Financial advice companies in South Africa are set to be very active in the wealth management merger & acquisitions space, according to research by International Adviser.
The vast majority of respondents (70%) said they have already entered or will enter into an M&A deal.
A similar proportion applies to firms’ acquisition strategy, with 71% looking to buy other companies, and the remaining 29% not looking at acquisitions at all.
Interestingly, no advisory firm in our research claimed to be looking to be acquired by other players in the industry.
But one of the most widespread worries for advisers in the country is the value of the rand throughout 2021. Most of them (67%) believe it will dip, with 11% thinking it will have a significant decrease.
Just 11% claimed there will be no change, and a similar percentage believes it will actually increase.
Emigration and offshore assets
One of the main areas of concern for advised clients in South Africa is financial emigration.
Half of respondents (50%) told IA they have spoken to clients about the issue to some extent, while 20% have had in-depth conversations on this.
A fifth (20%) said they haven’t really broached the subject with their customers, while the remaining 10% said their clients are not interested in financial emigration.
Similarly, South African clients have a large part of their wealth either invested or held offshore.
Our research discovered that around 60% have up to half of their wealth abroad, while the remaining 40% have more than half held offshore.
The breakdown was:
- 10% of clients have between 1-24% of their wealth invested abroad;
- 50% have between 25 and 49% offshore;
- 20% have 50-74% abroad;
- 10% have 75 to 99% offshore; and,
- 10% of customers have all of their wealth held abroad.
