WE have thousands of financial advisors in the country and one of the key aspirations is financial literacy. But the big question is, “Are we worth delivering the highest ethics in our professions?” I have seen few who are stirred with the client’s net worth thus propose products which they could get the highest commissions. I have seen few who do not comprehend the true value of what they are offering. I have seen few who are not really into advising but simply selling. I have seen few advisors who are product centered, that the products offered are not really suited to the goals and objectives of the clients.
One of the highest qualifications we should uphold is not the desire to have the product bought but the eagerness to help them achieve their goals. We must take this into account because it drives the client’s determination in the saving and investing process. We need to have the following considerations:
DETERMINE THE GOALS
IN determining the goals, advisors should not only stick with what the client will have to set. When he wants to save, ask him for what reason. When he wishes to invest, ask him for what objective. When he desires to have a business, ask what motivates him with the idea. However, we should make it in a way that it will lead us to his goals. If we are finding a tough time determining his goals, probe. Do not impose what the goals should be. Remember that the plan is not designed for us. Therefore, we must act to the best interest of the clients.
RESTRUCTURE AND CLASSIFY THE SMART GOALS
Our role does not end with purely determining the goals afterward. When we have determined the goals, restructure the stated goal. By digging in further with the details, we must attain a SMART goal. A SMART goal is Specific, Measurable, Attainable, Realistic and Time-bound. The goals should be precise and not vague. In lieu of the financial goals, we will need to determine the target needs with the right fund, hence it should be quantifiable. The goal should also be as realistic as possible. We have to identify if the client is most likely to achieve the goal, given factors like age, risk profile and others. The time element is one big consideration, consequently; we should create an understandable financial timeline. When the goal cannot be concluded in a short period of time, there is a need to organise the goals based on time horizon. Classify the goal into short-term, medium-term or long-term objectives. Typical examples of the long-term objectives are insurance, education fund and retirement funds.
DETERMINE THE SUITED FINANCIAL VEHICLES
Determine what instruments are suited for the client based on the stated goal. The financial instrument proposals should not be biased. If we think that the product we are offering is not the right means to the goal, we should disclose and advise what he should look for. When the goal is emergency fund, ensure that the vehicle is highly liquid, like savings account or even cash on hand. When the goal pertains to capital appreciation, take into account the risk profile of client and provide him options where he can grow his money. When the client is not yet prepared to get into stocks but is willing to start off, give the option of investing in managed funds while studying the in-depths of it.
MONITOR AND REVIEW THE GOALS
Monitor the progress heading for his goal. Don’t forget to find time with the client and review what did well and what should have done better. If it is essential to reconstruct or adjust the objectives or the steps toward the goal, it should be performed accordingly.
The role of financial advisors is an integral part in the financial goals of everyone. Each of us should vigilantly look into the qualification of an advisor. Some would just be amazed with the licenses or certifications of an advisor. Some would merely rely on the out-of-this-world trivia in personal finance. Some would advise you to get into an instrument that bears higher interest or higher returns. Some would urge you to invest in diverse kinds of instruments you don’t know. But in choosing the right financial advisor, whoever gives you advice on financial matters; look into this requirement—the ability to consider your smart goals with the right instruments.
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Don-Don Adolfo Crisostomo is a registered financial planner of RFP Philippines. To learn about financial planning, attend the 45th RFP program from February 21 to April 18. For more details, inquire at info@rfp.ph or text <name><e-mail><RFP> at 0917-3464126.
