Retirement Funding (Again)

Cius said:
This I know. I was trying to determine if Fresh did. SA is very backwards in the financial products space. We are one of the last countries with a large unit trust industry. Everywhere else in the world they are obsolete due to their high fees which impact the Total Cost Ratio (TCR). Hence any financial adviser who advises me to look into unit trusts I instantly know to ignore. In SA the financial advisers still earn money each month for products they sold reaping fees for decades despite the fact that they have often not spoken to the client in question for years. Its sickening to be honest. I know Financial advisers who take 5% up front on new investments and 2% ongoing. Warren Buffet said if you are earning 1.5% after inflation you are doing well and these clowns take 2% ongoing!!! Madness. The rest of the world is destroying those leaches by changing the way the industry works. In England a financial advisers income works the same way as a doctors would. You pay per hour. None of these ongoing fees nonsense. Its a much better system as good advisers will get more business and can up their fees. Bad advisers will loose business and be forced out the industry. Funny thing is you will struggle to find a financial adviser in SA who is willing to consult on an hourly basis. Here its still very much ongoing fees. I compared my simple diversified investment into an ETF over 5 years to all the latest unit trust performances and I beat 98% of them. This is not taking on big risk by stock picking or timing the market, it was just me buying some SATRIX Divi shares. Diversified, safe, and giving me market returns without anyone else taking exorbitant fees. I say that but Satrix has fairly high fees 0.8% compared to some of the international ones. I would love it if Vanguard would come to SA as their ETF's are amazing and have cost ratio's under half of those of Satrix.
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paragraphs please. My eyes.
 
I would gladly charge per hour rather than take comm but I don't know if the South African public are ready for this yet.....but really whether you are paying in the form of comm or consulting hours, pay you must. I dont think its completely fair to say
In SA the financial advisers still earn money each month for products they sold reaping fees for decades despite the fact that they have often not spoken to the client in question for years
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. Companies and advisors try very hard to make sure clients have current representation. More often than not the client just doesn't care (until it comes time for retirement and they moan how no one has looked after them). Whether you are working with an advisor or going it alone it is hugely important to keep current and review things regularly.

But there have been great improvements over the last few years. Legal commissions have been reduced, new generation products with reductions in admin fees based on loyalty and a generally much more professional industry with excruciating compliance legislation making it harder and harder for those who practice to take clients for a ride.
 
it seems more financial advisers are moving towards the cost per hour basis, but that just means you end up paying them twice as they still get the kick back from the insurers when they sign you up. So its the insurers that need to change the way they do business and not so much so the financial advisers
 
Freshy-ZN said:
I would gladly charge per hour rather than take comm but I don't know if the South African public are ready for this yet.....but really whether you are paying in the form of comm or consulting hours, pay you must. I dont think its completely fair to say . Companies and advisors try very hard to make sure clients have current representation. More often than not the client just doesn't care (until it comes time for retirement and they moan how no one has looked after them). Whether you are working with an advisor or going it alone it is hugely important to keep current and review things regularly.

But there have been great improvements over the last few years. Legal commissions have been reduced, new generation products with reductions in admin fees based on loyalty and a generally much more professional industry with excruciating compliance legislation making it harder and harder for those who practice to take clients for a ride.
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Glad to hear this Freshy-ZN. I also think SA is not quiet ready for a full transition. People here still need to figure out that they have to save! We have one of the worst savings rates for an economy of our size. Also glad that the crooks are being weeded out. My wife used to work for a financial planning company and they where really good and honest people. Their fees where some of the lowest available and they helped a lot of people. Still, they had a stream of people coming to them that had obviously been robbed by others. Some people would have 5 copies of the same RA or policy paying 5 times the required fees purely because the broker wanted to win a prize from the insurance company that was offering bonuses or oversees trips for number of policies sold.

Sorry if I came across a bit aggressive. I have just run into way to many "financial advisers" that had absolutely no interest in my financial well being and where flogging the most expensive products to try up their commission rather than help me accumulate wealth. I can see you are probably not in that camp.
 
What happens if I have an RA here and I move overseas. Am I allowed to keep contributing and take my money at retirement even if I haven't been here for say 25-30 years?
 
If you officially emigrate (and with Reserve Bank and SARS) approval you can withdraw your fund value and take it over with you. Not 100% sure if you can still contribute and take it later but I dont see why not.
 
You are going to get screwed through fees now and once you retire. This is why the pension savings racket is being scrutinised.

Cius said:
In SA the financial advisers still earn money each month for products they sold reaping fees for decades despite the fact that they have often not spoken to the client in question for years.
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It's the same with insurance brokers. They're mostly useless or crooked.
 
anyone using PPS for their RA??
do you find them any better as they have the added benefit of the rebate they pay from their profits to the members ...
noticed that my PPS cover for sickness,disability has actually paid for itself via the rebate ... just curious about the RA, as I was thinking of increasing my existing underfunded RA to be a little less underfunded, but if I put it in a PPS RA, would that give better returns when you include the rebate??
 
I have a range of PPS products. Its only the life and disability stuff that pays back into your SRA. RA has no impact. Its just another RA. I have a PPS RA that I signed up for yonks ago before I know much about retirement products and am thinking of shutting it down to be honest. I would rather invest that money myself. My broker keeps persuading me not to though.

Still, overall I am a huge PPS fan. The SRA is simply brilliant. Most people who contribute from graduation get out more than they ever put in. I even switched my short term insurance to them a year or two back but was a bit miffed when I found it it is just Hollard wrapped up in a PPS brokerage.
 
Cius said:
Its only the life and disability stuff that pays back into your SRA. RA has no impact.
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are you sure?? just got a doc from a broker that says otherwise .. also "As a member of PPS, you share in the success of the PPS business through your PPS Surplus Rebate Account, so you will also be improving your personal share of the wealth of PPS"
from their RA brochure ... maybe you need to convert to the new version of the RA fund to get the benefit
Maybe chat to your broker and see if he missed this ... which may have cost you a fair bit of money!!
 
As I understand it the SRA contribution comes from PPS profits. The portion assigned to you is dependent on how many "units" you own. The units are determined by the level of your income protection and life cover. The RA stuff is almost separate as I understand it. I could be wrong though. Perhaps check with PPS. Really not sure. I will definitely ask my broker though next time I see him.
 
will also check with my broker next week .... but you are right ... the number of units matter, but I think the RA and other products add to the amount/percentage you get back
 
Cool. Let me know what you find out. I signed up over 6 years ago so a lot of these details are a bit fuzzy and I have forgotten the smaller details.
 
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