Tag Archives: sanlam

Sanlam Cumulus Echo RA

I was recently approached by someone for help with her Sanlam RA’s – they are the bad, old traditional life RA’s with opaque fees, poor returns and hefty penalties if you make any changes before the term ends. It seems that Sanlam has found a way around this though with their Cumulus Echo RA where they are encouraging clients to move. The “carrot” is no penalties when the move to this RA and bonuses if they see out the term. Sounds good, or does it?

It took quite a bit of digging to find the fees on these new RA’s but after a while I found 2 pages* on the Sanlam website that say it all. The first one is the advice and marketing costs which are “hidden” behind a “more information” button. Here is what it says…

“If you prefer to select your own funds and will be investing recurring monthly payments, the following marketing and administration charge is applicable:”

Fund value band Yearly marketing and administration charge % of the fund value of the plan
First R500 000 4.10
R500 001 – R1 000 000 3.75
Excess above R1 000 000 3.50

The fee for using internal funds is slightly lower but still far too high to make it attractive.

But I think that the most insightful part of the investigation was an example of how much an investor could expect if they used the RA (including future bonuses).  “The Example is based on a monthly payment of R1000, taking into account an annual inflation increase of 6% over 25 years. It assumes an investment return of inflation plus 2% after fees.”

2% after fees? We know, that it is reasonable to expect a “balanced” unit trust fund to generate CPI+5% (after fees) over the long term (25 years). Sanlam seems to be acknowledging that their fees are so high that an investor should expect to only receive inflation+2% over that time. The loss of the 3% to fees, compounded over 25 years, will be devastating to your retirement and will result in significant damage to your ultimate fund value (bonus or not).

My advice to anyone considering the Cumulus RA is to run far away – pay the penalty for transferring away from the old RA and find a unit trust RA with an underlying passive fund – your total annual fee should come in at around 1-1.25% pa (advice fee included).


*One of the pages: https://www.sanlam.co.za/personal/retirement/savingforretirement/Pages/sanlam-cumulus-echo-retirement-annuity.aspx#Works

Dear Old Mutual, Liberty, Sanlam, Momentum, Discovery, PPS et al (insert name of insurance company)

Dear Old Mutual, Liberty, Sanlam, Momentum, Discovery, PPS et al (insert name of company)


There is a peculiar thing in this industry that if you are not the advisor on record because you don’t have a contract at a particular company (or the client transfer was not processes correctly) that you cant get information for your client from that company – without a letter of authority that is. But then not just any letter of authority – almost every one of the insurers/investment companies has their own interpretation of what this should be. Some are happy with a generic letter, some want it on their own form, some are happy with a letter that is dated last year others want it dated not more than 30 days ago and even different call centre agents appear to have different interpretations of the internal rules of the company. As a rule, insurance companies are worse than unit trust companies when it comes this this!

On the face of it this might seem reasonable, after all the insurers have a duty to protect their clients’ information from unscrupulous advisors* don’t they (NB see comment below)?

However, consider the medical profession where doctor A calls doctor B about a patient that they have both seen – information is shared freely and easily – even if doctor B is no longer treating the patient. There is an understanding that both doctors are professionals, that both have the patient’s interests at heart and that the information will be used for the patient’s best interests.

In the financial planning industry it appears that the opposite is true – I think that the lowest common denominator rule applies in that insurance companies are so used to dealing with unscrupulous advisors that they have it as their default setting that all financial planners are crooks and therefore must be treated with suspicion when it comes to requesting client information!  (As an aside, in my opinion, The Financial Planning Institute is missing a trick here and should have negotiated with each of the companies that anyone carrying the Certified Financial Planner® designation should be entitled to get any information that they request i.e. the default setting should be “trustworthy” for CFP® professionals).

To the insurance companies – if you want my business then treat me like a professional. I am not a crook – if I request information it is because I have been authorised/mandated by the client to get it. If only you knew just how much I hate having to deal with you and your call centres (or maybe if only you cared about how much I hate dealing with you). When we request client information and I am told (often by a rude agent) that we are not entitled to the information because:

  1. We are not the advisor on record, or
  2. The letter of authority is too old, or
  3. The letter of authority is not in the correct format, or
  4. Think of any other excuse not to give the information!

Every single part of my being has to fight the urge to take the business away from your company. When you won’t give me the information that I need (and am entitled to by virtue of the fact this it is my client) then it gets increasing difficult to recommend that the client stays with your company.

You just don’t get it: you spend millions each year advertising and building brand so that you can attract more customers rather than focus on retaining the ones you already have. It’s all about service!

You have no idea just how badly I want to take business away from you and how hard I have to fight against this desire sometimes when in spite of your rubbish client service, it still makes sense for the client to keep the policy.

But I guess the problem is you just don’t care!


*Unless of course said unscrupulous advisor is the source of much new business for the company!