Robo-advice is the latest buzzword you will find being used increasingly in financial publications, at financial planning forums and even among regulators.
This article was first published in the fourth-quarter 2015 edition of Personal Finance magazine.
Robo-advice is the latest buzzword you will find being used increasingly in financial publications, at financial planning forums and even among regulators.
As the term suggests, it is advice given by a robot – a computer following an algorithm, and so far the focus is mostly on investment advice. Typically, you use a website or app to enter your investment amount and time horizon and sometimes further details about your tolerance for investment risk, and you are provided with an investment portfolio that is designed to match your stated needs.
The definitions of robo-advisors on websites that explain new concepts, such as www.investopedia.com and www.wikipedia.com, make no mention of the use of index-tracking or passive investments, but this is a key feature of the larger robo-advisors cited in these definitions, such as Betterment, Wealthfront and Personal Capital in the United States and Nutmeg in the United Kingdom.
In countries with well-developed financial planning markets, such as the US, UK and Australia, robo-advice is limited but growing rapidly.
Time Money says that, at the end of last year, assets under management by US robo-advisors were about US$19 billion, while international accounting firm PWC says that, in 2012, total assets under management in North America were US$33.2 trillion.
Recent robo-advisors launched overseas give some indication of how the asset management industry believes technology will affect financial advice. Earlier this year, leading US index investment provider Vanguard launched a robo-advisor, Personal Advisor Services; Charles Schwab, the US banking and broker group, launched an automated investment platform, Schwab Intelligent Portfolios; and late in August, BlackRock, the world’s largest fund manager, acquired a San Francisco-based robo-advisor, FutureAdvisor.
The Financial Times reported in June that a host of well-known brands – including Investec Wealth, Brewin Dolphin and Barclays Stockbrokers – plan to launch similar robo services this year, while the UK’s largest investment platform, Hargreaves Lansdown, launched an automated service to match investment portfolios to your goals and attitude to risk.
To date, there have been only limited developments in South Africa – mostly small financial advisor firms launching virtual advice sites, particularly to serve the unadvised with investment amounts too low to justify a human advisor’s fees – but one of them was approached by four large financial institutions soon after opening its online door.
And Magda Wierzycka, the chief executive of asset manager Sygnia, has confirmed that Sygnia will provide a robo-advisor for direct investors in its Skeleton range of index-tracking unit trusts from February 2016.
Wierzycka says there is a whole segment of investors who do not want to use a financial advisor and, in the 18 months since Sygnia opened its investment platform, one-third of its clients were direct investors who had no financial advisor.
She says Sygnia has already built financial planning tools incorporating its own risk-profile questionnaire for users of its Alchemy investment platform and their advisors. The Sygnia robo-advisor will have a scaled-down version of this tool, she says.
The questions the tool asks try to determine if you are investing for your retirement or if you are retired and investing to provide an income in retirement through a living annuity.
Fees on Sygnia’s Skeleton funds are just 0.4 percent, and Wierzycka says the robo-advisor will guide you to a correct mix of these funds at this fee with no additional advice fee.
So it is only a matter of time before we have a much wider choice of robo-advisors, and you should know whether these online services will suit your needs, what to look for when choosing one, and what protection you enjoy if you use one.
Robo-advisors are likely to appeal particularly to younger, digitally savvy people who are comfortable using online services and don’t see the need to pay higher fees for human assistance. But that is no reason older or wealthier people should not use these sites; what everyone should just be aware of is that these sites can never replace the range of services, the individualised service or the coaching role that their human counterparts can offer.
Earlier in 2015, the international organisation the Financial Planning Standards Board (FPSB), called on financial planners around the world who have the Certified Financial Planner (CFP) designation to give their input on robo-advisors and sent their responses to the International Organisation of Securities Commissions (IOSCO), to which most financial services regulators belong.
The FPSB’s call to advisors for comments notes that the market for “automated advice” emerged in the US precisely from a desire to reach young investors of lesser net worth; it goes on to note that some commentators believe cheaper, automated advice has become attractive in the UK because recent regulatory reforms have led to an “advice gap”.
These reforms, known as the retail distribution review (RDR), have put the brakes on commission earned by financial advisors and forced them to charge advice fees instead. Investors who relied on commission-based advisors now cannot afford advice or do not want to pay out of their own pockets for it. Hence they are turning to robo-advisors.
