However, the price of the same type of terrace house he just bought near to his father’s house is 70% higher than what his father’s house originally cost. Imagine, his father bought it when he was about the same age as Azmi now. Add on the rising cost of goods and services due to inflation, you can imagine the financial challenges Azmi has in providing for his family. Back then, his mother was a home maker. Today, Azmi’s wife has to work to contribute to the home’s finances. Fortunately there are more financial products and services made available which can help them. Unless they know which one to choose and how it can help him, the services of a financial planner will certainly be valuable in helping him chart his financial road map.
Before you go out looking for a financial planner, it would be good to know why you need one as this will help you determine the type of financial planner you want to work with you. Be aware of the type of planners and the services they provide. The following is a guide to help you.
Financial Advisors and Planners Defined
There are two main designations for people in the Malaysian financial planning industry, namely financial advisers and financial planners. The definitions below are for easy reference. A professional who offers financial advice to clients for a fee and/or commission. (http://financial-dictionary.thefreedictionary.com)
A person who counsels individuals and corporations with respect to evaluating financial status, identifying goals, and determining ways in which the goals can be met. Although many people call themselves financial planners, a large number are primarily interested in selling a limited number of products they represent.
A full-time professional planner, including a certified financial planner, an investment manager, or a tax attorney, may be better able to provide unbiased advice to the investor. See also certified financial planner and chartered financial consultant (ChFC).
Wall Street Words: An A to Z Guide to Investment Terms for Today’s Investor by David L Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved.
Is there a difference? Yes and no. Yes in regards to the different licensing bodies because of the different sector of the financial industry the applicants originated from. Traditionally, advisers who evolved from being an insurance agent are required to complete and pass the Registered Financial Planner (RFP) or Syariah RFP programme. Only then can they apply for the Financial Advisers Representative (FAR) license through BNM. This also applies to those with the ChFC qualification.
Planners who evolved from being a unit trust consultant or remisier will need to complete and pass the Certified Financial Planning (CFP) or Islamic Financial Planning (IFP) programme and apply for the Capital Market Services Representative (CMSR) license, financial planning through the Securities Commission Malaysia (SC).
Today, both BNM and the SC recognise and accept the RFP, Syariah RFP, CFP, IFP and ChFC for both applica- tions, the FAR and/or CMSR licenses respectively. In other words, either license qualifies the holder to sign for a financial plan and charge fees. In view of this, initially you may find that some advisers come from the angle of insurance protection while planners tend to work from the angle of investments.
Ultimately, the work the licensees do for their clients are the same, holistic financial planning regardless of the origin of the license. This is due to market demand.
Types of Advisers and Planners
Yes, there are other types of licenses besides financial advisers or planners but their practice is limited to specific areas of expertise. The two tables below will give you a quick overview on who offers what so that when you are approached, you better understand the services offered. The fast pace of business today has resulted in people working longer hours with little personal time at the end of the day. Most would want to spend these precious moments with their loved ones rather than crunch- ing figures of their personal finances at home. There are those who find numbers simply confounding, so why bother? Not forgetting the rising concerns of our government over national household debts. Bank Negara Malaysia (BNM) reported a 75.9% ratio of household debt to the gross domestic product in 2011, which is an increase from 2004’s ratio of 66.7%. Generally if you are either a very busy person or not one who cares much for numbers, yet want to have a more definite direction in your financial life, you will seek out the services of a financial planner (Table 1).
However, if you are great with planning your financial goals but need to know what products and services will be suitable and are available, you will then look for a financial intermediary in specific areas as shown in Table 2 for help. Know the difference between a wealth manager and financial planner. Wealth managers are product specialists who advise on products based on your needs. Financial planners work out your plan and recommend products to implement the plan if necessary.
http://moneycompass.com.my/en/choosing-the-right-financial-planner-in-malaysia-part-1/
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