Financial Advice: Who Would You Trust?
Financial Advice: Who would you Trust?
In seeking financial advice, one is bombarded by various possibilities, via advertising through the media and advice from well meaning friends. One doesn't often hear of Certified Financial Planners (CFPs). You are more likely to hear of accountants, brokers, and financial advisors. You also hear of banks, brokerages, insurance companies, investment firms and financial services companies. All this is very confusing.
Where does Trust in a Financial Advisor Start?
Trust is based on relationships and never happens overnight. A good starting point is in the knowledge that someone qualified and capable is handling your specific financial matters, and understands your situation. You need clarity about her/his background and the advice s/he is legally entitled to give.
Ask all the questions that are on your mind. If answers are openly forthcoming, proceed further. Be careful to check someone's credentials before enlisting their services. Nothing stops you from asking a financial practitioner for references. Successful and trustworthy financial advisers would gladly supply this on request.
What is in a Title?
People use titles interchangeably. A correct title not only identifies someone's qualification and experience, but also indicates their accreditation and legal entitlement to give financial advice.
Accountant
Accountants are responsible for the legally required financial records of a business entity. They may advise on tax issues. Strictly spoken, their advice does not include the full scope of financial planning. In the USA, professional accountants are CPAs (Certified Public Accountants). The equivalent qualification in South Africa is a Chartered Accountant (CA).
Financial Brokers and Brokerages
In most countries investors cannot directly enter into transactions with a securities or stock exchange. After obtaining the required qualification, a broker or brokerage is the only entity that may legally fill this role. Acting strictly within this scope they don't give financial advice to individuals other than which investments in stocks or securities may be best. Like any profession, a post school qualification is required.
Investment Advisors
Many people call themselves investment advisors simply because they give advice on financial matters. They may or may not be qualified. Some investment advisors simply advise you to make investments to suit them.
Certified Financial Planner, or CFP
A CFP is a professionally qualified advisor who guides financial planning in a comprehensive way. It starts with analysing your financial needs and takes the process right through to planned implementation and results monitoring. The advice of a CFP who is amongst the Partners at StoneHouse Capital covers saving, spending, investment, insurance and planning wisely for the future. A CFP does not act as a broker or an accountant, although s/he may certainly make use of their services.
In most countries one can only claim the title of CFP if you have accreditation with a legally sanctioned body, e.g.
o USA: Certified Financial Planner Board of Standards, Inc. (CFP Board)
o South Africa: The Financial Planning Institute of Southern Africa (FPI)
o UK: Association of Professional Financial Advisors (APFA)
Affiliation vs. Independence
People going under any of the above mentioned titles can work on their own or for a variety of financial institutions. Quite often the first stop made by people seeking financial advice is their bank. Based on their past experience they already may have a trustworthy relationship with their bank.
The danger of using a financial advisor who works for an institution like a bank is that they could be limited to recommending financial products directly linked to their group of companies. The advantage is that one has recourse to higher levels if you are not satisfied with the service or advice.
One gets CFPs who practise completely independently. The advantage is that they are not limited to recommending certain financial products above other better performing ones. The disadvantage is that one person is always limited by the extent of their own knowledge and perspective, regardless of how brilliant they may be.
Partnership
The key is to select an organisation that doesn't have a stake in selling one or more specific financial products. StoneHouse Capital has a variety of Financial Planning Professional Partners who complement each other in terms of experience, while having high levels of qualifications and knowledge. This enables them to tailor a financial plan to suite the unique needs of their clients.
Ultimately you need to feel that you can trust the person, or institution you have chosen. Looking at the individuals within the StoneHouse Capital partnership, you can see vast resources of financial knowledge and experience on offer.
In seeking financial advice, one is bombarded by various possibilities, via advertising through the media and advice from well meaning friends. One doesn't often hear of Certified Financial Planners (CFPs). You are more likely to hear of accountants, brokers, and financial advisors. You also hear of banks, brokerages, insurance companies, investment firms and financial services companies. All this is very confusing.
Where does Trust in a Financial Advisor Start?
Trust is based on relationships and never happens overnight. A good starting point is in the knowledge that someone qualified and capable is handling your specific financial matters, and understands your situation. You need clarity about her/his background and the advice s/he is legally entitled to give.
Ask all the questions that are on your mind. If answers are openly forthcoming, proceed further. Be careful to check someone's credentials before enlisting their services. Nothing stops you from asking a financial practitioner for references. Successful and trustworthy financial advisers would gladly supply this on request.
What is in a Title?
People use titles interchangeably. A correct title not only identifies someone's qualification and experience, but also indicates their accreditation and legal entitlement to give financial advice.
Accountant
Accountants are responsible for the legally required financial records of a business entity. They may advise on tax issues. Strictly spoken, their advice does not include the full scope of financial planning. In the USA, professional accountants are CPAs (Certified Public Accountants). The equivalent qualification in South Africa is a Chartered Accountant (CA).
Financial Brokers and Brokerages
In most countries investors cannot directly enter into transactions with a securities or stock exchange. After obtaining the required qualification, a broker or brokerage is the only entity that may legally fill this role. Acting strictly within this scope they don't give financial advice to individuals other than which investments in stocks or securities may be best. Like any profession, a post school qualification is required.
Investment Advisors
Many people call themselves investment advisors simply because they give advice on financial matters. They may or may not be qualified. Some investment advisors simply advise you to make investments to suit them.
Certified Financial Planner, or CFP
A CFP is a professionally qualified advisor who guides financial planning in a comprehensive way. It starts with analysing your financial needs and takes the process right through to planned implementation and results monitoring. The advice of a CFP who is amongst the Partners at StoneHouse Capital covers saving, spending, investment, insurance and planning wisely for the future. A CFP does not act as a broker or an accountant, although s/he may certainly make use of their services.
In most countries one can only claim the title of CFP if you have accreditation with a legally sanctioned body, e.g.
o USA: Certified Financial Planner Board of Standards, Inc. (CFP Board)
o South Africa: The Financial Planning Institute of Southern Africa (FPI)
o UK: Association of Professional Financial Advisors (APFA)
Affiliation vs. Independence
People going under any of the above mentioned titles can work on their own or for a variety of financial institutions. Quite often the first stop made by people seeking financial advice is their bank. Based on their past experience they already may have a trustworthy relationship with their bank.
The danger of using a financial advisor who works for an institution like a bank is that they could be limited to recommending financial products directly linked to their group of companies. The advantage is that one has recourse to higher levels if you are not satisfied with the service or advice.
One gets CFPs who practise completely independently. The advantage is that they are not limited to recommending certain financial products above other better performing ones. The disadvantage is that one person is always limited by the extent of their own knowledge and perspective, regardless of how brilliant they may be.
Partnership
The key is to select an organisation that doesn't have a stake in selling one or more specific financial products. StoneHouse Capital has a variety of Financial Planning Professional Partners who complement each other in terms of experience, while having high levels of qualifications and knowledge. This enables them to tailor a financial plan to suite the unique needs of their clients.
Ultimately you need to feel that you can trust the person, or institution you have chosen. Looking at the individuals within the StoneHouse Capital partnership, you can see vast resources of financial knowledge and experience on offer.
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