Andile Jonas | When to fire your financial adviser

Your relationship with your financial adviser can probably be compared to the one you have with your doctor or hairdresser. It is a bit personal. Maybe they won’t take your blood pressure or recommend a new look, but money can be quite close to home. 

That is why trust is such an issue, especially if you are not a money guru yourself. You need to trust that the professional sees the bigger picture and stays on top of developments in the industry. And it’s best if knowledge can be shared in layman’s terms: please translate “asset diversification” to “don’t’ keep all your eggs in one basket” or you’ll lose me. Can they answer which financial gaps do you fill first, and where does one start with investing?

You also want to be protected against new threats, like a fly-by-night investment or another Steinhoff. You want to be protected against your neighbour or that friend at the braai who always knows what the “next hot share is” but somehow is not sitting on a huge portfolio. 

Most of all, you want to be protected against yourself. Are you prone to making emotional decisions when the markets are in turmoil? It is then your adviser’s job to keep you steady, as behavioural finance shows how much growth you will lose out on by jumping from fund to fund. 

It is also the adviser’s job to warn you when you are spending money you don’t have or always helping a family member where a pattern of foreseen mistakes is emerging.  They need to guide you to a financially secure future, not an “oops, now it’s too late”.  They can empower you with great plans and help with calculations such as how much faster you can pay off your house if you put in extra. 

Experience has taught me that it makes sense to start building trust at the beginning of relationships. What exactly will your financial adviser do for you, and how often? Will you receive a quarterly report and personal visit once or twice during the year? And if you never see the adviser, is it by choice or because the person has disappeared? 

If they earn commission, it is remuneration for making sure that you are on the right financial path, and that adjustments are made as your needs change. They must give feedback on the world economy and local challenges and put your performance in perspective.

Now, can you fire a financial adviser if you don’t think your assets are growing fast enough? The catch lies in “fast enough”. Fast enough compared to what? Inflation? That is a good measure, generally speaking, but you have to read up on how the markets and certain commodities are doing in general. Various indices can play the same role as growth indicators. And what did you choose to invest in? You can’t expect to beat equity growth if you insisted on a money market fund. 

They cannot be responsible if the service of your asset manager or insurer sucks, but they can take them to task if say your dividends are not coming through. They can fight your battles.

But are your investments pretty consistent, or do the adviser make you jump from product to product a bit too often for comfort? Just check. 

The main framework for your decisions on financial advice should be what you discussed in that first meeting. Are you on track for your financial goals, and if not, why not. 

It’s not an adviser’s job to avoid financial storms, because they will always come. But it is their job to keep your boat afloat and guide you until you reach calmer waters again. 

*Andile Jonas, Head of Marketing at Momentum Savings.