Preservation Funds

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Malcstonbru

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Hi guys, hopefully somebody can help me out here.

I am 32 years old and I am resigning from my job to move to the UK (my girlfriend got a job there). I need to put the money from my provident fund into a preservation fund.

The Sygnia Skeleton 70 fund looks like a good bet. I would manage this transfer myself.

BUT

My financial advisor sent me an email advising me against this saying

"Both Discovery and Liberty offer sign on bonuses and very low reduction in yields and extra money for using Liberty or Discovery is better than Sygnia and you have access to excellent portfolios."

he also said

"Also, if you go direct with Sygnia, you only have access to their funds. No chance to access other fantastic fund managers. If their funds tank, well, that’s the only choice you have."

Obviously I am a bit conflicted. Discovery seems to offer a 15% signup bonus on your investment. But then I would also be paying fees to both my financial advisor and Discovery. I can't understand Liberty's offerings.

Can anyone give me some advice?
 
I used Momentum's preservation fund when I resigned. Truth be told if I had to do it again I'd just cash the whole thing out and take the tax hit.
 
Malcstonbru said:
Hi guys, hopefully somebody can help me out here.

I am 32 years old and I am resigning from my job to move to the UK (my girlfriend got a job there). I need to put the money from my provident fund into a preservation fund.

The Sygnia Skeleton 70 fund looks like a good bet. I would manage this transfer myself.

BUT

My financial advisor sent me an email advising me against this saying

"Both Discovery and Liberty offer sign on bonuses and very low reduction in yields and extra money for using Liberty or Discovery is better than Sygnia and you have access to excellent portfolios."

he also said

"Also, if you go direct with Sygnia, you only have access to their funds. No chance to access other fantastic fund managers. If their funds tank, well, that’s the only choice you have."

Obviously I am a bit conflicted. Discovery seems to offer a 15% signup bonus on your investment. But then I would also be paying fees to both my financial advisor and Discovery. I can't understand Liberty's offerings.

Can anyone give me some advice?
Click to expand...

http://www.sygnia.co.za/wp-content/uploads/2015/11/Sygnia-Emporium-Fund-and-Fee-Summary-Nov-15.pdf

Just send that to him. Feel free to tell him he must stop talking k4k.

And anyway, if you are investing in the index funds, then your will perform as the market performs. Neither a winner but also never a loser.

Note, if you use the Emporium Option (Sygnia and other funds), there are fees that are not applicable to the Boutique Option (Sygnia funds only).

And I bet you can switch from Boutique Option to Emporium Option later, if you for some reason want too.

The Financial Advisor just wants to make some of your money his money.
 
I would definitely recommend the Sygnia fund you mentioned.
Ask your broker to send you the terms and conditions for the 15% bonus from Discovery, and post it here. It will enable me to comment on the pros and cons.
 
Malcstonbru said:
Thanks for all the help. Supersunbird, would you recommend the Boutique or the Emporium Option? Is staying with Sygnia exclusively a bad move?

Verde, I couldn't find "terms and conditions" as such. This is what I could find out. See page 3 of https://www.discovery.co.za/discove.../pdfs/invest/preserver_plan_fact_file_eng.pdf
Click to expand...

You have to invest in the Boutique option to get the low costs.
The Emporium option is the same as other platforms like Stanlib/Discovery where you have access to third party funds and pay platform fees.

I would say Sygnia's own funds (the low cost index funds like Skeleton70) are much better than 95% of the managed funds available on LISP platforms. Good luck finding an adviser who can identify the other 5%.
 
I had a look at Discovery's document.

The 15% boost only applies if your retirement date is 25 years plus away.
7.5% boost if it is 10-15 years away.

Earliest retirement date is age 55. I would strongly advise against selecting a retirement age later than 55, as this will create serious flexibility issues around your retirement planning - especially as you may emigrate permanently. Advisers selling Discovery and Stanlib crap will always try to convince you to select the latest possible retirement date, as this locks in higher commissions for them.

You are limited to Discovery funds if you want to get this boost. This just shows you what a charlatan your adviser is, as he criticises the fact that Sygnia Boutique limits you to Sygnia funds whilst conveniently failing to disclose that you will be limited to Discovery funds (and only the one’s they approve) if you follow his advice. Hypocrite!

I did a quick calculation based on a reasonable assumption that the annual cost difference between the Discovery funds and the Sygnia fund will be 1.5% (this is conservative): It will take 10 years for the higher costs to erase the 15% benefit, but you are locked in for 25. So Discovery scores all the way.
 
I just want to explain the 1.5% pa fee difference.
The fee for Sygnia Skeleton is 0.4%pa. There is no adviser fee, no platform fee. Vat included.

Discovery:
Broker will try to charge you 1.71% (1.5% +VAT) upfront and 1.14% ongoing - he will settle for 0.57% if you negotiate, and may waive the upfront fee.
Platform fee 0.57% pa not negotiable.
Fund management fee - +- 1.14-2.28%pa

So Discovery minimum = .57 +.57 +1.14 = 2.28% v Sygnia .4%: Difference 1.88%pa
 
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