Every industry exists to make money for someone. Employees take their share through salaries. Shareholders take theirs through dividends. And the investment industry? It takes its share through fees.
If you invest, you’re paying fees—whether you realise it or not. You can dodge some of them, but you’ll never avoid them completely. It’s like selling a house through an estate agent—you have to pay their commission. Sure, you can sell privately, but in the investment world, there’s no complete “private sale” option. Even if you manage everything yourself, the investment products you use will still charge a fee.
And here’s the uncomfortable truth: your friendly financial advisor probably isn’t going to lead with that information. Why? Because fees are their lifeblood.
Now, this is not a post telling you to ignore financial advisors. A good one can be worth every cent. But you should understand why you can’t get out of paying fees—and how the different models work—so you know exactly what you’re paying for.
Common Financial Advisor Fee Models in South Africa
South African advisors don’t all work the same way. Some charge once-off, some charge ongoing, and some still work on commission. Here’s what you’ll typically see:
1. Once-Off (Flat) Fees
A single, agreed-upon payment for a specific service. This could be:
• A set fee for a comprehensive financial plan—an analysis of your finances, goals, and an investment strategy.
• An hourly rate for advice.
• A flat fee for a one-time consultation or account setup.
This model works well if you want independent advice and plan to manage your own investments afterwards.
2. Ongoing Fees (Percentage of Assets Under Management)
This is the most common model. The advisor charges a percentage of your total investments, deducted automatically—often between 0.25% and 1% a year.
• Example: R1 million invested at 1% means R10 000 a year to the advisor.
• Advisors say this aligns their interests with yours—your portfolio grows, so does their pay.
• Covers continuous service: reviews, rebalancing, ongoing advice.
3. Commission-Based Fees
A more traditional model where the advisor earns commission from the product provider for selling a financial product.
• Can be a once-off or ongoing payment.
• The risk: they may recommend products that pay them more, not necessarily what’s best for you.
Can You Avoid Advisor Fees? Yes.
If you go the DIY investing route—opening your own account with a platform like EasyEquities or SatrixNOW—you can skip paying an advisor entirely. But you’ll take on all the decision-making, research, and risk yourself.
The Fees You Can’t Avoid
Even if you’re a hardcore DIY investor, there are still unavoidable costs:
• Management Fees (TER) – Charged by the fund manager for running the investment. Applies to both unit trusts and ETFs.
• Platform/Admin Fees – Paid to the broker or investment platform.
• Transaction Fees – Small charges when you buy or sell investments.
• Regulatory Fees – Statutory costs charged on trades.
Flat Fees in the U.S.—A Quick Comparison
In America, flat-fee “membership” models for advice are growing. Typical costs:
• $2 000 – $7 500 per year for ongoing access.
• $200 – $400 per hour for ad-hoc advice.
• $1 000 – $3 000 once-off for a comprehensive financial plan.
High-net-worth investors often prefer this—it can be far cheaper than paying a percentage of assets.
Questions to Ask Any Advisor Before You Sign
• How are you compensated?
• What’s my total, all-in cost?
• Do you charge ongoing fees, and if so, how much?
• Are there commissions I should know about?
• Can you show me the long-term impact of these fees on my returns?
Bottom Line
You can skip advisor fees by managing your own investments, but you’ll never escape the underlying management and platform fees that keep the financial industry’s lights on. The smart move? Know exactly what you’re paying, why you’re paying it, and whether you’re getting real value in return.
Because in investing, as in life, there’s one cost you’re never going to avoid.
