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People often ask me how they should go about finding a reliable financial adviser.
Consider many factors when deciding who should look after your estate, tax, investment and retirement planning.
The Financial Advisers and Intermediary Services Act defines three levels of licence, but here I refer only to level three, where the person may advise on all aspects of your financial wellbeing.
When you first meet an adviser he or she will complete a risk analysis. You will need to reveal all the important personal aspects of your life because the adviser needs to understand your family dynamics, establish your earnings, create or update your will, scrutinise your tax returns and be informed of all your investments and insurance policies.
If you run your own business the adviser will also need to understand how it fits into your overall financial plan.
The adviser may charge for services as commission on the business that he concludes with you or by an hourly fee.
Don't let the cost dominate your concern because they will be covered many times over if he gives you excellent investment advice. Your investments should also grow well and be stable.
Commissions payable to the adviser vary from product to product, but all insurance companies recommend a maximum charge and you can always negotiate these fees. By law, the adviser needs to tell you how much commission he will earn from the business.
Just as your adviser will ask you necessary personal questions, you have a right to ask questions of the person to whom you are about to entrust your affairs.
Ask the adviser about his background, experience and for his Financial Service Provider (FSP) licence number.
The adviser should be able to explain why he chose this industry and how he keeps up to date with changes in the industry and also how he updates his knowledge.
He should tell you which companies he represents and what percentage of his business he places with those different companies.
Ask how his business is split between life assurance, retirement annuities, unit trusts, endowment policies, other investments and offshore investments. Also ask what courses he completed in the past 12 months.
Most importantly, the adviser should be able to explain how he will add value to your plan if you deal with him.
Ask for referrals and contact them and find out how often the adviser is in touch with them.
Like any professional, your adviser should be energetic, innovative and enthusiastic. He must make you feel confident about his abilities, because you must be assured that he has your long-term financial health at heart.
l Bryan Hirsch is chief executive of Pioneer Financial Planning. Visit www.pioneer.co.za for more information.