Should I drop Sanlam?

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Maverick154

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Hi Everyone.

So I have a question that I am hoping some people here can give me advice on. I currently have three endowment policies that I took with Sanlam a while back when I was still young and stupid. Below is some more information on them:

Policy 1:
Value: R7462
Debit Order: R302.50
Termination Value: R6490
Investment Funds: SIM Bestuurde Matige Oplossing (12.58%) | SIM Finansiele Fonds (26.33%)
Start Date: 2012
End Date: 2022

Policy 2:
Value: R7107
Debit Order: R302.50
Termination Value: R6168
Investment Funds: SIM Bestuurde Matige Oplossing (12.58%) | SIM Gebalanseerde Fonds (15.71%)
Start Date: 2012
End Date: 2022

Policy 3:
Value: R5288
Debit Order: R275
Termination Value: R4353
Investment Funds: SIM Bestuurde Matige Oplossing (12.58%) | SIM Gebalanseerde Fonds (12.12%)
Start Date: 2013
End Date: 2023

As far as I remember the fees are something stupid like 4.4% and 4.5%. The only fund that then looks like it is worth while is the Financial one which performs rather well.

So here is my question, do I:

A) Keep going with Sanlam and invest in their best performing funds?
B) Drop them, take the knock on capital and move to another company like Coronation and invest in an Endowment policy there?
C) Something that I missed that someone can add?

On a final note, I heard that legally they are not allowed to charge me any exit fees after the investment is 5 years old, so then do I rather wait until that time comes and then pull my funds?
 
I went through the same exercise. First I was switching to much better performing funds as per your point a. The fee I was paying for the financial advisor was insane, and he did f-all.

I eventually took the knock after 3yrs -> +-7% penalty. I worked it out over the term until there is no penalty, and the costs to the advisor and insurance company outweighed the penalty, so I took the knock.

I can tell you now, I am as happy as a pig in Palestine.

But make sure to invest the payout in a reputable unit trust manager (direct with low TER + admin fee and proven track record) or ETF!

(not advise, just my take on it)
 
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On a side, note - unless it is REALLY for you, I would stay the ***** away from Endowment policies.
 
adidas said:
On a side, note - unless it is REALLY for you, I would stay the ***** away from Endowment policies.
Click to expand...

Do share why :), been contemplating if I should not move away from them all together. My adviser (the same one who is currently not doing much other than taking my money) advised that it is the best place to put my money (back when I knew nothing).

Oh and where are you investing at the moment?
 
Policy 3:
Value: R5288
Debit Order: R275
Start Date: 2013
Click to expand...

Looks like you have achieved zero growth. 24 months of R275 is R6600, yet value is R5288. The 12% you seemingly earcned was just eaten by fees. Pull out now as you would just be losing more money
 
I would find a fund with lower fees and cancel all and consolidate the payment to R1000 for one fund instead of 3.
 
adidas said:
On a side, note - unless it is REALLY for you, I would stay the ***** away from Endowment policies.
Click to expand...

+1

if you really want to save for retirement take a Retirement Annuity (with an asset manager, like Coronation or Allan Gray). Same tax advantages as a pension fund.

Endowment policies have no tax advantages, only limitations.
 
Maverick154 said:
Do share why :), been contemplating if I should not move away from them all together. My adviser (the same one who is currently not doing much other than taking my money) advised that it is the best place to put my money (back when I knew nothing).

Oh and where are you investing at the moment?
Click to expand...

Definitely stay away from endowments. They are products designed to maximize the commission of the adviser and secondly to tie you into a contract to pay for a long time from the provider perspective. The consumer's interest is placed last of all three as you face penalties and are locked in.

I would recommend that you fire your adviser and go with a reputable one. Here is a link to those accredited and associated with the Financial Planning Institute: http://www.fpi.co.za/YourFinancialPlanning/FindaFPIApprovedProfessionalPractice/tabid/3851/language/en-ZA/Default.aspx
They are all great companies and are independent for the most part. Once you find one that you like they can properly advise you on how to get out of this mess.

I can assure you that Sanlam has got the worst reputation in the industry for how they treat customers. I would never go with them.
 
