Finding a financial adviser can be a nightmare of trial and error - a process in which many people lose faith and money.
Finding your financial guide
Finding a financial adviser can be a nightmare of trial and error - a process in which many people lose faith and money. But the rewards that come with landing the right adviser can far outweigh the difficulty of the search. You may be reluctant to seek advice, thinking you are competent enough to manage your own assets. Or you may have been deterred by stories from friends and colleagues who have had bad experiences with financial advisers. But while a few financial advisers care more about making commissions on stock trades than guiding you to fiscal well-being, most advisers take their jobs seriously and have ample training and experience to help improve your bottom line. Still, financial advisers are not for everybody. If you are single, young and do not make a ton of money, seeking financial advice makes little sense. Your financial life, after all, is fairly simple, and fees and commissions will eat deeply into your small savings. If you're approaching retirement, have children to send to university and are looking into buying a house, however, life isn't simple, and advisers can be key allies in the quest to accomplish major goals. For white-collar expatriates who come here with salaries much higher than before, financial advisers can be especially useful guides in adjusting to a higher standard of living. Crucially, they can help ensure you don't squander your new-found cash on the UAE's many luxuries. If you think you need financial advice and are in the market for an adviser, your first step should be to interview a few of them - four or five should provide an ample field from which to choose. Ask for an initial consultation, which advisers will usually give you for free. You could also ask for a basic financial plan, which will give you a fuller sense of a planner's abilities (but will not likely be free).
Initially, keep your ears perked for advisers who offer guidance on all facets of your financial well-being and show immediate interest in your long-term goals. Use your gut and steer clear of advisers who come off as product-pushers. They may talk intelligently about stocks and complex fund investments, but that doesn't help you plan. In its initial stages, financial planning should be much more about your aspirations than your portfolio (although where you invest is pretty important, too). Be on the lookout for questions and advice that go beyond your finances. As you make your one-on-one assessments of planners, also make sure you check up on their qualifications. Financial planners come with a variety of certifications, and some have none at all. Unlike accountants, lawyers and doctors, in many countries anyone can hang up a shingle and call himself a planner. In the UAE, there are no financial advice regulations and no licenses issued by bodies akin to the Financial Industry Regulatory Authority in the US or the Financial Services Authority (FSA) in the UK. Some wealth management firms have nevertheless sought to be licensed by the Central Bank and the Ministry of Economy. "It means that we have certain responsibilities when we are advising people," says Paul Frame, a financial adviser with Acuma, a firm based in Dubai that has been licensed by the Government. "The UAE Central Bank has the ability to look at us a bit closer because we are licensed through them and we have to adhere to certain rules when we are dealing with people." But even if financial planning firms you look at are licensed, that doesn't necessarily mean the qualifications of the individual adviser you would work with are up to snuff. So check those out, too.
If you are an expatriate, it is wise to favour planners who have been licensed and trained in your home country. They will be familiar with your home country's tax laws and all the intricacies and pitfalls of repatriating money you earn tax-free in the UAE. They will also be more in tune with investment opportunities back home. If your prospective adviser is from the UK, ask if he holds a Certificate in Financial Planning (Cert FP) or a Certificate in Financial Advice (CeFA). If he is American, ask him how he fared on their Series Seven exam. Also ask if he is a Certified Financial Planner and whether he has bona fides from the Financial Planning Association or the National Association of Personal Financial Advisors. Certifications aren't the be-all and end-all of financial planning credentials, and many good planners don't have all the right degrees. Still, certifications at least prove that a planner put in a good deal of work to get them. Experience is also a key factor in selecting an adviser. Steer clear of fresh-faced rookies, but keep in mind that even old hats may not be right for you if they don't specialise in dealing with clients in situations like yours. Ask whether your potential adviser has worked with people like you before. If he tends to work with retirees keen on preserving their money and setting up estate plans, you might want to think twice if you are young. The reverse is true, too: if you are approaching retirement, you will doubtless be in better hands with someone who has led middle-aged clients through the retirement planning process before. Another thing to find out as you evaluate planners is how they get paid. Advisers can bill hourly, work on retainer, charge a percentage of the assets they manage, make money solely on commissions or work with a blend of fees and commissions. While many commission-based planners will put you in good stead, you should favour those who charge fees alone. When you pay fees, your risk of being guided into unsuitable investments because they come with high commissions is nil. It may seem to cost more upfront, but oftentimes you will pay a lot less over the long term when you axe out commissions. Also ask about and avoid firms that put restrictions on the products their employees can offer. Search for an independent adviser or wealth-management firm where advisers can recommend and give you access to virtually any financial product from across the globe - more than 30,000, according to the UK's FSA.