In 2014, the Financial Services Board (FSB) published proposals for South Africa’s own RDR. The proposals drew many comments, which the FSB is currently studying. So far, none of the proposals has been implemented, but some of them are expected to become reality in the next year and the rest within the next three years.
The local RDR proposals also seek to ban commissions on investment products, forcing financial advisors to charge fully disclosed and negotiated advice fees only. The aim of the RDR process is to ensure that the cost of financial services is transparent and disclosed in such a way that you know what you pay for each service rendered to you.
Speaking at the investment conference of international mutual fund rating and investment management company Morningstar in Cape Town in September, Caroline da Silva, the deputy executive for Financial Advisory and Intermediary Services (FAIS) at the FSB, said South African regulators and legislators are aware of the concerns around introducing an advice gap in South Africa, and are not following the UK RDR precisely. Instead, the South African version is mindful of the need to sustain financial advice and the role of the advisor for the benefit of the consumer, she says.
She also noted that the UK introduced minimum qualifications for financial advisors at the same time that it introduced RDR, while South Africa already has minimum qualifications.
The advice gap may be less of an issue in South Africa, but as Jonathan Dixon, the deputy executive for insurance at the FSB, told the Discovery Financial Planning Summit earlier this year, transparency about the cost of advice has also led some consumers in the UK to seek cheaper forms of advice, such as the simplified or automated advice offered by robo-advisors.
Phil Billingham, a chartered financial planner with Perceptive Planning in the UK and an expert on the regulatory changes there, told the Financial Planning Institute (FPI) conference earlier in 2015 that many consumers need simple advice: to spend less, save more, insure the breadwinner and make a will. This advice can be delivered by robo-advisors at a cost of closer to 0.05 percent to 0.1 percent of the amount you invest, rather than the two to three percent that some consumers have been paying, he says.
Understanding how financial advisors need to ensure their businesses are profitable also gives some insight into why you may find yourself with an automated or virtual solution offered by a firm of advisors.
Many South African advisors charge fees based on the size of the investments on which they give you advice rather than charging an hourly fee or a monthly retainer.
David Kop, the head of advocacy and consumer affairs at the FPI, explained at the FPI conference how financial advisors need to segment their clients and offer them services that match the fees they can earn from them.
For a lower price, the smaller investor may be offered only one consultation with a human advisor and advice that is no more unique than the advice a robo-advisor can offer.
So Although the term robo-advisor suggests that computers are doing some super-human analysis, their offerings are typically no more than the software their human counterparts use as part of the process of determining the best investments for you. They typically determine your investment needs and hence your investment horizon; they determine your tolerance for risk and calculate the level of risk you should take to meet your goals and sleep easily. Then they choose the asset allocation with the appropriate risk to meet your goals without exceeding your tolerance for risk.
The key, however, is how robust the process is. Providers of online services typically try to keep the process as brief as possible, while human advisors in an interaction with you have the advantage of being able to ask you as many questions as it takes to get a good grasp of what investments you need and how you will respond if the investments are affected by market downturns.
When you meet an advisor who follows the six-step planning process, there is a far greater focus on getting to know you and understanding your needs, goals and personal circumstances.
Robo-advisors are also not capable of analysing your existing investments and adjusting any new investments to complement your existing portfolio and ensure you are diversified across your investments into regions, asset classes and securities. But if your choice is between do-it-yourself investing and a robo-advisor, as Larry Ludwig, a writer for investorjunkie.com, says in his article “The rise of the robo-advisors – should you use one?”, “while this strategy isn’t perfect, it sure beats what most individuals have – which is nothing. What they have is usually a hodge-podge of investments with no asset allocation, actively managed funds, high annual fees, and whatever ‘investment du jour’ their peers recommend investing in.” He says robo-advisors help you with goal setting and asset allocation – when many people typically have no clue where to begin.
Once you are invested, a robo-advisor can rebalance the portfolio it has designed for you to ensure that, when your chosen asset allocation gets out of kilter, it is brought back into line. Automated rebalancing is regarded as an advantage over doing it yourself, because you may be tempted to hold on to an investment that is doing well instead of selling some of it to rebalance your portfolio.
While true robo-advisors are fully automated, the FPSB says there are a number of business models that offer some form of human-assisted automation.
It says the models may allow you to choose the robo-advisor to manage a portion or all of your own investment portfolios or have the advisory company manage them. You can also choose to create investment portfolios for single goals, such as retirement or providing for a child’s tertiary education.
