SPF Distribution is reorganising and repositioning itself to stay relevant, competitive and sustainable in a changing industry.
SPF Distribution has reviewed its strategy and business structure to align with SPF’s strategy and business model, considering the key forces and trends in the financial services business environment, says Jaco Coetzee, Chief Executive: SPF Distribution. Operational excellence is one of the most important pillars shaping the strategy, with the focus being on driving value optimisation.
‘Also, in light of the changes in the South African regulatory landscape for financial services and the change in consumer behaviour, we need to ensure our business model and support to intermediaries remain relevant, competitive and sustainable.’
‘Clients’ needs and preferences are changing and their expectations have shifted as a result of digital innovation. They expect their journeys to be simple, seamless and intuitive, so a positive client experience, immediacy and convenience are critical,’ Jaco says.
‘Intermediaries and intermediary support are essential to engage, acquire and service clients in the right way and offer them sound, holistic financial advice.’
Beyond the sales and intermediation process, clients now expect value-adding engagement and service through channels of their choice.
‘Recent advances in technology open up a world of options for us to learn about clients and to attract and retain them. It gives us the opportunity to improve their experiences while reducing costs and improving efficiencies. We have to adopt and deploy technology in a way that builds our competitive advantage relative to our peers.’
Jaco says businesses that adapt to the changing environment – particularly by optimising the benefits of technology to make operations as easy as possible – will have the edge. ‘By supporting intermediaries with the right value propositions to stay ahead, they’ll also have an opportunity to thrive as things change.’
The Retail Distribution Review (RDR) will also change how intermediaries are classified, which services a business can provide to the different categories of intermediaries and which remuneration and incentive structures are allowed, Jaco explains.
‘As Sanlam is mostly an intermediated business, we need to ensure we’re much more competitive in a post-RDR world.’
He says various relevant distribution channels and models will provide sustainable, profitable growth in market share as well as a competitive advantage.
‘We strive towards operational excellence through continuously improving the way we do business, our use of technology and data, and our processes. A benchmarking exercise showed we should reduce acquisition unit costs drastically in order to be competitive.
‘We’re deliberately driving down acquisition unit costs through optimisation, sharing, the use of technology and innovation. We’ll then apply these savings to increase client acquisition and new business volume growth by improving client solutions and investing in growth opportunities.’
Jaco stresses that the restructuring isn’t a cost-cutting exercise and that all employees will have jobs.
‘Although we’ve saved costs by not filling some vacant management positions over time, there will be enough jobs
in the new structure for all current employees.’
South Africa has a sophisticated and intensely competitive financial services industry. Although Sanlam has over time been able to anticipate change and build great businesses for competitive superiority – Glacier being an excellent example – the market positioning of new players today shows we can’t be complacent.
‘The financial services industry will attract new investment from existing players such as retailers, banks and telecommunication companies, as well as new entrants with a disruptive, technology-based value proposition. However, this creates affinity partnership opportunities for Sanlam.’
The management of Distribution’s field structure will change from a contract-based (tied/choice) structure to an intermediary needs-based one that’ll benefit both the business and intermediaries.
Principles determining the new design are:
- Competitive, omni-oriented distribution model to retain and attract clients
- Different types of service to the various categories of intermediaries based on performance and potential
- Needs-based services to intermediaries, which means not all intermediaries will automatically be provided with all services
- Recognition that high-performing product supplier agents (currently ‘advisers’) in an enterprise model need similar support
to high-performing registered financial advisers (currently ‘brokers’)
- Equivalence of reward. The new structure allows for bonuses to BlueStar intermediaries, who will no longer report to managers. These bonuses could function as compensation for outsourced services
- Adoption of an offensive investing and resourcing strategy for faster-growth markets and a defensive strategy for slower-growth markets
- Merger of the broker consultant and sales consultant roles into one function
- Separate, focused function for recruiting and vesting new intermediaries
- Maximisation of competitive opportunities
- Adaptation to advances in ease of doing business and optimal use of technology to free up people in sales-generating or sales-supporting functions
- Ensure top-line growth is higher than expense growth to reduce acquisition unit costs
- Maintain a large product supplier agency and ensure sustainable support from registered financial advisers.
SPF strategic themes
The business has adopted five strategic themes to position itself competitively across business operations:
- Product leadership
- Client experience
- Channel development
- Operational excellence
- Talent and transformation.
Read more about the structural changes here.