Why have a Financial advisor?

WHAT ARE THE MERITS OF GOOD, INDEPENDENT ADVICE?

At Royal Union Financial Services (Pty) Ltd we pride ourselves in offering our clients holistic financial planning, notably:

  • A sound wealth management solution, based on individual client needs

  • Specific target return investment portfolios

  • Product provider research and due diligence

  • Treating our Customers Fairly (TCF)

  • Regular communication and reporting

  • Competitive fee structure

Many investors lack the time, knowledge and experience to invest successfully, often encountering difficulties that could have been avoided had they taken advice from an Independent Financial Adviser at the outset and continued to listing to their counsel over time.

Many people have misconceptions about the role of an Independent Financial Adviser.  While not every investor may need, want or be able to afford an adviser, it is worthwhile understanding that Independent Financial Adviser’s play an important role in helping you make decision that are right for your circumstances and, importantly, help you to avoid the pitfalls of investing on your worn.

The role of a financial adviser

The critical starting point for achieving financial freedom is a well-crafted financial plan.  This should document your financial goals and serve as the point of departure for making informed decisions that suit your unique circumstances.  While you can naturally put a plan in place yourself, an adviser will help you to figure out the complexities of your financial situation, identify potential gaps in your thinking, and help formalise your plan based on your attitude towards risk, your time frame and results and your personal priorities.

Once your plan is in place, an Independent Financial Advisor will help you to navigate the investment options available and ensure that you make the right choices based on your goals and circumstances.  Financial advice brings order to chaos – think back of our contractor who brought order to chaos and mud, by carefully structuring and placing the rocks in a perfect place and position.

You can also rely on your adviser to stay abreast of investment trends and changes regulations, tax and product offerings.  A good adviser will review your situation regularly, report back to you and revise your plan as necessary so that you can stay on track to meet your goals.

There are a number of less obvious benefits to having an Independent Financial Advisor.  An adviser serves as an “emotional therapist”, minimising doubt in volatile times, helping you to be rational rather than emotional about your investments, and encouraging you to avoid switching between investments for the wrong reasons.  An adviser will ensure that a disciplined savings and investment process is implemented and maintained, thus eliminating any tendency to procrastinate and allowing you to gain valuable time in the market.

Important considerations when selecting an adviser

Your Independent Financial Adviser will advise you on some of the most important decisions in your life, so your choice should not be taken lightly.  Some points to consider:

Trust

A good relationship with an adviser is founded on trust.  You need to know that s/he is honest, values your business and has your best interests at heart.

Credentials and qualifications

By law, all financial advisers must be licensed by the Financial Services Board (FSB).  To get a license, they need to pass regulatory exams and fulfil the FSB’s Fit and Proper requirements (including honesty, integrity and competency).  All advisers must prove to the FSB on an ongoing basis that they are developing and maintaining their professional competence.

Your rights

Financial advice and those who provide it are strictly regulated.  If you believe that you been misled, have not received appropriate advice, or have been unfairly charged, you should raise your concerns with your adviser.

If you have a complaint which cannot be resolved, you can turn to the Office of the Ombud for Financial Services Providers.

The importance of independence

The best advice is independent advice.  A proper Independent Financial Adviser is not incentivised to advise on some products over others or employed by product providers to sell their products.  S/he is not restricted to selling the products of any one company.  In addition, there are laws in place that aim to prevent conflicts of interest between independent advisers and product providers, which means a higher likelihood that an independent adviser will remain objective and choose the products that are best suited to you.

Fees

Disclosure and transparency are crucial – make sure that your adviser explains to you upfront what fees you will pay and how they work.

Fees are usually charged as a percentage of the value of your investment.  The product provider will deduct the amount from your investment and pay it over to the adviser on your behalf, ie it will be deducted from your investment total.  These fees cannot be charged or paid unless you have agreed to them.  Fees of this nature include initial and annual (ongoing) gees. An annual fee is based on the value of your investment, but it is calculated daily to allow for any fluctuation in your investment’s value over the year.

Another fee model that can be used, is, charging for the advice provided directly, as a rand amount, usually an hourly rate.

Reference source:  Jeanette Marais, Allan Gray – October 2014

 

1 July 2015

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Contact Details

If you would like more information, or to arrange an appointment, please contact us:

Telephone: 031 717 2700

Fax: 031 717 2701

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Postal Address: PO Box 68, Kloof, 3640