A Financial Planner typically prepares financial plans, comprehensive or modular, for his or her clients. The kinds of services financial planners offer can vary widely. Ideal financial planners coaches, guides and plan every aspect of their clients' financial life holistically -- including saving, investments, insurance, taxes, retirement, and estate (inheritance) and help them develop a detailed strategy or financial plan for meeting all your financial goals. Such ideal financial planners are independent, not tied to any bank, insurance or investment companies, and act wholly for the interest of their clients. Their remuneration may come from only fees, only commission or a hybrid of fees and commission. Depending on which country they are practising and the regulations that binds them.
In Malaysia, financial planning profession is still very new despite being introduced more than 15 years ago through Insurance Act 1996. This is largely due to monopoly of financial advisory service by banks, financial institutions, as well as unit trust and insurance companies. It is already a norm to see young bank employees labelling themselves as someone who can advise financially or insurance agents who declare themselves as Financial Planner although they are actually product salesmen or agent who act for the interest of their employers or principals. These financial advisory personnel and financial planners earn income largely from commission from sold products, thus, they tend to advise clients in buying products rather than advising solely for clients' interest.
Another major obstacle is the lack of financial expertise among front liners in financial planning industries. Usually, the pundits, namely, chartered accountant and tax advisor are the one who undergo difficult process to obtain the relevant financial knowledge and qualification. These professionals who have the grasp of in-depth technical financial knowledge should be the one who give advice to clients in relevant financial matters, but these experts usually shun the industry as they view the fee received as too low for work done for each individual client. Without the real pundits, product salesmen or sales agents are the only ones left in these industry for public to rely on for consultation. They are usually either secondary school graduates or university graduates who study non-financial fields.
In Malaysia, those who practice as Financial Planner must pass any one of below examinations :
1) Registered Financial Planners/ Shariah Registered Financial Planner issued by Malaysian Financial Planning Council (MFPC)
2) Certified Financial Planners (CFP) issued by Financial Planning Association of Malaysia (FPAM)
Video Financial Planners in Malaysia
Financial advisers in insurance
Section 9 of Insurance Act 1996 requires a person carrying on 'financial advisory business in Malaysia to hold a Financial Adviser's license unless he is exempted under section 9(3) of the Act. The Act defines Financial Adviser as a person who carries on financial advisory business. The Act and Bank Negara specifically limit its ambit only to those practitioners who deal with insurance products.
Financial advisory business means any or all of the following services:- (a) analysing the financial planning needs of a person relating to insurance products; (b) recommending the appropriate insurance products; (c) sourcing insurance products from a licensed insurer; (d) arranging of contracts in respect of insurancsee products; or (e) other financial services as prescribed by Bank Negara.
In order for Bank Negara to consider an application for a Financial Adviser's license, an applicant must meet the following criteria:-
Establishment Requirements
a) A Body Corporate An applicant for FA licence must be a body corporate registered with the Companies Commission of Malaysia.
b) Minimum Capital Funds A FA must have minimum capital funds unimpaired by losses of RM100,000.
c) Shareholding Composition The corporate body must be at least 30% Malaysian owned.
d) Chief Executive Officer (CEO) The CEO of a FA must satisfy the fit and proper criteria as prescribed under the Act and comply with the circulars/guidelines on corporate governance issued by the Bank from time to time. The appointment of a CEO is subject to the Bank's approval under Section 70 of the Act.
e) Board of Directors The directors of a Financial Adviser must satisfy the fit and proper criteria as prescribed under the Act and comply with the circulars/guidelines on corporate governance issued by the Bank from time to time. The appointment of directors is subject to the Bank's approval under Section 70 of Insurance Act 1996. At least one of its directors shall be a Financial Adviser's representative.
f) Employee Composition The Financial Adviser shall endeavour to maintain an employee composition that is in line with the economic policy of Malaysia in terms of Bumiputera staff composition of 30%.
g) Professional Indemnity Insurance The Financial Adviser must have professional indemnity insurance coverage of at least RM200,000 net of deductibles.
Each Financial Adviser is allowed to hire employees in dealing with clients. These employees who advise clients are called Financial Adviser's Representative.
