Sanlam policy pitfalls

[VioletF]

I have a Sanlam policy (Fund of Funds, or something like that) that started in 2001 and will pay out in 2031. I was very young and stu... er, naive when I signed up for that.

*Edit*
I should also point out that picking a term of 30 years was my idea, not his (he wanted to sell me a 5-year policy).

The premium has a fixed growth of 15% per year and currently costs me about R650 per month (it has a life cover component built in as well). The value of the fund's now about R20K, which doesn't seem like much.

I've always assumed that I'm stuck with it, but the financial advisor now wants to come see me - he says he has some concerns about the growth of the fund value vs the premium I'm paying. I've never met him; he took over a few years ago from the guy who originally sold the policy to me. He didn't explain exactly what he wants from me, so I'm trying to be as prepared as possible.

Is it possible to change the terms of this kind of policy?
Is it likely that he'll try to convince me to get rid of it and buy something else (assuming that's possible)?
I know that I should ask about any possible penalties for whichever course he suggests, but what else should I ask?

I'm already disinclined to trust that he will necessarily have my best interests at heart, since the previous guy tried to convince me to buy another policy at one point - he "couldn't remember" how much commission he'd be getting and was also not interested in giving me information about other savings options.

I'm quite clueless about these things so I'd appreciate any advice.

*Edit*
OK, I've finally been able to get a look at the statement of assurance (their website wasn't working for me last night) which states that the gross fund value is R20K, but the fund value is R34K, which seems a tiny bit better.

 

[Zoltan]

I suspect the life cover component is whats eating up your capital here.
Very little of your premium is going towards your actual fund.
Your advisor will probably advise you to get separate life cover so that you full premium goes towards your fund.

Same happened to me with my Old Mutual retirement fund.

My advise: Keep your life insurance and disability funds far separate from your annuity and retirement funds.

I'm not a financial advisor so anyone who is, please correct me if I'm wrong.

 

[Other Pineapple Smurf]

The guy is after comission, the only reason why he is eager to switch you.

If you want a 2nd opinion, I will gladly PM you the number of the Sanlam advisor I used last year, he is an independant broker and he also moved all my wifes stuff over from Discovery & Old Mutual.

 

[Overmind]

Forget about this guy. The only thing he is interested in is selling you something else or something on top of what you already have.

1. Cancel the policy with Sanlam. Frankly it is a complete piece of s*&t. You can do this yourself. Read your contract and contact Sanlam directly to cancel (quick check: how much have you paid to Sanlam over the lifetime of the policy? Should be much more than R30k.)

2. Go see an INDEPENDENT financial advisor (preferably CFP qualified). Someone that gets paid for his services/advice and not for selling you some product.

 

[JerryMungo]

I suspect the life cover component is whats eating up your capital here.
Very little of your premium is going towards your actual fund.
Your advisor will probably advise you to get separate life cover so that you full premium goes towards your fund.

Same happened to me with my Old Mutual retirement fund.

My advise: Keep your life insurance and disability funds far separate from your annuity and retirement funds.

I'm not a financial advisor so anyone who is, please correct me if I'm wrong.

+1 same here.

 

[emptybruwer]

I talk today to my buddy in sanlam, he said they get commission on policies for 2 years after signing and 1 year for annuity . So they go back to clients after 2 years or so.so they then try and sell you somthing different or change your policy.

 

[Freshy-ZN]

I talk today to my buddy in sanlam, he said they get commission on policies for 2 years after signing and 1 year for annuity . So they go back to clients after 2 years or so.so they then try and sell you somthing different or change your policy.

Dont talk bollox. The law has changed and it is now compulsory for a proper financial adviser to make contact and review your portfolio at least once a year. This is for your benefit.

To the OP: Before 2007 (+-) the industry was plagued by a lot of useless 'brokers' and 'advisors'. Since that time the FAIS act (The Financial Advisory and Intermediary Services Act) has come into being and has forced the industry to become professional and accountable. Sounds like you had a lemon sold to you or you do not understand what you have. 'Fund of Funds' is a collective investment but could be any one of many for example the Multiu Managed Aggressive Fund of Funds. You dont have a Fund of Funds policy as such rather you invest in a Fund of Funds for example in your Retirement Annuity. A 15% annual escalation is heavy but you may well have chosen/been convinced to take an unsuitable premium pattern. Regardless there is always recourse if you were given bad advice.

