Quick Facts

• No, you do not need a financial adviser to open an RA
• Advisers typically charge 0.5% to 3% per year of your investment
• DIY options can save you thousands over 40 years
• Many platforms offer direct investment with no adviser fees
• You can get advice only when you need it

The Simple Answer

No, you do not legally need a financial adviser to open or manage a Retirement Annuity in South Africa. Many investment companies now offer direct investment options. You can open an RA yourself online.

However, whether you should use an adviser depends on your situation. This guide helps you decide what is best for you.

The choice between using an adviser and doing it yourself can affect your retirement savings by hundreds of thousands of Rand over time.

What is a Retirement Annuity?

A Retirement Annuity (RA) is a tax-efficient investment for retirement. You save money now. You get tax benefits. You can only access the money at age 55.

Key Features of an RA:

• You choose how much to save each month
• You get tax deductions up to 27.5% of your income
• Maximum tax deduction is R350,000 per year
• Your money grows tax-free inside the RA
• You cannot withdraw money until age 55
• At retirement, you can take up to one-third as cash
• The rest becomes a monthly pension income

Two-Pot System (Since September 2024):

Your RA now splits into two parts:

• Savings pot (one-third): You can withdraw once per year if you have an emergency
• Retirement pot (two-thirds): Locked until you retire at 55

This gives you more flexibility but withdrawing early reduces your retirement savings significantly.

What Does a Financial Adviser Do for Your RA?

A financial adviser provides several services related to your Retirement Annuity:

Planning Services:

• Calculate how much you need to save for retirement
• Work out if you are saving enough
• Help you understand your retirement goals
• Explain how inflation affects your savings
• Show you how long your money will last

Investment Choices:

• Choose which funds to invest in
• Match investments to your age and risk level
• Decide how much to invest in shares versus bonds
• Review and change investments as needed

Administration Help:

• Complete application forms for you
• Handle paperwork and documentation
• Monitor your RA performance
• Send you regular reports
• Help with tax certificates

At Retirement:

• Explain your options when you turn 55
• Help you choose between living annuity and life annuity
• Calculate how much income you can draw
• Help minimise tax on your lump sum

⚠️ The Real Cost of Adviser Fees

Adviser fees might seem small each year. But they compound over time and can cost you hundreds of thousands of Rand.

How Advisers Charge:

Fee Type	Typical Cost	What It Means
Initial Advice Fee	0% to 3% of lump sum	Charged once when you start
Ongoing Advice Fee	0.5% to 3% per year	Charged every year on your balance
Flat Fee	R2,000 to R10,000 once	Pay once for a financial plan
Hourly Rate	R1,000 to R3,000 per hour	Pay only for time spent advising

Real Example of Costs:

Let’s say you invest R1,000 per month for 40 years (from age 25 to 65). The investment grows at 10% per year.

Adviser Fee Level	Final Value at 65	Cost of Fees
No Adviser (DIY)	R6,300,000	R0
Low Fee (0.5% per year)	R5,600,000	R700,000
Medium Fee (1.5% per year)	R4,200,000	R2,100,000
High Fee (3% per year)	R2,800,000	R3,500,000

Even a 1% fee difference can cost you over R1 million over your working life.

✅ DIY Retirement Annuity Options

Many South African companies now let you open an RA directly without an adviser. These are called “direct investment” options.

Top DIY RA Providers (2025):

Provider	Annual Fee	Best For
10X Investments	0.86% to 1%	Lowest fees overall
Allan Gray	0.9% to 0.99%	Under R625,000 invested
Sygnia	0.9% to 0.99%	Index tracking funds
Easy Equities	1% to 1.2%	Young investors, tech-savvy
AlexForbes	Under 0.9%	Over R625,000 invested
Investec Online	0.95% to 1.1%	Private bank clients

Benefits of DIY RAs:

• Much lower fees: Typically under 1% per year instead of 2-3%
• Full control: You make all investment decisions
• No sales pressure: Nobody trying to sell you products
• Online access: Manage everything on your phone or computer
• Transparent costs: All fees clearly shown
• Easy changes: Switch funds or stop payments anytime
• Education resources: Most providers offer free guides and calculators

How to Open a DIY RA:

1. Choose a provider from the list above
2. Visit their website or download their app
3. Complete the online application (15-30 minutes)
4. Upload ID and proof of bank account
5. Choose your investment fund (most offer simple options)
6. Set up monthly debit order or make lump sum payment
7. You receive tax certificates automatically each year

