The more help in the cornfield the smaller the harvest

The more help in the cornfield the smaller the harvest

I’m sure most of you have heard the expression: “It’s not wise to put all your eggs in one basket”. I have had clients repeat this expression to me many times as a reason for why they sometimes have the exact same investment products, with many different product providers managed by multiple financial advisers.

Investments can be diversified through different assets classes, fund managers and geographies to name but a few, but when it comes to costs it should be simplified and as low as possible.

As an investor it is important to understand the concept of: The Circle of Influence and The Circle of Concern. The Circle of Influence, is where an investor has room for negotiation and a matter of control.

The Circle of Concern typically refers to factors that worry us, but that we have no control over, such as politics and the economy.

Not all investment solutions are cut from the same cloth. For this reason, it is imperative for each investor to understand what they are being offered before they can determine whether the fee being charged is reasonable in relation to the services they can expect.

Some product providers charge a flat rate for admin fees. Others might aggregate the total value of your portfolio to determine the admin fee on a sliding scale. Some advisors might charge upfront fees whilst other do not, and some fund-managers have performance fees whilst others find it unethical. In the end, everything adds up which could make investments costly when you end up with the wrong combination.

When faced with a decision regarding your long-term investment portfolio, it would be prudent to obtain a second opinion so as to ensure that any recommendations made are aligned to your goals and that costs are reasonable. You can also consider consolidation of your portfolio if it proves to be more cost-effective.

In this instance, consolidation does not mean putting all your eggs in one basket, it simply means that you are structuring your portfolio in a cost-effective manner.

PSG Wealth Financial Planning (PTY) Ltd is an authorised financial services provider. FSP 728.