You have probably all come across this picture before of the old witch… or is it a young lady… or is it a witch? Some people see the young lady with the red hair looking away, while others see the witch with the crooked nose and long chin wearing a yellow headdress. Yet we are all looking at the same picture.
In an almost reverse situation to the above, I find that few people look at financial planners and can distinguish between the “witch” and the “lady”. They therefore see 2 different pictures, but cannot distinguish that there is a big difference between the two.
They say that you should never ask a butcher if his meat is any good; What do you expect him to say? Similarly, an article about financial planners and their worth in society probably weighs less coming from exactly such a person. For that reason I am not going to try and convince you today of the merits of a professional financial adviser. Hopefully there are a couple of people receiving this article who can testify to this. And if you have a look at some of the testimonies on our website, you will hopefully see that it is indeed the case. On the flipside of the coin, I would not have a hard time collecting stories of people who have had a horrible experience with a so-called financial adviser or of people who cannot see any value that this person has added to their lives. The purpose of today’s 2Cents is to help readers tell the lady apart from the witch when it comes to financial advisers.
Let me start by admitting that I am not trying to purport with the distinction between the two, that on the one hand you have an adviser that has all the answers, who has complete foresight and never makes any mistake, while on the other hand, you have a crook who is out to steal your money. The distinction is unfortunately much more subtle than that and 90% of the difference is about incentives and intentions. Although the differences are subtle, the long term impact of your choice of adviser can have a CONSIDERABLE impact on your financial wellbeing.
One question that I always ask prospective clients is: Why are you here? Except if it is quite a young person, he or she almost certainly have dealt with an adviser or 3 before. Why is he not a client of that adviser any longer, and why do they feel the need for an alternative opinion? The answers to this question is very informative but also an indictment to my profession. Popular answers include the following; Listen carefully if any of them sound familiar:
Almost across the board, the people above have dealt with the “witch” in the equation. No matter how you look at the above complaints, the common thread is a lack of trust. Because of a mistake or 2 that has been made, a lack of integrity, independence, competence or a combination of the above, trust has been eroded between the client and his adviser. Trust is a very fragile commodity. It can slip through your fingers like sand and once it has been lost, you can hardly get it back. This is something we are acutely aware of at ProVérte. Warren Buffet hits the nail on the head when he says: “It takes 20 years to build a reputation and 5 minutes to lose it. If you think about that, you will do things differently.”
So how do you find a capable and professional adviser? I wish that I could share a recipe that you can follow blindly, but because we work with people, there will always be exceptions to the rule. If, however, you want to catch a fish, it wouldn’t help to look for one in the desert. I will therefore give you an idea of where to “fish” if you want to better your chances of finding the right type of person/institution who can add considerable value to your future. The term policy “smous” may be a bit harsh… So I am going to use the old-fashioned term of Assurance Agent (AA) for the type of adviser who you probably want to avoid and Professional Financial Planner (PFP) for the adviser that you are trying to find.
Tell-tale characteristics of an Assurance Agent (where I refer to HIM, I also mean HER):
Characteristics of a Professional Financial Planner (PFP):
As mentioned earlier, this is unfortunately not a recipe that applies to all. Although our opinion is that INDEPENDENT advice is the way to go, there are still “tied agents” who satisfy all the requirements of a true Professional Financial Planner and is per implication a true PFP. Conversely, there are well qualified independent advisers who conduct themselves like Insurance Agents, and is per implication nothing more.
At the end of the day, it is integrity and competency that remains the most important decisive factors and not qualifications or independence and unfortunately it is not an easy task to determine whether your adviser possesses those qualities or not.
Feel free to contact the author to share experiences that you may have had with advisers before, or if you have any questions about this article.
“Strive not to be a success, but rather to be of value” – Albert Einstein
Disclaimer: Although all possible care was taken in the drafting of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone planning on taking any financial action based on this document, is strongly advised to first consult with their personal financial advisor. ProVérte Wealth & Risk Managementis an authorised financial service provider with FSP no. 5966.
True to company culture, Samuel strives to build solid long term relationships with clients and has a meticulous way of identifying needs, defining goals and compiling an executable plan to reach one's goals. He firmly believes that one has to be a specialist in one's field to be able to add value, and continuous training & education is therefore paramount. To be objective and to have an independent approach to a client's planning is critical to make a difference.
Born & bred on a farm in the Montague region, Samuel matriculated in 2001 from Montague High School. He completed his BComm Honours degree in Business Management as well as his Postgraduate & Advanced Diploma in Financial Planning. Samuel is a CFP charter holder. Apart from a short stint at an agricultural company Samuel has spent his whole working career with ProVérte. Samuel is a shareholder and valuable member of the board of directors of ProVérte.