It’s Time for Financial Planning Companies to Adopt Technology

By Rafiq Hidayat Mohd Ramli

Should access to financial technology be available to a certain individuals in the finance industry or for everyone? Here, I discuss why financial planning firms should have access to the latest technology suitable to the technological shift happening in our financial industry.

When I attended the Association of Financial Advisers (AFA) Conference last month, one of the speakers shared with the participants with regards to a new social financial tool that will help Financial Planners improve their efficiency and augment their intelligence.

All in all, I was impressed by the thought that went into the development of the tool, as most of the functions were items that I was planning to include in our own application.

However, when I went to inquire more about the functions of the tool, to my dismay the developer informed me that the tool was built for the individual financial planners with no plans to have an aggregator built-in for firm-level data analysis and decision making.

That brought me to think, should the development of the financial planner business be individual-led or firm-led, or a combination of both?

Obviously, as a firm owner, I see some disadvantages if the system is left for the individual financial planner.

Benefit of Having Firm-Based Fintech Instead of Individual Oriented

Initiative to Improve As A Group

If FinTech tools are only available to individual financial planners, this would mean that only financial planners who see the value in engaging the company for the system would pay for the services, and this needs to take into account whether they have the means to do so. On the other hand, a financial firm can impose implementation of wide usage of FinTech in which firms can dictate/support/subsidize the cost to allow everyone to reap the benefits of using the system.

Ease of Learning Curve

Best known method sharing. When individuals use the system, they will attempt to learn how to use the system to help them with their own sales process, etc. While this is good, on the other hand having a firm-mandated system would allow the same advisor to learn from the mistakes/findings of the firms and/or other advisors. Leveraging in this manner would accelerate the full implementation of the system faster.

Better Management of Clients

Currently, some firms do provide leads to their advisors (some, not all). As a firm that does so, I would also like to know how the lead/client that has been provided is being managed instead of being kept in the dark for a resource that has been provided to the advisor. Having the system being aggregated at a firm-level would allow for some supervisory functions which in turn will help in better management of the clients in general.

Why FinTech Is Not Available for Firms Yet

The reasoning behind why it’s not made to be aggregated at a firm-level was to allow for planners/advisors to move between firms as the ownership of the clients belongs to the advisors, not the firm. I can’t speak on other firms, but in Wealth Vantage Advisory – WVA, our advisors are allowed to bring out all their clients, AUM, etc if they decide to leave the firm at any time, with the exception of the firm-provided clientele.

Back to my experience at the AFA conference, I was hoping that the system that was presented could have been implemented seamlessly for the firm as this would cut down on the process that we would have taken to implement/built it ourselves. However, as it seems, we will still have to spend the resources in order to do so.

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5 Questions People Ask on Investing

By Stephen Yong

As a licensed financial planner, I have been asked a number of investment questions over the years. What are the most common yet often challenging questions on investment?

Should I invest now or try to time the market due to X reason (i.e. Novel Coronavirus)?

No one can accurately predict what can happen next. Overall, more importantly than trying to time the market is your overall personal investment plan. This starts with your portfolio in a good asset allocation that is meant to be held throughout different economic conditions. This starts with investing based on your current funds available after allocating for emergency savings. Then you will want to continue to grow your investments by investing regularly.

Over time your asset allocation will go off thus you will want to rebalance regularly typically every 6 months. This allows enough time for investments to gather some gains. While making sure that your overall asset allocation is not too far off that you are overly at risk with increased volatility.

Should I invest lump sum or stagger my investment?

Investing lump sum rather than trying to time the market generates on average a 2-3% higher returns. In the longer scale of things would make more sense to be invested rather than not.

If you miss out the best X number of days in investing you are risking out on a significant amount of returns:-

Miss best 10 days in market: -15% returns

Miss best 20 days in market: -40% returns

Miss best 30 days in market: -55% returns

(Source: iFAST and Wealth Vantage Advisory)

Should I sell off my under-performing investment now or wait for it to recover?

Again, there is no crystal ball to determine where an investment will head next. Generally if you are switching in the same asset class, the asset class that is generally down will likely also be lower cost when you switch into a similar asset class. If you are looking at a particular single investment you can choose to go through technical and/or fundamental analysis as part of the decision making process for disposing of an investment. This may help to minimize losses/maximize returns although in the larger scale and time of things it does not make that significant of a difference.

Cutting under-performing assets is important as you need to stick to your investment plan including when to exit under-performers. If you continue to hold on to under-performers, your capital is trapped within the particular investment and you are forgoing future income even if the investment just continues to stay stagnant. Selling off under-performing investments is also important for rebalancing your portfolio, if you need cash, and/or you simply acknowledging you made a wrong investment choice.

Should I invest in X investment?

Asset allocation is responsible for 80% (or higher) of your total returns. Knowing what to buy and when to buy it, is responsible for less than 20% of the total returns. Most importantly is to not consider your investment in isolation but on overall holistic basis of how an investment fits into your overall investment plan. With that said, you do need to perform due diligence on every investment.

