FPI FPI Financial Planning Institute of Southern Africa SETTING THE STANDARD Your Guide to Financial security 1
The global symbol of achievement CFP Certification Global excellence in financial planning The global symbol of excellence in financial planning CFP certification is the only globally recognised mark of professionalism for financial planners. When seeking objective, expert and trusted financial planning advice you should always look for the CFP mark. To achieve the best financial planning results, call CFP professional. To achieve the best financial planning results, call a CFP professional. For more information on finding a CFP professional, near log onto you call www.fpi.co.za 1800 999 999. or call 0861000 FPI (374). CFP, CERTIFIED FINANCIAL PLANNER TM and and are are certification marks marks owned owned outside outside the U.S. the U.S. by Financial by Financial Planning Planning Standards Standards Board Ltd. Board Financial Ltd. Financial Planning Association Planning Institute of Australia of South Limited Africa is the is the marks marks licensing authority for for the the CFP CFP Marks Marks in Australia, in South through Africa, through agreement agreement with FPSB. with FPSB. The CFP professional designation is registered for the FPI SA by SAQA on the National Qualifications Framework (NQF), ID number 59235. What is Financial Planning? Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child s education or planning for retirement. The financial planning process consists of six steps that help you take a big picture look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans and reviewing this on an ongoing basis. The The global global symbol symbol of of achievement The The global global symbol symbol of of excellence in financial financial planning planning CFP certification is the only globally recognised mark of professionalism for financial planners. When seeking objective, expert and trusted financial planning advice you should always look for the CFP mark. To achieve the best financial planning results, call a CFP professional. CFP CFP certification is the is the only only globally globally recognised mark mark of professionalism for financial for financial planners. planners. 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Your Guide to Financial security Can you do your own Financial Planning? Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, you may decide to seek help from a professional Financial Planner if: You need expertise you don t possess in certain areas of your finances. For example, a Financial Planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances. You want to get a professional opinion about the financial plan you developed for yourself. You don t feel you have the time to spare to do your own financial planning. You have an immediate need or unexpected life event such as a birth, inheritance or major illness. You feel that a professional Financial Planner could help you improve on how you are currently managing your finances. You know that you need to improve your current financial situation but don t know where to start. What is a Financial Planner? A professional Financial Planner is a trusted advisor who works with you to review all of your options so that you can make informed decisions about your financial situation at every stage in life. By meeting rigorous international competency, ethical and professional practice standards, a Financial Planner is qualified to deliver integrated financial solutions that allow you to take control of your finances and achieve your life goals. The best financial planning results come from working with an FPI-accredited financial planning professional. 3
The financial planning process consists of the following six steps: Establishing and Defining a Professional Relationship The Financial Planner should clearly explain or document the services to be provided to you and define both his/her and your responsibilities. The Financial Planner should also explain fully how he/she will be paid and by whom. You and the Financial Planner should agree on how long the professional relationship should last and on how decisions will be made. Gathering data, including goals The Financial Planner should ask for information about your financial situation. You and the Financial Planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The Financial Planner should gather all the necessary documents before giving you the advice you need. Analysing and evaluating your financial status The Financial Planner should analyse your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analysing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. Developing and presenting financial planning recommendations and/or alternatives The Financial Planner should offer financial planning recommendations that address your goals, based on the information you provide. The Financial Planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The Financial Planner should also listen to your concerns and revise the recommendations as appropriate. Implementing the financial planning recommendations You and the Financial Planner should agree on how the recommendations will be carried out. The Financial Planner may carry out the recommendations or serve as your coach, co-ordinating the whole process with you and other professionals such as attorneys or stockbrokers. Monitoring the financial planning recommendations You and the Financial Planner should agree on who will monitor your progress towards your goals. If the Financial Planner is in charge of the process, he/she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. 4