 

[Freshy-ZN]

Financial Advisory and Intermediary Services Act, 2002
Chapter IV - Codes of Conduct
16. Principles of code of conduct





1) A code of conduct must be drafted in such a manner as to ensure that the clients being rendered financial services will be able to make informed decisions, that their reasonable financial needs regarding financial products will be appropriately and suitably satisfied and that for those purposes authorised financial services providers, and their representatives, are obliged by the provisions of such code to –

a) act honestly and fairly, and with due skill, care and diligence, in the interests of clients and the integrity of the financial services industry;

b) have and employ effectively the resources, procedures and appropriate technological systems for the proper performance of professional activities;

c) seek from clients appropriate and available information regarding their financial situations, financial product experience and objectives in connection with the financial service required;

d) act with circumspection and treat clients fairly in a situation of conflicting interests; and

e) comply with all applicable statutory or common law requirements applicable to the conduct of business.

2) A code of conduct must in particular contain provisions relating to –

a) the making of adequate disclosures of relevant material information , including disclosures of actual or potential own interests, in relation to dealings with clients;

b) adequate and appropriate record-keeping;

c) avoidance of fraudulent and misleading advertising, canvassing and marketing;

d) proper safe-keeping, separation and protection of funds and transaction documentation of clients;

e) where appropriate, suitable guarantees or professional indemnity or fidelity insurance cover, and mechanisms for adjustments of such guarantees or cover by the registrar in any particular case;

eA) the control or prohibition of incentives given or accepted by a provider; and

f) any other matter which is necessary or expedient to be regulated in such code for the better achievement of the objects of this Act.

 

[guest2013-1]

I think you should separate the life cover from your normal premium and work with that. 15% growth per annum from 2001 and you're only 20k into the fund? Slow indeed.

You should also make sure *what* type of fund it is. If it's a retirement annuity or something for retirement, they won't pay out or let you close the policy. It has to by law come to "term" (how this changed with the new consumer protection act I do not know)

The reason I was given is because the government is forcing people not to cash out on policies like that if it's over R8000.

The problem with when you "cancel" the policy though is Sanlam will deduct about R26k off your fund (or you have to pay that money in) for their fees. Yes. If you cancel, they deduct the next 20 odd years fees you would have paid immediately. Then your money just sits there *hopefully* growing a bit till it pays out. Tough when you have R100k available and need it to actually survive but can't use it cause government said so...

 

[blunomore]

....... I will gladly PM you the number of the Sanlam advisor I used last year, he is an independant broker and he also moved all my wifes stuff over from Discovery & Old Mutual.

You mean to say her insurance policies, etc was moved from Discovery to SANLAM ? How did the broker justify that? I do not like SANLAM one bit, but that's JMO.

 

[VioletF]

The guy is after comission, the only reason why he is eager to switch you.

If you want a 2nd opinion, I will gladly PM you the number of the Sanlam advisor I used last year, he is an independant broker and he also moved all my wifes stuff over from Discovery & Old Mutual.

Thanks, I'm getting a 2nd opinion, but a third might also come in handy.

 

[VioletF]

The problem with when you "cancel" the policy though is Sanlam will deduct about R26k off your fund (or you have to pay that money in) for their fees. Yes. If you cancel, they deduct the next 20 odd years fees you would have paid immediately. Then your money just sits there *hopefully* growing a bit till it pays out.

Ouch! I'm sure it's not a retirement policy, though. Of course it's still very likely that they'll deduct those 10 year's worth of fees if I cancel it.

It looks as if the general consensus is: get more information; try to get rid of the life insurance part if I can and rather go to an independent broker.

Thanks, everyone!

 

[Freshy-ZN]

You mean to say her insurance policies, etc was moved from Discovery to SANLAM ? How did the broker justify that? I do not like SANLAM one bit, but that's JMO.

My God, you like Discovery? Ive yet to meet a broker that understands their policy documents properly, nevermind one of their clients!