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Alexander Forbes embarks on consumer-centric strategy

Nov 28 2016 16:19
Lameez Omarjee
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Company Data

ALEXANDER FORBES GROUP HOLDINGS LIMITED [JSE:AFH]

Last traded 4
Change 0
% Change -1
Cumulative volume 13434
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg – Alexander Forbes plans to “capture opportunities” in the financial services retail sector as part of its new strategy to transform the group and “unlock” its potential, said group chief executive Andrew Darfoor.

Darfoor was speaking at the group’s interim financial results announcement for the six months ended September 30 2016. The group reported a 4% increase in profit to R416m for the period.

The financial services group, which specialises in employee benefit solutions for institutional clients, is shifting its historical focus to include both institutional and retail clients for the future.

“We will focus on customers across their life journey and help them secure their financial well-being for now and the future,” he said.

Darfoor added that the group would focus on growing its three business units; institution, retail and emerging markets.

Among the strategic priorities included is the organic growth of retail and emerging markets businesses, while leveraging on the strength of its institutional platform. Other priorities involve the inclusion of the modernising the group’s IT platform and increasing its digital capabilities.

READ: Alexander Forbes not living up to potential – CEO

Darfoor highlighted that the scale of its businesses, retail and institutional, were relatively the same. Retail reported operating profit of R224m, compared to the operating profit of R225m, for its institutional business.

Sugendhree Reddy, managing director of Retail Holdings South Africa, explained that the renewed focus on consumers came about because previously the group only dealt with one portion of the consumer’s life, retirement.

“We did not look at the customer holistically,” she said. The group will now be taking an advice-led approach. “Life happens in between retirement and we need to make sure we help you in those phases of life,” she added.

This means advice will extend beyond retirement and include other short-term and life insurance products. The group will also look into taking on partners who can provide financial solutions which aren’t offered by Alexander Forbes.

As for introducing technology when interacting with clients, Reddy said that consumers want robo-advice solutions. However consumers still want a personal advisor when it comes to closing a decision. “We must build digital solutions as part of our omni-channel strategy,” she said.

Luendran Pillay, managing director emerging markets added that digital is not only important, but critical, especially because emerging markets are leapfrogging traditional markets.

Its emerging markets business, formerly known as AfriNet, is continuing to “optimise its footprint” with growth in the South, East and West of Africa, he said. Operating income grew by 2% to R165m, however operating profit saw a decline of 19% to R26m. But despite the macroeconomic pressures on this business, Darfoor said that emerging markets were a priority for the group’s long-term strategy.

He added that the macro-economic factors may have impacted the business, but it has still displayed resilience.

“We have come off a four-year growth tear. We have been growing at more than 20% for four years. This year it’s tapering off a little bit,” he said.

This is mainly due to a client that the group lost in Botswana.

“We have taken corrective action in that business,” he said.  “If you exclude Botswana you will see that our business is growing its top-line at 11%, its cost-line at 9% and bottom-line at about 19%.”

He added that although there are pockets of issues, overall the emerging markets business is performing well.

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