Investments/Retirement saving - Financial advisers, yes or no?

[OrbitalDawn]

I've already got a provident fund which is being preserved at the moment. I'm looking to add a retirement annuity and unit trust investment, but I'm not sure whether to go it alone or make use of the financial adviser I'm using for my provident fund. The fees seem ridiculous (R4.5k initial advisers fee on the RA).

Is it possible (and advisable) for someone who's a layperson in the financial world to go it alone in the investment space? Don't want to screw myself over, but also don't want my money being chowed like crazy.

Far as I've heard/read Allan Gray Unit Trusts are a decent idea. Which retirement annuity is currently the best?

 

[HavocXphere]

You can fill in the forms yourself & save yourself quite a bit of coin. SSB posted a bunch of RA info all over this place.

>Which retirement annuity is currently the best?

"Best" is tricky. Kinda like saying whether Merc or BMW is better. Alangray and Corronation are the biggest ones.

 

[Dubes]

As with everything in life, it is possible to do anything you want by yourself. If you feel no value is added then even more so.

Worth considering the value outside of the initial sale though. Any future interactions will have you dealing with a call centre and they are no fun.

 

[OrbitalDawn]

You can fill in the forms yourself & save yourself quite a bit of coin. SSB posted a bunch of RA info all over this place.

>Which retirement annuity is currently the best?

"Best" is tricky. Kinda like saying whether Merc or BMW is better. Alangray and Corronation are the biggest ones.

SSB?

Yeah, sorry. 'Best' wasn't really the most apt word. I meant reasonable yield, risk and maintenance.

I'm basically just looking to get some experiences from the people on here, whether you guys reckon it's worth paying the extra money for the adviser or if it's possible to handle yourself without buggering it all up.

 

[HavocXphere]

https://www.google.co.za/search?q=s...j4&sourceid=chrome&espv=210&es_sm=93&ie=UTF-8

 

[OrbitalDawn]

Ah, thanks. Will have a read through there, as well. He seems very clued up.

 

[OrbitalDawn]

I personally would not go for RA's from what I have read. The fund managers deduct far too much as fees. Look for low fee UT's or ETF's such as Satrix. The STXIND seems the best for long term at about 32% pa and the fees are low.
I, as an almost retired will use Satrix for my pension growth.

Well, I'm looking at having both, actually. I'm still young, so want a separate investment that's a bit more aggressive.

 

[xrapidx]

I personally would not go for RA's from what I have read. The fund managers deduct far too much as fees. Look for low fee UT's or ETF's such as Satrix. The STXIND seems the best for long term at about 32% pa and the fees are low.
I, as an almost retired will use Satrix for my pension growth.

32%?

 

[HavocXphere]

You might also want to check out Sygnia. Lower rates & interesting products (passive)...only downside is you need an initial 50k which is pretty steep for most people.

I personally would not go for RA's from what I have read. The fund managers deduct far too much as fees. Look for low fee UT's or ETF's such as Satrix. The STXIND seems the best for long term at about 32% pa and the fees are low.
I, as an almost retired will use Satrix for my pension growth.

RAs are interesting due to the tax savings primarily. Unlike returns those are guaranteed. And the rates aren't that high...the sygnia is half a percent and it mostly tracks equities somewhat like you STX.

The one thing that makes me a hint uncertain is the lack of access to the funds. Its a benefit in a way (safety) but also inconvenient if I need say a deposit on a house.

 

[Dubes]

I personally would not go for RA's from what I have read. The fund managers deduct far too much as fees. Look for low fee UT's or ETF's such as Satrix. The STXIND seems the best for long term at about 32% pa and the fees are low.
I, as an almost retired will use Satrix for my pension growth.

Sorry, but a ridiculous comment. A retirement annuity is merely the investment vehicle, the portfolio choice can be one of hundreds. You can choose a fund that suits your investment needs, within the limitations of Regulation 28, of course.

