Financial Planning

Financial planning is something that has in time become most regrettably synonymous with insurance broking and policy selling. Although this is only one small part of financial planning, it is the part that often leaves clients with a bad taste in their mouths.

In the past, most financial planning surrounded the simple selling of insurance or similar type policies. Even today, most financial planners simply believe that selling policies constitutes the giving of comprehensive advice. We believe that insurance companies are partly to blame for this, as they simply refuse to pay commissions to financial advisers on an on-going basis, but instead offer hefty upfront commissions often up to 10 times the premium of the policy.

There has been a big movement or call for the industry to become more fee-based, i.e. on-going commission based, whereby financial planners only earn their commission on an annual basis. This ensures that financial planners will remain in touch and in tune with their clients and provide on-going service. The only life insurer thus far to move to towards the on-going commission remuneration of financial planners is Altrisk who now offers both on-going and up-front commission.

The FSB are currently reviewing the commission structures in the financial planning industry and have offered financial planners the opportunity to come forward with requests or suggestions. It is believed, that should an on-going commission structure be enforced, almost half of the financial planners currently operational would be without work.

In the early 2000’s there was a big transformation made in the financial planning industry with the introduction of linked investment service providers (LISP’s) and the introduction of on-going advisory fees. This way of remuneration not only saved clients hefty fees and offered higher returns, but it made financial planning more credible for those financial planners that were willing to step into the fee-based financial planning realm.

Financial Planning involves a significant 2 part process

1. Covering yourself for while you are growing assets in case of the event that something happens rendering you unable to earn money for yourself and/or your dependents.
2. Growing assets big enough to look after you in a life changing event.

If fees, the type of policy/investment, as well as the financial plan you have in mind are not correctly structured, then you will certainly find yourself in a messy situation. Financial Planning will help avoid this while taking into consideration your retirement, tax, estate and long-term needs.

Modern financial planning, with a Certified financial planner, who is contemporary thinking, should always be able to help organize your life, so that you never left out in the rain.

	Pioneer Financial Planning is a Licensed Financial Services Provider www.fsb.co.za

We are a registered Financial Services Provider: FSP 7007 - 1999/017409/07
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