Finding a Financial Advisor

May 30 - 31, 2009. Is finding a financial advisor so important these days? After all, information has never flowed as freely as it does today. For most of us, ready access to the internet is a reality and with it flows all the information resources that the internet provides.

It is incredibly easy to conduct research on a particular financial topic and the information on the internet is generally free, so why should you ever pay for advice?

As a good rule of thumb you should not pay for mere information. However sound, impartial advice is a different kettle of fish.

One of the problems with the internet is that the source of the advice is hazy. Very often, the person putting forward an apparently sensible, impassioned case has a vested interest in influencing your final decision. Effectively, their pay-off comes from leading you to a certain conclusion.is benefiting from this advice? Rather like the old commission-based financial services model here in Souh Africa.

There is much to be said for receiving quality written advice from a registered, independent Certified Financial Planner, and as with all professionals, this does carry a professional fee.

Finding a Professional Financial Advisor

• Are they are properly qualified?

Your financial planner must be licensed in terms of the Financial Advisory and Intermediary Services Act. If your planner is a Certified Financial Planner, combined with an undergraduate finance degree, the relevant experience, industry credentials and industry reputation, then they are suitably qualified.

• Are they are independent?

You also want to ensure that your financial advisor is independent of any particular provider. By being independent, they are able to represent your interests, as opposed to placing your money with a particular provider to earn the commission. Understand how a financial planner receives their income? Is it earned as commission from a particular provider, or fee-based? Fee-based income is the best method for the investor, as this ensures that you can control the payment terms. Understand how the advice is given. Is it verbal or telephonic? By law, all advice should be given in writing.

• Do they have references?

Your prospective financial planner should also be able to provide references, both within the industry and at a client level. If they are not prepared to, be wary.

• Are you completely comfortable?

I would suggest that you follow the same route you would when choosing your family doctor – ask friends and family for a referral. Your relationship with your financial planner should be an enduring relationship, and it will be a very personal relationship, as not many issues are as personal as your finances. Ensure then that you not only have a good feeling but also a good understanding of your financial planner, as the relationship is likely to endure through not just the bull markets, but more importantly the bear markets as well.

When Is It Time to Move On?

When should your alarms bells start ringing, and make you reconsider your relationship with your financial planner?

The relationship between you and your planner should be a close one. If you are battling to communicate with your planner, and they don’t return your calls, there is the possibility that they do not have your best interests at heart.

Likewise, if your planner is rude, patronising or hides behind jargon, this is also a sign that the relationship is becoming rocky.

Your planner should be professional, and should be able to outline the different features, choices and consequences of your situation in a manner and language that you can understand. If this is not the case, you may wish to reconsider your choiceof financial adviser.

How to Assess Your Financial Planner

Here are a few key indicators of the ability and professionality of your financial advisor.

• Customised solutions

Do they take all your unique circumstances in to account, and produce a tailor-made solution for you, or do they park you in a one-size-fits-all investment solution? You have individual requirements, and should be accommodated accordingly.

• Expertise and Ongoing Monitoring

What resources and skill do they have to review your strategy on a consistent basis? Is your portfolio monitored over time to ensure it will deliver appropriate returns for your financial requirements? If this is not happening, your financial advisor is not providing you with the best service possible.

• Do You Feel Like It's Still Your Money?

Your financial planner works not just for you, but with you. You need to feel comfortable that your financial advisor has your best interests at heart, and is putting you in investments and solutions that meet your ultimate goals.

If you feel this is not the case, start investigating alternatives. Ultimately, the impact on your future will be enormous. It is your money, after all and you owe it yourself to ensure you have the right financial planner managing your interests.

Aim to have a trusted, fee-based independent financial planner on your side for life.

Visit the website www.fpi.co.za to select a qualified, Certified Financial Planner® professional.

Debbie Netto-Jonker, CFP®, is founder of Netto Financial Services and was financial planner of the year in 2001.
Her business partner Ian Beere, CA(SA) CFP® was Financial Planner of the Year in 2007.