FROM THE EDITOR

When asked why they would use a financial adviser, most people would give an answer something like this: “To ensure that my money is invested in investments that will give me the best returns possible.”

That, to my mind, is the worst reason to use an adviser, and it’s unfortunately the reason that many vulnerable people fall prey to unethical so-called advisers who put their clients into high-risk investments that often go belly-up.

If you are looking for above-average returns, a truly professional adviser – one who puts your financial interests above his or her own and who abides by a professional ethical code – is likely to put a damper on your expectations. This is because returns and risk are two sides of the same coin, and a professional adviser will assess your capacity for risk before advising on an appropriate investment.

And then – and this is where the professional adviser’s true worth comes in – he or she will hold your hand through the minefield that is the financial market, ensuring your longer-term goals are not derailed by knee-jerk decisions.

Ideally, this should all form part of a holistic financial plan that embraces all aspects of your finances, which is one of the first things you and your adviser (or planner, who is an adviser who belongs to a professional body such as the Financial Planning Institute), should focus on. So instead of regarding your financial adviser as an investment expert, regard him or her as a financial counsellor, who becomes as familiar as your family doctor.

Martin Hesse

Just because you can afford it doesn’t mean you should buy it

– SUZE ORMAN American financier