How to choose the best financial advisor

By Fredrick Obura

When Anne Wanjala got a loan from her savings and credit society three years ago, she had a plan, to use part of the debt in setting up self-supporting business and channel the surplus in other ventures.

Investing in the stock market was at its peak then, blue chip companies were offloading part of their shares to the public dubbed the Initial Public Offering.

Just like many other investors, the 29-year-old mother of two bought shares from different companies through a brokerage firm, the firm was, among other duties, to manage her portfolio and advise her.

"The stock market proved a promising venture, I was able to recoup my investment within a short period of time," she says. However, trouble started two years later for lack of funds to operate.

According to investment analysts the market at times would offer numerous investment alternatives, this may in-turn confuse an individual debutant.

It is, thus, essential for one to have proper guidance before implementing a financial plan.

"A professional advisor analyses your financial circumstances, prepares a plan to meet your financial goals, and, sometimes, manages your investment portfolio," says Henry Bisigye, a financial consultant.

Non-genuine advisors

Focusing on advisors who have credentials is a good idea because it suggests a commitment to the field based on some combination of work experience and formal study.

But, as Bisigye notes no professional credential can guarantee the quality of an advisor’s services or ensure that investor’s needs are met.

In some cases, the basic interest of non-genuine advisors may be to sell you a particular financial product rather than to provide impartial guidance.

Mr Bisigye says a good advisor develops a clearly written plan for you, based on the financial objectives and explanations you can understand.

Advisors should offer clients with a quarterly assessment and advise them on change of strategy. To get this one-to-one individual benefit, it is advisable to choose smaller firms.

If the advisor is to provide ongoing advice, agree beforehand how frequently he or she will monitor your financial plan and provide status reports. And, if the advisor is to manage your investments, be sure to evaluate results objectively.

"Basically, individuals need to identify their own needs, for instance risk-tolerance, insurance needs, taxes, and their short-term or long-term benefits. When this is done, choosing a financial advisor becomes easy," notes Geoffrey Williams, the Ken-tax financial advisor.

Stocks advisors work with different titles such as a financial planner, an investment advisor, an accountant, a banker, an insurance agent, or a securities broker.

However, anyone can use the above-mentioned titles, regardless of their training or education. "Individuals need to interview advisors and ask them questions about their experience, track record, services offered, investment approach, and educational credentials," he says.

Ethical financial advisors can help decide which investments are best suited for individual needs, based on financial objectives.

Defining goals

They will also help with a savings programme to build assets.

You should define your financial goals, even if only in a general way. If need be go for a planner who analyses and co-ordinates the many aspects of your financial picture.

"It is therefore important in your search to look beyond job titles or credentials by gathering other information to ensure that the advisor you choose will be the right one.