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Financial Planner Assisting Client

Why does a financial planner ask so many questions, and what should I be asking a potential financial planner? Um… good question. Cherise Enslin of NLD Independent Financial Advisors answers all this, and more.

Financial planning is exactly that – to plan for financial scenarios and outcomes. To do any form of planning, you need context and information, and the best way of getting this is by asking… yup, you guessed it… questions.

READ MORE: 9 Key Documents You Need To File Somewhere Safe – Over And Above A Basic Will

Proper, detailed financial planning entails the planner understanding your personal life, circumstances, dreams, goals and aspirations, and this is why they ask personal questions. By asking the right questions, the financial planner digs deeper and puts herself in the best position to assist you in making good decisions that help you get where you want to be financially.

The questions should help the financial planner identify the problem you’re trying to solve, then help you work on a strategy to solve it. During your first meeting, you should get to a point where you feel comfy sharing personal info, because the more honest you are about what you want, the more accurate advice the financial planner can give.

Questions a financial planner could be asking in the first meeting:

  • What brings you here today?
  • What brought you to this point in your life and where would you like to see yourself go next?
  • What would you like to gain from this relationship?

Note: Don’t feel pressured here. Take the time to think before you answer. Now is the time to dig deep and be honest with yourself.

READ MORE: Do You Need A Wealth Manager, Financial Advisor Or Lifestyle Financial Planner? What’s The Difference?

Before you give away more sensitive info, make sure you can trust the planner. Start off by making sure she is accredited to provide the services you require. Check out the Financial Sector Conduct Authority website to find out if they have a financial service provider (FSP) license. Then check their online presence. What do they talk about? What kind of ideas and news do they support and share? Ask questions if there’s anything you’re not sure about.

Heads up – try to establish whether you are the client, or if your money is the client. If it’s just about your money, this could be a red flag. Beware of anyone who seems solely focused on how much they can make from you, instead of putting the focus on you and getting you to where you want to go.

These three questions will help you decide on the best financial planner for you:

1/ “Who do you like working with?”

Just like anyone else, there are certain things that inspire and motivate financial planners more than other things. They might enjoy working with a specific gender, people who enjoy the same hobbies as they do, people in a certain age group, etc.

Find out what makes them tick and see if you fit their “Ideal Client” definition. If you don’t, no sweat. The importance of this exercise lies more in them being able to connect to their clients on a personal level and have real conversations. They need to be able to understand your lifestyle to really add value.

2/ “What problems do you enjoy solving and which areas of financial planning can you advise on?”

Whether it’s event-specific, like planning for retirement, or short-term goal planning, you need to know what they enjoy, because it’s probably what they’re best at too. While some planners are more niche, the majority prefer doing a comprehensive plan for their clients, because all the areas are dependent on one another and influence each other.

It’s also worthwhile knowing which licenses they carry. For example, they could be licensed to advise on investments and long-term insurance, but don’t have a licence for medical aids and short-term insurance. If all of those areas are critical to you, find someone licensed in all of them.

READ MORE: 5 Good Money Habits Everybody Should Adopt In 2021

3/ “How are you paid?”

If a financial planner is commission-based and gets paid by selling products, they will most likely start talking about products before they know what you really need, or what problem you need to solve. Of course, we all have bills to pay, but try to find someone who isn’t heavily remunerated by commission (preferably none), so they focus on you rather than the next product they’re selling.

There are various ways for a financial planner to be paid:

Advisors who are fee-based are better positioned to give you advice that’s suitable for your needs. They charge a fixed rand amount, depending on what you need done. They could have different packages based on these fees.

They could also give you numerous payment options:

  • Assets under management (AUM): the planner earns an annual percentage of your savings (under their management) as a fee.
  • AUM and cash: products have a cap on the percentage fee that can be taken from them, and the fee being charged could be higher than that percentage. In this case, the financial planner could maximise the fee percentage on the product(s), and the remainder will be paid in cash by you, either upfront or via a payment plan.
  • Cash only: some financial planners prefer getting their fee from you in cash via a payment plan, for example monthly debit orders. Your investment value will not reduce by an annual fee when this option is selected.

READ MORE: 5 Ways To Get Out Of Debt, According To A Financial Advisor

Finally, check their online presence…

This is not a question, but it’s an action I recommend. Check if the financial planner has a website (or look up the company they work for). They might also have a LinkedIn or Instagram account where they share content – and this is a good reflection on what they believe and do. You’ll quickly be able to pick up on the type of person and financial planner they are through these platforms.

This list should put you on the right track. Based on the answers you get, it might even spark more questions. When you meet a financial planner and they aren’t for you, don’t be afraid to admit it. You might not be their ideal client either, and that’s okay. That is what the first meeting is all about – to find out if you’re a good fit.

Psst: Found this article useful? Look out for upcoming articles on what to expect in the second and third meetings with your financial planner.

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