Exclusive Interview - Malaysian Financial Planning Council

Transcription

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CONTENTS
06
Exclusive Interview
32
Money Management
Minister of Higher Education
Learn the Secret of the Rich:
Create Your Wealth
Mr. Tan Choon Kiang
10
A Moment with MFPC President
RFP, MSc.FP, FChFP
Crystal Strategic Planners Bhd
16
Special Interview
Y.B.Dato’ Seri Mohamed Khaled Nordin
Mr. Kee Wah Soong
Y.Bhg. Dato’ Dr. Nik Ramlah Mahmood
34
Managing Director and Executive Director of Enforcement
Securities Commission
20
RFP, FChFP, Master of Sciences in Financial
Planning, DBA
Professional Education for a Profession
SK Samy
Walk The Talk
Creating Value-Added Services in Growing
Financial Planning Practices (4Qs Thought)
Mr. Lee Koh Yung
38
40
24
MFPC 1st Advisory Board Meeting
Launching Ceremony - 21 August 2008
1-day Affiliate RFP Certification Programme for the
Deans & Lecturers
Shariah RFP & Affiliate Shariah RFP Programme
New Edition of Course Material for RFP & Affiliate RFP
Programme
27
Are You Ready to Charge a Fee?
En. Nordin Manan
Tax Planning
2009 Budget Commentary
Mr. KK Chow
RFP, CA(M), FCCA, FTII
44
MFPC Activities
Estate Planning
RFP, CFP, CA [M]
RFP
Oscar Wealth Advisory Sdn. Bhd.
24
26
28
The Impact of Rate of Return on
Retirement Fund
Dr. Chai Kon Lim
MFPC Member’s Sharing
RFP
Deputy President, MFPC
22
Retirement Planning
Investment Planning
Online Unit Trust : Threat or
Opportunity?
En. Fadzli Anas
CEO of Philip Mutual Bhd
48
49
30
MFPC Puzzle
iFast
Three Reasons for Investing
in Malaysia
Editor’s Note
Dear Readers,
Looking Forward to a Better Year
How will 2008 be remembered for? The year
of political tsunami? Financial market turmoil?
Rising roti canai prices? The continuing oil
price yo-yo? Hillside tragedies? For many,
these will be most remembered and will
set the background for 2009. But for MFPC
there are no bad times in 2008.
2008 started on the upbeat. After the launching of the
undergraduates workshop in December 2007, first half of 2008 is
filled with workshop activities around the country. The political
happenings and the increase in roti canai prices do not stop
the cheery activities of MFPC. In May, MFPC Secretariat moved
to new spacious office; in August the Affiliate RFP certification
programme was offered to university deans and lecturers. At
the same time MFPC celebrated the birth of Shariah RFP and
Affiliate Shariah RFP new credentials for financial planners.
Towards the end of the year new edition of RFP modules were
made available.
The global financial crisis that brews for a while started to show
effect towards the end of 2008. With large financial institutions
collapsing and governments had to come up with rescue
packages, it gave a slight chill to the planners bones. With all
the negative financial news dominating the headlines there are
planners who are distracted and wait longer before going to
the market. Our only advice is there is no better time to meet
customers than now. Not only that not all sectors of the economy
are directly affected by the financial meltdown, our own business
has to move forward. Knowing also that market will be more
pragmatic and cautious in their spending, getting started earlier
in this new landscape provides us with upper advantage.
The year 2008 is dedicated to education. The MFPC workshop on
financial planning is a national program to increase awareness
of the importance of financial planning as a culture and career
choice. The Ministry of Higher Education has been in full support
of the initiatives and in this issue we feature an exclusive interview
with Y.B. DatoÊSeri Mohamed Khaled bin Nordin, Minister of
Higher Education who shared his thoughts on developing the
new generation of graduates equi pped with tools on financial
planning.
The Securities Commission (SC) has always of the view that
financial planners play a complementary role in the capital
market. Planners help broaden consumer awareness of the
different products and strategic choices available to them. To
learn more on this aspect, we have featured a special interview
session with Y.Bhg. Dato Dr.Nik Ramlah Mahmood, Managing
Director and Executive Director of Enforcement, Securities
Commission.
Finally, bad times are always remembered better but we should
cherish our achievements. 2008 is a great year, but 2009 looks
especially better if we have learnt. Perhaps, we can declare
2008 as a learning year. In the coming issues we will bring to
you more perspectives on the year ahead with more thoughtprovoking articles and ideas.
We wish you happy and healthy new year. Gong Xi Fa Cai!
Financial 1st
Editorial Board
Members
Editor-In-Chief Mr. Mohd. Taipor Suhadah
Deputy Editor-In-Chief Mr. Lim Yuen Seong
Board Members Mr. Joseph Anthony Illingworth
Mr. Girish Kumar
Ms. Ann Margaret
Mr. KR Raju
Mr. Terence Cheong
Managing Editor Ms. Chung Kar Yin
Deputy Editor Mr. Zekri Ghazali
Production & Ms. K. Kogilavany
Marketing Ms. Chee Pei Ling
Design Adstream Design Sdn. Bhd.
(270405-V)
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Desa Tun Razak, Cheras,
56100 Kuala Lumpur, Malaysia.
Publisher Malaysian Financial Planning Council
(0402-04-5)
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Jalan Raja Laut, 50350 Kuala Lumpur
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Feedback?
We welcome your comments and
views on our Financial 1st towards
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feedback may be published in our
future issues. Kindly forward your letter
by email to [email protected] or
postal as below address:
Malaysian Financial Planning Council
(0402-04-5)
Editor-in-Chief
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th
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Lumpur.
06
Exclusive Interview
Y. B. Dato’ Seri Mohamed Khaled Nordin
1: First of all we would like to thank you for your acceptance to be one of
the Committee Member of Malaysian Financial Planning Council (MFPC)
Advisory Board. Perhaps you can share with the readers on how you feel
and also the respond from the Ministry of Higher Education Malaysia
towards Malaysian Financial Planning Council (MFPC)?
Financial planning is now an emerging profession, and with this, the MOHE
would certainly like to play a supportive role in helping MFPC achieve its
objectives in respect of developing the profession.
2: As our Minister of Higher Education and also MFPC
Advisory Board Member, what would be your main
perspective towards the nature of MFPC mission and
vision in achieving to be the umbrella in providing national
professional financial planning designations?
In all professions, there will always be a central body
formed to champion their respective cause and to provide
an interchange where the consumers, professionals and the
regulators can use as a platform to exchange information,
get feedback and to help the trade. Being a wholly Malaysian
formed body, supported by some of the best financial
Certainly, it would be our pride to promote the
professionals in around, I am of the opinion that these
local designations above all others, provided of
combination of factors, make the MFPC the most suited course, the MFPC can prove to government that
organization to play the role of an umbrella body to help all indeed its courses leading to these designations
the stakeholders achieve their respective objectives, and in can match the standards of the similar imported
the process fulfilling the mission and vision of MFPC.
designations. After all, it is also the goal of the
government to help the country excel in the area
3: MFPC is competitively promoting its professional of education and to help develop its local courses
designations namely Affiliate RFP and RFP (Registered to match the best offered by the international
Financial Planner). All designations from MFPC are
community.
nationally endorsed by Central Bank of Malaysia,
Securities Commission and also by your respective
4: MFPC has started such efforts in getting the
Ministry of Higher Education. How far do you think that
attention of our local universities since last year
our national professional designations and certifications
and your respective Ministry of Higher Education
in financial planning should be prioritized compared to
has also endorsed our professional RFP Module
foreign designations?
1 – Fundamentals of Financial Planning as
Financial 1st January 2009
07
Exclusive Interview
to be an elective paper in the
universities. What would be your
advices to our local universities in
this respect?
Help to provide research support
in all areas concerning financial
planning and to share any such
developments and results with the
professionals of MFPC. The whole
idea is to achieve a harmonious
and beneficial blend between the
efforts of the academia and the
practitioners for the benefit of the
public. Ultimately, this will to help
develop the country’s knowledge
repository in the area of financial
planning and bring to fruition the
idea of financial planning as a fullfledge profession.
5. Graduates who have a degree
qualification
coupled
with
professional designation such
as RFP are more marketable and
have an advantage in employment
opportunities. What is Dato’s
opinion?
AA degree will provide a graduate with
broad knowledge of his field of study,
but as the finance industry plays a critical
part in the development of the nation,
and for it to move in that direction,
there will be a great need for further
training in this area. The result of this
demand for better man power trained in
finance, will automatically mean there
will be vast career opportunities for
those who are professionally trained. It
is in this context that I would strongly
encourage those aspiring finance-based
graduates to augment their degree with
a professional designation such as the
RFP.
Shariah RFP Launching Ceremony on 21st August 2008
6: How would you describe the interest and support of Ministry of
Higher Education in supporting the local universities to incorporating such
professional programs for our undergraduates?
In line with what was mentioned earlier, it is to the nation’s benefit that the
MOHE promotes and encourage our graduates to enhance their knowledge
and specialty through the process of earning a professional qualification as an
additional to their degree.
A Moment to Commemorate
08
Exclusive Interview
7: Is there any data of research indicated that Business
Administration Management, Finance, Marketing and
all other related courses are in high demand among
the graduates?
8: What is your best advice to Malaysian Financial
Planning Council (MFPC) and its members in
promoting RFP designation as a preferred professional
designation in Malaysia?
In a developing country such as ours, it would be normal
that Malaysia will require expertise in all areas concerning
business. Even without the support of detailed statistics,
it would not be far wrong to assume that education is
the common denominator of all industrial developments.
In fact, if you consider the backbone businesses of the
economy are the SMEs, it is imperative that sufficient
resources pump into the market to help develop cuttingedge expertise and competency to support the growth of
these businesses for the future.
Continue to work with all the government agencies,
including the MOHE, to promote and develop your
programmes and professional designations.
A Moment with the Guest on 21st August 2008
09
Exclusive Interview
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of the year 2007
10
Mr. Kee Wah Soong,
President, Malaysian Financial Planning Council
(MFPC)
Dr.Heazar bin Ismail
Pegawai Khas Dato’ Seri in attendance for
Y.B. Dato’ Seri Mohamed Khaled bin Nordin,
Mr.Lim Eng Leong
Principal Private Secretary in attendance
for Y.B. Dato’ Liow Tiong Lai, Minister of
Health
st
MFPC has conducted its 1 Advisory Board
Meeting on 21 August 2008. We appreciate
if Mr. Kee could up-date us on strategic
achievement of the meeting.
MFPC has successfully conducted its first
Advisory Board Meeting on 21 August 2008
at Securities Commissions. Our sincere
appreciation to Y.B. Dato’ Mustapa bin
Mohamed, Minister of Agriculture and AgroBased Industry for chairing the meeting.
Indeed it was a solid one and half hour
productive meeting. We are also extremely
grateful to have the members of advisory board
members and their senior representatives
to join us in the Advisory Board meeting.
Meeting participants included:
Y.B. Dato’ Mustapa Bin, Mohamed –
Meeting Chairman
Minister of Agriculture and Agro-Based
Industry
Y.Bhg. Tan Sri Dato’ Hamad Kama Piah
bin Che Othman
President and Group Chief Executive Officer
of Permodalan Nasional Berhad
Y.Bhg. Dato’ Sri Abdul Hamidy bin Abdul
Hafiz
Chairman of the Association of Banks in
Malaysia (ABM)
Mr.Goh Ching Yin
Executive Director, Strategy & Development
representing Y.Bhg.Dato’ Dr. Nik Ramlah
binti Nik Mahmood, Managing Director
and Executive Director, Enforcement of
Datin Mokhzidah Mokhtar
Deputy Director of Consumer & Market
Conduct representing Y.Bhg.Dato’ Mohd
Razif bin Abdul Kadir, Deputy Governor of
Bank Negara Malaysia
Ms.Carol Chew
PA in attendance for Y.B. Dato’ Dr. Ng
Yen Yen, Minister of Women, Family and
Community Development.
We are happy to report that the Advisory
Board has deliberated thoroughly on
two main issues.Firstly, the effective
implementation of RFP and Shariah RFP
to the universities; and secondly, the
rational approach of the formation of SelfRegulatory organization for the financial
planning industry in Malaysia.
The Advisory Board has endorsed and
encouraged the National Council’s
continuous
efforts
in
promoting
Financial Planning education to all the
undergraduates nationwide. With the
Advisory’s encouragement and commitment
to promote the financial planning education
in Malaysia, we shall work rigorously to
introducing our Module 1, Fundamentals in
Financial Planning as an elective paper in the
university programmes.
Just as what you have read from Dato’ Seri
Khaled’s interview message, it would be our
pride to promote our local RFP programme
above all others and for the MFPC to prove
to the Ministry of Higher Education that the
RFP progarmme can match the international
standards! With this, obviously we are
committed to play our role at MFPC, and we
shall not hesitate to promote the RFP and
Shariah RFP programmes as the preferred
professional progarmmes among the
undergraduates!
In line with the development of e-learning
channel as one of the mediums to gain
extensive knowledge at the higher education
institutions; we are keen to introduce the RFP
modules as e-learning subjects at the university
level. We welcome constructive feedback
and further discussion on this area from our
Members and interested universities.
Apart from providing Financial Planning
knowledge to our young generation such
as the undergraduates, the National Council
will ensure the financial planning education
and trainings will also be provided for the
practitioners in the industry such as bank
officers, insurance agents and unit trust
consultants etc. The Shariah RFP Programme
will serve as an enhancement programme
for all our RFPs and for those who are keen
to develop and acquire new knowledge and
skill in Shariah Financial Planning.
11
Faculty of INCEIF, and Datuk Ranjit Ajit
Singh, Managing Director of Securities
Commission for attending this memorable
event and I would like thank all the MFPC
Members, Deans, Professors and Lecturers
from the 27 universities and polytechnics
who had turned up for the launching
ceremony.
gather practical orientated feedbacks from
the practitioners in the field. We have 28
participants in this Pilot Class. Please allow
me to take this opportunity to express my
sincere appreciation to the National Council
Members and Board Members; all the Pilot
Class participants for their enthusiasm and
kind support in making this Pilot Class a
success. I personally learn a lot from the
lecturers as well as my peer in the class.
As for the formation of a SRO for the Financial
Planning industry, the Advisory Board has
endorsed the National Council’s proposal
to bring the related decision makers of the
associations into formation of the SRO. It is
noted that the SRO will serve an important
purpose to coordinate the development of
the financial planning activities in Malaysia.
The National Council was entrusted to
work together with the regulators and
industry associations to ensure appropriate
framework and funding issues shall be
addressed. This exercise will require due
diligence and cooperativeness from all
parties involved.
At MFPC structure, we have the unique
situation where a few associations and
institutions together with individual
members have form the National Council.
We shall therefore ensure consensus and
agreement must be attained within the MFPC
to facilitate productive meetings with other
players in the financial planning industry in
the future.
Mr.Kee, we have attended the grand
Launching Ceremony on 21 August
2008 and there were a few major events
announced on that day. Could you please
highlight these events to our readers?
First of all, on behalf of the MFPC National
Council, I would like to thank Y.B. Dato’ Seri
Mohamed Khaled bin Nordin, Minister of
Higher Education for gracing the Launching
Ceremony of the three combo events on 21
August 2008 at Securities Commission. Y.B.
Dato’ Seri Mohamed Khaled has launched:
Shariah RFP & Affiliate Shariah RFP
Programme
New Edition of Course Material for RFP
& Affiliate RFP Programme
1 - day Affiliate RFP Certification
Programme for the Deans & Lecturers
In conjuction with that, my sincere
appreciation to Datuk Syed Othman
Alhabshi, Chief Academic Officer/Dean of
Shariah RFP Programme
YB Dato’ Seri Mohamed Khaled Bin Nordin
launched this new professional programme –
Shariah RFP on 21 August 2008 at Securities
Commissions. It is our hope that with this
Launching Ceremony we have motivated all
our Members and other new associates in
the industry to pay attention to the Shariah
based businesses and financial planning
services. At the same time, we would like
to encourage more non - Muslims to worm
up and participate actively in the Shariah
compliance Financial Planning business.
