What is a Financial Advisor?
A financial advisor, or financial planner, is someone who provides financial advice, as a professional service, i.e. they charge a fee for their advice.
Your financial advisor will start by asking you questions, and getting information from you, to determine things like:
- how much money you earn, and how you earn your money,
- what your financial obligations are,
- what people are dependent on you to provide for them,
- how much risk you can and are prepared to take with your investments,
- what assets, investments, etc., you currently have,
- what insurance policies, medical cover, etc., you currently have, and
- what your goals are in life.
Your financial advisor will then take all the information he got from you, and use it to prepare a financial plan.
His aim is to prepare a financial plan that will allow you to best reach you life goals, while still allowing you to meet your financial obligations, and have the adequate insurance and medical cover to protect you, and your family, from unforeseen setbacks and crisis’s.
The financial advisor’s job ends when he hands you your financial plan. From there on it is up to you to implement the plan.
That said, most financial advisors will also be able to setup and manage your investments, and a good financial advisor will usually aim to build long standing relationships with his clients. It is also in your benefit to build such a relationship with your financial advisor.
People’s circumstances and goals change all the time. It is a good idea to meet with your financial advisor on a yearly basis, so that you can discuss, and make changes to your financial plan.
What qualities should I look for in a Financial Advisor?
A good financial advisor:
- usually charges an upfront fee for his advice,
- main priority is not to sell financial products (see Financial Advisor or Product Peddler?),
- is a good steward of his own money,
- is someone you can respect, and trust,
- is qualified (e.g. as a Certified Financial Planner), and
- is accredited with a trusted body like the FPI.
You should expect to pay a financial advisor between R2,000 and R25,000 for him to draw up your initial financial plan. The exact amount will depend mostly on the complexity of your financial affairs, and thus, the amount of work required.
It is a good idea for anyone to consult a financial advisor, especially at the beginning of his or her career.
The upfront fees charged by a good financial advisor may seem like a lot, but the advice you get from them often fall into the priceless category.
Who do I recommend?
One financial planning company that I believe in and whom I openly and wholeheartedly support, is Ultima Financial Planners.
If you are looking for good financial advice, feel free to get in-touch with them.
