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Priceless advice

Sep 26 2012 11:16
MyFin24 is a user-generated section of Fin24.com. The stories here come from users.

Fin24 user Liziwe Ndalana shares her experience on finding the right financial adviser.

I MET my financial planner on an odd detour. A few years ago when I started working, my graduate account was upgraded to a cheque account, which came with a perk of a relationship manager.

He later became my financial adviser. In the three years since we have been “working” together, I’ve come to learn that a financial adviser is more than just someone who gives advice on where to invest.

If it wasn’t for him, I would still be struggling with debt and I would not have had life cover which he helped me buy at a highly discounted rate.

However, I’ve learnt that the onus still lies with me to educate myself about the options available and more importantly, understanding my finances is the key to my financial independence.

A financial adviser will assist you, but you still need to take responsibility for your money.

Face reality

Probably the biggest lesson my adviser taught me is that you need to be willing to face the truth about your finances, especially when it comes to debt and identifying what triggers reckless or impulsive spending.

Without this insight into your behaviour, your adviser cannot help you.

I remember when I first worked with my adviser I used to make appointments but just didn’t show up, because I was still unwilling to face the truth about the debt I was in.

My mind was set: advisers are out to make money off you and they don’t want you to “enjoy” your money.

But I’ve since learnt that it is good to have someone help you put a plan together to achieve your financial goal, be it financial independence, amassing wealth or simply getting rid of debt.

Understand who you are

I’ve found that although we honestly want to take control of our finances, our experiences with money, upbringing, family interactions, peer pressures and personalities all have a profound impact on how we handle  and where we spend our money, especially when it comes to deciding which cellphone or car to buy.

I grew up with little access to money. I learnt early on to accept that I couldn’t just desire a particular pair of shoes or anything that was “in” and have it.

I also learnt to differentiate between “wants” and “needs”. In my teens I was only given money for school and on weekends I stayed at home. This meant that I did not need money for weekends.

I knew that when I needed money, I had to ask for it, and give very good reasons for needing it.

The disadvantage was that I got the exact amount I asked for and never had the opportunity to willy-nilly spend or save any surplus.

This led me to think that I didn’t need money and I subsequently never had interest in earning my own pocket money.

This mindset followed me into adulthood and I never thought of generating my own money, other than working for someone. Needless to say, I had no entrepreneurial spirit.

What this essentially did was turn me into an extremely conservative investor. Only recently, after reading a lot and asking even more questions, have I learnt that whenever you decide to invest there is always some risk involved.

Owing to the great direction from my financial adviser, I am now willing to take on the risks.

Many viewpoints are better than none

My financial adviser helped me face the truth about my finances and especially debt, but he didn’t encourage me to get rid of debt altogether. Instead, he helped me to manage it well.

Another adviser told me that it is possible to live debt-free. His motto:  “Just because other people have debt does not mean we are bound to have debt.”

This made me determined to get rid of all my debt - and I’m nearly there!

My concern is that my bank adviser is encouraged to extend credit to customers and may be focused on selling a product without considering if it is in line with my financial needs.

I’ve come to the sobering realisation that you can also advise yourself. A case in point is when, after some reading, I asked my adviser if I should invest in the stock market via unit trusts and he said “never, because it will never work for you”.

Instead he told me to invest in a flexi fixed deposit account with the bank, where I would accumulate half a percent in growth. He also told me not to close my clothing account because I “will always need it”.

What he failed to tell me is that had I invested the amount I pay on my monthly clothing instalment in a unit trust instead, I would have earned more in compound interest if the investment had been left long enough to accumulate growth.

This knowledge came as a result of reading and questioning different people who are knowledgeable in the financial field.

I firmly believe hat you should educate yourself about all the financial solutions and products available. Not only to make better investment choices, but also to understand what your financial adviser is feeding you.

This way, you can tell if he/she is truly interested in your financial wellbeing.

I prefer my new adviser as he charges fees rather than earning a commission, and I know his advice is aimed at meeting my needs.

This does mean that I have to pay him rather than having what on the surface appears to be a “free” adviser from the bank. I am willing to pay for his impartiality, and for the best advice suited to my needs.

 - Fin24

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