What should I expect when I meet a financial planner?

Key takeaways

  • An adviser is obliged to analyse your financial situation and give you appropriate and suitable advice to help you achieve your goals.
  • A meeting with a financial adviser should begin with an outline of the services you will enjoy and the cost involved, as well as establishing  whether you can work together.
  • Your second step should be giving your adviser all the information he or she needs to analyse your financial situation, and outlining your goals.
  • In the third and fourth steps, your adviser should determine and present to you what you need to achieve your goals, where your current financial situation falls short and how you can remedy that.
  • The fifth step is deciding which recommendations to implement and how and the final step is regularly reviewing and monitoring your progress towards your goals.

Financial advisers are obliged by law to analyse your financial situation and give you advice that is suitable and appropriate for you, and will help you achieve your goals.  

This also means the adviser needs to get quite a bit of information from you and to do a due diligence on any financial product before determining if it is right for you.

Your adviser will therefore need to get information from you not only on your needs and goals, but on the financial products you currently have, how you feel about investment risk, what you know about financial products, what you can afford and even your marital status and obligations to your dependants.

If you get limited advice on, for example, medical scheme cover or short-term insurance, you should be asked to acknowledge that the advice you receive is limited in its scope.

This also applies if you ask a financial adviser to focus only on giving you advice on, for example, life insurance. This is known as advice for a single need and you should be asked to acknowledge that the advice is limited.

Financial planners who give broader and, all-encompassing advice, and are members of the Financial Planning Institute, follow what is regarded as best practice for financial planning - a six-step process.

Understanding these steps will help you to know what to expect when you meet a financial planner, and if an adviser skips these steps, you may need to decide if you are happy to continue working with him or her.  

1. Getting to know you

Your first meeting with a planner is often one that he or she will not bill you for and is used to get to know you and to set out the professional relationship. The aim is to determine whether or not you can work together.

Your planner should give you details about his or her qualifications and experience and the practice in which they work.

The planner should outline the services he or she can offer you, the cost of these services and how you will pay.

Your planner should also tell you which products he or she can recommend and disclose any conflicts of interest, such as if the adviser is a tied agent only able to recommend products offered by the company by which he or she is employed.  

Your planner should ask you about yourself and what you want to achieve and also assess whether or not you can work together. A planner may decide not to take you on as client if he or she decides you are not likely to follow his or her recommendations.

You may also decide at this stage that the adviser is not someone you can work with. You have to be able to trust them enough to share everything about your financial situation and be willing to let them help you with all aspects of your finances.

2. Collecting info and setting goals

Once you have established that you can work with your planner and are comfortable with his or her services and costs, you will need to give him or her all the information necessary for him or her to understand your current financial situation.

Your adviser may call for documents showing, or information, about your:

  • Income;
  • Marital status;
  • Dependents;
  • Budget;
  • Debts;
  • Any properties you own;
  • Any investments you have;
  • Any life and disability cover you have, including the benefits of any group life schemes to which you belong;
  • Any retirement funds or retirement annuities to which you belong;
  • Any medical scheme you belong to or health policies you have;
  • Tax status;
  • Will; and
  • Any trusts you have founded or of which you are a beneficiary.

He or she should also ask about how you feel about losing money on your investments, and may ask you to complete a risk profile questionnaire to gage how much investment risk you are comfortable taking.

In this session, your adviser should also discuss your goals with you to determine what is important to you beyond the obvious things like securing your income, your family’s financial security and your own security in your later years.

This is where you should also set timeframes for your goals – for example, that you want to save for the tertiary education of your children in eight years, or you want to retire at age 65 or you want an overseas holiday by a certain date.

Providing this detail may be hard work, but accurate financial information is key to ensuring your financial plan is accurate and meaningful.

3. Analysing your financial status

Your financial adviser should then take all the information you have given him or her and analyse it to determine how you can achieve your goals and how suitable any current financial products you have are for that purpose, and what else you need to do to meet your financial goals.

This analysis could encompass your cash flow, your assets and liabilities, your employee benefits, your emergency fund, your insurance cover, your investments and your tax situation.

4. Your financial plan

Once your adviser has analysed your information, he or she should develop and present you with your financial plan. Your plan should give you a rundown of where you are in terms of reaching your goals, explain your options and make suitable recommendations.

This information should be presented to you as a written plan that you can keep regardless of whether you decide to implement the adviser’s recommendations. Read more: What should a financial plan include?

Your adviser should not only give you a written copy of your plan but should also present it to you and ensure you understand it, the recommendations made and their implications.

If you do not understand the recommendations or do not agree with them, this is the time to voice your concerns.

5. Implementing recommendations

Once you have the financial plan, you and your financial planner should agree on which recommendations to carry out and how you will do that.

Your financial planner may implement certain recommendations, such as starting an investment for you, or getting quotes to take out life or disability cover.

In other cases, your adviser may help co-ordinate the implementation of certain recommendations by, for example, referring you to an attorney to help you draw up a will, or to a tax adviser for specific tax advice, or to a healthcare broker to get you signed up as a member of a medical scheme.

This can be time consuming, may incur additional costs and there may be much paper work to complete. However, you should see the value in what you are doing and understand the transactions even if an adviser or another professional assists you.

Remember that you should never sign a form that has not been completed and don’t be afraid to ask questions.

6. Monitoring your plan

When you first meet your financial planner, you should be informed how often your planner will meet with you to review your plan. You should have at least one meeting a year.

At these meetings, your adviser should take you through your financial situation and give you updates on the performance of your investments and whether this is in line with your plan.

Your adviser should also inform you if there have been any changes to any of the financial products you own – for example, if you could get better cover from your life policy by making some small change, or changes to regulations that may affect your plan – for example, increases in annual tax-free savings contributions.

If there are any dramatic changes in your life, such as a death, birth, marriage, divorce or job change, you should update your adviser and decide if that event requires a meeting.

Alternatively, use your review meeting to share any changes to your personal or financial circumstances, so that you can ensure your plan stays relevant.