One percent. It is the kind of number nobody argues about in a meeting.
On R500,000, one percent is R5,000 a year. That is before you look at how the fee is calculated, before VAT, and before the balance moves. Then it is charged again the next year, and the year after that.
The deduction is only half of it. Money that leaves for costs is no longer in the account earning growth, so the gap widens quietly in the background rather than announcing itself on a statement.
None of this means the cheapest option wins. A more expensive service or investment may do work you genuinely value, and paying properly for good advice is not the same thing as leaking money. The point is to see the cost clearly enough to weigh it against what you actually get.
One more thing worth knowing. Percentage fees move with the balance. If the investment grows, the rand cost grows with it, even though the percentage never changed. Some rates step down at higher balances. Many do not.
Try this now
Take one percentage fee off a statement or proposal. Multiply the relevant balance by the annual percentage to get a rough rand figure, then check whether the real calculation uses an average balance, a tiered rate or another method.
Ask your advisor
- What did this fee amount to in rand last year?
- What service or investment function did it pay for?
- How will the rand cost change if the balance rises or falls?