Who do you absolutely trust with your personal finances? Is it your spouse, lifelong best friend, sibling or no one at all? Who do you rely on, to talk you out of a bad financial decision or perhaps steer you in the right direction for a major financial shift in your life? 

Financial independence is one thing we advocate for on Art of Superwoman platforms and while we are on the journey to advancing, and growing ourselves financially and taking up space as breadwinners, we have to be conscious of the resources available to us to do so efficiently and effectively, a financial advisor is such one resource. 

On this week’s Womenomics Thursday, we look at the benefits of involving a financial advisor in mapping out your financial goals, how to get the most out of them, and optimize your relationship with them.

Hopefully after reading this, you’ll move up your financial advisor to speed dial, or utilise the services of one.

Prioritising Financial Planning

“A failure to plan is planning to fail,” says Financial Advisor, Barbara Shikwambana, highlighting the importance of financial planning, as women. “From a very young age, we plan our lives and our future – from what we would like to do for a living, the cars we want to drive, houses we want to live in, and the type of lifestyle we want for ourselves, and our family. Almost all these plans involve money in some sort of way,” she says, highlighting how financial planning is the ticket to reaching these financial goals. “Just like in a relay race during athletics – the failure to plan is passing the poverty stick to the next generation.”

In Jennifer Barrett’s book Thinking Like A Breadwinner she writes, “It’s not just that men are trained from a young age to be providers, but that women are actually discouraged from thinking of ourselves as breadwinners every step of the way – steered into lower-paying fields and urged to spend money on disposable items that make us more attractive rather than investing in assets that can grow in value and make us wealthy.”

We have seen the dire consequences of the lack of financial planning through the pandemic. Representative of the South African Independent Financial Advisors Association, Bertie le Roux indicates that financial planning is an important tool in providing for the impact of any unforeseen circumstances in your personal life, your health, and the impact it might have on your family. He also highlights the importance of being able to provide for a comfortable retirement as early as possible.

Misconceptions About Financial Advisors

People have different perceptions about financial advisors. Shikwambana says that most people think they know (when in fact they don’t). “Some of the reasons I’ve come across on why individuals opt not to utilise a financial advisor is because they don’t have any or enough money and assets that need planning for (especially when it comes to wills). Another reason I’ve heard is that it is too expensive to consult a financial advisor – they can’t afford it – as well as the lack of education, understanding and experience of what financial planning is about, which is something that needs to be addressed more,” she states.

Shikwambana adds that financial advisors enable you to create the means required to achieve your financial goals and most importantly, assist you to protect the resources (including yourself) to get you to your goals. “They assist you in strategising and implementing plans in order to reach your goals and alleviate any shortfalls. They actively monitor and review the plans and progress with you, to ensure you’re still on track,” she explains.

When you look at your bank account, do you want to see rands and cents or do you want to see freedom?

“Also note that there is a big difference between an Independent Financial Advisor and a Tied Advisor. An Independent (referring to Independent Financial Advisors – IFA) means having the choice of any financial product that suits the need of the client without any restriction. A tied adviser is also just what the description implies. They are employed or contracted to a specific financial organisation and can only give advice on that organisation’s products,” her indicates.

The Benefits Of Having A Financial Advisor 

Sikwambana lists the following benefits:

  • Expert Advice – an advisor teaches, gives you information and guides you through financial planning. They conduct a full needs analysis on your situation and identify your shortfalls that need to be addressed. You have unlimited access to this person.
  • Exposure – An advisor gives you exposure to products you wouldn’t normally know or have access to. For instance, when it comes to investments, people have different risk appetites and this needs to be taken into consideration when investing.
  • Confidentiality – Money and trust go a long way. You are able to share with your financial advisor confidential information without judgement.
  • Lifetime companion –  A person who is in your corner, who is constantly encouraging you and assisting you to keep on track with achieving your set financial goals. 
  • Peace of mind – Everything that has to do with your financial wellbeing is being taken care of by someone who is competent, knowledgeable, and experienced, taking the stress away from you, allowing you to improve on your overall well-being.

