What is Financial Planning?

Under the Capital Markets and Services Act 2007:

“Financial Planning” means analysing the financial circumstances of another person and providing a plan to meet that other person’s financial needs and objectives, including any investment plan in securities, whether or not a fee is charged in relation thereto.

Is a Licensed Financial Planner an Insurance Agent or Unit Trust Agent?

The short answer, is no.

A Licenced Financial Planner holds the Capital Markets Services Representative License (CMSRL), which he/she has to apply to the Securities Commission (SC) for. Additionally, he/she has to be attached to a company that is licensed by the SC to conduct Financial Planning services (the company must hold a Capital Markets Services License).

Attaining the CMSRL requires the applicant to hold the Certified Financial Planner (CFP) or Registered Financial Planner (RFP) professional qualification. This also normally comes with a minimum of three years working in a financial planning firm.

An insurance agent only needs to pass a computer-based test called the Pre-contract Examination (PCE). Nowadays, most insurance companies also require their agents to pass the Certificate in Investment-linked Life Insurance (Ceilli) test. The minimum requirement for both these tests are five (5) passes in the Sijil Pelajaran Malaysia (SPM).

A unit trust agent is required to pass the Computerised Unit Trust Examination (CUTE). The minimum requirement for this test is three (3) credits in the SPM.

Should you seek professional guidance regarding your finances?

If you’re working five, maybe six days a week, and you want to spend your precious one or two days off researching personal financial management, then maybe you won’t need to seek external help.

However, if you want do not want to spend your little free time doing all that research, then let a licensed and qualified professional help you. We’ve all had to complete at least 12 months of professional education on the subject matter.

Do you really need to see a Licensed Financial Planner, as opposed to other financial service intermediaries (such as bank staff, insurance agents, or unit trust agents)?

Financial Planning is a regulated and licensed profession. The licensing is done to protect you as the client. Seeing a licensed professional provides you with a level of accountability and certainty of the quality of the person you are engaging to help you. 

If you had a medical issue, would you see an unlicensed doctor? If you had a legal issue, would you see an unlicensed lawyer?

What if I’m not earning that much yet, and can’t afford to engage a Licensed Financial Planner?

The Licensed Financial Planning industry is still in its infancy. There are a good number of Licensed Financial Planners willing to work with you at significantly reduced fees (sometimes even without fees, as long as you buy your financial products from them!). Don’t be afraid to ask.