Financial adviser fees

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ima_be_thatguy

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Good day
I bought a RA from a financial adviser a couple years back.
I havent really spoken to him or been "advised" by him in nearly a year. I am however paying him a 2% payment based commission.
Firstly is this too much? and should I stop this commission payment altogether?
Not really sure what to do here.




Regards
 
ima_be_thatguy said:
Good day
I bought a RA from a financial adviser a couple years back.
I havent really spoken to him or been "advised" by him in nearly a year. I am however paying him a 2% payment based commission.
Firstly is this too much? and should I stop this commission payment altogether?
Not really sure what to do here.
Click to expand...

Which company is the RA with?
 
Thanks.

You might need to contact Sanlam and ask them if you can remove the Financial Advisor.

2% is a lot in my opinion, especially if you do not get any service, 0.5% is just just permissible in my opinion.
 
Thanks, Ive contacted them and they have advised I can remove the commission I pay. Just have to do it in writing.
 
ima_be_thatguy said:
Good day
I bought a RA from a financial adviser a couple years back.
I havent really spoken to him or been "advised" by him in nearly a year. I am however paying him a 2% payment based commission.
Firstly is this too much? and should I stop this commission payment altogether?
Not really sure what to do here.




Regards
Click to expand...

I think that is too much imo.

Worth while read/listen

https://justonelap.com/retirement-annuities/
 
ima_be_thatguy said:
Good day
I bought a RA from a financial adviser a couple years back.
I havent really spoken to him or been "advised" by him in nearly a year. I am however paying him a 2% payment based commission.
Firstly is this too much? and should I stop this commission payment altogether?
Not really sure what to do here.




Regards
Click to expand...

Standard operating procedure, you will not hear from them again until they can sell you the next high cost product.
 
2% is way over the top.
I'm with Pioneer and pay 0.35% for myself and 0.22% for my wife's investments and that includes vat.
0.58% to 0.75% is the norm, with an up front fee of 0.75% to 1.5%
You cannot stop the fee payments, but negotiate with your adviser to lower it, or just switch to another company and they will take over the RA and it will not cost you a cent.
 
ProAsm said:
2% is way over the top.
I'm with Pioneer and pay 0.35% for myself and 0.22% for my wife's investments and that includes vat.
0.58% to 0.75% is the norm, with an up front fee of 0.75% to 1.5%
You cannot stop the fee payments, but negotiate with your adviser to lower it, or just switch to another company and they will take over the RA and it will not cost you a cent.
Click to expand...

Hi Ive contacted sanlam, and they advised to send in writing that I want to stop the payments.

Also on the forms that i signed, it says the fee is optional and can be stopped at any time. or something to that note.
 
Aren't the commissions paid to the FA paid upfront once the policy is written and that's why when you stop payments they penalize you?
 
tRoN said:
Aren't the commissions paid to the FA paid upfront once the policy is written and that's why when you stop payments they penalize you?
Click to expand...

Depends on the type of policy. In a unit trust RA the FA might get a lumpsum fee from the initial lumpsum and an annual fee of a certain % of the investment (deducted monthly, kidn of like interest pays monthly). So to cancel the FAs "services" with the provider (if the provider allows it, some providers will only works via a FA I think) will not incur a penalty.

Now with a contractual endowment or RA, whole different story...
 
If you are starting a new RA then I can understand the 2% fees you pay as you must understand that administering R10k is just as involved as administering R1m so hence the reason the advisers hit you hard at the beginning, so as soon as the RA starts getting to several 100k you need to get that fee seriously dropped.
Take a good look here, btw, I'm not an agent or anything, just I was screwed for over R600k in the 2008 crash so I learnt the hard way.
https://www.allangray.co.za/what-we-offer/retirement/#fund-1
 
Boom.PNG

BTW - besides adviser fees, your Sanlam RA (assuming its an Echo RA) is costing you between 3.8% - 4.2% p.a. in "marketing and administration costs"...

You may wanna track down your initial quotation and READ the fees disclosures... Kind of makes the "massive bonus" you going to be getting at retirement seem paltry... because as the graph above suggests it will be a bonus on a much much MUCH smaller amount, due to costs...

Oh and don't change anything in the way in which you service premiums into this product as this WILL affect your bonus... in not the GOOD kind of way...

The above can in no way be regarded as advice as it is FACTUAL information found on the quotation - if only clients took the time to read the quotes they would be better informed. Because let's face it... your adviser probably didn't read the quote before writing you the product either...

#fact
 
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FxJalarupa said:
View attachment 375501

BTW - besides adviser fees, your Sanlam RA (assuming its an Echo RA) is costing you between 3.8% - 4.2% p.a. in "marketing and administration costs"...

