If you are investing in unit trusts directly it is important to be aware that upfront fees between unit trust companies vary dramatically.
For example, last year Investec Asset Management dropped its upfront fees on all investments into their unit trusts. While you may still agree on a fee if using a financial advisor, if you invest directly, it costs you nothing upfront.
However Stanlib charges a 5% upfront fee whether or not you have used a broker. Stanlib’s brochure states that ‘Where an investor elects not to use an intermediary, the full charge will be payable to the management company and there will be no obligation on the management company to provide an advisory service”. In other words, money for nothing.
Stanlib defends its fee with the argument that it needs to protect its broker force — it is always good to know where ones fund manager’s loyalties lie. When selecting a unit trust fund manager consider their costs as well as performance. If it is costing you 5% more, the fund has to outperform their competitors by that amount just to stand still.