When You Should Consider Using an Adviser

An adviser can add value in certain situations. Here is when you should consider paying for advice:

Complex Financial Situations:

• You have multiple income sources (rental property, business, investments)
• Your income varies significantly each year
• You have complex tax situations
• You own a business and need integrated planning
• You have offshore investments or income

Large Investment Amounts:

• You have over R1 million to invest in a lump sum
• You are close to retirement (within 5-10 years)
• You need sophisticated asset allocation
• You want exposure to international markets

Lack of Financial Knowledge:

• You do not understand investment concepts at all
• You have never invested before
• You feel overwhelmed by financial decisions
• You make emotional investment decisions (panic selling)

Life Changes:

• You received an inheritance or large payout
• You are going through divorce and need to split retirement funds
• You are approaching retirement and need to plan carefully
• You have health issues affecting your retirement plans

Estate Planning Needs:

• You have dependents with special needs
• You want to structure your estate efficiently
• You need to coordinate life insurance with retirement planning
• You have complicated family situations

DIY vs Adviser: Full Comparison

Factor	DIY Approach	Using Adviser
Annual Cost	0.8% to 1.2%	1.5% to 3.5%
Setup Time	15-30 minutes online	1-3 meetings (3-6 hours)
Ongoing Management	You check once per quarter	Adviser monitors for you
Investment Choices	You choose (simple options available)	Adviser recommends
Financial Plan	Use online calculators	Comprehensive professional plan
Tax Planning	Basic (certificates provided)	Integrated tax strategies
Estate Planning	You handle separately	Coordinated with overall estate
Ongoing Support	Email or phone support	Regular meetings and reviews
Best For	Simple situations, cost-conscious	Complex situations, large amounts
40-Year Cost (R1,000/month)	R500,000 in fees	R2,000,000 in fees

✅ How to Make Your Decision

Answer these questions honestly to decide what is best for you:

Question 1: How Much Are You Investing?

• Under R500 per month: Definitely go DIY. Adviser fees will eat too much of your savings.
• R500 to R3,000 per month: DIY is usually best. The fee savings matter a lot.
• R3,000 to R10,000 per month: DIY or low-cost adviser. Consider your knowledge level.
• Over R10,000 per month: An adviser might add value if your situation is complex.
• Large lump sum (R500,000+): Consider getting advice for the initial investment plan.

Question 2: Do You Understand Basic Investing?

If you can answer YES to most of these, you can go DIY:

• Do you know the difference between shares and bonds?
• Do you understand that investments go up and down?
• Can you avoid panic selling when markets fall?
• Do you know what “diversification” means?
• Can you use online tools and read basic information?

Question 3: How Complex Is Your Situation?

Consider an adviser if you have:

• Multiple income sources
• Your own business
• Offshore investments
• Complex family structure (divorce, dependents with special needs)
• Large estate planning needs

Question 4: What Is Your Time Horizon?

• Over 20 years to retirement: DIY works well. You have time to learn.
• 10-20 years to retirement: Either option works. Focus on keeping fees low.
• Under 10 years to retirement: Consider professional advice for this critical period.
• At retirement (age 55): Get advice on annuity choices. This decision is crucial.

🚨 Red Flags When Using an Adviser

Be very careful if an adviser does any of the following:

Dangerous Sales Tactics:

• Pressure to invest quickly: Good advisers give you time to think
• Guaranteed returns: No investment can guarantee returns in South Africa
• Complicated products you don’t understand: Run away immediately
• High fees not clearly explained: All fees must be disclosed upfront
• Products that lock you in for years: Most RAs now allow transfers

Warning Signs of Poor Advice:

• The adviser only sells products from one company
• They cannot explain fees in Rand amounts
• They focus on their commission rather than your needs
• They recommend withdrawing from your RA savings pot
• They cannot show you their FSCA license
• They promise to “beat the market” consistently

How to Check If Your Adviser Is Legitimate:

1. Ask for their FSP (Financial Services Provider) number
2. Check the FSCA website: www.fsca.co.za
3. Verify they are licensed for retirement planning
4. Check if any complaints have been lodged against them
5. Ask for references from current clients

The Middle Ground: Hybrid Options

You do not have to choose between DIY and full adviser service. Here are middle-ground options:

Option 1: Once-Off Financial Plan

Cost: R3,000 to R10,000 once

What you get: A professional creates a retirement plan. They show you how much to save and which funds to choose. You then implement it yourself.

