Financial planning is in a growth stage in Malaysia as more people realize the benefits of financial planning. However, many still find it daunting to get professional financial advice or talk to a financial planner. Why is it worth it to engage a financial planner?
Financial planning is in an early growth stage in Malaysia as more people realize the benefits of financial planning. Malaysians are increasingly aware of the importance of making good financial decisions and not being sold financial products that do not fit their needs. In fact, financial planners are finding it less frequent nowadays needing to explain that a financial planner isn’t a unit trust or insurance agent.
However, many still find it daunting to talk to a financial planner. So, let’s discuss about some common barriers and misconceptions on engaging a financial planner. The below experiences and viewpoints are my own as a licensed financial planner and founder of a leading personal finance website.
Contents
#1 – I don’t trust someone to tell me what to do with my money
Trust in financial products and services offering are low with an alarming number of financial scams and unlicensed investment gurus out there. The term licensed financial planner and financial advisor is often misused (both knowingly or unknowingly) despite regulation.
In Malaysia, financial planning is a regulated activity requiring a Capital Market and Services Licensed or Representative License (CMSL/CMSRL) issued by Securities Commission Malaysia (SC). This means that only a licensed financial planner can use that designation. According to the Financial Services Act 2013 section 58, misusing the term financial planner or holding yourself out as providing financial planning without a license is liable to a fine up to RM10m and/or imprisonment up to 10 years. (Note: Having a CFP, RFP or IFP certification does not automatically make a person a financial planner).
SC maintains a public list of finance professionals which you can use to verify if a person is a licensed financial professional.
Bank Negara Malaysia (BNM) also maintains an updated financial consumer alert listing.
Your financial planner is not there to tell you what to do with your money, but is there as a valuable member in your financial team helping you to look at your finances in a holistic manner.
The 6 steps in financial planning (EGADIM) can be simplified as below:
- Establish relationship and financial goals
- Gather information required
- Analyze information gathered
- Develop a plan of action
- Implement plan set by client
- Monitor and follow up
This basically means you are in the driver’s seat while your financial planner helps you identify and work towards financial improvements, and provides navigation to avoid potential financial hazards.
Among the rigorous requirements to apply for a license include having a CFP, IFP, or RFP professional qualification. Certified Financial Planner (CFP CERT TM) issued by Financial Planning Association of Malaysia (FPAM) typically takes 1.5 – 2 years to complete 4 professional modules. Islamic Financial Planner (IFP) issued by Islamic Banking and Finance Institute Malaysia (IBFIM) and Financial Planning Association of Malaysia requires 28 training days. Registered Financial Planner (RFP) issued by Malaysian Financial Planning Council (MFPC) requires 42 lecture hours.
As a Certified Financial Planner, your financial planner has a fiduciary obligation and complies with a code of ethics and professional responsibility to act in the best interests of you as a client.
#2 – I cannot afford paying for a financial planner
Financial planning used to be only if you were a millionaire. While a common complaint from those in financial services why they did not want to do financial planning is that it requires too much time and effort that they would rather spend time to do sales.
But that’s no longer true today as Malaysians increasingly seek financial advice, and it is more affordable than ever to engage a licensed financial planner.
Forward facing financial planning firms are increasingly embracing digitalization and technology to reduce costs both internally and for clients.
How affordable is financial planning?
- From below RM100 a month (that’s less than most gym memberships) or RM3 a day
- For less with a one-time consultation or hourly rates
- For free! (see below)
Free Consultation at InvestSmart® Fest 2020 organized by SC in collaboration with Financial Planning Association of Malaysia and Malaysian Financial Planning Council.
Or click here for a complimentary first consultation (if you have never engaged a financial planner before).
#3 – I can DIY my own personal finances
Yes I do believe that mankind has it in themselves to accomplish all that they set out to do. For some people, this may include DIY (Do-It-Yourself) your personal finances.
MyPF traces its roots to a personal blog on personal finance and has evolved over time into a leading personal finance education platform. But we have not wavered from our core mission to simplify personal finances and help people grow. And I am blessed indeed to have many join our MyPF team over the years from our hardworking editors to writers to social media community managers who came onboard believing in our mission.
That is also the reason why we put out so much content (1000+ articles videos infographics etc and counting) on personal finance related topics. Most or our content is publicly available for free and some behind a membership wall that you can register for free. And now we are working to connect Malaysians who want good solid financial advice to licensed professional financial planners.
Speaking from my own personal professional experience, some of my clients happen to be financially savvy and highly educated professionals including managers, engineers, lawyers, IT and other finance professionals. While some of my clients are fresh graduates who have an interest in improving their personal finances and achieving financial independence. Increasingly as well, I find clients having done some form of DIY personal finances such as actively investing, tracking budgeting or even having self-developed personal finance tracking spreadsheets.
