“A fool and his money are soon parted!” There is no need for anyone to be foolish with their money, especially not today. With all the legislation we have in place around financial advice and with the wealth of information available to help you make sound financial decisions there are no more excuses for being foolish! Here are the first 3 of 13 steps to prevent you from being a fool!
- Trust no one! Trust is the basis of any relationship – and especially the relationship with your financial advisor. However, a financial advisor must earn his/her trust – it is not a right and should not be your “default” setting when it comes to money matters. Trust is something that is earned over time. People do strange things when there is money involved so be careful and especially wary of anyone who asks “don’t you trust me?” Do your homework before you deal with an advisor – ask for references (and check them). If you trust blindly you will most probably be ripped off at some stage.
- Don’t sign a blank form – ever! Not only is it illegal for any company or advisor to ask you to sign a blank form, it is also an extremely foolish thing to for you to do. Go back to step 1 – trust no one. Make sure that every form that you sign is fully completed, especially the section with your bank and beneficiary details. If you are happy to sign blank forms, then you dont be surprised if you get ripped-off.
- Find out about the fees/costs (in writing – it is your legal right). Investment and insurance products are governed by the Policy Holders Protection Rules (PPR) and the FAIS Act and one of the conditions is that all of the fees/costs must be disclosed in writing so insist on seeing them. There is nothing wrong with paying the fees (everything you buy has a cost) you just need to know if you really are getting good advice or if it is prejudiced by the making of a sale. This same principle should apply to all financial products even those which fall outside of the scope of the PPR/FAIS so ask for the fees and costs in writing. If you don’t, don’t be surprised when you find out that the advice you received was motivated by money.
More to follow…