What are the criteria for sourcing the right financial adviser or planner? Don’t have any idea? Maybe we can help!
Here we’ve listed down some of the main criteria that you should know when trying to find the right financial adviser or planner:
• Credentials, qualification and license
• Compensation like how fees are charged
• Characteristics, personal attributes and principles
• Client servicing, implementation of a signed plan and regular reviews to ensure your plan is on track
How can you tell if your planner is licensed? Ask where his license originated and check with either Bank Negara Malaysia’s (BNM) or the Securities Commission Malaysia’s website, under licencing. They have the list available for reference.
Having certification does not mean the person is licensed. It merely means the person has passed the examination but is unable to sign off a financial plan that is drawn up or charge financial planning fees. The keyword here is license. Remember to ask to view the license of the financial adviser or planner if you are unsure.
A customised and comprehensive plan takes time and effort to draw up. The planner needs detailed information from you and has to crunch the figures you provided for him. He analyses them in relation to your dreams and goals in life, then make appropriate recommendations so that these important goals can be achieved.
Likewise, would you be comfortable going to surgeon who will operate on you for free? Only if he is a trusted family member, right? Then again, you will still have to pay for hospital charges if not for the surgeon’s fees.
Financial advisers or planners are compensated in four ways:
- Plan and retainer fees only
- Product implementation commissions through front and back end charges
- A combination of any or all of the above
Always ask before you appoint
Discuss what your financial goals you want to achieve and agree upon the fee. Remember, if you want the planner to do more work outside the agreed scope, be prepared to pay for added services.
In the construction industry, we call this the Variation Order (VO) which is work required outside the agreed scope and additional payment is made on the VO when the work is completed.
The basic principles required for a financial adviser or planner are integrity, objectivity, competence, fair dealing, confidentiality, professionalism, and due diligence.
Furthermore, you will want someone, who:
- you can trust enough to reveal important and key information.
- genuinely has your best interest at heart.
- will listen emphatically to understand your situation.
- must be able to walk you through each step of your financial life.
- has the patience to let you think through your needs so that you have clarity of thoughts.
- you are comfortable working with over and above the credentials and compensation model.
- has experience in doing a financial plan, especially his or her own to start with.
Another important information is to know whether the financial planner is tied to a company or works independently. This will determine the manner in which he or she works with you.
Always remember that the planner will need to ask you questions related to your goals to help the both of you understand your own situation better and recommend customised solutions.
You have the option to decide whether you want your planner to just prepare for you a plan and you can manage the plan yourself after that or you need someone to review your plan annually to ensure it is on track.
This must be agreed upon with the planner at the beginning before you engage the planner’s services as it determines the type of fees incurred.
Before you say ‘No’ to the annual review in order to save your fees to the planner, remember that as your life changes from year to year, so will the dynamics of your finances in relation to your needs.
Are you able to monitor your own plan and determine whether it is on track? If not, what do you do? It might be prudent to get a planner to go through an annual review for you. He or she can ensure your plan is on track and what to do if there are significant changes in your life that may impact your finances.
Your Role as a Client
It takes two hands to clap. This applies to working with your financial adviser for optimal results and to your advantage. Unfortunately, they are not mind readers, so your cooperation in the following ways will help the planner serve you better:
a) If you are uncomfortable with the prospective planner initially, do not proceed. Look for another.
b) Give relevant information fully to save time having to revise the plan.
c) Respond to the planner’s questions as best you can. The questions are to give clarity to your needs so that the planner can work effectively and customise the plan to your needs. Recommendations are also based on the information you provide.
That way you can be sure the financial adviser or planner will give you the service and value that you pay him for.
BNM’s Initiatives to Help the Man-in-the Street
BNM has embarked on the following approach to enhance the financial capabilities of consumers:
• Introduced the Consumer Education Programme in 2003, where BNM develops and disseminates educational materials on financial products and services through booklets and websites,
• Organise outreach programmes to various target groups, including university students through a strategic partnership with other organisations, and
• Promote financial education at schools to students in collaboration with the Ministry of Education and financial institutions.
The Pengurusan Wang Ringgit Anda or POWER programme was launched in January 2011 as part of the agenda to improve the financial capability of Malaysian consumers. It complements the bankinginfo and insuranceinfo initiatives as the key platforms through which BNM, in collaboration with its partners, works to support better financial decisions among the adult population.
Employers and the public can obtain more details of this programme in Agensi Kaunseling Dan Pengurusan Kredit’s (AKPK) website. Interested parties can also contact AKPK at their toll-free number 1-800-88-2575 or BNM’s Telelink at 1-300-88-5465.
This article was first published on 19 December 2017