The paper noted that some human advisors see an opportunity to offer automated advice as a complementary service to clients, while others regard it as a threat.
Ludwig says robo-advisors are great for the competitive marketplace, because they will push down the costs of high-fee advisors who offer no real value and, if anything, are a drag on returns.
To get an idea of the fees you can expect, you can look at the robo-advisors in developed markets, but fees may not go as low in South Africa because the economies of scale are smaller.
The US site Betterment charges 0.35 percent of assets under management annually and this decreases to 0.25 percent if you invest more than US$10 000 and to 0.15 percent if you invest more than $100 0000.
Wealthfront charges no fees on the first $10 000 in your account and there is an annual 0.25 percent fee on amounts above $10 000.
Vanguard’s Personal Advisor charges 0.3 percent annually for its robo-advice.
Fees are important, and even the smallest percentage-point reduction in fees can make a big difference to your final savings pot after a long savings period of, say, 10, 15 or 20 years.
But remember too that advisors can add a huge amount of value and may very well be worth their fees if they also, for example, save you tax, save your estate money with good planning and ensuring you have a will, ensure the gaps in your financial plan from inadequate cover for disability, dread disease or early death are plugged, and keep you invested through market lows.
Research in the US by a company called Dalbar has, for many years, highlighted the big difference between what funds return, on average, and what investors earn, on average, because of the timing of their deposits and withdrawals from funds.
Local manager Allan Gray published the average returns earned by investors in its three most popular unit trust funds in 2010. This showed that, between 2000 and 2010, investors’ annual returns were 1.5 to 4.4 percentage points lower than the funds’ returns.
If you are not the kind of person who has the discipline and confidence to stick to an investment plan, having a human advisor who can hold your hand may well be worth it.
Remember, robo-advisors are most likely to suit beginner investors and investors with uncomplicated financial affairs. Anyone whose affairs are more complex should seek advice from more than a robot.
The FPSB paper says that, in 2014, the IOSCO’s Committee on the Regulation of Market Intermediaries analysed the impact of automated advice on investor well-being, and attempted to identify how regulators around the world were addressing oversight issues.
The report acknowledged that there were “regulatory challenges”, and outlined eight major concerns of regulators who participated in a survey on the issue:
Some firms classify the output of automated advice tools as something other than a recommendation – for example, they may say it is non-personal promotional material – to avoid complying with regulations relating to financial advice;
Firms do not regularly update the information used to determine if the investment is suitable;
Consumers input insufficient information for an automated tool to provide appropriate responses;
Consumers, believing that they received advice, buy riskier, unsuitable products;
A firm’s conflicts of interest result in an automated tool making recommendations that favour the firm at its customers’ expense (for example, recommending products that the firm provides, churning or changing existing investments unnecessarily, or favouring preferred clients);
Firms lack sufficient internal controls to adequately supervise the use of automated advice tools;
There is uncertainty about whether firms provide their customers with sufficient information/disclosure about using automated tools, such as instructions and risk disclosures; and
There is uncertainty about whether firms are applying proper suitability requirements when they recommend complex or illiquid products to you as a retail customer.
The FPSB recommended that if you, as the end user of a robo-advice site, assume you are getting “advice”, the firm should classify the robo-advice tool’s output as advice and it should be regulated in the same manner as human advice.
It also said regulators should require firms to ensure that the data in automated advice tools is based on up-to-date personal information and risk profiling, and an annual review should be mandatory.
The FPSB also said the sites should require you to acknowledge the correctness of the data supplied.
Da Silva told Personal Finance that, should a robo-advisor be set up with a low- or no-advice model, the FSB will look at the product supplier and future product standards that the FSB plans to put in place to ensure that you get a fair outcome, adequate disclosure and that there is accountability.
All three of the online investment sites currently available in South Africa (see “What is available in South Africa?”, below) have financial services provider licences, and Wierzycka says Sygnia’s robo-advisor will use Sygnia’s licence and be offered as “low-level advice”.
She says the advice from the robo-advisor will be for what is known as a “single need”. This means the robo-advisor will not give you holistic advice for all your potential financial needs, but will focus on single investment needs, such as investing for retirement or the education of a child.
Before you proceed to invest, the robo-advisor will inform you of your post-retirement income needs and whether you are on track to reach that goal, Wierzycka says.
