‘Are my fund fees too high?’

Mike is concerned that the fees he is paying on his pension fund for advice and administration are over the odds and asks personal finance guru Noel Whittaker for his view.


Q. Mike*

I have an accumulation pension fund of $216,000 solely invested in Australian shares for the purpose of earning franked dividend income.

The fees for my account over the past financial year totalled $3236, comprising: administration fees $1068, advice fees $1810, brokerage $274 and regulatory fees $84.

For these fees I received an annual report and an annual meeting with my adviser as well as electronic access to my account, and the payment of my minimum pension.

But $2900 for administration and advice, although only 1.34 per cent of the total fund value, still seems an inordinate amount to pay for a fund that is fully invested in Australian shares and on which I decide, in conjunction with the adviser, where those funds will be invested. 

Can you please suggest an alternative, and cheaper way, to operate my account while still maintaining its income-generating purpose?

I am 76, and have metastatic prostate cancer. My oncologist thinks my life expectancy could be between five and seven years, however, I am out to prove him wrong. Long-term investment is consequently not my aim or intention.

A. My first question is do you need to be in super? Unless you have substantial other assets, the funds could be held in your own name outside super with no ongoing fees. Furthermore, there would be no worries about the death tax of 17 per cent, which applies to the taxable component of superannuation left to a non-dependant.

Alternatively, you could simply roll the money to another fund and let them do all the work for you.

In view of your comments about life expectancy, the rate of return on your fund may not be as important as having a strategy with which you feel comfortable, and which your family could handle if you became incapacitated.

* Not his real name

Do you have a question you’d like Noel to tackle? Email us at newsletters@yourlifechoices.com.au

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

Related articles:

New retiree assets test
Beware the death tax
Passing shares to a grandchild

Written by Noel Whittaker

International bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker, Noel Whittaker is one of the world’s foremost authorities on personal finance.
He is currently an Adjunct Professor and Executive-in-Residence with the Queensland University of Technology, as well as a committee member advising the Australian Securities and Investment Commission.

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