Whether you’re getting married, divorced, become a parent, property owner, landed the job of your dreams or starting your dream business, life happens. With these changes, you’ll face varying degrees of financial responsibility. That’s why it’s important to keep tabs on your finances by seeking good, trustworthy financial advice.
Here are six things to consider:
1. The sooner you get advice, the better
Many people postpone buying life insurance or starting long-term savings until they have children or reach a certain age. Bear in mind, the benefits of the compounded interest earned on your savings will be so much greater the sooner you start . This in turn will reduce the pressure to save aggressively because of your family or pending retirement. And even if you have no dependants, disability cover is a must for most of us. If you’re earning an income, it’s important to make sure you’ll still be able to pay your own way if anything should happen to you.
2. Shop for a good financial adviser
This shouldn’t be any different from ‘shopping’ for a good GP or dentist. A good financial planner is supposed to understand your financial needs, based on your income, assets, debt, expenses and existing insurance cover. He or she should help you set financial goals and work towards them, help you manage your financial affairs and not just sell you insurance products. Ask your friends and family for recommendations, check them out on Google or LinkedIn and look if they’re listed on the websites of the Financial Services Board (www.fsb.co.za) or Financial Planning Institute (www.fpi.co.za) websites. Remember the choice is always yours!
3. Your financial adviser should be independent
If your financial adviser is linked to a specific insurance or investment company, the advice you receive will tend to be biased towards the company in question, which might not always be in your best interest. Advisers are required to declare their affiliation with any of these companies to you upfront – so make sure you ask. A good, independent financial planner is more likely to compare different investment and insurance products to find options that meet your specific needs.
4. Seek transparency
The commission and fees of financial advisers are regulated. Advisers are legally required to disclose their remuneration to you. If the adviser asks a consultation fee, the time the adviser spends with you should justify this expense leaving you with a variety of options that meet your needs, and are explained to you in detail.
5. Qualifications are important
All financial advisers must be registered with the Financial Services Board (FSB). Certified Financial Planners (CFPs) meet stringent professional standards and belong to a professional body, the Financial Planning Institute (FPI). Only 4 600 of the 100 000 financial advisers registered with the FSB are Certified Financial Planners. Brokers and advisers are licensed according to their qualifications and experience for the type of service and products they may offer – ask your financial adviser to explain his background and qualifications to you.
6. What are the optional extras?
Some advisers are Jacks of all Trades, and offer assistance with tax, estates and a variety of lesser-known or complicated investments. Other advisers are specialists, but may have comprehensive support networks offering these additional services. Do make sure what you’re letting yourself in for in terms of extra bells and whistles. You don’t want to get charged for someone else’s time and expertise unless you explicitly seek it.
Article credit: http://www.fanews.co.za/article/intermediaries-brokers/7/general/1227/why-you-need-financial-advice/17618