Research shows people who get professional financial advice have more financial planning success. Whether you opt for a financial planner who is "tied" or closely related to a service provider, or independent (has no ties to one service provider), make sure that the person is a certified financial planner and well qualified.
"Tied" planners are typically employed by a financial services provider like Sanlam and will advise clients on Sanlam products and services. They are often also accredited to sell products from competitor companies.
Given that "tied" financial planners are employees of a particular financial services provider, the financial services provider stands in for the advice. Clients who make use of "tied" financial planners therefore have recourse against the financial services provider who employed the planner.
BlueStar practices offer clients a one-stop shop and access to specialised services like life insurance, estate planning, short-term insurance and retirement planning and investment planning.
BlueStar practices are built on the premise that financial planners cannot be experts on all the solutions in the market, given the vast variety of financial needs from categories of clients. This model allows financial planners to specialise so that they can identify the most appropriate solutions to meet their clients’ needs.
The BlueStar concept positions the relationship between the client and the financial services provider, instead of between the client and an individual planner. You still receive personalised service, but the advice does not depend on only one individual. This ensures the continuity and longevity of the relationship. You can get advice for all your financial needs in one location.
The financial advice given through BlueStar practices is backed by Sanlam, which provides security to both you and the financial planner. Products sold are not restricted to Sanlam’s.
Independent financial planners are authorised to sell a variety of companies’ products and services. The planner may provide advice on and sell products from Sanlam as well as other companies. The advice is considered ‘independent’ as independent financial planners operate under their own licence.
Whether you’re speaking to a single person or have a shortlist of financial planners, here are some questions to ask them:
A financial planner should have an industry acknowledged qualification. Also check whether the person is authorised by the Financial Services Board (FSB) as a financial services provider or the representative of a provider.
Your financial planner may receive either commission on products sold, or a payment for advice given, or a combination thereof. This could be an hourly rate, a retainer or a percentage of the assets managed for you. Make sure you know how your financial planner will be paid before you proceed.
Choose someone who can help you with an extensive range of services and can offer integrated advice. If you need specialised advice, get the services of someone who has in-depth knowledge of the area in which you are interested, for example, estate planning.
The strategy should be thorough, but clear and easy to understand, with minimal jargon. A good financial planner will not mind going over the plan repeatedly until you are confident you fully understand it.
Some firms and financial planners only take on clients in a high income bracket who have a large amount to invest.
Consider the benefits of choosing a financial planner who is affiliated with a reputable financial services provider that has been in the industry for many years. Not only is he/she likely to be well-trained, but he/she will also have access to strong support as well as in-house expertise on all aspects of financial planning.
While experience is important, do not discount younger financial planners – they are generally well-trained. Rather check for specialist experience in the particular financial services you require.
Ask how often your financial planner is prepared to meet with you to discuss your financial needs, and whether you will be meeting with him or her personally or with an assistant. Also ask how often you will receive written updates on your investments.
The financial planner should be eager to find out more about you – to understand your particular financial goals and investment objectives. He/She should show insight into what is important to you and how your financial goals can be achieved.
When all the other questions have been answered, you need to feel you trust the financial planner enough to be completely open about your finances. You will be establishing a long-term working relationship and it is crucial that you feel he/she will at all times have your best financial interests at heart.