When you should con­sult an ad­viser

A good fi­nan­cial ad­viser will help you to make wise de­ci­sions when faced with life’s chal­lenges. re­ports

Pretoria News Weekend - - ENTERTAINMENT -

IF YOU are in­vest­ing money, you don’t have to use a fi­nan­cial ad­viser (or plan­ner); you can do it di­rectly through most as­set man­agers, if you know what you want. But a good ad­viser is worth the ex­pense if you are look­ing be­yond a once-off in­vest­ment, for a long-term fi­nan­cial plan that en­sures that you and your fam­ily are fi­nan­cially se­cure well into the fu­ture and into your re­tire­ment.

This week is Fi­nan­cial Plan­ning Week, pro­moted by the Fi­nan­cial Plan­ning In­sti­tute of South­ern Africa (FPI), and it co­in­cided with World Fi­nan­cial Plan­ning Day, which was on Wed­nes­day, Oc­to­ber 4. Dur­ing the week, many mem­bers of the FPI have been giv­ing of their ser­vices free of charge.

Jeanette Marais, the direc­tor of dis­tri­bu­tion and client ser­vice at Al­lan Gray, says not ev­ery in­vestor may need, want, or be able to af­ford an ad­viser, but there are times when seek­ing pro­fes­sional ad­vice makes all the dif­fer­ence.

“Good, in­de­pen­dent ad­vis­ers play an im­por­tant role in help­ing you to make de­ci­sions that are right for your cir­cum­stances,” Marais says. She says that although you may be re­luc­tant to fork out the ad­vice fee, ad­vis­ers can save you money in the long run, earn­ing their keep time and again.

So when should you seek coun­sel on your fi­nances? Marais lists five prompts:

You want to put a plan in place, but you have no idea where to start.


“A fi­nan­cial ad­viser can help you to de­velop a long-term plan that meets your ob­jec­tives,” Marais says. “An in­de­pen­dent pro­fes­sional can help you to shape your fu­ture com­mit­ments into re­al­is­tic goals. He or she will also help you to keep on track in un­cer­tain times. If your cir­cum­stances don’t change, your plan shouldn’t change.”

You need to choose an in­vest­ment prod­uct, but you suf­fer from anal­y­sis paral­y­sis. The trou­ble with to­day’s in­vest­ment mar­ket is


that there is so much choice, not least be­tween ac­tive in­vest­ments (in which an ex­pert fund man­ager chooses the un­der­ly­ing se­cu­ri­ties) and pas­sive in­vest­ments (funds that track a mar­ket in­dex and re­quire no re­search or selec­tion on the part of the fund man­ager).

“Dif­fer­ent prod­ucts suit dif­fer­ent in­vest­ment ob­jec­tives – some have tax ben­e­fits and oth­ers have re­stric­tions that you need to be aware of be­fore com­mit­ting your money, Marais says.

“While re­search­ing ev­ery prod­uct avail­able is not im­pos­si­ble, it can be over­whelm­ing and time-con­sum­ing. An ad­viser will as­sist you in work­ing through the op­tions and mak­ing choices suit­able for your sit­u­a­tion,” she says.

Your cir­cum­stances have changed, or are about to change. Get­ting mar­ried or di­vorced, hav­ing chil­dren, in­her­it­ing a large sum, los­ing your job, los­ing a spouse, re­tir­ing: these events in­tro­duce fi­nan­cial chal­lenges.

“Man­ag­ing your money dur­ing such events can be con­fus­ing, and bal­anc­ing your re­spon­si­bil­i­ties can be tough,” Marais says, adding that


fi­nan­cial ad­vice is cru­cial in nav­i­gat­ing the ques­tions that in­evitably arise dur­ing any of these big events.

You are chang­ing jobs and need ad­vice on your re­tire­ment sav­ings. “If you are chang­ing jobs, make sure you pre­serve the re­tire­ment sav­ings you have built up. If you do not, your re­tire­ment plans are likely to suf­fer a set­back. Not only do you land up spend­ing the cap­i­tal you have ac­cu­mu­lated, but you give up the fu­ture com­pound in­ter­est,” Marais says.

A fi­nan­cial ad­viser can help you to stay on track and de­ter you from spend­ing your re­tire­ment sav­ings when you change jobs.

You are drown­ing in debt. In this case, your first port of call should be a rep­utable debt coun­sel­lor. “As with fi­nan­cial ad­vis­ers, not all debt coun­sel­lors are alike,” Marais says. Only coun­sel­lors who are qual­i­fied and reg­is­tered with the Na­tional Credit Reg­u­la­tor may of­fer debt-coun­selling ser­vices.”


Fran­cis Aldrich, a Cer­ti­fied Fi­nan­cial Plan­ner and tech­ni­cal mar­ket­ing spe­cial­ist at PPS, says the ideal re­la­tion­ship with a fi­nan­cial plan­ner should be sim­i­lar to the one you have with your fam­ily doc­tor or per­sonal trainer. And just as you would go for reg­u­lar check-ups for your phys­i­cal health, so you should reg­u­larly see your ad­viser to keep tabs on your fi­nan­cial health.

“The new breed of fi­nan­cial plan­ners are not sim­ply in­ter­ested in sell­ing prod­ucts. Their pur­pose is to as­sist you to achieve your life goals by pro­vid­ing lifestyle-based fi­nan­cial plans.

“A lifestyle fi­nan­cial plan­ner is there to coach you to be­come fi­nan­cially fit. There­fore, it is im­per­a­tive that you are hon­est and dis­close as much in­for­ma­tion as pos­si­ble to get the most ben­e­fit,” he says.

“Just as you would tell your per­sonal trainer about your cur­rent diet and ac­tiv­ity lev­els so that he or she can help you to reach your fit­ness goals, you need to be open with your plan­ner.

“A good lifestyle fi­nan­cial plan­ner will be pro­fes­sional, but per­sonal too. Fi­nan­cial mat­ters are of­ten about much more than the num­bers. Get­ting per­sonal means that your plan­ner will make an ef­fort to un­der­stand who you are and what you want to achieve,” Aldrich says.

Be­fore draw­ing up a fi­nan­cial plan and rec­om­mend­ing a course of ac­tion, the plan­ner will con­duct a thor­ough anal­y­sis to as­sess your in­vest­ments and fi­nan­cial sit­u­a­tion, and de­ter­mine your fi­nan­cial needs and goals.

Aldrich says that one of the main rea­sons peo­ple do not en­gage with a fi­nan­cial plan­ner is be­cause they feel they can do it them­selves or that it is too ex­pen­sive.

“There are many ben­e­fits of us­ing a fi­nan­cial plan­ner and many dif­fer­ent ‘pack­ages,’ rang­ing from ba­sic to com­pre­hen­sive or be­spoke so­lu­tions to meet your price point.”

What you pay your ad­viser is ne­go­tiable: it could be a per­cent­age of your in­vest­ment or a straight fee, as you would pay a doc­tor.

The fees you are charged must be agreed to up­front, and any­thing that the ad­viser may earn ex­tra in the form of com­mis­sion or re­bates on fi­nan­cial prod­ucts must be dis­closed to you be­fore you sign the agree­ment. martin.hesse@inl.co.za

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