MyMoney Online

Questions you should ask your financial advisor

Generally speaking, when you make a financial decision the outcome is only realised some time in the future.

Your advice should not be taken in isolation and as a once off decision. You need to keep in touch with the advice given by reviewing frequently to ensure it is keeping track with your expectations. At the outset you need a good relationship with your financial advisor. This relationship, like any other, should be based on transparency and trust.

So it stands to reason that you should get to know your financial advisor as much as possible before taking his advice. Here are some questions you should have answered.

Listen to the conversation below...

Who do you work for ?

If your advisor is an independent he does not work for anyone but himself. If your advisor is an agent he works for a company.

Independents answer to themselves. They work for their reasons and are not accountable to any company. They have their own business objectives and expenses for that matter which translates into the fees they charge for the advice provided.

Agents/broker representatives are accountable to the companies they work for. Therefore, they work towards targets and objectives set by these entities.

Independent advisors need a succession plan to assure their clients will be looked after if the advisor moves on. This places the client in a vulnerable position if there advisor is not there to review the performance of the financial plan into the future.

Agents have the backing of the company they work. The entity will be in a position to provide continuity by assigning a new representative to the plan.

When dealing with either an independent or a representative trust and transparency will always be the order of the day. It boils down to liking your advisor in the light of believing that he has your interests at heart.

What license do you have?

Advisors need to be licensed to provide certain levels of advice. The licenses are controlled by the FSB and they need to be maintained by the advisor through some stringent compliance which includes continuous development on the part of the advisor to keep up to date with the ever changing industry. FSB regulatory exams are compulsory for all advisors and they cannot do business without having completed them.

How do you ensure that the advice you give is appropriate?

The advisor should in every instance provide objective advice which suites your situation and lifestyle needs. He should conduct a comprehensive financial needs analysis before making any recommendations. A need is the difference between what you have and what you want. So how can anyone know what you need without establishing what you have. A financial needs analysis is a discovery process which comprehensively looks at what you have in relation to what you need. Only then can an appropriate recommendation be given. Sound advice?

How do you get paid?

Commissions and fees. What do you actually pay for? Understand this in rand terms and not only percentages which look very different on paper. 1.5% of a R1 000 000 with an annual fee of 0.5% on the value of the fund means that the advisor gets R15 000 upfront which comes off the initial investment and around R5000 plus, depending on the value of your investment, per annum, which also comes off your investment. A 1% per annum fee translates into R10 000 plus per annum which is a bigger slice out of your investment every year and on e would expect more justification over this charge. So its important to discuss what the advisor does for you to justify his fees.

Read more from Paul Roelofse at www.investforlife.co.za

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Where to invest money you intend to leave to your kids

Where to invest money you intend to leave to your kids

The Money Show’s Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram.

How to survive retrenchment

How to survive retrenchment

Your rights (and their responsibilities) upon retrenchment. Bruce Whitfield interviews Personal Financial Advisor Warren Ingram.

3 shares that'll bring home the bacon

3 shares that'll bring home the bacon

The Money Show’s Bruce Whitfield interviews Overberg Asset Management analyst Kirk Swart.

The best investment on the JSE right now and one from abroad (by Anchor Capital)

The best investment on the JSE right now and one from abroad (by Anchor Capital)

Bruce Whitfield interviews Anchor Capital Aggressive Long Short Fund Portfolio Manager Liam Hechter for his “stock picks” feature.

You’re wrong if you think you (or anybody else) can time the market

You’re wrong if you think you (or anybody else) can time the market

Don’t even try, because inflation will eat you for lunch, says personal financial advisor Warren Ingram.

3 best companies to invest in right now (by Nefg Fund Managers)

3 best companies to invest in right now (by Nefg Fund Managers)

The Money Show’s Bruce Whitfield interviews Nefg Fund Managers Chief Investment Officer Gerbrand Smit.

Popular articles
KPMG SA’s new CEO opens up about the future of the disgraced auditing firm

KPMG SA’s new CEO opens up about the future of the disgraced auditing firm

The Money Show’s Bruce Whitfield interviews KPMG South Africa CEO Nhlamu Dlomu.

Ocean View activist speaks: We have had 20 murders in 2017 alone

Ocean View activist speaks: We have had 20 murders in 2017 alone

Sharone Daniels, a community activist in Cape Town's Ocean View says they need police intervention to end gang violence.

Civil engineer devises plan to use stormwater in Cape Town

Civil engineer devises plan to use stormwater in Cape Town

Civil engineer and Ph.D. researcher John Okedi speaks to CapeTalk host John Maytham about his plans.

Zuma is the ANC. The ANC is Zuma, the two inseparable - Kgalema Motlanthe

Zuma is the ANC. The ANC is Zuma, the two inseparable - Kgalema Motlanthe

Former President Kgalema Motlanthe sat down for a lengthy and candid interview with 702 and CapeTalk anchor, Eusebius McKaiser.

[WATCH] Day-Zero for water running out fast approaching?

[WATCH] Day-Zero for water running out fast approaching?

A government employee emailed John Maytham about what he or she believes is the real state of play with the Cape water crisis.

Sasfin CEO opens up about dumping KPMG

Sasfin CEO opens up about dumping KPMG

The Money Show’s Bruce Whitfield interviews Sasfin CEO Roland Sassoon.