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

702 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 702 community a safe and welcoming space for all.

702 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.

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

Read More
These 3 behemoths are the best investments on the JSE - Vestact Asset Management

These 3 behemoths are the best investments on the JSE - Vestact Asset Management

Portfolio Manager Michael Treherne on what he believes are the three hottest stocks right now.

Some investments are more attractive after Budget 2017 (some not so much)

Some investments are more attractive after Budget 2017 (some not so much)

Personal Financial Advisor Warren Ingram gives advice on where to put your money; considering changes brought by Budget 2017.

Single best JSE investment right now (by First Avenue Investment Management)

Single best JSE investment right now (by First Avenue Investment Management)

You should make lots of money (while you sleep!) if you invest in this company suggested by Investment Analyst Nadim Mohamed.

Unmarried, but living together? Here’s how to arrange your finances…

Unmarried, but living together? Here’s how to arrange your finances…

Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram for his weekly personal finance feature.

2 best investments on the JSE right now (by Nedbank Private Wealth)

2 best investments on the JSE right now (by Nedbank Private Wealth)

Looking for a hot investment tip, or two? Bruce Whitfield interviews Nedbank Private Wealth Portfolio Manager Warren Jeffery.

3 wealth creating shares you should buy (by Aluwani Capital Partners)

3 wealth creating shares you should buy (by Aluwani Capital Partners)

Looking for a hot tip, or three? Bruce Whitfield interviews Aluwani Capital Partners Head of Equities Patrick Mathidi.

Popular articles
10 sexting tips on how to keep things spicy (and safe)

10 sexting tips on how to keep things spicy (and safe)

Interested in sexting but worried about the risks? Dr Eve has created a guideline to help you 'sext' in a fun and responsible way.

Vaal Dam about to reach 100% capacity

Vaal Dam about to reach 100% capacity

A few months ago the dam was only 27% full.

Confrontations between Somalis and locals, police fire rubber bullets

Confrontations between Somalis and locals, police fire rubber bullets

The #ForeignerMarch has turned violent. Police had to use stun grenades and rubber bullets to disperse the crowd.

Letters show Moyane refuses to account to Gordhan, turns to Zuma to intervene

Letters show Moyane refuses to account to Gordhan, turns to Zuma to intervene

M&G reports that Sars Commissioner Tom Moyane declared an intergovernmental dispute against Finance Minister Pravin Gordhan.

Violence breaks out in Atteridgeville amid #XenoMarch

Violence breaks out in Atteridgeville amid #XenoMarch

Tensions are high in Atteridgeville as a group calling itself Mamelodi Concerned Residents prepares to march against immigrants.

Where is that corrupt bastard? - EFF MP to Brian Molefe

Where is that corrupt bastard? - EFF MP to Brian Molefe

Former Eskom CEO Brian Molefe was sworn in as a Member of Parliament replacing Abram Mudau this week.

Mashaba says violent Jozi@work protests in Joburg Council orchestrated by ANC

Mashaba says violent Jozi@work protests in Joburg Council orchestrated by ANC

Joburg mayor Herman Mashaba has condemned the violence in the strongest possible terms and says he will lay charges.