Lack of financial literacy behind Malaysians’ money woes
PETALING JAYA: Malaysia may be the first country in the world to regulate financial planning, but Financial Planning Association of Malaysia (FPAM) CEO Linnet Lee ( pix) opined that lack of financial literacy is the main culprit behind Malaysians’ financial woes.
She said for children, introduction to the value of money and savings should be encouraged; for teenagers, the effects of time on the value of money, importance of managing allowances and ideas to earn extra income; fresh graduates entering into workforce, the knowledge and ability in money management; adults in the medium-income group, a fullfledged financial plan; the high net worth, wealth management; and for retirees, managing one’s finances to optimally fund the retirement and preparing for the hereafter.
“What a financial planner can do for you is ascertain your direction in life, define your life’s priorities, work out the route/financial plan for you to achieve your life goals, walk you through the financial road map and its solutions, ensure you are on the right track throughout the journey,” Lee told SunBiz.
According to a Financial Planning Standards Board-FPAM 2015 survey, the main reasons for relying on financial professionals are: they help simplify and explain financial matters (65%), come up with long-term plans (64%), and research the entire market (63%). Consumers’ financial priorities are owning a home (71%), building savings or emergency fund (68%) and being free of major financial debt (66%). The financial planning services of interest are mostly retirement planning (60%), investment planning (60%), budgeting/cash flow/debt management (58%).
Lee said the majority of people who use financial planners are from the middle-income group and the number is rising due to more awareness on financial planning and a more challenging economic outlook.
She said fees charged by financial planners range from RM1,500 for money management for those entering the workforce, RM3,000-RM5,000 for working adults, RM5,000-RM10,000 and even RM20,000 for people with money overseas.