Alexander Forbes’ risky new IFA move

By: Independent financial services journalist Katya Stead

Alexander Forbes announced this week in the enigmatically titled ‘Help wanted’ presentation that they will be opening up their doors to every single independent financial advisor across the country. The company also plans to acquire IFAs and partner with others in affiliate and associate programs, moving towards an intermediated model, from their traditional B2B model to a new B2B2C (business-to-business-to-consumer) model.

“We are looking for qualified IFA’s that can both help support us and partner with us to support both our corporates and individual clients.This is a unique opportunity for the IFA community to expand beyond their current scope of your business lines. We have the products and solutions, we’ve got the IP and the knowledge to help the IFA community in SA solve their long term sustainability and succession plans,” said Anton Kok, Executive: IFA at Alexander Forbes.

Independent financial advisors that take them up on the offer by becoming either affiliate or an acquisition will have access to Alexander Forbes corporate rolodex,be offered parity of pricing on all Alexander Forbes products and have access to their Financial Well being programme. Those that become ‘associates’ rather than ‘affiliates’ will get access to Alexander Forbes investment, employee benefits, short term and life products as well as in-fund solutions like Living Annuities.

Simply put, Alexander Forbes is proposing a trade-off to IFA’s: your distribution network for our financial and manpower support with compliance, expert knowledge and, of course, access to Alexander Forbes products.

The aim is “building a lifetime financial wellbeing solution for clients” and “to build a distinctly pan-African financial services group” said Chief Executive Andrew Darfoor.

But what do the independent advisors think? And the rest of the industry, for that matter?

“The reaction has been very positive so far – although it’s very early days yet,” said Darfoor in an exclusive interview some fifteen minutes after the announcement. It was telling that, according to Darfoor, they had already been approached by IFA’s in the audience in between his getting off the stage and sitting in an interview with me less than half an hour later.

“I think it’s a very positive and a very confident move,” said UK financial services consultant Phil Young, one of the presenters speaking at the IFA Symposium. “If you look at the UK and the Australian experience, there’s a lot of companies trying to protect their margins just by buying up firms and assets. And the independent market is going ‘this is too expensive’ and opting out. Alexander Forbes is going in the other direction, and that suggests that they are very confident that they will stand up to scrutiny. When you put stuff up on a pedestal, like Alexander Forbes is, you’re putting it up to be shot at. I’ll be really interested to see how successful it is.”

So, what about competitors copying the model? “Good luck!” says Darfoor. “There’s always going to be competition,however the real questions is this: ‘do you have a strong proposition?’ And we’ve shown that to be the case – 99.2 percent of our clients have been with us since 2013.”

This new model will go live on 1 April 2018. “But as you can imagine, the work starts now,” said Kok.

Independent advisors who are interested can visit the Alexander Forbes website and apply by clicking on the ‘IFA’ button and filling in the requisite form.

Want to know more? Visit ‘Unpacking the significance: How Alexander Forbes’ big news affects us all’