Finweek English Edition - - FEEDBACK - Marc Ash­ton Ed­i­tor Fin­week

As a 66+ se­nior cit­i­zen con­tem­plat­ing re­tire­ment in the near fu­ture, I read Wim Wi­jen­berg’s “Maybe Not That Great?” let­ter in the 29th Novem­ber edi­tion of Fin­week with great in­ter­est.

On the one hand I have a f inan­cial ser­vices plan­ner, of­fer­ing me a choice of pen­sion pack­ages rang­ing from large fixed monthly sums to smaller inf la­tion­linked monthly sums.

On the other hand I have a pri­vate bank f inan­cial ad­viser pre­fer­ring the liv­ing an­nu­ities op­tion, pos­si­bly to link it back to some­thing else when in­ter­est rates im­prove.

Which­ever di­rec­tion I choose, I’m told it will cost me more than R12 000 a year, or over R1 000 a month in fees – a healthy prospect for any ad­viser but not so great for me !

Tak­ing Wim’s com­ment re­gard­ing the do-it-your­self method, it sounds ideal on the sur­face, but how long can it last – when I’m in my eight­ies or nineties will I still be in­tel­li­gent enough to look af­ter my­self f inan­cially or, if I’m still around, will I be drib­bling into my gruel?

I ac­cept that there will never be a “one-package-f its-all” ideal but it seems to me that ev­ery “spe­cial­ist” in re­tire­ment plan­ning has a dif­fer­ent ap­proach.

Let’s hope that the Mayans had the right idea and by next week we won’t need to worry any more, the world will have ended and I will have saved my­self R1 000 a month.

Kind re­gards

Ge­off Pos­nack Fin­week re­sponds: Thanks Ge­off, it’s a very nice ques­tion and one I think a lot of peo­ple spend a great deal of time con­sid­er­ing.

Be­fore we get on to the fees, maybe I can sim­plify the re­sponse a lit­tle bit.

Rule num­ber 1: Don’t lose your ini­tial


Rule num­ber 2: It’s only an in­vest­ment if it de­liv­ers a re­turn greater than in­fla­tion. Rule num­ber 3: Try not to give any of it to the tax­man.

Sure, th­ese rules are sim­ple but if you re­mem­ber them, it can guide a lot of your de­ci­sion mak­ing with­out over-com­pli­cat­ing any­thing. If you are plan­ning to go the DIY in­vest­ing route then re­mem­ber that you can­not af­ford to lose your nest-egg and you have to be bru­tal on your­self about whether it is ac­tu­ally de­liv­er­ing a pos­i­tive re­turn on in­vest­ment.

If you are go­ing di­rect, you have to cal­cu­late your af­ter-tax re­turn. I put your ques­tion to a cou­ple of f inan­cial plan­ners and they made the fol­low­ing sug­ges­tions:

1. You can go di­rect and cut out the ad­vi­sor (if you feel con­fi­dent and able to do this on your own).

2. Ne­go­ti­ate the fees with the plan­ner/ ad­viser – th­ese could be both the ini­tial fees and/or the on-go­ing fees – th­ese are not cast in stone. You should also es­tab­lish ex­actly what it is that he’s paying the “R12 000” for.

3. Find­ing a plan­ner who will do the work for you on a “project” ba­sis with no on­go­ing ad­vice fee and where he can con­sult with the plan­ner on an as-and-when ba­sis.

4. As part of that fee, you should be get­ting con­sul­ta­tion and ad­vice, not just a pro­ductlinked fee.

Fin­gers crossed that the Mayans got it wrong.

Thanks for the great ques­tion.

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