Finding the right financial adviser is an important first step on your journey to financial freedom. Picture: iStock
Finding a financial adviser is the easy part. Many financial institutions have tried and tested agents who could help you but you need to be aware that they will only be able to offer the products with which they are affiliated with and you won’t be offered the choice that an independent adviser would provide you.
You can find an independent financial advisor through the Financial Planning Institute at fpi.co.za or the Financial Services Board (FSB) has a search function on its website (fsb.co.za) that enables you to check whether a financial advisor is authorised or debarred before you enlist their services.
A good financial adviser should have a sound and up-to-date legal and technical knowledge and should understand your needs, says Lianne Lutz, financial consultant at Women’s Wealth.
They need to have a high level of honesty and integrity together with the ability to present solutions and recommendations to consumers which address their problems and concerns. They need to talk openly about risks, ensuring you understand what they can gain or lose in different scenarios
Lianne Lutz, financial consultant
Importantly, advisers need to be transparent about fees.
“A financial adviser must provide a breakdown of the fees and indicate to you who gets how much and for doing what. The transparent disclosure of fees will give you an understanding of the fees, costs and other charges payable to the different stakeholders and enable you to consider the impact of such fees on your investments or premiums,” says Caroline da Silva, financial advisory and intermediary services deputy executive officer of the FSB.
Read: What you need in your financial plan
Technology can also be a great help. Ask what technology they are using and where you can log in to see all you have with them.
“The best advisers keep up to date and are investing in technology to ensure a more convenient and transparent relationship with them. If a financial advisor is not providing this type of technology they do not have a plan for the future and you can’t plan a future with someone that has no plan for their businesses future,” adds Eugene Maree from Wealthport.
“An adviser should easily be able to produce client and industry references. If they are not prepared to – be wary,” warns Graeme Tarr a certified financial adviser at Alexander Forbes Financial Planning Consultants.
What is a bad financial adviser?
Typically a bad financial adviser will only be interested in extracting information from you so they can identify products to sell to you. They’re also conveniently blasé when it comes to fees.
You should be able to get a simple breakdown of fees whenever you ask. If your adviser is vague on fees and can’t give you a simple straight answer then be concerned
Eugene Maree from Wealthport
Bad advisers will also leave you high and dry once they have sold products to you and earned their commission.
“The financial adviser must monitor your financial affairs. It is important that you establish an ongoing business relationship with your financial adviser. The person must always be there to attend to your ongoing financial needs, assist you to review your existing financial portfolios, and also be there for you when you need to make a claim on your policies or draw income from your investments,” says Da Silva.
What can you do if you’re getting bad advice?
If you have a feeling that you’re not getting the service you need there’s no shame in asking for a second opinion.
Dismissing the bad adviser is a good start. If they’ve made any serious mistakes or acted in bad faith you can always approach the Financial Planning Institute (if they are a member), the Financial Advisory and Intermediary Services ombudsman or the FSB – who will then investigate your case and debar the adviser.