MFPC has proactively developed a new
practical professional programme to our
targeted market; the Shariah RFP is for
our practitioners to equip themselves with
Takaful and Islamic financial planning
principles and knowledge.
To make it a successful class for all
experienced CEOs and practitioners in the
industry, the lecturers appointed must have
been demonstrated tremendous knowledge
and skills in these Shariah Finnacial Planning
subject matters. My utmost appreciation
goes to the committed professors and
lectures as below:
Datuk Dr. Syed Othman Alhabshi, Chief
Academic Officer of INCEIF
Assoc. Prof. Dr. Shafaai Bin Musa, Executive
Director, International Islamic University
Malaysia
Dato Dr. Kamaruddin, UKM
Dr. Zurina Shafii, Senior lecturer, USIM
Pn. Adibah Abdul Wahab, Head of
Department, Lembaga Zakat Selangor
En. Nordin Manan, RFP
En. Ezamshah Ismail, RFP
Dear RFPs,
We will invite your participation soon; we
have tentatively scheduled the Shariah RFP
classes to be opened to our RFPs by 1st
quarter of 2009!
New Edition of Course Material for RFP
Programme
Dear all Students,
At this juncture, we are pleased to report that
we have initiated the Shariah RFP Pilot Class
on 22 Oct 2008. The Pilot Class will serve a
very important purpose for the Certification
& CPD Board and Examination Board to
Indeed, I have a very good new to you. We
would like to inform you that the new edition
of the RFP text materials were ready for
use!
We have taken initiatives to up-date, up-grade
and enhance our RFP texts continuously. Over
the last 12 months, we have focused on this
revision exercise. We have a team of 11 writers
and editors and Task Force Committees
worked on this project.
Now, we are happy to have completed a
thorough revision exercise of all 6 modules
of course material for the RFP programme.
The texts were up-dated and revised to
ensure professional and consistent approach
from one module to another. Texts are now
enhanced with samples and illustrations
for easy reference and practice. With the
expertise and skills in providing this new
set of revised text materials, we hope more
Students will be motivated to complete their
RFP Programme promptly; and more new
entrants will be nurtured to our financial
planning industry!
We have considered this action as our
responsibility and duty to ensure that the RFP
Programme is offered to the practitioners
with high quality and professional standard.
We are confidence and ambitious that RFP
designation can and will be exported to the
regional countries that will bring Malaysian
proud in the near future!
1 - day Affiliate RFP Certification
Programme for the Deans & Lecturers
I am happy to inform that MFPC has make
another miles stone to facilitate yet another
quality certification programme for 120
enthusiastic learners, the Deans of Faculties,
Head of Schools, Professors and Lecturers
from the 27 universities and polytechnics in
Malaysia.
The 1- Day Certification Programme was
a dynamic response of MFPC to blend
the experience from the diverse needs
of different types of professionals within
the financial industry and the academic
professionals who have been dedicate and
will do more to propagate the financial
planning education especially to the young
generation in Malaysia. The universities and
polytechnics are the two key areas which
MFPC would like to work closely.
12
of Pheim Unit Trusts Berhad
2. Wan Zamri Wan Zain, Chief Executive
Officer, AIA Takaful International
Berhad
3. Kee Wah Soong, Executive Director of
Premier Investment Management Sdn
Bhd
4. Muhammad Fikri Bin Mohamad Rawi,
Director of Business Development,
CIMB Aviva Assurance Berhad
5. Clement Heng, General Manager, Agency
Sales and Training, AmAssurance
Berhad
The Affiliate RFP designation serves as a
mechanism to promote new entrants into
the financial planning industry and they
could well be up-graded to a fully qualified
Registered Financial Planner (RFP) who can
be granted a license to conduct financial
planning advisory services to the public
at large. Therefore MFPC been selective
in gathering our participants for this
Certification Programme. All the participants
are nominated by the Vice Chancellors of the
universities and they are at least with Master
Degree qualification with two years of
working experience. MFPC will be awarding
the “Affiliate RFP” Designation for those
lecturers have attended a full day programme
, completed the MCQ assessment on the
day itself and submitted their take home
assignment (5 short questions) before 30
November 2008.
Upon completion of the Certification
Programme, we are certain that Deans and
Lectures are given the insights of the financial
planning profession and the industry; and
later to apply some of the financial planning
knowledge and skills specified in the RFP
Module 1 - Fundamentals of Financial
Planning and M6 - Retirement Planning.
On behalf of the MFPC National Council,
we applaud with lecturers’ commitment
and diligence in continuous up-grading
themselves with financial planning
knowledge and skills.
I must also mentioned here that we were
very happy to have experienced practitioners
and outstanding industry product providers
who have formed as panel of speakers and
presented their view points in their capacity
as practice professions as well as service
providers in the industry. There were:
1. Phua Lee Kerk, Chief Executive Officer
Our sincere appreciation from MFPC!
Shariah Financial Planning Awareness
Programme
In continuation with MFPC’s mission
to promote financial planning to all
Malaysians, we are excited to announce
that this year MFPC is caring out another
project with Polytechnics & Universities all
over Malaysia. For that, we would like to take
this opportunity to express our gratitude to
Y.B.Dato’ Seri Mohamed Khaled bin Nordin
and Ministry of Higher Education (MOHE) for
approving our proposal on Shariah Financial
Planning Awareness Programme for 10,000
undergraduates from the 20 polytechnics.
We believe via this Shariah Financial Planning
Awareness Programme we would be able to
provide an understanding of the influence
of Shariah in a business context i.e. Islamic
Finance and Takaful (Islamic Insurance)
industries and provide opportunities for the
undergraduates to explore potential career
in Islamic Financial Industry.
As for our Members, I would like to take this
opportunity to invite you for the Launching
Ceremony of Shariah Financial Planning
Awareness Programme which tentatively
scheduled to be held on 7 March 2008, 9am
at Auditorium Parcel E, Putrajaya (to be
confirmed).
With that note, I wish everyone a Happy New
Year and our sincere appreciation to all our
corporate and individual members for their
continuous support in developing the financial
planning industry to greater heights.
MFPC Financial Planning Workshop for Public & Practitioners
13
27 - 28 August 2008
INTAN Workshop
Workshop Updates
Date
27-Aug-08
Wednesday
28-Aug-08
Thursday
30-Oct-08
Thursday
Total Workshops = 42
Venue
INTAN
Bukit Kiara
Part 1
Pax
55
INTAN
Bukit Kiara
Part 2
55
Ipoh
Part 2
Total Participants = 2232
Language
Bilingual
Malay / English
Lecturer
Javern Lim
Nordin Manan
Bilingual
Malay / English
Phua Lee Kerk
Kee Wah Soong
50
English
Allan Yap
Anuar Shuib
Time
Morning
9am-1pm
Afternoon
2pm-5pm
Morning
9am-1pm
Afternoon
2pm-5pm
Morning
9am-1pm
Afternoon
2pm-5pm
Chapter
1, 2 & 5
9, 10 & 11
6, 7 &8
3&4
6,7 & 8
9,10 & 11
* Certificate of Completion
shall be presented to the
participant
* 6.5 CPD hours will be
awarded to the participant
This workshop series is an ongoing project. For future workshop
schedule please call:
LLL - Ms. Mavis Tan 03-2161 8044
MII - Ms. Puteri 03-2087 8882
MFPC - Ms. Kogila 03-2693 1900
NAMLIFA - Ms. Yati 03-3281 3167
PNB-MFPC 109 Financial Planning Seminar
Sept 08
DATE
3-Sep-08
5-Sep-08
6-Sep-08
7-Sep-08
10-Sep-08
14-Sep-08
17-Sep-08
21-Sep-08
22-Sep-08
VENUE
Putra Palace Kangar, Perlis
Dewan Kolej Jururawat Masyarakat Tawau
East Wood Valley Golf & Country Club, Miri
Juita Premier Hotel, Kota Bharu
Universiti Sains Malaysia
Hotel Grand Continental, Kuala Terengganu
Dewan Serbaguna Majlis Perbandaran Padawan
Dayak Association Miri, Ruai Francis loke
Kolej Komuniti Masjid Tanah
LANGUAGE
Malay
Malay
Bilingual Malay/ English
Malay
Malay
Malay
Malay
Malay
Lectures (MFPC)
Thum Keng Pong
Poedjo Soesilotomo
Ee Guan Teck
Sunthara Segar
Thum Keng Pong
Sunthara Segar
Ee Guan Teck
Chong Kin Fatt
Chu Jia Yau
Oct 08
DATE
1 Oct 2008
2 Oct 2008
8 Oct 2008
12 Oct 2008
16 Oct 2008
21 Oct 2008
22 Oct 2008
24 Oct 2008
30 Oct 2008
31 Oct 2008
VENUE
Dewan Serbaguna Senadin, Senadin Commercial Centre Park, Miri
Dewan MEC, Bukit kanada, Lot 3, Blok MCLD, 98000 Miri
Johor Bharu, Johor
Dewan Wau 1, Grand Riverview Hotel, Kota Bharu, kelantan
Butterworth, Penang
Dewan bandaraya Kuching Utara
Kangar, Perlis
Numonyx Sdn Bhd Muar
Shah Alam,Selangor
Kota Kinabalu, Sabah
LANGUAGE
Malay
Malay
Malay
Malay
Lectures (MFPC)
Chong Kin Fatt
Chong Kin Fatt
Ho Kim Fa
Tee Pong Meng
Thum Keng Pong
Ee Guan Teck
Lim Poh Ho
Ho Kim Fa
Nordin Manan
Poedjo Soesilotomo
Nov 08
DATE
4-Nov-08
5-Nov-08
10-Nov-08
14-Nov-08
18-Nov-08
19-Nov-08
21-Nov-08
22-Nov-08
24-Nov-08
25-Nov-08
26-Nov-08
VENUE
Heritage Hotel, Ipoh, Perak
Lawas, Sarawak
Avillion Legacy Melaka
Kangar, Perlis
Kota Kinabalu, Sabah
Shah Alam
Sandakan, Sabah
MS Garden Hotel, Kuantan
Alor Setar, Kedah
Seremban, Negeri Sembilan
Sri Aman, Sarawak
LANGUAGE
Malay
Malay
Malay
Malay
Malay
Malay
Lectures (MFPC)
Saseetharan
Chong Kin Fatt
Chu Jia Yau
Lim Poh Ho
Poedjo Soesilotomo
Roadzman
Poedjo Soesilotomo
Rejinald Yoganathan
Lim Poh Ho
Chu Jia Yau
Ee Guan Teck
14
Financial Planning Workshop for Undergraduates
25 - 26 September 2008
Financial Planning Workshop for
UTAR Undergraduates
18 - 19 October 2008
Financial Planning Workshop for
Workshop Updates
Date
25-Sep-08
Thursday
26-Sep-08
Friday
18-Oct-08
Saturday
19-Oct-08
Sunday
Total Workshops = 24
Venue
UTAR, PJ
13, Jln 13/6
46200
Petaling Jaya
Part 1
Pax
110
UTAR, PJ
13, Jln 13/6
46200
Petaling Jaya
Part 2
110
USIM
Nilai
Part 1
90
USIM
Nilai
Part 2
90
USIM Undergraduates
Total Participants = 2592
Language
English
English
Lecturer
Ho Tsok Shien
Time
Morning
9am-1pm
Chapter
1,2 & 5
Lawrence Seow
Afternoon
2pm-5pm
3&4
Teng Luen Foong
Morning
9am-1pm
Afternoon
2pm-5pm
6,7 & 8
Anuar Shuib
English
English
9,10 & 11
Ezamshah Ismail
Morning
9am-1pm
1,2&5
Chu Jia Yau
Afternoon
2pm-5pm
3&4
Sunthara
Morning
9am-1pm
Afternoon
2pm-5pm
6,7 & 8
Anuar Shuib
9,10 &11
16
Special Interview
Y.Bhg. Dato’ Dr. Nik Ramlah Mahmood
Managing Director and Executive Director of Enforcement
1. What has the SC done to promote
financial planning in Malaysia in
recent years?
The Securities Commission (SC) has
been active in the development and
promotion of the financial planning
industry since 2001, in line with
recommendation 106 of the Capital
Market Masterplan. As financial
planning is an important segment of
the capital market, the SC amended
the Securities Industry Act 1983 in
2004 to require individuals who call
themselves financial planners or
offer financial planning services to
be licensed as Investment Advisors.
The importance of financial planning
is further evidenced in the Capital
Markets and Services Act 2007
(CMSA), where financial planning
is now recognised as a distinct
regulated activity and no longer a
subset of the “investment advice”
licence.
The SC also worked together with
the Federation of Malaysian Unit
Trust Managers (FMUTM) and the
financial planning associations to
develop a platform where financial
planners can distribute multiple
unit trust products. FMUTM issued
the Guidelines for Registration of
Corporate Unit Trust Advisers for
the Marketing and Distribution
of Unit Trusts (CUTA Guidelines)
on 11 October 2007. The SC also
organised an industry consultation
on the proposed mutual recognition
framework for financial planners
and financial advisers late last
year. Feedback from this industry
consultation was helpful in
developing a practical mutual
recognition framework with Bank
Negara Malaysia (BNM) which is
capable of meeting the industry’s
needs. As you may be aware, the
licensing requirements for SClicensed financial planners and
BNM-licensed financial advisers
were streamlined late last year.
This year, the SC has continued
with our efforts to promote the
financial planning industry and
encourage greater participation in
the industry. These efforts include
monitoring the take-up rate of the
initiative to allow financial planners
to broaden their activities through
acting as Corporate Unit Trust
Advisers (CUTA), and collaborating
with BNM to streamline operational
and regulatory issues for financial
planners and financial advisers
to minimise if not eliminate, gaps
or overlaps in the exercise of our
respective regulatory functions.
In our developmental efforts,
the SC will continue to ensure
that measures are put in place to
enhance the skills, professionalism
and quality of service of financial
planners.
With open channels of communication
between the SC and other regulators
as well as the industry associations,
we will be able to work together to
minimise regulatory burden and
compliance costs for the industry,
and enhance the professionalism
and image of the industry.
2. Following the coming into force of
the Capital Markets and Services
Act 2007 (CMSA) late last year,
how will this Act benefit financial
planners specifically and what
impact will it have towards
Malaysians?
In addition to consolidating the
securities, futures and fundraising
laws into a single legislation, the
CMSA introduced new concepts
like the single licensing regime
and framework for recognition
and oversight of self-regulatory
organisations, whilst strengthening
the investor protection framework.
As mentioned previously, the CMSA
now recognises financial planning
as a distinct regulated activity,
and practitioners will be given a
Capital Markets Services licence
for the regulated activity of financial
planning. The CMSA also set the
legal basis for financial planners to
deal in unit trust products. Prior to
this, financial planners could not
become a CUTA as the financial
planning licence only permits
advisory services. Under the CMSA’s
single licensing regime, licensed
financial planners who intend to
distribute unit trust products, may
apply to add the regulated activity
of dealing in unit trust products or
“restricted” dealing to the regulated
activity of financial planning under a
single licence.
Financial planners interested in
distributing unit trust products
must incorporate their business as a
company with a paid up capital and
shareholders fund of RM100,000.
These financial planners must
also obtain professional indemnity
insurance of at least RM200,000,
appoint a head of regulated activity
for dealing and have at least two
representatives, inclusive of one
director, who are licensed to carry
out financial planning activities and
registered with FMUTM. The financial
planning company must also register
with FMUTM pursuant to the CUTA
Guidelines.
