A Lisp is a company that enables you to invest in a wide range of collective investment schemes, such as unit trust funds, via one source.
Effectively an investment administration and product packaging business, a Lisp also offers access to traditional life insurance products such as endowments, retirement annuities, preservation funds and living annuities to cater for the full range of your investment needs.
A Lisp is licensed to buy and sell units in collective investment schemes on your instruction, either directly or via a life product, effectively acting as your agent. Once units have been bought, the Lisp holds these units in bulk accounts. For your protection, these bulk accounts must be held either in the name of the insurer, the retirement fund, or an independent custodian on your behalf, depending on the product.
A Lisp never owns the units that it buys. You own the units in the case of a direct investment, otherwise they are owned by the retirement fund or insurer, depending on the product. A Lisp must therefore always be able to reconcile buy and sell instructions received from clients with the actual units held. The independent nominee must ensure that this is done.
By law all money received by a Lisp from clients must be held in a trust account until invested and similarly the proceeds of all sales must be paid into a trust account. Under no circumstances may your money be mixed with Lisp assets.
All Lisps must be licensed with the Financial Services Board (FSB) as Administrative Financial Services Providers. Lisps are regulated by the Financial Advisory and Intermediary Services (FAIS) Act.
Many Lisps require that you invest with the help of intermediaries. While some of them will deal with you directly, the complexity of the product structures and investment options means that expert investment advice is required to properly structure a long-term solution.
A Lisp provides an efficient platform, enabling you to invest across a wide range of collective investment schemes offered by different companies. The typical Lisp platform offers well over a hundred different collective investment schemes, with some of the bigger platforms offering close to a thousand investment options.
With a Lisp, you have one relationship and one point of contact. The administrative burden of buying units across different companies is taken away from you. For one, you will have to comply with FICA requirement only once and only one application form per product is required.
When investing through a Lisp, you will get regular statements detailing all your investments across different funds and different asset management companies. The Lisp will also provide you with a capital gains tax certificate for all transactions that took place during the year.
By law a Lisp must disclose all costs to you upfront. This includes the fees levied by the Lisp as well as the fees of the underlying investments.
When investing with a Lisp you can expect to pay the initial fees and the annual fees of the collective investment schemes you have selected, as well as the Lisp’s administration fee and the adviser’s fees.
The collective investment scheme fees are often negotiated down significantly by the Lisp and the saving passed on to investors.
Fees are typically also negotiable, especially for bigger investors.
Lisps are ideal for investors wanting to take advantage of centralised processes and reporting mechanisms. Lisp platforms are specifically suited for clients wanting to invest larger sums of money and who would like to spread their assets across a range of investment options and investment managers.
Most Lisp platforms apply an investment minimum of R50 000 for lump sum investors and R500 a month for recurring investors.