On its own advice is just advice and probably not that effective. Let’s consider a retirement annuity, for example. In isolation, the product has many features and benefits which provide many reasons to invest
In one. A main advantage is the tax deductibility of the premiums from your taxable income.

So should every have one? Well, if you are young and just starting out in your working life, perhaps not yet. You see a retirement annuity cannot be accessed until age 55. If you need money for a deposit on your home or a car there is nothing you can do if your savings is in a retirement annuity fund. You may be better off saving in unit trusts which will give you accessibility to your money when you need it.

Good advice comes into its own when total provisions are considered, including pension and provident fund contributions. This place limits on the amount that can be deducted from retirement annuity contributions. Having carefully calculated the maximin deductibility would set up an appropriate contribution and any excess could be diverted to different investments making the overall provisions far more tax effective. You see, it’s not just a product. It’s really about taking everything relevant into account and making a financial decision on your circumstances.

So good advice boils down to appropriateness. Advice that suits the situation. Different strokes for different folks. This can only be accomplished through a thorough and holistic evaluation. It is not about the best but rather suitability.

• Good advice is therefore not product focused. It is rather solution-focused. Just like visiting a doctor, you are taken through a medical evaluation which then leads to a diagnosis and then suitable treatment is prescribed. A competent financial advisor will take you through a financial planning process which will highlight opportunities which will form the basis of his recommendation. This is good advice. It is not premeditated. It is objective and appropriate.

Next time you are given advice be aware of the way the advice is delivered. If it is all about features and benefits, past performance and speculative opinions into the future then be careful.

A qualified financial planner is able to find appropriate solutions through a professional planning process. Make sure that your financial decisions are made through this approach.