And a little secret I am letting out is that I actually prefer clients who have at least some personal finance knowledge as it means that there’s so much more depth that we can go into in our financial planning sessions. Some clients have interest in a specific area/niche such as equities investing or trading which they can continue focusing on. My work as a financial planner is to complement all your other financial areas while filling in any gaps you may have. Financial planning covers not only investing but also portfolio asset allocation, cashflow management, debt management, risk management, estate planning, tax planning, retirement planning and more!
Working with a financial planner lets you focus on your strengths while we help you work on improving your overall financial health. Gains of a few extra +% every year may seem little but compounded over a period of time it makes a tremendous difference in you achieving and going beyond your financial goals!
My open letter response to ‘An open letter for financial planners’
Suraya the founder of personal finance community blog Ringgit Oh Ringgit wrote an open letter for financial planners which I have extracted parts of as below. Click here to read the full letter. While it wasn’t specifically directed to me, sharing my thoughts as a financial planner as while the financial planning industry is growing, we remain a minority with only 1k+ practicing licensed financial planners compared to Malaysia’s population of 33m (22m working, 85k insurance agents and 68k unit trust agents).
I respect your profession, I really do, but here’s the thing. I don’t know if you’re aware of this but some financial advice that you give out sounds (a) really condescending, and (b) victim-blaming.
I would really hate to receive or give advice that is condescending and victim-blaming. We can do better than this!
For example, every time I hear some financial planner repeat the statistic, 52% of Malaysians ‘face difficulties raising even RM1,000 for emergencies’, what you say is we’re bad at saving money (and yes to be fair some of us are pretty bad at it), but what you ignore is the fact that many Malaysians are underpaid.
36% of Malaysians can’t raise the RM1,000 for emergencies according to AKPK with the top reasons from the Malaysian public being:
- I am facing a high cost of living
- I do not have enough surplus income
- I have high debt commitments
- I am not ready to save
- I am not sure how much to save
Yes, income is a key factor where I have told some clients that there is only so much expenses you can cut. You may need to find ways to increase your income, ask for better employee benefits and/or find a side hustle.
However, accumulating bad debt on things you don’t need, lifestyle creep where your expenses keep going up every year, and buying things with “future money” aka installment purchase plans and outstanding credit card debt can be a major drain on your cashflow.
Your financial planner would be able to help you find out whether it’s your income, your spending habits or other factors that are affecting your cashflow. And if you are unsure of how and where to save, that’s where I would come in to help you look at how you can start paying yourself first in a suitable and sustainable pain-free way.
You can watch the video below when AKPK came on MyPF PodCat to share on that (0:42).
Stop telling people they can budget their way out of poverty, when that is a near-impossible feat. Being poor is expensive.
I agree. A budget is but a tool. Not everything is a nail that requires a hammer.
Stop telling people who have not taken insurance or do wills that they don’t care about their families – it is hard for low-income earners to commit to long-term plans when they are still figuring out how to feed and shelter their families today.
An ethical licensed financial planner would not do this and I would be appalled to hear anyone say this. Telling people that if you don’t take an insurance or will you don’t care about your family sounds like an emotional hot-button from someone trying to get sales. The opposite is more likely where your financial planner would tell you how to optimize your coverage, lower your premiums, and even possibly suggest terminating unsuitable insurance policies.
Stop telling people to simply stop spending money, without acknowledging sales and marketing, which *is* a billion-dollar industry, is exceptionally good at what they do.
I truly believe that one should spend on the needs of yourself and your loved ones, and then some on wants. Saving on the cup of kopi everyday is not going to make you a millionaire. Sales and marketing is a major force and you can be a smart and savvy shopper. On the other hand, this does not mean spending frivolously on things you don’t need.
It’s not my place to tell you what to do, nor your responsibility, but here’s my plea anyway – where you can, please:
– lead by example and provide at least living wage to your employees, and
– fight for higher pay for low-paid colleagues, including the janitors and cleaners, and
– encourage your high-net-worth clients – the ones who have more money than they know what to do with – to give back.
We do our best to provide decent wages for employees (and even interns). For our business clients, we encourage them to provide better employee benefits while maximizing returns in other ways. For all our clients (and not only high net worth clients), we encourage giving as part of estate planning.
Thank you for reading. I’ve poured what I kept inside for the longest time, now over to you. Thank you for your continued dedication to helping fellow Malaysians.
Thank you for pouring out your heart Suraya. We at Wealth Vantage Advisory will keep doing our best to realize out our goal of industry transformation by focusing on the right way of doing things, and living our most important value of putting clients needs first.
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Why are you OR are you not engaging a financial planner (or sitting on a fence)?
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