19 Sep How to choose an investment advisor
When solid financial advice is needed, look for a combination of qualifications, experience and relevant licences or certifications such as CFP (Certified Financial Planner), considered as the gold standard internationally.
CFP certification.
A CFP certified advisor indicates a high level of competence and ethics. To retain their license, they must commit to ongoing professional development.
Not all financial advisors have financial degrees, but many are very experienced and certified. For younger advisors, a minimum of three years of relevant experience is required, or completion of an FPI membership programme.
Communication skills.
Apart from experience and qualifications, your investment advisor must be a good communicator. Their investment proposal needs to clearly articulate what they’re recommending, why they’re recommending it, and what the impact or benefit will be. Crucially, they must also ensure that you understand any underlying risks.
Friends and family.
It’s very important that you don’t accept advice from non-certified but well-intentioned friends or family. Their circumstances can differ widely from yours, and your plan should reflect your personal financial situation and objectives, investable amount, risk tolerance and many other factors. Or your friend might be bubbling about their investment performance but unknowingly stuck in a Ponzi scheme!
Asking friends or family for referrals is a good idea but you must still tick the boxes regarding experience, qualifications, and CFP certification.
Small investment funds.
If your investment portfolio is relatively small, you might find it difficult for a top-tier advisor to accept you as a client. Do not despair – most of South Africa’s top insurance companies have well-trained and certified advisors who can help you.
Run a mile when…
When an investment advisor makes ‘convincing’ promises of mind-boggling returns or investment performances above the norm, the golden rule is simple. Say goodbye and run a mile!
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