About to retire, shocked at financial advice fees | Fin24
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About to retire, shocked at financial advice fees

Apr 09 2015 14:37

A Fin24 user is getting ready for retirement, but is worried about the fees he has to pay for financial advice. He writes:

I am retiring shortly and contacted a few financial advisers. They are charging me an advice  fee of 1.5%  and a monthly fee of 0.2%.

How can I avoid these charges? I know I have to pay normal taxes, but what must I live off? I have to pay my own medical aid, household expenses, water and lights.

READ: Is a financial adviser a must?

Gustav Potgieter CFP® of Aurum Trust responds:

Planning for retirement is probably one of the most important decisions you have to take in your life. The decisions that you make can have an effect on your life for the next 20 years plus.

Unfortunately, there is no indication of your retirement capital available, so it is difficult commenting on the fees. If it is an initial fee of 1.5% and an ongoing advice fee of between 0.5% and 1% annually, it does not sound out of line, depending on the person's skills and qualifications.

Other services, like tax advice, estate planning, your will, normally form part of the services included in the annual fee.

READ: Choosing a financial adviser

Depending on the capital amount available, retirement planning has two distinct important legs, namely tax planning and managing the investment afterwards.

Tax planning

If you have an adviser who has the necessary skills and knowledge, he can structure your retirement income as tax efficient as possible.

Investment planning

This is an ongoing process and that is why there is an ongoing fee. Your adviser will have an annual meeting to discuss your portfolio, your needs and to ascertain if circumstances changed in your life.

Your choices?

You could take the do-it-yourself route and hope you make the right choices among the numerous possibilities. There are more unit trust funds available than shares on the JSE, for instance. Beware of the "sounds too good to be true" investment schemes that prey on people.


Contact a professional adviser, preferably a Certified Financial Planner, to assist you. They are professionals and will put your interest first.
Always remember, fees are negotiable, but financial advice cannot come for free. Financial advisers have a lot of statutory costs to be able to do their jobs professionally and to adhere to the Fais Act.

ALSO READ: Shake-up expected in financial advice industry

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.

retirement  |  money  |  money clinic


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