What to consider when choosing an adviser

Many South Africans say they would like to have a financial adviser, but don’t know whom to trust when it comes to financial planning. Here are eight points that will help you to choose an adviser who’s right for you.

HOW often do you get to the middle of the month and stress over whether the money in your bank account will stretch until payday? You are not alone: according to the 2017 Old Mutual Savings & Investment Monitor, 52% of working households in South African metropolitan areas said their income has not covered their living costs at least once in the past year.

Add to this unexpected expenses, such as car repairs or medical costs, and it’s not surprising that most South Africans are feeling financially frazzled.

While challenging economic conditions are a major factor, it’s undeniable that a lack of careful long-term financial planning exacerbates the situation.

According to Lizl Budhram, the head of advice at Old Mutual Personal Finance, only 13% of metropolitan employed South Africans have a relationship with a financial adviser.

“Initiatives like Financial Planning Week are trying to change this. Many South Africans continue to suffer as a result of poor financial management, yet resist seeking help from a professional.”

Finding the right financial adviser can, however, be daunting, Budhram says. “Nearly 40% of metro working South Africans say they would like an adviser, but do not know whom to trust when it comes to financial planning.”

To help you choose a financial adviser who’s right for you, Budhram suggests you consider these eight factors:

For the same reason that you wouldn’t want to see an unqualified doctor if you were ill, you shouldn’t put your financial health in the hands of an unqualified financial adviser. Ask to see the adviser’s training credentials and Financial Advisory and Intermediary Services Act accreditation.

Trust is an essential component of any good relationship, and, when it comes to your finances, you’ll want to know that you are in good hands. You want an adviser for life who can partner with you to achieve your goals.

Ask for referrals from people you know and trust, or choose a financial adviser who represents a respected financial institution.

Depending on the type of adviser, whether practising as affiliated to a corporate or independently, research their practice or the company they represent. Look at their website, service offering and see what customers are saying about them on social media.

Also gather as much information about all the various financial solutions as you can – knowledge is power, and a good understanding will lead to richer discussions with your adviser.

Here are some questions to add to your own when meeting your adviser for the first time:

• Do you provide holistic and comprehensive financial advice?

• Which products and services are you licensed to sell?

• Are you backed by a reputable financial service provider? If so, which one?

• How can you help me achieve my goals?

Look for a financial adviser who has access to a range of specialist support services to suit your specific needs, and who has access to solutions from a reputable institution. This means you can trust the products or solutions that the adviser recommends to deliver on your specific needs.

Having an adviser who is linked to a reputable support system will also give you peace of mind that, if something were to happen to your adviser, someone else could take over the relationship.

Avoid advisers who offer a one-planfits-all approach. No two people have the identical financial situation, and a good financial adviser will provide guidance and support that is tailormade to your unique circumstances.

A good financial adviser will help you to take stock of your personal situation and your unique needs, and regularly update your financial plan to shift and change as your life does – so that you stay on track to reach your goals.

Good financial advisers are passionate about empowering their customers to achieve their goals. This should be apparent not only in the first meeting with your adviser but in every interaction you have with them.

Your adviser should be able to relate to you and identify with your personal circumstances and priorities to become your financial partner for life, coaching and guiding you to achieve your financial goals.