Case Study

What We did

Structuring and Life Management on My Vault

Transfer and Consolidation of Retirement Annuities

Reinvestment of Provident Fund

Conversion of Group Life Cover

Drafting of Last Will and Testament

Mr. G, 45, married with 2 children, contacted us after he receiving a Section 189 (3) letter of resignation from his employer. The company was downsizing.

At the time, he had 3 retirement annuities, a small unit trust for emergencies, his provident fund benefit, group life cover, an individual life policy and medical aid.

He had a Will at one of the large banks, and an existing advisor that looked after his affairs. When asked about who his contact at the bank was, Mr. G was unable to provide a name. When we asked him about the fees on his investments, he sent us a statement for one of his investments that indicated an Effective Annual Cost of 2.80%. His other investments were old products, which generally coincide with exorbitant fees (often obscured and difficult to understand). He provided us with a snapshot of the investments.

Mr. G had a a good handle on his affairs, but it lacked structure. His financial information and documents were all kept in different places and locations. Some were stored in OneDrive, some on his laptop and cellphone, and others in a file cabinet at his residence. Additionally, he used a combination of Excel spreadsheets, Word documents, authenticator applications, and email folders.

Background

Mr. G wanted an update on the status of his affairs and needed objective input about his impending retrenchment. He specifically wanted to know whether taking a portion of his provident fund in cash was a good idea, and what the implications would be. He also asked us to have a look at his other policies and investments.

The Brief

The Planning

After explaining our process and benefits of our packages to Mr. G, he opted for a PREMIUM package. By opting for this package, he automatically qualified for our discounted fees and commission, in addition to the wide array of benefits, which proved extremely valuable throughout our planning and engagement.

After 2 in-depth consultations and gathering and consolidating all relevant information on his behalf based on his PREMIUM membership, we made in-depth recommendations that included, inter alia, the following:

• Transfer his retirement annuitues to a new platform to reduce costs and increase transparency. Mr. G qualified for ongoing fees of 0.30% per annum based on his PREMIUM membership. No initial fees were charged when we transferred the investments. Although there were termination penalties, the benefit of reduced fees significantly outweighed the costs of keeping the investments were they were. We estimated that he paid between 5% and 6% per annum.

• Consolidate and restructure his retirement annuities to enable more effective management and portfolio diversification. His risk profile and target objectives were never reviewed since inception of the investments.

• Reinvest his Provident Fund benefit. We gave him the entire picture and what his options re: cash withdrawals were, including tax implications.

• Convert his group life cover, free of medical underwriting. Mr. G qualified for 50% commission discount based on his PREMIUM membership.

• Setup his My Vault account to help him manage his affairs cohesively in one central location.

• Draft a new Will to ensure that his family knows who to contact, and where to find all his information (his My Vault account).

• Help him work through his Life File to ensure that his family knows what to do in the event of his death or disability.

Some of the Results

1 | Conversion of Group Life Cover

The discount on Mr. G's policy resulted in significant savings, which just about offset the monthly costs that he is paying for being a PREMIUM member. Additionally, our projections show that he would have saved close to R 150,000 after 20 years because of the discount.

2 | Transfer and Consolidation of Investments

Mr. G qualified for an ongoing investment management fee of 0,30% per annum for being a PREMIUM member. We transferred and consolidated his investments in a new portfolio aligned with his risk profile and target objectives, which we established during our planning. Prior to the transfer, his total fees (Effective Annual Cost) ranged between 2,80% and 6% per annum, which is substantial when it comes to investment growth. We were able to bring his total fees down to 1,5% per annum (VAT included). This means that more of his capital was now available to be invested.

Assuming a growth rate of 8% per annum across all scenarios, our projections showed that Mr. G would have earned between R 958,000 and R 2,596,000 more after 20 years based on the restructure.

3 | Life Planning and Management

Mr. G managed to structure all his affairs using My Vault, our life management system, together with the Life File Blueprint that he received as a PREMIUM member. We also drafted a new Will for him to streamline his estate. With this system now in place, we started focusing our attention to helping Mr. G carve out a roadmap for his own business. Knowing that his financial affairs were well addressed and managed, we were comfortable to shift our focus to his dreams and aspirations.

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