By Sydney Sekese, CFP® professional and FPI 2016 Media Award Winner

Let me take you down memory lane in the late 1800s, speaking in Clinton, Illinois, during the famous Lincoln-Douglas debates, Abraham Lincoln made one of his most famous statements: “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.”. Today being commonly known as the April fool’s day, it befits to warn readers of the possibility of being fooled by unscrupulous financial advisors/planners who may lure you into a financial product with no due regard of your best interest.

A study conducted in conjunction with Financial Planning Standards Board (FPSB) and GfK, a global research firm; revealed that well over eight in 10 consumers believe trustworthiness is a very important consideration when choosing a financial planner. The study was conducted in 19 countries around the world with a total of 19,092 participants who were either primary or shared household financial decision-makers.  It is prudent to take time in choosing as credible financial planner to avoid being fooled. This brings me to the first question: What is the difference between a financial planner and financial advisor?

CERTIFIED FINANCIAL PLANNER®/CFP® professionals are required to take CFP® Professional Competency Exams ( known as the board exams) and then become members of the Financial Planning Institute of Southern Africa (FPI). FPI is a South African Qualifications Authority (SAQA) recognised professional body and ensure that people who carry the CERTIFIED FINANCIAL PLANNER®/CFP® designation are qualified, experienced and that their credentials can be checked and verified by any interested persons. Financial advisors often do not have the postgraduate qualification in finacial planning (pathway to CFP® certification), they however have to be registered with the Financial Services Board.

A genuine financial planner with genuine interest in your financial wellbeing will possess certain traits. He/she will demonstrate that personal financial planning is easy to understand and will ease the implementation of the plan. There are further quality behaviours that should be considered including the following:

  • They have a good reputation
  • They take a proactive approach
  • They don’t panic and have a clear strategy
  • They invoke confidence and trust
  • They have a holistic view of your finances
  • They have a support team
  • They work with you and never chase revenue at your expense

The financial planning profession and regulators have implemented several mechanisms to protect consumers in reducing the unscrupulous behaviours of certain individuals. It is the responsibility of the consumer to also interrogate the intended relationship with a financial planner/ advisor. A scientific approach is followed by CFP® professionals and this includes a six steps process as follows:

Step 1 – Establishing and defining the professional relationship (the first appointment)
Step 2 – Gathering information (Including your goals, timeframe and attitude of risk)
Step 3 – Analysing and evaluating your financial status
Step 4 – Developing and presenting the financial recommendations
Step 5 – Implementing the financial planning recommendations
Step 6 – Monitoring the financial planning recommendations

It is clear from the above that the relationship with your chosen financial planner should be long-term in nature. It is therefore not a fool’s game to spend time in this aspect of your life.  Research shows that 37% of those working with a CFP® professional strongly agree that they are knowledgeable about financial matters compared to 29% of those working with any financial professional and 25% among those not working with a professional.

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