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Financial Planner South
Africa
Do you
need a Financial Planner?
Thousands of people in South Africa are
now realising the need
for a financial planner if they are going to be
able to create wealth and financial freedom
in South Africa. Around the world
governments and corporations are
increasingly shifting the responsibility for
health, disability and retirement provision
to individuals and employees themselves.
Today, if you do not undertake some personal
planning and provision YOURSELF, it is
almost certain that you and your loved ones
will suffer in the future.
The problem is that financial planning has
become increasingly complex. Tax
legislation, health legislation and the
products themselves have all exploded in
complexity leaving the individual faced with
a bewildering array of options and choices.
Not even the financially literate have the
time or expertise to keep abreast of
developments. This is why you need a
personal financial advisor now, more than at
any time in the past. Having the right
personal financial advisor can probably have
the greatest long-term effect on your
quality of life, than any other profession.
Financial Planning
Goals
The main goal of a financial adviser/planner
is to develop relationships with clients in
order to reach their dreams/goals of their
future financially and to maintain that
relationship. In order to ensure ethical
practices, financial advisers must
understand a client's financial situation,
as well as, their need for financial
stability. Clients should understand that
advisers/planners cannot help all clients,
but it is imperative to have a financial
professional take a look at your financial
position to see if your financial goals can
be achieved. Remember that they are
professionals. Finance can be complicated,
especially in the world today, but
understand that your adviser/planner has
responsibilities ethically to see that your
risk is minimized and monetarily your money
is maximized.
Retirement
One of the major services that financial
advisers offer is retirement planning. The
financial adviser will typically have great
knowledge in the areas of budgeting,
forecasting, taxation, asset allocation and
financial tools and products in order to
establish realistic goals and the strategy
by which to reach them. In the United
States, this will include the use of several
investment tools such as 401(K)/403(B) Roth
account's, Individual Retirement
Accounts/Roth IRAs, mutual funds, stocks,
bonds and CDs.
The financial adviser will determine what
percentage of the available income is
necessary--when taking into account the tax
liabilities, expected inflation and
projected return on investment--in order to
meet a minimum balance by the client's
target age of retirement. This is a fairly
straightforward calculation, and there exist
many automated tools that do this. The
financial adviser's greatest contribution
will be that of asset allocation:
determining how to maximize the return on
investment while satisfying the client's
risk tolerance.
Investing
Financial advisers may help their clients
invest for both long and short term goals.
It is the financial adviser's duty to
determine the clients' goals and risk
tolerance and then to recommend appropriate
investments. Generally, a longer time
horizon allows for the advisor to recommend
more volatile investments with potentially
greater risks and rewards. Such investments
include direct investment in stocks or
through collective investment schemes such
as mutual funds and unit investment
trusts/unit trusts.
If the client has shorter term goals, the
adviser should recommend less volatile
investments with shorter time spans. Such
investments could include cash, Certificates
of Deposit, and short term bonds. While
these types of investment generally have
lower returns there is less volatility and
there is less likelihood of losing
principal. Although short-term investments
can guard against loss of capital, their
value can be eroded by inflation over longer
periods of time.
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