Speaking to a financial planner is free – so what’s the catch?

Published on 25th June, 2024 at 08:35 am

Many people won’t go to see a financial planner because they don’t understand how it works and are worried about fees. Here’s exactly what you need to know.

Reading time: 3 minutes

In this article you will learn:

• • What financial planners do
  • How they charge for their services
  • When to contact a financial planner

“A lot of people think financial planners are only for the rich,” says Sanlam financial planner Adele Barnard, “but really, anyone can benefit from working with one, such as if you are working, or a business owner, if you have company benefits like a pension, if you have financial dependants, or maybe you’re getting married, or divorced. Those are all trigger events where you should partner with a financial planner.”

How do you choose a financial planner?

Barnard points out that it’s important to remember you’re not ‘married’ to your financial planner. If you’re already with one and you’re not satisfied with them, you should change to someone you’re more comfortable with.

“You work hard for your money, and you need to be sure that you trust the person you choose,” she says. “But it’s not enough to trust – they must also be accredited to give advice and registered with the Financial Sector Conduct Authority.

“There are so many scams and get-rich-quick schemes out there, so it’s important that people do their homework before trusting someone with their money.”

What services do financial planners offer?

It’s vital to remember that your financial planner can’t fix your finances overnight, says Barnard. “Growing wealth is a long-term plan,” she says. “It’s a bit like a lifestyle change. If you’ve picked up some weight, you can’t just eat a salad and drink some water and think the weight will drop off immediately.”

However, they will help you to take a very honest look at your money – how much is coming in, how much is going out, and how much you need to put away for retirement, for starters. From there, they can recommend where and how to invest your money, and how you can make your money work harder. They can also help with estate planning, and some will even help you with budgeting.

So, when you first meet with a financial planner, Barnard recommends that you take along your employee benefit statement, any existing life or retirement policies you have, a copy of your will if you have one, and even your budget, which, she says, is the “heart and soul” of your financial plan.

How do financial planners charge?

There are two main ways. The first is a financial planner that is affiliated with a particular provider like Sanlam, who sells that provider’s policies and/or solutions to you. This type of financial planner is free because they are remunerated via the policy they sell to you – a commission goes to them once you buy the product.

Some financial planners, however, work for a brokerage and sell products from a variety of companies, and if they are a certified financial planner, they are allowed to charge a fee for their consultation. So, it’s up to you to ask them upfront what the costs will be, and these can depend on how much planning needs to be done.

In conclusion, Barnard says it’s important that we normalise talking about money – it’s not a dirty word! “I’m not suggesting we all compare our salaries at dinner, but it’s important that we educate ourselves about our finances and make sure we understand how money works.”

For more information about FAIS at Sanlam, please click here.