Do you really need a financial planner? 2

Do you need a financial advisor?

The profession of financial planning is relatively new, the average pensioner will tell you that in their youth financial planning was not even a recognisable term. During and after the Second World War the depression made
it virtually impossible for most people to make ends meet, let alone have
surplus money to invest. Access to financial advisors was the domain of the
super rich.

As the world settled down to growth and prosperity and insurance and investing became viable for the masses, sales people were sent out in force to sell products to anyone who could afford them. Promises of
great wealth were made with little to substantiate the claims. Future values
were calculated on best case scenarios and when the products failed to deliver,
investors became disillusioned and insurance sales people got a bad

Up until as recently as five years ago, the financial planning industry was seriously under regulated and an advisor was not really recognised as a professional, but rather a purveyor of products. If a doctor,
lawyer or accountant acted unethically they each had an association or board
that they had to answer to, but financial planners were able to walk away from
their mistakes without any concern about repercussions. This lack of
accountability created a lack of trust in the public and much criticism from
the media. Today the situation is entirely different. Financial advisors go
through a rigorous set of examinations and have to certified by the Financial Services
Board. This process has separated the wheat from the chaff and only the
professionals have remained in the business.

This is good news for investors because trying to navigate the world of financial planning on your own is a difficult if not impossible task. Anyone who earns a decent income can benefit from the services of a
professional advisor. The key to a successful relationship with your advisor is
team work. They can guide you in terms of choosing the correct products for
your objectives but if you are not totally committed to a long term plan no product
in the world will perform the way it was designed if it is cancelled or not
adhered to. The only way to guarantee true financial freedom is to become a
partner with your advisor by educating yourself to the point where you can
understand his or her recommendations, explain your needs in detail and be
upfront about your situation

So how do you choose an advisor?

There are many ways to find an advisor. You can log onto the Financial Services Board Website to find a list of advisors, you can also look at the Financial Planning
Institutes website for lists. Both will have a list of certified financial
advisors in your area. Chose a few close to you and give them a call. Explain what
you need and ask if they can help you. This is important because some advisors
specialise in certain sectors of the market. For example one may specialise in
group investment schemes, another may only deal with clients who have a Million
or more to invest. Another way is to ask friends and family if they have an
advisor they can recommend. If you have an investment with a financial services
company but have lost touch with the original advisor, give them a call and ask
them to recommend an alternative.

A relationship with a financial advisor is generally a long term one so don’t feel bad if you go for a meeting and you feel there is no rapport. You need to feel comfortable with your advisor so it’s important that
there is a suitable fit. When you set up a meeting for the first time explain
to them that you will be interviewing a few others before you make your final

It would be of huge benefit if you do some reading before hand to familiarise yourself with the terminology of the financial services world. Even more importantly if the advisor uses a word or term you are
unfamiliar with, ask for an explanation. Make a habit of reading the Personal
Finance pages in your favourite publications or online to keep up to date with

Once you have selected an advisor tell them everything, even if you gamble 20% of your income each month, this will have a significant effect on your plan. There are many life events that will impact the advice you
receive. For example, aging parents that may move in with you, grown kids who
periodically come home to regroup, children from previous marriages and over
indebtedness, will need to be taken into account. Half truths and omissions will compromise your
long term goals as the planner will not be able to make the correct
calculations in terms of needs and affordability. If they do not have the full picture their
advice will miss the mark.

While everyone would like to become rich, and could achieve that status within 20 to 30 years of income, most people retire with inadequate or very little wealth. The reason for this does not lie in incompetent
advisors, bad products or even volatile markets; it lies largely with the
investor. The single biggest obstacle to building wealth is commitment to a
long term plan. If you can get this right you will achieve significant wealth.

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2 thoughts on “Do you really need a financial planner?

  • Miro Bagrov


    I would also like point out somethings that people sometimes do not know and therefore are reluctant about seeing a financial planner…

    You should therefore ask for the man’s qualifications and experience at first meeting.
    I personally have studied a Bachelor of Commerce and have an NQF6 in Financial Management, Risk Management, and Strategic Management. To add to that I have assisted and consulted in all aspects of finance for companies and individuals.

    Possibly the first reason people wonder about hiring a person with my profession is that they do not understand exactly what tasks a Financial Planner performs.

    There are many many aspects to what here is called “Financial Planning”
    * Estate Planning
    * Succession Planning
    * Investment Planning
    * Emigration Planning (For those considering leaving the country and still protecting their assets)
    * Tax Planning
    * Career Planning
    * Insurance & Risk Management Planning
    Example: We can see, that when it comes to an issue such as “I want to move to Australia with my family”, a lot of financial issues come into concern… Will it be better to sell my house in SA, or rent it out? Should I ship my car overseas, or should I sell it and buy a new one there? How can go about it, in a step 1,2,3,4 process?
    These are good times to consult a Financial Manager… Considering that very large numbers of money are involved and that there is a large risk of loss of assets.

    The 2nd thing that concerns many is, “How much do these guys want???”
    It depends… And spend time, as Iona says, to “shop around” for a good, affordable, qualified consultant.
    They seem to be broken up into 2 types – the ones working for big companies, and the ones working for themselves… I prefer to offer my services without working for a big company, this allows me to be affordable and spend enough time on giving individual focus.
    Another thing is – you help decide your own fee… If people can not find & negotiate what they feel comfortable with they risk being ripped off.

    The third reason is the popular – “I can just read a book.”
    YOU ABSOLUTELY CAN study this out of self interest. The advantage of hiring a professional is his TECHNOLOGY, KNOWLEDGE AND EXPERIENCE (things you might not have at the moment) – exactly like hiring a doctor or lawyer.
    Even if finance is not in your study interest or schedule —- Reading a bit ahead of time (i.e. doing your homework) will be a good step towards establishing clear objectives and setting reasonable goals….

  • iona minton Post author

    Gail I only train consumers and i agree there is a chasm between the service provider /IFA and the consumer that needs to be breeched-expectation VS reality.