But the most ridiculous thing about immediately dismissing an RA as a long term, specifically retirement, plan is the current tax deductibility of the contributions. You refer to possible returns of 32% with the Satrix Indi but with an RA you are GUARANTEED a 40%* return on your investment every year before you even look at your portfolio returns (*assuming a 40% personal income tax rate). And the favourable tax on the returns within the fund.

 

[supersunbird]

*I have been summoned!*

That's a steep initial fee.

Anyway, RAs are actually quite easy to DIY and cheaper (no advisor fees). You go directly to the institutions website, look for their balanced fund, download and print the forms or complete online and submit.

If you want a managed fund (more expensive than index funds, possible outperformance) RA you can look at Coronation or Alan Gray and just invest in their balanced fund. Personally I like a index fund RA, you can get that from 10X (1.07% incl VAT annual fee) or Syngia (0.40% incl VAT annual fee) RA with the Skeleton Balanced Fund option.

The name Balanced Fund indicates the fund manager will keep it Regulation 28 compliant (determine maximums that can be in an asset class, imposed on RAs). Now my works provident fund is with 10X (they only have one fund and its balanced), it had 21% growth last year, the same as the big managed balanced funds. The Skeleton Balanced Fund has a very similar composition to 10x, so should perform about the same for even lower costs. My next RA will be with Sygnia.

Next year it will get even more beneficial tax wise to have a RA. Say you have a 15% contribution at employers retirement fund vehicle, you can easily contribute up to another 12.5% to a RA and get a tax benefit. But no harm in starting now if possible.

 

[Dubes]

If I may add, threads like this seem to argue in favour of using an adviser. Sadly a lot of inaccurate information is given in threads like this. The ethics of some advisers may be called into question but at the end of the day if the advice they give you is inaccurate you may approach the Ombud for recourse. Following advice on here leaves you with no recourse.

If you know what you are doing then go it alone but if you are needing advice from an anonymous forum then I'd suggest you rather pay up that R4.5k.

 

[supersunbird]

You might also want to check out Sygnia. Lower rates & interesting products (passive)...only downside is you need an initial 50k which is pretty steep for most people.

Yeah, I'm not sure if they require that if one just wants to start a monthly contribution. Will have to find out. 10X you can start with R1000 pm.

 

[HavocXphere]

If I may add, threads like this seem to argue in favour of using an adviser. Sadly a lot of inaccurate information is given in threads like this. The ethics of some advisers may be called into question but at the end of the day if the advice they give you is inaccurate you may approach the Ombud for recourse. Following advice on here leaves you with no recourse.

If you know what you are doing then go it alone but if you are needing advice from an anonymous forum then I'd suggest you rather pay up that R4.5k.

Well kinda. An advisor would be good to plan overall financial strategy, but just for signing up to an RA...I can fill in a form on my own.

One thing I haven't figured out though is where to find a good advisor that is paid by the hour & not based on commission on whatever crap he peddles.

 

[HavocXphere]

Yeah, I'm not sure if they require that if one just wants to start a monthly contribution. Will have to find out. 10X you can start with R1000 pm.

Well if not then its a no-brainer. Let me know if you do find out pls.

Also confused as to ongoing vs debit order:

Minimum investment
• Lump Sum: R50 000
• Ongoing: R10 000
• Debit Orders: R1 000

http://www.sygnia.co.za/collective-investments/product-options/sygnia-retirement-annuity-fund/
http://www.sygnia.co.za/collective-...tirement-Annuity-Fund-Term-Sheet_-Feb2014.pdf

 

[Dubes]

One thing I haven't figured out though is where to find a good advisor that is paid by the hour & not based on commission on whatever crap he peddles.

Sadly the SA market isn't mature enough yet for many to accept paying by hour for financial advice. Advisers struggle to get people to agree to a full financial analysis for free

 

[manu55]

I've already got a provident fund which is being preserved at the moment. I'm looking to add a retirement annuity and unit trust investment, but I'm not sure whether to go it alone or make use of the financial adviser I'm using for my provident fund. The fees seem ridiculous (R4.5k initial advisers fee on the RA).

Is it possible (and advisable) for someone who's a layperson in the financial world to go it alone in the investment space? Don't want to screw myself over, but also don't want my money being chowed like crazy.