Robo-advisors may be able to guide you to an investment better than you could do yourself and they can be cheaper than their human counterparts, although you are likely to see the real cost-saving coming from robo-advisors that negotiate lower fees with product providers on your behalf.
The weakness of the robo-advisor is in the risk-profiling questionnaires. The quicker they are to complete, the less accurate they are likely to be, leading to potential problems down the line.
A professional human advisor should take a lot into consideration when determining what investments are suitable for you. In an article published four years ago in Personal Finance magazine (“Risk profile shouldn’t determine how you invest”, fourth-quarter 2011) the Institute of Behavioural Finance’s Cobus du Plessis said that advisors need to know:
The risk you need to take to earn the return that you require to achieve your goals;
Your risk capacity, which is the extent to which the future may be less favourable than was predicted without your financial plan being derailed; and
Your risk tolerance, which is the level of risk you would prefer to take.
The asset allocation of your investments should be based on the risk required, the risk capacity and your risk tolerance. Your financial advisor should guide you to accept the right balance between these risks so that your assets can be allocated correctly, Du Plessis says.
First, your advisor must determine the return that your investment should earn in order to meet your goal. This return can then be used to determine the right allocations between asset classes.
The asset allocation strategy and the risk associated with it must be explained to you. If the risk exceeds a level that you would normally be willing to accept, you should be aware of the mismatch, and you and your advisor should then explore the trade-offs between this asset allocation and alternative strategies, Du Plessis says.
In finding the balance between the allocation you require to meet your needs and the one that won’t prevent you from sleeping at night, he says, you and your financial advisor may have to:
Find ways in which you can increase your resources by earning more, spending less or converting personal-use assets into investment assets;
Scale back your investment goal by delaying, reducing and/or discarding it; and
Accept more risk than you are comfortable with, but not to the extent that this may induce you to panic and sell your investments during a market downturn.
In the same article, Andrew Bradley, the chief executive of Old Mutual Wealth, says although it is critical that your advisor understands your risk tolerance, this cannot be determined by using a risk-profile questionnaire. He says your psychological profile, perceptions and feelings, as well as your level of financial well-being and security, change all the time, and will influence how you answer a questionnaire.
He says your advisor has to consider your risk tolerance by engaging with you about the investment strategy you need to follow to achieve your goals. The discussion about your risk tolerance becomes meaningful only when you have been through the financial planning process and you and your advisor understand all the dynamics.
This is one way in which a face-to-face visit with a good financial advisor who is willing to engage with you outstrips the services of a simple robo-advisor.
But there is a lot more to be said for using a human financial advisor.
Patrick Duggan, a London-based private client wealth manager at Investec, says “investing is never just about the money. It’s about articulating lifestyle, family, business and philanthropic goals, adjusting tactics as markets and personal circumstances change, engaging family members and securing retirements and legacies through all market cycles”.
He says robo-advisors for largely index or passive investment solutions are workable, provided you have only cash to invest, need only a basic level of financial planning, truly understand your risk tolerance in all market conditions and don’t really want to talk to another person.
“Investors with concentrated single holdings or existing portfolios comprised of individual stocks, bonds and unit trusts would have a difficult time making the transition to robo-advisors, which aren’t able to incorporate existing holdings into a portfolio. Forced sales would likely realise large capital gains, with the resultant tax implications,” Duggan says.
He says complex income and estate laws require careful consideration when implementing investment strategies, and robo-advisors are ill-equipped to provide tax planning.
Cash-flow planning, liability analysis, concentrated stock planning, charitable planning and, of course, multi-generational estate planning, are similarly beyond the capabilities of a robo-advisor.
Duggan also says the true test of the robo-advisor will be during times of extreme volatility, such as a severe correction or bear market, when investors are most likely to panic or be drawn into rash switches. He says the August 2015 edition of InvestmentNews reported that the big sell-off and volatility during that month led to increasing numbers of requests for consultations from investors who had used robo-advisors.
A good financial advisor and life planner can help you to identify the goals you want to reach to ensure that your financial plan serves your life plan. A human planner can then also be a coach, who can advise and encourage you to take the steps you need to take to meet your goals – perhaps cutting expenses to save more – and will also ensure that your goals are not derailed by gaps in your financial plan, such as the lack of an emergency fund or medical scheme cover.
