You’ve just received your first paycheck, or maybe you’ve recently been promoted, perhaps there is a new baby on the way. Right, time to get your financial world into order and get a Financial Plan. But wait, what’s this, you get Financial Planners, Financial Advisers, Financial Coaches and Brokers… what’s the difference? How do I pick one? Who is right for me?
Don’t worry, you’re not alone in feeling overwhelmed by this choice. But stress no more, this post shall assist you in finding a match for you.
First of all, congratulations for taking responsibility and ownership of wanting to do something about your finances. By making the commitment to look at your financial status and wanting to do something about it you are already way ahead of those who choose to ignore their responsibility in this area of their Lives.
The history of the Financial Services Industry in South Africa
I won’t bore you with all the technical details, but I will explain that traditionally financial services were offered to clients by Brokers or Sales Agents from product providers like Insurers. Traditionally these Brokers would approach you with a product offer that was made “just for you” and you would be promised something in the future in return for signing on the dotted line today, just as long as you paid the monthly commitment stipulated in the contract you signed. Brokers earned their income from the sales they made ie. commission rather than a basic salary. It was a win for the Insurers, they didn’t have to pay people to market their products, but only when a product was sold and the contracts that were sold along with these products would guarantee future income as to cancel such contract was near impossible.
This went on for a while until the Financial Services Board (FSB) and Financial Advisory and Intermediary Act (FAIS) were created in order to regulate the conduct of the various role-players in the Financial Services Industry. This included balancing the interests and rights of clients (like you!) , intermediaries (Financial Advisers, Brokers, Financial Planners) and product providers (Insurance or Investment Company’s).
Today the Financial Services Industry in South Africa is still evolving. This means that you will find different kinds of intermediaries, with a range of experience, qualifications and titles.
Broker vs Financial Adviser vs Financial Planner
Is there a difference between these different titles? According to the requirements of FAIS and the General Code of Conduct, there shouldn’t be as all intermediaries are required to conduct themselves according to a set of norms and standards that have been legislated. The FAIS act regulates what is considered an intermediary service, what is considered advice and how the financial planning process should be executed.
“Advice” is defined as any recommendation, guidance or proposal of a financial nature
furnished, by any means or medium, to a client or group of clients in respect of the
purchase or investment in any financial product, the conclusion of any other transaction
aimed at incurring any right or benefit or liability in respect of any financial product (this
includes a loan or cession), or the variation, replacement or termination of any financial
“Intermediary Service” means any activity other than the furnishing of advice that is
performed by a person for or on behalf of a client or product supplier.
The six steps of financial planning are as follows:
- Establishing and defining the relationship between intermediary and client
- Gathering of information from client and determining needs and goals
- Analysis and evaluation of the client’s financial status based on the information collected from client
- Development and submission of a financial plan with recommendations and alternative proposals, as needed
- Implementation of the agreed upon proposed solutions
- Monitoring of the implemented solutions and reviewing of the plan, at least annually
So why the different professional titles if you’re all required to do the same job? I believe this is a question you should ask any Broker / Financial Adviser / Financial Planner you meet. Is the title they are using linked to what they most put a value on ie. sales, advice or planning? Does their title imply that they are the expert in the relationship concerning your financial affairs? Is power in the relationship equally balanced?
Regardless of their title, do their values reflect the desire to put you at the centre of the relationship with the aim to deeply understand your needs and goals and create a plan to take you there, as well as support you along the journey?
What about the Financial Coach?
A Coach is someone who may have expert knowledge as well as experience, but who is focused on you as the client and wishes to not only share their knowledge with you, but also empower you by coaching you to learn and grow and make your own choices that positively impact your Life.
Financial Coaches have a specific focus on your relationship with money, but can also be trained to coach around any other topic relevant to your Life.
The ideal Financial Planner and Coach
The ideal intermediary will be BOTH a Financial Planner AND a Coach. Someone that is trained in the numbers aspect of financial planning- able to identify and calculate your financial needs and put together a plan that will take you from your starting position to your goals. And also someone that is trained to have courageous conversations with you about money- holding space for you to explore your thoughts, feelings, beliefs and behaviours about your money and abundance and wealth and what these concepts mean to you.
The combination of the two ensures that you are not only given advice and a set of instructions and left to fumble on your way, but that you are held and supported. Your Financial Planner and Coach should be a long-term financial partner, someone you can turn to not only when confronted with a challenge that requires navigation to overcome, but also when you want to high five and celebrate a victory as you reach a goal.
Financial Planners and Coaches are few and far between at present, however the industry is evolving and more and more Financial Adviser and Brokers are seeing the value in Coaching and therefore upskilling themselves to be able to add that extra value to their relationship with their clients.
Mary Fourie is both a Financial Planner and Coach having qualifications both in Financial Planning as well as Coaching and Leadership. She is passionate about the integration of the financial planning process with coaching, creating relationships that are empowering to clients and that enable shifts in thinking, feeling and behaviour in order for clients to stay the course of their financial plans and achieve the financial freedom they desire, however that looks to them. For more information about the Financial Planning and Coaching experience offered by Mary, please contact her at firstname.lastname@example.org or on 082 4555 919.