Far as I've heard/read Allan Gray Unit Trusts are a decent idea. Which retirement annuity is currently the best?

Hey, like most people said there is no such thing as a perfect RA. Shop around. Approach different advisers. I am a financial adviser, fully qualified and would be gladly willing to assist. PM me if you need more help. This is the company I work for www.bwm.co.za

 

[OrbitalDawn]

*I have been summoned!*

That's a steep initial fee.

Anyway, RAs are actually quite easy to DIY and cheaper (no advisor fees). You go directly to the institutions website, look for their balanced fund, download and print the forms or complete online and submit.

If you want a managed fund (more expensive than index funds, possible outperformance) RA you can look at Coronation or Alan Gray and just invest in their balanced fund. Personally I like a index fund RA, you can get that from 10X (1.07% incl VAT annual fee) or Syngia (0.40% incl VAT annual fee) RA with the Skeleton Balanced Fund option.

The name Balanced Fund indicates the fund manager will keep it Regulation 28 compliant (determine maximums that can be in an asset class, imposed on RAs). Now my works provident fund is with 10X (they only have one fund and its balanced), it had 21% growth last year, the same as the big managed balanced funds. The Skeleton Balanced Fund has a very similar composition to 10x, so should perform about the same for even lower costs. My next RA will be with Sygnia.

Next year it will get even more beneficial tax wise to have a RA. Say you have a 15% contribution at employers retirement fund vehicle, you can easily contribute up to another 12.5% to a RA and get a tax benefit. But no harm in starting now if possible.

Thanks for the info. I really don't see the point in paying the adviser fee and another monthly fee per contribution for something that I can just set up myself. I guess where my fear comes in is what would I actually have to do to manage my RA in the future? How involved do I have to be, and what are the risks in doing it yourself?

What fees do you reckon are reasonable when it comes to RAs? I saw the Discovery RA had a R25 monthly policy fee and also an annual admin fee of 3.5% of your fund (with 14% slapped on for VAT). I also see there's a management fee of 1.4%.

However, they do have a payback system where after 10 years, and every 5 years after that you get 55% of your admin fees invested back into your fund.

Struggling a bit to make heads or tails of all of this. All the jargon and convoluted numbers confuse me.

 

[OrbitalDawn]

Hey, like most people said there is no such thing as a perfect RA. Shop around. Approach different advisers. I am a financial adviser, fully qualified and would be gladly willing to assist. PM me if you need more help. This is the company I work for www.bwm.co.za

Thanks for the offer. Will keep it in mind.

 

[supersunbird]

Thanks for the info. I really don't see the point in paying the adviser fee and another monthly fee per contribution for something that I can just set up myself. I guess where my fear comes in is what would I actually have to do to manage my RA in the future? How involved do I have to be, and what are the risks in doing it yourself?

What fees do you reckon are reasonable when it comes to RAs? I saw the Discovery RA had a R25 monthly policy fee and also an annual admin fee of 3.5% of your fund (with 14% slapped on for VAT). I also see there's a management fee of 1.4%.

However, they do have a payback system where after 10 years, and every 5 years after that you get 55% of your admin fees invested back into your fund.

Struggling a bit to make heads or tails of all of this. All the jargon and convoluted numbers confuse me.

Just read through their "Retirement Plan" brochure, don't really like it. Too complex. Seems a bit expensive and what about issues like can't pay, do you loose benefits?

As to managing a RA... they only thing you need to manage is how much you put in (and you can probably have that escalate 5% or 10% or whatever per annum automatically but ticking the relevant box on the form, eliminating that issue) and if even you want to stop contributing for some reason (life happens, the Discovery products benefits will probably not happen if you have to stop for a short period).

Also that's why you need to choose a Balanced Fund, the fund will be kept Regulation 28 compliant at all times, no management from your side. If you chose a bunch of asset class funds (like this equity fund, that foreign fund and this property fund) to make up you own compilation, there would be managing involved to rebalance it every now and then for regulation 28 compliance.