Alexforbes enters R500 billion fund management industry 

Alexforbes is entering the R500 billion Discretionary Fund Management (DFM) market with the launch of Investment Solutions by Alexforbes.

The company said this would create a new unit within Alexforbes, separate from the existing investments multi-manager and internal adviser business. 

“We’ve chosen to reimagine the Investment Solutions brand for our DFM as it’s the best descriptor of what it offers – investment solutions backed up by the scale, experience and expertise of Alexforbes,” explained Alexforbes CEO Dawie de Villiers.

The new platform will give independent financial advisors access to the same investment advice and capabilities used by South African investment consultants, corporations and retirement funds through Alexforbes’ existing platforms. 

This includes research processes, offshore solutions facilitated through the company’s partnership with Mercer, new asset classes through our private markets programme, and specialised multi-managed investment portfolios. 

Some of the new asset classes include hedge funds, private markets, and infrastructure investments. 

Alexforbes said it is moving into this market following the strong growth of DFMs in South Africa, with them now managing over R500 billion in investments. 

The move into this industry follows Alexforbes’ purchase of OUTvest digital investments platform from OUTsurance. This forms part of its plan to double its retail business over the next five years.

OUTvest is a digital investments platform launched in 2017 that connects people to financial advice and investments to help them achieve their financial goals.

“We believe OUTvest fits neatly into our strategy by helping customers set goals, select investments and track their progress over time,” said Alexforbes retail executive Viresh Maharaj. 

Alexforbes previously said it plans to double its retail business over the next five years by capitalising on a new, slimmed-down structure and consulting expertise. 

“The growth area for us is to double our retail business in three to five years,” De Villiers told Bloomberg. 

The asset manager and fund administrator, backed by South African billionaire Patrice Motsepe, wants to take advantage of legislative changes allowing pension fund administrators to communicate and advise members directly. 

Previously, they remained in the back office with access limited to human resource departments, not members.

“That is the massive opportunity,” De Villiers said, adding that the changes could bolster growth in its retail base. 

“We have solutions that our clients have invested in throughout their savings life, and now they can continue in those solutions with us post-retirement.”

The pivot to growth follows the implementation of a turnaround strategy established after De Villiers joined the administrator from Sanlam. 

Alexforbes has since sold its short-term insurance business to Momentum Metropolitan and disposed of its life insurance unit to refocus on consulting and advisory.

The company used those proceeds to acquire Sanlam’s retirement fund administration business for R154 million in 2021, expected to boost client numbers by 40%. 

According to de Villiers, the Sanlam deal will add as many as 400,000 new members to the firm.

“The strategy around acquisitions is to build scale on administration — the more members you have under administration, the more overheads it covers and the more scale and synergy benefits you get,” De Villiers said.