“A professional financial planner assisting you in all aspects of your financial life is critical. They have the experience and the know how to clarify and qualify your ongoing risks, often associated with your profession, such as temporary and permanent inability to work, severe illness, accident cover, death cover – which if not addressed could have devastating effects on yours and your family’s future quality of life,” says le Roux. 

Developing and Maintaining A Relationship With Your Financial Advisor

“Continuously threading water is exhausting l. Yet we often keep it up, hoping that maybe someone will notice us flailing about and “save” us or that things will just improve over time” – Jennifer Barrett, Think Like A Breadwinner.

Shikwambane says this needs to be an open relationship with trust, “after all this is a two-way relationship.” She highlights that the advisor and the client have expectations from each other that they need to be upheld and communicated.  “It’s a client’s responsibility to disclose material changes in their lives, and it’s the advisor’s responsibility to make regular contact with the client by means of reviewing. Honesty is very important in any relationship. Communication is very crucial. Non-disclosure (omitting important information) and misleading information (being dishonest) leads to inaccurate planning, wasting the clients and advisors time because the plan will fail,” she explains. “Let your financial advisor know if you’re unhappy about something and give reasons. If you are still unhappy and there is no change then contact the service centre and request for reintermediation which is to be allocated to a different financial advisor,” she says.

Le Roux adds that if you cannot relate to the individual, then you would not feel comfortable sharing all your personal information, dreams and wishes which would make effective financial planning difficult, if not impossible. “So, ensure you can relate to the individual first,” he advises.

How Do You Know If A Financial Advisor Is Legit?

Le Roux explains that when registering with the FSCA a FSP (Financial Service Provider), the advisor must comply with several strict requirements before he/she would be allowed to act as a Financial Advisor. Key requirements are (and this not a once off but an ongoing requirement);

  1. Personal character qualities of honesty and integrity.
  2. Competence including experience, qualifications, and knowledge.
  3. Operational ability.
  4. Financial Soundness (of the business).
  5. Continuous professional development.

Shikwambane adds that financial advisors earn commission from the sale of the products they offer, and that a financial advisor can also charge a fixed fee for consultation, however, this varies according to the different categories/ classes of financial advisors.

Le Roux advises the following when it comes to verifying an advisor’s credibility:

  1. Ensure that you feel at ease. Ask the uncomfortable questions at the first interview. 
  2. Get his/her details. Get references, proof of successes, check up on their qualifications, years of experience, etc. Better to be careful than to be sorry.
  3. Note that Advisors are not allowed to give advice on products they are not licenced to sell. (For example, a Category 1 advisor cannot sell shares nor manage share portfolio’s – Unit Trust portfolio or on alternative companies’ products or services they are not accredited to represent).
  4. If you feel the need to investigate your advisor’s credentials. You can go to the FSCA’s website – use this link https://www.fsca.co.za/Fais/Search_FSP.htm and search using their FSP number or practice name. You’ll get all the relevant information there.
  5. Remember that you always have access to an Ombudsman. If you feel that you have received inappropriate/incorrect advice, and either were put at risk or lost money.

It became apparent to me when I took in all the responses from Barbara and Bertie that the key to optimising your relationship with a financial advisor begins with research and understanding of what I want to achieve. It is important to be clear on what you want to get out of your financial situation. There is saving and there is growing your finances. Most of us, myself included, spend a lot of time only looking at the rainy day purse, the health insurance, and the long term saving for retirement. 

If you are like me and have interest in growing your finances, look for that financial advisor who is able to provide more than the basics. One that will be able to answer the questions that a wealthy individual would ask. 

Being a breadwinner is not just about bringing the bread to be eaten now, it’s about giving you the flexibility and means when you need it. 

Would you consider getting a financial advisor for yourself?