RA options for doing a section 14

[Verde]

Well ... in short, that is the only fees that I can see NOW. I think the annual fees are taken per year only.

But I will update this if I know more about what is going off !

These fees are deducted within the funds and lowers the unit price for that fund - it is deducted daily. You will never see these fees on a statement, they just reduce your fund price and thus your returns. The return for the AG balanced fund for for eg. is reduced by +- 1.7% pa by these fees/costs.

 

[zerocool2009]

These fees are deducted within the funds and lowers the unit price for that fund - it is deducted daily. You will never see these fees on a statement, they just reduce your fund price and thus your returns. The return for the AG balanced fund for for eg. is reduced by +- 1.7% pa by these fees/costs.

Well, the nice thing so far with AG ... I an see exactly what is going off for WHAT ! Compared to the other firm ... FEES on FEES on FEES with no detail !

 

[Verde]

Hey Verde,

I see my Coronation (Class A to P) and Stanlib Property (Class A to B1) funds in my AG RA were moved to clean pricing classes and now paying a much higher Annual Administration Fee per month on each. Can you shed more light on what's happening here?

Is this an Allan Gray RA.
If so I am aware that they moved to clean priced funds this past year.
This has no effect on your total cost.

Clean price simply means a price which can be compared accross fund providers. In the past there was a lot of confusion with some fund providers and some funds only deducting manager fees in their funds, other manager fees and platform fees, and others even adviser fees in addition the the manager and platform fees.

The industry is now moving to clean prices where only manager fees (and obviously fund costs) are deducted straight from the unit prices (not visible to investor). Under this system platform and advice fees will be deducted explicitly by selling units - this will show up on your statements.

So with these funds you mention the amount deducted straight from the unit price for platform fees has now fallen away, and been replaced with an explicit deduction showing on your statement. The manager fees are still deducted straight from the unit price.

 

[Verde]

Well, the nice thing so far with AG ... I an see exactly what is going off for WHAT ! Compared to the other firm ... FEES on FEES on FEES with no detail !

Sadly this is not true - the vast majority of the fees you pay for unit trusts at any provider are not shown on your statement. You have to go to the fact sheet to get disclosure of what those fees are.

 

[supersunbird]

Is this an Allan Gray RA.
If so I am aware that they moved to clean priced funds this past year.
This has no effect on your total cost.

Clean price simply means a price which can be compared accross fund providers. In the past there was a lot of confusion with some fund providers and some funds only deducting manager fees in their funds, other manager fees and platform fees, and others even adviser fees in addition the the manager and platform fees.

The industry is now moving to clean prices where only manager fees (and obviously fund costs) are deducted straight from the unit prices (not visible to investor). Under this system platform and advice fees will be deducted explicitly by selling units - this will show up on your statements.

So with these funds you mention the amount deducted straight from the unit price for platform fees has now fallen away, and been replaced with an explicit deduction showing on your statement. The manager fees are still deducted straight from the unit price.

So say I am now paying about R19pm vs more like R3.50 before the class move, was that R15.5 extra on the AG Annual Administration Fee hidden somewhere else?

 

[SauRoNZA]

http://www.etfsara.co.za/

I see they have lowered their TER quite a bit since I last investigated.

Also enough index Unit Trusts now in the market to use, in my opinion, ETFs are luckily not the only game in town anymore.

So lots of choice.

I’m also strongly considering moving my one fund across to 10x because of the high TER on my one Old Mutual often.

First want to see if the FA makes any moves to improve it or recommend something else.

 

[tRoN]

Sadly this is not true - the vast majority of the fees you pay for unit trusts at any provider are not shown on your statement. You have to go to the fact sheet to get disclosure of what those fees are.

Is it worth moving from a traditional Sanlam RA to one one of the unit trust based ones like AG.
Is the penalty knock and loss of Sanlams Echo bonus worth it in the long run?

Can't seem to find a proper FA without bias to their greed of fees.

 

[Verde]

So say I am now paying about R19pm vs more like R3.50 before the class move, was that R15.5 extra on the AG Annual Administration Fee hidden somewhere else?

Yes - it used to be part of the total investment charge deducted from the unit price, now it is shown explicitly.

 

[Verde]

Is it worth moving from a traditional Sanlam RA to one one of the unit trust based ones like AG.
Is the penalty knock and loss of Sanlams Echo bonus worth it in the long run?

Can't seem to find a proper FA without bias to their greed of fees.

This can only be answered on a case by case basis, depending on individual circumstances. Generally I can say that it almost always is a good idea to pay the penalty and move away from an insurance RA to a unit trust RA if it is less than 3 years old. It is almost always better to stay if it is more than 15 years old. The grey area is in the 4-14 year range.

 

[supersunbird]

This can only be answered on a case by case basis, depending on individual circumstances. Generally I can say that it almost always is a good idea to pay the penalty and move away from an insurance RA to a unit trust RA if it is less than 3 years old. It is almost always better to stay if it is more than 15 years old. The grey area is in the 4-14 year range.

And depends on the size of "penalty" (in actual fact it's recovery of their real or perceived costs), if any. So one would need to get a quote for moving it, right? And then go from there.

 

[zerocool2009]

And depends on the size of "penalty" (in actual fact it's recovery of their real or perceived costs), if any. So one would need to get a quote for moving it, right? And then go from there.

ANY fees and penalties is noted in the contract signed when it was taken out.

 

[supersunbird]

ANY fees and penalties is noted in the contract signed when it was taken out.