In an article in the Financial Times, columnist Emma Ann Hughes says a robo-advisor can’t look you in the eye and advise you that buying an expensive new home is a bad idea.
A robo-advisor will rebalance your portfolio, but only a human one can prevent your emotions from derailing a good financial plan. Only a calming human voice can guide you to sell high and buy low and not to disinvest when markets fall dramatically.
A good financial advisor is said to be like your own chief financial officer, fulfilling a task that goes well beyond finding the best investment portfolio and tax efficiencies. He or she has the whole picture of your financial life in view and can direct you to the areas that need attention.
Robo-advisors tailored for South Africans are likely to be launched soon. To date there is only a limited range of websites and apps that can offer you automated advice. Personal Finance is aware of three financial advice firms that are either delivering advice online or could be regarded as forerunners of robo-advisors. There may be others, but these three are good examples of what you can find, and comparing them highlights what you should look for. They all offer only investment advice, and the advisors behind the sites are all financial services providers licensed by the Financial Services Board.
Of the three sites highlighted, SmartRand (www.smartrand.co.za) has the cheapest advice fees, its recommended funds are largely cheaper, passive ones and its advice questionnaire is the most sophisticated. Users will find lots of educational information to guide them.
The site was developed by Galileo Capital and independent financial advisors Theo Vorster and Warren Ingram (the Financial Planner of the Year in 2011).
Vorster and Ingram built the site primarily to serve people they cannot service because their investments are too small and are incapable of sustaining the advice fee, but it is now attracting wealthier investors as well.
Ingram says SmartRand is not designed to serve people with more complex financial needs, such as a business owner or someone who needs a retirement plan. Even a person with young children who needs life assurance and has competing needs to pay a home loan and save for retirement should rather consult a financial advisor, he says.
SmartRand uses the Ashburton investment platform and the funds it recommends are all RMB funds. There are three RMB Fusion unit trust funds – multi-asset funds that track indices representing the different asset classes. The other two funds are actively managed: Ashburton’s money market fund and its equity fund.
SmartRand’s investment advice begins by explaining the need for SmartRand to balance your tolerance for risk with the risk you need to take to meet your goals and the risk you can afford to take (your risk capacity).
The process starts with 12 questions to determine your risk tolerance. This is based on the FinaMetrica test. FinaMetrica is an Australian company that has developed a web-based questionnaire with the help of psychologists at the University of New South Wales for advisors to use to accurately determine your risk tolerance. FinaMetrica has tested the validity, reliability, understandability and answerability of the questions it uses.
Next, you need to answer eight questions that test how much risk you can afford by asking, for example, your age, who you support and the value of all your assets.
After answering these questions, you get a two-page report on your risk tolerance that you can read through and decide whether or not you agree with it.
You also receive a recommendation to invest in one of the five funds offered through SmartRand, with reasons the fund is the right one for you.
Ingram says that if your investment requirements do not match your risk tolerance – for example, if you say you want to invest for 10 years but then indicate that you may need to withdraw the money sooner – Galileo’s financial planners will contact you telephonically to coach you on what to do.
The minimum investments on SmartRand are R5 000 for a once-off lump-sum investment and R500 for a debit order.
You can also take out a retirement annuity (RA) or open a tax-free savings account with Ashburton: the minimum single premium is R25 000 and the minimum monthly debit order is R500. The tax-free savings account has a maximum of R30 000 a year and R500 000 over your lifetime.
The low investment fees are one of the highlights.
Upfront advice: nil;
Ongoing advice: 0.29 percent annually;
Platform administration fee: nil; and
Underlying fund management fees: an annual 0.3 percent for the money market fund, 0.46 percent for the multi-asset funds and 0.5 percent for the equity fund.
This adds up to a total annual fee of between 0.59 and 0.79 percent, depending on your investment choice.
InvestOnline (www.investonline.co.za) is a virtual investment site launched about five years ago by Nick Brummer, a chartered accountant and investment analyst, and Rod Lowe, a Certified Financial Planner.
To invest with InvestOnline, you need to answer just five questions about how old you are, how long you want to invest for, whether you have other money on which to live if you lose your job, what you know about investing and what your return expectations are.
You then receive an email that provides you with your risk profile – for example, “moderately aggressive” – and tells you which unit trust companies you can invest with using the site.
If you wish to continue, you can apply online for an investment making use of those unit trust funds.
