With the focus falling on Financial Planning Week between 3 and 9 October, there is no better time to get your personal finances in order. In the piece below, Tamryn Lamb from Allan Gray looks at how investors can get personal with their finances this month.    

Many investors underplay the importance of financial advice to the detriment of the performance of their portfolios and their ability to meet their savings and investing goals over time.  

This is the view of Tamryn Lamb, Head of Retail at Allan Gray, who says that with interest rates and inflation on the rise, investors who are concerned about how to achieve real returns and protect their savings and investments from losing value over time, should consider getting “personal” about their finances with a trusted, independent adviser.  

“A good financial adviser can drastically improve an investor’s financial outlook by guiding their financial planning and ensuring that they remain committed to their goals.”  

Lamb says that advisers have the objectivity and experience to help investors address the range of challenges they may face over the course of their investing journey. This includes ensuring investors have a well-crafted financial plan that sets clear actions and steps to help them achieve their goals.  

“While it is easy and helpful to find financial planning tools online these days, these should not be seen as a substitute for tailored financial advice that helps investors make decisions that are right for their personal circumstances. It is important to seek the help of a qualified professional when it comes to personal finance,” says Lamb.  

Common mistakes that advisers help investors avoid  

Lamb says that there are common mistakes that advisers can help you avoid, including being invested in the wrong product or not maximising tax benefits.  

She says advisers help their clients position their portfolios appropriately to account for this uncertain environment and not to disinvest at inappropriate times.  

“This may include assistance in investing in the right product, ensuring that return objectives and retirement savings goals take inflation into account and that portfolios are sufficiently, but not overly, diversified,” says Lamb. “Finally, advisers help investors remain committed to their plan, adjusting only as circumstances suggest it is appropriate. Importantly, they help investors manage themselves with discipline, identifying and understanding how their emotions can lead them astray in the investing process.”  

How often should you update your financial plan?  

Lamb says that if you are invested for the long-term, tracking your investment too regularly, particularly if you still have a way to go until retirement, may do more harm than good.  

“That said, every investor should review their retirement goals and objectives annually or when there is a big life change like having a child, getting divorced, or when there is a death.”  

She adds that if you who haven’t got round to an annual check-in with your adviser before the year is out, now is an opportune time to schedule a thorough review to ensure that your financial affairs remain aligned with your goals and plans.  

If you haven’t got an adviser… how to find the right one for you  

Lamb says that there are two things that are important when trying to find the right financial adviser. The first element is independence.  

“Independent advisers are agnostic about products, as they are not incentivised based on which product is selected.  We believe that removing potential conflicts like these in the advice process helps ensure that the advice provided is suitable for the individual client’s needs.”  

The second element she says, is trust.  

“You need to be able to trust your adviser to help you stay the course: If you are struck by fear if your investment is underperforming, for example, you need to trust your adviser to help you look forward and understand the performance of your investment relative to your goals and future focus.”  

There are several questions you can ask of the adviser to establish whether you can build a relationship based on trust over time. “Ask them about their approach, how they think about structuring your portfolios and how frequently you will be meeting. This helps set expectations and establish a good working arrangement.  Ask about what the advice process will look like, how fees will be charged (and do they seem reasonable relative to the value you will receive) and what is expected from you, as the client.  Fees should also be well disclosed, and transparent.”  

For investors looking for an independent financial adviser to help them on their journey, Allan Gray has a free and easy-to-use online tool available here: https://www.allangray.co.za/find-an-ifa.