17
Special Interview
Previously, investors would have to
deal with several parties to obtain
financial planning advice and invest
in various unit trust products. With
the introduction of the new licensing
regime and CUTA, investors now
only need to deal with a financial
planner to obtain financial planning
advice and purchase suitable unit
trust products from a variety of unit
trust providers pursuant to their
financial plan.
3. Effective 11 October 2007, financial
planners with the CMS Licence are
eligible to apply to register with the
Federation of Malaysian Unit Trust
Managers (FMUTM) as Corporate
Unit Trust Advisors (CUTA).
(i) We would appreciate if Dato’
could further brief us on the
rational behind this new category of
service?
Consumers generally prefer to
obtain advice and financial products
from a single source, whether they
are purchasing equities, unit trust
products or insurance products.
However, due to the limitations in
the licence, financial planners were
unable to fulfil consumer demand to
provide their clients with a financial
plan as well as financial products.
To put it in financial planning
terms – they weren’t able to assist
their clients in implementing their
financial plans. The SC has found
that even in jurisdictions where the
financial planning industry is more
established, for example Australia,
business models include those
that sell financial products with or
without receiving commissions
from the product manufacturer.
Recognising this, the SC worked
closely with FMUTM to develop a
platform where financial planners
can provide both a financial plan
and sell unit trust products that
are within the purview of the plan.
To ensure that the quality of advice
is not compromised, financial
planners must be licensed by the
SC and registered with FMUTM, be
able to provide choice of products
to their clients, and have sufficient
resources, expertise and policies
to market unit trust products and
prevent conflicts of interests from
arising.
(ii) How will CUTA tie in with the
licensing requirement of SC?
As mentioned earlier, the CMSA
has set the licensing regime that
provides financial planners with the
legal basis for dealing in unit trust
products, which is supplemented
by registration with FMUTM as a
CUTA. The activity of dealing differs
from advisory services with different
risks ascribed to the former. As
such, additional investor protection
safeguards have been imposed on
financial planners dealing in unit
trust products in the form of higher
entry requirements as described
earlier and registration with FMUTM.
In addition, the SC has ensured
that the entry requirements for a
financial planner and “restricted
dealer” under the CMSA and CUTA
Guidelines are similar.
As part of the SC’s plans to
promote industry regulation where
appropriate, FMUTM has been
entrusted with the oversight of
persons marketing and distributing
unit trust products, which includes
the activities of CUTAs in marketing
and distributing unit trust products.
The SC is confident that the high
professional standards of financial
planners will continue to be
maintained with the requirements
set out in the FMUTM guidelines,
FMUTM’s monitoring of compliance
with its guidelines, and monitoring
by the respective financial planning
associations with respect to
compliance with their code of ethics.
With all these safeguards in place, it
is expected that financial planners
would not deviate from their main
business of providing clients with a
comprehensive financial plan.
(iii) How would CUTA
consumers and investors?
benefit
As explained earlier, with the
introduction of CUTA, clients now
only need to deal with one trusted
advisor to obtain financial planning
advice and purchase suitable unit
trust products from a variety of unit
trust providers. Furthermore, under
section 92 of the CMSA as well as
other SC and FMUTM guidelines,
financial planners are responsible for
ensuring that the products offered to
their clients are consistent with the
financial plan that they’ve created
for their clients.
The SC hopes that enabling financial
planners to provide their clients with
a one-stop service will translate into
more professional, transparent and
cost-effective advice.
4. There’s been remarkable progress
in the Malaysian Islamic Capital
Market (ICM) r ecently.
(i) Can you describe on its status
and what is the impact on financial
planning?
Malaysia today has one of the largest
and comprehensive Islamic capital
markets in the world. The vast
majority of our listed companies,
about 85%, and 38% of outstanding
bonds are shariah-compliant. This
is complemented with an array
of innovative shariah-compliant
products such as unit trust funds,
ETFs, REITS, structured products and
derivatives. To maintain Malaysia’s
competitive edge, the SC facilitates
the development of a comprehensive
Islamic capital market that co-exists
with the conventional system to
ensure that all participants receive
the same degree of clarity, certainty
and protection.
The SC expects that consumer
awareness of and demands for
Shariah compliant products and
services will grow in tandem with
the growth of the Islamic capital
market. With enhanced awareness
18
Special Interview
of Islamic principles, products
and services, greater demand for
Shariah compliance in all aspects of
the capital market can be expected,
including in the area of financial
planning. The challenge for financial
planners will be to understand
Shariah concepts and principles and
equip themselves with knowledge
on Shariah compliant products in
order to provide a financial plan
that is Shariah compliant. Financial
planners should start preparing
themselves with the requisite
knowledge and understanding of
the Islamic capital market now.
It is not be enough to label a
product as Shariah compliant,
the planner must know and be
able to explain to investors why
the product is Shariah-compliant.
Financial planners who do not have
a comprehensive understanding of
both the conventional and Islamic
capital market will find themselves
at a disadvantage in the future.
(ii) How does the ICM help boost
employment
among
financial
planners?
The Islamic capital market offers
opportunities for financial planners
who are qualified to offer Islamic
financial planning advice to widen
their client base. Provided that
financial planners maintain high
professional and ethical standards in
ensuring that their advice is suitable
and services and products offered
are true-to-label, they will be able
to tap an underserved market that
require end-to-end Islamic products
and advice.
5. In your opinion, besides abiding by
the Code of Ethics and completing
the CPD requirement, how are
financial planners able to enhance
their professional knowledge to
benefit the public at large?
Abiding by the Code of Ethics and
Practise Standards and meeting
the SC’s Continuing Professional
Education requirements is the
minimum mandated for financial
planners to enhance their knowledge
and maintain their professional
standing.
To be a truly professional financial
planner capable of delivering
excellent services, the individual
would have to update himself on the
latest developments in the market
as well as conduct himself in a
highly ethical and honest manner,
in order to maintain confidence in
the quality of his services. He must
monitor and understand not just
local market trends but global ones
too, and keep pace with their clients’
changing investment appetite for
capital market products. Where it
is not possible to avoid a conflict
of interest with his clients, he
must provide clear and adequate
disclosure of his interest and place
his clients’ interest first.
The financial planner must also tailor
their clients’ individual financial plan
according to their clients’ needs,
goals and risk appetite.
The financial planner can enhance
his professional knowledge through
reading relevant materials and
attending relevant courses. To provide
clients with highly professional
service, the financial planning
principal should also be responsible
for enhancing their representatives’
professional
knowledge
by
establishing good training and
competency
enhancement
programmes to identify and close
gaps in their representatives’
knowledge. The principal must
also manage potential conflicts of
interest by developing robust conflict
management policies to be adhered
to by its representatives.
6. Last but not least, is there anything
you would like to add and advise
our readers?
The SC recognises the strong
need for a highly professional and
efficient financial planning industry
as financial planners are a vital link
between product providers and retail
investors as they help investors
navigate through the plethora of
financial products and information.
The SC has always been open to
industry feedback whether on a
formal or informal basis, and it has
been through such feedback that the
SC has embarked on many of our
initiatives for the financial planning
industry.
The ability of the financial planning
industry to move to the next level
would depend upon the collective
action of financial planners. As
a financial plan is very personal
to the client, to be successful the
financial planner must maintain a
close rapport with clients and show
through his track record the value
added from the advice provided. It
is very easy to destroy the personal
relationship and trust of clients,
thus financial planners must strive
to maintain high standards of
professional and ethical conduct
at all times. The financial planning
associations must also play their
part in enhancing financial planning
standards and practices, as well as
in monitoring compliance with their
code of ethics and professional
standards.
As mentioned earlier, the SC believes
that there is tremendous growth
potential for the financial planning
industry. As the nation progresses
and more Malaysians move towards
being informed investors, they will
demand and be willing to pay for
quality products and services.
BNM Article
Bermula daripada keluaran ini, kami akan memaparkan artikel berkaitan pelbagai
jenis penipuan kewangan yang perlu anda hindari. Tumpuan artikel kali ini adalah
tentang pengambilan deposit secara haram. Keluaran yang akan datang pula
PENGAMBILAN
DEPOSIT
SECARA HARAM
(SKIM CEPAT KAYA)
disusuli dengan artikel berkenaan penipuan secara elektronik, skim pelaburan
melalui Internet serta skim dagangan haram mata wang asing.
Pengambilan deposit secara haram atau skim cepat kaya menjanjikan faedah atau
keuntungan yang tinggi ke atas deposit di bawah skim ini. Pengendali sebegini
tidak mempunyai lesen yang sah untuk mengambil deposit.
Anda mungkin menerima pulangan yang dijanjikan pada permulaannya, kerana
pengendali skim ini membayar wang yang dikumpul daripada pendeposit lain
kepada anda. Walau bagaimanapun, tiada jaminan yang pengendali ini mampu
Bagaimana anda boleh membantu
mencegah skim sebegini daripada
terus beroperasi?
untuk terus membayar kadar pulangan yang tinggi, menyebabkan skim ini akhirnya
gagal dan pendeposit kehilangan wang mereka.
Apakah risiko sekiranya terlibat dengan skim cepat kaya?
Skim sebegini akan terus beroperasi
selagi masyarakat menyertai skim ini.
Sebagai pengguna yang bijak, anda
bertanggungjawab untuk melindungi
wang anda. Jangan mudah terpedaya
dengan skim-skim sebegini kerana
akhirnya anda boleh kehilangan
semuanya jika tidak berhati-hati.
Sekiranya anda mempunyai sebarang
pertanyaan mengenai skim cepat kaya,
anda boleh menghantar pertanyaan
anda kepada:
BNM TELELINK
Jabatan Komunikasi Korporat
Bank Negara Malaysia
P.O. Box 10922
50929 Kuala Lumpur
Tel: 1-300-88-LINK atau
1-300-88-5465
Faks: 03 – 2174 1515
E-mel: [email protected]
Anda boleh didakwa kerana menjalankan aktiviti skim cepat kaya mengikut
Akta Bank dan Institusi-Institusi Kewangan 1989.
Anda akan membebankan diri sendiri serta keluarga sekiranya anda
menggunakan wang simpanan anda. Terdapat mangsa yang mengeluarkan
kesemua wang simpanan atau mengambil pinjaman daripada institusi
perbankan hanya untuk menyertai skim ini.
Bagaimana untuk mengenalpasti pengendali skim cepat kaya?
Pengendali skim cepat kaya mungkin beroperasi secara individu, perkongsian
mahupun melalui syarikat dengan pendaftaran yang sah. Walau bagaimanapun,
mereka masih tidak mempunyai lesen yang sah untuk mengambil sebarang jenis
deposit daripada orang ramai.
Berikut adalah di antara ciri-ciri skim cepat kaya yang harus anda ketahui untuk
mengelakkan diri anda daripada menjadi mangsa:
Pengendali tidak mempunyai lesen yang sah di bawah Akta Bank dan InstitusiInstitusi Kewangan 1989 untuk mengambil deposit.
Pengendali berjanji membayar pulangan yang tinggi atau keuntungan di dalam
tempoh masa yang pendek, lazimnya lebih tinggi daripada apa yang ditawarkan
oleh institusi perbankan berlesen.
Pengendali menawarkan cara bayaran selain daripada secara tunai. Contohnya,
sebahagian daripada pulangan mungkin dibayar dengan kupon, barang kemas
atau barangan elektrik.
MFPC Member’s Sharing
20
SK Samy
RFP
Deputy President, MFPC
Customers have sophisticated
demands these days. They are
no longer satisfied with simple
investments. Rather than
dealing with normal agents,
they prefer to seek professional
financial planners who not only
manage their wealth but also
grow it while maintaining or
improving their lifestyle through
proper financial planning. An
educated professional financial
planners not only teaches
consumers financial planning,
but also creates excitement for
the consumers in the process.
Gone are the days where high
school certificate and some
basic selling skills were enough
for a career as an insurance
agent. To become an agent
today and stay competitive,
you need the power and the
confidence by being well
informed. Customers prefer to
work with such professionals
who can bring added value to
them.
Professional Education for a Profession
Many life insurance agents have
established their profession through
excellent standards of professional
conduct, customer service and
need based selling without any
formal professional qualifications
or certifications. In today’s world,
agents who are having professional
education,
certification
and
membership from professional
bodies are perceived as competent,
ones that follow best practices and
uphold the ethical standards of
professionals.
Life agency market has become
fiercely competitive now. Since
1996, there has been a radical
change in the life industry. Today,
many professionals like chartered
accountants
and
management
graduates are being attracted to
the financial advisory profession
and are raising the standards of the
profession. As such, it is time for the
existing agency force to undertake
professional education courses like
RFP and acquire the skills needed to
excel in this profession in the face of
expansion and competition.
On top of that, new distribution
channels like banks, and other
corporate agents, brokers, multi-level
and network marketing entities are
also emerging as strong competitors.
With the sophistication of IT system,
insurance selling is now also available
via the internet and through automated
teller machines (ATMs). Now,
since the customers are spoilt with
choices in buying insurance, they will
definitely prefer the better informed,
better equipped and professionallyconduct agents to deal with.
With this growing awareness among
the consumers, it is important that an
agent is able to demonstrate to clients
that he is competent, ethical and
trustworthy by adhering to a code of
ethics and practice standards which is
at par with the global best practices.
The question is whether the old
– fashioned, individual agent will be
able to survive the onslaught.
The answer is, it depends.
It depends on whether he is willing
and able to upgrade himself with
professional courses and training,
keep continually informed about
developments in their field and keep
his skills continuously polished up.
It helps them move from pure sales to
sales management and perhaps even
higher corporate responsibilities, Is
this possible? Certainly, more & more
sales managers like me who started
their careers as agents have acquired
professional skills and qualification
that prepared us with technical,
commercial and practical skills to
make a transit to a corporate career.
“Why should an insurance agent do a
professional course?”
21
“Greatness lies, not in doing
extraordinary things, but in doing
ordinary things extraordinarily well”
The primary aim of a person, when
he becomes an agent, is to earn a
living. Then he/she too aspires to
fulfilling his hierarchy of needs as per
Maslow’s theory. This goes all the way
from thirst, food and shelter to selfactualization as well as respectability
in society. He asks himself why he was
born. He would like to be respected
as a true professional by society like
any other profession. The question
is – “How today’s agent commanded
that respect?”
Many MDRT Producers earn much
more than a software engineer, or
similar professions, but are they
respected? Self-respect is everyone’s
requirement and this can be earned
through professional education.
Professional education to agents is
important to the insurance company.
The CEO, or the Chairman of insurance
companies do not sell insurance and
face the prospect / customers. The
brand is represented by the face
of their agents. If their agents are
unprofessional, then the customers
form negative opinion about the
company based on these fundamental
perceptions.
Through experience, we keep
learning more. Reading books will
give the knowledge in theory. Having
both knowledge and experience
will improve the agents. Hence,
Professional
Education for a
Profession
continuous education will inevitably
produce better quality professionals.
Finally, with the knowledge and skills,
having attached to professional bodies
with codes of conduct and ethics, will
produce a well-rounded professional
agent, who will has tremendous faith
and belief that what he is doing is
right.
equipped with sound knowledge in
investment, tax and Estate Planning,
which is essential tool to help
pension planning which is important
to our clients for retirement. All the
7 modules in RFP have enhanced
and increased my understanding of
financial planning.
The Malaysian Financial Planning
Agency development managers have
to play bigger role in motivating his
agency force to take up professional
development course. He can explain
to his agency force how they, through
professional development, can create
more business opportunity, hence
create more income in a longer run.
In my opinion, many agents will
buy this idea. Agents who choose
to invest their time and money to
upgrade themselves, can bridge the
gap between being good and great.
Council
Having gone through fundamental of
financial planning as a Senior Group
Sales Manager and a RFP graduate,
I am now able to understand risk
management & Insurance Planning
on a broader scale. My team and I are
that an 18 years old person with a
is
professional
a
Malaysian
based
organization
for
insurance and financial services
industry. The Registered Financial
Planners
(RFP)
programmes
conducted by MFPC signifies the twin
pillars of professionalism in financial
planning i.e. Professional Education
and Practice Excellence.
