Introduction
In professional circles, you often hear clients’ express concerns about the fees they pay to lawyers, doctors, or other service providers whose intellectual capital is their greatest asset. There’s a story that resonates with many in such discussions: Picasso was once asked to sketch a lady’s portrait. After completing the drawing in 15 minutes, he requested a substantial fee for his work. The lady, surprised at the cost, exclaimed, “But it only took you a few minutes!” Picasso’s response was simple yet profound: “It took me 15 years of training to be able to complete it so well.”
Much like Picasso’s mastery of his craft, financial planning as a profession has evolved, and today’s financial advisors possess years of education, experience, and credentials to offer invaluable advice. So, when you invest in financial planning, you’re paying not just for the time spent, but for years of expertise that ultimately protect and grow your wealth.
Here are a few key indicators to help you assess the professionalism and ability of your financial advisor:
1. Are They Properly Qualified?
If your financial advisor holds the designation of a Certified Financial Planner (CFP), coupled with an undergraduate finance degree, relevant experience, and industry credentials, they are suitably qualified.
2. Do They Have Strategic Alliances with Other Professionals?
Top financial planning practices often have established strategic alliances with a multidisciplinary team, including chartered accountants, lawyers, discretionary fund managers, and estate executors. This ensures comprehensive advice and a holistic approach to your financial planning.
3. Are They Independent?
Independence is crucial. Your financial advisor should be free from ties to specific product providers, ensuring they can represent your interests. The financial landscape is increasingly complex, and an independent advisor can research the best solutions for your needs—rather than adopting a one-size-fits-all approach.
4. Is Their Advice Clear, Appropriate, and Objective?
Clarity and objectivity are key. Ensure the advice is explained in a way you understand and is backed by a proven process. All advice must be given in writing and should be specific to your situation and aligned with your goals.
5. Do They Have References?
A reputable financial advisor should be able to provide references both from within the industry and from satisfied clients. If they are unwilling or unable to do so, it may raise red flags.
6. Is Your Portfolio Actively Monitored and Managed?
Your portfolio should be rebalanced and restructured to take advantage of the cyclical nature of markets to ultimately provide you with consistent, top quartile performing portfolios over the long term. The extent to which your portfolio is actively managed and monitored significantly improves the probability of the investment delivering the desired returns. In other words, the ongoing and active management of your portfolio will ensure lower volatility which will make a meaningful difference to its long-term health.
7. Do They Review Your Strategy At least Once a Year?
Annual reviews are an essential part of the financial planning process. Your investment portfolio should be reviewed in the light of the asset allocation, fund selection, your changing circumstances and the current regulatory environment and where appropriate, relevant changes should be recommended. Reviews ensure that your investment strategy remains aligned with your evolving needs, goals, and the current economic and regulatory landscape. Effective planners will initiate these reviews proactively and recommend adjustments when necessary.
8. Are You Completely Comfortable?
Choosing a financial planner is a highly personal decision. Similar to choosing your family doctor, you should feel both comfortable and confident in your advisor. This relationship should be built on trust and open communication, as it is vital to have a clear understanding of your financial plan and the person helping you execute it.
Building a Partnership for Success
These indicators highlight the qualities you should expect from your financial planner. However, it’s also important to remember that a good advisor will have expectations of you as well. A successful financial plan is built on mutual trust and cooperation. This means keeping your advisor updated on any changes in your personal circumstances and financial goals. Transparency ensures that your plan is always tailored to your evolving needs.
Ensuring Your Future Prosperity
Your financial planner plays a pivotal role in managing your wealth and ensuring you’re on track to meet your future goals. If at any point you feel that your advisor isn’t acting in your best interest or the relationship isn’t meeting your needs, it’s worth considering other options. After all, it’s your money—and your future—and you owe it to yourself to have the best possible advisor managing your finances.
