Planning Perspectives with Palesa Tlholoe

Financial planning demystified

WITH October being Financial Planning Awareness Month, this is a chance to understand why it’s important to have a comprehensive financial plan and how to choose the best financial partner to help you create and implement it.

A financial plan is like a road map that shows you where you are, where you want to go, and the best way to get there. Your current financial position reflects your assets and liabilities, and your income and expenses.

Where you want to go involves your dreams, your goals, and your aspirations. If, for example, you want to buy an investment property that will give you extra income at some stage in your life, your financial plan should show how you’ll raise funds to buy the property.

When I first started as a financial adviser, my coach used to say, “we all have five problems in life that we have to face at some point”. They are: dying too soon, living too long, the loss of income due to an illness or incapacity, inflation, and taxes.

Most life decisions we make every day have an impact on our finances, and most financial decisions we make can be affected by any of these five problems. Deciding to get married and having children will have a financial impact, and your family’s finances can be affected by any of the five problems.

A Certified Financial Planner (CFP) can help you to put together a customised and comprehensive plan by performing a financial needs analysis.

This analysis will make certain assumptions about the future, taking into account your current financial resources and potential risk, compare those to your needs or aspirations, factor in inflation, taxes, your time horizon, and your risk ability, and ultimately make a recommendation, which will include financial products that will fit your plan.

CHOOSING THE BEST PLANNER FOR YOU

It’s often said that knowledge is power. You need to have a good idea of the difference between a financial adviser and a professional financial planner with the CFP designation. A financial adviser should meet the minimum qualification and experience requirements, and be registered with the Financial Sector Conduct Authority. He or she should also achieve a minimum of 18 Continuing Professional Development (CPD) points per year, and be registered for the products they recommend.

A CFP professional, on the other hand, has been awarded a formal designation by the Financial Planning Institute after passing rigorous board exams.

To write the exams, the individual needs to hold an NQF8 qualification in a recognised field and meet the required number of years of experience in the profession. This is over and above the requirements for a financial adviser, and the CPD requirements are higher, at 35 CPD points per year.

A CFP professional is therefore trained to handle more complex financial portfolios, and this training is ongoing, because legislation changes all the time, and financial plans need to be updated.

For a list of all practising CFP professionals, visit www.fpi.co.za To verify that your financial adviser is registered with the regulator for the products recommended to you, visit www.fsca.co.za

INFORMATION

Here are sources that can help you with financial education, give you more information on savings and investments, and afford you recourse if you have a consumer complaint or a complaint against a financial services provider

FINANCIAL EDUCATION Financial Sector Conduct Authority MyMoney Learning Series https://www.fscamymoney.co.za South African Savings Institute #WaysToSave https://waystosave.co.za/

BANKING Ombudsman for Banking Services ShareCall: 0860 800 900 or phone: 011 712 1800 Email: info@obssa.co.za www.obssa.co.za

CONSUMER ISSUES National Consumer Commission Toll-free: 0860 003 600 or phone: 012 428 7000 Email: complaints@thencc.org.za www.thencc.gov.za

Consumer Goods and Services Ombud ShareCall: 0860 000 272 Email: info@cgso.org.za www.cgso.org.za

Credit Ombud MaxiCall: 0861 662 837 or phone: 011 781 6431 Email: ombud@creditombud.org.za www.creditombud.org.za

National Credit Regulator ShareCall: 0860 627 627 or phone: 011 554 2600 Email: complaints@ncr.org.za or (debt counselling) dccomplaints@ncr.org.za www.ncr.org.za

FINANCIAL ADVICE

Ombud for Financial Services Providers phone: 012 470 9080 or 012 762 5000 Email: info@faisombud.co.za www.faisombud.co.za

INVESTMENTS Financial Sector Conduct Authority ShareCall 0800 110 443 or 0800 202 087 info@fsca.co.za www.fsca.co.za

LIFE INSURANCE Ombudsman for Long-term Insurance ShareCall 0860 103 236 or phone: 021 657 5000 Email: info@ombud.co.za www.ombud.co.za

MEDICAL SCHEMES Council for Medical Schemes MaxiCall: 0861 123 267 Email: complaints@medicalschemes.com or information@medicalschemes.com www.medicalschemes.com

RETIREMENT FUNDS Pension Funds Adjudicator ShareCall: 0860 662 837 or phone: 012 346 1738 Email: enquiries@pfa.org.za www.pfa.org.za

SHORT-TERM INSURANCE

Ombudsman for Short-term Insurance ShareCall 0860 726 890 or phone: 011 726 8900 Email: info@osti.co.za www.osti.co.za

TAX

Tax Ombud ShareCall: 0800 662 837 or phone: 012 431 9105 Email: complaints@taxombud.gov.za www.taxombud.gov.za

PROFESSIONAL ORGANISATIONS Fiduciary Institute of Southern Africa (FISA) phone: 082 449 2569 Email: secretariat@fisa.net.za www.fisa.net.za

Financial Planning Institute of South Africa (FPI) Phone: 011 470 6000 Email: info@fpi.co.za www.fpi.co.za

South African Institute of Tax Professionals (SAIT) Phone: 012 941 0400 Email: info@thesait.org.za www.thesait.org.za

FINANCIAL DATA

◆For the latest financial market indicators, go to https://www.iol.co.za/businessreport/market-indicators

◆For the latest quarterly unit trust performance, go to https://www.iol.co.za/ personal-finance/collective-investments