The value of obtaining the right financial advice
This is according to Nico Coetzee, Executive: PPS Financial Planning, who says that many people may not be fully equipped to manage their personal finances effectively. "This is where the value of advice comes in - and having the right financial advice can make the world of difference to ensure individuals can maintain or improve their standard of living."
Coetzee says a major problem among many South Africans when it comes to financial planning is that often, the first time they actually have a meeting with a financial adviser is when the adviser initiates contact. "It is rare that people actively search for a financial adviser to assist them with their planning."
PPS Financial Planning was created in a bid to address this, following research of global distribution trends over the past two years. "The research revealed a clear need for product providers to supplement their current distribution strategies with a client-centric advice approach, as opposed to a product-driven sales approach."
He says some financial advisers do not develop financial objectives that are aligned with the overall needs of their client, as the primary objective is to facilitate the sale of products. "The new-generation lifestyle financial planners are not product salesmen - they will listen to the client first and thereafter ask lifestyle related questions to ascertain their financial health before making recommendations that are both relevant and understandable to the client."
He explains that a lifestyle financial planner will allow the client to speak their mind. "The adviser will listen to the client's concerns, goals and dreams to determine what their lifestyle requirements are and compare these against their current financial situation. The intention is that the client will not be persuaded to buy products that will result in the most commission for the adviser; but that the client gets the solutions that they actually need."
Insurance and investment policies generally contain technical language and jargon that most people do not understand. A good financial adviser will therefore fully explain how the investment or insurance product assists the client to achieve their specific life goal. The benefit, cost and purpose of the solution should be clearly disclosed upfront.
Coetzee believes a good test of a financial adviser is whether they can explain their value proposition as well as how their proposal will benefit the client in layman's terms, as opposed to trying to justify costs by elaborating on technical product features and benefits.
As famous psychologist Edward de Bono once noted; "An expert is someone who has succeeded in making decisions and judgements simpler through knowing what to pay attention to and what to ignore." He encourages people to seek out lifestyle financial planners who can guide them through their different life stages and protect them from making poor decisions.
A good planner will coach their client to do the things they do not necessarily want to do, in order to live the life they want to live. He states that people should not wait until they are contacted by a financial adviser before they start working on their financial plan, but rather collaborate with a planner who understands their personal needs in order to achieve financial independence.