Financial advisers are an integral part of your financial planning process. With their guidance and expertise, the daunting task of planning your finances will become easier. Here are some guidelines to help you find a qualified financial adviser.
Ask for the financial adviser’s credentials: This will give an indication of his/her set of financial skills and level of knowledge. The better qualified the financial adviser is, the better the level of service he/she will deliver. Certified Financial Planner is regarded as the highest qualification in the industry.
But it’s also advisable to match your needs to the financial adviser’s qualification level. For example, if you are looking for a basic funeral plan, you may not need a sophisticated financial adviser.
Similarly, when planning for retirement, it is highly recommended to speak to a suitably qualified financial adviser:
- Membership of professional or industry bodies: if the financial adviser belongs to professional or industry bodies such as the Financial Planning Institute and the Financial Intermediaries’ Association, it demonstrates his/her commitment to compliance with stringent professional codes of conduct. Membership of these institutions gives the adviser access to ongoing training and development, ensuring he/she has up-to-date information. It also gives you some kind of assurance that you are not dealing with a fly-by-night financial adviser.
- Relevant industry experience: always inquire about the financial adviser’s experience and ensure that it is relevant to what you are looking for. Some customers are more comfortable with an experienced financial adviser with several years in the industry than a newly qualified one. Others may prefer a newly qualified adviser who brings fresh ideas to the table — it is a matter of personal preference.
- Establish what services the financial adviser offers: determine upfront if he/she offers a specialist service (such as investment planning) or broader financial planning. Depending on your needs, you should choose an appropriate financial adviser. For example, retirement planning is better served by an investment or retirement specialist who is more au fait with the technicalities involved with retirement.
- Mandate to product provider/s: Find out whether the financial adviser is mandated to single or multiple product providers. This means that if he/she is mandated to a single product provider, he/she will sell only one company’s products. In terms of the Financial Advisory and Intermediary Services Act, the financial adviser must present you with a document to prove what products he/she is mandated to sell. Always keep in mind that access to a broader selection of products presents more options and you can make an informed decision on the best product to suit your needs.
- Remuneration: ask the financial adviser if he/she will charge a fee, commission on transactions, or a combination of both. It is important to know because fees and commission are levied against the amount invested, thereby reducing returns. But it is important for you to know what you are being charged for, such as the initial and ongoing financial advice and the service offering.
- Financial adviser’s service policy: establish upfront the level of service to expect after the conclusion of the transaction. It is important to find out how the financial adviser’s practice is structured to eliminate possible future frustrations. Ensure you agree on an appropriate frequency for future meetings to eliminate unrealistic expectations from both sides. An estate plan, for example, has to be revisited at least once a year to ensure it remains relevant whereas it might not be necessary to meet frequently to review a funeral plan.
Clement Makhaza is senior investments adviser at Metropolitan Retail