Best for: People who need a roadmap but can follow it themselves.

Option 2: Hourly Consultation

Cost: R1,000 to R3,000 per hour

What you get: Pay only for the time you need advice. Might be 1-2 hours per year to review your RA.

Best for: People who mostly understand investing but want to check their decisions.

Option 3: Robo-Advisers

Cost: 0.3% to 0.8% per year

What you get: Computer algorithms manage your investments based on your age and risk profile. Lower cost than human advisers.

Available through: Some South African banks now offer this service.

Best for: People comfortable with technology who want low-cost automatic management.

Option 4: Free Consultations

Many DIY RA providers offer free consultations with investment specialists:

• 10X Investments: Free consultants (no commission)
• Allan Gray: Free planning support
• Investec: Free advice for clients

These consultants do not earn commission. They can answer questions and help you choose funds.

✅ Your Action Plan

Follow these steps to make the right choice for your situation:

Step 1: Calculate What You Need

1. Use an online retirement calculator (available free from most RA providers)
2. Work out how much you need to save each month
3. Understand your time horizon (years until retirement)

Step 2: Assess Your Knowledge Level

• Read 2-3 basic investment guides (available free online)
• Watch educational videos from RA providers
• Take a basic investment course if needed (many are free)

Step 3: Decide Your Approach

Choose DIY if:

• You invest under R5,000 per month
• Your financial situation is straightforward
• You are over 10 years from retirement
• You are comfortable using technology
• You want to maximise long-term returns

Consider an adviser if:

• Your situation is complex (business owner, offshore income)
• You have over R1 million to invest
• You are within 5 years of retirement
• You make emotional investment decisions
• You need integrated financial planning

Step 4: Take Action

If going DIY:

1. Choose a low-cost provider (10X, Allan Gray, Sygnia)
2. Open account online (takes 15-30 minutes)
3. Start with a balanced fund if unsure
4. Set up monthly debit order
5. Review once per quarter (15 minutes)

If using an adviser:

1. Check their FSCA license
2. Ask about fee structure upfront
3. Compare at least 3 advisers
4. Get everything in writing
5. Negotiate fees (they are negotiable)

Frequently Asked Questions

Can I switch from adviser to DIY later?

Yes. You can transfer your RA to a DIY provider at any time. There should be no penalties. Just complete a transfer form with your new provider.

What if I make a mistake with DIY?

Most mistakes can be fixed. You can change funds. You can increase or decrease contributions. The biggest “mistake” would be not starting at all.

Are adviser fees tax deductible?

No. Adviser fees are paid from your after-tax money. This makes high fees even more expensive. Only your RA contributions are tax deductible.

Do banks offer RAs without adviser fees?

Some do. Standard Bank, Nedbank, FNB and ABSA offer RAs. However, their fees are often higher than specialist providers like 10X or Allan Gray.

Can I have multiple RAs?

Yes. You can have as many as you want. But the total tax deduction is limited to 27.5% of income or R350,000 per year across all RAs.

What happens at retirement if I chose DIY?

At age 55, you will need to choose an annuity. DIY providers offer simple options. You can also consult an adviser at that point on an hourly fee basis.

Is my money safe with a DIY provider?

Yes. All RAs are regulated retirement funds. Your money is separate from the provider’s money. It is protected by law even if the provider closes.

Can I stop my RA contributions?

Yes. You can pause or stop at any time. Your existing money stays invested. You can restart whenever you want. This flexibility is the same with or without an adviser.

For Most South Africans: Start with a DIY Retirement Annuity. Choose a low-cost provider like 10X Investments, Allan Gray, or Sygnia. You will save hundreds of thousands of Rand in fees over your lifetime.

If You Need Advice: Pay for a once-off financial plan (R3,000 to R10,000) rather than ongoing percentage fees. Implement the plan yourself to save on annual fees.

Complex Situations: If you have a complex financial situation or large amounts to invest, consider an adviser. But negotiate fees below 1% per year. Anything above 1.5% per year is too expensive.

The Most Important Step: Start saving now. Whether DIY or with an adviser, starting today is more important than having the perfect plan. Time in the market beats trying to time the market.

Review Annually: Check your RA once per year. Make sure fees are still competitive. Adjust contributions as your salary increases. Keep it simple and keep costs low.