Your Guide to Financial security How to make financial planning work for you You are the focus of the financial planning process. As such, the results you get from working with a Financial Planner are as much your responsibility as they are those of the Financial Planner. To achieve the best results from your financial planning engagement, you will need to consider the following advice: Set measurable financial goals Set specific targets of what you want to achieve and when you want to achieve results. For example, instead of saying you want to be comfortable when you retire or that you want your children to attend good schools, you need to quantify what comfortable and good mean so that you ll know when you ve reached your goals. Understand the effect of each financial decision Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child s education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated. Re-evaluate your financial situation periodically Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your financial goals. Start planning as soon as you can Don t delay your financial planning. People who save or invest small amounts of money early and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies. Be realistic in your expectations Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results. Realise that you are in charge If you re working with a Financial Planner, be sure you understand the financial planning process and what the Financial Planner should be doing. Provide the Financial Planner with all of the relevant information on your financial situation. Ask questions about the recommendations offered to you and play an active role in decision-making. 5
10 questions you should ask a Financial Planner 1. What are your qualifications? 2. How are you paid (fees or commission) and explain? 3. Do you belong to a professional body - if yes which one? 4. How many years experience do you have in giving advice? 5. Do you have any references? 6. Are you a licensed Financial Services Provider (FSP), what is your FSP number? 7. What products are your authorised to give advice on? 8. What after sales back-up do you provide? 9. What can I do if I am dissatisfied with your services? 10. Which product providers do you support? How can we help you? The Financial Planning Institute of Southern Africa (FPI) is the only professional body for Financial Planners in South Africa with accredited qualifications and programmes to certify professionally qualified Financial Planners. Our members subscribe to a strict Code of Conduct and Professional Responsibility. Our members are also required to maintain their knowledge to ensure you are given the best advice. The highest professional membership level is the CFP /Certified Financial Planner designation. We take the responsibility to protect South African financial services consumers very seriously - it is our primary objective. Unfortunately, mismanagement, misrepresentation and mis-selling by financial intermediaries and companies continues in the financial services sector despite the good work being done by the Financial Services Board (FSB) and other industry role players. These unethical practises continue to undermine consumer confidence in the sector as well as putting their financial futures at risk. Working with the right Financial Planner can be an extremely rewarding and valuable experience for you and your family. Let us put you in touch with a Financial Planner who is accredited with us. Visit our Consumer section on www.fpi.co.za where you can learn more and Find a Financial Planner. Plan Your Financial Future...speak to an FPI-accredited Financial Planner. CFP, CERTIFIED FINANCIAL PLANNER and are trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. The Financial Planning Institute of Southern Africa is the marks licensing authority for the CFP Marks in South Africa through agreement with FPSB. 6
Your Guide to Financial security 30 Years of Excellence in Financial Planning About the FPI The Financial Planning Institute of Southern Africa (FPI) is a non-profit professional body formed in 1981 as the Institute of Life and Pension Advisors (ILPA) to improve levels of professionalism. Today, we are regarded as the premier independent professional body for financial planners in South Africa. Through our global partnership with FPSB, along with other over 20 other countries, we are the only institution in Southern Africa able to offer the CFP certification. Living in a global village means ensuring that local practices are aligned to global standards. To ensure that Financial Planners in South Africa met international standards, in 1998 we affiliated with the Certified Financial Planner Board of Standards Inc. in the United States, in April 2000 adopted our new name (Financial Planning Institute of Southern Africa) and were a founding member of the international Financial Planning Standards Board Ltd. (FPSB). The CFP mark asserts that the financial planning professional has met appropriate competency, ethics and professional practice standards to provide comprehensive personal financial planning services to clients. In addition to the CFP mark, we also have two local trade mark levels of membership: Associate Financial Planner /AFP and Registered Financial Planner /RFP. We are uncompromising in establishing and maintaining professional financial planning standards in Southern Africa and play a major role in ensuring that the public has access to competent Financial Planners who are professionally qualified, are experienced and have agreed to abide by our Code of Conduct, Ethics and Practice Standards. Many top financial institutions have adopted us as an independent standards partner and our members include both general practitioners and specialists in particular branches of financial planning. 2011 marks the 30th year that FPI has been in existence as the professional body for financial planners in South Africa. When considering the first ILPA examinations offered in the early 80 s to the current qualifications, competency levels and professionalism as well as the evolution of the financial services industry, we can be proud of our professional Financial Planners for their commitment to the journey to becoming a recognised and respected profession thereby serving the consumers best interests. 7
Financial Planning Institute of Southern Africa Palms Office Court, Block A, Ground Floor, Kudu Avenue, Allen s Nek PO Box 6493, Weltevredenpark, 1715 Tel: 086 1000 FPI (374) E-mail: fpi@fpimail.co.za www.fpi.co.za