Be careful what you pay for when you retire.

Let us focus on the cost of retirement in South Africa in as far as individuals decide to take up advice from investment or financial advisors.

We appreciate that many people only ever see an advisor when they need to buy a life policy, a funeral policy or to claim for money after a member of their family passes away.

In most of these encounters there are no payments being made by the client directly, and if so, they are usually negligible.

The reason you have to be aware of the cost of retiring is because this is most likely the biggest cost you will ever pay for financial services.

We would not be concerned if these costs came with a lot of good service and you were treated as the most important part of the two-way relationship with your advisor.

Let us look at the fees that you will pay upon retirement.

Financial advisors fees are guided by the Financial Services Board to be between 0% and 3.25%. This means that if your retirement benefit is R1-million you should look to pay no more than R34200 to your adviser.

You should know you are allowed to negotiate the fees you pay - they are not fixed and most advisors will never disclose these fees to you in rands, but will show them to you in percentage terms because you will not bother calculating the value in rands.

Some wealth management companies only charge clients a percentage for advisory fees, so look out for the best deal. The fee may come with an analysis of your budget, a suggestion on a possible post-retirement budget, weekly follow-ups and updates from employers like the GEPF and other employers you may have worked with. Advisors can also make sure that once your money has been received and allocated to your investments and to your bank account - depending on your choice - they organise a will for you so your affairs are up to date. The costs you pay through the process of retiring and resigning should include the realignment of your life and funeral policies.

The other costs to be aware of include fund manager fees, which vary between zero percent and 5%.

These need to be considered carefully as they can reduce your investment values drastically - especially if the asset manager does not perform. The last, but very important. cost is the annual advisor fee. How much do you pay the adviser?

What does he do for you after you receive your retirement benefit? Should you really pay these fees?

lFor more questions regarding your retirement, you can call us on 087-160-0018, or e-mail invest@iwgsa.co.za