The shifting role of retirement fund advisers in South Africa

Traditionally, the role of retirement fund advisers was mainly technical, with a focus on understanding fund rules, assisting with compliance, and providing input on investment mandates and administrator selection. Today, advisers are increasingly considered strategic partners by their clients (trustees, employers, fund administrators and members).

The cost and complexity of running standalone retirement funds have increased on the back of legislative reforms and how market participants, such as fund administrators and investment managers, have responded to them. Now many employers are opting for umbrella funds instead. As these changes unfold, they have an impact on the role of advisers. While investment strategy remains critical, advisers now typically evaluate the suitability of default investment options across umbrella fund providers, rather than constructing portfolios directly. Under Regulation 37 of the Pension Funds Act, retirement funds must offer appropriate default portfolios. Advisers are increasingly called upon by employers to assess the appropriateness of these strategies. 

With the added complexity introduced by the two-pot retirement system, which splits contributions between savings and retirement components, advisers must also evaluate the operational effectiveness of platforms and administrators. This includes assessing their ability to accurately and efficiently manage withdrawals, tax calculations and annuitisation requirements. These due diligence responsibilities are now central to platform selection, reinforcing the adviser’s role as a strategic partner in benefit design and member outcomes.

Providing member-centric advice in a reform-driven landscape

The introduction of compulsory annuitisation in 2021 and the roll-out of the two-pot retirement system in 2024 have reshaped how members engage with their retirement savings. Members need more guidance to navigate their options, including around making early withdrawals. Increasingly, employers are asking retirement fund advisers to offer direct advice to underlying members on these complex choices. This shift represents a challenge to advisers, but also opportunities to expand their client base and revenue.Decision-making for members exiting retirement funds has also become more complex. Members must consider how much of their savings can be accessed in cash, which tax tables apply to each component, and what portion must be used to purchase a living or guaranteed life annuity. Advisers who provide clear guidance, practical tools and well-informed conversations can help members navigate these choices confidently.

Regulatory pressure and professional risk

The adviser’s fiduciary duty is under closer scrutiny, with a narrower margin for error.  All eyes will be on the Financial Sector Conduct Authority (FSCA) when they roll out their Integrated Regulatory System (IRS), a data-driven platform to monitor advice practices and flag potential risks, in late 2026. It will also support the implementation of the Conduct of Financial Institutions (COFI) Bill, which aims to improve outcomes for financial customers. The IRS will hold advisers accountable for broader patterns and outcomes.

Opportunities in a changing industry

Yet, this environment presents significant opportunities, including in financial education: Demand for member workshops, tailored advice and digital tools is rising. To remain effective, advisers must adopt a proactive and adaptive mindset. 

Ultimately, the adviser’s role is becoming more dynamic, demanding and impactful. Those who embrace the transition will contribute to a more resilient and inclusive retirement system.