It’s often difficult to discern whether financial advisers are championing your interests, or whether they’re merely trying to sell their company’s products.
Among the most sceptical are millennials, who often believe a thorough, online search can supply them with enough financial advice – either that, or a phone call to mom or dad.
However, the 2018 Old Mutual Savings and Investment Monitor found that, despite their efforts, 47% of millennials do not know what a unit trust is.
The Monitor also found that 61% of millennials saved their money in a bank account, rather than an investment vehicle, which could earn them more in the long-run.
According to Andile Jonas, head of marketing at Momentum Financial Planning, millennials need to be approached from a unique angle to sidestep their scepticism.
“They are tech-savvy, creative problem-solvers, and they are socially conscious. They demand a financial advisor whose expertise can’t be found online,” says Jonas.
Contrary to millennials’ mistrust in large institutions, he believes financial advisors don’t need to be seen in such a negative light.
“The comfort that comes with an adviser who is backed by a reputable and dynamic organisation adds credibility,” says Jonas.
He points out that large companies demand rigorous accreditations from their advisers, they’re accompanied by professional client support, and they offer tried-and-tested products.
However, Grace Winter, head of brand and communications at FMI, explains that this does not always create trust.
“Many lives have been positively affected by good financial advice, but the process can feel complex, and some people feel that advisers may not always have their best interests at heart,” says Winter.
She nonetheless believes millennials should have a carefully structured investment plan, as well as the discipline to make the necessary monthly contributions.
A financial adviser is, by name, qualified to help millennials achieve this. Winter recommends the following ways to find a trustworthy financial adviser:
1. Personal recommendation
Chat to colleagues, friends and family. Often, the easiest and most effective way to finding a suitable financial adviser is through word-of-mouth and a positive, personal recommendation.
2. Qualifications
Find out whether the financial adviser is authorised by the Financial Sector Conduct Authority (FSCA) to do business in this capacity.
Find out what their qualifications are and which financial products they can and can’t sell. They should ideally have a Diploma in Financial Planning and be a Certified Financial Planner.
Understand whether they are truly independent, or if they represent a particular company or product, which will sway their recommendations to you.
Both the FSCA or the Financial Planning Institute (FPI) can provide you with a list of professionally certified financial advisers.
3. Experience and references
Ask for a reference or speak to their other customers. You want a financial adviser with experience, but someone still young enough to understand your needs and life stage.
4. Service standards
Ask yourself how often you will meet with your financial adviser so that you can ensure you get the most out of your money.
It’s important that the adviser completes a financial needs analysis at the outset, followed by an annual review of your plan to ensure it continues to feed into your financial goals.
5. Fee structure
Make sure you have a clear understanding of how your financial adviser will be remunerated.
6. Specialisation
Many financial advisers specialise in certain areas, such as investments, retirement, or general financial planning.
Make sure your financial adviser’s area of specialty aligns with your particular goals and needs.
7. Connection
A good financial adviser will listen to your needs and desires, give you guidance and put together a financial plan that will help you achieve your goals.
Choose an adviser you have a good rapport with, who takes the time to explain the policies, and makes sure you understand how much you need to save for retirement.
You want an adviser who will build a long-term relationship with you, not someone who’s just interested in completing a sale.