Success depends on You - Help Your Financial Planner!

The Weekender / Business Day 21/22 Oct 2006

You are free to choose your financial planner but your chosen adviser is also free to un-choose you.

We have often emphasised what investors should expect of their financial planners. But a good financial adviser will also have certain expectations of their clients.

This may sound arrogant, but a successful financial plan requires a partnership based on mutual trust. Without mutual trust, the partnership cannot be beneficial.

We have found that successful investors are able to unlock wealth by subscribing to an ethical relationship. When fear and greed are in the minds of investors, they are most likely to fall prey to unethical advisers who promise the earth, but fail to deliver. They succeed only in destroying wealth.

In an ethical relationship, an investor who is approached by another broker with an alternative solution should keep his financial planner informed.

This will allow his advisor to respond to the recommendations made by the other broker, thus ensuring that the investor receives the best solution based on his or her individual circumstances.

We have found that our investors see us and treat us as professionals. Financial planning as a profession has evolved.

Most effective financial planning practices have a qualified multidisciplinary team of chartered accountants and lawyers with specialist degrees in financial planning and the certified financial planner designation.

Most of our appointments are held at our offices during office hours. You wouldn’t expect your lawyer to meet you at your house in the evening unless there was an emergency.

Investors need to give their full co-operation in all matters, for example, communicating changes in their needs and personal environment. They also need to adhere to compliance legislation such as the Financial Intelligence Centre Act. This ensures that financial advisors can fulfil their role effectively.

Full disclosure of relevant information is required by investors. This is important in a technical and emotional sense.

If, for example, you neglect to inform your financial adviser about your direct share portfolio, your asset allocation analysis (the allocation of your funds between bonds, property, cash and equities) may be inaccurate and you may receive inappropriate advice.

You must also inform your financial planner about life-changing events, for example a change of employment, cash flow, health or marital status. This will ensure your financial strategy is tailored to your changing personal circumstances and financial goals.

Successful investors understand that financial planning is a life-long process. Investors need to stick to their financial plan. Unnecessary switches in and out of funds result in additional costs for the investor and often results in lower returns in the long run.

It has been proven time and time again that trying to time the market or select specific stocks is not something that can be done consistently with success.

An investor also needs to accept that a financial advisor is not a miracle worker.

Even though the equity market has been very bullish over the past three years, it would be unreasonable to expect your money to double every two years.

A successful investor does not mind paying reasonable fees. It is a fact of life that you get what you pay for.

Financial planners who have systems and processes in place in their practice can ensure continuity of advice, which in turn ensures that your financial goals and expectations remain on course.

Investors may decide to go on their own, but they soon realise that the complexity of investment and tax issues has become too daunting. They will need a trusted adviser soon.

We recommend all investors review their strategy at least once a year.

This is part of the ongoing review and monitoring process, step six of the financial planning process as endorsed by the Financial Planning Institute (FPI).

My advice to you is to engage an independent financial planner who is focused on your best interests, not merely aiming at selling you a product.

Visit the website of the FPI on www.fpi.co.za to select a certified financial planner.

Debbie Netto-Jonker, CFP™, is founder of Netto Financial Services and was financial planner of the year in 2001.