Find right advisers for your different financial needs
There are many different kinds of advisers who can give you advice on your investments and finances.
Unfortunately, many investors see no difference between these advisers. The truth, however, is that there is a huge difference in the manner in which advisers conduct themselves and the various products they offer.
Different companies position themselves in unique ways to attract a certain clientele.
The three major groups of advisers in South Africa are distinguished as "tied advisers", "independent advisers" and a growing group who are "specialists" in certain aspects of advice but do not necessarily focus on holistic advice.
It is up to you, the investor, to research which type of adviser will suit you best.
These advisers usually work for a big institution such as a bank, an insurance company or other financial services companies.
They are employed to market the products of the company for which they work. This takes away their independence and ability to find a best fit for your needs.
They consider other financial services companies as competitors. This means your choices are limited to the products and services being sold by the "tied" agent or adviser.
Most of these agents give "house view" advice, meaning they have little room to use their discretion in giving advice, as they are trained to follow certain processes.
Independent advisers are independent from any contractual relationship with any company or product provider. These advisers have the luxury of giving independent advice and are able to source solutions for you from different companies, giving them flexibility and potentially the ability to assess the affordability of products and services.
These advisers usually have well-capitalised businesses that focus on certain clients, such as retirees or professionals.
When you engage an independent adviser who gives holistic advice, you can expect that they will source solutions for you from several financial services providers.
These advisers are best suited to serving your financial needs and are able to advise you on estate planning, investments, share trading, offshore investing, life assurance and, in some cases, even on medical scheme cover. When all your affairs are under one roof, it is easier for you administratively.
You can move your financial products from an adviser with one of the big financial institutions to an independent adviser without having to change your insurance products or investment house, as long as the independent adviser has a licence that enables him or her to work with the various companies currently providing the products to you.
These advisers specialise or focus on one aspect of the financial advice. For example, some advisers focus only on selling short-term insurance, or a medical scheme membership, a retirement advice or a share portfolio (a stockbroker).
Remember that specialisation gives these advisers the edge over generalist advisers. People who consult such advisers usually do so because they have other advisers dealing with their other planning needs.
So, before you appoint a financial planner do some research. This is like choosing a doctor when you are sick. You must consider the qualification and specialty of the doctor. Alternatively, choose a very good and reputable general practitioner who can either prescribe the necessary medication or refer you to a specialist practitioner.
• Nkomo is an executive director atInkunzi Wealth Group
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