The right financial planner for you may be only a mouse-click away.
One of the most frequently asked questions is, "How do I find a good financial adviser?" Thanks to the Financial Advisory and Intermediary Services (FAIS) Act and the internet, it should soon become a lot easier to find an adviser.
A new website, findanadvisor.co.za, gives you a searchable database of advisers who have been licensed as financial service providers (FSPs) in terms of the FAIS Act. Currently, the site (www.findanadvisor.co.za) bears the names of licensed advisers, as well as advisers who have not yet received licences, but who are able to continue practising because they applied for licences before October 1 last year.
However, according to Chris Preen, the Certified Financial Planner (CFP) who started the website, after the cut-off date for the issue of licences - which has yet to be announced by the Financial Services Board (FSB) - no unlicensed adviser will be listed on the site.
The search facility is on the home-page of the site. You need to select the dialling code for the area in which you want to consult an adviser. Currently, the site covers 17 dialling code areas and lists 91 advisers.
You can also select the various financial planning disciplines you would like the adviser to be able to help you with. For example, retirement planning, investments, estate planning, life and disability assurance, medical schemes, short-term insurance and so on.
You also need to answer two questions about yourself regarding your age group and whether you are a professional, self-employed, retired, contract worker, newly married or other. Preen says these details are included in the filters used in the search engine to ensure that only the advisers who best meet your needs are returned in the results.
After clicking the "search" button, you should be returned a list of suitable advisers. You can view details about each adviser on the list, including:
The name of the adviser's employer or business. From this you can ascertain whether the adviser works for a large institution or is independent.
His or her photograph. Although looks shouldn't count, it is important to find an adviser you can relate to, and that may mean a particular age group or gender or simply someone with the "right" look.
His or her qualifications. The top qualification in the industry is a CFP. But there are numerous other degrees, diplomas and courses that a well-qualified adviser may have completed, including a BCom, a Certified Financial Analyst, an MBA, a higher diploma in tax, a chartered accountant or an LLB.
His or her experience. Preen says you should look at an adviser's qualifications in conjunction with his or her experience, as qualifications without the necessary experience are often meaningless.
The fields in which he or she can give advice. Your search should only return advisers who are able to offer the services you requested, but you should also look at what other services the adviser can offer.
Preen says many areas of financial planning overlap and in some instances it is better to employ a "general practitioner" who has a good overview of many areas and can offer integrated, holistic advice. However, he says, if the service you require is of a complex and specialised nature, it may be better to approach an adviser who only works in one or two areas.
His or her areas of expertise.
The financial services companies or product providers he or she represents. From this you can get an idea of whether the adviser can shop around on your behalf. If you want help with a specific product or policy you already have, you can check whether the adviser has contacts with the company concerned.
Whether he or she earns more than 30 percent of his or her income from any one of these companies. This gives you an indication of the adviser's independence, and advisers are required in terms of the FAIS Act to give you this information.
How he or she is paid, for example through a fee or commission. Most advisers make a living from commission, but this creates the potential for the adviser to be biased towards the products that pay the highest commission, rather than selecting the best product for you. As a result, there is a growing trend internationally towards advisers charging a fee for their service. This fee may be offset by any commission paid by the product provider. It is important that you know how an adviser charges for his or her services, and that you negotiate the charges before you take advice.
The minimum level of premium or investment the adviser's business accepts, for example R100 000 lump sum or a R1 000 monthly premium. This will give you an idea of whether the adviser is suitable for you.
The legal structure of the financial planning business. This gives you an indication of the size of the business and helps you to understand whom you are dealing with, Preen says.
The number of staff in the organisation - this gives you an indication of the level of support the adviser has and how efficient he or she will be in dealing with the administrative aspects. However, if you choose a large company, you should expect that you will not always get to see the head adviser, unless you are a very high-net worth client, Preen says.
Whether or not the business has indemnity insurance and if so, how much. This is important if you suffer a loss as a result of adviser's negligence or the advice you are given, and you claim against the adviser. Indemnity cover is especially important if your adviser is self-employed or in a small business that may not have enough assets to cover your claim.
His or her telephone number(s) and email, physical, postal and website addresses.
Preen says there is more to finding the right adviser than the criteria on the website. Only after a face-to-face meeting will you know whether you are comfortable with the adviser and confident that he or she can advise you appropriately.
He says you should also establish:
How often you will meet with each other;
Who you will be dealing with (the adviser personally or an assistant);
How often you will receive written updates on your policies/investments; and
What will happen to you, as a client, if the adviser leaves the business or the industry.
The findanadviser site also has a page of contacts, which you will find useful if you want to get in touch with any of the ombudsmen who deal with financial advice and product problems. It also invites you to pass on information about advisers listed on the site who you feel have provided you with unprofessional or unethical advice. Complaints will be investigated and could result in an adviser being removed from the site.
Another useful page explains your rights as a financial services consumer as provided for in the FAIS Act.
Two other sites
The Financial Planning Institute (FPI) also has a search facility for financial advisers on its website (www.fpi.co.za). Look for the "Find a Financial Adviser" link on the left-hand navigation bar. Click through again on the "Find a Financial Adviser" link. Then you can decide what qualification you would like the adviser to have and search for all the planners with that qualification in a region or city.
The qualifications from which you can choose include a CFP, the highest qualification, an Associated Financial Planner (AFP), the next highest qualification, or a Registered Financial Planner (RFP).
Alternatively, you can search for an adviser you may have heard of by his or her surname.
But the results are a bit disappointing. Aside from the qualification that you choose to find results on, the information on each adviser is restricted to his or her name, contact details and the suburb in which he or she operates.
In addition, the search results include CFPs, AFPs or RFPs who are no longer practising advisers.
The FPI is apparently working on a revamp for the site, but details were not available at the time of going to press.
The Life Offices' Association (LOA) website (www.loa.co.za) does not have a facility to search for advisers, but it does allow you to check whether an adviser has been S-referenced.
S-referencing is a system of self-regulation within the long-term insurance industry, whereby the public at large, and the industry, are protected from people who are not fit and proper to be engaged in marketing the products of the industry, or in directly controlling or training those who are so engaged.
An S-reference can be imposed upon an intermediary for up to five years (or less as determined by the S-reference panel). The S-reference lapses after the expiry of the five-year (or shorter) period.
In order to search the database of S-referenced advisers, you need to enter the identity number or name of the adviser.
The FSB says it will be making information regarding financial advisers who have obtained licences available on its website (www.fsb.co.za) and through its call centre (0800 110 443 or 0800 202 087). Russel Michaels, the FSB's spokesperson, says the final format of the information has not been finalised.
This article was first published in Personal Finance magazine, 1st Quarter 2005.