Alexander Forbes aids ARC affiliate
Financial services firm partners Colourfield to launch investment framework for individualised pension portfolios
African Rainbow Capital Investments’ (ARC’s) strategic investment in Alexander Forbes’ African operations has delivered its first child, with the retirement administrator and an ARC investee company announcing a joint venture on Wednesday.
Colourfield Liability Solutions, in which ARC owns 13.7%, and Alexander Forbes plan to launch Alexander Forbes Clarity, a retirement investment framework that structures unique portfolios for personal goals, in the first quarter of 2018.
It is the first partnership venture since Alexander Forbes concluded a R754m empowerment deal with ARC for the purchase of 10% of its African operations late in 2016.
At the time Alexander Forbes said it would leverage ARC’s expertise in SA to drive growth in the rest of Africa and provide solutions to its institutional clients, among other attractions.
Shareholders approved the deal in January 2017.
"We continue to explore mutually beneficial relationships with ARC and affiliated companies," Alexander Forbes CEO Andrew Darfoor said.
These include a previously announced plan to shake up the healthcare funding sector, where Alexander Forbes has about 200,000 customers.
ARC previously said it had identified inefficiencies in the domestic healthcare market, founding ARC Health with former AfroCentric Investment Corporation CEO Dewald Dempers to tackle the issue.
Darfoor said Alexander Forbes Clarity was a focused, outcomes-based target fund, which was individualised in its approach – a key differentiator for the South African market.
It was developed after an Alexander Forbes survey showed only 5% of workers would be able to retire comfortably based on their current contributions to retirement funds.
Many people aim to receive around 75% of their final salary when they retire, but are not saving the proportion of their salary required to reach this goal, the survey found.
"The concept of the [Alexander Forbes Clarity] solution has been launched in international markets [such as] the US and Canada by other companies, for example Sun Life, my previous company," Darfoor said.
"The launch of Alexander Forbes Clarity will be a first for the African market and we believe will redefine the retirement landscape."
Colourfield operations chief Shaun Levitan said the investment manager had traditionally tailored portfolios to meet the obligations of defined-benefit pension funds, where pension payouts are determined by an actuarial formula that takes into consideration a number of factors such as age, years of service and salary.
"The same technology and rigour should be applied to individuals within defined contribution plans," he said.
"Alexander Forbes Clarity is an investment framework that explicitly targets the individual income goals of such members by taking into account their unique circumstances and individualising their investment strategy."