Finally, education is a continuous
process. Age should not be a hindering
factor to study. Research has shown
professional education like RFP; will
change his whole approach towards
financial service delivery in a positive
manner.
Change………and Take Charge.
Walk The Talk
22
Sean Lee
RFP
CEO, Oscar Wealth Advisory Sdn Bhd
Creating Value-Added Services
in Growing Financial Planning
Practices (4Qs Thought)
Financial planning is a BIG PUZZLE Scientific Word for normal man on the street.
Everyone knows the important of financial planning but not many follow through
due to lack of knowledge, skill and execution power. Many types of professionals
in the financial services industry such as insurance agents, unit trust consultants,
accountants or bankers are claiming to be “financial planner” or “financial advisor”
to polish up their image eventhough the use of these titles are restricted under the
regulated framework by Securities Commission and Bank Negara Malaysia.
The financial services industry has undergone major changes over the last few
decades. The types of firms includes investment banking, asset management, trust
institutional, insurance, commercial banks, takaful, securities broker, mortgage
brokers etc. Financial planning is a new, exciting and growing industry in Malaysia as Finance is an important aspect of
our life. You work so hard to earn money and therefore we are dutybound to manage our hard-earned money well. We can
manage our finances through proper financial planning process . This process is called wealth management and it involves
utilizing various financial instruments of insurance, unit trust, stock, real estate, personal banking, asset management, estate
planning, offshore planning legal resources and others investment resources to achieve our desired financial objectives.
Financial services industry is a very
competitive. As a financial service
provider, what does creating value mean
to us in our business? How do we deliver
values to our client? How can we be the
best in our practice? To enable us to grow
our business, we have to distinguish
ourselves from our competitors. This
differentiation is commonly known as our
Blue Ocean Strategy in our practices.
So what make us so different? Why are
we so special? We design life plans based
on the needs of our customers. Eventually
we create relationship and trust. We share
with our customers our experience and
knowledge. We understand the little stuff
that makes the difference. We are able to
communicate clearly without confusing
them. We integrate the big picture and
accomplish this without losing sight of
our objectives. We light up other live.
Time is money. Each of us are very
valuable economic enterprise. We are in
an era where creative ideas and energy
flow globally at the speed of light. How
do we compete in this new and faster
market place? We compete by taking
responsibility for our professional lives.
How do we take responsibility? There are
4 questions of thought (4 Qs) that we as
advisors have to address:
1.
2.
3.
4.
Who are you?
What do you do?
Whom do you serve?
How do you deliver value?
Who are you?
“Who are you?” as a common tagline in
Jacky Chan movie. You define who you
are daily. Why do you work every day?
Why are you in this business? What do
you want to be? What are your strengths
and weaknesses? Are you superior in
financial planning knowledge? Take a
look inside you and find out who you
really are. Are you the person you always
dreamed of becoming? It all starts with
how we face challenges and opportunities
on a daily basis.
You must have purpose, focus, dedication
and empathy in order to grow. Even with a
great attitude, we will still face challenges.
Remove the word “can’t, “, “wont’” and
“should” from your vocabulary. This will
ensure you are in positive position to take
action. Success only happens when you
take action. What action do you take?
You know and understand your clients’
hopes, dreams and fears. You take time
to understand them. What makes you
different from other advisors? You are
uniquely positioned to start where other
advisors stop, to ask difficult questions
and listen. You must fully understand
clients’ need instead of what you need.
Successful businesses are those that
clearly understand their client’s needs
and address them. Businesses have to
understand that their most valuable asset
is their existing clientele and make sure
that they maintain a good, and lasting
relationship with them. When the needs
of the clients are understood accurately,
appropriate changes may be done to the
business such that clients or customers
will be satisfied that they got what they
needed.
Whatever dream that you wish to
pursue, remember that you will bring
your personality to your adventure. Your
habits, your views on life, and your attitude
are the luggage you will carry with you.
Before starting out-take some time to find
out who you are.
What do you do?
Clients usually do not take their time to
be accountable for their master plan.
Why? They need a coach and preferably
a wealthy one. You help clients to map
out their financial goals and objectives.
Clients have objectives. We can starts
in the fact finder where you discover
dreams. What they really want, not what
they need. In short, the financial planning
service includes Wealth Creation, Wealth
Protection, Wealth Accumulation, Wealth
23
Preservation and Wealth Distribution.
- They implement your strategies
- They get your opinion before other
people do
- They take personal responsibility for
their actions
- They refer you to others
This selection of client process will
definitely help you in establishing a solid
and profitable business. You only meet
with and keep those clients who want to
go to the next level and will need your
coaching services.
How do you deliver value?
(is this your model / theory? If not, you
must reference)
Generally, Wealth Creation is to create
sustainable wealth or more. Wealth
Protection is to protect against the
unforeseen losses Wealth Accumulation
is to accumulate lasting wealth through
proper structures system. Wealth
Preservation is to preserve wealth and
keep it private. Wealth Distribution is to
distribute wealth as the person wishes.
So, you may have many business
opportunities if you are competent as a
wealth coach for their entire planning. One
of the opportunities you have as a wealth
coach is to advise your clients against
making mistakes common to human
behavior particularly mistakes relating to
finances such as the following:
- Failure to recognize the impact of
inflation
- Lack of tax planning strategies
Procrastination resulting in the cost of
waiting
- Ignorance of the Time Value of Money
- Inadequate protection against
unforeseen losses
- lack of understand distribution act
- Failure to use professional advisors
Having worked in the financial services
for over 16 years, I am well aware that
there are critical areas that cause clients
to worry and other areas that create
opportunities. You may Ask yourself the
following 4 questions:
- What do clients get from my company?
- What do clients get from my company
that is value add?
that they want?
that they do not want?
A person buys a product or service due to
many motivating factors. For example, it
may be due to a desire to own something,
fear of losing something, security and
protection, comfort and convenience, pride
of ownership and to satisfy their needs.
When we understand these factors and
know how to induce a need, our products
or services will definitely be successful.
Ability to Present the products or services
to motivate the client to purchase them is
therefore very important. Understanding
your client needs will be easier if you see
from the clients’ perspective. Make sure
that you provide products of quality and
lasting so that the customers will keep
coming back to you for repeat purchases.
Keep in touch with your customers by
sending them permission-based e-mails,
reminding them about your products
or services so that they will select your
products when there is a need.. Change
the quality, features of the products to
the needs of the clients will ensure that
customers or clients are satisfied. After
sales service will also go a long way in
helping retain customers, make sure that
the customer is treated well and returns
home happy. Word of mouth is the best
publicity to boost your sales as well as to
increase your credibility.
Whom do you serve?
Financial planning service is an ongoing
and challenging process due to human
behavior and economic change. In order
to ensure a profitable margin, you must
do client selection process and knowing
your client well. As establishing “Right Fit
Client” is crucial to generate good profits
and quality referral to you in future. In
describing right fit clients:
A variety of forces shape the professional
services industry – from fierce competition
and globalization to the modularization
of business processes and technology.
Clients want professional financial
planning firms to deliver cost-effective
services at value pricing value , but at the
same time want to retain high expectation
on your services as needed. So, how to
deliver value add service is crucial. First
is to understand what is it the most
important and priority to them. Second
is to understand why is important to
them. Third is to understand how would
you feel and client feel when all tasks are
executed.
To succeed in this environment,
professional financial planning firms must
continually improve their service delivery
methods to increase client value and
profitability and lower costs. This involves
implementing more efficient resourcing
and partnering processes, creatively
packaging services, and co- creating value
with clients. However, for any of these
endeavors to work, a firm must have a
foundation of hand-delivering a totally
integrated solution and a comprehensive
plan for wealth management. For the firms
that succeed, the rewards are great. They
can differentiate themselves in a crowded
marketplace, lock in loyal clients, use
internal and external resources more
profitably, and improve time to market.
In conclusion, getting through this
process in not easy but it will bring more
fruitful financial result in a longer term. As
financial planner, you must be passionate
in your career path and always put your
customer as your first priority to create
long term relationship
resulting in
profitability.
- They trust you
- They are willing to pay you
24
MFPC Activities
26 to 28 August 2008
NAMLIFA 30
th
Mega Convention at Genting Highland Convention Centre
13 September 2008
SME Financial Solutions 2008 organised by Money Compass at
Wisma Chinese Chamber, Jalan Ampang
18 September 2008
FA Seminar organized by Bank Negara Malaysia at Lanai Kijang, Kuala Lumpur
25
MFPC Activities
16 October 2008
MFPC Deeparaya Luncheon
24 – 26 October 2008
Minggu Kesedaran Kewangan 2008 at International Convention Centre,
Persada Johor, Johor Bharu.
25 October 2008 - 9 November 2008
Module 7 Class at MFPC
Money Management
32
Mr. Tan Choon Kiang
RFP, MSc.FP, FChFP
Crystal Strategic Planners Bhd
Learn the Secret of the Rich:
Create Your Wealth
on the other hand, insinuate the
idea of creating your own wealth. By
building your wealth, you will be able
to gain profit only by maintaining your
We all work to maintain our
lifestyle. Many, in fact, earn
enough to be able to sustain a
reasonably well-appointed life.
But above all, we are financially
dependant on the work we
do to determine how much
income we are able to generate.
For instance, many financial
planners, insurance and unit
trust agents earned millions of
Ringgit in commission but they
never achieve financial freedom.
I would like to define financial
freedom as a well-planned
lifestyle where one is no longer
required to work for income to
cover their expenses. Financial
freedom is attainable by having
enough passive investment
income to cover one’s expenses,
and/or a large enough “nest
egg” that can be liquidated over
time to cover one’s expenses.
In short, the key to achieving
financial freedom is to have your
money working for you.
Don’t Just Earn, Build
There is a huge distinction
between earning a living and
building wealth. First of all, the
word earn itself suggests that
you are compensated for your
service, meaning that you will
receive only as much as you
do. Concisely, if you do nothing
you will receive nothing. Build,
financial assets. The diagram below
explains a perfect progression towards
financial success.
The lifestyle of success progression
Based on this diagram, the progress
towards
financial
success
is
categorized into three stages – learning
years, earning years and yearning
years. The diagram simplifies that in
the first 10 to 15 years of our career
line, we mostly gain much more from
our earned income than we do from
passive income. During the next
stage, however, a slight increase can
be observed in earned income and
a significant increase can be seen in
passive income. It is only during the
third stage, the yearning years, that
most of us finally reap the reward of
our investments and achieve financial
success by constantly generating
sufficient passive investment income
to cover our expenses.
To further emphasise the difference
between earning a living and building
wealth, I would like to highlight here
that building wealth is more about
managing money than about making
money. As a matter of fact, wealth is
not measured by what you own - it
is measured by the degree to which
what you own can enrich your life.
For example, you may be the owner
of lavish sport cars but if that sport
cars does not give you the freedom to
achieve what you want in life, then you
are not wealthy. From my perspective,
I see wealth as an income stream for
which you don’t have to work. To be
wealthy is to have enough reliable
income to maintain your lifestyle
without having to work at all!
To come to the point, bestselling author
and businessman Robert Kiyosaki
determines wealth by “the number of
days you can survive forward if you
stop working tomorrow”. This is the
true measure of wealth – how long
one can sustain a lavish lifestyle if
he/she is suddenly unable to work to
earn any income. Unfortunately, many
people spent everything they made
as they went through life and in death
they left their families in debts even their
insurance policies cannot cover.
Take the case of Lee*, a 36 years old
insurance agent for example. His job
was to sell life insurance and he earned
good commission from it. Thanks
to his outstanding personality and
salesmanship, he was very successful
33
and earned enough to afford a lavish
lifestyle. He bought a luxurious doublestorey bungalow in Kuala Lumpur and
changed his car almost every year,
trying to impress his friends, peers and
others – even people he didn’t know
– with his successful career. Lee spent
everything he had on luxury items from
his commission, bought some term
insurance but regrettably, never had
enough to save or invest. Worse, he
lapsed some of his insurance policies
as his expenses grew more than he can
cope. Lee made an irreversible mistake
when he didn’t plan his lifestyle well. In
2003, tragedy struck and he died in a car
accident, leaving his wife, a housewife,
to cover his debts amounting more
than RM220,000 even after making
death claims of the remaining life
insurance policies. Certainly, any of
us are careful enough not to fall under
the same trap but Lee’s case is a good
reminder for us all to spend wisely and
be fully prepared of what might happen
in the future.
The Lifestyle of Success
The Lifestyle of Success vs. the
Lifestyle of Failure
The Lifestyle of Failure
The diagrams below illustrate the two
lifestyles – the lifestyle of success
and the lifestyle of failure. In the
lifestyle of success, the key is to have
a standard of living lower than our
earned income and invest the rest to
earn unearned or passive income, and
once the unearned income is equal or
more than the earned income, we can
have an option to retire, and even if we
choose to work it is because we want
to, not because we have to. Conversely,
the lifestyle of failure is indicated by
having our standard of living higher
than our earned income. In time, our
accumulated debt will reach the point
of bankruptcy where we owe more
than we can possibly earn. Hence, we
need to carefully manage our finance
from now on so that we will be able
to harvest the reward in the future and
avoid bankruptcy beforehand.
Good Debts, Bad Debts
Theoretically, debts can be seen in
two ways: destructive debts and
constructive debts. Destructive debt is
best exemplified by credit cards used
to buy things you don’t really need.
For example, it’s destructive to charge
a dinner for RM300 on your credit card
and pay 18% interest on that dinner
for months after you have digested the
meal. On the other hand, if you use your
credit card to buy a washing machine
for RM300 and can save RM15 a week
in laundry bills for the next five years,
you have used credit constructively.
Same credit card charge, different
outcomes.
Most people spend enough money on
finance charges to become millionaires
over a lifetime. The key is not what you
buy but when you buy it. Planning for
big purchases in advance helps us avoid
accumulating mounts of destructive
consumer debts. Therefore, it is largely
important for us all to understand
where our money goes by tracking
our money and developing a personal
budget. If you wish to get software that
can help you track your money and
develop a personal budget, Tan Choon
Kiang can be contacted at tanck98@pd.
jaring.my. One of the courses that I
created and conduct titled “Rich Agent,
Poor Agent” that was attended by
hundreds of sales professionals further
elaborates on this subject of creating
wealth. Throughout this course, I
elucidate in comprehensive detail what
distinguish a financially successful
practitioner from an average one and
provide guidance to lead participants
to a flourishing career.
We spend our entire life working and
trying to earn as much money as we
can but building wealth is what matters
the most as it guarantees us a better
and brighter future and at the same
time makes life easier for us in the long
run. The opportunity to learn and take
charge of your own life is in your hand.
Learn the secret of the rich - don’t
just earn, start creating your wealth
today and be prepared for a promising
tomorrow.
For details of the “Rich Agent, Poor
Agent” seminar and how you can attend
it for FREE, please log on to
www.RichAgentPoorAgent.net.
Retirement Planning
34
Dr. Chai Kon Lim
RFP, FChFP, Master of Sciences in
Financial Planning, DBA
The Impact of Rate of Return on
Retirement Fund
Table A below shows the utilization of retirement fund based on 3.5% return and
3.5% inflation rate as follows:
This paper provides a brief
discussion on the impact of
the rate of return in retirement
account for retirement funds. I will
start the discussion with a crucial
question, “If the rate of return
increases marginally, does it mean
that the retirement fund will only
have a corresponding marginal
improvement?” In answering this
question, I will demonstrate why
we need to constantly re-examine
our retirement portfolio in respect
of the rate of return. For example,
if it is really the case where a
marginal increase in the rate of
return will only produce a slight
improvement in the retirement
fund, there is really little incentive
to make changes to the retirement
portfolio since to get a higher
return generally involved taking
on investment with a higher risk.
