Financial Advisors
What Financial Advisors Do — and Why It Matters in Emerging Markets
A financial advisor is a qualified professional who assesses a client's financial position, recommends suitable investment and savings strategies, and monitors outcomes against agreed objectives. In African and emerging markets, where regulatory frameworks are evolving and product complexity is rising, the quality of advice has a direct bearing on whether investors meet their long-term goals.
This guide sets out what to look for in a financial advisor, how the retirement planning process works in practice, and how platforms such as Veri Global are changing the way advisors and their clients interact with portfolio data.
What Are the Investment Options Requirements for a Financial Advisor?
Before recommending any product, a regulated financial advisor must complete a fact-find — a structured assessment of a client's income, liabilities, risk tolerance, investment horizon, and tax position. This is not optional; it is a regulatory requirement in most jurisdictions, including South Africa under the Financial Advisory and Intermediary Services (FAIS) Act.
The fact-find determines which investment options are suitable. Common categories include:
- Collective investment schemes (unit trusts): Pooled vehicles offering diversification across equities, bonds, and money-market instruments.
- Retirement annuities (RAs): Tax-advantaged vehicles designed specifically for long-term retirement saving.
- Exchange-traded funds (ETFs): Listed instruments that track an index or basket of assets at lower cost than actively managed funds.
- Offshore investments: Rand-denominated or foreign-currency allocations providing geographic diversification.
- Fixed-income instruments: Government and corporate bonds offering predictable income streams.
An advisor who recommends a product before completing this assessment is not acting in a client's best interest — and may be in breach of their licence conditions.
How the Retirement Planning Process Works
Retirement planning is not a single event. It is an ongoing process with distinct phases, each requiring different decisions.
Phase 1: Goal-Setting
The advisor establishes when the client intends to retire, what income they will need in retirement, and what assets they currently hold. A realistic retirement income target is typically 70–80% of pre-retirement income, adjusted for inflation.
Phase 2: Gap Analysis
The advisor calculates the difference between projected savings at retirement and the capital required to sustain the target income. This gap determines how much the client must save monthly and at what real rate of return.
Phase 3: Product Selection and Structuring
Based on the gap analysis and the client's tax position, the advisor recommends a combination of retirement annuities, pension fund contributions, and discretionary savings. Contributions to retirement funds in South Africa are deductible up to 27.5% of taxable income (capped at R350,000 per year), making the tax structuring of this phase particularly consequential.
Phase 4: Ongoing Review
Market conditions, personal circumstances, and tax rules change. A competent advisor reviews the retirement plan at least annually, rebalancing allocations and adjusting contribution levels as required.
Retirement Planning Examples in Practice
Example A: A 35-year-old professional earning R600,000 per year wants to retire at 65 with a monthly income of R40,000 in today's money. Assuming 5% real investment growth and 6% inflation, the advisor calculates a required retirement capital of approximately R12 million in nominal terms. The plan structures maximum RA contributions for tax efficiency, supplemented by a tax-free savings account (TFSA) and a discretionary portfolio.
Example B: A 50-year-old business owner with significant equity tied up in a private company needs to diversify before retirement. The advisor structures a phased liquidation plan, directing proceeds into a combination of living annuity-compatible assets and offshore holdings, while managing the capital gains tax exposure on disposal.
Best Savings Account Benefits: What Financial Advisors Look For
Not all savings vehicles are equal. When evaluating savings accounts and wrappers, a financial advisor considers:
- Tax efficiency: TFSAs in South Africa allow R36,000 per year (lifetime limit R500,000) to grow free of income tax, dividends tax, and capital gains tax.
- Liquidity: Some retirement vehicles impose restrictions on early withdrawal. Discretionary savings accounts offer greater flexibility but fewer tax benefits.
- Fee transparency: Total investment charges (TIC) must be disclosed. Advisors should be able to explain exactly what the client pays and to whom.
- Interest rate competitiveness: For cash savings, the real (inflation-adjusted) return must be positive. Many standard bank savings accounts fail this test over the medium term.
