What Do Financial Planners Actually Do?

In an ideal world, we’d all have a good handle on our money. We’d know how to create a budget (and stick to it), we’d know how to spot the right investments, and we’d all be well on our way to the retirements of our dreams.

But reality is often less than ideal. Some of us will struggle with some, if not all, aspects of our finances. And since many of us just don’t have the time, experience, or resources, it’s difficult to optimise every single aspect of our money all on our own.

Plus, given that our life circumstances can vastly vary from person to person, not all the financial advice we read online or in books will work for us.

So, it’s only natural to want to seek a little bit of help with our finances. And that’s where financial planners can come in.

What is a financial planner?

Think of financial planners as personal trainers but for your money.  They’re licensed specialists in the arena of money management that can help you navigate your finances and create a plan specifically tailored to your goals and needs.

Just as you would hire a fitness trainer to help you lose weight, get lean, or bulk up, a financial planner can help you reduce your debt, build your emergency savings, or optimise your retirement portfolio, , among other things.

Marshall, a licensed financial planner and blogger at PLANNERD shares, “My job as a financial planner is more than just the calculation and projections. I see my main role as a listener and also someone that carefully prompts clients to think about their life goals.”

In other words, a financial planner isn’t a person that just tells you what funds to invest in or financial products to buy. They’re there to listen to your financial struggles, answer your burning money questions, provide guidance and recommendations that fit your goals and needs, and track your progress towards your goals.

What it’s like to work with a financial planner

When you first consult a financial planner, they’ll give you a detailed questionnaire or do a thorough assessment of your financial situation.

Typically, they’ll ask you questions about your current spending habits, debt obligations, savings, income streams, and the goals that you hope to achieve. According to Chief Executive Officer of FPAM, Linnet Lee, “The financial planner will help you determine your goals and time horizon, after which they will need to obtain information about your financial situation.”

Your consultation can get very detailed and take up to a couple of hours. You may discuss various aspects of your financial life including your:

• budget and savings,
• cash flow,
• emergency funds,
• taxes,
• retirement plan,
• investments,
• estate and legacy plan, and
• debts

Some people may only need help in a few areas, while others may require a comprehensive financial plan that covers all aspects of their finances. So, your first consult is a good way to gauge how far along you are in your financial planning journey. You can think of it as a health screening for your money.

If you feel like you need more help with your money, and you trust the planner that you engage with, you could continue working with them and even use their financial planning services. Generally, a financial planner will build a 1-year plan based on your goals and needs.

Costs of engaging with a financial planner

Though the fees vary across different financial planners, you can expect to pay within this range:

• One-off consultation fee: RM150 – RM500
• Full financial plan: RM2,500 and above

Some financial planners also get a commission for recommending particular financial products. This leads us to our next point.

How can we tell the difference between independent financial planners that genuinely want to help from those that simply want to sell a financial product?

Look for licensed financial planners

Though the financial planning industry has grown over the last 25 years in Malaysia, there’s still a misconception that financial planners are just hard-selling insurance agents. And it doesn’t help that many sales agents call themselves “wealth planners”, “financial consultants”, or “financial advisors”.

And with the rise of finance influencers and gurus, it becomes harder to weed out the people trying to sell you a financial course from legitimate financial planners.

But one way to ensure that you’re engaging with a real financial planner is to check their credentials. Make sure that they’re certified by the Malaysia Financial Planning Council (MFPC) or Financial Planning Association of Malaysia (FPAM).

In addition, check to see if your financial planner is licensed by both Bank Negara Malaysia (BNM) and the Securities Commission (SC).

A financial planner that’s licensed by BNM is called a Financial Adviser Representative (FAR). FARs can recommend any insurance products from any insurance company.

Meanwhile, a Licensed Financial Planner, licensed by SC,  can deal in financial planning activities and can recommend unit trusts and Private Retirement Schemes.

Because a financial planner that holds all these licenses can recommend products from any institution, they’re more likely to recommend products that best suit your needs.

You can also check the Public Register of Licensed Financial Planners for a list of independent financial planners in Malaysia.

Linnet also shares that genuine financial planners are more concerned with your life goals than selling a financial product.

So, don’t be afraid to ask your financial planner why he’s recommending a particular product, how it fits into your overall financial plan, what fees are involved, and whether he gets a commission for it.

And if you feel like your planner is trying too hard to sell you something, whether it’s a financial product or their financial planning services, you may want to get a second opinion.

Should you get a financial planner?

You don’t have to be a millionaire to work with a financial planner. On the other hand, if your finances are simple, you may not even need a financial planner at all.

But if you’re feeling overwhelmed and stressed every time you think about money, it might help to seek advice from a financial planner. Linnet says, “It is the middle-income group that will benefit the most from the services of a financial planner (as it will) help them through the different economic cycles and avoid costly financial mistakes.”

Not to mention, having a financial planner guide you through the financial considerations of your big life milestones such as buying a home, getting married, or having children, can alleviate your anxieties about these milestones and help you plan for them better.

And even if you feel confident about your financial health and your DIY financial plan, it doesn’t hurt to have someone else look over your plan. A financial planner may be able to see areas of improvement in your current plan to help you reach your goals quicker.