Good financial advisors will encourage their clients to ask questions. An advisor would rather have a satisfied client who understands his or her financial needs than an unhappy client who is disillusioned about the service they received.
Can I see your lisence?
Financial advisors in South Africa must be lisenced to with the Financial Services Board (FSB)
Are you qualified?
Many advisors are certified financial planners (CFP), but experience can also be a form of qualification. Any advisor representing Liberty, for instance, will meet the requirements set out by the Financial Advisory and Intermediary Services Act (FAIS).
Do you have references?
A referral from a satisfied client is one way to select a good advisor. However, find out first why the client is satisfied. Is it because the advisor doubled their money in a month or because they have a long term financial strategy that they are happy with? Short- term gains can be reversed, but a long- term financial plan creates long- term wealth.
Do you follow the six- step process?
Most leading financial planners follow the internationally recognised Financial Planner Institutes sis- step process for identifying a client's current financial knowledge and experience, and current financial situation. The gap between the current situation and desired outcome helps to create the financial plan.
How often will I meet you?
Financial reviews are critical to any successful plan and one should meet with an adviser at least once a year. At this time changes to personal circumstances can be discussed as well as taking stock of whether or not you are on track with your plan.
Do you have someone who can step into your shoes?
It is preferable to deal with a financial adviser that is part of a company so if something does happen to the adviser there is someone else who can take over the relationship.
Which companies do you deal with?
Make sure your adviser has contracts with reputable service and product providers.
What do you charge and what will you provide for this fee?
It is important to understand how the adviser earns an income. Some are paid commission by the product providers they represent and others an advisory fee from their clients. You need to understand what services this include and whether you feel that you are getting value for money. Clients can stop their ongoing advisory fee on investment products if they feel their advisor is not providing a service. Changes to legislation also allow clients to now redirect and ongoing commission on their investments products to a new advisor if they change advisers.
What are the costs of this product and what is your commission?
Costs matter, especially on investment products where they can affect total returns.A good advisor will offer you various choices where you can decide on the relative costs and benefits of the products on offer.
Why is the product right for me?
The product must meet your needs, not that of the adviser, so make sure that you understand the product benefits, terms and any restrictions on claims or withdrawals.
(Article by Liberty)