RA's on Carte Blanche

[neio]

Yup, paying of debt, especially long term debt is a very good move. Simply but, paying of debt is almost equal to an investment for the loan rate on your debt.

Yes it's true, however if you put more money into your home loan the interest component decreases. Thus you are paying off a asset much quicker than your standard 20 year repayment.

 

[bb_matt]

I haven't watched Carte Blanche in ages - it always seemed to be a "rich mans whinge session" to me, which I guess was the target market intially.

As for insurance, I don't have life insurance right now, but for all my other insurance I go through a broker.

I've been really happy with them so far, until recently.
Having been with them for 3 years now, I've never had a problem claiming, I've refused point blank to install a tracker, telling them I'd go elsewhere, so they waived that. I've always got to use the panel beater I want and not theirs (meaning I never pay excess) + I've been getting household, car, personal liability etc. for a very reasonable price.

Then suddenly, last month, WHAP, R120 more expensive, with no warning.
I phoned them and they hummed and haad about this extra cover here and a change there. I told them they could stick it, I'm going overseas anyway, so it's not a big deal.

They "apologised" for not letting me know "oh, but didn't I get the policy renewal through the post ?" - but that's just not good enough. I've lost faith in them totally.

Insurance is an unneccessary evil in these modern times, how I wish it wasn't so, as the very idea of paying money to protect from what may happen in the future goes against my very nature.

 

[scatlett]

Personally I've had too many bad experiences with brokers. They want to start selling me stuff and I ask them how much is the comm going to be.

Everybody reading this thread should remember one piece of advice that I can give them.

No matter how 'good' a friend a broker is, no matter how well 'respected' he/she is, no matter 'who' referred the broker to you - NO ONE (sorry noone ) will every have your best interests at heart when it comes to your money but YOU.

Remember that the broker is always driven by money. He is also, by the general nature of brokers, may be selling you something that you may not need - even if they actually tell you that they are not that type of broker. Always double check what they are telling you and read policy documents as if they were the terms and conditions of ordering ADSL from telkom.

R200 per month does not sound like a lot, but times that by 12 and then by 30 and add a 10% escalation to it and you may be spending over a million rand on a policy over your lifetime!

 

[scatlett]

bb_matt - don't even get me start about short-term insurance.

People are so over-insured it is crazy. Those brokers are even worse than life insurance brokers!

 

[rpm]

Hi guys

I agree that CB is very biased. It is certainly not an investigation into a certain issue but rather a sensationalized view on the matter. They will put in whatever they feel will sell. It does however expose certain evils which is certainly good.

They are currently investigating the whole ADSL issue, and have subsequently contacted me. What did they ask for: can you please supply the names & contact details of four people whose lives were affected by the high price of ADSL. I then explained what they should actually investigate or do, but they came back and said they will have Telkom and IS on, but want a few people that have been affected. I have been asked to appear on camera, but have declined a recorded interview. I have made myself available for a live interview, but that is not really their style…

Regards,

RPM

 

[scatlett]

rpm - do you know when the story will be aired by CB?

 

[Darth Garth]

I think that that black guy (not sure of his name) is doing a fantastic job.

His name is Vuyani Ngalwana.
The headline from the Financial Mail article on him was titled "The ****** who caused all the trouble" .

They actually asked his permission to use the word "******" and he had no problems with it.

 

[bb_matt]

I have made myself available for a live interview, but that is not really their style…

And that says it all really - it's a slick production, with no room for the presenters to be challenged or for content to get slightly risky - can't mess with the potential advertising revenues !

I'd love to see someone like Tim Sebastian from Hard Talk interview Sixwe and Steven White.
If anyone has seen him in action, you'll know what I'm talking about.
He makes the Carte Blanche team look like complete wussies.

 

[bwana]

Just adding to the de-railment but how can anyone think that CB would be unbiased with Mnet and Telkom being in bed and so cozy with each other atm.

Even though I subscribe the ludicrously high priced DSTV I would prefer to see a broadcast current affairs programme tackle the story - at least this would ensure it reached a much wider audience. MyADSL'ers could then launch a email campaign geared towards getting people to watch the show.

 

[Dolby]

Can someone tell me what an RA really is?

Is it purely a 'savings account' where one can 'save' a fixed sum every month, and collects whatever they have saved at maturity/retirement? Can't one do the same with a real savings account - and also have the benefit of having access to the cash?

 

[bb_matt]

Just adding to the de-railment but how can anyone think that CB would be unbiased with Mnet and Telkom being in bed and so cozy with each other atm.

Even though I subscribe the ludicrously high priced DSTV I would prefer to see a broadcast current affairs programme tackle the story - at least this would ensure it reached a much wider audience. MyADSL'ers could then launch a email campaign geared towards getting people to watch the show.

In this day and age, it's possible to create a show on a low budget and stream it over the interent, in the hope that it attacts enough audience for a larger production company to "buy it out" and air it on TV.

But we don't have any media freedom in terms of TV coverage - it's either government controlled, or independent (yet regulated) and ad-spend calls the shots.