Do you understand the investment and how it works? Is the investment legal and approved by regulators? What are the fees and charges for the investment? What are the expected rate of returns after deducting fees? Are there any other better alternatives to the investment? How does the investment fit into your overall personal investment plan and asset allocation?

(Source: NovelInvestor and Wealth Vantage Advisory)

Should I diversify into X investment?

Diversification is part of asset allocation but not just that. Asset allocation is dividing up your investments among different asset classes (e.g. equities, bonds, property, commodities). This allocation is decided in advance based on life goals and priorities, risk profile, age and stage of life. Asset allocation is the one key factor that determines where an investor ends up. It’s one of the most important things to do and yet the one most investors neglect.

When investing on a regular schedule using dollar cost averaging in accordance with your asset allocation plan, you are diversifying over time. The fluctuations of the market work to increase your gains (not decrease them). To be a successful investor, you need to rebalance your asset allocation at regular intervals. You also need to rebalance within markets and within asset classes.

Diversification needs to be done purposefully and regularly for overall improved returns at reduced volatility and risk. But over diversification can work negatively by reducing your gains without necessarily reducing your risk while adding unnecessary complexity with too many investments to monitor.

Interested to engage with a financial planner to better understand investing? Contact us at hi@wealthvantage.com.my

Cara Mengatasi Penipuan Kewangan di Malaysia

By Saidah Asilah

Apakah yang boleh dikategorikan sebagai penipuan kewangan? Mengikut Bank Negara Malaysia, penipuan kewangan boleh didefinisikan sebagai aktiviti yang mengandungi unsur tipu helah melibatkan transaksi kewangan dengan sengaja untuk menguntungkan individu/organisasi dan merugikan mangsa. Terdapat pelbagai jenis penipuan termasuk skim cepat kaya, Macau Scam, pemalsuan identiti dan lain-lain. This article was originally published on MyPF.my.

Skim Cepat Kaya, Skim Piramid dan Penipuan Kewangan

Akhbar dan televisyen melaporkan PDRM berkata kebanyakan golongan professional telah terjerat dalam skim cepat kaya. Kos sara hidup dilaporkan antara faktor utama sertai skim cepat kaya. Apabila sudah terjebak dengan skim cepat kaya ini, perancangan kewangan bagai angin lalu, ibarat masuk telinga kanan, keluar telinga kiri. Kebanyakan masa skim cepat kaya terdiri daripada golongan bawah 40 tahun. Mereka inilah juga yang mempunyai kelebihan merancang awal kerana 2 faktor: kelebihan umur dan “compounded dividend/interest”.

Golongan ini akan tertambat untuk membuat perancangan kew awal apabila terjebak dengan kesalahan demi kesalahan kewangan. Contoh biasa adalah; pinjaman dengan faedah yang tinggi, pinjaman demi pinjaman yang tidak menguntungkan serta terjerat dengan penipuan skim cepat kaya.

Oleh kerana ramai yang sanggup membuat pinjaman kerana terpengaruh dengan skim cepat kaya, berikut antara langkah untuk kita mengenalpasti perniagaan yang mempunyai tanda skim piramid:

1. Tawaran komisen sebagai ganjaran penajaan ahli dan pengedar baru.

Setiap ahli baru akan dikenakan yuran keahlian. Dikatakan yuran tersebut sebagai pelaburan pokok, walhal untuk habuan kepada pengusaha skim ini.

2. Penggandaan wang apabila merekrut ahli.

Mengatakan ada penggandaan wang menerusi kemasukan ahli yang semakin ramai. Semakin besar ahli, semakin besar pendapatan yang bakal diperoleh.

3. Tidak jelas bagaimana sumber pendapatan diperoleh.

Banyak skim ini tidak menceritakan bagaimana sumber pendapatan mereka dijana. Skim-skim ini mengatakan keuntungan adalah hasil penjualan barangan.

4. Penceritaan pengalaman mereka yang sudah menerima habuan dan ganjaran.

Selalunya, mereka ini adalah mereka yang terdahulu sudah masuk ke dalam skim ini. Realitinya, habuan ini daripada wang ahli yang beramai-ramai menyertai kemudiannya.

5. Banyak bercerita tentang pulangan pelaburan yang tinggi.

Skim ini tidak boleh dipanggil pelaburan kerana wang pokok yang dilaburkan ahli bukan “bekerja” untuk mendapat pulangan atau dividen.

6. Pelaburan yang sebenar, dalam konteks saham, akan mendapat pemilikan ekuiti, yang diterbitkan oleh syarikat yang tersenarai di Bursa Malaysia.

Selain saham, pelaburan yang berdaftar memberi setiap ahli risalah pelaburan dan juga penyata kewangan yang diaudit setiap tahun.

