Most of us don't really look for specialist financial advice. We have a basic set of banking needs, and many people believe they can manage these without any professional help. But there are various ways a good relationship with a financial adviser can benefit you at different life stages – for example, when you're just starting to save and invest, when you've started your own business, or when you have significant cash and assets to invest.
How to choose the right financial adviser
If you're starting a savings and investment portfolio, you'll want a financial adviser to answer some important questions before you trust them with your money. Make sure you both see eye to eye on the following issues:
- Your financial goals
Your adviser will help you shape your financial hopes and dreams, so you need to align your definitions of 'success' and be clear about what goals you hope to achieve.
- Budgeting and planning
You need an adviser who can help you plan a strategy to achieve your savings and investment goals that fits into your budget, taking account of your current levels of debt.
- Fees and commissions
When you're first getting to know your financial adviser, trust is paramount. They should clarify their remuneration and explain how they structure their commissions and fees upfront.
- Disclosure and transparency
Your adviser should inform you whether they work independently, or if they are required to recommend financial products from a specific institution. You're also entitled to check their professional experience, education, and accreditation.
- Reporting
They should provide accessible, understandable reports on the performance of your investments and whether you need to make any changes.
Financial advice for your business
If you're a business owner or entrepreneur, a financial adviser is not allowed to offer strategic business advice. However, they can help you navigate the challenges of your business finances, and growth or succession planning. These challenges include:
- Savings
Choose an adviser who can show you ways to maximise profits and improve cash flow through a combination of cost-cutting and reinvesting profits for higher earnings.
- Debt
Loans and credit cards can offer you the financing you need to grow your business, but they come at the cost of interest payments that reduce liquidity and profit. A financial adviser can help you plan your debt with a guided repayment plan.
An experienced professional adviser can also show you how to plan your tax liabilities efficiently
- Growth
If you've established your business and want to grow or expand it, your adviser can help you with any regulatory financial information you need. For example, they can tell you how to go about getting trade permits, or how to analyse new markets.
- Retirement planning
This is an important responsibility of business ownership – not only for yourself, but for everyone your business employs. You'll need advice on the most tax-efficient, cost-effective retirement solutions and succession plans, in the best interests of all parties involved.
Special considerations for high-net-worth individuals
High-net-worth individuals (HNWI) can include entrepreneurs, professionals with many share options in their company, or beneficiaries of a large inheritance. In all these cases, you’ll find specialist advice helpful and valuable.
As an HNWI, you'll often need financial planning related to buying property, planning your retirement, or optimising your tax liabilities. HNWI finances are complex and can include multiple income streams from trusts, businesses, properties, or assets, both in South Africa and abroad. Or your income might be sporadic, via large bonuses or share dividends, causing irregular cash flow that can lead to challenges when financing property.
Having a financial adviser to help manage your money can be worthwhile. Even if you have investment and financial knowledge, you probably have multiple constraints on your time. An experienced professional adviser can also show you how to plan your tax liabilities efficiently, both during your lifetime and in your estate. This ensures you pass your wealth on to the next generation without paying more inheritance tax than you need to.
Most high-net-worth financial advisers work closely with other professionals like accountants, property managers, and corporate advisers to offer a holistic planning and advice service. This typically includes insurance, investment management, retirement planning, and education.
As an HNWI, here are 3 more questions to ask your Nedbank adviser about investment.
If you need help with financial planning, speak to a Nedbank financial adviser.