A single professional financial advisor is the future of financial planning

It is often required of me to “educate” new clients to understand just how important it is to approach their financial planning from a holistic point of view and not from a single need, product driven point of view.  Holistic planning takes more time, but it is the right thing to do if you’re serious about protecting your assets and creating wealth.  

The following article taken from the 05/2011 edition of FIA-Inform, highlights the value of a single, professional financial planner’s role as apposed to utilising the services of different agents/advisors/brokers promoting particular products to address a single need – whether that particular product made sense within the broader context of the clients’ life, overall financial obligations or long term financial plans, was irrelevant. 

Traditionally financial advice has been driven by the value of the transaction that each broker might be selling. Whether that particular product made sense within the broader context of the clients’ life, overall financial obligations or long term financial plans was irrelevant. Yet if every individual had a single professional financial advisor with a long term holistic view of each client and their families’ goals and plans, the selection and value of financial services purchased might be very different.
 
The best financial choices involve mixing and matching different investment, retirement and risk protection approaches over time as the lifestyle, income, assets, needs and responsibilities of a person change. Since getting this right as an individual is a big ask, no matter how many brokers are consulted, “the future is likely to see the advent of the professional financial advisor, appointed and consulted for life, rather like GPs today” says Paul Rosengarten, Managing Director, Alexander Forbes Retail Holdings (Pty) Ltd.
 
People develop a long term relationship with their GP who, over a lifetime, treats them for countless conditions as and when they arise. More significantly, however, GPs are able to develop a holistic understanding of their patients health needs over time, enabling them to guide patients on more serious medical conditions by sending them to specialists and other professionals as needs arise.
 
So, as Alexander Forbes and other major institutions work with brokers and government to professionalise the financial advice industry they are also working to educate consumers on the need to centralise advice – even as clients’ diversify their investment, retirement planning and risk protection along with the management of their discretionary spend.
 
Certainly, “the difference between once-off transaction-driven advice and the advice provided by a lifelong financial advisor with a comprehensive view of a clients’ situation, needs and goals is often very startling” says Rosengarten.
 
For example, a life broker might do his sums and correctly determine that you need to purchase four million Rand life cover. Similarly, an investment broker might identify that you need to be investing 25% of your salary to achieve an income of ten thousand Rand a month at retirement. Both would be providing correct advice from the perspective of their particular disciplines. Yet if you had a professional financial advisor intimately familiar with you and your families’ circumstances over many years, he or she might advise you to take a higher excess on a risk policy thereby reducing the premium and saving  money for retirement or the purchase of more life cover, depending on which was more appropriate to your life stage.  
 
And appointing and developing a lifelong relationship with a single professional financial adviser does not mean a one-stop-shop.  In future “as GPs do today, professional financial advisors will refer clients to specialists as and when necessary” explains Rosengarten.  Should, for example, the professional financial advisor be unable to provide a certain need or product themselves they will have the knowledge to guide the client to the right specialist. Moreover, they will be able to oversee the transaction in the best interests of their client since only they will be informed by a comprehensive knowledge of the clients’ financial position, needs and goals.
 
At the moment, however, the product and event-driven way in which the financial services industry markets itself contributes to the schizophrenic view that consumers have of what financial wellbeing means. Certainly the random purchasing of products thatresults represents a very poor use of limited resources. Rosengarten believes that “if we are to succeed in professionalising this industry we need to develop financial advisors who understand how to maximize scarce resources variably over time while protecting assets and ensuring a decent lifestyle.”
 
In getting this right it is inconceivable that additional advisors and professionals will not need to be consulted from time to time or that clients may be encouraged to take on more risk at appropriate times in their lives. “The difference in that the future is that it will all be managed by a single professional advisor with a holistic view of the clients lifestyle needs, financial capacity, assets and long term goals” concludes Rosengarten. 
 
Source: FD Media & Investor Relations