How to Become a Financial Planner?

After the two series of article on Financial Planning and Financial Planner. Some of you may asked: "Is it difficult to become a Financial Planner? What's the requirement needed?"

Hmmm... Good news is it is not difficult, but the bad news is it's not easy either and the requirements for sure will be raised in the future.

So, how?

In Malaysia, those who practice as Financial Planner must pass any one of below examinations:

1. Registered Financial Planners (RFP) issued by Malaysia Financial Planning Council (MFPC)
2. Certified Financial Planners (CFP) issued by Financial Planning Association of Malaysia (FPAM)

After you have passed the said examination, it doesn't mean that you're a Licensed Financial Planner straight away. Why? It's just serves you an entry passport only. Once you have accredited the qualification, you must apply the required licenses with Bank Negara Malaysia (BNM) and Securities Commission (SC) before you can carry out financial planning activities.

By then, you can claimed the following title:

• Financial Adviser Representative (FAR) by BNM
• Licensed Financial Planner by SC

Please take note that passing the said examinations doesn't carry you the titles, getting the licenses does. If not, you're deem to have convicted an offence which can land you in jail or subject to hefty fine.

Other requirements include:

• Must be a Malaysian citizen
• At least 21 years old
• Have minimum 3 years related experience
• Must be a FULL time practitioner
• Then, you must fulfill the minimum hours for personal development programs every year

Next, we will talk about "The Challenges Faced by Financial Planning Industry in Malaysia"

This article was contributed by Alex Yeoh, a licensed financial planner with a reputable financial planning firm. Finance Malaysia blog will work together with Alex in bringing more interesting articles on personal financial planning. You may reach him via email alexyeoh@vka.com.my

The Rise of Financial Planner

As promised, Finance Malaysia blog would like to educate public at large on the importance of personal financial planning, after knowing that most Malaysians falls into debt traps because of this poor financial planning. After finding out, we're surprised that actually not many of us knowing this NEW distribution channel in financial markets --- Financial Planner.

The NEW Alternative...

Traditionally, when we sourced for financial products or services, we normally go to either agent or bank. Example, for life insurance or unit trust, we buy from life insurance agent or unit trust consultant or banker.

This trend continues few years back, when Securities Commission of Malaysia and Bank Negara Malaysia comes out a framework or guidelines introducing financial planning industry. Then, financial planning firms emerge, until only recently some of us would have heard about its existence in the market place. Of course, financial planners came into picture too.

Role of a Financial Planner?

By definition, a financial planner is a practicing professional who covers the whole process of financial planning including cash flow management, education planning, risk management, investment planning, retirement planning, estate planning, tax planning and business succession planning (for business owners). The key defining aspect of what the financial planner does is that he/she considers all questions, information and advice as it impacts the financial situation of client. 

Highly Regulated?

In Malaysia, the term 'financial planner' was regulated and legislation requires a person to be licensed before he/she can hold himself/herself out as a 'financial planner'. Authorities view financial planner as a professional and should be differentiate it from the rest of financial practitioners. Just as the title 'Dr' only for Doctor or doctorate graduates, and 'Ir' for qualified professional engineers to instill the confidence of public based on titles.

It's an offence to call on yourself as financial planner or practicing financial planning for clients, without license in Malaysia. Those who found commits such offence, on conviction, be liable to a fine not exceeding RM5mil or to imprisonment not exceeding 5 years term or to both. Wow... Considered as a serious offence.

Even said so, many insurance agents or unit trust consultants commits the offence without realizing it. So, please tell your insurance agent or unit trust consultants whom you love or care about.

This article was contributed by Alex Yeoh, a licensed financial planner with a reputable financial planning firm. Finance Malaysia blog will work together with Alex in bringing more interesting articles on personal financial planning. For more info, you may reach him via email alexyeoh@vka.com.my

Do YOU understand what is "Financial Planning"?

We can't deny that everyone of us can't runaway from financial matters, thus, planning it wisely would put you on a better path to achieve financial goals as desired. Does this called "financial planning"? Hmmm... Many people think that financial planning is for high-income earner and the rich. But is this true? If not, what is it actually?

Generally, financial planning is a journey to achieve financial goals set with a comprehensive and systematic step-by-step process. It involves taking a broad view of one's financial affairs covering many areas of wealth management.

What's Included in Financial Planning?

