Ruminations on financial advisors

Aweh, My Dearly Beloved Fellow Ruminants & Groupies

As you know, I’m 64 and, surprisingly, Nerine still feeds me, though it’s debatable whether she still needs me. Next year, I hit my “sell-by” date, and formal full-time employment ends. Retirement looms.

Polite people don’t talk about money. Ask how their investments are managed or how they approach their finances, and you’ll get a cough, a subject change, or a sudden interest in the weather. That silence comes at a cost. How your money is invested is the difference between a secure future and one filled with compromises, which is why it’s worth thinking deeply about how your money is managed.

So, I’ll be impolite, unzip, and piss straight into the gale.

Advisers Love LISPs

We’re constantly told to consult a certified financial adviser and let them arrange everything. Sounds sensible. But is it?

Reaching retirement in South Africa without enough money is grim. There’s no real safety net. A state pension and poverty are basically the same thing. Only 6% of South Africans retire comfortably, a stat every adviser loves to quote.

Enter the LISP, the Linked Investment Service Provider. It’s a neat one-stop platform where an adviser can bundle your funds, admin, and reporting into tax wrappers like RAs or living annuities. Advisers love them because they’re convenient. But layered fees, platform, fund, and adviser can quietly hollow out your returns.

The Termites in Your Financial Cellar

Most high-net-worth individuals rely on traditional wealth managers, Allan Gray, PSG, Glacier, and friends. But these structures are the termites in your financial cellar: small, persistent, and very hungry.

Glacier vs DMA: A Real-World Example

Instead of you worrying about how to save for retirement and worrying about all the complexities of investing, let your very friendly financial adviser arrange things for you, and you can sit back and retire comfortably. Is this a good approach? It’s what most South Africans who retire reasonably well do, so it must be good, right?

Why do I say this? For those of you who don’t like technical details and don’t worry about termites in your financial cellar, skip this week’s blog, focus on your hobbies, and come back next week. I’m writing for those of you who have a defiant streak and are not that concerned about the well-being of your friendly, helpful termites.

Let’s assume you have R10 million to invest for 10 years.

You could use:

• Glacier, South Africa’s largest LISP, or
• A low-cost offshore DMA account buying low-cost Irish-domiciled index tracking ETFs on the London Stock Exchange.

Here are the numbers:

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 Fee Breakdown

Fee Component	Glacier LISP	DMA ETF Approach
Platform/Admin Fee	0.85% = R85,000	0.05% = R5,000
Fund TER	0.60% = R60,000	0.076% = R7,600
Adviser Fee	0.50% = R50,000	0%
Total Annual Fees	1.95% = R195,000	0.126% = R12,600

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📈 10-Year Results

Metric	Glacier LISP	DMA ETF Approach
Nominal Ending Value	R21,745,000	R25,580,000
Real Value (after 5% CPI)	R13,350,000	R15,700,000
Real Value Difference	→ You lose R2.35M

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📈 20-Year Results

Metric	Glacier LISP	DMA ETF Approach
Real Value (after inflation)	R17,615,000	R24,980,000
Real Value Difference	→ You lose R7.37M

These tables highlight the powerful impact of fees on long-term investment outcomes. While both Glacier and the DMA ETF approach assume the same gross return (CPI + 5%), the difference in annual fees, 1.95% for Glacier vs 0.126% for DMA, results in a substantial divergence in final wealth.

The difference over 20 years is a Lamborghini or two. Or, more realistically, it’s money you gave your adviser so you could “focus on your hobbies” while he can have two Lamborghinis.

The takeaway is clear: even small differences in fees, when sustained over time, have a massive impact on investment outcomes, making cost efficiency a central pillar of long-term financial success.

Active vs Passive: The Final Nail

“But surely,” I hear you say, “my adviser will pick better funds!”

Let’s call bullshit on that.

Decades of data show 80–90% of active managers underperform their benchmarks over 10–20 years, especially after fees.

Even the few who outperform usually don’t repeat it. Today’s winners are often tomorrow’s losers.

I have carefully listened to so many certified and qualified financial advisers over the decades, and the best ones serve excellent coffee, but I’m afraid none of them has got past my bullshit deflectors.

For those of you who prefer your hobbies and don’t like Lamborghinis or whatever extravagance that floats your boat, I suggest taking up an inexpensive hobby like walking, which offers physical and mental health benefits. Lamborghinis are overrated anyway.

The Slow Leak You Don’t Notice

High fees don’t feel like a robbery. No one kicks in your door and runs off with your TV. Instead, it’s a slow, polite siphoning, like a friendly neighbour “borrowing” sugar every day until you’re broke.

That’s why most people don’t notice. Your statement still shows growth, so you assume everything’s fine. But here’s the truth: you’re not earning market returns, you’re earning market returns minus a lifestyle subsidy for your adviser.

Over decades, that gap is the difference between travelling first class and taking the bus. Between retiring when you want and working until your knees give out.

A small leak sinks big ships. And in investing, the leak has a name, a business card, and a really nice car.

Final Thought

If you’re too lazy to take charge of your finances, be prepared to spend your golden years polishing someone else’s Lamborghini.

Thanks for all the comments and input.

Bruce