Maverick154 said:
Do share why :), been contemplating if I should not move away from them all together. My adviser (the same one who is currently not doing much other than taking my money) advised that it is the best place to put my money (back when I knew nothing).

Oh and where are you investing at the moment?
Click to expand...

These days people are investing in ETF's and Index funds.
Do some reading up on them before investing.
There are many options.
 
Say that I want to use the funds that I take out of Sanlam for saving for my childs education. Where do I place these funds?

I currently have a retirement annuity with Coronation that invests in the balanced plus unit trust, but I do not want to add it to these funds.

I was thinking of maybe investing into the Coronation Top 20 fund once this cash comes out, but not sure if that is the best place to put it? Perhaps Allan Gray is the better option in this regard due to the various funds I then have available to invest in?
 
Maverick154 said:
Say that I want to use the funds that I take out of Sanlam for saving for my childs education. Where do I place these funds?

I currently have a retirement annuity with Coronation that invests in the balanced plus unit trust, but I do not want to add it to these funds.

I was thinking of maybe investing into the Coronation Top 20 fund once this cash comes out, but not sure if that is the best place to put it? Perhaps Allan Gray is the better option in this regard due to the various funds I then have available to invest in?
Click to expand...

As mentioned before, I would start here: www.justonelap.com

Take the time and learn about money. Go to the absolute beginner series-> http://www.justonelap.com/SearchResults.asp?name=absolute beginner series
 
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adidas said:
Mostly ETFs and some quality single stocks. Then a mix of index tracking and actively managed unit trusts
Click to expand...

Hmm, what is your take on ETF's vs Unit Trust investing? I read an interesting paper a while back from the owner of Sygnia with regards to the fees on ETF's vs Unit Trusts. It would seem that the Unit Trusts generally have lower fees.
 
Maverick154 said:
Hmm, what is your take on ETF's vs Unit Trust investing? I read an interesting paper a while back from the owner of Sygnia with regards to the fees on ETF's vs Unit Trusts. It would seem that the Unit Trusts generally have lower fees.
Click to expand...

Depends on which ETF and Unit trust. My RA is with Sygnia. They have some of the lowest costs on unit trusts in SA. So some of their unit trust costs are cheaper than some ETFs. But that does not happen often, difficult to find a unit trust with TER under 1% the last time I looked. Also most unit trust managers charge admin fees as a % of your holdings. Where if you go ETFs with a online stock broker, you can buy efficient ETFs and pay a low monthly admin charge, or no charge in the case of Easy Equities.

You also get 2 types of unit trusts - actively managed (more expensive) and index tracking (less expensive and more in line with ETFs). Remember ETF is basically a index tracking basket of shares (like unit trust) trading on the JSE as a security.
 
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Maverick154 said:
Do share why :), been contemplating if I should not move away from them all together. My adviser (the same one who is currently not doing much other than taking my money) advised that it is the best place to put my money (back when I knew nothing).

Oh and where are you investing at the moment?
Click to expand...

Endowments can work great if you are earning serious money and pay 42% tax and you are prepared to invest serious monthly amounts, like earning 100K and saving R20-40K per month. The tax saving would be worthwhile, endowment investments are not taxed at the 42%.
Endowments are usually also fixed term like 5 years where you are not allowed to withdraw funds, you are however allowed to loan against the capital, etc lots of complex rules designed to make them money.

The amounts that you are "investing"... you have maximized the fees you are paying. Your "financial advisor" has given you the perfect advice to fill his pockets. I would suggest that you contact Sanlam, tell them you are not happy with your advisor, you want to fire/remove him/her, you do not want any financial advisor. Most decent companies will allow you to invest without having a "advisor" drawing fees every month. If they do not allow it, then best you see if you can transfer to another investment company that does allow it. I know Coronation does allow you to invest without a advisor. If you really need one, find a decent one. I have not personally ever met such a "advisor" myself, but I do like this guy http://www.thefinancialcoach.co.za/

I have been advisor free for 5 years now. It was worth my time to do all the reading. Now I am earning all the "advice" fees myself.

Here is a summary of Sanlam funds http://www.equinox.co.za/unittrusts/funds/fundresults.asp?func=manco&mancoId=SAN
I am not a big fan of Sanlam funds
 
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