Before you make the leap with any financial adviser, you should ask for references, too. You won't get unsatisfied clients, of course. But if you ask the right questions, you should be able to elicit some of the adviser's weaknesses. And that could be useful information. And don't forget to ask friends and colleagues about their financial advisers. In the Emirates, word of mouth and relationships reign, and the experiences of other people can immediately jump you a few steps ahead in your search. Word of mouth is also a huge part of how advisers get clients, and their reputations hinge on it. "If you give good advice to somebody, then people will keep walking into your office," says Aadil Kadri, a financial planner with Continental Financial Services in Dubai. "My future in the business depends on my existing clients because they give recommendations to friends, relatives or colleagues." Establishing trust is perhaps the biggest hurdle you will face as you seek out a planner. Your finances are personal, after all, and they are not something you usually disclose to strangers. Yet you need to get comfortable with sharing all facets of your financial situation - even embarrassing ones - if you want your relationship with your adviser to be fruitful. Advisers routinely deal with clients who hide assets or, more likely, debts, making it all the harder for them to come up with sensible plans. Building trust may not be possible overnight, but it is an absolutely essential part of the adviser-client relationship. "When you are talking to a planner, he must understand what your requirements and needs are," says Mr Kadri. "Once he understands them he can begin planning effectively." As part of the trust-building process, you should expect prospective advisers to ask about your investment goals, retirement expectations, health and life insurance and attitude towards risk. With this information, he will be able to develop a budget and begin to make recommendations. Ideally, a series of initial consultations with a few planners will give you a good notion of who you get along with and who you are most likely to trust with your financial future. As Mr. Frame of Acuma says, "Trust is huge; it is probably the biggest area that we work on. Once you develop trust with somebody you have to be responsible and look after them." If that confidence is not present, not only will financial planning be no fun, but you may also be guided into investments and savings schemes that are not right for you or, even worse, investments that just aren't right for anybody. Craig Vintcent, a South African who lives in Dubai, fell victim to such a situation when he moved here three years ago. "There was a clause that stated I had to continue paying a significant amount for a period of time, and if I changed the amount I was contributing, the claim would then be significantly reduced," says Mr Vintcent. "It wasn't as flexible as I needed it to be. I was completely uninformed." This is one scenario that scares people away from planning. Many erstwhile clients of advisers find themselves tied to products that do little more than charge them fees and force them into saving and investment schemes that they cannot get out of without paying a big penalty. Your adviser should fully inform you of all the features and restrictions tied to investments he sells. That's all part of the trust equation. It's also another reason to make sure you vet planners and begin to establish a healthy relationship before you even sign up. With all your money at stake, it's the least you can do. And while interviewing and researching a bunch of planners might be a chore, a successful search can be intensely rewarding. If you are lucky, you'll find someone whom you can stick with for decades and who can help guide you through some of life's biggest financial minefields. "If you do not have a proper plan to cater for your family's needs, your family's education, your retirement, you won't survive in this world," says Mr Vintcent, now a client of Acuma. "That's why you need a financial planner. What the financial planner does is put a structure in place; if you don't have a structure you are going nowhere." email@example.com