The first question one needs to ask is, do you actually need a financial planner? The same question could be asked as to whether you need a doctor, a lawyer or an accountant, but those questions are for another time.
If you are asking whether you need a financial planner, you also need to ask yourself whether or not you are up to the task of looking after your own investments and keeping up with markets, the economy and changing legislation. You should also ask yourself whether you are able to draft a comprehensive financial plan for yourself – taking into account your short-, medium- and long-term goals. Are you up to date with tax, retirement and insurance legislations; and indeed, estate planning and trust legislation?
If you are, you need to ensure that you are disciplined enough to stick to your financial strategy through both the good times and the bad times. You also need to ensure you continually review your plan to ensure that it is on track and keeping up with your financial objectives. These are just some of the tasks that a professional financial planner will do for you.
If you decide you need a financial planner, where do you start looking?
According to the Financial Planning Institute of Southern Africa (FPI), at last count there were north of 40 000 ‘financial advisors’ practicing in South Africa. Using the analogy above, when looking for a doctor, do you look for a professional or are you happy to deal with a non-professional? You should start out by looking for a professional financial planner to look after your financial health.
A certified financial planner®/CFP® professional is an accredited professional who has met the Four Es of financial planning, namely: education, has passed a rigorous examination that assesses competency, experience and ethics requirements. FPI is the only institution in South Africa that offers the CFP® certification. The CFP® credential is the most desired and respected global certification for those seeking to demonstrate their commitment to competent and ethical financial planning practice.
CFP® professionals, through continuous professional development, need to keep up with the latest legislation, financial matters and ethics to maintain their designation. They also need to adhere to a strict FPI code of ethics and practice standards, pledging to provide financial planning in the interests of clients and with the highest ethical and professional standards.
As related to the principles underlying the code of ethics, a CFP® professional needs to assess whether their analyses, decisions and actions are ethically sound and need to ask themselves the following eight questions:
- Clients first: Did I act in the best interest of the client?
- Integrity: Am I prepared to read about my actions in tomorrow’s newspaper?
- Objectivity: Am I convinced that I did not allow any emotions to cloud my judgement?
- Fairness: Have I done what any reasonable person would have done under the same circumstances or, if I had the power of hindsight, would I have given the same advice?
- Competence: Do I have the collective and sufficiently-updated knowledge and skills to render the best advice and service?
- Confidentiality: Am I sure that I have made all efforts to protect confidential information?
- Diligence: Have I applied all my skill and motivation to act in the best interest of the client in a timely manner?
- Professionalism: Have I inspired trust in myself as a professional and in the profession as a whole through dignity and respect in all my actions?
While your financial planner should be a certified financial planner®/CFP® professional and adhere to the code of ethics, they must also be your long-term professional financial partner or coach. He or she should be someone that you trust implicitly, as you will end up sharing some of your most confidential information with them.
According to David Kop, CFP®, head of public policy and consumer affairs at FPI, your financial planner should also be the chief financial officer of your life. They need to be someone who will help navigate and guide you through the various stages of your financial life in a simple yet effective manner. Before appointing a financial planner do your research on them. Make sure that they are a CFP® professional in good standing and that they will structure as well as arrange your financial resources to meet your specific financial objectives.
To find a CFP® professional in your area, and to get access to free financial planning tools and tips, visit www.letsplan.co.za (powered by FPI) or contact FPI on 086 1000 FPI (374).