A tribute to Alexander Forbes
If ever there was a company that should have its licence suspended, it is Alexander Forbes. It was the main offender in the secret profits bank account-bulking scandal. In the 1990s, it facilitated the stripping of the surpluses of a number of retirement funds, to the disadvantage of pensioners and members.
Alexander Forbes did this despite legal advice that what it was doing was not lawful.
Alexander Forbes has repaid almost R400 million of the secret profits (under pressure from the FSB, and some funds have challenged whether it has paid back enough). But when it comes to the asset-stripping, Alexander Forbes is playing complex legal games to avoid meeting the demands of the curator of the affected retirement funds.
This is an excerpt from an article written by Bruce Cameron, my favorite South African financial writer.
In the article he talks about the FSB’s role in taking action against retirement funds that steal from – or don’t meet their obligations to – their fund members.
If offending companies (like Alexander Forbes) are forced to suffer real consequences, that actually costs them real money, or takes them out of the retirement fund business for good, it should keep the rest of the industry honest and trustworthy.
Since Alexander Forbes is still going strong and in the business, I figured it’s a good idea to just share this little tribute.
If you’re considering entrusting your retirment savings to them, I’ll leave it to you to make up your own mind about whether or not that is a good idea.
May 26th, 2009 at 01:40 pm
Thanks for the advice. Not a lot of companies left out there that you can trust these days. Seems like its almost worth it to be in charge of your own retirement fund.
May 26th, 2009 at 07:32 pm
@Johan
It does seem that way, yes, but actually there are quite a few good investment companies out there.
The ones that are not good give the whole industry a bad name – a few rotten apples can spoil a barrel-full.
I like the idea of making my own investments by buying stocks directly (like you call it, being in charge of my own retirement fund) and I do this myself.
However, I wouldn’t recommend it to just anyone. It takes a great deal of research, company analysis, etc., etc., etc.
If you don’t know what you’re doing or don’t spend the time to do it properly, it’s not a good idea.
Most people are better off investing their money in unit trusts and other savings vehicles (especially ones that allow you to get a deferred tax benefit). And most people should consult a financial advisor to help them draw up a financial plan and pick the best investments for them.
Here are some articles about how to pick a good financial advisor:
What is a Financial Advisor?
Financial Advisor or Product Peddler?