By Ross Marriner
Keeping your financial affairs in order is becoming increasingly challenging in this day and age. Individuals are faced with a huge range of insurance, investment, and saving products and most do not have the time, experience, or expertise to deal effectively with these matters. Getting it wrong could have disastrous consequences. This is where a qualified, professional Financial Planner is well-positioned to provide support and guidance.
The Financial Planning process involves a thorough analysis and evaluation of your current financial status and goals. This is followed by appropriate recommendations as to what you would need to do in order to meet your financial expectations over the short, medium, and long term. Finally, the plan that is developed would need to be implemented and monitored on a regular basis, because circumstances keep changing.
Choosing a Financial Planner is very much like choosing any other professional such as a doctor, dentist, or lawyer and it is important for you to feel comfortable with your choice of professional.
The Financial Planning profession has changed dramatically over the past few years, from being predominantly sales focused to becoming more advice-driven. Investment and insurance products have become extremely complex and complying with the relevant legislation has become an onerous task. Today, Financial Planners are required to write regulatory examinations before they can become qualified and licensed to practice in the profession.
A few take their financial planning education to the highest level and become Certified Financial Planners (CFP®). A Financial Planner who has obtained the internationally recognised CFP® designation has to have passed a rigorous set of examinations administered by the Financial Planning Institute on the specifics of personal finance. In order to maintain the designation, a CFP® has to commit to continuing education on financial matters, attend seminars on ethics and the latest industry regulations and keep up to date with industry trends. According to the Financial Planning Institute, currently, only around 4% of Financial Planners in South Africa are Certified Financial Planners (CFP®).
Effective financial planning involves developing a plan to meet your financial goals over time. These goals could include a carefree retirement, educating your children, reducing the amount of tax you are obliged to pay, saving for a new car, or being able to sleep well at night with the knowledge that life will go on in the event of an unplanned incident.
A Financial Planner can operate as an independent adviser having contracts with various Life Offices and Investment Houses, or as an agent linked to a single Life Office. The more experienced Financial Planners tend to specialise in areas such as risk, investing, retirement, tax, and estate planning.
According to research undertaken by the Vanguard Group, individuals who invest through an experienced Financial Planner tend to earn an average return that is 3% per annum higher than the average return achieved by individuals who “go it alone”. Working with a Certified Financial Planner® to develop a financial plan can provide you with peace of mind knowing that things are not being left to chance and that one day your goals and aspirations will become a reality.
Rands and Sense is a monthly column, written by Ross Marriner, a CERTIFIED FINANCIAL PLANNER® with PSG Wealth.
His Financial Planning Office number is 046 622 2891.
