When it comes to managing your finances, trusting your financial advisor is essential. A good financial advisor can help you navigate complex financial decisions, plan for your future, and ensure that you are making the best possible choices with your hard-earned money. However, while trust is a crucial element in any advisory relationship, it is important to understand that this trust should not be automatic. Trust is always earned, and not something that is blindly given. As a consumer, you also have a responsibility to verify certain aspects of your advisor’s credentials and standing.
Trust is always earned, and not something that is blindly given
Trust, But Verify
Trusting your financial advisor means believing in their expertise, integrity, and commitment to your financial well-being. It means being confident that they have your best interests at heart and that they are equipped with the knowledge and skills to guide you effectively. However, this trust should be balanced with due diligence on your part.
Here are some key steps you should take to ensure your advisor is both trustworthy and competent:
1. Check Their Licensing with the FSCA
The Financial Sector Conduct Authority (FSCA) is the regulatory body that oversees financial services providers and its key individuals and representatives (financial advisors). Before engaging with a financial advisor, it is crucial to confirm that they are licensed and in good standing with the FSCA. A licensed advisor is authorised to provide financial advice and is subject to the regulatory standards set by the FSCA. You can easily check an advisor’s licensing status by visiting the FSCA’s website and using their search tool.
2. Verify Competency Levels and Qualifications
A competent financial advisor should have the necessary qualifications, experience, and training to provide sound financial advice and deliver intermediary services. Ask your financial advisor about their qualifications, certifications (like being an RFP® FSA® or CFP® professional, i.e. a professional member of the Financial Planning Institute of Southern Africa NPC (FPI)) and the ongoing education (known as “CPD”) they undertake to stay updated on the latest financial trends and regulations. Advisors with globally recognised credentials, such as the CERTIFIED FINANCIAL PLANNER® (CFP®) designation, have undergone rigorous training and adhere to a strict code of ethics.
3. Ensure Good Standing with Regulatory Bodies and Professional Bodies
Being in good standing with regulatory bodies like the FSCA and Professional Bodies such as the FPI, is a good indicator of a financial advisor’s integrity and professionalism. Financial advisors who are members of the FPI are held to higher ethical standards and are required to maintain their competency levels through continuous professional development (CPD). The CPD requirements set by professional bodies are much higher than the minimum standards set by the regulator.
4. Ask for References or Testimonials
Do not hesitate to ask your financial advisor for references or testimonials from other clients. Speaking to current or past clients can provide valuable insights into the advisor’s performance, reliability, and client satisfaction. Be cautious of advisors who are unwilling or hesitant to provide references.
5. Why Absolute Trust Can Be Risky
While it is important to trust your financial advisor, placing absolute trust—where you follow their advice without question—can be risky. Financial advisors, like all professionals, can make mistakes or may not fully understand your unique financial situation. By taking an active role in your financial planning and ensuring that your advisor meets the necessary standards, you protect yourself from potential pitfalls. Remember, your financial future is ultimately in your hands. While a financial advisor can provide guidance and expertise, it is your responsibility to make informed decisions. This includes asking questions, seeking second opinions when or if necessary, and staying informed about your financial matters.
A Balanced Approach to Trust
Trusting your financial advisor is important, but it should be a trust rooted in verification and ongoing diligence. By taking the steps outlined above, you can build a strong, collaborative relationship with your financial advisor—one that is based on mutual respect and transparency. A financial advisor’s commitment to understanding your needs, matching product benefits with your needs, and disclosures of product terms, conditions and exclusions are good signs of their desire to equip you with you the knowledge to make informed decisions. This balanced approach will help you achieve your financial goals with confidence, knowing that your financial advisor is both trustworthy and qualified to guide you on your financial journey. In the end, trust is earned, and by doing your homework, you can ensure that your trust in your financial advisor is well-placed.
To learn more about FPI and/or to Find a Financial Professional, visit www.fpi.co.za and/or www.fpimymoney123.co.za.
Financial Planning and Advice for all.
The Financial Planning Institute of Southern Africa is the only professional body in South Africa to offer the FSA®, RFP® and internationally recognised CFP® professional designations. It is a South African Qualifications Authority (SAQA) registered professional body and our professional designations are registered on the National Learning Registered Database (NLRD). We are also approved by the South African Revenue Service (SARS) as a Recognised Controlling Body (RCB).
For more on the Financial Planning Institute of Southern Africa go to www.fpi.co.za.
For more information on media interviews or bookings with a Financial Planner or Advisor please e-mail marketing@fpi.co.za.
