Seek a proper financial planner now

Financial advisors need to really understand your investment goals.
Financial advisors need to really understand your investment goals.
Image: 123RF

The success of any sports or athletic team depends on a credible coach.

Sports coaches train, coach and manage amateur and professional athletes.

They could be working one-on-one with an individual in sports like tennis, gymnastics or boxing, or they could be working with a team like in football, netball or rugby.

Similar to a sports coach, a financial planner can help you formulate your future. They could assist in developing a plan which identifies your financial goals and builds the means of achieving them into your monthly budget.

Financial intermediaries, also known as financial planners (or advisors), act on behalf of individuals or corporate clients to protect their financial security, investments and assets against potential harm or loss.

The main role of a financial planner is to investigate the needs of a client and provide the most appropriate insurance to match their client's specific needs and budget.

I would like to suggest that you seek a fit and proper financial planner. A renowned business law firm in South Africa once said that the concept of a "fit and proper" person is a fundamental one in many professions, jurisdictions and organisations as it is used to determine a person's honesty, integrity and reputation.

There is, however, no single infallible test regarding what constitutes a "fit and proper" person and, in some instances, this requirement is not defined in legislation.

The first step in seeking a fit and proper financial planner is to establish a rapport with such an individual. He or she needs to have excellent communication and listening skills.

They will need to build a close relationship with you to really understand your investment goals. To give good advice, an investment advisor must gather personal and financial data about you. They must understand your tolerance for risk and your expected rate of return on investments.

A good investment advisor will use this data to analyse existing investments and make recommendations about what you should be doing going forward. A good planner should know where all your investments are so that your portfolio makes sense. Otherwise, you may end up owning the same type of investments.

The regulatory landscape has evolved in the financial services industry. There has been an increased level of consumer protection.

The "fit and proper" requirements as laid down by the Financial Services Conduct Authority (FSCA) is enforceable to all financial service providers (FSPs), key individuals, representatives and compliance officers. The following requirements should be met:

  •  Honesty and integrity requirements (or behaviour);
  •  Competency requirements that consist of experience and qualification requirements;
  • Operational ability requirements; and
  • Solvency requirements.

The above mechanisms aim to reduce the unscrupulous behaviours of certain individuals in the past. It is the responsibility of the consumer to also interrogate the intended relationship with a financial planner (or advisor).

The relationship with your chosen financial planner should be long-term in nature.

Research shows that 37% of those working with a professional financial planner, strongly agree that they are knowledgeable about financial matters compared with 25% among those not working with a professional.

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