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A Fin24 user wants to know what is a reasonable fee to pay a financial adviser. He writes:
What is a fair and reasonable upfront and annual fee for my financial planner to charge on my investments?
Advocate Dries Bekker, national head of Sanlam senior market advice and support, responds:
Cost surely can erode the performance or returns of an investment over time, so it makes sense to ask what the cost of your investments should be.
When investing, the client will find that different costs apply to different products. Factors that may influence product cost include:
Product quotations will usually provide such an indication, but you must note that this does not include the advice fees being paid to the investment adviser.
Depending on the type of product, the investment adviser may again receive an upfront commission and/or a recurring advice fee.
On discretionary investments, the adviser may usually take a larger upfront fee while in the case of retirement products this is limited to a maximum of 1.5%.
- Fin24
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever
resulting from the use of this site in any manner.
* Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
What is a fair and reasonable upfront and annual fee for my financial planner to charge on my investments?
Advocate Dries Bekker, national head of Sanlam senior market advice and support, responds:
Cost surely can erode the performance or returns of an investment over time, so it makes sense to ask what the cost of your investments should be.
When investing, the client will find that different costs apply to different products. Factors that may influence product cost include:
- Does the product include a guarantee?
- Is it fully liquid? Some products are for a fixed term and may have early termination penalties.
- The underlying assets you invest in may also boost cost, as it is usually cheaper to invest in interest-bearing funds compared to equity or international funds.
- Does the product offer exposure to external fund managers, as this usually comes at an increased cost?
- Is it a discretionary investment or does it relate to the investment of retirement funds? The latter usually puts a limit on the fees that may be taken.
Product quotations will usually provide such an indication, but you must note that this does not include the advice fees being paid to the investment adviser.
Depending on the type of product, the investment adviser may again receive an upfront commission and/or a recurring advice fee.
On discretionary investments, the adviser may usually take a larger upfront fee while in the case of retirement products this is limited to a maximum of 1.5%.
- Fin24
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever
resulting from the use of this site in any manner.
* Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
