Lack of fi­nan­cial lit­er­acy be­hind Malaysians’ money woes

The Sun (Malaysia) - - SUNBIZ -

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.

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