Guiding consumers since 2009

10 Habits of a good financial advisor

By Staff Writer
By Angelique Ruzicka, editor, Justmoney

 
So you are looking for a financial advisor? The trouble is in finding the right one for you. Another problem is avoiding those few rotten ‘apples’ that have given the industry a bad name. 
In any industry there are professionals that take advantage of customers and are just interested in getting their money. So when it comes to finding the right financial advisor how do you know if you’ve come across a keeper? 

 
Here’s a list of what makes a good financial advisor ‘brilliant’ at what he or she does:

 
1. Your advisor chooses the right product for you and not the right product for him. This means that he doesn’t offer you products that just provide him with the highest commission possible. Instead, he offers you a product that suits your needs even though it may not fetch him the most money. “In your first meeting, a good financial advisor will start by finding out about you rather than explaining the product they sell. They should be asking you about your financial goals and dress, both short and long term,” explains author Maya Fisher-French in her book ‘Maya on Money’. 

 
2. Your advisor is open and honest about the fees she charges or the commission she gets. 

 
3. He worries about your money problems first. “If you are struggling with debt repayments, a good advisor will tell you to sort those out before buying any products,” says Fisher-French in her book. 

 
4. Your financial is qualified. Find out if your advisor has a permit and if they have passed their regulatory examinations. Ask if they are registered with an industry body. Also, according to the Financial Advisory and Intermediary (FAIS) Act, every financial advisor in South Africa needs to be licensed with the Financial Services Board (FSB). You can check whether an advisor is licensed with the FSB by searching on the FSB’s website. If they are not registered with the FSB – walk away! 

 
5. She is experienced in her field. You can’t tar all young financial advisors that are just starting out with the same brush but like it or not, experience does count. So ask your advisor what experience they have, where they’ve worked and how they came into the profession.

 
6. Your financial advisor does her research when it comes to a new product. There’s something new on the market and the people/organisation behind it are boasting about stellar returns and are pushing you and your broker to invest all your pension money into it. Your broker doesn’t know how the product works exactly but he thinks you should go for it. Don’t do this and walk away from this ‘professional’ as quick as you can! A good financial advisor will be able to answer any and all questions about a product and explain to you in detail how it works. They will generally not ask you to put all your money into one financial product. And if there are claims that something can beat ‘above average market returns’ your advisor should be sceptical and if she isn’t – you should ask her why. 

 
7. Your financial advisor likes to continue with furthering his education and he keeps up with the latest regulatory changes. There’s nothing worse than a professional who’s not passionate about the industry in which they operate. Things can change and so your advisor shouldn't be arrogant and pretend that he knows everything there is to know all the time. Casually ask your financial advisor if they like to go to industry events or how they keep up to date with the latest laws that affect them and your savings. If they give you a vague answer or sound disinterested, rather walk away. 

 
8. They’re there to serve you, regularly. A good financial advisor will tend to keep in touch with you after they’ve recommended a basket of products for you to invest your money in. They should not ride off into the sunset, never to return and follow up with how you are doing. A good advisor will check whether your financial circumstances have changed or whether you are happy with how the investments have performed so far. If you haven’t heard from your financial advisor in over a year – ditch them! 

 
9. They are properly insured. Every professional in this industry should have some kind of professional indemnity insurance. This protects you if you ever need to make a claim against them in the event they make a bad judgement call on your investments or if they are found guilty of negligence. 

 
10. They adhere to a code of ethics. Is your advisor open and honest about which companies they represent? Do they adhere to a code of ethics and can you quiz them about it? If not, it’s best you don’t continue with them and find someone else who is happy to be open and honest. 

 
Finding a financial advisor that’s right for you and your needs is not always an easy exercise. Some people tend to go to professionals based on recommendations from friends or family. But be weary of these sorts of recommendations. Ask yourself if your friend or family member recommends this professional because of the good service they provide or whether it’s for another, more sinister reason. 

 
Remember, it’s your hard earned money that this person will have access to. You want to make sure that the advisor you choose is a professional and has your best interests at heart. Tell them how you want to retire and what you want to earn in retirement and ask them to help you achieve that. 

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