DO YOU KNOW WHO YOU'RE WORKING WITH?
What should you look for in a financial adviser?
If you have never worked with a financial adviser before, you may find yourself overwhelmed by the choice, confused by the jargon and frustrated at the cost! But in the same way you wouldn't service your own car, drill a filling in a sore tooth or cut your own hair (you could do all of these... but most of us don't...), it's good to have someone you trust to advise and guide you to make healthy decisions about your wealth.
If you think of an experienced ship's captain, he doesn't sail the boat himself - he chooses the best crew he can and makes the choices about their destination. His navigator will know the seas, the weather and conditions under which they are sailing and will make recommendations about which course to take - but the captain makes the final choice. The navigator then makes sure the stay the best course to reach their destination, and will advise if a change in course is needed.
Your financial adviser is similar to this navigator - and you are the captain.
HERE ARE A FEW POINTERS TO HELP YOU CHOOSE YOUR FINANCIAL ADVISER
START WITH RECOMMENDATIONS
Referrals are excellent and can help establish trust, so begin with the recommendations of your friends, but make sure you keep looking at the bigger picture. Be open at your first meeting with a prospective adviser, let them know you are considering your options and would like to know exactly what their value proposition is. Everyone's financial situation is unique; an adviser who worked well for your parents might not work well for you. Step back and take your time in making your decision.
WHAT KIND OF ADVISER ARE YOU LOOKING FOR?
Financial planners advise their clients on how best to save, invest, and protect their money. They could assist in developing and realising financial goals, such as preparing to buy a house, or give you an overview of your portfolios and the way that they all work together. Some specialise in retirement or estate planning; others consult on a range of financial matters. Ask your planner what they are certified to advise on.
There are numerous types of financial planners and advisers (brokers, fee-only planners, fee-based planners, comprehensive planners, tax advisers, estate planners etc.) and people tend to assume they are all basically the same. They are not and each will offer value to you in a different way - you can also choose to have a team of advisers who each offer different expertise.
HOW WOULD THEY MANAGE YOUR INVESTMENTS?
Ask your certified financial planner about their strategy to structure, or restructure, your investments to meet your goals. When you first meet with your financial adviser your conversation will most likely include the financial goals you have in mind. You should also be informed about the risk involved relative to the returns you wish to receive – if you are promised consistent, guaranteed returns on your investments, you should be suspicious. No investment is perfect and there will be risk attached to every investment, so it's prudent to know these risks (and the rewards) up front.
WHO ARE THEY AFFILIATED TO?
Finally, you should know what affiliations your financial adviser has with any of the companies, products or services being recommended to you. If they have any, they should be disclosed right away. It doesn't mean that the recommendations are bad: it will simply help you make informed decisions on different aspects of your investments.
Remember, you’re in control of your personal finances – you're the captain. If at any stage you want a second opinion, get it. Never rush any big decisions and always step back to look at the bigger picture! There will be a time for risk and a time for caution.
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