What Is Financial Planning?

Financial Planning is an ongoing process of helping an individual to achieve his / her financial goals through a systemic management of his / her finances. It is not just about buying insurance products or mutual funds as many as you can. Eventually, if you buy too many insurances and too many mutual funds without knowing their features and return rates, you seems like blind faith, who expose yourself to the icy ground. According to EPF, 70% of members who withdraw their funds at age 55 use up their savings less than a decade after retiring (The Star, 25^th October 2017: Most Malaysians Cannot Afford To Retire). This indicated that the EPF savings are insufficient for retirement living.  “If, you fail to plan, you are planning to fail.” (Tony Bilby)

Why you need financial planning?

1. Inflation

Inflation is an increase in cost of goods and services over time, causing a  depreciation in the value of money over time. As a result, cost of living will become much more expensive year by year. For instance, with RM50 on 1998, you were able to purchase a full trolley of daily goods. However, with RM50  on 2012, you were only able to purchase a few daily goods on a trolley. The inflation does not only affect our daily expenses, but it could dilute the value of our investment, savings, and pension funds. Financial planning ensures you to grow the value of your hard-earned money and hedge it against inflation.

2. Long Term Goals

Some financial goals such as children’s education funds, marriage funds after children grow-up, house purchasing funds, may take 10 years, 20 years, or 30 years to accomplish. Hence, it is important to plan as earlier as possible. As a result, you can have ample time to invest and accumulate your funds. In line with these goals, financial planning can help you to determine the appropriate investment instrument.  So that, you are able to generate return and accumulate your funds for future needs. As Tony Robbins said that “The most important thing to do is start investing now so you can unlock the power of compounding.”

3. Emergency

Sometimes, unforeseen incidents such as hospitalization, loss of job, accident, and passing /demise of family member might happen. It is better to be ready than sorry. Therefore, financial planning can guide you to prepare the umbrella before it rains. Subsequently, the interest of your family is safeguarded. 

4. Dreams

You might have some dreams such as owning a house, owning a business, children schooling fees, create a family trust, foreign trips and so forth. Financial Planning leads you to the proper direction on realizing your dreams.

5. Retirement

Other than, family goals, your own retirement planning is significantly important. “If, you do not find a way to make money while you sleep, you will work until you die.” (Warren Buffet) Retirement is a long weekends without working. In life, you cannot expect your parents to be your emergency fund and your children to be your retirement fund. Based on the new survey done by HSBC shows that 68% of Millenniums in Malaysia borrow from their parents to purchase their own home (CBC News: 37% Of Young Homeowners Borrow From ‘Bank Of Mom And Dad,’ HSBC Survey Indicates”). A journey of the thousand miles begins with a single step, in order to grant yourself a comfy financial freedom during retirement age, you should seek financial planning from now.

Alert: Unauthorised Websites / Investment Products / Companies / Individual, Scams And Fraud

Gold scam by 'Datuk Seri' leaves victims in Malaysia poorer by S$5 million

https://www.youtube.com/watch?v=NedR2bWJge8

Kindly access to the list of unauthorised websites / investment products / companies / individual, scams and fraud in Malaysia and International:

https://www.sc.com.my/list-of-unauthorised-websites-investment-products-companies-individuals/

http://www.bnm.gov.my/index.php?ch=en_fraudarchive&pg=en_fraudarchive

https://my.usembassy.gov/u-s-citizen-services/scams/

http://www.mas.gov.sg/IAL.aspx?sc_p=A

http://www.asiaone.com/singapore/11-scams-are-happening-singapore-now

http://travelscams.org/asia/common-tourist-scams-thailand/

http://www.ambd.gov.bn/Pages/Financial-Consumer-Alert-and-Updates.aspx

https://travel.state.gov/content/travel/en/international-travel/emergencies/international-financial-scams.html

https://www.actionfraud.police.uk/a-z_of_fraud

http://www.news.com.au/travel/travel-advice/health-safety/common-scams-in-the-countries-we-travel-to-the-most/news-story/2047580b87619b84c24082d173a20b78

http://travelscams.org/asia/common-tourist-scams-indonesia/

https://www.mfat.govt.nz/en/countries-and-regions/south-east-asia/thailand/new-zealand-embassy/living-in-thailand/scams-in-thailand/

https://th.usembassy.gov/u-s-citizen-services/common-scams/

http://theindependent.sg/warning-top-scams-to-watch-out-for-when-travelling-in-asia/

https://www.mycert.org.my/en/resources/fraud/main/main/detail/515/index.html

https://www.rmp.gov.my/scam-alert

https://china.usembassy-china.org.cn/u-s-citizen-services/local-resources-of-u-s-citizens/scams/

https://www.scamwatch.gov.au/types-of-scams/unexpected-money/nigerian-scams

https://www.mfa.gov.sg/content/mfa/overseasmission/shanghai/announcements/Press_20160314.html

https://www.fbi.gov/scams-and-safety/common-fraud-schemes

http://ccid.rmp.gov.my/semakmule/index.cfm

http://www.scamnet.wa.gov.au/scamnet/Scam_search.htm

https://www.police.gov.hk/ppp_en/04_crime_matters/ccb/fst.php

https://www.moneysmart.gov.au/scams/companies-you-should-not-deal-with/unlicensed-companies-list/h

http://www.hkma.gov.hk/eng/other-information/fraudulent-bank-websites.shtml

https://www.whatsonweibo.com/10-scams-in-china-to-watch-out-for/

http://news.abs-cbn.com/video/business/05/28/15/watch-10-biggest-scams-ph

How To Become A Independent Financial Adviser In Malaysia?

