In order to build your credibility as a financial planner, dispensing impartial advice and being transparent with your client are critical factors to adhere to.
At a time when debts and expenses are skyrocketing, financial planners are being hailed as saviours and protectors of their clients’ wealth from the big bad wolf of bankruptcy. Even so, financial planning is still a relatively misunderstood industry. Some deem it a fancy term for product-pushing, while others view it as a form of financial counseling.
In our earlier article entitled “Why you need an independent financial planner!” we gave readers some points of why it is important to work with a financial planner. The reasons included client’s general lack of financial knowledge and also that financial planning requires multi disciplinary skills and multi industry knowledge. Time constraints faced by individuals, the normal lack of discipline, the ever changing market and economic situation are also reasons why working with a professional financial planner is so important in organizing and making important financial decisions that impact an individual’s financial well being in the long term. My colleague Robert Foo and I also stressed that it is important to work with a financial planner who is independent and places the clients interest first and that the mode of compensation has a great effect on the level independence of your financial planner.
Surveys and studies carried out about personal financial habits have indicated that individuals normally do not handle their financial matters effectively and need to work with a competent and independent financial planner or adviser. There are many reasons for this situation.
I read with interest the uproar concerning the substantial losses incurred by Employees Provident Fund (EPF) contributors who have invested their EPF money in local unit trust funds.
EPF should make it a rule that any investments in unit trusts by way of using EPF contributors' monies should have a lower upfront charge (perhaps 0.5% or even at NAV) rather than the current high rate of 5-7% on the initial investment amount. (I remember at one time our Deputy Finance Minister Dr Ng Yen Yen also remarked that unit trust upfront charges are too high.)