You may wanna track down your initial quotation and READ the fees disclosures... Kind of makes the "massive bonus" you going to be getting at retirement seem paltry... because as the graph above suggests it will be a bonus on a much much MUCH smaller amount, due to costs...

Oh and don't change anything in the way in which you service premiums into this product as this WILL affect your bonus... in not the GOOD kind of way...

The above can in no way be regarded as advice as it is FACTUAL information found on the quotation - if only clients took the time to read the quotes they would be better informed. Because let's face it... your adviser probably didn't read the quote before writing you the product either...

#fact
Click to expand...

Is it worth moving from a Sanlam RA to a unit trust based RA and take the hit of a penalty?
What will that penalty % be?
 
FxJalarupa said:
View attachment 375501

BTW - besides adviser fees, your Sanlam RA (assuming its an Echo RA) is costing you between 3.8% - 4.2% p.a. in "marketing and administration costs"...


The above can in no way be regarded as advice as it is FACTUAL information found on the quotation - if only clients took the time to read the quotes they would be better informed. Because let's face it... your adviser probably didn't read the quote before writing you the product either...

#fact
Click to expand...
Its the Sanlam Stratus Retirement Annuity
 
In that case it's going to be a painful experience to cancel and section 14 transfer your money across to another provider... These old legacy products pre 2010 are very expensive to get out of... You should meet with a certified financial planner so that you can ascertain the best course of action forward... Be careful of taking financial advice online from individuals, who (whilst having the best intentions) may not be qualified to render financial advice...

At least you have options, but one should take care to do the math on all the scenarios that could play out...

If you are good with Excel you could do the math and build a model that will show you what would be best... Ourr you could get an advisor to do that for you?
 
FxJalarupa said:
In that case it's going to be a painful experience to cancel and section 14 transfer your money across to another provider... These old legacy products pre 2010 are very expensive to get out of... You should meet with a certified financial planner so that you can ascertain the best course of action forward... Be careful of taking financial advice online from individuals, who (whilst having the best intentions) may not be qualified to render financial advice...

At least you have options, but one should take care to do the math on all the scenarios that could play out...

If you are good with Excel you could do the math and build a model that will show you what would be best... Ourr you could get an advisor to do that for you?
Click to expand...

I've converted to the echo plan.
Who do you suggest we speak to. These FA's can't be trusted to be objective anymore
 
I'll PM you

** Let me just clarify the following **

There is nothing wrong with your Echo RA if you make all your payments and service the contract (cause that's what it is... a contract taken out until the VERY DAY that you have contracted to retire) in full paying all premiums and not doing anything stupid like taking a premium holiday or dropping the premium amount...

The net effect of servicing this contract would be that you end up having paid the RIY (Reduction in yield) that you have been quoted on the quote you accepted... Mostly I have seen the value sits around 2.3% to 2.5% (after the bonus pays out) if you have been placed in the SIM Balanced Fund (which is not a bad balanced fund - relatively speaking)

Now, is 2.5% p.a. expensive... well that depends... you probably going to pay around 2.2% - 2.5% with Allan Gray but their platform offers flexibility that is not available to you with Echo - Sanlam will say you are allowed premium holidays and actually promote clients take a premium holiday, but this kills / destroy's / murders your Echo Bonus... Do not do it!

As far as I have seen there are companies that offer very unique and strong benefits (especially for creating a tax neutral/free income in retirement - [Not Echo]) in terms of their RA's but the majority of these products require you to stick to the contractual agreement to the letter, otherwise you will get your ass handed to you in terms of fees (which can and does come in both flavors of reduction in capital value and/or reduction of benefits realized at retirement.

Direct platforms offer so far as I have seen the cheapest option... But is cheap the be all and end all of financial planning - Well in a RA it certainly is a massive factor...
 
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ProAsm said:
If you are starting a new RA then I can understand the 2% fees you pay as you must understand that administering R10k is just as involved as administering R1m so hence the reason the advisers hit you hard at the beginning, so as soon as the RA starts getting to several 100k you need to get that fee seriously dropped.
Take a good look here, btw, I'm not an agent or anything, just I was screwed for over R600k in the 2008 crash so I learnt the hard way.
https://www.allangray.co.za/what-we-offer/retirement/#fund-1
Click to expand...

He merely fills In a Form on your behalf, then pockets 2% for the life of the policy, you can fill the form in yourself, won't take more that 5 minutes, I have no issue with the companies annual fees, but a FA charging 2% for filling in a form for you and choosing a balanced fund is ridiculous.
 
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