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Why an independent financial planner matters?

Author
Stian De Witt
Date
2 July 2024
5 min read

In today's increasingly complex financial landscape, individuals need more than just basic savings accounts and insurance policies. To navigate this intricate environment and achieve their financial goals, people require comprehensive, unbiased advice. This level of guidance can only come from an Independent Financial Planner (IFP) who can help create a holistic financial plan tailored to each individual's unique needs and circumstances.

Unbiased advice vs. product sales

Understanding the distinction between a 'tied agent' and an IFP is crucial. A tied agent, affiliated with a specific company, can only sell that company's products and cannot charge for advice. Their primary goal is to sell products from their employer, often leading to a conflict of interest. In contrast, an IFP operates independently and can offer advice on a fee basis without being obligated to sell any product to earn an income. This independence allows IFPs to prioritise their clients' best interests over sales targets.

Imagine visiting a doctor who is paid based on the medication they prescribe rather than the accuracy of their diagnosis. You would likely receive a lot of unnecessary prescriptions. Similarly, a tied agent might push products that earn them a commission, while an IFP would focus on diagnosing your financial needs and providing unbiased advice. For instance, if you are concerned about saving for retirement but have a high level of interest-bearing debt, an IFP would advise paying off the debt before investing in a retirement plan, even if it means earning less commission in the short term. This unbiased approach ensures that clients receive advice that truly benefits their financial health.

However, when the time is right to discuss investment products, IFPs are not limited to selling the products of a single company. They have the flexibility to mix and match products from various providers to create a financial plan tailored to individual needs. This flexibility allows IFPs to design a more diversified and effective investment strategy. Additionally, IFPs can manage existing investments without incurring unnecessary costs or tax penalties, further enhancing their clients' financial wellbeing.

What is the difference Between an IFP and a CFP®?

An independent financial planning (IFP) offers a holistic view of an individual’s financial situation, often acting as the conductor of the financial orchestra. They coordinate with accountants, attorneys, bankers, and even risk and audit resources to ensure that all aspects of their clients' finances are in harmony. Certified Financial Planners (CFP®s) take this expertise a step further. They have pursued advanced studies and qualified as professionals through a rigorous Board Examination process, similar to that of a Chartered Accountant. This qualification enables CFP®s to handle complex estate planning, retirement planning, investment strategy, and intricate tax matters, both domestically and offshore.

This integrated approach is especially valuable for individuals who need to balance personal tax planning, investment strategies, and estate planning. By partnering with CFP®s, individuals can ensure that their financial goals, whether building multi-generational wealth or securing a comfortable retirement, are achieved. The expertise of CFP®s ensures that all elements of a financial plan are optimally aligned to serve the client's best interests.

What to look for when partnering with an independent financial planner?

When seeking a CFP®, the Financial Planning Institute (FPI) website is a good place to start. The FPI maintains a database of qualified IFPs and CFP®s and ensures that these professionals obtain the requisite 35 continuing professional development (CPD) points every year. In contrast, agents need just 18 CPD points. This ongoing education ensures that IFPs and CFP®s stay current with the latest financial strategies and regulatory changes, providing their clients with the most up-to-date advice.

An IFP should also be able to demonstrate two critical aspects: succession planning and professional indemnity (PI) cover. Succession planning means that in the event an individual IFP with whom a client has a relationship passes away or retires, there is a plan in place to ensure the client’s matters are continuously managed. This continuity is vital for maintaining the stability and consistency of the client’s financial planning.

Professional indemnity (PI) cover is a type of insurance that protects policyholders, in this case, the IFPs, and by extension, their clients, if they are found liable for losing their clients’ money through professional negligence or omissions. This cover provides an additional layer of security, ensuring that clients are protected even in the rare event of professional errors.

Independent financial planners tangibly benefit your financial health

NMG Benefits recently helped an individual save significantly in taxes by restructuring her financial setup. These changes were crucial for her financial stability during the COVID pandemic. She confirmed that without these changes, she would have faced significant financial loss. This example underscores the tangible benefits that an IFP can provide.

Similarly, partnering with an IFP like those at NMG Benefits, who provide unbiased, comprehensive financial advice that goes beyond mere product sales, can help you achieve your personal financial goals. Whether you are planning for retirement, saving for your child's education, or looking to invest wisely, an IFP can offer tailored advice and strategies that align with your unique financial situation and aspirations.

In conclusion, the value of an independent financial planner cannot be overstated. Their unbiased, comprehensive approach ensures that individuals receive advice and strategies that are truly in their best interests. By partnering with an IFP, you can navigate the complexities of the financial landscape with confidence, knowing that your financial future is in capable and trustworthy hands.


T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968

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