Financial planning is too common of a word nowadays. In Malaysia, the public gets confused because your unit trust agent, banker and insurance agent also can call themselves financial planner. Those who had bad encounter with one or more of these financial agents will be skeptical of the so-called “financial planners“. So here, I break it down into very layman terms – what it means to be a financial planner cum adviser in its true meaning versus tied agents who use the same term nonchalantly.
Minimum Qualifying Requirements
Licensed Financial Planner – A Bachelor’s Degree, CFP certification (240hrs of lecture and 14hrs of exam) or RFP certification, 3 years minimum of relevant experience.
Tied Financial Agent – SPM, CPE (2hrs exam), CEILI (2hrs exam), CUTE (2hrs exam)
Example – The Ivy league universities vs others
Approach and Methodology
Licensed Financial Planner – Financial planning & systematic process or holistic approach, i.e. optimizing your current & future resources to your financial goals. In-house research on funds selection, life insurance plan stars rating and financial planning / cash flow modelling.
Tied Financial Agent – Single need / piecemeal solution and pretty much product focused.
Example – Chief Accountant / CFO vs Accounts executive
No. of financial providers or solutions
Licensed Financial Planner – At least two providers in life insurance, unit trust and PRS. In addition provide service like financial plan and estate planning, i.e. will writing, trust, biz succession planning, etc.
Tied Financial Agent – Cannot represent more than one supplier, and tied to its principal.
Example – 1-stop shop, e.g. Senheng Electric, senQ, Harvey Norman.
Interest represented / Client & Distributor (legal) Relationship
Licensed Financial Planner – Client & Professional (i.e. FA) relationship. (Is required to purchase a Professional Indemnity insurance).
Tied Financial Agent – Client & Supplier (i.e. Insurer / Unit Trust Management Company) relationship (note: Agent acts as an employee of the supplier, and he/she has no legal relationship with the client)
Example – External auditor vs internal auditor.
Transparency of proposed solution
Licensed Financial Planner – Impartial views (evaluating pros and cons of each possible solutions or products) and choices.
Tied Financial Agent – Biased view (pros only) and without choice.
Example – Senheng vs Sony/Apple Store.
Continued education (CE)
Licensed Financial Planner – SC (20hrs), BNM (20hrs), FiMM (16hrs), FPAM (20hrs)
Tied Financial Agent – LIAM (30hrs), FiMM (16hrs).
Example – Doctors & accountants who needs to fulfill CE points to renew license.