What does it take to be a great financial adviser?

According to the Fundamentals of Financial Planning 2016, the following skills and characteristics are some of the integral requirements to be a successful financial planner:

• Credibility and trust - When you engage with a client, you start by building a relationship of trust. This means taking the time to pay attention to details, delivering on promises and showing the client that your appointment adds value to their life.
• An ethical and honest nature: you are going to be handling large sums of money on behalf of your clients. Your behaviour and handling of funds must be beyond reproach.
• The ability to offer a vision and direction: you help your clients to determine their investment objectives and then you provide them with direction in the form of a long-term financial plan.
• The ability to challenge and encourage: when markets are down or there is a plethora of bad financial news in the media, you have to be able to reassure your clients so that they are not guided by their fears. You should remind them of the importance of trusting in the long-term performance of their investment portfolio, so that they don’t make rash, emotional decisions which result in real losses rather than paper losses.
• The ability to get the best out of people: part of your role includes convincing the client that the more discipline they exercise when it comes to their money, the larger the reward. This means having the discipline initially to actually set aside money for saving rather than spending it immediately. Once that has been achieved, the client then needs to be convinced to have the discipline to leave their savings untouched until the investment has matured.
• The ability to work through and overcome difficulties: the reality is that life isn’t always smooth sailing. As an adviser, you will provide your clients with financial guidance in situations such as retrenchment, an unexpected baby or suddenly having to take responsibility for other family members.
• Organisational skills: these are especially important in terms of responsibilities under the Financial Advisory and Intermediary Services (Fais) Act, as amended.

Managing client expectations

You also need to help your client manage their expectations. The Schroders Global Investor Study 2017 – a survey of over 22 000 wealth investors across 30 countries, conducted by global asset management firm Schroders –shows that, over the next five years, South African wealth investors (those expected to invest at least R150 000 in the next year) expect to receive an average annual total return of 13.3%, which is significantly higher than the global average return expectation of 10.2%. In other parts of the world investor expectations ranged from 11.7% in Asia and the Americas to 8.7% in Europe.

Doug Abbott, the head of business development: South Africa at Schroders, said one of the concerns around this is that these high-return expectations may leave some South African wealth investors disappointed, or result in them failing to meet their financial goals, such as saving for retirement.

Sources:

Fundamentals of Financial Planning, Lexis Nexis;

The Schroders Global Investor Study 2017 (http://schroders.com/en/media-relations/newsroom/all_news_releases/schroders-global-investor-study-2017-sustainable-investing-on-the-rise/)

Disclaimer

This article is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. Discovery Life Investment Services Pty (Ltd), branded as Discovery Invest, is an authorised financial services provider. Registration number 2007/005969/07.