Do you have burning questions that you would like to ask
your financial adviser but you’ve always been too embarrassed to ask?
Paula Walker, a director and advisory partner at
Consolidated Wealth, says that financial planning can be complicated, but your
adviser is there to help you to navigate any uncertainty you may have.
“Certified advisers study for years to become experts in the
field but ultimately, this is a people-oriented profession,” she says. “One of
our greatest responsibilities is to make our clients feel comfortable and this
includes educating them to ensure they receive the best advise that’s tailored
to their unique circumstances. So there is no need to feel embarrassed about
asking what you may believe are obvious questions.”
If you are one of those people who have nodded along while
your friends talked about their financial planning only to secretly search the
conversation afterwards, here are Walker's answers to what may be some of your
embarrassing questions.
1. If I am in debt, will you be able to help me?
In the world of finances, managing debt is a specialised
field and if you are in a fix, your best option is to speak to a qualified debt
counsellor. Their job is to help you get out of debt and they will negotiate on
your behalf with your credit providers. Once your finances are under control
and you have cash reserves, then an adviser will help you achieve your
financial goals such as saving for your retirement, buying a home or putting
your children through university.
2. How do you get paid?
This is actually an important question that you shouldn’t
feel embarrassed about asking. There are a number of ways that financial
advisers get paid. Advisers are remunerated by either commission, fees or a
combination of the two. Traditionally most advisers received commissions from
the company whose products they were selling, but recently more advisers are
opting for fee-based planning. This has distinct advantages as the adviser can
remain totally objective. There are, however, some advantages to the commission
route: you can view the adviser’s quality and level of financial planning
before incurring any costs. Whatever route you choose, make sure you have
clarity on the exact method of remuneration before proceeding.
3. What is compound interest and how does it work?
Compound interest is when you earn interest on your
interest. Let’s say you invest R10 000 at a realistic rate of 6% per year. In
one year, your money will grow to R10 600. If it’s in an interest-bearing
account, in the following 12 months, you’ll begin to earn interest on your
original investment as well as the interest it has accumulated. So depending on
the outcome required for your investment, the longer it remains invested, the
better!
4. Is there a minimum amount I need to invest?
This is one of the most common questions asked by people who
want to start investing. The answer is that the amount that you invest as well
as the outcome required by the investment will determine the type of product
that will be best for you.
5. Do I need a financial adviser?
Managing your money and making the right financial decisions
takes time, skill and effort. Working with a qualified adviser will ensure that
you have a long-term plan for your money, that you are making decisions that
are tailored to your circumstances. A Financial Adviser will help you to make
and save money in the long run by keeping you on track and proactively
identifying any financial risks and opportunities.
Walker says you should never feel embarrassed about asking
even the most basic questions. “Your relationship with your financial adviser
is a long-term partnership that is based on trust and it’s our job to make you
feel comfortable that your money is in the best hands.”
Click here for the
original article.