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Category:
Insurance News /
Investments /
Fedgroup
/ April 2009
Questions To Ask
Your Financial Planner
While access to information can have a great impact on an investor's
ability to harness the power of the market, the challenge of wading
through the vast amount of information that is available can also be
overwhelming.
According to Scott Field of FedGroup, "We live in the age where
questions can be answered and information accessed from anywhere in
the world at the push of a button."
"The problem with this information is that it is generally
complicated and difficult to understand, however for an investor it
is crucial to understand this information in order to grow their
wealth that has been created over time."
Investment management is a critical component to harnessing your
wealth for future growth.
While there are a number of individuals that offer financial
planning and advice, Field believes that there are some simple
fundamentals that if followed will ensure your 'financial planner'
is offering you a comprehensive wealth management solution.
Financial Planner Fundamentals:
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A FAIS licence?
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All financial planners have to display a copy of their
licence at their office.
This
licence shows what type of products the financial planner is
licensed to advise you on.
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If you are looking to invest in a unit trust you need to
make sure your financial planners is licensed to give advice
on unit trusts.
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Ask to see a copy of their licence and ask them what
products they are licensed to advise you on.
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A Financial Needs Analysis (FNA)
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Your Financial Planner should perform a FNA to determine
your financial needs and your risk profile.
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Based on this analysis he/she will recommend products in
which you should invest.
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Product Options:
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Always ask for a second or third option: don't always accept
the first product he/she suggests.
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Understand the product:
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Consider the returns over the past 5 years
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Understand what fees are charged by the product supplier,
fees are often difficult to understand, as they are
disclosed in many different ways.
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Understand what costs are charged, some products don't have
fees but they charge costs.
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Understand the commission paid to your financial planner
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Your financial planner needs to be paid for the advice that
he/she has given you.
Your
financial planner normally receives commission on the
product that he/she has advised you to invest in.
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Ask what percentage commission you financial planner will
receive.
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The commission normally comes off your returns (for example
if the product is paying 10% per annum and the commission is
1% you will only receive 9% each year)
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Some products like Participation Bonds pay the financial
planners commission for you (for example they rate of 10%
per annum is after the payment of the financial planners
commission and you will receive the full 10% each year).
"When structuring an investment portfolio two questions that
normally arise are what are my financial needs and what financial
product can I use to fulfil those needs," he says.
"Investment decisions should be done with the proper planning and
advice provided."
"It
is important to have a relationship with your financial adviser and
ensure that they have an understanding of your financial needs and
are able to assist you in determining the right solutions to grow
your wealth," concludes Field.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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