10X and Momentum Wealth debate the real cost of investment fees

Investment fees are easy to ignore because they often look small on paper, or you just straight up struggle to find them all! A percentage here. A platform fee there. An advice fee, an admin fee, an investment management fee - none of it sounds dramatic in isolation.

That was the focus of the discussion when Stephen Grootes spoke to Tobie van Heerden, CEO of 10X, and Therese Grobler, Head of Wealth Management at Momentum Financial Planning, about investment fees and whether growing investor pressure is forcing the industry to rethink what people are being charged.

The discussion wasn’t a simple; “high fees are bad” versus “low fees are good”. Rather, it centred the fee discussion on the value investors get. So the real question for investors isn’t only how much they are paying, but whether they feel those fees justify the totality of the value they are getting in return.

Do your fee sums with the 10X Effective Annual Cost calculator, and see if your investments could be doing more for you.

The many layers of investment fees

Therese explained that investment fees can come from several different places. You may pay for financial advice, an underlying investment manager, a product wrapper such as a retirement annuity or endowment, and the platform that administers the investment.

For many investors, this is where the confusion starts. It is not always obvious which fee pays for which service, or whether each layer is necessary for your particular needs.

Tobie’s view was that one way to reduce costs is to remove unnecessary layers where possible. He explained that at 10X, the direct investment model is designed to cut out some of the third-party costs that can sit between the investor and the investment, such as advice and platform layers.

Therese then pointed out what she considered to be the role of the advice provider. She argued that cheaper does not automatically mean better, especially if the investor is paying for qualified advice, regular reviews and a broader financial planning relationship. Tobie agreed that advice can add significant value, particularly for people with more complex financial needs, but made the point that not every investor needs the same level of advice simply to get started.

Why small percentages can have a big impact

The reason fees matter so much is that they don’t only reduce your balance once - they compound (much like the interest on your investment compounds) only against you.

Tobie gave the example of the difference between paying 1% and 2% in fees. Over 30 years, that 1% difference could reduce the final value of an investment by as much as 30%. In his example, an investor who ended up with R10 million after paying higher fees could have had around R13 million if they had paid 1% less.

This is why fees deserve more attention. A 1% difference can feel small in the moment, but when it applies every year, across decades, the effect can be substantial.

Tobie also made the point that in volatile markets, fees are one of the few things investors can control. Investors cannot control market returns, inflation, interest rates or global uncertainty, but they can control how much of their return is lost to costs.

When advice is worth paying for

Therese’s strongest counterpoint was that a financial advice fee should not be judged only against investment performance. A good financial advisor may help with tax planning, estate planning, wills, trusts, insurance, retirement planning and regular portfolio reviews.

A financial planner who called into the show made the same point, explaining that their fee covers holistic financial planning, not only investment growth.

That distinction matters. For investors with more complex financial lives, advice can be valuable and may justify the additional cost. The question is whether the investor understands what that value is, and whether the service they are receiving matches the fee being charged.

For some people, a full advice relationship may be appropriate. For others, a simpler, lower-cost investment solution may be enough. The important thing is not to pay for complexity you do not need, or to assume a higher fee automatically means a better outcome.

Transparency is improving, but investors still need to ask questions

Both Tobie and Therese agreed that investors deserve to know what they are paying and why.

Tobie argued that although transparency has improved, the industry still has some way to go, particularly when it comes to underlying or hidden fees that are built into products and are not always easy for investors to see. He said 10X shows fees in rand and cents, rather than only in percentages or basis points, so investors can connect the fee to the actual amount they are paying.

Therese agreed that unclear or unexplained fees should be treated as a red flag. If an advisor or provider cannot explain what a fee is for, what service it relates to and how it affects the investor’s long-term outcome, investors should keep asking questions.

This is a useful test for anyone reviewing their investments. You do not need to understand every technical detail of the investment industry, but you should be able to understand what you are paying for.

Are South African investors still paying too much?

Tobie believes there is still room for fees to come down in South Africa. He argued that local investment costs remain higher than global averages in some areas and that continued investor pressure could help move the industry toward more competitive pricing.

That pressure is already building. Investors are becoming more fee-conscious, digital platforms are making it easier to compare options, and younger investors are often more comfortable questioning traditional investment models.

At the same time, Therese’s point remains important: the goal is not simply to find the cheapest option. The goal is to understand the cost, understand the value, and make a more informed decision.

The bottom line

Fees are part of your investment outcome, not just an admin detail.

Lower fees do not guarantee a better result, but higher fees should have a clear reason behind them. If you are paying more, you should understand whether that cost gives you access to advice, planning, service or expertise that genuinely adds value.

The danger is in paying high fees without understanding them, or paying for layers of service you do not need.

A good place to start is by asking three simple questions: What am I paying? What am I getting for it? And what could this cost me over time?

If you're interested in checking if you could be saving on fees, get in touch with one of our investment consultants.