If your going to be openly critical about a giant like Telkom, your going to kiss some revenue goodbye.

So even an independently filmed indepth look into the reality of Telkoms exorbitant prices and how they are holding us back financially, wouldn't do any good because no TV station would touch it, no matter how good.

 

[bwana]

In this day and age, it's possible to create a show on a low budget and stream it over the interent, in the hope that it attacts enough audience for a larger production company to "buy it out" and air it on TV.

But we don't have any media freedom in terms of TV coverage - it's either government controlled, or independent (yet regulated) and ad-spend calls the shots.

If your going to be openly critical about a giant like Telkom, your going to kiss some revenue goodbye.

So even an independently filmed indepth look into the reality of Telkoms exorbitant prices and how they are holding us back financially, wouldn't do any good because no TV station would touch it, no matter how good.

Maybe when you get to the UK you could push the Beeb to make a show on it - claim its one of the reasons for the mass exodus of south africans to the UK. At least then it might get shown here late night on SABC and on DSTV. The local stations would probably pick it up - even CB wouldnt be able to ignore it then.

 

[bb_matt]

Maybe when you get to the UK you could push the Beeb to make a show on it - claim its one of the reasons for the mass exodus of south africans to the UK. At least then it might get shown here late night on SABC and on DSTV. The local stations would probably pick it up - even CB wouldnt be able to ignore it then.

I'll be too busy gloating at my super fast cheap ADSL line - either that, or standing in a dole queue (or worse still, a soup kitchen queue)

Seriously tho, I'll be visiting this site as much as possible because I'll be back in South Africa, even if it's in 5 years and I want to be kept up to speed.
Besides, there'll be plenty of people from this forum popping to the UK and back who I can meet for a pint !

 

[stoke]

RA = Retirement Annuity.
You spend a good part of your life depositing funds into theis facility.
Somebody is looking after your facility, investing your money into "safe" long-term investments like property that is going to be rented out.
The money you place into this fund is not taxed like any other investment's money is taxed, and that should give you the financial boost you need to make the venture worthwile.
You may not touch YOUR money in this facility till age 62 -> 65 (CSomething like that).
You can sell your RA and get money for it though (At a loss natrually).

Reality is that the charges are worse than the tax would be, and depositing the money into a savings account with compound interest could work out better (If you can keep your grubby paws off of it.).

 

[RVFmal]

The insert on Carte Blanche was extremely one sided. I am not siding with the Life Companies as I feel that the penalties that are enforced on early cancellation or reducing premiums on an RA or investment is completely over the top. The way the insert was structured it made out that to invest in an RA is not a good idea. this is unacceptable as RA's are an important part of one's investment portfolio.

Just to dispel some grey areas:

Annualised (upfront) commission paid to a Financial Advisor accounts for approximately 32% of the fees on an investment product. The rest are administration costs, Fund Managers fees and the like.

The fees paid to an Advisor are paid 85% in the first year and 15% in the second. The amount paid is worked according to contribution size and the term of the policy.

If the client cancels in the first two years, the commission is clawed back from the advisor (in other words he/she has to pay back the commission yet the Life Company will still penalise you for that and the admin and other costs.

The problem that has been highlighted and the reason why the Adjudicator has ruled against the Life Companies is due to the fact that the penalties were never clearly stated in the policy wording document. Therefore the client was never advised of such penalties and this is tantamount to non-disclosure. Hence our new legislation governing the industry FAIS and his rulings.

As for the churning of policies, it has been rife in the Assurance industry for many years and the Life Companies are very aware of it. To say that they would never condone churning is extremely naive as I know for a fact that that is exactly what they try and get the Financial Advisors to do. (I was a consultant for a number of them).

LouisP I do not think that you are correct in stating that the rulings applied by the PFA are absurd. Non of these penalties were ever disclosed to the Broker let alone the client. I have serious doubts as to whether any of thses clients would have taken the policy had they been disclosed and if they did at least they would have been informed. The life companies have been looking after themselves for many years and when a fund does not perform they throw their hands up in the air and say "sorry, not our problem".

I for one would not advocate that an individual takes on all the responsibility of looking after their investments as they are not knowledgable enough to make informed decisions with out the advice of the professionals. I would however strongly advise that they research their options with the help of an advisor.

As for commissions, you have a choice to negotiate them with your Broker, but bear in mind that they are not going to do anything for free (as much as you all would like us to). The option to remunerate your advisor by way of as and when commission is in all honesty the fairest option as there is no upfront commission payable, but monthly so if you reduce premiums or stop paying, there are no huge commission clawbacks (but be advised that there are still penalties to pay in most cases).

The reality is that investing for ones future is a serious business and we do not need the life companies to make our jobs more difficult by hiding costs from the FA's or clients.

One should not look on RA's as a waste of one's time or money as they do have their benefits, but one needs to ascertain how they fit into one's investment portfolio.