However, if the improvement to
the fund size is very significant
with a mere marginal change in
rate, then, it would make sense
to constantly re-examine our
retirement portfolio to seek ways
to increase the rate.
Take this case. Allen who has just
retired, places RM1 million in an
account earning 3.5% per annum.
He intends to utilize the retirement
fund based on capital liquidation
approach over a 20-year period.
Assuming inflation is also at
3.5%, Allen will start with annual
retirement fund of RM50,000 per
annum, increasing at 3.5% per
annum subsequently.
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Beg. Capital
$1,000,000
$983,250
$964,103
$942,410
$918,018
$890,765
$860,479
$826,982
$790,085
$749,594
$705,299
$656,986
$604,427
$547,385
$485,608
$418,837
$346,797
$269,201
$185,749
$96,125
Annual Fund
$50,000
$51,750
$53,561
$55,436
$57,376
$59,384
$61,463
$63,614
$65,840
$68,145
$70,530
$72,998
$75,553
$78,198
$80,935
$83,767
$86,699
$89,734
$92,874
$96,125
What does that table tells us? Let
me start with some preliminary
explanations on how the tabulation
works. Look at Year 1 where the
original retirement capital was
$1,000,000 as listed in the second
column. At the beginning of Year 1,
an amount of $50,000 was withdrawn
as annual retirement income as
shown in the 3rd column. In the 4th
column, the amount after withdrawal
of $50,000 will be $950,000 (value
in column 2 – value in column3). At
3.5% as the rate of return, this will
provide a return of $33,250 (950,000
x 0.035%). The last column shows
the ending balance which is also the
sum total of $950,000 and $33,250
(value in column 2 – value in column
3 + value in column 4). The ending
balance is then carried forward to
the second year for utilization. The
process of withdrawal and income
generation is repeated in the second
year and subsequent years until
retirement capital of $1 million is
Return
$33,250
$32,603
$31,869
$31,044
$30,122
$29,098
$27,966
$26,718
$25,349
$23,851
$22,217
$20,440
$18,511
$16,422
$14,164
$11,727
$9,103
$6,281
$3,251
$0
End. Capital
$983,250
$964,103
$942,410
$918,018
$890,765
$860,479
$826,982
$790,085
$749,594
$705,299
$656,986
$604,427
$547,385
$485,608
$418,837
$346,797
$269,201
$185,749
$96,125
$0
fully utilized or liquidated at the end
of 20 years.
One should also note that the amount
of annual withdrawal in column 3
is increasing at 3.5% per annum in
order to keep pace with inflation. For
instance, the second year withdrawal
of $51,750 is 3.5% higher than the
first year withdrawal of $50,000.
Having understood the mechanics
of Table A, we shall move on to the
question I posed in the beginning
regarding the impact on the retirement
fund with a slight change in rate.
Say, if the rate of return is increased
by 1%, will it mean that the annual
retirement fund will only increase by
1%, i.e. to RM50,500 per year or will
it be some other amount for the entire
retirement phase of 20 years?
To answer the question, I have
provided the computation in Table B
below:
35
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Beg. Capital
$1,000,000
$987,840
$973,133
$955,693
$935,325
$911,822
$884,966
$854,526
$820,257
$781,900
$739,182
$691,816
$639,496
$581,901
$518,691
$449,508
$373,974
$291,688
$202,231
$105,158
Annual Fund
$54,698
$56,613
$58,594
$60,645
$62,768
$64,964
$67,238
$69,592
$72,027
$74,548
$77,157
$79,858
$82,653
$85,546
$88,540
$91,639
$94,846
$98,166
$101,602
$105,158
From the table, you can see that while
the original retirement capital of $1
million remains unchanged, the annual
retirement fund now starts at $54,698
in the first year. The ‘improved’ initial
figure increases at 3.5% in every
subsequent year. What is the impact to
the annual retirement fund in the first
year? It is close to 9.4%! If you look at
the two tables, you will note that the
figures in Table B provides an increase
of 9.4% in annual retirement fund
over those figures stated in Table A
for the whole 20-year period. Another
difference between Table A and Table
B is the rate of return which is 4.5%
in the calculation of values in the 4th
column of table B. In this example, we
have shown that 1% increase in the rate
of return in the retirement account has
provided a significant increase in the
annual retirement income for Allen.
Having demonstrated the impact a
slight marginal increase in rate can
have a significant positive impact on
the annual retirement income of the
investor, we shall now take a look at
the corresponding risk to be taken
if an attempt is made to improve the
rate. In general, a higher rate of return
Return
$42,539
$41,905
$41,154
$40,277
$39,265
$38,109
$36,798
$35,322
$33,670
$31,831
$29,791
$27,538
$25,058
$22,336
$19,357
$16,104
$12,561
$8,709
$4,528
$0
whether there are investment vehicles
that can provide this slight increase in
rate while ensuring that the increased
risk is within the tolerance of the
retiree.
Let us start with the bank deposits,
which is the most common and safest
vehicle a retiree can put their money
in. Currently, most of the bank fixed
deposits generate about 3.5% in
interest income. So, are there any
comparatively safe instruments to bank
deposits that a retiree can invest in to
get a higher rate of 1% to 1.5% per
annum? As noted in the comparison
we have made earlier, identifying such
safe instruments that can provide a
higher return will be very beneficial to
the retirees who wish to have a better
standard of living. This is especially
helpful when the current inflation rate
is at an all-time high!
End. Capital
$987,840
$973,133
$955,693
$935,325
$911,822
$884,966
$854,526
$820,257
$781,900
$739,182
$691,816
$639,496
$581,901
$518,691
$449,508
$373,974
$291,688
$202,231
$105,158
$0
in investment usually involves higher
risk. This is the main reason why most
retirees choose to place their retirement
funds in low return accounts. With the
finding that even a 1% increase in the
rate of return can generate so much
more annual retirement income for the
retiree, it is now worthwhile to explore
While there is no intention to promote
sales for any government or financial
institutions, I thought it would be
valuable to provide some examples
of such low risk but higher return
products to the readers. In this light,
some of the products with low risks in
Malaysia are as follows:
Financial Products
Current
return/ rate
Provider
Remarks
Merdeka bond
5% p.a.
Malaysia
Bank Negara
Syariah compliance
bond. Maximum amount
of RM50k per retiree.
Profit payment is payable
quarterly.
Exclusive 5s
5% p.a.
Building
Society
Malaysia
A subsidiary of EPF.
Interest is payable halfyearly.
EPF contributions
5.80% p.a. EPF
(Year 2007)
Dividends may vary from
year to year
36
Preservation Key to Wealth Management
Mr. Alvin Yap
RFP, B. Eng M.ScFP(NZ) ChLP FChFP
Principal Consultant & Managing Director of A. D. Capital
Alvin Yap, the principal consultant and managing director of A. D. Capital gave FMPC an inside look of what
he has almost single handedly directed his passion on getting people to preserve and protect their hard
earned wealth.
Alvin was an engineer by profession before embarking into the life insurance business. After 13 years in the
life insurance business, he started to refine his practice and moved into financial planning.
The following are excerpts from the interview he had recently on what A. D. Capital does to move ahead on
the FP platform.
As a financial planning practitioner, what
do you see are some of the obstacles
hindering the industry?
We have been talking to the regulatory
issues for the past five years and we are
still talking about it today as you might have
heard that participants were still voicing
out their concern on the just concluded
forum organized by Bank Negara, 18th
Oct 2008. The constraints and practical
aspect of running a firm are still a big
challenge amongst the practitioners. We,
as practitioners are subjected to numerous
uncommon and unreasonable situations to
deal with. Despite all this constraints, A. D.
Capital have decided to look ahead, pursue,
persevere and work within the framework
as an independent licensed financial planner
and adviser specializing in asset protection
and preservation for high complex wealth
individuals. We are very optimistic that
things will change as we have notice in
other part of the region.
In your opinion, what is the main thing that
needs to be done for the whole FP industry
to move forward?
Despite all the constraints the FP have been
facing, the main thing that I feel strongly
about is for the current Financial Planners
to get together and not be a fence sitter.
They must reach out to engaged with the
industry. The current FP practice model
can be quite confusing to aspiring financial
planners. At the moment, its definitions and
practices differ significantly from one firm
to another. Aspiring financial planners must
ask themselves what they are looking for in
an FP firm before joining them.
So, what do you think an aspiring financial
planners should do?
If they are starting out as interns, they must
be sure the financial planning firm they join
is offering them the right practice model.
For example, are they looking for a fee
based model, commission based model, a
combination of both or even a tied structure
model? There really is no right or wrong
answer here.
Financial planning has been misconstrued
in the marketplace as merely the “sale of
financial products” before. But we know it’s
more than financial products. So aspiring
financial planners need to decide from the
onset which practice model they want to
use or practice in. They should not be just
looking at the form, but more importantly, the
substance of these financial planning firms.
In what areas of FP work is A. D. Capital
involved in specifically?
We in A. D. Capital do a lot of work in
wealth preservation for our clients. It is
an area we know very well, and we have
helped many of our clients to preserve their
hard earned wealth for many generations.
We have helped clients who have more
than one family, who don’t have a clue in
legally protecting their assets, who have
squandering heirs and family feuds, who
have many offshore assets, who have
business succession issues, who have
nominees in other companies but do not
know what will be the best arrangement
to preserve their interests, who have
Muslim partners and do not understand
the implications of the Syariah laws on
their business upon the death of their
partner, who are worried about their heirs’
competence in managing wealth, and those
who have special children and need to know
how best to provide for them.
How do you, as an independent FP intend
to participate in the emerging financial
planning industry in Malaysia.. in terms
of positioning your services?
We are constantly reaching out to the high
net worth individuals who have complex
financial needs to educate them and
increase their awareness of the implications
of not planning for their wealth succession
and distribution.
We also have an internship programme for
aspiring financial planners. To date, we have
43 interns, and half of them are licensed
by the Securities Commission. Through
our internship programme, we pass down
our knowledge and experience we have
acquired over the years to them. We share
a proven practice model – P. A. D. Model –
with the Financial Planners designees. The
P. A. D. Model basically emphasizes wealth
preservation above wealth accumulation and
distribution. ‘P’ stands for Preservation, ‘A’
for Accumulation and ‘D’ for Distribution; in
that order.
Our goal for this internship programme
is to produce at least 100 passionate fee
based financial planners by end of the year.
In addition to the internship programme,
we also have our Professional Firm Alliance
(PFA) involving account firms, Legal firms
and Secretarial firms. These firms have
clients who fall within our target market,
and we want to work closely with them to
provide this set of clients with additional
value added services.
What do you think needs to be done to educate
prospective FP practitioners on financial
planning from the standpoint of industry
development as well as from the standpoint
of transiting their careers as merely product
pushers to financial planners?
When we talk about product pushers, we
are generally referring to the insurance
and unit trust industries. They are the
intermediaries. They are tied to a single
product manufacturer. And the tied system
has been around for many years. You can
say it is deeply rooted. They have been in
the market for more than 40 years. Change
is, therefore, quite difficult. As a result,
most stay where they are. Many have even
got their professional certifications but are
‘sitting on the fence’ for fear of moving out
of their comfort zone.
But my advice to those fence sitter is to not
be complacent and lose sight on the growth
of the financial practice. What they can do
during their transition is to balance between
products sales and being client centric
and always plan according to their clients’
financial goals and objectives.
It’s not going to be easy. That much I
know. There will be times where you will
be confronted with conflicting interests.
Since there are so many products in the
marketplace, the FP practitioner must have
the right sense of ethics as well. Always
remember to put your clients interest
first before commission. You must be
transparent at all times with your clients.
Estate Planning
38
En. Nordin Manan
RFP, CFP, CA [M]
Are You Ready to Charge a Fee?
With the Securities Commission of Malaysia now
accrediting the RFP designation as a recognized
qualification for providing financial planning advice,
the time is right for those who wish to consider the
transition to fee based advisory services.
On Your Marks, Get Set ………..Go!
-
Certainly the biggest challenge of the day will
not only be the current debate of “is the market
ready for it?” or coming to terms with defeatist
statements like “Malaysians are not willing to pay
fees for financial advice!” but rather have we, as the
financial planning community, primed ourselves to
face the task of educating our clients that advisory
work simply means a fee is due somewhere in the
equation?
[Synopsis: the writer articulates that
advisory fees are inevitable if the financial
planning industry is to advance to the next
level and the faster the practioner educates
the client on this fact the faster the industry
can progress. He also expounds the
usefulness of “The Letter of Engagement”
as a tool to help bridge the gap between the
“fee versus commissions” conundrums
and shows how a well drafted and presented
“Letter of Engagement” may help dissipate
a client’s objections to paying an advisory
fee. The writer also attempts to provide a
few tips to the intrepid financial planner on
making the transition from commissions to
fees].
To Fee or Not to Fee, that is the
Question?
So you have been in the financial planning
industry, in some form or other, for the
last fifteen [15] years, got your Registered
Financial Planner [RFP] certificate in your
back pocket, now wondering what’s all the
fuss about charging a fee.
If questions like “is it possible for me to earn
an income by spending some time giving
advisory based services to my existing
clients and prospects?” are on your mind,
then welcome to the world of fee based
financial planning advisory services.
Two things, firstly, it’s entirely your call.
Nobody is telling you things are going to
be easy. If you feel you have the maturity,
talent and above all the ability to look at the
big picture and empathize not only with the
financials but also the emotional mind set
of the prospect, then making the switch
to fee based financial planning may be the
thing for you.
Secondly, if you don’t give it a go, you will
never know, right? Not all of us are made
from the same mold or have the same
abilities. It may not work for all, but then
again, you will never know until you give
it a try!
If we ourselves are not ready, unsure, and not
pushing hard for fee compensation for time and
resources spent on advisory services, then who
will? Do you see the marketplace on its hands and
knees, with cheque in hand, saying “advice me,
advise me please, o’ wise one”? Surely not!
Fees versus Commissions
The recommended Six-Step Process in constructing
any written financial plan for the client, be it in
the discipline of estate planning, retirement,
investment, children’s education, insurance and
risk management planning, etc, invariably demands
that planner devotes a great amount of time and
resources in crafting the financial plan for his
client.
planning assignments, if any, to the financial planner
are meager and fall woefully short in compensating
him for the time he spends in data collection,
working out strategies, report writing, research,
sourcing the third party solution providers and, of
course, the inevitable endless tweaking of solutions
to meet client’s constantly changing demands.
So, when we talk about what is adequate
compensation a lot depends on the balance between
the product content, and therefore commissions,
and the advisory content of any particular case or
assignment.
Estate planning advisory services may be viewed
as being at one end of the scale [fee heavy] due to
its concentration on the wide multitude of possible
strategies, options and tools and instruments that
may be employed, and the fact that each estate
planning assignment is unique and requires unique
responses. For sure no two estate planning cases
are exactly the same!
Depending on which particular cornerstone of
the financial planning discipline you practice, be
it wealth accumulation, allocation, protection or
distribution, be aware that one shoe does not fit all,
and feel free to experiment.
Costing yourself?
Not sure how much you are worth for an hour spent
on advisory or consultation work? Try the economic
cum accounting approach and do some basic
costing to work out what you are worth.
This endless debate over fees versus commissions
does more harm than good in that it confuses not
only the players in the industry but worse still, the
very clients we depend on to have a clear view of the
industry and its machinations.
Two approaches here. One is to approach it from
the revenue angle working backwards from your
after-tax income expectations [take home pay], add
your expected expenses and overheads [taxes, staff,
office, travel, entertainment, etc, etc] then divide
that by the hours you expect to work a month and
that will give you your ballpark man-hour fee charge
to quote clients. This would be appropriate for the
better established financial planner with his own
branding and positioning in the market place.
Commissions, is it enough?
You may consider this your “upper” benchmark!
