Choosing a Financial Advisor to look after your investments and protect your long term financial obligations could be one of the most important decisions you make. If you are planning for retirement, looking to finance a new house or saving for your children’s education a financial planner can help you make the right decision every step of the way.

Selecting the right financial adviser / wealth advisor is a mine field as your decision could affect your future lifestyle and financial standing. When searching for the right financial advisor try interviewing them and thereby evaluating their credentials.  Essential you will be confiding in this person about your financial plan and retirement future.  You will need to know if the financial planner you pick is ethical and capable of handling your financial potential.

Do the research and ask the following questions! If your financial advisor is a professional he will welcome them.

1. What are your qualifications?

Financial planning and Wealth advice is a detailed and complicated process and one which involves understanding the technicalities of personal Income tax, Annuities and various kinds of Investments, Life Insurance, retirement advise, wills and estate planning. Your financial advisor should also be able to explain how the above are interconnected and the effect one would have on the others.

Also what kind of qualifications does you financial advisor have? Are they qualified and what training did they complete to become a successfully qualified financial planner. Your financial planner should be hold professional credential such as a Financial Planning diploma from Stellenbosch University, University of the Free State and Milpark business school. The CFP (Certified Financial Planner) qualification is recognised internationally as a mark of competent, ethical, professional financial planner.

2. What experience does your Financial Planner have?

Choose a financial advisor with a “wealth” of experience. Experience is important in any professional. Ask them how long they have been in the profession and the types of companies they have been associated with. Make sure that they have been associated with credible companies like Liberty Life, Old Mutual or Sanlam. Also it may be prudent to choose a financial adviser who has least 2 years advising others of their financial affairs.

3. What Services does your Financial Planner offer?

Financial planners offer a range of products depending on their experience and credentials. Financial Advisors who offer advice on Life Insurance, Shares and funds will need to be registered with FICA and FIA in South Africa.

4. What is your approach to financial planning?

Financial Advisors will differ in their approach depending on where their expertise lies. Some Financial Planners may specialize in specific areas namely: Tax, estate Planning, Insurance and Investments. Other Wealth Advisors may only deal with a certain High Income level of Individual.

5. Who else will you are working with?

Financial planners will often work with other professionals to order to implement your financial planning recommendations. You need to find out all of the people working on your financial portfolio and you may even want to meet them.

6. How do Financial Planners make money?

This is a major consideration for most people as financial advisors work on a commission basis and therefore are more likely to pushes products onto customers which generate the maximum commission for the financial advisor. While the rules may change in 2012 to a fee based model, due to FICA and FIA, currently the financial planner will be compensated by a % of the amount invested in the product.

Manny financial advisors have changed their revenue stream to in a Fee-for- service model. This includes a professional fee for professional advise; similar to that of a doctor or lawyer.

7.  How much does to costs?

The amount that your financial planner earns depends on your particular needs and the type of products which the financial planner recommends. Dependant on how the financial planner operates this could be an hourly rate or a % of commission the Advisor receives from the products you take out.

8. Does anyone else benefit from the advice I receive?

Your financial advisor’s business relationships may form a conflict of interest to your personal financial plans / goals. Make sure you are aware of these upfront and get you financial advisor to communicate this to you in writing.

9. What are the regulations for Financial Advisors in South Africa?

Any Wealth Advisor selling financial products or providing investment advise needs to be regulated by the FSB (Financial Services Board) in addition to that they need to be FICA and FIA certified. Also financial planners who hold a CFP will need to subscribe to the profession code of ethics such as the Certified Financial Planner Code of Ethics.

10. Get it in writing?

Ask your financial planner for a written document detailing the services they will provide. Keep this agreement for future reference.

Your financial planner should be happy to provide you with answers to the above questions. Spend time with them and access their strengths; make sure you are getting the best advice and are comfortable talking about their reference and your financial needs.

If you are still unsure Contact: Andre Bottger © 072 8227672 / 021 8016891

Your Financial Advisor in Cape Town! 

Graeme Coyne

13 December 2010

concise and informative - thanks for such a well-rounded overview!