The true cost of ‘free’ financial advice

THE phone call came late one evening.

- SANJITH HANNUMAN

My fitness trainer’s wife needed urgent investment advice. She had visited a financial adviser about accessing her preservation fund.“T already know which portfolios I want,” she explained, frustrated.

“But this adviser wants to charge me R20 000 for a 15-minute consultation. She claims she’s doing me a favour by dropping her fee from 3.5% to 1%. It’s outrageous!"

I asked about her profession.

“I’m an accountant,” she replied.

“Would you work for free?” | asked.

Silence.

This exchange captures a troubling paradox. The same professionals who expect fair compensation for their expertise somehow believe financial advice should come free of charge.

The illusion of the 15-minute consultation

What appears as a brief meeting represents the visible tip of a substantial professional iceberg. Before that adviser sat down with my caller, she had spent years acquiring qualifications, maintaining FSCA registrations, and developing expertise. For this consultation, she conducted research, analysed portfolio options, assessed regulatory implications, and prepared tailored recommendations.

That “15-minute consultation” represents career-long expertise. She maintains expensive research platform subscriptions, carries professional indemnity insurance costing thousands annually, and invests continuously in knowledge updates. Reducing professional services to time-based calculations fundamentally misunderstands their nature.

The real value proposition

After reviewing her portfolio selection, I identified alternative investments offering similar risk profiles with potential additional returns of 3% to 4% per annum. On a R2 million preservation fund, this compounds dramatically.

AR2 million investment growing at 8% annually over 20 years yields approximately R9.3 million.