Financial planning for M’sians in turbulent times
For starters, those who cannot afford and need basic money management skills, can seek the services of the Credit Counselling and Debt Management Agency which offers free financial education on responsible use of money, credit management skills as well as counselling and advise on financial management. Linnet Lee, FPAM chief executive officer
KUALA LUMPUR: Malaysians should have some form of financial planning to help them navigate through turbulent times and have a better quality of life, said the Financial Planning Association of Malaysia (FPAM).
Chief executive officer, Linnet Lee said those unable to understand how to undertake their own financial planning can seek free guidance from various government agencies or get professional advice from licensed financial planners for a fee.
“For starters, those who cannot afford and need basic money management skills, can seek the services of the Credit Counselling and Debt Management Agency which offers free financial education on responsible use of money, credit management skills as well as counselling and advise on financial management.
“As for those who want to plan for retirement, a good place to start is at the Employees Provident Fund (EPF), which offers Retirement Advisory Service (RAS) to its members, also for free. It helps you calculate the amount you can spend monthly with the money you have and accumulate in your EPF,” she told Bernama.
Lee said those requiring a better financial roadmap, could seek the services of a licensed financial planner to help crystalise their goals, prioritise them and draw up a plan on how to achieve it.
“After that, they will help implement the plan and monitor it through an agreed review period.
“Financial planning is a regulated activity under the Securities Commission Malaysia (SC) and the role of a financial planner is to walk with you throughout your financial life and help avoid expensive financial mistakes,” she added.
Financial adviser representatives are regulated and approved by Bank Negara Malaysia and their role is to advise on and bundle suitable financial products based on clients’ needs to help them achieve desired objectives, for example, life, health and asset protection.
“A licensed financial planner can provide direction for your personal financial management, investment, personal taxes, retirement and estate planning. This enables better control of your money, while growing and protecting assets. They can also help you make the right choices and avoid costly mistakes,” she added.
To enable the licensed financial planner to help make the right decision, clients must first set their goals and financial needs and provide reliable data such as income, expenses, budgets, savings and investments, protection plans and identify the loved ones they wish to provide for in the event of unforeseen circumstances.
According to Lee, these professionals are remunerated in several ways, either by fees or a commission, a combination of fees and commission, or by the consultation hour plus annual review fees to ensure implementation of the plan is on track.
She said the financial planning awareness among Malaysians was higher with the younger generation, particularly those who studied overseas as they were exposed to knowledge of it at university.
“For senior citizens, things are different as financial planning did not exist during the early days. However, they were instilled with a savings culture as a form of planning. This helped to see them through their retirement, but they could have done better with proper retirement planning in place.
“For Malaysians, the target group for licensed financial planners are the middle 40 per cent income group (M40) as they can help the B40 (bottom 40 per cent) group. The upper 20 per cent group (U20) need more wealth planning and management rather than financial planning,’ she added.
Lee said FPAM was participating in initiatives by the SC under the InvestSmart Fest from Oct 13-15.
“Hence, we urge the public to book a slot for a complimentary consultation with licensed financial planners which is a good start for financial planning,’ she added.
She said currently there are only about 680 licensed financial planners in Malaysia and the FPAM hoped to see it increase to 1,000 in the next two years by working with various associations and firms.
“Government incentives for those who undertake financial planning, probably in terms of a tax break for financial planning fees, would help enhance financial literacy among the people and this will in turn, strengthen the country’s economy.
“At the same time, it will boost the number of much needed licensed financial planners,” Lee added.