If you need your car fixed – you go to a mechanic or your car dealership. If you have a toothache? yup, you go to your dentist. When you have a money problem? Well, that’s when you need make the acquaintance of a good financial planner.
Times are tough , strike that Times are really tough, money is tight, people are turning over their money three times and then still not spending on products, goods or services, and doing business is becoming increasingly difficult and it’s probably going to get worse before it gets better.
You have to think twice about how best to earn, protect and grow your money, or maybe you just feel uneasy about your money – you’re not sure where it’s going now or how far it will take you in the future.
Whatever your money problem – too much or too little – a financial planner can probably help.
“Many people don’t realize that hiring a financial planner can be a good … excellent investment.
“If you find yourself letting important financial decisions go because you just don’t seem to get around to them, you might want to talk to a financial planner to get those jobs done.”
1st order of business
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“If you ask yourself the question, then you probably do. Everybody can benefit from using a financial planner simply by getting all of your ducks in a row,” he says.
You want to start your search by looking for a reputable brokerage and do some homework on their track record, their website should give you a lot of the initial information you may need.
What you actually want is to try to do things in this order
Insist on a detailed Financial needs analysis report on your current financial situation
Do a budget and understand your affordability and needs. See – www.mybudget.co.za
Insist on a reason and plan in writing as to why you need certain financial products
If necessary get a second opinion, make sure you are getting good appropriate advice
Hold back on signing documents until you are sure of your financial needs and future budgeting for the premiums
Still confused ?
Don’t be. Unless your needs fall outside the norm or you have a personal relationship or bond with an accountant or insurance agent who also does financial planning, you’ll probably be shopping for a CFP.
Qualified Financial Advice is Vital for business, personal and family success! Find and work with a good financial planner
Fee structures
Certified financial planners (CFP) come in four flavors: Fee-only, fee-based with commission, fee-offset and commission only.
Simply put, planners who make a commission do so on the financial products they sell you — insurance policies, Investment / unit trust funds, etc. Some charge a fee and collect commissions on what you buy from them, others offset the commissions they earn against their flat fee, and some work on commissions alone.
There is nothing underhanded about these forms of compensation; bankers and even accountants today receive commissions in the same way and we barely blink an eye at it.
Fee-only planners, on the other hand, charge a set amount, either an hourly fee, flat fee for a comprehensive plan or annual retainer, and do not earn any commissions, so get a quote so you know what to budget for and what to expect
Fee-only or commission?
“Starting with a CFP means a lot. However not having a CFP does not mean your financial planner does not have the experience or qualifications, many planners are in the process of writing exams or instead have many years practical experience, having their CFP means they have gone the extra step of education and training, and I would go one step further and, because of the potential for conflicts of interest, ask upfront how you will be paying for their service and advice, fees? commissions? or a combination? – all are perfectly OK, it’s just good to know
Find an financial planner who has access to expertise and who is willing to work with you long term and establish a relationship, this will always be in your best interest
What can you do for me?
There are no guarantees that a planner will, say, double your money. Should a planner offer you such promises, head for the door immediately.
What they can and should offer to do for you is:
Assess your current financial situation by reviewing your last two tax returns, all income sources, liquid and non liquid assets, wills, insurance policies, and estate and retirement planning documents;
Identify your financial needs and goals;
Develop a financial plan;
Explain the pros and cons of various options and financial instruments (life cover, Estate planning, Business Insurance and protection, Retirement funding & general investing)
Advise you in identifying other professionals (investment brokers, lawyers, accountants) to execute your plan; and
Review your progress periodically to make sure your plan remains on track.
To find a reputable planner in your area, check out the Money 101 Financial planners directory
Advice and education is what makes the right financial adviser worth the investment. Neither your banker nor your accountant has the broad training necessary for sound cradle-to-grave financial planning.
“Getting an understanding and education as far as inflows and outflows, assets and liabilities and what the future holds, that’s a great investment,” he says. “Yes, R3 000 to R5 000 seems to be a lot of money. But if you amortize that over the benefit you’re going to receive through financial planning, it’s really a drop in the bucket.”
“I’m a big fan of doing a lot yourself, because the more you empower yourself the better off you will be.
However get a good financial planner it makes sense and will give you confidence that you are not leaving your affairs unattended. But the basic steps are pretty simple: figure out what your goals are, what you need to achieve them, and just get started.”
