Five ways to get the most out of your financial planner.
While the world braces for the second wave of the COVID-19 pandemic, investors experiencing losses are questioning whether their once-careful financial plans are still sound.
According to Sharon Moller, Financial Planning Coach at Old Mutual Wealth, it’s this sense of anxiety in the face of the unknown that is driving more and more South Africans to seek out financial planners, many of them for the very first time.
“From the onset of the national COVID-19 lockdown until May this year, investors have been asking themselves whether their financial reserves are resilient enough to weather the storm. Are last year’s money goals realistic now – or even relevant anymore? These are the questions that are top of mind for investors,” says Moller.
Moller says that there is value in financial planning in times of uncertainty. “Unlike the economic and political crises we’ve faced in the past, the health crisis created by COVID-19 has resulted in personal pandemonium and wide-reaching socio-economic consequences that have impacted the performance of our investments,” says Moller.
She says never has the relationship between the client and financial planner been more important to help investors stay on track to reach their specific financial and life goals. “In times of crisis, it’s important to remember that most of our decisions are based on fear and scarcity. A financial planner can help take the emotion out of the moment and help you see the situation more clearly. In other words, planners remove the noise and can help you see the wood from the trees.”
Moller says for investors to get the most value from a financial planner, they should see them as less of an instructor and more as a financial coach. “A financial planning specialist doesn’t spend their time telling clients what they should do to solve the situation they find themselves in. Instead, an excellent financial planner acts more like a partner and provides the client the space to come up with the solution that suits them best,” says Moller.
Instead of a passive monologue between a financial planner and client, Moller encourages an active conversation. She offers the following advice to clients to make the best possible use of their time with a financial planner.
1. Be brutally honest with yourself
A successful investment strategy requires self-awareness, insists Moller. If, for example, you have a history of impulsive spending that keeps you from meeting your goals, start by admitting this to yourself.
“We all have behavioural patterns around money. Cultivating a willingness to see them will make it that much easier for your financial planner to get you where you want to be,” she says.
2. Share fully and authentically
The best planner in the world can’t help you if you don’t disclose the nitty-gritty of your financial life. Neglecting to mention specific details is only cheating yourself, warns Moller.
“Remember, it is not the planner’s job to judge you. Rather, they should create a safe space in which you can freely put all your numbers on the table. And not just your numbers but your thoughts and feelings too, as these are a big part of finding the strategy that’s exactly right for you.”
Feeling a sense of security with a planner goes a long way in bringing the best out of the partnership. This is more likely to be achieved when the client and the planner have a shared investment philosophy and can agree on which direction to take.
According to Moller, the only way a planner can help you manage your money effectively is if you are both aligned in your thinking. “Both parties must understand clearly what it is the client wants their money to do for them — it’s not about the best return possible but rather the appropriate strategy to achieve the life the client wants.”
If the only conversations you’re having with your financial planner are around performance, you might need to reconsider what you’re paying them — there are many other variables that you can control in your planning that will have a bigger impact on the success of your plan. Integrated Wealth Planners know how to have the right kinds of conversation.
3. Let them hold you accountable
Expert advice is hugely important, but knowing what to do is never the same as getting it done.
Your financial planner should always set you tasks at the end of each meeting, suggests Moller. For example, you are transferring extra cash from your current account into a short-term savings account.
“The accountability that they then provide by following up is one of the biggest benefits this partnership has to offer,” she says.
4. Be open and ask lots of questions
Since you’re paying for an expert and objective perspective, it makes sense to stay sincerely open to feedback, changes and new ideas – even when this takes you way beyond your comfort zone, advises Moller.
“And if there’s something you don’t understand, ask until you do. The more willing you are to ask and to learn, the more you’ll gain from your planner.”
5. Take full responsibility for your money
On this point, Moller is firm: don’t outsource your financial decisions to anyone, not even to your financial planner. Client’s must participate in co-creating their investment strategy.
“Time and again we see that if a client doesn’t fully own their decisions, they aren’t likely to stick to their investment plan, however solid it may be,” she concludes.
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