What is a Financial Planner and Financial Advisors?
The financial planner is one particular type of financial advisor who specializes in helping companies and individuals create a program to meet long-term financial goals.
A financial planner might have a specialty in investments, taxes, retirement, and/or estate planning. Further, the financial planner may hold various licenses or designations, such as Certified Financial Planner (CFP) designation. Financial planners may specialize in insurance planning, tax planning, asset allocation, risk management, retirement planning, and/or estate planning.
Who does Financial Advisor represent?
- A financial advisor provides financial advice or guidance to customers for compensation. Financial advisors (sometimes written as ‘advisers’), can provide many different services, such as insurance planning, investment management, tax planning, and estate planning.
- Increasingly, financial advisors are providing a range of services from portfolio management to insurance products as a one-stop-shop.
Difference between Insurance Agent and Financial Advisor?
- Insurance agents are appointed representatives of life insurance companies. They will advise/sell you on your insurance or investment needs based on the products that their insurance company provides. Also known in the industry as tied agent, they have a responsibility to act in the best interest of the insurance company that they represent. Example: AXA agents who represent AXA will advise/sell you products mainly from AXA. AIA agents will advise/sell you products mainly from AIA. Great Eastern agents will advise/sell you products mainly from Great Eastern.
- Financial Advisors can advise/sell you products from at least five life insurance companies. Their recommendations are to be independent , unbiased and they are not allowed to be influenced by the insurance companies that they provide products from. A good financial advisor is someone that focuses on understanding the customer first, and then recommending products they are able to advise/sell to fill the needs of what the customer is looking for.
What can Financial Advisor do?
- If you are unsure what exactly the job scope of a financial advisor is, understand that a financial advisor is NOT a stockbroker, remisier, accountant or insurance agent.
- A financial advisors may work as an independent agent, or may be employed by a larger financial firm. They use their knowledge and expertise to construct personalized financial plans that aim to achieve the financial goals of clients. These plans include not only investments but also savings, budget, insurance, and tax strategies.
- Financial advisors can also help you remain disciplined about your financial strategy. They act as a financial coach – to listen and understand your concerns, and to push you to make the right decisions at the right time.
What are the licenses do Financial Advisor hold?
- All financial advisors in Malaysia are required to possess a Capital Market Service Representative Licence to deal in financial planning activities by the Securities Commission (SC).
- Furthermore, all independent financial advisors must hold a Financial Adviser Representative Licence issued by Bank Negara and a Corporate Unit Trust Adviser Licence provided by the SC. These licenses allow the financial advisor to provide different services without which, he or she is unlikely to be able to advise you independently and comprehensively.
How do you know if your agent is Financial Advisor?
- By law, not everyone is allowed to give investment advice. Unlicensed investment advisors potentially face up to 10 years in prison, a fine of up to RM10 million, or both.
- To help the public, the SC has publicly listed the names and information of unlicensed investment advisors in Malaysia.