A licensed financial planner is deemed to be in the best position to help his/her client chart the latter’s financial roadmap to live a better life. Often, the individual is someone who holds the professional Certified Financial Planner® (CFP) qualification and licensed by a capital market regulator.

Smart Investor speaks to the Financial Planning Association of Malaysia’s (FPAM’s) CEO Linnet Lee on the role and scope of services that can be expected from the financial planning industry and why a professional qualification is essential in the selection of a financial planner.

Roles of financial planners

Source: FPAM

In Malaysia, financial planning comes under the purview of the Securities Commission (SC) while financial advice is regulated by Bank Negara Malaysia. However, a licensed financial planner (LFP) is the person authorised to draw up a customised financial plan for his/her discerning clients. 

“A LFP does more than to just calculate the amount of money needed to have a better life,” Lee points out. “He/she is also a coach and counsel to his/her clients by helping them to crystallise their thoughts and prioritise their life goals.”

Moreover, the planner will go through an array of financial planning processes to develop a financial plan which will provide:

  • A snapshot of where the clients are financially today
  • List out goals of the clients in life and whether they have enough to realise those goals or still need to take a certain course of action to achieve it
  • Ensure the clients have an emergency fund to buffer against the unexpected
  • What actions need to be taken – not necessarily just in monetary terms as this can entail a change in lifestyle and habits
  • How to implement such course of actions, and
  • Who can help the clients implement those actions and what the suitable financial products to do so are.

These are the major areas where a financial planner works:

  • Assessing their clients’ current financial health by examining their assets, liabilities, income, insurance, taxes, investments and estate plan, and
  • Developing a realistic, comprehensive plan to meet their clients’ financial goals by identifying financial opportunities and leveraging financial strengths.

Types of guidance a licensed financial planner can render:

  • Ensuring that the client’s savings are able to last throughout his/her retirement or during a rainy spell
  • Managing inheritance or any unexpected financial windfall
  • Financial preparation for a marriage or divorce
  • Planning for the birth or adoption of a child
  • How best to overcome financial crises such as an illness, layoff or natural disaster
  • Coping financially with the death of a spouse or close family member
  • Funding for education expenses
  • Buying, selling or passing on a family business, and
  • Planning for complex financial situations.

Selecting the right financial planning professional

On selection criteria, Lee suggests emphasising the 4Es – education, examination, experience and ethics.

“Readers are encouraged to select LFPs from SmartFinance.my (a website managed by the FPAM to help Malaysians manage their money well) as these professionals have been vetted to ensure that they are certified and licensed before getting listed,” she enthuses.

“Feel free to chat with them to enquire what are their scope of services, areas of specialty and the range of fees.”

Lee further urges the shortlisting of three potential candidates, and encourages the discerning client to speak to them all before selecting the individual he/she is most comfortable with.

“Bear in mind that the selected planner will be walking with you through your financial journey in life to ensure you are on-track to achieve what you want in life,” she adds.

Below are some additional virtues of a certified financial planner:

  • Candidates who have passed the CFP certification programme examination which equips them with the ability to integrate and apply their financial planning knowledge.
  • must acquire three years of financial planning related experience, or a limited two-year structured option before achieving the right to use the CFP mark.
  • CFP professionals must voluntarily abide by FPAM’s code of ethics, rules of conduct and best practices as well as SC’s licensing requirements as mandated. This includes providing financial planning services as a fiduciary, or acting in the client’s best interest.