As compliance pressures mount, Fairbairn Consult Financial Planning is positioning itself as a safe succession solution for independent advisers ready to step back.
By Eleanor Becker – Citywire South Africa
Succession planning has become a more prominent topic in South Africa’s financial advice sector, but execution still lags.
Failing to have a plan not only exposes clients to risk but also violates the Financial Advisory and Intermediary Services (FAIS) Act, which requires continuity planning.
This is the gap that Fairbairn Consult Financial Planning (FCFP) aims to fill. The firm offers several succession models to advisers looking to exit or give up the burdens of entrepreneurship, explained managing director Barry Matthew in an interview with Citywire South Africa.
Fairbairn Consult (FSP 9328) founder Guy Holwill launched FCFP as a separate division in 2022, appointing Barry Matthew to lead it with a distinct planning philosophy. Fairbairn Consult, meanwhile, offers a home to individual advisers wanting to join an advisory practice.
‘What I’m trying to do with FCFP is take over the clients of advisers who want to exit,’ said Matthew. ‘I want to offer a proper succession plan for those who are ready to move on.’
FCFP has been steadily growing its team ahead of COFI’s implementation and its predicted ripple effects on the financial planning industry. A significant number of IFAs are expected to either sell their practices or join larger firms better equipped to handle the regulatory burden that COFI will introduce, believes Matthew.
The firm is already working with advisers exiting the industry for various reasons – illness, retirement, emigration, or simply having had enough of the growing compliance demands.
‘We expect more advisers to say, “It’s just too much regulation, I’m out”,’ Matthew said. ‘We want to be a safe landing space for their clients.’
Flexible succession models
FCFP offers a range of plans, with flexible options for exit, payment and partnership.
One option is the ‘drop-and-go’ model, for when an adviser needs to exit quickly due to unforeseen circumstances, such as ill health. While this sometimes necessary, it’s not ideal for clients or FCFP.
‘That’s our least preferred model, ‘Matthew explained. ‘Clients are pulled out of long-standing relationships and must adjust quickly.’
FCFP advocates the phased exit plan model, ideally over a two-year period. This allows for a smooth transition and better client retention.
Here, an adviser would be encouraged to join Fairbairn Consult as an IFA, maintaining as much continuity as possible for clients. Most product providers are comfortable with the change in FSP and in many cases, adviser codes can remain the same, said Matthew. Some paperwork is required where clients are concerned, however, but this offers an opportunity to engage with them on the adviser’s long-term exit plans.
‘This model works well for retaining clients after the adviser leaves,’ said Matthew.
FCFP also offers a ‘sell-and-stay’ model for advisers who want to continue providing financial advice without the burden of being business owners.
In terms of remuneration for their client books, the firm offers several options, including shared income over time (a shared-rik model); lump-sum buyouts (discounted to account for client attrition risk); and hybrid model with portion paid upfront and the balance as ongoing shared income.
Advisers sought
‘Since we’re [also] buying books, we need to service these clients,’ said Matthew. ‘We’re looking for professionals who want careers in financial planning without necessarily being entrepreneurs.’
To that end, FCFP employs advisers on a salary basis to minimise conflicts of interest and ensure objective advice. The firm offers ongoing mentorship and support, and prioritises professionalism, favouring those with the Certified Financial Planner (CFP) designation, or who are willing to pursue it.
Matthew, a CFP himself, is passionate about elevating standards in the industry.
‘We’re part of the group of advisers in South Africa that’s working to professionalise financial advice,’ he said.
Structure and support
Fairbairn Consult is a part of the Old Mutual group but operates independently. Matthew said that it assists with compliance, systems, provider contracts and regulatory requirements for its advisers (and those of FCFP), allowing advisers to focus on serving their clients.
He emphasised that advisers who join the firm retain control over their client relationships, fee structures and product provider choices. Fairbairn Consult has contracts with about 120 different product providers and is open to adding more, based on adviser needs.
Fairbairn Consult Financial Planning is a division of Fairbairn Consult.
Fairbairn Consult is a Licensed Financial Service Provider (FSP no. 9328) and a member of the Old Mutual Group.
