How to Vet Your Financial Advisor


When you work with a financial planner, advisor or broker, you entrust them with an important part of your future. Things such as financial security for your loved ones when you are no longer there, your financial stability in retirement and your children’s ability to go to school or university are at stake. Therefore, it is of the utmost importance to rigorously vet any financial professional before you work with them, especially since it is not uncommon for people to use titles such as “financial planner” or “financial consultant” freely, despite not being qualified or certified to practice. It is always good practice to avoid doing business with a financial advisor, financial planner or consultant, investment advisor, broker or agent before checking their complaint record and verifying their credentials. Below are some important ways in which you can vet your financial advisor.


1. Ensure that your advisor is a registered representative at an authorised financial service provider (FSP).


Every reputable FSP and financial advisor is subject to oversight from regulatory entities. You need to be aware of this entity so that you can confirm the legitimacy of both FSP and its representatives. In South Africa, the Financial Sector Conduct Authority (FSCA) regulates and supervises all financial institutions that provide a product and/or service to ensure they abide by the Financial Advisory and Intermediary Services Act (FAIS Act). The FSCA, therefore, ensures that representatives of FSPs comply with the “fit and proper requirements”, which encompass personal characteristics of honesty and integrity, academic qualifications, technical experience, and mandatory ongoing professional development, all of which financial advisors ought to possess. Therefore, it is essential to check that your financial advisor is a registered representative at a legitimate FSP as it can help ensure that your advisor abides by strict ethical standards, is and continues to be appropriately qualified and has highly experienced and knowledgeable in the field. You can use the FSCA Website to check out both your advisor and the FSP they work for.

Searching the FSCA Website can also indicate if your financial advisor has been debarred. Debarment in the financial industry is a severe consequence for any representative who no longer conforms to the “fit and proper requirements” and means that they are prohibited or banned from continuing to render financial services in South Africa. Examples of instances that would warrant debarment include theft, fraud, forgery, and dishonourable or unprofessional conduct, amongst various other serious actions. It is, therefore, important to vet any advisor to avoid doing business with dishonest and incompetent financial intermediaries.


2. Ask which Financial Products They are Approved to Sell


The FSCA Website also has a helpful page that can help you see and understand what products each FSP can sell, as they are required to be licensed to market and sell any product. This can also be checked if you ask your financial advisor for a copy of their “Disclosure letter”. This document provides information about who the financial advisor is, namely their name and contact details of the FSP they work for; what products the person is allowed to give advice on; the product supplier(s) the financial advisor can provide advice; how much commission they earn, how the commission is structured and who should you contact if you are not satisfied with the service you receive.


3. Complaints and Questions


As a part of the FSCA’s regulatory role, they assist clients with any queries or complaints relating to how registered FSPs and their representatives conduct themselves and handle any infringement of the acts by which they are governed. You may submit any complaints or queries to the FSCA, which can help them regulate financial institutions that provide financial products and financial services and that are licensed in terms of a financial sector law.

The take-home message is to do your homework before you choose an advisor and make sure you work with someone who can satisfy your financial planning needs. Ensure you assess your advisor’s credentials, ensure they are viable and check their regulatory background. Finally, remember that creating a strong and trustworthy relationship with your financial advisor can help develop a successful financial roadmap.


For more information, contact us on:

Phone: 011 803 9686

Email: vivian@pbafsa.co.za or chrisw@pbafsa.co.za

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