One thing that does concern me is the fact that a number of people are under the impression that to put all one's savings into your bond is the best move you can make. It is true to an extent as it reduces your loan term and you do tend to save a fairly substantial sum, but it is again only one aspect of looking after your finances as the value your residential home should not be your focus to fund your retirement.

Make an informed decision by talking to people in the industry and not base your decision on an insert that was clearly one sided.

 

[RVFmal]

RA = Retirement Annuity.
You spend a good part of your life depositing funds into theis facility.
Somebody is looking after your facility, investing your money into "safe" long-term investments like property that is going to be rented out.
The money you place into this fund is not taxed like any other investment's money is taxed, and that should give you the financial boost you need to make the venture worthwile.
You may not touch YOUR money in this facility till age 62 -> 65 (CSomething like that).
You can sell your RA and get money for it though (At a loss natrually).

Reality is that the charges are worse than the tax would be, and depositing the money into a savings account with compound interest could work out better (If you can keep your grubby paws off of it.).

The earliest you can access the capital in an RA is age 55 ( you choose this at inception of policy - do not allow a broker to sell you a policy where retirement age is older than that as you may be forced to retire early - if you choose to retire early and have a policy that pays out at age 65 you cannot touch the capital until age 65 regardless).

When accessing the capital you may only take a maximum of one third in capital - the rest has to be invested in some form of annuity (pays monthly income).

There are tax benefits on you contributions and in the event you become insolvent your creditors CANNOT attach the value of your RA.

You can make an RA paid up, but there are some penalties to pay.

It has yet to be proven that investing in a savings acoount gives better returns as you are taxed on the interest earned. If the RA you have taken invests in the money market you are essentially investing in a savings account as it is, though with the tax benefits.

 

[mZbZ]

Carte Blanche i an exelant program weather you like it or not, it has exposed some serous issuses in the past and contines to do so to this day. And of course it is biased, when oposing some ones view you are always biased, you are biased towards your view as a consumer or a supplier.

 

[Nivec]

My RA

Hi All

Unfortunately I did not get to see the discussion on CB last night regarding RA’s, I am one of those people that can vouch for a previous article saying that you have internet, you watch less TV .

Anyway, I have been in discussion with my RA provider for about a month now and have discovered some rather scary facts about my particular RA. It has taken a month and still going as they are not very forthcoming with the details, this alone should tell you that something is wrong.

I signed up for my RA about 7 years ago, I contract so have look after myself. I later increased my premiums, reduced them again for 7 months as I was without a contract, then increased them a further twice.

To cut a long story short. I have paid about 150k into this RA, so far they have charged me directly close to 40k and the expense account. This is an account(Loan) they take out on your behalf to pay initial expenses and then charge you interest on it, is sitting at 58k.

So to date, there charges are near to 100k and climbing for my 7 year old policy.

If you can tell me this is not a rip-off, then I can tell you, you are a broker.

I heard a few months ago on 702 them discussing these issues, and brokers crying that they are not going to survive if they do not get commission. I was shocked at the one broker who called into the show, claiming that he had extensive experience in the industry and no one can tell him anything about finances. He argued that brokers should get 10% of your monthly premium. Not a bad job if you have no conscience, imagine meeting with someone for an hour and then getting paid 10% of there premiums for the next 25 years. Damn, I whish my hourly rate could be that.

Well I would like to tell him something, who in there right mind, would invest money and take a 10% loss before any gains. What was even more scary, the financial guests on 702 at the time agreed with him.

Anyway, just thought I would share this with you, be very very careful, they will not disclose these costs, in all my dealings with them, including the contract, has there ever been a mention of what I am actually paying for there RA.

 

[RVFmal]

Nivec those charges are extremely high and a rip off (and I am a Financial Advisor). I take it you took the policy directly with the company concerned?

Seeings your policy is 7 years old you fall into the category of people who bought policies before this furore erupted and before FAIS was implemented which is highly unfortunate.

If you feel that you are not getting any luck with the relevant company I advise that you speak to someone higher up the chain of command so to speak and keep records of all correspondence. If they do not settle your queries satifactorily do not hesitate to contact the ombudsman.

Commissions are currently under review and it seems that commissions payable on an investment product through a life company will soon fall in line with those of a standard investment product being 3% ongoing (and even this is negotiable).

There are many Financial Advisors who rely on up-front (or annualised commissions) due to the fact that that is the way that they have earned all (or most) commissions up to now. What is happening now is very similar as to what happened a few years back with the Medical Aid industry's commissions. Many Brokers closed down or got out of the industry all together due to the drastic reduction in commissions. IMHO, it will be very tough for Financial Advisors to survive the changes, but like anything there will be those that do.

I for one saw this coming quite some time ago and made the necessary adjustments to my lifestyle and structure of my fees, Something many should have done, but failed to do.

 

[Dolby]

Alright ... hyperthetical situation :

I'm 25 years old, open a Retirement Annuity till 55, and contibute R300.00pm. By age 55 I'll have (as an example) R150,000 saved in my RA. I can take 2/3 capital (R100,000) and by law I must invest that other R50,000 - is this right, basically?