Financial services companies usually make a lot of money and are a good business to start. This is a guide on how to start a financial services company in South Africa.
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Our world is powered by financial services providers, from insurers to capital markets, FSPs are the backbone of our economy. The demand for financial services is not going to go down in the near future, it is perhaps one sector that might be valuable for all eternity unless something drastic happens.
This is a much broader guide on how to be a financial services provider that provides more than one service. The barriers to entry are a bit steep but are manageable, it depends on which services you want to provide.
You need to meet a certain when applying for an FSP license and one of the criterions is that you should be qualified. Being qualified doesn’t mean having formal education, it just means having extensive experience in your field. This mainly applies to brokers and agents.
If you are not qualified then you have to find someone who is qualified and partner with them. Your partner will be responsible for reporting to the Financial Sector Conduct Authority (FSCA).
Choose a niche
You can’t really offer all financial products from the start; you first have to focus on one or two products that you know really well. There are a lot of products that can be sold under an FSP, products like Insurance, retirement funds, hedge funds, credit etc.
You can start by offering insurance then moving on to offer other services or you can start by micro-lending. It’s best if you start in the area that you are qualified in, you can expand your offering as time goes on when you bring more qualified people into your team.
Register your business
You have to register your business as a private company, which is currently R125. You will also have to apply for a license to be a Financial Services Provider, getting this license is not easy and takes a very long time.
There are so many different types of companies that operate as financial services provider, this makes it difficult to provide more specific information beyond this point. The information needed to start a hedge fund is way different from one needed to start and insurance or micro-lending business.
This was a guide on how to start a financial services company in South Africa. Do you have any thoughts or questions? Comment below.