1. Cash Flow management:
• assessing your current financial net worth
• budgeting
• debts eliminations
• building savings
  
  
2. Insurance planning
• ensuring that our assets and family are well protected by having adequate insurance coverage
  
  
3. Investment planning
• this is the wealth accumulation step, whereby investing a portion of your savings with the aim of getting a higher return.
• an investment strategy is needed to ensure greater success
  
  
4. Tax planning
• this is an area largely ignored or forgotten by most tax payers
• it involves strategies to optimize our income, including from investments, by legally minimizing the tax payable.
  
  
5. Retirement planning
• this is crucial to ensure that your golden age won't be miserable
• start planning as young as possible, the better
  
  
6. Estate planning
• writing a will is the most common steps in this stage
• ensuring that your estate will be passed on to your beneficiaries, as you desired, smoothly and to avoid family disputes

The 6 steps of financial planning

According to licensed financial planner, Alex Yeoh (email: alexyeoh@vka.com.my), a solid financial plan should be more than just buying an insurance plan or having some unit trusts. It should cover 4 key areas, namely wealth management, wealth protection, wealth accumulation and wealth distribution.

The next question is: "Who should you sit down with to discuss financial planning?"

Stay tune for more...

Is it SAFE to Invest in Private Retirement Scheme (PRS) ?

This is one of the common question asked by potential PRS contributors. First, I want to emphasis that PRS is a long-term investment for the purpose of retirement planning. In investment case, long-term means you already using the most powerful method to reap a good return. Anyway, many contributors still want to treat PRS as some kind of short-term investment. I got the answer for you.

Basically, PRS is very similar to unit trust investment. The underlying structure and investment philosophy were the same actually. No wonder many people perceived PRS is another unit trust scheme. Yes, you're correct to a certain extent.

Under the guidelines, each PRS providers must at least launched their core funds for investors to select, namely Growth, Moderate and Conservative. To make things simple, we only discussed these core funds because I believe most of us only invest in core funds. From these core funds, growth fund is the most aggressive one. In other words, the most risky one, with the aim of getting better return than the other two.

Asset Allocation of Core Funds under the guideline by Securities Commission of Malaysia

Is it really so risky?

Let's us examine even deeper now. Again, under the guideline for PRS growth fund, only maximum of 70% of NAV can be allocated to equities, while the balance was in fixed income/money market instruments. If you're an unit trust investor, you will know that this is almost like a balance fund type of asset allocation. For your information, for normal unit trust equity fund, equities exposure was between 70% - 98%. Meaning, the maximum equities exposure for PRS Growth fund equals to the minimum of an equity fund. Not so risky, right?

Of course, if you want higher equity exposure for your PRS portfolio, you can opt for those non-core funds, which can go as high as 98% in equity exposure. Then, the next question was "Is it risky to invest now?"...

It all depends on your perception. If you think that Malaysia market is too expensive now, you may opt for those funds with foreign exposure. Currently, from the 4 PRS providers whom already launched their schemes, some can invest into foreign countries. Some are fund-of-funds, some are foreign funds. Coming soon, more variety of PRS funds will be offered, such as property fund, commodities fund...

This is a guest post by Alex Yeoh in the series of Private Retirement Scheme. For more PRS info, you may contact Alex Yeoh (email: alexyeoh@vka.com.my), a licensed financial planner, whom representing multiple PRS providers. Thank you.

Launching of Association of Financial Advisers (AFA)

31^stOct 2012 would be a historic day for Malaysia financial planning industry with the launching of newly formed Association of Financial Advisers (AFA) at Lanai Kijang, Bank Negara Malaysia. From now onwards, AFA will effectively represent all the Licensed Financial Advisers and Corporate Unit Trust Advisers (CUTA) Firms. The association is approved by Registrar of Societies on the 16th August 2012 with the support from Bank Negara Malaysia.

In conjunction with its launching, AFA also held its inaugural financial advisers conference titled “Charting New Frontier – FA the Future”. During the conference, audiences were empowered with up to date practices by Bank Negara and Securities Commission. Then, an interesting forum on the Future of Malaysia Financial Advisers Industry was discussed with everyone attentions. How we benchmark ourselves with other countries? We heard some success stories from Singapore and Hong Kong.

It was a successful milestone event for financial planners and CUTAs judging by the numbers of financial practitioners who attend the event. Product manufacturers, such as insurance and unit trust companies, started to realize the potential influences of financial planners and CUTAs in distributing their products and services. This signifies the bright future of financial planning industry moving forward, in line with the Capital Master Plan 2 by Securities Commission of Malaysia. There is no better time to be a licensed financial planner now.

This is a guest post contributed by Alex Yeoh, a licensed financial planner with VKA Wealth Planners. Finance Malaysia is glad to have Alex's input on financial planning matters. You may contact him via alexyeoh@vka.com.my