What are all the deductions?

Never heard of half of the fees mentioned in this piece? Here’s a brief explanation of each one.

O Platform fee: The fees charged by a platform that allows investors access to various funds and types of investments (ranging from unit trusts to stocks and exchange traded funds and others). This typically includes a set-up charge, an annual charge and dealing charges (fees for buying and selling investments). It can also include other charges such as monthly or annual fees, dividend reinvestment fees and so forth.

O Financial adviser’s commission: This is a premium or contribution-based commission. Every time you contribute towards your investment, your financial adviser is paid a percentage of that instalment. Depending on the investment product, this could be between 3% to 5% of the contribution made.

O Financial adviser’s trail fee: This is also known as an annual advice fee. Instead of paying a percentage of your premium every month, your financial adviser takes a cut of your total accumulated fund every month. It’s usually calculated monthly and then charged annually. Typically, this ranges between 0.5% and 1%. But even though the charge is overtly lower than commission, for a longterm investment, this kind of fee can take out even more of your savings than a traditional commission fee.

O Discretionary fund management fee: A fee charged by an asset manager who invests in a variety of funds and securities on behalf of their client. Typically, an “assets under management” (AUM) fee is charged. As the company’s assets under management increase, so the AUM fee will go up. Fees vary greatly — you could be paying anything from 0.1% to 4%.