Are you independent or a tied agent?
An independent adviser is preferable to one who is tied to one company, because someone who is independent can give you advice that meets your needs, Torr says.
"For example, if you need an income protection policy, an independent adviser is able to recommend the insurer whose product most suits your specific needs and budget.
"Although there are many excellent tied agents, they are not able to shop around to ensure you get the most appropriate policy."
Mti says it can be difficult to identify the limitations of a tied adviser, because they may offer a suite of products addressing all of your needs.
But some tied agents are heavily incentivised to drive you into certain products at your expense. She says you want quality advice that addresses your needs rather than pushing the product/s that will pay the most commission.
Noluntu Bam, the former ombudsman for financial services providers, says you need to be sure that the adviser is acting in your interests and not their own.
Torr says financial advisers who sell life companies' investments are paid by way of large upfront commissions which are effectively funded from your future investment.
"Rather seek a financial planner who is able to set up a unit trust investment for you on a reputable investment platform, such as Allan Gray, Sygnia, Old Mutual Wealth or Investec."
She says you must also beware of financial planners who promise unrealistically high investment returns. Stick with "household" names when it comes to investing.
What to ask a financial adviser
A financial adviser can add real value to your life by helping you cover your risks and build wealth over time.
But only if the adviser is suitably qualified to give advice and is not commission-driven or charging excessive fees that erode returns. Before you sign on the proverbial dotted line, ask a prospective financial adviser these three questions:
What are your qualifications?
A financial adviser who holds a Certified Financial Planner (CFP) designation has met the highest standards for financial planners in terms of ethics, integrity and experience, says Sue Torr, an advocate and the MD at Crue Invest.
Anelisa Mti, an advisory partner at Citadel, says an adviser with the CFP qualification is competent in various aspects of financial planning - such as investments, tax, estate planning and insurance - and continuously keeps at the top of his or her game.
"However, advisers also need to have a broader and deeper knowledge of a more general nature to be able to apply judgment and wisdom when offering advice. Look for an adviser who might be able to identify with your personal circumstances and help you reach your financial goals."
It's about finding the right fit for you, says Torr. "Financial planners operate within a range of different types of practices so it's important to find one that meets your needs. For example, some deal only with high net worth individuals who are nearing or in retirement. Others focus only on risk cover or personal insurance. Some firms are general practices which deal with investments, risk and estate planning."
Are you independent or a tied agent?
An independent adviser is preferable to one who is tied to one company, because someone who is independent can give you advice that meets your needs, Torr says.
"For example, if you need an income protection policy, an independent adviser is able to recommend the insurer whose product most suits your specific needs and budget.
"Although there are many excellent tied agents, they are not able to shop around to ensure you get the most appropriate policy."
Mti says it can be difficult to identify the limitations of a tied adviser, because they may offer a suite of products addressing all of your needs.
But some tied agents are heavily incentivised to drive you into certain products at your expense. She says you want quality advice that addresses your needs rather than pushing the product/s that will pay the most commission.
Noluntu Bam, the former ombudsman for financial services providers, says you need to be sure that the adviser is acting in your interests and not their own.
Torr says financial advisers who sell life companies' investments are paid by way of large upfront commissions which are effectively funded from your future investment.
"Rather seek a financial planner who is able to set up a unit trust investment for you on a reputable investment platform, such as Allan Gray, Sygnia, Old Mutual Wealth or Investec."
She says you must also beware of financial planners who promise unrealistically high investment returns. Stick with "household" names when it comes to investing.
What is your fee structure?
The fee structure on which advice is based will be a key determinant of whose interests are being served, Mti says.
"Look for advisers who are remunerated for the advice they provide and do not rely on commissions. Pay a fee for the service you require," she says.
Bam says you should ask: What costs will I be looking at for this service?
Torr says most independent financial planners charge ongoing fees as a percentage of the money you have invested with them.
You may feel that you don't earn enough or haven't saved enough to invest, but don't let that put you off going to see a financial planner. Torr says there are advisers willing to engage with you at the start of your journey.
"Find one who will see the value in having you as a client for life, and who is happy to help you grow your wealth over time - regardless of how much you earn or your net asset value."