Becoming a financial advisor in South Africa

When I resigned from Old Mutual on 1 April 2011 I applied for and obtained a "FAIS licence" (aka "FSP licence"), so that I could give investment advice; in fact I thought I was being smart by applying for the licence in the name of a CC I owned. Years later (March 2017) I have decided to move the licence into my personal name, as the CC has evolved into doing completely unrelated work (travel), and there's immediately unnecessary confusion with clients, and I need to explain the whole story.

Reapplying for my FAIS licence

Since the FSB has no procedure for moving a licence from a company into a personal name (even when it's a one-man show), I needed to reapply for my "FAIS licence". I also decided to document the process I followed to allow others to learn from my mistakes. The following describes the path I followed, and my understanding of the ins and outs of the various options (if you see areas where my understanding is incorrect, please email me at yzerfontein@gmail.com so that I can rectify the errors).

Legal background

Section 7(1)(a) of the FAIS act says that "a person may not act or offer to act as a financial services provider unless such person has been issued with a licence under section 8". A "financial services provider" is defined as "any person, other than a representative, who as a regular feature of the business of such person" - (a) furnishes advice; or (b) furnishes advice and renders any intermediary service; or (c) renders an intermediary service". Being a financial advisor boils down to either using somebody elses licence or getting one yourself:

I chose the independent finanical advisor path (IFA) as I didn't want to work full time, and I wanted the freedom to be able to advise on the products from the financial service provider that I considered to be best (I would feel incredibly conflicted if I had to always pitch a certain company's products - I don't think any one company has a monopoly over the best financial service products).

I quickly became aware of how well financial service companies treat independent financial advisors, for example getting invited to an investment presentation by RE:CM when I told them I was considering becoming an IFA.

My plan

To succeed as an IFA you've got to have a plan to get clients in touch with you and to add value for them once they arrive. I'm a semi-competent web developer, I have a good knowledge of html, and a working knowledge of php. My initial focus will be on developing a website providing the best info on preservation funds annuity products in South Africa, and to attract people there through organic and paid search. I chose these areas as and I'm confident of my ability to provide best advice in that area. I'm also lucky that with 22 years of experience working as an actuary in financial services, including the last 10 as an investment actuary I will in some senses be overqualified for the job.

Maintaining a phone list

Being an adviser revolves around contacts, and I resolved to maintain a phone list of all the important contacts at the various companies.

TO DO list

Apply for a financial services provider licence.

I was advised to contact Moonstone to assist with the compliance side of things.

Get business cards.

What I like reading

RE:CM asset management

Allan Gray March 2011

Allan Gray Orbis

Contrarius

Berkshire Hathaway's annul letters to shareholders.

John Mauldin

To find a financial advisor:

Offshore investment

A brief description of how I do my offshore investment.