Most people who hesitate to use a financial adviser do the maths on one number: the advice fee. It's visible, it's on a statement, and it feels like money leaving your pocket for something you could arguably do yourself.
That comparison — fee versus zero — is the wrong one. It leaves out two things that usually matter more than the fee itself: what your own instincts cost you in a downturn, and what you're already paying for the funds you hold, whether or not anyone ever pointed it out.
The cost that never appears on a fee schedule
The single biggest drag on most private investors' returns isn't a fund choice at all. It's timing — buying after a fund has already run up, and selling after it's already fallen. The opposite of what a return actually requires, done by ordinary, rational-feeling people at exactly the wrong moments.
This is well documented, including locally. A research group formed by Momentum Investments, North-West University, and the University of Pretoria followed the investment decisions of roughly 17,600 South African individual investors over a decade and found a cumulative underperformance gap of between 22% and 24% over 20 years — a finding consistent with earlier UK research from Barclays Wealth, which put the cost at around 21% over the same horizon. The same research found investors were roughly two-and-a-half times more likely to switch funds after poor recent performance than after strong performance, and that most switches were simply chasing whatever had just done well.
Even disciplined, buy-and-hold-oriented investors aren't immune. Allan Gray has reported that its own clients, on average, gave up roughly 0.57% a year over a 10-year period relative to the fund's own return — purely through the timing of switches and withdrawals, at one of the more patient investor bases in the local industry.
None of this requires unusual bad luck. It's the ordinary, human response to volatility — sell when it's frightening, buy back once it feels safe again — applied at exactly the wrong moments.
An adviser doesn't eliminate volatility. What a good one does is stand between you and the decision to act on it — which, based on the research, is often worth more to your eventual outcome than any single fund choice.
The one you're already paying, whether you've checked or not
Every investment carries a second cost that's easy to miss for the opposite reason — not because it's dramatic, but because nobody ever shows it to you. The fund's own annual running cost, usually expressed as a Total Expense Ratio or TER, is deducted from performance before you ever see a return. You don't get a line item for it. You just get a slightly smaller number at the end of every year, for as long as you hold the fund.
Many funds exist in more than one share class — effectively the same underlying portfolio, managed identically, but priced differently depending on how it's accessed. A retail class, bought directly by an individual investor, typically carries the highest fee. An institutional or wholesale class of the very same fund — accessed through the buying power of a large adviser practice or a platform's negotiated terms — can carry a meaningfully lower one. The holdings don't change. The manager doesn't change. The fee does.
Take R1,000,000 invested for 20 years at a 9% market return. At a 1.25% annual fund cost, it grows to roughly R4.45 million. At a 0.85% annual fund cost — a 0.40 percentage point saving, in line with what's typically available by moving from a retail share class into the institutional class of the same fund — it grows to roughly R4.79 million.
That's a difference of around R342,000 on the fund fee alone, before a single decision about strategy, timing, or asset allocation has been made.
An advice fee, charged on top, is real money too. But set against a gap of this size, it isn't automatically the more expensive side of the equation.
Cheap and efficient aren't the same thing
It's tempting to treat fund selection as a simple rule from here: find the cheapest option and take it. That's the wrong instinct. A fund with a materially higher fee can still leave you in a better net position than a cheaper one, if what you're paying for is genuine skill — a manager who has demonstrably added value net of costs, or exposure that isn't easily replicated through a low-cost index tracker.
The harder, less visible part of the work is telling the two apart: knowing which of two similar-looking funds is charging a premium for something real, and which is charging a premium for nothing but marketing. That means looking past the fee to the fundamentals underneath it — the stocks and sectors a fund actually holds, the manager's philosophy and track record through different market conditions, and how consistently the strategy has been applied.
It also means recognising when two funds that look very different on the surface are, in substance, close substitutes — holding similar underlying exposure — while charging very different fees for it. The right question is never "which fund is cheapest," but "which fund's fee is actually earning its keep."
Structure, tax, and fit
The same rand can sit in a retirement annuity, a tax-free savings account, an endowment, or a discretionary account — and the wrapper you choose changes both the fee you pay and the tax you owe. Get the wrapper wrong and no amount of fund selection makes up for it.
There's a second lever alongside it: how many places your money is actually held. Accounts opened at different providers at different points in your life usually mean duplicated administration fees. Consolidating them onto a single platform brings that cost down too, on top of whatever the wrapper decision already saved.
None of this is solved by a formula. The right structure depends on your income, your tax position, and your own lifestyle and liquidity needs — not just the lowest theoretical cost on paper.
This isn't a guarantee — it's a net-effect question
None of this means an adviser automatically saves you more than they cost. It depends on the funds you're already in, the platform your adviser uses, the size of your portfolio, the fee your adviser charges, and how much of the behavioural cost above you'd have avoided on your own anyway. A high advice fee stacked on top of retail-priced funds and no real guidance is still an expensive combination.
The comparison that actually matters isn't advice fee versus zero. It's the advice fee versus the combined net effect of everything on the other side of the ledger: the behavioural cost avoided, the fund-fee saving, the value of the fund selection itself, and the tax and structural efficiency.
Ask us to run the numbers
If you've never compared what you're currently paying — in fund fees, and in the timing decisions you've made along the way — against what's available through an adviser relationship, that comparison is a straightforward starting point — not a commitment.
Book a consultation