5 Crucial Questions to Ask Before Hiring a Financial Advisor

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According to a survey conducted by FPI (the Financial Planning Institute of Southern Africa), the major reasons why consumer are wary of pursuing financial planning are because of lack of trust (70% of respondents), affordability (62%) and because they do not know where to start (55%).

But having a planner is crucial, with statistics suggesting that only about 6% of South Africans can maintain their standards of living in retirement. One of the reasons South Africans don’t save is the culture of no planning. Finding a reputable, registered financial advisor goes a long way to mitigating those concerns which is why we’ve put together the top five questions to ask when you’re want to hire an advisor to help you manage your wealth.

1. What are your qualifications?

Your prospective advisor should, at a minimum, be registered with the FSB (South Africa’s Financial Standards Board). Most advisors are certified financial planners (CFP) but remember to take experience into account by asking them how long they have been in business.

2. Do you have references?

It’s one thing for them to tell you how great they are, it’s quite another to have a referral from a satisfied client. Remember to pay attention to why they are pleased with the service. Is it because of short term gains? Or is it due to a long term relationship and a strong long-term financial strategy.

3. What do you charge and what is included in this fee?

This question is crucial to building trust with your advisor. They must be able to tell you how they earn income from your business. In some cases, they will be paid a commission by the product providers that they work with and in some cases, they will charge an advisory fee. It is important to understand what their service includes and whether you feel that their service offers value for money. You have the right to discontinue their regular advisory fees on investment products if you think your advisor is not providing a service.

4. Which providers do you work with?

Take the time to do some research on the service and product providers that your advisor works with. In many cases the top financial services providers provide advisors with regular training, resources and access to experts who can assist the advisor on the more technical aspects of financial planning. This is particularly helpful in the areas of estate duty, taxation and trusts.

5. How often will we meet?

You need to have an advisor who is invested in your future. By setting up regular updates (at least one a year) they will have a better understanding of your situation, be able to make timely changes if your circumstances change and be able to give you current advice to make sure that you are making the best financial decisions.