The best savings account for a given client depends on their time horizon, tax bracket, and liquidity needs — not on which product pays the highest adviser commission.
Wealth Management vs Alternatives: Understanding the Difference
Wealth management is a comprehensive service that combines investment management, financial planning, tax advice, estate planning, and sometimes fiduciary services. It is typically offered to clients with investable assets above a defined threshold — often R5 million or more.
Alternatives to a full wealth management relationship include:
- Robo-advisors: Algorithm-driven platforms that construct and rebalance portfolios based on a digital risk questionnaire. Lower cost, but limited personalisation and no tax or estate planning.
- Stockbrokers: Execution-focused, suitable for clients who want to select their own instruments.
- Financial coaches: Unregulated practitioners who offer general financial education rather than specific product advice.
- Direct fund investment: Investing directly with an asset manager without an intermediary. Removes adviser fees but also removes ongoing monitoring and rebalancing.
For clients with complex needs — multiple income sources, offshore assets, business interests, or dependants — a regulated financial advisor providing wealth management services will generally produce better long-term outcomes than any of these alternatives.
Tax Advice: What a Financial Advisor Can and Cannot Do
Financial advisors are not tax practitioners, and the boundary matters. A financial advisor can structure investments to be tax-efficient — maximising retirement fund deductions, selecting tax-free wrappers, and timing asset disposals to manage capital gains. This constitutes legitimate financial planning.
However, the preparation and submission of tax returns, and advice on complex tax disputes, falls within the domain of a registered tax practitioner (in South Africa, registered with SARS and a recognised controlling body such as SAIPA or SAIT). The best outcomes typically arise when a financial advisor and a tax practitioner work in coordination — sharing data on contributions, disposals, and income sources so that the client's tax return accurately reflects their investment activity.
Clients should be cautious of advisors who claim to provide comprehensive tax advice without the relevant credentials.
How Veri Global Supports Financial Advisors and Their Clients
Veri Global is a data and portfolio administration platform built for investment professionals operating in African and emerging markets. For financial advisors, it addresses a practical problem that affects client outcomes directly: the gap between what a client's portfolio actually holds and what the advisor can see at any given moment.
Africa's fund administration landscape is fragmented. Assets are held across multiple custodians, fund managers, and jurisdictions. Reconciling this data manually is slow, error-prone, and expensive. Veri Global aggregates and reconciles portfolio data across these sources, presenting advisors with a single, auditable view of each client's holdings.
Wealth Management Pricing and Transparency
One of the most common sources of client dissatisfaction in wealth management is fee opacity. Clients are charged at multiple levels — adviser fees, platform fees, fund management fees — and the cumulative impact on returns is rarely presented clearly.
Veri Global's reporting infrastructure allows advisors to present total cost disclosures in a format that is both regulatory-compliant and genuinely readable. Clients can see what they pay, what they hold, and how their portfolio has performed — without needing to interpret multiple disconnected statements.
For fund administrators and multi-adviser practices, the platform supports bulk data processing, automated reconciliation, and audit-trail generation — reducing the operational cost of servicing a large client book without reducing the quality of oversight.
Choosing a Financial Advisor: A Practical Checklist
Before engaging a financial advisor, confirm the following:
- Regulatory status: Are they licensed under the relevant authority (e.g., FSCA in South Africa)?
- Qualifications: Do they hold recognised qualifications such as CFP®, CFA, or equivalent?
- Remuneration model: Are they fee-only, commission-based, or a hybrid? Understand how they are paid before taking advice.
- Specialisation: Do they have demonstrable experience in the areas relevant to your situation — retirement planning, offshore investment, business succession?
- Technology and reporting: Can they provide clear, timely reports on your portfolio? Do they use platforms that offer independent data verification?
- Independence: Are they tied to a specific product provider, or can they recommend across the market?
A financial advisor who cannot answer these questions clearly is not ready to manage your financial future.