SA’s largest pension fund administrator Alexforbes is looking to use its newly refreshed brand to attract younger retail clients as part its strategy to bring in additional sources of revenue.
Alexforbes, previously known as Alexander Forbes, is beefing up its complement of financial consultants to support employed retail clients 30 to 50 years old to make the right choices in their financial planning.
“Normal businesses don’t talk to people at that age about retirement. You are left to your own devices. We feel that if we build a relationship with our clients from a young age, they will stay with us when they need to make life choices like growing the family, or retirement,” CEO Dawie de Villiers told Business Day in an interview.
“If we can prove to them that we are a trusted brand and will give them the right advice and find them the best solutions in the market, as we are independent advisers, then they will stay with us and be a loyal client until retirement,” he said.
The size of SA’s retirement funds industry is R4.7-trillion, according to Batseta Council of Retirement Funds of SA. This figure excludes government pension funds.
Alexforbes will not necessarily charge a fee for the advice rendered to retail clients as they are already within its existing client base, but will target their discretionary investments over time.
De Villiers’s comments came after the company reported a rise in headline earnings of almost one-fifth and declared a dividend for its 2022 financial year as its investment business and individual consulting business grew.
The company said on Monday in results for the year to end-March that headline earnings per share from continuing operations were up 19% to 37.2c and declared a final dividend of 20c per year, resulting in an annual dividend of 32c, up 45% year on year.
Alexforbes, which has been shaking up its portfolio since De Villiers became CEO in 2018 and is nearly 40%-owned by Patrice Motsepe’s African Rainbow Capital, has offloaded its insurance businesses to focus on retail advice, investments, retirement fund administration and employee benefits.
Employee benefits typically cover items outside of the salary, and include discretionary items, such as medical aid and retirement savings.
The Covid-19 pandemic, which led to the loss of 2-million jobs in SA, had a big effect on the company, which changed its name in March.
Operating income rose 7% year on year to R3.221bn as the investment business grew 11% thanks to higher average assets and market performance, as well as new business boosting the individual consulting business by 13%. Most income was generated from the investments side (44.21%), followed by retirement consulting (26.36%) and individual consulting (11.02%).
During the financial year, it completed the sale and transfer of its group risk and retail life businesses to Sanlam Life for R100m.
It announced in March that investment management firm Prudential Financial, together with LeapFrog Investments, would acquire a 14.8% stake in the company.
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