Checklist for truth

Tama was about to invest $100,000 in a savings product recommended by his adviser, when he chanced upon Sorted’s fees checklist. He decided to ask his adviser to get the provider to complete the form.

The provider told Tama’s adviser it didn’t want to commit the projections, which the form required, to paper. However, Tama’s adviser persisted and persuaded the provider to do so. When the provider returned the form, Tama and his adviser found that the product didn’t charge a brokerage fee and there was no explanation about who covered these costs.

Tama called the provider himself. He found that brokerage was paid but that it was charged to all members by taking the expenses out of the whole fund.

While Tama was disappointed the provider hadn’t been more up-front with this information, he decided to invest in the product anyway. Tama’s adviser had calculated that although Tama would subsidise other people’s costs by being a member, his own costs would be lower. That’s because the members would be helping to pay the brokerage costs associated with his investment as well.

Tama and his adviser were pleased they had persisted. Tama understood more about the product he had bought and his adviser had a better understanding of the product he was selling!