It can also simply signify an important discussion between two partners about a topic or issue that needs a thorough treatment of proper two-way communication.

Having a discussion with your financial adviser should rank along the same levels of importance, but not the same levels of induced fear. It should not fill you with trepidation, but it should definitely be a two-way process, focus on significant topics, and in the end, actually be about you.

It’s KY, without the C

Everyone is familiar with Know Your Customer, the mandatory process of verifying a client or customer before allowing them to open an account. But, before going to see the financial adviser that you’ve set your sights on, you also have to go through an introspective process where you get to know yourself, first. 

Entering into a co-creation partnership with an adviser will only work if you know what is important to you and which milestones you want to reach on your financial road trip.

Do you want to retire early? Is leaving a legacy important to you? Do you have goals along the way to retirement that you want to save for? Do you want to travel?

Just like any relationship, neither you nor the other party will know if the match is a good fit unless you present an honest version of yourself and what you see as important.

Mickey Gambale, CEO of INN8, an independent investment platform that offers local and offshore investment options, says that there is always homework to do before meeting with a financial adviser.

“You need to truly understand what it is that you want for yourself, what your aspirations are and what you can cope with from a risk perspective. Then you need to be open and transparent with your financial adviser, otherwise, they won’t be able to help you plan for your financial future,” he says.

Check the creds

When you own a BMW or a Mercedes-Benz and you have to take it in for a service, you make sure that the service provider is either accredited or authorised by the manufacturer to work on your vehicle.

When you are diagnosed with a faulty heart valve, you don’t find the nearest person with a relatively sharp knife and tell them to have at it. You get referred by your doctor, first to the specialist, then to the surgeon.

For that same reason, when looking for someone to walk alongside you on the road to financial wealth and independence, you should make sure you find a qualified and registered financial adviser.

Not only are you allowed to ask about your adviser’s credentials, you have to, says Gambale.

Get recommendations from friends and mentors that you trust on who they have partnered with. Make sure the practice that you approach is registered with the Financial Services Conduct Authority (FSCA) and has an FSP number. You can check whether they are in good standing with the authority. The adviser should show you their Financial Advisory and Intermediary Services Act (FAIS) accreditation.

If the adviser is registered with the Financial Planning Institute of Southern Africa (FPI) they will hold the CFP® designation, an indication that they are kept up-to-date through continuous professional development.

Also check if your adviser is licensed to offer the category of products that they are recommending to you, says Michael Summerton, head of proposition and marketing at INN8.

There is no such thing as a stupid question

When Gambale had to go for a knee operation, he peppered the surgeon for details.

“I wanted to know what he was going to do, how he was going to do it, how long it would take and what the risks and outcomes were likely to be,” he says. 

You can ask any and all questions of your doctor when it is your physical health that is at stake. In the same manner, you should feel free to ask any and all questions of your adviser, as it is your financial wealth that is at stake.

Don’t be intimidated by the jargon, either. Do some research prior to your meeting to get yourself versed in the general options available to you, but if your adviser puts something on the table and you don’t understand what it is, ask. And then ask again if you still don’t understand.

Summerton uses the world of offshore investment as an example.

“When you engage with your adviser around this topic, for example, you should ask about the liquidity of your investment – will you be able to have access to your money. Ask about their fees – what expenses will you be paying down the value chain to the fund manager, the cost of exchanging your rand into dollar etc. Ask about the platform used and the jurisdiction where the money is going to be invested,” he says.

If terms like sinking funds, endowments, asset swaps and LISPs swirl around the conversation and you are not 100% clear about what this means for you, stop your adviser and take your time to understand what is being discussed*.

“Choose an adviser that has some experience and speaks authoritatively to any kind of issues that may arise, whether this is offshore or family legacy planning,” he says. 

Understand and compare

Some advisers are tied to a particular financial institution. With this comes the assurance and security that comes with larger, established, and experienced financial services providers, but it could limit you in terms of choice.

An independent financial adviser would most likely be able to offer you various solutions from different service providers, increasing the range available, but, as a trade-off, lacking the backing of one specific financial institution.

Summerton cautions against “fly-by-night shops”. “We have seen a lot more activity from the FSCA to flag providers when there is reason for concern, which is good. If something seems too good to be true, it probably is and you should step away,” he says. 

Also ask your adviser which of the functions of your financial wealth management they are outsourcing. Is the practice using an investment platform, and if it is for offshore exposure, where is it domiciled? Would your money be given to a discretionary fund manager as part of a model portfolio, and will you be able to get updates from those fund managers on the strategy for the investment? Are the underlying funds actively managed or passively tracking an index?

Work on the relationship

According to the latest Momentum/UNISA Household Financial Wellness Insights report, obtaining financial advice was one of the top coping mechanisms during the Covid-19 hard lockdown in South Africa.

Many of the respondents had to assist family and friends in financial difficulty, or adjust their lifestyle due to a decrease in income, and partnering with a professional financial adviser to review financial goals is listed as one of the strategies employed.

Having someone you can trust in uncertain times could prove invaluable.

Building a sustainable and trusting relationship with a financial adviser takes some real thought, preparation and transparency from both parties, says Gambale.

“Ultimately financial advice is as much about getting the investment right as it is about life coaching,” he says. DM/BM

* INN8 has compiled a white paper to help you understand the world of offshore investments. The paper goes into detail about the advantages as well as risks that could be associated with the options at your disposal. Access it here.

Liberty Group Limited is a Registered Long-Term Insurer and an authorised Financial Services Provider (“FSP”) with FSP number 4209 and registered office residing at 1 Ameshoff Street, Braamfontein, Johannesburg, 2001; INN8 is a registered trademark of STANLIB Wealth Management (Pty) Limited, an authorised FSP with licence number 590 and registered office residing at 17 Melrose Boulevard, Melrose Arch, Johannesburg, 2196, South Africa; and a registered business name of STANLIB Fund Managers Jersey Limited, regulated by the Jersey Financial Services Commission with registration number 30487 and registered office residing at Standard Bank House, 47-49 La Motte Street, St Helier, Jersey JE2 4SZ. © 2019 INN8