1. Overview of Financial Planning By: Associate Professor Dr. GholamReza Zandi zandi@segi.edu.my

2. What is Financial Planning ? It is a PROCESS of Formulating; Implementing; and Monitoring multi-functional decisions that enable an INDIVIDUAL, family or an organization to achieve their FINANCIAL GOALS

3. Financial Planning in Malaysia Still at its infancy stage FPAM formed as an association under Societies Act on 13-Dec- 1999 Main objective of FPAM to educate the general public on the process & benefits of FP FPAM also aims to produce qualified FP professionals through the CFP programme April-2000: FPAM entered into an Affiliation Agreement with CFP Board of Standards, USA and licensed to use the CFP mark in Malaysia FPAM became the 12 th member of the International CFP Council In Malaysia, financial planning is a regulated activity – under part 2, schedule 2 of the Capital Markets and Services Act 2007, it is defined as : Analyzing 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

4. Range of Financial Planning Services Retirement planning (most frequently offered) Estate planning Education planning Tax planning Risk management Others (eg. asset management)

5. Users & Providers of Financial Planning services The general public Potential clients include doctors, lawyers, business executives, retirees, etc USERSPROVIDERS Accounting firms Law firms Insurance companies PFP companies Banks Brokerage houses Unit trust companies

6. Profile of a Competent Financial Planner 1. 2. 3. 4. 5. 6. 7. 8. Ability to assist client achieving their goals & objectives via the process of financial planning Ethical in his dealings Good communication skills Variety of skills & knowledge covering: Estate & retirement planning Tax planning Investment planning Insurance planning Time value of money Education planning External analysis Communication & internal analysis Financial statement analysis

7. Components of a Financial Plan GROWTH COST SAVINGS PROTECTION

8. Views of Financial Planning 1.SINGLE PURPOSE (Specialist) VIEW 2.MULTI-PURPOSE VIEW 3.COMPREHENSIVE VIEW

9. Necessities of True Financial Planning 1.SOLVE more than a client’s single financial problem 2.INCLUDE some investment planning activity 3.DEAL with a large part of one category 4.EXTEND beyond the selling of a single financial product or service

10. Necessities of True Comprehensive Planning 1.Consider all aspects of a client’s position 2.Utilise several integrated and coordinated planning strategies for fulfilling the client’s needs and objectives 3.Be performed for a client all at once, then update periodically 4.Encompass all of the client’s needs and objectives

11. Steps in Financial Planning 1.Help the client set financial goals 2.Gather relevant information (objective & subjective) about the client 3.Analyse the client’s present position by determining where the client is now with respect to the goals that have been established 4.Develop a plan to achieve the client’s objectives 5.Implement the plan 6.Review the plan’s performance and revise the plan periodically

12. Main Job Activities of a Financial Planner 1. Marketing FP services  Writing articles Advertising Making personal presentations Obtaining referrals from other professionals & clients 2. Evaluating the client’s needs  Interviewing Using questionnaires Helping the client define financial goals & needs 3. Communication  Explaining the FP concepts Clarifying client’s goals 4. Preparing the Plan   Analysing the client’s circumstances Incorporating relevant documents (eg. Tax returns, insurance policies, etc) 5. Implementing the client’s Financial Plan 6. Monitoring the client’s Financial Plan

13. Worth’s Magazine’s Top 250 Financial Advisors in the US 78% holds CFP mark 65% of CPAs and Attorneys in the list holds CFP designation 84% of those with single credential holds only the CFP designation

14. Types of Professional Advisers Used

15. 18 3.63.6 4 4 4.24.2 4.54.5 4.64.6 012345 Cost of services Credentials Specialization Client references Experience TrustTrust Importance of Selection Criteria Mean scores How would you rate the importance of this criteria? Please rank on a scale of 1 to 5, with 1 being not important at all” and 5 being “extremely important.”

16. Major Concerns of Consumers 1.Running out of money during retirement 2.College funding 3.Long-term care for parents

17. Major Concerns of Consumers Among New Generation 1.Meeting mortgage payments 2.Having sufficient retirement funds 3.Expense of LT parental care affect savings for children’s education 4.Expense of children’s education affecting ability to support parents 5.Outliving retirement savings 6.Meeting financial responsibilities 7.Saving a greater amount to deal with above concerns

18. Challenges Ahead of Consumers in Financial Plans 1.Tendency to procastinate 2.Tendency (for Malaysians) to live beyond their means 3.Lack of financial knowledge

19. 22 Who is a Financial Planner?

20. The End