FINANCIAL SERVICES: Editorials: October 2019 / January 2020

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First-mover
advantage

Clever shifts at Forbes for appeal to clients and challenge to competitors.
Institutional core facilitates retail interventions.

Over time, long-established brands hold firm but their characteristics and connotations change with the operations that underlie them. So profound are the strategic changes at financial-services group Alexander Forbes that a clear demarcation can be drawn between the old and the new.

Since becoming chief executive last year, Dawie de Villiers has cut through swathes of legacy. The ground is being prepared for a tectonic shift in the approach to its institutional client base. In brief, it’s an extension of services to provide individual members of retirement funds with accessible advice.

What this essentially means is delving from the fund level, where Forbes has huge scale, to the member level. By encouraging members to preserve their savings and addressing their needs at relevant times, through personalised focus, it aims to engage them through evolving life stages to eventual retirement and beyond.

This might sound hoary, but it isn’t. Forbes has released capital to focus on person-to-person counselling. It will take several forms and won’t be cheap. The prize for Forbes, by effecting the intended gains for employers and employees, is in the retention and extension of business as the retirement-planning environment transforms.

“Being in the institutional business, we want to help the employees of institutional clients appreciate that they can best save through employer schemes,” says De Villiers. “We can only do this by having closer member-based interactions.”

The message to be driven home is that employees will be better off by remaining in employer schemes. There they’ll benefit from inclusion in corporate-fee arrangements as opposed to the typical retail prices were they to buy products independently.

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uccess will rely on Forbes’ designated counsellors getting to employees — before they change jobs, are promoted or retire — to hear from them about benefit options. Since this skills set isn’t usually the speciality of employers’ human-resource departments, their best recommendation is often to call in an advisor who conveniently happens to be available in any case from the administrator of the company’s fund.

Critical for savings outcomes are wholesale prices, which reduce costs, and improved preservation, where compound interest works in members’ favour. Members shouldn’t be tempted into cashing their pots when they switch jobs, or buying another policy when they can stay in the employer’s scheme, if they want superior outcomes.

“The more we can assist members,” De Villiers believes, “the better for them, the employer and the country.” Also of course for Forbes. “Our benefit will be in the employer and ultimately the employees wanting to remain with us because they’ll have recognised the value of our counselling.”

This strategy is top-of-mind. He’s determined, he says, that “we get it right”.

As he sees it being rolled out, the Forbes advantage is that its machine is institutionally geared for employee benefits whereas others are numerically structured for retail in terms of primary services. The suggestion is that it’s more effective and appropriate to work top-down from funds than bottom-up from members.

Complement this refocus with the “capital light” model to concentrate on consulting, administration and investments for the logical linkages. Add to them the leadership of De Villiers and Forbes has not only a fresh face but also a fresh drive.

De Villiers . . . down to the members