Requirements for a FA's Representative
a) Age Financial Adviser's Representative must at least 21 years old.
b) Resident Financial Adviser's representative shall be a resident in Malaysia.
c) Qualifications The applicant must possess:-
d) a Registered Financial Planner qualification as conferred by the (i)Malaysian Financial Planning Council (MFPC); (ii) a Certified Financial Planner (CFP) qualification; (iii) a Chartered Financial Consultant (ChFC) qualification; or (iv) other professional qualifications as specified by the Bank from time to time.
e) Commitment The Financial Adviser's representative shall be engaged by a FA on a full-time basis.
f) Continuous Professional Development Programme The representatives of Financial Advisers must attend a minimum of 20 points of Continuous Professional Development (CPD) programme each year. The type of courses which qualify for the CPD points will be drawn up by the Malaysian Financial Planning Council, and shall include both relevant technical and non-technical courses.
Maps Financial Planners in Malaysia
Financial planning in securities
Brokers and intermediaries of securities dealing in Malaysia are governed by Security Industry Act 1982 and Capital Market Service Act 2007. In its guidelines regarding representatives in investment industry, Securities Commission defines Financial Planning as analysing the financial circumstances of another person and providing a plan to meet that other person's financial need and objectives, including any investment plan in securities, whether or not a fee is charged.
For purposes of undertaking Financial Planning activities, an individual applicant must possess :
(a) a Certified Financial Planner (CFP) qualification and be a member of the Financial Planning Association of Malaysia (FPAM); or
(b) a Chartered Financial Consultant (ChFC) qualification and be a member of the Malaysian Association of Chartered Financial Consultant (MAChFC);
and have at least three (3) years relevant experience in Financial Planning activities.
Financial planning service
The rules and guidelines currently in practice discourage anyone who is independent from engaging in providing consultation in the area of insurance. Furthermore, consumers have no choice other than to turn to insurance agents whenever they want to buy or seek advice regarding insurance.
Same goes to investors in unit trust industries who have to refer to unit trust consultants in seeking investment advice. Although there is a positive change with the introduction of Corporate Unit Trust Agent (CUTA) which allows an agent to represent for more than 1 unit trust companies, the development is low. First, the paid-up capital requirement is RM100,00 which is very big for average agent. Secondly, unit trust companies are often reluctant in co-operating with such independent agents as this affects their interest negatively. Thirdly, the CUTA still earn commission based income as they still sell products.
Tax accountants often shun tax planning for individuals as it is not giving big enough fee.
For will writing, people will subscribe the service of professional will writers such as Rockwills and attorneys. For Muslims and intestate non-Muslim moveable estate, Amanah Raya Berhad administers them at certain charges. Individuals who are knowledgeable often skip these tedious procedures by creating trusts. However, managing trusts requires high level of expertise that they have to hire a professional trustees. The fee for all these services are very expensive.
Nevertheless, financial consumers in Malaysia need independent financial planners who are not biased towards any life insurance and unit trust companies. However, these companies are not comfortable with such movement as it puts them at disadvantage.
Latest Development
In recent development, things have changed quite drastically. There are now 20 Financial Planning Companies, and with about 281 individual licensed as Financial Adviser as Financial Adviser Representative (FAR) as approved by Bank Negara Malaysia (BNM) and more licensed as Financial Planner as Capital Market Services Representative License (CMSRL) as approved by Securities Commissions Malaysia.
Financial planners who are properly licensed by the regulators are often carrying designation such as Independent Financial Adviser or Licensed Financial Planner as they are independent and do not represent any product or service providers, therefore, these financial planners are able to put their client best interest on the top as they will not have conflicting interests, hence making unbiased financial advice are no longer a pipe dream but reality.
Despite existence of outlet for independent financial literacy with financial planning companies, consumer associations such as Persatuan Pengguna Islam Malaysia (PPIM) and unofficial community movements, such activity will not be able to compete against massive marketing campaign by banks, unit trust and life insurance companies.
References
External links
- http://www.sc.com.my/
- https://web.archive.org/web/20071215234648/http://www.bnm.gov.my/
Source of article : Wikipedia
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