So what’s the relevance of this obvious statement to
the particular discipline of estate planning, one may
ask? We now move to the perennial debate of fees
versus commissions as a means of compensating
the financial planner. Now run your mind through the
Six-Step Process and think Step 5 implementation,
the tools and instruments to make your plan work!
The other approach let the market cost you! Trial
and error, also known as experience, will provide
the financial planner with a reliable benchmark as to
how far he can push his own valuation to the market.
This would be more for the novice financial planning
advisor feeling his way around an unknown market
place. Some even start giving free advisory services
just to get the experience of the entire six-step process.
It’s not a bad way to get the hang of things either.
The time and resources that the financial planning
practioner dedicates to this end needs to be
adequately compensated for as the old cliché goes
“time is money”!
In the estate planning context for example, Wills,
trusts, business continuity agreements, valuation
reports, inter-vivos gifting, and for the Muslim
clients Wasiats, Harta Sepencarian Declarations and
so on, all come to mind as the requisite products
and instruments the estate planner would utilize to
implement the estate plan.
But these are the purview of the lawyers, the
accountants and trustee companies, or the so
called product providers, who earn the bulk of
compensation. Commissions and payouts in estate
You may consider this your “lower” benchmark!
Using “The Letter of Engagement [LOE]”
The LOE is the principal contractual document
that binds the financial planner’s relationship with
his client. In practice the LOE usually makes its
appearance after an initial [first] meeting with the
client or after conducting a Preliminary Review
[refer below].
39
Besides setting out the standard Terms and
Conditions and Scope of Works of your assignment,
the LOE can be utilized as useful tool in negotiating a
fee for your services.
a comprehensive financial plan complete with
alternative strategies and solutions is only done
once the prospect sign on the dotted line and an
advance fee has been paid.
The LOE is traditionally presented to the client at
the second meeting and is an attempt to close the
assignment by getting the client to sign on the dotted
line. When reviewing the LOE with the prospect take
the opportunity to cover the following:
Here the objective is two-fold. One is to hot-button
the client into realizing a more comprehensive review
is necessary, for a fee and two, by charging a small
fee the planner can gauge the client’s willingness to
pay fees for decent honest advisory work.
Highlight your credentials – use this opportunity
to say a few words on your qualifications, on the
various licenses your firm may possess and
briefly mention cases you may have handled
without compromising the confidentiality ethics
to which the profession so treasures.
If the client is unwilling to even commit to such a
minor outlay in terms of fees just drop it and walk
away!
Use the Six-Step Process – attach the Six–Step
Process as a standard attachment to the LOE
and emphasize the standard of care, diligence
and time you allocate to ensuring that the clients
interests are attended to at all times.
Attach a Time-table of Activities to the LOE
– providing a best estimate of timings of
expected activities via a time-table or work-flow
analysis will give the client a further overview
of the quantum of effort put into preparing his
financial plans. Show the various constraints
and complexities that go to determine the
progress of the Client’s case.
Learn To Say No!
Probably one of the first skills the advisory based
financial planner need to learn is to say no to a client
or prospect. The art of negotiating is a difficult skill
to acquire and negotiating an advisory or consulting
fee is probably doubly hard because you are
attempting to value yourself. Your value judgment
and self esteem are at stake here and if rejection is
your Achilles heel be prepared for some bruises.
When “push” comes to “shove” there is a bottom
line in the fees that will compensate you with what
you perceive you are worth to the market. Experience
in negotiating a fee only comes through experience
in negotiating a fee, there is no short-cut!
Show Man-Hours Budgeted for his Case – break
down each activity into specific man-hours and
justify the charges for your fees. Reinforce and
cross reference this to the time-table of activities
above.
You will never find out how much you are worth
unless you take off your shoes and socks and test
those waters. When negotiations start to get into the
ridiculous zone, learn to say “no” and walk away.
You may be surprised at the new respect and light
your client or prospect may view you in.
There are many other activities, issues and items
in the LOE that you may use to justify your fees.
The ultimate objective of course is to impress the
client that your time and resources spent on his
assignment are well worth his money.
And do not be too surprised either if that prospect,
which you said “no” to, gives you a call a few years
down the road or invites you to a chat to catch up
with old times. A cold case comes alive again!
However, be careful not to clutter your LOE with too
many details. This may be achieved by relegating as
much detail as possible as attachments to the main
body of the LOE.
Note too that the LOE is a complex document
containing much more detail and data and the
author only highlights here a suggested approach
to justify charging of a fee.
Take Baby Steps via a Preliminary Review
Another useful approach is would be to encourage
a prospect to commit to a Preliminary Review for a
small fee. Here the planner undertakes to provide
a summary overview or a snap-shot of a client’s
financial situation where shortfalls or areas of
concern to the planner may be brought to the
client’s attention.
Basically a hot-buttoning exercise, data for the
Preliminary Review is collected using an abridged
or shortened Fact-Finding Questionnaire and
should take no more than a couple of hours to
produce the Preliminary Review. The Preliminary
Review technique is designed to raise questions
and concerns but not to provide strategies or
solutions to a client’s particular situation. Providing
Rome Wasn’t Built in a Day!
Don’t expect miracles. Be prepared for a fair dose
of disappointments rather a roaring successful
transition from commissions to fee based income.
There will be more “nays” than “ayes” until you are
able to hone your presentation and negotiation skills
to the requisite level of professionalism.
There are only three possible responses you can
receive from a prospective fee based client “yes”,
“no” and “maybe”. Do not give up on the “no”
and “maybe” prospects. From the estate planning
experience, nobody believes they are going to die
tomorrow, in fact most people think they are going
to live forever, so sitting down and committing to an
estate planning exercise becomes a “postponable”
activity.
However, one fine day something will trigger that
prospect’s desire to discuss what happens to his
estate upon his exit from the material world. Then
he will think of you. This same expectation must be
applied to all prospective financial planning advisory
work. It may be a failed investment, the death or
disability of a close relative, or some other event that
triggers the prospect to decide that it’s about time
he gets some sensible advice on whatever bothers
him and pay for it.
Staying Within the Law
The Capital Market Services Act, 2007 is a
comprehensive act primarily aimed at regulating the
securities industry and includes financial planning
under its ambit.
Malaysia has the distinction of being the first
country in the world to define and regulate, by an
Act of Parliament, the financial planning profession.
Schedule 2 of the Act defines financial planning as a
“regulated activity”:
“Financial planning” means analyzing the financial
circumstances of another person and providing
a plan to meet that other person’s financial needs
and objectives, including any investment plan
insecurities, whether or not a fee is charged in
relation thereto.
This definition is all encompassing and leaves little
room for misinterpretation. Financial planning
requires a license and any contravention is an
offence and shall, on conviction, be liable to a fine
not exceeding 10 million Ringgit or to imprisonment
for a term not exceeding 10 years or to both.
If you feel so inclined to move towards a fee based
revenue, then get your firm licensed or if you prefer
practicing as an individual then affiliate yourself to
a licensed firm. There are a few fully licensed firms
out there with comprehensive affiliation schemes
who are always on the look out for aspiring financial
planners willing to take the plunge into fee based
financial planning activities. Regulation whilst
creating barriers can also present opportunities; it’s
a matter of attitude!
In Conclusion
Hopefully this article clarifies some misconceptions
that the industry may have about charging a fee and
at the same time opens the boundaries and exposes
the reader to the possibilities within the realm
of financial planning to make the transition from
commissions to fees.
Above all, the writer hopes to impress the reader
that fees and commissions are not mutually
exclusive but rather a balance would have to be
attained between the two. By charging a fee you are
implying you have the knowledge and expertise to
provide advice and with professional advice comes
liability, so be protected!
Notice we have not broached the subject of
independent financial advice. That concept will be
the next level for the industry and a long, long way
off for now.
Fee base financial planning is so new that there are
literally no rules, regulations or benchmarks for
success and you are in the privileged position of
making the rules of the game as you go along. For
the traditional product dependant financial planner
heavily strapped in the confines of the commissionbased environment, do not fear there is a blue ocean
out there, so get prepared!
Some final words of wisdom, do not throw away
your product [commissions] hat in exchange for
your advisory [fees] hat but rather decide which hat
to wear for the occasion, dress well and the blue
ocean is yours to explore!
Tax Planning
40
Mr. KK Chow
RFP, CA(M), FCCA, FTII
2009 Budget Commentary
ranging between 0% and 28% and
Chargeable income not exceeding
RM35,000 is given a tax rebate of RM350.
Non-resident individual
A non-resident individual is taxed at a fixed
rate of 28%.
PROPOSED
At
4 pm, 29 August 2008, our
Prime Minister and Minister of
Finance Yab Dato’ Seri Abdullah Bin
Hj Ahmad Badawi started his 2009
Budget speech by telling us that the
Malaysian economy will continue to
remain stable with a GDP growth of
5.7% this year.
A caring-government 2009 Budget
will focus on 3 specific strategies:
First
Ensuring the Well Being
of Malaysians
- to reduce the impact
of increased living
costs
Second Developing Quality
Human Capital
- to implement various
programmes with the
objective of creating
a highly trained and
competitive work
force
Third Strengthening the
Nation’s Resilience
- to remain
resilient and
provide significant
opportunities for
growth in selected
sectors of the
Malaysian economy
With the above 3 specific strategies
in mind, presented below is the 2009
Budget Commentary in detail.
Resident individual
Tax rebate for chargeable income group up
to RM35,000 be increased from RM350 to
RM400.
Tax rate for chargeable income group
exceeding RM35,000 to RM50,000 be
reduced from 13% to 12%, and
Tax rate for chargeable income group
exceeding RM250,000 be reduced from
28% to 27%.
Non-resident individual
The fixed tax rate be reduced from 28% to
27%.
Effective: Assessment Year 2009
TAX EXEMPTION ON INTEREST FROM
DEPOSITS
PRESENT
1 Medical and dental care;
2 Childcare benefits in childcare centres
provided by employers;
3 The value of employer’s own products
or services received by employees of up
to RM200 a year;
4 Mobile phones and telephone bills
exceeding RM300;
5 Broadband subscription fee;
6 Free transport from certain pick-up
points or from between the home and
work place;
7 Meals and drinks provided free of
charge;
8 Group insurance premiums to cover
workers in the event of an accident;
and
9 Leave passage including food and
accommodation in Malaysia not
exceeding 3 times in a calendar year or
leave passage outside Malaysia once in a
calendar year not exceeding RM3,000.
Interest income received from monies
deposited in approved institution is taxed
at 5%.
However, interest income received from the
following deposits is exempted from Tax:
Savings account in Lembaga Tabung Haji
and Bank Simpanan Nasional.
The above benefits provided by the
employers are allowable as full deduction if
such benefits are required to be given to the
employees in accordance with the contract
of service.
Fixed deposit account up to RM100,000
in all banking and financial institutions
approved under the Banking and Financial
Institutions Act 1989, Islamic Banking Act
1983, Bank Pertanian Malaysia Berhad,
Bank Kerjasama Rakyat Malaysia Berhad,
Bank Simpanan Nasional, Borneo Housing
Mortgage Finance Berhad and Malaysia
Building Society Berhad; and
Employees are tax exempted on allowances,
benefits in kind and perquisites received
from employers as follows:
Fixed deposit account exceeding 12 months
in institutions in paragraph (ii) above.
PROPOSED
Interest income received by individuals
from monies deposited in all approved
institutions is fully exempted.
EFFECTIVE: 30 August 2008.
REVIEW OF INDIVIDUAL INCOME
TAX
PRESENT
TAX TREATMENT ON ALLOWANCES,
BENEFITS IN KIND AND PERQUISITES
PRESENT
Resident individual
Income tax rates are progressive
Allowances, benefits in kind and perquisites
received by employees are taxable.
However, perquisites in the form of excellent
service, safety and long service awards are
exempted up to RM1,000 annually.The
following benefits in kind are tax exempted:
PROPOSED
1 Petrol card or petrol allowance or travel
allowance between the home and work
place up to RM2,400 a year;
2 Petrol card or petrol allowance or travel
allowance and toll card for official duties
up to RM6,000 a year;
3 Allowance or fees for parking;
4 Meal allowance;
5 Allowance or subsidies for childcare of
up to RM2,400 a year;
6 Telephone and mobile phone, telephone
bills, pager, personal data assistant
(PDA) and internet subscription;
7 Employers’ own goods provided free of
charge or at discounted value where the
value of the discount does not exceed
RM1,000 a year;
8 Employers’ own services provided free
or at discount provided such benefits
are not transferable;
9 Subsidies on interest on loan totalling up
to RM300,000 for housing, passenger
motor vehicles and education. The
exemption be given to
existing and new loans;
10 Medical benefits exempted from tax
be extended to include expenses on
maternity and traditional medicines
such as ayurvedic and acupuncture;
11 Existing perquisites be extended to
awards related to innovation, productivity
and efficiency such as the Six Sigma
Award and the exemption be increased
from RM1,000 to RM2,000 a year.
The above exemptions are not extended
to directors of controlled companies, sole
proprietors and partnerships.
Expenses on allowance, benefits in kind and
perquisites provided by employers are given
full deduction even though such benefits
are not stipulated in the service contract of
the employee.
EFFECTIVE: Assessment year 2008 and
above except proposal (i) which is effective
from assessment year 2008 to 2010.
COMMENTS: It is of the opinion that the
amounts of item 3 allowance or fees for
parking and item 4 meal allowance should
be reasonable and not excessive or it may
be questioned by the Inland Revenue Board
as to its allow ability.
INCREASING THE LIMIT FOR
DEDUCTION ON CONTRIBUTIONS
PRESENT
TAX
Contributions made by companies are
given deductions for the purpose of tax
computations up to 7% of aggregate
income as follows:
i) Contributions made in the form of cash
to approved institutions, organisations
or funds for charitable purposes under
S 44(6);
ii) Contributions made in the form of cash
or the cost of contributions in the form
of goods for sports activities approved
by the Minister of Finance or Sports
Commissioner under S 44(11B); and
iii) Contributions made in the form of cash
or the cost of contributions in the form
of goods for projects of national interest
approved by the Minister of Finance
under S 44(11C).
PROPOSED
The limitation for tax deduction be increased
from 7% to 10% of aggregate income.
The proposal is not extended to companies
under the Petroleum (Income Tax) Act 1967.
EFFECTIVE: Assessment year 2009.
STAMP DUTY EXEMPTION ON LOAN
AGREEMENTS
FOR
RESIDENTIAL
PROPERTIES
PRESENT
Purchasers of residential properties
are given stamp duty exemption on the
following instruments:
1 All
instruments
including
loan
agreements for the purchase of low cost
houses are given full exemption; and
2 Instruments of transfer for residential
properties priced up to RM250,000 are
given 50% exemption. The exemption is
given to sales and purchases agreements
executed beginning 8 September 2007
to 31 December 2010 and given only
to one residential property for each
individual.
PROPOSAL
The loan agreement instruments executed
for the purchase of residential properties
priced up to RM250,000 be given 50%
stamp duty exemption.
The exemption is given to individual
Malaysian citizen and limited to the
purchase of one residential property only.
EFFECTIVE: 30 August 2008 to 31 December
2010.
COMMENTS: Please note that unlike as in
the period from 8/9/2007 to 29/8/2008, the
proposal is applicable, as from 30/8/2008
to Malaysian citizen only.
The full stamp duty exemption on transfer
of properties between husband and wife
on the basis of love and affection remains
unchanged.
DEDUCTION
ON
EXPENSES
RECRUITMENT OF WORKERS
PRESENT
FOR
Cost of recruitment of workers is allowed
for the tax deduction provided such
expenses are incurred after the companies
have commenced business.
PROPOSED
The recruitment cost incurred before the
commencement of business like expenses
on participation in job fairs, payment to
employment agencies and head-hunters are
now tax allowable.
