 60% stake in TSA, a business that has been around for decades.
“This acquisition is one of the most significant steps we’ve taken to demonstrate our commitment to an intermediated strategy.”
Naicker highlights the benefits of this move, particularly for FSPs.
“TSA supports a binder arrangement that gives intermediaries access to multiple insurers – Sanlam, Old Mutual, Hollard, and Capital Alliance – through a single point of contact. This streamlines the process, making it much more efficient for intermediaries.”
He adds, “Our 60% stake in TSA, with the potential to increase over the next five years, is a clear stride towards communicating to the market that we want to work closely with intermediaries.”
Naicker reassures that TSA remains independently managed.
Another two significant moves “in the right direction” include acquiring the former OUTvest digital investment platform and entering the R500bn discretionary fund management (DFM) market with the launch of Investment Solutions by Alexforbes.
As of July, the digital investment platform is fully integrated into Alexforbes. The concept behind the platform is to enable the distribution of a range of high-quality, simple, and low-cost wealth products through direct and intermediated channels to a range of customer segments. The platform integrates automated advice, human advice, administration, and asset management.
Read: Alexforbes: OUTvest lift-and-shift date set for 1 July
The DFM unit provides IFAs with access to previously inaccessible asset classes, such as hedge funds, private markets, and infrastructure investments.
Read: Alexforbes launches discretionary fund management unit
Time will tell
Naicker says the intermediary segment, which includes IFAs, employee benefits consultants, and independent asset consultants, is an intensely competitive market.
“We work across that market, engaging with all three types of professionals,” he says, noting that Alexforbes has historically played a more significant role in the independent asset consultant space.
“We have more than R525bn under management and administration, a portion of which has been supported by independent asset consultants, either through the use of our platform or our investment products.”
When it comes to independent employee benefits consultants, Naicker says Alexforbes believes this is where the future growth lies, particularly umbrella funds.
He admits, “Right now, our competitors enjoy the largest share of the independent market because they’ve supported intermediated products for several years. We have a lot of work to show the market that this is really what we want to do. We want to partner with them, and we have really good solutions that they can use and recommend to their clients, but it takes time.”