Macau Scam

Macau Scam memperdaya mangsa melalui panggilan palsu yang menyamar sebagai anggota polis, pihak bank, atau agensi kerajaan selain menawarkan hadiah kemenangan cabutan bertuah. Dua tahun lepas, sehari sebelum saya menyambut Aidilfitri, gangguan emosi yang dahsyat telah dihadapi oleh diri saya sendiri apabila menerima panggilan bertalu-talu serta SMS daripada Skim Macau. Di daerah Sepang sahaja, PDRM melaporkan 12 kes diterima sejak Januari tahun ini, kebanyakannya adalah dari golongan professional dan pesara.

Antara langkah untuk mengendali Macau Scam adalah:

1. Bertindak rasional dengan tidak melayan sebarang panggilan.

Tidak mudah panik dan bertindak tegas akan melaporkan kejadian kepada pihak berkuasa segera. Tenang dan jangan bertindak mengikut emosi kerana mereka sering kali mengeksplotasi emosi penerima panggilan melalui senario-senario tertentu contohnya seperti; dakwaan penggubahan wang haram, kes langgar lari, penculikan ahli keluarga dan sebagainya.

2. Skeptikal terhadap maklumat yang diberi oleh pemanggil.

Tidak mempercayai sebarang maklumat, walaupun benar seperti nombor IC yang disebutkan oleh pihak pemanggil. Segera semak dengan bank dan pihak berkenaan untuk pengesahan dan aduan. Ini adalah kerana bank jarang berkomunikasi dengan pelanggan melalui telefon dan selalunya melalui mod surat-menyurat.

Gagal Mengawal Emosi Akan Membawa Kepada Tindakan Tidak Rasional

Kebanyakan punca kehilangan wang adalah disebabkan kegagalan mengawal emosi. Menurut Dr Edward Charlesworth, pakar psikologi Amerika Syarikat, wang adalah punca tekanan hidup yang parah. Mereka yang tertekan dengan hutang akan membuat keputusan di luar jangkaan, berfikiran singkat tanpa menimbang akibat sesuatu perkara.

Mereka yang tidak mempunyai keutamaan dalam perancangan kewangan akan cepat berputus asa dan berada dalam keadaan penafian. Menerusi pengamatan saya, mereka akan membuat hutang tanpa henti. Golongan ini boleh mengalami masalah tekanan hidup, rendah keyakinan diri, mempunyai sifat kebendaan melampau dan kemurungan. Penyelesaian bagi golongan ini adalah membeli belah sebagai satu bentuk terapi.

Segala nasihat, idea dan cadangan yang digariskan tidaklah sama kepada setiap individu. Golongan ini boleh mendapatkan nasihat professional untuk mencapai matlamat kewangan sebenar. Usaha ini bukan mudah, dan memerlukan masa untuk seseorang mula belajar langkah pengurusan kewangan yang baik.

Saya merupakan salah seorang perancang kewangan bertauliah, yang bukan sahaja tertakluk memberi produk pelaburan atau perlindungan yang sesuai. Malahan lebih kepada memahami dan membantu sesorang mencapai matlamat kewangannya.

Langkah-langkah tersebut merangkumi bermula daripada analisis aliran tunai, pengurusan hutang, nilai aset-aset setelah ditolak hutang-hutang, kedudukan kewangan, perlindungan diri, harta dan keluarga, pelaburan yang sesuai, pembayaran cukai, perancangan untuk persaraan, dana pendidikan sesuai untuk anak, dan perwarisan harta. Berdasarkan kes yang diterima kami, pegawai bank yang berlatarbelakang pendidikan kewangan juga ramai mendapatkan khidmat nasihat professional untuk mengetahui pendapat kedua, selain daripada pengetahuannya sendiri.

Jika mengagungkan kehidupan selebriti, renungkan contoh di Amerika Syarikat. Menurut Biro Kajian Ekonomi Kebangsaan, hampir 16% pemain Liga Bola Sepak Kebangsaan telah difailkan status bankrap, hanya selepas 12 tahun bersara. Banyak selebriti mengalami contoh serupa, namun lebih parah adalah atlit.

Contoh realiti terbaik pencapaian kebebasan kewangan atau pelaburan ialah Lesley Scorgie, penulis buku terkenal Rich by Thirty: A Young Adult’s Guide to Financial Success (2007). Beliau dinamakan oleh Oprah Winfrey sebagai seorang wanita di ambang jutawan ketika umurnya mencecah 30 tahun. Lesley telah mengamalkan pelaburan pertamanya di dalam Canada Savings Bond ketika umurnya 10 tahun.

Untuk lebih arif tentang penipuan dan skim cepat kaya ini, di luar sana, carilah seorang mentor atau jurulatih kewangan peribadi serta menambah ilmu di dalam soal kewangan dan pelaburan.

Kongsi bersama kami cerita anda dan komen di bawah jika anda atau kenalan anda pernah terjerat dengan mana-mana penipuan kewangan.

Saidah started her career as a graduate trainee with Securities Commission Malaysia. Then, with a deep interest in investments, she furthered her studies in MSc in International Business and Emerging Markets, graduating in 2013 from The University of Edinburgh, UK.Saidah is a Certified Financial Planner and describes herself as a multi-talented adventurer who gives a positive impact to whomever she meets.