It’s international Financial Awareness Day – the ideal time to think about getting good financial advice

Life happens! Whether you’re getting married or divorced, becoming a parent or a property owner, or you have just landed the job of your dreams, your life and your needs are changing all the time. And with these changes, your financial risks and responsibilities are likely to change too. That’s why it’s important to keep regular tabs on your finances with the help of a good, trustworthy financial adviser who can help you make informed decisions about your money matters.

Here are six things to consider when seeking financial advice:

1. The sooner you get advice, the better
Many people postpone buying life insurance or starting long-term savings until they have children or reach a certain age. But when it comes to financial planning, there’s no time like the present. The sooner you start saving, the greater the benefits of the compounded interest you will earn on those savings. This, in turn, will reduce the financial pressure on you when you start a family or start nearing retirement age. And even if you don’t have any dependants or have many years to go before retiring, if you’re earning an income, then disability cover is a must. That way, you’ll still be able to pay your own way if anything should happen to you.

2. Shop for a good financial adviser
Finding a good financial adviser shouldn’t be any different from ‘shopping’ for a good GP or dentist. A good financial planner will help you understand your financial needs, based on your income, assets, debt, expenses, and existing insurance cover. They will assist you with setting financial goals and identify ways you can work towards them. A good financial planner won’t just focus on selling you an insurance policy or an investment plan, but will help you manage your financial affairs. Ask your friends and family for recommendations, check them out on Google or LinkedIn and look if they’re listed on the websites of the Financial Services Conduct Authority (www.fsca.co.za) or the Financial Planning Institute (www.fpi.co.za). Remember, the choice is always yours!

3. Ask if your adviser is independent or represents a specific company
There are two main types of financial adviser in South Africa – independent advisers who will have contracts with multiple insurance and investment providers, and tied financial advisers who are linked to a specific insurance or investment company. An independent adviser will usually be able to give you quotes from different providers in the market, comparing different investment and insurance products to meet your needs. A tied adviser, on the other hand, will recommend products from the specific company they represent. Advisers are required to declare their affiliation with any of these companies to you upfront – so make sure you ask.

4. Don’t be scared to discuss your adviser’s commission and fees
The commission and fees of financial advisers in South Africa are strictly regulated. Advisers are legally required to disclose their remuneration to you. Advisers can either earn commission – that is, a capped percentage of the premium you pay or the amount you’re investing – or a specified fee for their time. Advisers can also charge a combination of commission and fees. As with any other expense, you have the right to negotiate with your adviser about their fees and commission. A good financial adviser will ensure that the time they spend with you is well worth your money, giving you a variety of options that meet your needs, and explaining these options to you in detail.

5. Qualifications are important
All financial advisers must be registered with the FSCA. Certified Financial Planners (CFPs) must meet stringent professional standards and belong to a professional body, the Financial Planning Institute (FPI). Reportedly, there are over 100 000 registered financial representatives registered with the FSCA in South Africa, of which only around 3 500 are certified financial planners registered with the FPI. Your financial adviser should disclose their background and qualifications to you, and tell you what types of service and products they are licensed with the FSCA to offer their clients.

6. Any optional extras?
Some advisers are Jacks of all Trades, and can help with anything and everything from insurance cover to advice on tax, estates and a variety of lesser-known or complicated investments. Other advisers are specialists but may have comprehensive support networks offering these additional services. Do make sure you know what services are offered by your financial adviser, and what you’re letting yourself in for in terms of any extra bells and whistles. A good adviser will clearly explain the services they offer and any additional charges you may face if they need to tap into someone else’s time and expertise to assist you.