InvestOnline uses the Allan Gray platform, and it has a range of 63 “premium-branded” funds from Allan Gray, Coronation, Investec, Foord, Nedgroup Investments, Prudential, Prosperity, Cadiz, Kagiso, Marriott, PSG, RE:CM, Rezco, Satrix, Stanlib, 27Four, 36One and Momentum.
According to the site, these funds are used in five investment portfolios, which match the risk profiles aggressive, moderately aggressive, moderate, moderately conservative and conservative. The one-, three- and five-year returns of each portfolio are shown on the site.
Depending on your profile, you are invested in one of the five portfolios. If you don’t agree with your profile, or with the make-up of the portfolio, you can choose a different portfolio from one of 10 offered by InvestOnline, or make your own selection, but you must acknowledge that this is not what InvestOnline advised you to do.
InvestOnline also offers three RA portfolios, again through the Allan Gray platform, but this is not an online process.
InvestOnline will communicate with you when it is time to review your portfolio annually, and a manager will be available via email, telephone or Skype.
Minimum investments are a lump sum of R20 000 or a debit order of R500 a month.
The costs are:
Upfront advice: 0.5 percent.
Ongoing advice: 0.5 percent annually.
Platform administration fee: according to the Allan Gray platform – 0.5 percent a year on the first R1.5 million and 0.2 percent on the balance over R1.5 million. If your investments are only in Allan Gray funds, you pay 0.2 percent.
Underlying fund management fees: from 0.75 to 2.5 percent a year.
Beanstalk (www.beanstalk.co.za) was developed by Mark Moir, a Certified Financial Planner who founded Silvertree Risk and Wealth Management, and Andrew Mobbs, the managing director of The Hatchery Limited, a UK-based web and mobile application development company.
Moir says that when he and Mobbs started developing Beanstalk, he hadn’t even heard the term robo-advisor and just wanted to offer an easy and accessible online investment site. Initially, it was aimed at people whose investments were too low to justify the full service of a financial advisor, but Moir says he has realised that wealthier investors also want to use the service.
Like InvestOnline, Beanstalk uses the Allan Gray platform and chooses from 56 actively managed local funds and two index-tracking Satrix funds, as well as 58 offshore funds. It also offers access to the Allan Gray RA and preservation fund, and, by the time you read this, is likely to also be offering a tax-free savings account making use of the Investec investment platform.
The Beanstalk site includes an Investor Dashboard on which you can see at all times the current value of your investments, the asset allocation and their performance over the past one, six or 12 months.
Another advantage Beanstalk has over its rivals is that you can invest without submitting any paper documents: you can upload all the documents required for Fica and sign your investment application form with an electronic signature.
Beanstalk also makes use of a very simple risk-profile questionnaire, as Moir is of the view that simpler is better. The financial advisory space is unnecessarily complex and confusing for investors, especially first-time investors, he says. Beanstalk is attempting to demystify the process so that it is easier and more accessible for you.
You just need to answer how old you are, how much you want to invest, how long you will invest for, what are you investing for and what your risk profile is – and you are done. Beanstalk recommends an answer to the risk profile question – aggressive, moderate or conservative – based on your investment term.
Then Beanstalk will recommend funds for you – which could be a combination of funds, depending on your risk profile – as well as the percentage split you should opt for among these funds.
You are free to tweak this selection, and Beanstalk will guide you on which alternative funds you can choose based on its classification of funds as aggressive, moderate or conservative. Moir says that if you select funds Beanstalk thinks are inappropriate, you will receive a call and be advised on a more selection.
Beanstalk says the fund selection and classification is based on the fund’s mandate, the fund’s performance and a risk analysis that includes the maximum negative return you could face if you invest in the fund.
A Beanstalk advisor reviews all portfolios quarterly and sends you a comprehensive investment report.
If you want to transfer an existing unit trust, RA or preservation plan to Beanstalk, you can place a “move investments’’ request on the site, and a Beanstalk advisor will investigate your existing investments and whether you will incur any penalties if you go through with a transfer.
The costs of investing are:
Upfront advice: Nil.
Ongoing advice: 0.5 percent annually.
Platform administration: according to the Allan Gray platform – 0.5 percent a year on the first R1.5 million and 0.2 percent on the balance over R1.5 million. If your investments are only in Allan Gray funds, you pay 0.2 percent.
Underlying fund management fees: from 0.75 to 2.5 percent a year.