Financial Data
Updated 21 Feb 2020


Which should you choose: A broker of a financial planner?

Wouter Fourie, CFP® professional and 2015 FPI Financial Planner of the Year, on why entrepreneurs need to choose between a broker and financial planner.


Wouter Fourie, 21 March 2016  Share  0 comments  Print


All the answers to your unique business lifestage questions

Entrepreneurs are truly unique individuals; they often exhibit more enthusiasm, energy and resourcefulness than many of the people that normally seek financial advice or support. 

However, one thing that entrepreneurs do not have, is time. Starting (or taking over) a business is an all-consuming task, and personal issues, including finances, are often ignored, or at best left to the very end of the checklist. 

Ultimately, with so little time in the day and so many demands to attend to, entrepreneurs often convert the checklist into a shopping list and merely pluck readymade financial products from a broker or agent. 

It is true that in most cases a generic financial savings or life insurance product is better than not having anything at all. This is especially true if there are several entrepreneurs in a single business and life insurance on the partners’ lives becomes important to ensure business continuity. But ultimately, a poorly chosen and/or mismatched product for your financial needs, can end up costing you more than you save. 

Related: 12 Business financial resources and profit tools

What’s the difference?

To better understand this, one should clearly distinguish between brokers/agents and certified financial planner® professionals/CFP® professionals. Both professions have an important role to play, however, in the first instance, a broker/agent are focused on commission incentivised selling of ready-packaged products to clients.

One concern with this approach is that a generic product cannot consider individual needs, as is often the case with entrepreneurs who have varying income streams and different immediate needs to salaried workers. 

The alternative is a CFP® professional. They are trusted professionals who consider all of your financial needs by understanding you as an individual. They work with you, taking all aspects of your finances and lifestyle into account. They will design an appropriate financial plan and coach you through all the necessary steps to achieving financial freedom. 

CFP® professionals work under a strict code of ethics which ensures that your interests always comes first. They keep pace with the ever-changing financial world, providing relevant advice to you at all times. 

Essentially the journey begins with you, and the CFP® professional ultimately assists you as an entrepreneur to realise the importance of a financial plan. 

Here are three reasons for using a CFP® professional:

1. You have little margin for error 

As an entrepreneur, you strain your resources to ensure the best possible chance of success.

Choosing the wrong financial product will not only offer less benefit than a tailor-made solution, but it could cost you money once the fees and inflation-linked value is considered.

2. The broker may be the client

Unfortunately, many generic financial products are aimed at the broker and not at the end user. Financial institutions have been found to create products that are attractive to sell through a broker/agent, with little or no benefit to the client.

3. There is usually more than one solution

You may want to buy life insurance on the life of your business partner, but you could be better served by a different corporate structure or alternative product to ensure the best benefit and most trouble free business continuity. A CFP® professional can help you consider these options.

To find a CFP® professional near you or for more information go to www.fpi.co.za or watch this YouTube video: https://youtu.be/lzNojz-iT48.

Related: Financial management checklist

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About the author


Wouter Fourie

Wouter Fourie is a CFP® professional and 2015 FPI Financial Planner of the Year.

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