One must pass a series of rigid examinations conducted by either one of the following:

1) Certificated Financial Planner (CFP) issued by Financial Planning Association of Malaysia (FPAM), which is recognized globally.

2) Registered Financial Planner (RFP) issued by Malaysian Financial Planning Council (MFPC), which is recognized locally only.

What is the difference between ACCA and MIA? ACCA is a worldwide recognized Accounting Professional qualification, whereby MIA is a locally recognized Accounting Professional qualification. 

To enroll in CFP courses, the particular person must fulfill the following requirement:

- Possesses a minimum of Bachelor Degree in any faculty of studies.

To enroll in RFP courses, the particular person must fulfill the following requirements:

- At least possesses a Diploma qualification (RFP).

After passing above examinations, the particular person must fulfill all of the requirements:

- Must be a malaysia Citizen.

- Have 3 years financial services experiences.

- At least 21-year-old

- Must be full time practitioner

- Attained a minimum 20 CE and 20 CPD hours on personal development training programs in yearly basis.

Besides that, the person has to obtain the title of CMSRL from Securities Commission Malaysia as Financial Planner and FAR license from Bank Negara Malaysia as Financial Adviser before practicing his/her role as an Independent Financial Adviser.

Those who act as or represent themselves as being "Financial Planners" without an investment adviser’s licence would be in contravention of the licensing requirements under the SIA and would be liable, on conviction, to a fine not exceeding RM1 million or to imprisonment for a term not exceeding 10 years, or to both.

Meanwhile, the term “Financial Adviser” is a restricted word under Section 139 of the FSA. no one shall in name, description or title uses such a word, unless he or she is approved under the (FSA) Act to carry on a financial advisory business. Anyone who contravenes the Act shall on conviction, be liable to imprisonment of up to eight years or fined not exceeding RM25 million, or both.



What is the different between Licensed Financial Adviser / Licensed Financial Planner with Unit Trust Consultant and Insurance Agent?

	Financial Planner & Financial Adviser	Insurance Agent	Unit Trust Consultant	Private Retirement Scheme Consultant
Represent	Customer	Insurance Company	Unit Trust Company	PRS Company
Approved / Registered by	Bank Negara (BNM) = Financial Adviser Securities Commission Malaysia (SC) = Financial Planner (CMSRL licensee)	PIAM (General Insurance) LIAM (Life Insurance)	FiMM	FiMM
Function	Offer professional financial planning advisory services to suit client’s personal finance need(s) from - wealth creation - wealth accumulation - wealth preservation & - wealth distribution S/he will research from multiple life & general insurers, multiple unit trust companies, multiple PRS providers, various local and overseas investment facilities, Will writing, and bereavement.	Salesperson for a single Life Insurance products. Salesperson for 2 general insurance products.	Salesperson for a single unit trust products.	Salesperson for a single PRS products.
Minimum Entry Requirement	Bachelor’s Degree, Passed CFP Certification / RFP Certification (240hours of lecture and 14 hours of exam in English language) Minimum 3 years of relevant experiences in financial services industry	Minimum with 3 credits in SPM and passed CPE (2 hours computerized exam in English language, Bahasa Malaysia or Mandarin Language)	Minimum with 3 credits in SPM and passed CUTE (2 hours computerized exam in English language, Bahasa Malaysia or Mandarin Language)	Minimum with 3 credits in SPM and passed CPRE (1.5 hours computerized exam in English language, Bahasa Malaysia or Mandarin Language)
Transparency Of Propose Solution	Impartial views and choices by evaluating the Pros and Cons of solutions or products.	Biased views without choice by just providing pros of product only.	Biased views without choice by just providing pros of product only.	Biased views without choice by just providing pros of product only.
Continued Education	SC (20hours), BNM (20hours), FiMM, FPAM (20hours) / MFPC (20hours)	LIAM (30hours)	FiMM (16hours)	FiMM (16hours)

References:

https://mfpc.org.my/education/registered-financial-planner-rfp/

http://www.kmdc.com.my/cfp/certified-financial-planner.html

http://www.thesundaily.my/news/1065338

https://www.thestar.com.my/business/business-news/2017/04/21/malaysia-needs-more-certified-financial-planners/

https://www.finews.asia/finance/24434-malaysia-wealth-management-private-wealth

https://en.wikipedia.org/wiki/Financial_Planners_in_Malaysia

https://www.youtube.com/watch?v=6T2Rbskz_aA

https://www.youtube.com/watch?v=bc-JSXFjvFI

Private Managed Account (PMA)

Private Managed Account (PMA) is a specifically managed investment account, which is designed for individual, corporate and institutional investors to attain their financial goals such as retirement funds, children education funds, emergency funds and etc.

