With a career in financial services dating back to the late ’60s, Smorenburg is no stranger to the gusts of change sweeping through the industry. And with South Africa’s Retail Distribution Review just around the corner, he is working hard to keep independent financial advice alive.
“With change comes opportunity,” says Smorenburg.
“Change brings out the best in people. The RDR in South Africa is an opportunity for advisers to remodel themselves to their clients.”
While 71-year-old Smorenburg admits that some financial advisers – particularly those in their later years – do not embrace change easily, he is eager to support them, holding the firm belief that next year’s move towards fee-based remuneration structures is not just positive for clients, but also for advisers.
“The RDR in South Africa is an opportunity for advisers to remodel themselves"
Having set up his own life assurance brokerage and a fund administration company, Smorenburg has established a deep understanding of financial services.
Reluctant to waste his expertise by spending his years in retirement playing golf, Smorenburg says he wants to give something back to an industry that he has been a part of for so long.
Preparation lacking
“The majority of IFAs are not prepared for the implementation of RDR, and unless they get their act together they are going to have difficulty surviving,” he says.
“Many independent financial advisers still rely on upfront life assurance policy commissions to put bread on the table. If RDR reduces this commission to, say, 50% of the current level, these independents will need other sources of income to restructure their practice financing.”
Smorenburg says, similar to the way UK IFAs have been forced to become tied to big corporate firms, this means many advisers will join large institutions that have deeper pockets and can afford to pay them.
Uncertain
Comparing SAIFAA with what Smorenburg describes as “pure” independent IFA associations – bodies such as the Association of Professional Financial Advisers in the UK and the Association of Independently Owned Financial Professionals in Australia – he says it is important for South African IFAs to learn from their RDR journey.
Although it is uncertain how closely South Africa’s advice business will follow in the footsteps of the UK and Australia, Smorenburg sees value in sharing information between the associations, and regularly holds workshops and conferences to evaluate financial services and products.
“Looking at the UK, if a client has less than £100,000, they will have difficulty finding IFAs to give them advice,” he says.
