‘Help Malaysians grow fi­nan­cial cap­i­tal’

> Time to em­power the peo­ple fi­nan­cially over the long term and to re­duce hand­outs, says ad­viser

The Sun (Malaysia) - - MEDIA & MARKETING - BY EE ANN NEE

PE­TAL­ING JAYA: Fi­nan­cial ad­viser Whit­man In­de­pen­dent Ad­vi­sors Sdn Bhd has called for mea­sures that will help Malaysians grow their fi­nan­cial cap­i­tal over the long term and to em­power Malaysians to re­claim the abil­ity to chart their own fi­nan­cial path re­spon­si­bly.

Its in­de­pen­dent fi­nan­cial ad­viser Felix Neoh ( pix) said this can be achieved mainly by mak­ing Malaysians more fi­nan­cially em­pow­ered, en­cour­ag­ing long-term sav­ings for re­tire­ment and mak­ing fi­nan­cial prod­ucts more ac­ces­si­ble.

“At the end of the day, there’s only so much of hand­outs from the gov­ern­ment. Ev­ery Bud­get sea­son, year in and year out, we go through the same mo­tion and process. We’d like to see a Bud­get that is able to help Malaysians grow their fi­nan­cial cap­i­tal over the long term, not just (think­ing of) what’s the hand­out for me this year,” he told Sun­Biz in an in­ter­view.

In an ef­fort to make fi­nan­cial plan­ners more ac­ces­si­ble to the lay­man, Whit­man is propos­ing that ad­vi­sory fees for en­gag­ing li­censed fi­nan­cial plan­ners be tax-ex­empt.

“There is no in­cen­tive for the man on the street to pur­posely look for this (fi­nan­cial ad­vi­sory) ser­vice. While our ser­vices and prod­ucts ex­ist, they are not as well utilised. If more and more Malaysians be­come fi­nan­cially em­pow­ered, they will be less de­pen­dent on the gov­ern­ment for hand­outs ev­ery year,” said Neoh.

He said per­sonal fi­nance should be in­cluded in the na­tional ed­u­ca­tion syl­labus and teach­ing of the sub­ject should start at pri­mary school level, while ed­u­ca­tional pro­grammes like the Se­cu­ri­ties Com­mis­sion’s In­vests­mart should be con­tin­ued and made avail­able in more ar­eas, not just in ur­ban lo­ca­tions.

To en­cour­age long-term sav­ings for re­tire­ment, Neoh said, the tax re­lief for Em­ploy­ees Prov­i­dent Fund (EPF) con­tri­bu­tions and life in­surance poli­cies should be split, with a tax de­duc­tion of RM6,000 each as a start. Cur­rently, for the mid­dle class, the tax re­lief of RM6,000 for EPF and life in­surance com­bined is nor­mally fully utilised by con­tri­bu­tions to the re­tire­ment fund alone. It is also sug­gested that the gov­ern­ment in­crease the tax re­lief for pri­vate re­tire­ment schemes, which is cur­rently capped at RM3,000.

In mak­ing fi­nan­cial prod­ucts more ac­ces­si­ble, Neoh has pro­posed to cap the dis­tri­bu­tion cost of fi­nan­cial prod­ucts, like the ini­tial ser­vice charge for unit trust or pre­mi­ums on in­surance poli­cies.

“For ex­am­ple, if you go through agents for unit trusts, you’re pay­ing 5.5%6.5% as ini­tial charge. We pro­pose that the max­i­mum amount that dis­trib­u­tors charge be low­ered for the ben­e­fit of the pub­lic for all fi­nan­cial prod­ucts,” he said.

Neoh also sug­gested that the gov­ern­ment fa­cil­i­tate bet­ter ac­cess to low-cost global fi­nan­cial in­vest­ment prod­ucts such as ex­change­traded funds.

He said Malaysians should be em­pow­ered to grow in­comes by pro­vid­ing in­cen­tives for em­ploy­ers to drive em­ployee pro­duc­tiv­ity and share the in­cre­men­tal ben­e­fits with the em­ploy­ees via higher wages.

“There is a good num­ber of Malaysian cor­po­rates mak­ing good prof­its. Those ben­e­fits are be­ing shared with share­hold­ers of the com­pany but they may not trickle through as ef­fi­ciently and ef­fec­tively to the em­ploy­ees of the com­pany, which is keep­ing Malaysian wages low,” said Neoh.

Ef­fec­tive man­age­ment of the cost of liv­ing with more ways to make hous­ing more af­ford­able rather than just fo­cus­ing on in­creas­ing ac­cess to fund­ing, es­pe­cially for first-time home buy­ers, as well as mea­sures to re­duce spec­u­la­tion in prop­erty as an in­vest­ment as­set class, are also en­cour­aged.

“From a fi­nan­cial plan­ning per­spec­tive, we’ve seen many clients en­joy gains in prop­erty over the last five years and have in re­al­ity taken prop­erty as a high as­set al­lo­ca­tion in their re­spec­tive in­vest­ments. There needs to be more ef­forts to help peo­ple to buy prop­er­ties for their own stay, but have more strin­gent mea­sures for those buy­ing prop­er­ties for in­vest­ments,” he said. Neoh said re­duc­ing the per­sonal in­come tax post-Good and Ser­vices Tax im­ple­men­ta­tion should also be con­sid­ered, cit­ing Sin­ga­pore as an ex­am­ple.

On mea­sures to in­crease the gov­ern­ment’s rev­enue, he sug­gested the rein­tro­duc­tion of es­tate tax (death tax) and to in­crease real prop­erty gains tax be­yond first home or res­i­den­tial prop­erty, tar­get­ing in­vest­ment prop­er­ties. “Death tax tends to af­fect more of the rich and if we’re try­ing to re­al­lo­cate re­sources from a so­cial per­spec­tive, per­haps this is one av­enue to im­prove gov­ern­ment cof­fers,” said Neoh, ex­plain­ing that the ag­ing pop­u­la­tion means that there will be a lot of tran­si­tion of wealth upon death in the next few years. The death tax in the UK is 40%.

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