You don’t have to feel like a deer in the headlights when you start planning your joint financial future, writes Letitia Watson.
Charl and I got married straight after finishing our studies. Financially we literally started with a clean slate – we had nothing! Did we stand back and really ask ourselves where we were financially headed in the long term? Really planned for it? Hum ho… no and no!
We had some basic ideas of saving and did not indulge in debt, but looking back after 16 years it could have been so much easier if we had good advice from the start.
Instead, I felt as if every single financial advisor in town tried to sell us some kind of policy. You start working and suddenly it is open season – intermediaries of all sorts and sizes are drawing charts and telling you what a nightmare your lives will turn into if one of you die, get ill, or – heaven forbid – dare to grow old.
You have to plan for these risks and eventualities and you need to do this as early as possible for your retirement. But, and a big BUT, it does not have to be a negative, complicated deal. You don’t have to be pushed into buying an insurance product.
So here is my advice:
When you get married and are planning a life together, ask yourself this question: Do we have a competent financial planner or adviser? Someone who will look at the bigger picture and our wealth building in the longer term?
A good financial planner will help you to invest for life. There is no better time to start saving before you have the responsibility of children and the longer you invest, the greater the impact of the compound interest you will earn on these savings. You can still have a good time as a young couple, but you need a financial road map to build wealth.
Here’s the good news: There are some really good financial planners out there
What do they do?
A financial planner should analyse your individual and joint financial needs, based on your income, assets, debt, expenses and existing insurance cover. They help you set financial goals and work towards them. In the end, they help you to manage your financial affairs and don’t merely sell insurance products.
And more good news: You can find one
As Pooh Bear says: “You can’t stay in your corner of the Forest waiting for others to come to you. You have to go to them sometimes.”
Finding an efficient financial planner is about the same as finding a new doctor. You get referrals – ask family and friends who are settled and successful (beware, size of cars and TV’s might not be an indication of success, but rather be a sign of sizable debt!) for recommendations.
Try to get the names of a few qualified planners and then check them out – on the internet and personally.
When you talk to them, remember to ask the following:
# Are they independent or linked to a company? The latter work for specific financial services groups and only sell their products – they are required to declare this upfront. Independent financial planners should be able to compare different investment and insurance products to find those that meet your specific needs.
# Ask them what they do and what they charge for it. The commission and fees of financial advisers are regulated and they are legally required to disclose their remuneration. Some planners ask a consultation fee, but then you seriously sit down and discuss your financial planning. Not the weather!
# Ask about their qualifications. Under the Financial Advisory and Intermediary Services Act (FAIS Act) financial planners must be registered with the Financial Services Board (FSB). Brokers and advisers are licensed according to their qualifications and experience for the type of service and products they may offer. Certified financial planners (CFP®) are supposed to complete their financial planning certification at a Postgraduate level. According to the Financial Planning Institute, out of the nearly 100 000 registered representatives licensed with the Financial Services Board, only around 4600 of these are CFP® professionals. You can check the licencing status of brokers/advisers/consultants with the FSB (www.fsb.co.za). For CFP® professionals visit www.fpi.co.za and other financial intermediaries the Financial Intermediaries Association of Southern Africa website at www. fia.org.za.
# Ask them if they have a support structure? Specialities differ. Not one financial planner can be a one-size-fits-all tax, retirement or estate planning expert. They should have the assistance of tax, legal and investment guru’s.
Even better news: You don’t need to earn big bucks to consult with a financial planner
According to Old Mutual’s latest Savings Monitor, about 59% of people who have not consulted with a financial adviser believe that they don’t have enough money to do so.
Remember: Everybody needs to start somewhere. Ask upfront about the costs. Move on if an adviser makes you feel intimidated or inferior in any way, or if you are not comfortable.
Sometimes we see change coming, whether it’s a wedding, birth, divorce or a new job. Every time you will need to sit down with your financial planner and review how this change will affect your financial future – as an individual and as a couple.
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