6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant
Key Takeaways
Financial planning is one of the regulated activities under the CMSA, so anyone carrying it on must meet the licensing requirements in the SC Licensing Handbook.
An individual applying for a CMSL for financial planning must be at least 21, be resident in Malaysia and have net personal assets of at least RM50,000 at all times.
The SC Licensing Handbook recognises three credential providers for financial planners: FPAM, MFPC and MFPAA, which was formerly the Malaysian Association of Chartered Financial Consultants.
A Consultant who introduces himself as a financial planner needs a CMSL or CMSRL for financial planning in addition to FIMM registration.
In 2019 the SC allowed flexibility in the fee structures of CUTAs and CPRAs, enabling mentorship models and commission sharing between senior and junior planners.
Financial Planning Is a Regulated Activity
Financial planning is a regulated activity listed in Schedule 2 of the CMSA, so anyone carrying it on must meet the licensing requirements in the SC Licensing Handbook.
| Licence route | Rule |
|---|---|
| CMSL – company | Meets Chapter 4 of the Licensing Handbook: organisational competence, fit and proper directors, CEO and key staff, shareholding composition, adequate financial resources |
| CMSL – individual | Meets Chapter 5 of the Licensing Handbook (below) |
| CMSRL | A licensed representative may carry on financial planning if the principal is licensed for it |
| Sole proprietor or partnership with a CMSL | Cannot have licensed representatives acting for it; in a partnership only the licensed partner may do financial planning |
Requirements for an individual CMSL for financial planning
- At least 21 years old.
- Business registered with the Companies Commission of Malaysia, unless otherwise approved.
- Net personal assets of at least RM50,000 (or foreign-currency equivalent) at all times.
- Resident in Malaysia.
- A readiness checklist covering manuals, IT, policies, controls and compliance; the SC may run a readiness examination.
- A qualification from one of three credential providers: FPAM (Financial Planning Association of Malaysia), MFPC (Malaysian Financial Planning Council) or MFPAA (Malaysia Financial Planners and Advisers Association, formerly the Malaysian Association of Chartered Financial Consultants).
- Ongoing Continuing Professional Education in the format the SC specifies.
Skills a Financial Planner Needs
| Skill | Why it matters |
|---|---|
| Technical skills | To analyse finances and build a plan |
| People skills | To make clients comfortable sharing full personal and financial data; a plan cannot suit a client who withholds information |
| Listening | To pick up clues to clients' thoughts and fears in data gathering and reviews, empathise when returns disappoint, and record sessions in writing |
| Reading body language | Clients sometimes say one thing while their body language says another |
| Ethics and professionalism | Putting the client's interests ahead of one's own builds trust, the most valuable ingredient in the relationship |
The Securities Industry Development Corporation (SIDC), the SC's learning and development arm, introduced the Industry Competency Framework (ICF) in 2017. Its Competency Dictionary has 61 competency titles covering 173 job roles. In 2019 SIDC launched the Capital Market Competency Management System (CMS) for assessing competencies and identifying development needs. Each chapter of FIMM's study guide is mapped to ICF competency levels.
Financial Planner vs UTS/PRS Consultant
The study guide uses two examples:
| Example 1 | Example 2 | |
|---|---|---|
| How "A" presents himself | As a UTS or PRS Consultant | As a financial planner |
| What "A" does | Needs analysis, then recommends a UTS or PRS product | Needs analysis, then recommends, among other things, a UTS or PRS product |
| What "A" needs | Only FIMM registration as an authorised Consultant | A CMSL or CMSRL for financial planning and FIMM registration |
| Type of planning | Single-purpose planning (investments only) | Can offer comprehensive planning |
Comprehensive financial planning covers cash management, insurance, wealth creation, enhancement and preservation, tax, business succession, trusts and wills. FIMM's practice question: a Consultant cannot introduce himself as a financial planner unless licensed by the SC to carry on financial planning. The FIMM Code of Ethics reinforces this by prohibiting unauthorised use of the title.
How Financial Planners Are Paid
| Model | How it works | Comment |
|---|---|---|
| Fee based on time | Charge for the time spent building a plan | Longer engagement, higher fee |
| Fee based on portfolio size | A percentage of assets under review | Larger portfolio, higher fee |
| Performance-based fee | Linked to investment results (some US advisers) | Rare |
| Commission | Paid by product providers when a product is sold | Transaction-driven; clients may question whether advice is objective |
In the UK and Australia a large share of unit trust sales comes through independent financial advisers. In Malaysia, paying for a plan was once uncommon and seen as only for the wealthy, so planners were paid by commission like Consultants. Commission-only pay rewards transactions, which some argue is inappropriate when advising on goals. A service-based fee reduces the need to "sell" and is often seen as more independent and professional. Retail investors are now more willing to pay for advice.
Initiatives to Strengthen Financial Planning in Malaysia
- Fee flexibility for CUTAs and CPRAs (2019) – lets firms build mentorship models and share commission between mentors and mentees, so junior planners gain practical skills under senior planners. Firms must make sure this benefits planners broadly and does not become a pyramid structure.
- Marketing Representative framework – financial planners may refer clients to another capital market licence holder without registering as marketing representatives if the referral is made in the course of providing financial planning; otherwise they must register.
- Technology – planners who give holistic, proactive advice have an edge over robo-advisers, which cannot replicate human connection, but should still use technology to spread financial literacy.
Under what condition may a UTS Consultant introduce himself to clients as a financial planner?
After registering with FIMM as a Consultant
After passing the FIMM Combined Examination with distinction
After joining a CUTA or CPRA
After being licensed by the SC to carry on the regulated activity of financial planning
What minimum net personal assets must an individual applicant for a CMSL for financial planning maintain at all times?
RM100,000
RM10,000
RM500,000
RM50,000
Which organisation was formerly known as the Malaysian Association of Chartered Financial Consultants?
Malaysian Financial Planning Council
Malaysia Financial Planners and Advisers Association
Financial Planning Association of Malaysia
Securities Industry Development Corporation
Sections you finish are checked off in the contents.