You trust your financial adviser to be able to help you navigate the minefield that is your financial future. So bear the following in mind:
- Have you run a check on your financial adviser? Your money is too important to entrust to someone who may or may not be an amateur planner or fly-by-night. Examine his or her credentials and ask for references. Financial advisers should be accredited with the Financial Services Board.
- Ideally, your financial adviser should be a Certified Financial Planner (CFP). To obtain this CFP credential, a planner must pass an exam to determine competency in the areas of retirement planning, investment planning, insurance, estates, tax and more. In short, they should have a full picture of how one set of choices will affect all areas of your life.
- The Financial Advisory and Intermediary Services (FAIS) Act stipulates that your adviser has to offer services honestly, with due skill, care and diligence, in the interests of the client. Is your adviser up to scratch?
- How much are you paying for advice? Ask for a written breakdown of fees to make sure there are no hidden costs. Don’t just accept percentages, ask what that equates to in rands and cents.
- Is your adviser pushing a particular financial product because he or she will earn off the sale? An adviser is obliged to declare a contractual relationship with a product supplier, or state whether he or she has receives more than a total of 30% of their annual remuneration (including commission) from a product supplier.
- Don’t rely entirely on a financial adviser for advice. This may sound obvious, but if you are assuming your adviser knows everything about everything, you could be headed for trouble. Double-check tax advice with a tax consultant; a deceased estates attorney can double-check advice about wills and estate planning.
- Beware the financial planner who uses software to generate plans. Are they tailored for you specifically? Do they allow for nuances relating to returns on investments or rate adjustments? If not, what are they actually worth?
- Visit the Financial Services Board website for more information: www.fsb.co.za
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