ENHANCING GROUP RELIEF
PRESENT
Group relief is a tax treatment which allows
losses of a company to be set-off against
the income of another company within the
same group. Currently, this treatment is
limited to 50% of current year unabsorbed
losses to be set-off against the income of
another company in the same group.
PROPOSED
The rate of current year losses allowed to
be set-off against the income of another
41
company within the same group is
increased to 70%.
ACA TAX INCENTIVE TO ENHANCE THE
USE OF ICT
PRESENT
Accelerated Capital Allowance given on
information and communication technology
(ICT) equipment including computer and
software can be claimed within 2 years with
an initial allowance of 20% and an annual
allowance of 40%.
PROPOSAL
The period for claiming Accelerated Capital
Allowance be accelerated from 2 years to 1
year.
EFFECTIVE:Assessment year 2009 to 2013.
CAPITAL ALLOWANCE FOR SMALL AND
MEDIUM ENTERPRISES
PRESENT
Small asset valued less than RM1,000 can
be claimed within 1 year but total claim is
limited to RM10,000.
Expenses on certain assets eligible for
Accelerated Capital Allowance such
as security control equipment and ICT
equipment, the capital allowance claimed
depends on the accelerated period
specified.
SME is defined as a company resident in
Malaysia with an authorized ordinary share
capital of RM 2.5 million or less at the
beginning of the basis period of a year of
assessment.
SMEs are subject to income tax rate of 20%
on the first RM 500,000 chargeable income
and 26% (AY 2008) on the remaining
chargeable income.
PROPOSAL
i) SMEs are given Accelerated Capital
Allowance on expenses incurred on
plant and machinery acquired in the
years of assessment 2009 and 2010.The
allowance is to be claimed within 1 year,
that is, in the year assessment the asset
is fully acquired, and
ii) SMEs are not subject to the maximum
limit of RM10,000 for capital allowance
on small value assets.
For the purpose of income tax, the definition
of SMEs is reviewed as a company resident
in Malaysia with an authorized ordinary
share capital of RM 2.5 million or less at
the beginning of the basis period of a year
of assessment WHEREBY such company
does not control or is controlled directly or
indirectly by another company which has an
authorized ordinary share capital of more
than RM 2.5 million.
42
EFFECTIVE: Proposal (i) is effective for
years of assessment 2009 and 2010 and
proposal (ii) is effective from year of
assessment 2009.
TAX TREATMENT ON COSTS OF
DISMANTLING AND REMOVING ASSETS
AS WELL AS RESTORING THE SITE
PRESENT
Currently, “costs of dismantling and
removing assets including plant and
machinery as well as restoring the site
where the asset was locate” do not qualify
for allowance under Schedule 3, Income
Tax Act 1967.
However, FRS 116 states that the cost of as
asset includes the estimated costs incurred
relating to the obligation to dismantle and
remove the asset and to restore the site on
which the asset was located.
PROPOSED
Special provision is introduced to provide
for balancing allowance on the cost of
dismantling and removing plant and
machinery as well as restoring the site
where the asset was located subject to the
following conditions:
- The eligibility for such tax treatment only
applies where the obligation to carry out
works on dismantling and removing the
plant and machinery as well as restoring
the site is provided for under any written
law or agreement; and
- Such plant and machinery is not allowed
to be used by that person in another
business or used in the business of
another person.
The total balancing allowance is determined
by adding “the cost of dismantling and
removing the plant and machinery as well
as restoring the site” to the balance of
expenditure on plant and machinery at the
time of the disposal.
EFFECTIVE: Year of assessment 2009
REINVESTMENT ALLOWANCE
PRESENT
(a) Reinvestment Allowance (RA) is given to
companies engaged in manufacturing,
processing and selected agricultural
activities that reinvest for the purpose of
expansion, automation, modernisation
or diversification for companies that
have been in operation for at least 12
months.
(b) Can be claimed for 15 consecutive
years from the year of assessment the
company makes the first claim.
(c) Given at 60% of the qualifying capital
expenditure incurred in a year of
assessment and is allowed to be set-off
against up to 70% of statutory income.
Companies that achieve a certain level
of productivity based on a process
efficiency ratio and companies located
in promoted areas (Eastern Corridor of
Peninsular Malaysia, Perlis, Sabah and
Sarawak) are allowed to offset against
100% of statutory income.
(d) Where an asset is disposed off at any
time within 2 years from the date of
acquisition of the asset, the RA given
shall be withdrawn in the year of
disposal.
(e) There are no legal provisions to prevent
companies within the same group from
claiming RA on the same asset that has
been given RA. Companies may also
dispose off an asset which has been
given RA after 2 years from the date of
purchase without any penalty imposed
even though the RA on that asset has
been fully set-off.
need to be revised, 18 MONTHS and 3
YEARS are considered more reasonable
and realistic.
TAX TREATMENT
DIRECTORS’ FEES
PRESENT
ON
BONUS
AND
Income tax on bonus and directors’ fees
is based on the year such income are
receivable and tax payer will declare the
bonus and directors’ fees in the year such
incomes are received which will involve a
review of income tax for previous year of
assessment.
PROPOSED
Bonus and directors’ fees be taxed in the
year such incomes are received.
EFFECTIVE DATE: Year of assessment
2009.
2009 ECONOMIC PROSPECTS
(a) Manufacturing activity be given a more
specific and clear definition under
schedule 7A, Income Tax Act 1967.
The Malaysian economy is projected
to grow by 5.4% in 2009. Growth is
expected to be broad-based with positive
contributions from all economic sectors
and spearheaded by the services sector,
which is projected to grow by 6.9%.
External trade will remain buoyant with
exports growing at 4.6%.
(b) The condition that the company must
be in operation for at least 12 months
to be eligible to claim RA be extended
to at least 36 months.
Per capita income is estimated to increase by
8.1% to RM27,900 or in purchasing power
parity terms, equivalent to USD17,600.
PROPOSED
The criteria and conditions of these
incentives be amended as follows:
(c) A company purchasing an asset from
a related company within the same
group where RA has been claimed on
that asset is not allowed to claim RA on
the same asset.
(d) The provision to claw back RA for
assets disposed off within a period of 2
years from the date of purchase of the
asset be extended to 5 years.
EFFECTIVE: Year of assessment 2009
COMMENTS:
1 The condition that the company must
be in operation for at least 12 months
to be eligible to claim RA in 2009
budget proposals be extended to at
least 36 MONTHS.
2 The provision to claw back RA for
assets disposed off within a period of
2 years from the date of purchase of
the asset in 2009 budget proposals be
extended to 5 years.
The ‘36 MONTHS’ and ‘5 YEARS’
conditions are considered too
restrictive and unrealistic. If the original
‘12 MONTHS’ and ‘2 YEARS’ conditions
CONCLUSION
In closing his 2009 Budget Speech,
the Prime Minister and Minister of
Finance, YAB DATO’ SERI ABDULLAH
BIN HJ. AHMAD BADAW said:
“The tabling of the 2009 Budget
demonstrates yet again that the
Government is responsive to the
concerns of the ‘rakyat‘ and has taken
measures to lighten the burden of
all Malaysians, particularly the lower
income group. The approach taken
is focused towards support and
assistance, which not only improves
the quality of life but also enables
all Malaysians to enhance their
productivity. This Budget is in line with
the medium term plan as articulated
in the National Mission and the Ninth
Malaysia Plan to further develop the
nation towards Vision 2020.”
Investment Planning
44
En. Fadzli Anas
CEO of Philip Mutual Bhd
Online Unit Trust : Threat or Opportunity?
anywhere at their convenience. For
example, an investor can be in New York
and yet still be able to keep close track
of his investments despite the 12 hours
time difference. Likewise, online unit
trust facilities also give investors the
freedom to easily conduct transactions
like buying, switching or redeeming their
unit trust investments at their own time,
whether it be late at night or first thing in
the morning.
savings in the sales charge might look
minimal but I think everyone can agree
that over a long period of time, say
10 years, it would have a tremendous
compounding effect. Furthermore since
the lower sales charge is offered all year
round, investors now need not wait
for promotions by banks and UTMCs
to get the best price for their unit trust
investment.
4) Research and fund updates
The
Internet has changed
the way we lead our everyday
lives. Almost everything is now
available through a few clicks of
the mouse at our own comfort
and convenience. The Internet
has made our lives much easier:
we can buy things online, book
hotels, restaurants and flight
tickets, trade shares and now
invest in unit trust online.
While online unit trust is relatively
new in Malaysia, the concept
has grown quite popular in other
countries since its introduction
several years ago. We need
not go far to study the impact
and development of online
unit trusts; in Singapore, this
platform is now on par with other
more conventional distribution
channels. In fact, the online
platform is PhillipCapital’s main
distribution channel in Singapore
and contributes around 50% to our
revenue. So, what are the factors
which gave rise to the online unit
trust platform’s popularity among
investors today?
Benefits of online unit trust
1) Ease of transaction
With online unit trust, investors
can do their transaction anytime,
Another huge benefit of trading on a
multi-unit trust online platform is the
reduction of paperwork. With just one
Master Account, investors can transact
units in various unit trust funds managed
by different unit trust management
companies (UTMCs). Monitoring the
investments is also easy with the
provision of one consolidated statement
that details all the various investment
holdings at different UTMCs.
As part of investor education and also to
assist investors to make an investment
call, online unit trust providers normally
value add their service by providing
reports and articles. These reports
and articles, written by analysts, fund
managers and professionals, provide
relevant and up to date information on a
wide range of topics.
As an approved Institutional Unit Trust
Adviser (IUTA), Phillip Mutual currently
partners with at least 20 UTMCs and
will offer more than 200 funds covering
various economic sectors, industries and
region – arguably the widest selection
of unit trust funds available on a single
transaction platform. Once our e-unit
trust platform is launched in November,
investors can shop for their preferred
unit trust investment among these more
than 200 funds - all on the same e-unit
trust website.
At Phillip Mutual, we provide investors
with market outlook and strategies
from different UTMCs on a periodic
basis. Via our in-house Phillip Funds
Focus publication, investors will be
professionally guided in selecting
their investment as the publication
highlights current issues on local and
global markets, economic review and
unit trust recommendations based
on the prevailing market outlook and
investment strategies. Better still, these
reports will also be made available in
investors’ mailbox, i.e. it will be delivered
directly to the client’s email as soon as it
is published online.
3) Lower Cost
5) Portfolio monitoring
Operating from an online platform, unit
trust providers are able to offer investors
substantial discounts in sales charge as
it does not have to maintain physical
branches across the country. This lowers
the operating expenses substantially and
the cost reduction can be passed back to
the investors in the form of lower sales
charge. For example, a three percent
One of the common issues faced by unit
trust investors is that they are unaware
of the performance of their investment.
With online unit trust, investors now
have the facility to view the current
portfolio value anytime they want or need
to. Moreover, the portfolio will be made
transparent and will not have any element
of “sugar-coating”, such as eliminating
2) Wider Choice and Variety
45
products, as earlier mentioned, will
allow financial planners to add on the
appropriate premium for their valueadded, personalised services.
the sales-charge and showing the gross
performance in order to display “higher
returns performance”.
To further make it more convenient
for investors who invest via our onestop e-unit trust platform, we provide
one consolidated statement of all their
investments in different unit trusts
managed by the different UTMCs.
This eliminates the need for investors
to organize the different statements
they receive for each of their unit trust
investment managed by different
UTMCs. Now, there won’t be any need
for them to maintain different ring
folders for each UTMCs that they invest
with, we will consolidate all the different
statements for them and give them just
one single statement detailing all their
investments.
We’ve now covered the key benefits of
online unit trust platform for investors.
What about the financial planners? How
can financial planners use the online
platform to their advantage, and turn a
perceived threat into an opportunity?
Advantage of online unit trust platform
for financial planners
The issuance of the Federation of
Malaysian Unit Trust Managers’
(FMUTM) Guidelines for the Registration
of Corporate Unit Trust Advisers in
October last year paved the way for
financial planners who are registered
with FMUTM to market and distribute
unit trust products. This bodes well
for the development of the Malaysian
financial planning industry as financial
planners can now offer investors a more
extensive range of unit trust products
appropriate to their needs.
As our economy develops and investors
become more educated, there is a
genuine and growing need among
Malaysian investors for high quality
financial advice. I believe that nothing
can compete with the interactive, human
factor, therefore online unit trust can
never replace the advisory and servicing
Conclusion
role of a financial planner completely.
To complement our B2C online unit
trust platform which provides a wealth
of benefits for investors as mentioned
above, we provide B2B facilities which
financial planners can leverage on to
reach out further to their clients.
Our B2B proprietary platform enables
financial planners to assess, source
and monitor their clients’ investments
all from a single platform. It allows
financial planners greater flexibility to
keep track of their clients’ investments
anytime of the day, anywhere in the
world. Additionally, financial planners
can outsource the back-office aspects
of their operation to our unique B2B
platform’s advanced facility, freeing
them up to fully focus on servicing their
clients’ needs while minimizing their
resources. Furthermore, the reduction in
distribution costs of the various financial
Today’s technological evolution has
made it inevitable for Malaysia to adopt
this new distribution channel. As with
anything new, there will be resistance
from some skeptics. However critics
may want to remember that in the past,
objections have always greeted each
new innovation and more often than not,
the critics too eventually benefitted from
those innovations.
Moving forward, Phillip Mutual will be
working hand in hand with financial
planners to reach out and promote our
unit trust platform, for the benefit of both
investors and financial planners.
We strongly believe that the online unit
trust platform offers a myriad of benefits
and advantages in terms of convenience,
time and cost savings to both investors
and financial planners alike. Therefore,
instead of being a threat, we believe the
presence of online unit trust is indeed an
opportunity for everyone.
Launch of Phillip Mutual Berhad’s
Online Unit Trust Platform
19 NOVEMBER 2008
at
Mandarin Oriental
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Your Particulars
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Please call Ms. Kogila of the Malaysian Financial Planning Council (MFPC)
at 03-2693
1900 for inquiries.
Suite 7.01, 7th Floor, Menara Tun Razak, Jalan Raja Laut, 50350 Kuala Lumpur.
Tel: 03-2693 1900
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Financial Quotes
“Resolve not to be poor: whatever you have, spend less. Poverty is a great enemy to human happiness;
it certainly destroys liberty, and it makes some virtues impracticable, and others extremely difficult”.
Samuel Johnson
“Success in investing doesn’t correlate with I.Q. once you’re above the level of 25. Once you have
ordinary intelligence, what you need is the temperament to control the urges that get other people
into trouble in investing”.
Warren Buffet
PUZZLES
#SǑ̢͸5FǚҕȪST
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&ͩҿ҅Jɚ.Ӆґӂ"ҍ̢WȺ#Zyyyyyyy
"͝͡1̴҅[ɚ"SȺ/е5SǑͩTGȪSǑȒMȺźȺ-VD͕Z8̢ͩOȪST8̢͝͡
#Ⱥ"ͩOΝӅODFȠ*͸źȺ/ˊ
'̢OǑODJǑ͡ґӂ1ӅȒ̨͝DǑҿJΝ͸źȺ
+VE̔ȺT%ɂ̨ґJΝ͸*T'̢OǑ͡
1. A snail creeps 5 ft up a wall during the daytime. After
all the labor it does throughout the day, it stops to rest a
while but falls asleep!! The next morning it wakes up and
discovers that it has slipped down 3 ft while sleeping. If
this happens every day, how many days will the snail
take to reach the top of a wall 33 ft in height?
2. It was semester break, and so I decided to visit my friend
Chua’s condominium. Chua and I had a splendid time.
In the mornings, we both would go for a jog. We spent the
evenings in the swimming pool. Tiring as these activities
were, we could manage only one per day, i.e., either we
went for a jog or swim in the pool each day. There were
days when we felt lazy and stayed home all day long.
