It’s common these days for Malaysians to buy financial products such as life insurance, unit trusts, and real estate from “agents” who are actually friends or family members.
While there’s nothing wrong with this per se, it’s important for you to ask yourself: “Are these products actually useful to help me build or protect my wealth?”
Oftentimes, people buy such products without considering how they truly impact their financial lives. They tend to decide hastily or emotionally, or simply out of a desire to please the person from whom they are making these purchases.
Here’s where financial planners can come into play. Such professionals are trained to help you make the best decision that will truly be of benefit to you when it comes to your personal money.
Here are three reasons why working with a financial planner is the more efficient and effective choice.
1. Professional training
It’s relatively easy to join an insurance company as an agent, or a realtor as a property negotiator. But to be a certified financial planner (CFP), you will need to have undergone the following educational modules:
- Module 1: Foundation in Financial Planning and Tax Planning
- Module 2: Insurance Planning and Estate Planning
- Module 3: Investment Planning and Retirement Planning
- Module 4: Financial Plan Construction and Professional Responsibilities
Subsequently, the candidate is required to obtain his Capital Markets Services Representative’s Licence from the Securities Commission, and be attached with a licensed financial planning firm before he or she is allowed to practise.
As such, the route to becoming a CFP is longer. This means that when you work with one, you can expect them to be well-versed in all financial areas, allowing them to:
- assess your financial health comprehensively;
- address issues that are more critical to your finances;
- chart the big picture to your financial life; and
- work towards achieving your overall objectives with you. Which leads to:
2. The big picture
In their training and line of work, financial planners are exposed to working with life insurance companies, fund-management houses, stockbrokers, realtors, trust companies and others.
As such, he or she can propose products that are required and relevant to you as they don’t represent a single company. If a product from one firm is not suitable, they will move on to the next one that can and will serve your needs.
Working with a financial planner also means you do not need to do the hunting and sourcing of products, making life much more convenient. You won’t need to meet up with agent A, B and C from company X, Y and Z to get quotations 1,2 or 3 – your licensed professional will identify them and usually present you with the top three options that are best for you.
In the meantime, you could use your time for more leisurely or productive pursuits.
3. A long-term relationship
Have you bought an insurance policy from an agent who is now no longer one? When was the last time you contacted your real estate negotiator? What about your unit trust consultant or will writer?
It is common for agents to be commission- rather than client-focused. Meanwhile, financial planners are less inclined to “dump their clients because their engagement usually requires a yearly contract, obligating them to work with you for at least 12 months.
Also, going back to point No. 1, the journey to becoming a CFP is long – meaning, those who embark on this profession are likely to stick with it.
After all, the cost of exiting or switching careers is much higher for financial planners, which is good news for those who are afraid of discovering that their planner has moved on to the next “big thing”.
This article first appeared in KCLau.com. Ian Tai is a financial content writer, dividend investor, and author of many articles on finance featured on KCLau.com in Malaysia, and ‘Fifth Person’, ‘Value Invest Asia’ and ‘Small Cap Asia’ in Singapore.