Under this PMA product, a professional fund manager is assigned to actively manage, monitor and review client’s portfolio as per client’s risk profile and investment needs. Investors can access to the latest investment performance, decision, and news through the portal of client account.

Our company is one of the top performer in PMA. Investor can invest PMA via Cash and EPF Member's Account 1 withdrawal. The minimum amount to setup the cash account of PMA would be RM50,000.

Meanwhile, for the minimum setup amount for PMA investment via EPF Account 1 withdrawal would be RM5,000 with the commitment of RM30,000. PMA resembles a regular savings scheme, whereas it invests in a steady growing blue chips with high dividend yield.

According to analysts, it would be challenging for (EPF) Pension Funds to sustain dividend payouts of above 5% in the future. In long run, the Pension Fund’s performance will be determined by those returns from low-risk investments such as government bonds. Pension Fund invested almost 40% of the managed funds in bonds and loans. These type of investments have experienced dwindling yields. (The Star, EPF returns on the slide, 19 March 2009).

Nowadays, insufficient savings to support the high cost of living and medical costs during retirement have become a serious issue (New Straits Times, Self-funding your retirement, 11th January 2018). MHAS president, Professor Dr Philip George stated that the majority of retirees exhaust their EPF savings within three to five years, which can demolish their standard of living and quality of life (Malaysian Reserve, Malaysia needs to address challenges on ageing population, 27th March 2018). Due to those unexpected phenomena, why do not you give a chance for yourself to invest in PMA. Since, PMA investment might be able to offer you an opportunity to earn better return than Retirement Fund. Prepare umbrella before rains, prepare sufficient retirement fund before retires. So that, you may attain leisure lifestyle and enjoyment during your retirement.     

References:

https://www.thestar.com.my/business/business-news/2017/10/25/most-malaysians-cannot-afford-to-retire/

http://www.todayonline.com/world/asia/78-malaysians-do-not-have-enough-funds-retirement

https://www.youtube.com/watch?v=g7NHgIaMH7Y

Are you placing your personal Finance in the right track?

The survey of Federation of Malaysian Consumer Associations (FOMCA) showed that 30 to 40 percent of Malaysians do not have sufficient savings for emergency situations and retirement (Malaysian Digest, Almost Half Of Malaysians Have Zero Savings, Are You One Of Them?, 12th January 2017). More than 50% of Malaysians between 18 to 55 years old do not financially ready for retirement (The Sun, A study on 1,000 Malaysian found more than 50% not financially ready for retirement, 28th November 2017). A total of 294,000 Malaysians are involved in bankruptcy cases due to their failure to settle hire purchase loans, credit card loans, personal loans, housing loans and social guarantor debts (due to errant debtors). According to the Department of Insolvency's statistics, 70 per cent of bankruptcy cases involved individuals between the age of 35 and 45, and around 8,000 to 20,000 individuals were declared bankrupt for numerous reasons in a year (Malaymail, Bankruptcy cases involve 294,000 Malaysians a year, says minister, 14th September 2018). 

Are you always honest with your personal finance? Are you on the healthy financial status? Money seems like a discussion taboo. It is so much attributed to our egotistic, and self-esteem. If, you fail to plan, you plan to fail. If you fail to manage your money, your money manages you to fail. Do not let your money take control on you. Otherwise, you will be burdened with tonnes of debt.

Here are some methods, which you can implement honestly to yourself.

1. Find a piece of paper, or prepare to write note in somewhere as follows:

a. Your current debts, your commitments whether it is known or unexpected (credit card, loans, car service, daily expenses, petrol expenses, toll expenses, parking expenses,  future trip, etc) for the next 6 months. Write the total amount.

b. Figure out your total earnings for the next 6 month.

c. Minus total expenses with total earnings to determine its balance. If, the figure is positive,  congratulations to you! If, it is so unfavorable, break it down to how much you can afford to pay within each month (For 6 months).

If you are unable to allocate 20% to 30% of your monthly earning except EPF contribute for savings, you will get into hardship during emergency, credit card (interest around 7.88%p.a to 15% p.a), and personal loans (interest around 5.99% p.a to 18%p.a) might be the alternatives to fund your emergency. Eventually, you will end up accumulating more and high interest loans.




We cannot run away from debts. The longer you defer in repaying loans, the greater the interest will be. At the end, you have to extend your retirement age.

I experienced this as well. What I had done.

1. Cut down expenses
2. Find a way to earn more (side-incomes)

Financial management won't make you an overnight millionaire, "Rome wasn't built in one day",  but it will grant you a peace of mind and debts controllable status.

Be honest to yourself will let you make quick decision such as:
1) Can you afford the new commitment?
2) Can you afford that fancy dinner at fancy restaurant?

If you need a healthy lifestyle and healthy cash flow that you need tomorrow. It is advisable to start your savings and investment, today.

Formula of Savings = [23% (EPF Contribution) + 10% (Emergency) + 10% (Specific Purposes)] X Monthly Gross Income (Before Deduction of EPF)