Financial planning industry has grown considerably to play pivotal role – SC chairman

PETALING JAYA: The financial planning industry has grown considerably and played an increasingly pivotal role in the financial well-being of many Malaysians.

Between 2015 and 2022, the number of financial planning firms increased by 42 per cent, from 31 to 44 firms as at end-2022, while the number of licensed representatives grew by 145 per cent over the same period to 1,455.

The Securities Commission Malaysia (SC) executive chairman Datuk Seri Dr Awang Adek Hussin said it is important for the financial planning industry to keep up with changing market conditions and investor demands.

“The financial planning industry must broaden its offerings to meet investors’ preference for socially responsible investment (SRI), invest in technology for more personalised services and build a skilled talent pipeline for the future,” he said in his keynote address at the Financial Planning Association of Malaysia (FPAM) Annual Signature Financial Planning Symposium 2023 here today.

Moving forward, he said, regional and local wealth trends indicate that investors are seeking holistic investment strategies that consider their entire portfolio, rather than focusing on individual products.

“The evolving service model and access demanded by clients is led by increased demand for personalised advice with deeper investor engagement over the long term.

“Towards this end, the SC seeks to facilitate and empower firms and consultants to move towards more comprehensive wealth management offering across the capital market and financial sectors in a bid to meet Malaysians’ evolving needs,” he said.

He also urged the industry to take more initiatives to build talent pipeline at their own accord by collaborating closely with universities and other professional associations to enable firms and industry associations to develop courses to mould the next generation of financial planners and ensure a steady stream of high-quality local talents.

Through these means, the industry will be able to cultivate the next generation of talent, ensuring the sustainability and continuity of the Malaysian financial planning industry, he said.

Awang Adek added that the performance of the capital market in the near term will continue to hinge upon key global and domestic developments, notably geopolitical developments, global monetary conditions and corporate earnings.

Signs of moderating inflation globally have led to a shift in expectations that major central banks are close to the end of their monetary policy tightening cycle and supporting financial asset prices, he said, adding that both the US Federal Reserve and European Central Bank (ECB) raised their rates by 25 basis points in July and kept the door open for future hikes but hinted that their policy rates may have reached their peaks.

Domestically, he said, there appears to be more clarity following the launch of the government’s Madani Economy framework.

He said the Malaysian economy has continued its recovery path post Covid-19 pandemic with an expansion of 4.2 per cent year-on-year Gross Domestic Product (GDP) growth in the first half of 2023, attributed to an improving labour market, resilient domestic demand and increased tourism activities.

Compared to pre-pandemic levels, the Malaysian economy is currently more than six per cent above 2019 real GDP levels and is expected to remain on a steady growth path of between 4 per cent and 5 per cent in 2023, he said.

“Initiatives under the Madani Economy framework are expected to improve investor confidence in the Malaysian economy and attract greater inflows and foreign investors into the domestic capital market. This in turn will provide better opportunities for financial planners to expand their client base as well as enable existing clients to grow their wealth,” he said.

On another note, he said the government is also looking at policies to facilitate and attract the setting up of family offices in Malaysia with the aim of attracting a larger pool of investors to support financing for small and medium enterprises (SMEs) and the new economy.

“These family offices will require specialist advice in a broad range of investments and services, from traditional investments to tax and estate planning to name a few.

“Licensed financial planners are uniquely placed to capitalise on this invaluable opportunity to service family offices that will be looking to set up operations in Malaysia,” he added. – BK