What to look for when choosing an IFA (Independent Financial Advisor)

Last week, we discussed the impact that upfront fees have on your investment and the importance of choosing an advisor that can facilitate this. But, in the “sea” of advisors out there, who all seemingly offer very similar products, what are the points to look out for? Here are a couple of things to consider:

• License – Are they an Authorised Financial Services Provider? In South Africa, all service providers are required to be registered with the Financial Services Board (FSB) The FSB issues each provider with a unique license number. Your advisor must also present you with documentation stating their credentials, qualifications and any declaration of potential conflicts of interest (i.e. they do not have any vested interest or ownership in the products/institutions they are recommending). If you are in any doubt, you can confirm all details of the provider and the advisor via this link on the FSB website https://www.fsb.co.za/Departments/fais/searches/Pages/providers.aspx

• Track Record and Experience – Big does not necessarily mean better! Big, global brokerages require large administration teams that often come at a higher cost. They may base their administration departments offshore, their staff may not be easily reachable and may not have a great command of the English language. Turnaround times are often slow – be prepared to be one of tens of thousands of clients! Choosing a medium-sized or boutique style brokerage can have the benefit of enjoying the same time zone and may be more able to provide bespoke solutions and offerings. Ensure you choose an advisor and providers who have a proven track record not only in the industry, but also relating to the products they are offering. Request testimonials or references, do your due diligence and ensure that you are reliably informed

• Product offering – Is the provider TRULY independent? Can your advisor offer you a range of different product providers who themselves have a proven track record? Look out for any potential conflicts of interest (as mentioned above). Insist that your advisor provides at least two to three options to consider and states the reasons for their recommendation.

• Full disclosure – It’s the law! By law your advisor has to disclose all fees that you will be required to pay. Value for money should be the yardstick that you apply when considering fees. Remember fees are potentially levied at multiple levels (as discussed in our previous blog),

• How Committed Is Your Advisor – Pension & Retirement Planning generally has a medium to long-term horizon so ensure that you establish a long-term relationship with your advisor. As a bare minimum, ensure your advisor meets with you at least twice a year and that you receive regular valuations on your investments four times a year. That way you can keep a clear track of your investment.

• Trust is one thing that can never be purchased – What does your “gut” tell you? The old adage of first impressions last is always true. Make sure you are comfortable with all aspects of your relationship with your advisor and make sure you understand every aspect of the investment proposal. Ask lots of questions and make sure you understand all of the answers – it’s your money after all!

Carrick Financial Services (Pty) Ltd is an Authorised Financial Services Provider with offices in Johannesburg, Cape Town and Durban. We have a wealth of experience in providing offshore investment structures, portfolio management and bespoke fiduciary and estate planning. We offer you solutions that are truly unique to your needs and requirements.

Talk to us about how we can assist you with your Financial and Retirement planning needs.

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