Now, there were 10 mornings when we did nothing, 14
evenings when we stayed at home, and a total of 16
days when we jogged or swam. For how many days did
I stay at Chua’s condominium?
4. Bala takes the LRT to work and uses an escalator at the
LRT station. If Bala runs up 8 steps of the escalator, then it
takes him 40 seconds to reach the top of the escalator.
If he runs up 14 steps of the escalator, then it takes him
only 25 seconds to reach the top. How many seconds
would it take Bala to reach the top if he did not run up
any steps of the escalator at all?
5. “Dad, where had you been?” asked Ali. “I had been to the
store room, Ali,” replied Dad. “And do you know what I saw
there? There was a big web with 23 spiders and flies on
it.” “How many spiders were there?” asked Ali with curiosity.
“Well, there were a total of 154 legs on the web,” answered
Dad with a smile. “Now you can find out how many spiders
were there by yourself. Can’t you?” Can you help Ali find out
how many spiders were on the web in the store room?
3. Annie: “When I add 3 times my age 3 years from now to 4
times my age 4 years from now, I get 8 times my current
age. How old will I be 3 years from now?”
Entry form – Your particulars
1. Name
: …………………………………………………………………
2. Gender
: …………………………………………………………………
3. I.C. No.
: …………………………………………………………………
Please indicate your answer
in the table below
Question
4. Company name : …………………………………………………………………
1
5. Address
: …………………………………………………………………
2
6. Tel / H/P No.
: …………………………………………………………………
3
7. Fax No.
: …………………………………………………………………
4
8. Email add.
: …………………………………………………………………
5
Answer
Complete the following slogan in less than 20 words:
Financial Planning is for everyone today because ………...………………………………….………………………………
…………………………………………………………………………………………………………………………………………
Submit your answers by 1 April 2009 via fax or email to:
48
Ms Kogilavany
Suite 7.01, 7th Floor, Manara Tun Razak,
Jalan Raja Laut, 50350 Kuala Lumpur, Malaysia.
Tel: 03- 2693 1900
Fax: 03- 2693 1700
Email: [email protected]
iFast Three Reasons for Investing in Malaysia
It is an irony that to support our position that there are good
reasons to invest in Malaysia now, we need to start with a
piece of bad news – ‘recession’ may be just around the corner.
It is almost common knowledge that there is a likelihood that
Malaysia will enter a technical recession in the first two quarters
of 2009. The word ‘recession’ often creates anxiety amongst
investors so it warrants a closer look. A technical recession
occurs when a country goes through two consecutive quarters
of negative growth. The country’s construction sector, mining
and plantation sector have a bearish outlook and this makes it
very likely for Malaysia to experience low or negative growth in
the coming months.
The construction sector has been in the doldrums since the
government postponed some of the major projects in the Ninth
Malaysian Plan. Meanwhile, both mining (crude oil and related
products) and agriculture (palm oil plantations) the backbone
of strong economic growth for the country have seen sharp
falls in its price. The plantation sector suffered from a decline
from falling crude palm oil prices. As at 26 Nov 2008, CPO was
trading at US$410 per metric tonne a sharp fall from its high of
US$1319.4 per metric tonne in March 2008. Both crude oil and
palm oil prices dropped significantly by 66% and 69% from
their respective highs (Refer to chart 1).
Chart 1: Crude Oil and Palm Oil Price Movements
So, why should investors invest in Malaysia? It boils down to
three points: valuations, government support and increasing
political stability.
1. Yes, It Is Cheap!
The KLCI market is a bargain! Year-to-date, the KLCI has
dropped by 39%, wiping out its gain of 31% made throughout
2007. The KLCI market is currently trading at a low priceearning (PE) ratio of 9.9X as at 18 November 2008. This PE
level was last seen during the Asian Financial Crisis. The priceto-book (PB) ratio is also low at 1.3X in November 2008. The
country’s 5-year average PB ratio is 1.87X. Chart 2 shows the
performance of the KLCI and its PE and PB Ratio.
49
Chart 2: KLCI and its PE & PB
Fortunately, Malaysia has not been directly impacted by the
financial crisis. This is due to relatively tighter government’s
investment rules. Malaysian financial institutions did not invest
subprime-related investments. And after several mergers and
consolidations in the financial sector, Malaysian financial
institutions are in much better shape to withstand this financial
storm as compared to the Asian Financial Crisis. According to
the Fitch Rating’s, the Malaysian banking system is relatively
healthy, with its Tier 1 capital ratio and capital adequacy ratio
(CAR) at 10% and 13% which higher than the minimum
required ratio of 4% and 8%. Tier 1 capital measures the
banks’ financial strength fro m a regulator’s point of view (CAR
measures the capacity of the bank to meet its liabilities and
incorporates other risk such as credit risk, operational risk,
etc).
Non-financial Malaysian companies are also fairly healthy as
compared to American companies. By comparing the ability
of the top 25 listed companies on the KLCI and Dow Jones,
ranked by market capitalization, to serve their short term
and long term debt obligations, it appears that Malaysian
companies are fundamentals of Malaysian companies are
far better than their US counterparts in meeting the debt
obligations.’
Malaysian companies generally have higher current ratios,
with an average of 2.1X as compared to US companies’ 1.2X
(at 19 November). The higher the ratio, the more likely that
these companies can meet their short term debts. However,
comparing the total debt to equity, we find that Malaysian
companies tend have a slightly higher debt-to-equity ratio than
US companies. This could mean that Malaysian companies
have slightly been more aggressive in financing its growth via
debt.
50
iFast Three Reasons for Investing in Malaysia
Table 1: Comparisons between the top 25 companies on the KLCI & Dow Jones
3
Reasons
for Investing
in Malaysia
Source: iFAST Compilations, Bloomberg
2. Government support
The Malaysian government is working hard to boost the economy. A RM7 billion
stimulus package was launched last November which is equivalent to about 1% of
Malaysia’s gross domestic product (GDP), looks set to be the additional ammunition
needed to fire up the economy, apart from the Budget 2009.
The stimulus package is focusing on industry sectors that will be able to benefit most
Malaysians, including infrastructure and educational funding by the government
This includes RM500 million of construction on roads, RM200 million on education,
RM400 billion on high-speed broadband infrastructure, RM500 million on public
transport, RM1.5 billion for an investment fund and RM1.2 billion for low cost housing.
However, the effect from the pump-priming might not be seen immediately.
We expect to see the impact in the second half of 2009, which is also when we
expect the economy to start to recover from the economic downturn.
3. Stabilising Political Landscape
After the 8 March election, the political landscape seems to have stabilised after
much upheaval. The probability of an earlier change of federal government in the
election aftermath, which may be a potential destabilizing factor to the economy if
it does happen, seems to have cooled down somewhat. In any case, regardless of
which party will dominate the country’s political landscape, we believe that the ruling
party will try to prove its ability. The best
way to do this is through stimulating the
economy during this turbulent period.
Political uncertainty is always short-term
noise.
Forward Looking Stock Market
The stock market is forward-looking,
moving about 6 to 9 months ahead
than the real economy. We are seeing
economic indicators such as slower
exports, softer manufacturing sales
and lower industrial production and will
likely be hearing more bad news in the
coming months. However, the KLCI
start to recover by early next year. Our
earnings growth rate of 4.4% and 3.1%
for 2008 and 2009 has already factoredin the lower expected corporate earnings
growth due to the global downturn. But
its lower PE levels of 10 .5X and 10. 2X
for 2008 and 2009 (as at 2 8 November
2008) makes Malaysia an attractive
investing buy.
.....CONTINUE
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Chapter 4 : Tax Matters
Time for another the teh-tarik stall session among the 3 friends…
this time the discussion is on tax matters
Krishnan
Sigh! It is that time of the year again…
Karim
Yeah, filling up the forms are so laborious. That’s why I’ve appointed a tax agent to do the tax submissions on my
behalf.
Keong
So, how are people in business taxed differently from us employees?
Karim
People in business will have to prepare the accounts for the business first, and then we prepare the tax assessments
from whatever we earn from our business.
Krishnan
Why pay a tax agent to do your tax? The tax officers at the IRB (Inland Revenue Board) to review our tax returns, and they
will advise us if we have not made any deductions or we make mistakes in our computations, wouldn’t they?mistakes in
our computations, wouldn’t they?
Karim
I’m not sure about that, but at least, I’m free from all liabilities if they are the ones who make a bad mistake.
Let’s examine and clarify some the statements made
by our three friends:
Karim
People in business will have
to prepare the accounts for
the business first, and then we
prepare the tax assessments
from whatever we earn from our
business.
Businesses earn profits, whereas employees earn a
salary. Profits of a business may differ from month to
month, but employees’ monthly salaries seldom differ.
In order to arrive at profits, which are what businesses
really earn, all expenses which are “wholly and
exclusively” incurred for generating revenue are allowed
to be deducted from the revenue.
For tax purposes, the net profits (revenues less
operating expenses) need to be adjusted before arriving
at the statutory income for the business. Generally,
disallowable expenses such as depreciation (a method
of writing off the cost of a business asset over time)
are added back to the net profits. Instead, capital
allowances, which are the tax equivalent of depreciation,
are deducted to arrive at the statutory income.
Just like for employees, the self-employed, after arriving
at the statutory income, can deduct the same personal
reliefs (and rebates, where applicable) for specific
personal expenses incurred, for example, life insurance
premiums and full medical examination costs.
Krishnan
Why pay a tax agent to do your
tax? The tax officers at the IRB
(Inland Revenue Board) to review
our tax returns, and they will
advise us if we have not made
any deductions or we make
mistakes in our computations,
wouldn’t they?mistakes in our computations, wouldn’t they?
Under the self-assessment system (SAS), the taxpayer
must fill in his own tax assessments and compute his tax
payable. The tax officers at the Inland Revenue Board
will only check for under-declaration of tax. They are
in no way obligated to inform the taxpayer that certain
deductible allowances have been missed out.
Karim
I’m not sure about that, but at
least, I’m free from all liabilities
if they are the ones who make a
bad mistake.
The onus of correctly and
accurately declaring one’s
taxes is on the taxpayer
himself. Just because he appoints a tax agent to assist
him in preparing the tax returns, it does not mean that
he can absolve his responsibilities on his own tax
assessments. He is still ultimately responsible for his
own taxes.
xÓ
We need not view taxes as being mere financial burdens. In fact, we should be thankful that we have taxes to
pay, because this means that we are capable of earning an income. Just follow these simple tips and it can help
you to keep your taxes low or even reduce your taxes:
• Ensure that all tax reliefs and/or rebates
are claimed. Keep abreast of new reliefs or
increases / decreases in reliefs proposed in the
annual Budgets. Reliefs such as the cost of full
medical examinations of self, spouse or children
up to RM500 have just been introduced in recent
times.
• Pay your taxes on time. Penalties are
automatically imposed for late payments as it
does not make sense for a person to declare but
not pay his/her taxes. Expectedly, penalties will
increase your tax payable and therefore result in
higher cash outflows.
• Have a personal filing system to keep all receipts and relevant documents in a proper manner. The IRB estimates
that it can perform an audit on 20% of all taxpayers every year. That means, every single taxpaying individual, business
or company can expect to be visited by the IRB once in every 5 years for an audit. The lack of supporting documents
could lead to increased tax liabilities with interests.
• Make little adjustments to your family’s lifestyle to maximize on tax benefits. For example, since Budget 2007 has
proposed an increase in the relief for purchases of books up to RM1,000, spend less money on recreations such as
computer games and DVDs and more on interesting books for children.
• If you are charitable and wish to make contributions for the betterment of our community, ensure that they are made
to approved organizations whereby all donations are deductible from the aggregate income.
Ê*
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Ê Ê9"1ÊÊ*,/Ê
Chapter 5 : Managing Personal Risks
The financial risks we have to face daily are discussed by the three friends in this meeting….
Karim
Hey Krishnan, so how’s Chris doing? Is his dad still in
coma?
Krishnan
Are their advice objective? How different are they from
those who only push products?
Krishnan
Well, his dad has been in that state for two months now.
He’s still in the hospital. I didn’t know that a fall off the roof
could be that bad.
Karim
Oh! There should be some good ones like mine. He did a
very thorough analysis of my risk situation before advising
me. Very professional … you may want to contact him, so
here is his contact.
Keong
So how about the hospital bills? Does his dad have any
medical insurance?
Krishnan
No. That’s the tricky part. Their family savings are running
low, so Chris is thinking of talking to his relatives, asking if
they could help. Sad case, really….
Keong
Well, that’s the problem if we are uninsured. Has he not
consulted a financial planner on such matters before? I
understand there are quite a lot of them around.
Karim
True, but they can only give advice. But how many of us
took their advice? It’s too late now for Chris…can only get
insurance when you don’t need it.
Keong
Errr… I’m provided with a group term life, a group PA and
H & S benefits which is also extended to my family. Isn’t
that sufficient to cover my risks?
Krishnan
Me, too! I have an endowment plan with a few medical
riders attached to it. It will give me back some money when
I reach 50, but I find that the returns are not so attractive.
Wonder what your planner has to say.
Karim
It’s no harm getting a review from a professional if you are
unsure of your coverage adequacy. Here is the number
…tell him its my recommendation …
xÎ
Let’s discuss some of the matters that were mentioned by our 3 friends:
Krishnan
“How would we know that they are giving us the best advice?”
The standard of advice on insurance matters from financial planners and insurance intermediaries
has greatly improved over the years. The regulators are ensuring this trend continues. Here are
some industry developments that support this view:
• Financial planners and insurance intermediaries are now required by Bank Negara’s guidelines to
perform a fact-find on the client and analyse his/her situation thoroughly before they can recommend
any insurance plan.
• Continuous professional development of a certain number of credit hours per year is now a
compulsory requirement for practitioners in the financial planning and insurance industry.
• Increasingly, more of those practitioners in the Insurance industry are obtaining qualifications
such as Registered Financial Planner (RFP) to improve their ability and standard of service to their
clients.
Keong
“...I’m provided with a group term life, a group PA and H & S benefits which is also extended to my
family. Isn’t that sufficient to cover my risks?”
Group insurance schemes usually give a very basic cover to employees. It is important to
consider the following issues even if you are already covered by such schemes:
Are you going to stay employed in the organization for your entire working live? Remember that you
lose the coverage the moment your leave!
What about after your retirement and for some reasons you still need coverage? There are modern
insurance plan that cover your retirement needs which you should consider.
Will the next company you work for provide the same kind of insurance schemes to cover you?
What if there are no such schemes at all? The safest route to personal risk management is to cover
yourself adequately.
If you happen to lose the group schemes coverage and still need insurance protection, will you be
insurable then? The best time to insure is when you have no immediate need for insurance .... as
that is the only time you can get it!
Is there any limit of coverage on the group insurance, for example, a limit of RM20,000 for
hospitalization coverage per annum? It is essential to get a financial planner apt at insurance
matters to analyse your insurance needs and help you determine if the group scheme coverage is
adequate.
Krishnan
“…I have an endowment plan with a few medical riders attached to it. It will give me back some
money when I reach 50, but I find that the returns are not so attractive. Wonder what your planner
has to say... ”
The principal purpose of an insurance plan, including an endowment plan, is protection. Hence, it
should not be compared to other forms of investment vehicles, with no protection feature. Traditional
endowment policies provide for both savings and protection. Compared to other plans like whole
life plans, there is a stronger emphasis on the saving aspects for endowment plans. The trade-off
is lower protection-value.
There are also pure protection plans, called term insurance, where there is no cash value feature.
Riders, which may include critical illness or hospitalization and surgical coverage, etc. are
attachments to a basic life policy, to give a broader coverage of risks. They usually ends with the
basic policy term or over a fixed term that last no longer than the basic policy term. Over the years, a
broader spectrum of insurance riders are been introduced to meet the mercurial needs of the public
and these should be explored to match your needs.
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Exclusive Interview - Malaysian Financial Planning Council

Transcription

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