The "penalties" if you try to cancel after 5 years is different than that same policies penalties after 20 years (in 5 years they might not have recovered a lot of that sales commission they paid the "advisor" and whatever other costs they make up, after 20 years they most likely would have recurred those cost, thus much smaller penalty).

The amount of penalty will of course be limited by their agreements with the Minister of Finance from circa 2006 and the date the policy was taken out in relation to that agreement.

 

[zerocool2009]

The "penalties" if you try to cancel after 5 years is different than that same policies penalties after 20 years (in 5 years they might not have recovered a lot of that sales commission they paid the "advisor" and whatever other costs they make up, after 20 years they most likely would have recurred those cost, thus much smaller penalty).

The amount of penalty will of course be limited by their agreements with the Minister of Finance from circa 2006 and the date the policy was taken out in relation to that agreement.

In my eyes that isnt true. They cant just take 40% or 20% of the policy. EVERYTHING must be in the contract.

If you are going to the ombudsman and fight, any firm would lose if they are charging what they want if you pull out.

That is my view. My RA was active way more than 5 years (and they took as specified on the contract) when I did my section 14.

 

[supersunbird]

In my eyes that isnt true. They cant just take 40% or 20% of the policy. EVERYTHING must be in the contract.

If you are going to the ombudsman and fight, any firm would lose if they are charging what they want if you pull out.

That is my view. My RA was active way more than 5 years (and they took as specified on the contract) when I did my section 14.

I think you misunderstand. Yes, it is in the contract but the penalty you pay after 4 years is different to what you would have paid after 14 years and what the insurers costs were, that why it's a case by case thing.

And if doesn't matter what your contract said if it was before a certain date, after that date there would have been limits:

The initial agreement has since been amended so that, on RA products sold before January 1, 2009, the penalties would be limited to 30 percent, and on RAs sold after January 1, 2009, the penalties would be limited to 15 percent. The most recent changes also limited the penalties on life assurance endowment policies sold before January 1, 2009, to 40 percent and on those sold after that date to 20 percent.

http://www.iol.co.za/personal-finan...wn-the-law-to-assurers-over-penalties-1590927

 

[zerocool2009]

I think you misunderstand. Yes, it is in the contract but the penalty you pay after 4 years is different to what you would have paid after 14 years and what the insurers costs were, that why it's a case by case thing.

And if doesn't matter what your contract said if it was before a certain date, after that date there would have been limits:


http://www.iol.co.za/personal-finan...wn-the-law-to-assurers-over-penalties-1590927

I understand what you are saying. Well, in my case my RA was taken out way before 2009 and the penalties was noted from 1 to 60 months, and every single possible fee that they could take.

From making it paid up, switching funds and section 14 fees

I still think any firm would lose if you move and FEES are taken not specified. Brokers sell something and avoid the bad parts at the start, not informing you

 

[zerocool2009]

I would love to hear someone who is doing a section 14 and they took 30% and the RA is old.

I am listening alot to the money show on 702 (and service providers is always saying, what is standing in the contract).

A few weeks back someone called in. He took out an RA from OM and he moved it, and they took a lot of the RA as a penalty. OM was also on the line and they asked what is on black on white.... And sad to say, if the client dont read when he takes something out, who is to blame.

So .... anyone doing a section 14 soon where you are losing thousands and thousands and nothing stated in the contract (please comment if you want)

 

[tRoN]

This can only be answered on a case by case basis, depending on individual circumstances. Generally I can say that it almost always is a good idea to pay the penalty and move away from an insurance RA to a unit trust RA if it is less than 3 years old. It is almost always better to stay if it is more than 15 years old. The grey area is in the 4-14 year range.

Mines was transferred from PPS to Sanlam about 3 years ago. Again I despise my FA for simply filling his pockets and not advising me properly as I could have moved it then.

 

[Splinter]

I am considering doing a section 14 with an existing RA.

I started by asking a few firms for fee structures to see how they work etc.

The firms I approached so far are ....

Allan Grey
PSG
Stanlib
Satrix

Most firms doesn't allow you to do a section 14 and add a debit order to that lump sum. Stanlib and Allan Grey works like that. Lump sums and DO's are totally split up.

My motto are to choose my own regulation 28 funds. Satrix on the other hand allow RA's, but you invest in pre-selected baskets (which is Satrix funds).

Any other firms you guys think I should contact to get a quote ?

Hey, you should be allowed to do a S14 transfer of your RA to any other insurer.

I think your issue is you want to go to an RA that allows you to choose your own Reg 28 investments? That is likely where you are hitting your roadblock - newer RA's do allow some flexibility, but usually not as much as you seem to be wanting?

 

[zerocool2009]

Hey, you should be allowed to do a S14 transfer of your RA to any other insurer.

I think your issue is you want to go to an RA that allows you to choose your own Reg 28 investments? That is likely where you are hitting your roadblock - newer RA's do allow some flexibility, but usually not as much as you seem to be wanting?

Not really. The issue is more if you have a provider which is draining you in fees, if you let go, they take even more (in the fine print).

 

[SauRoNZA]

These ****ers really need to get more transparent with fees.

My Old Mutual plan has a TER 1.77% which doesn't seem all that crazy.

But when you look at month to month transaction statement there is a "Plan Charge - Asset" which amounts to 13-14% of the amount invested.

I mean what the **** is this? And surely that is part of the TER?


And how does this compare on the passive funds like 10x? Do these fees magically disappear?

Trying to get transparency out of these ****ers is like getting water out of a stone.


My favourite is my Preservation Fund from a previous job where you can't get any data whatsoever from it. It's like there are magically no costs whatsoever.