Keynote Address at e-Forum: MPFC Professional & Ethics Forum 2022

Speaker: Dato’ Seri Dr. Awang Adek Hussin, Chairman, Securities Commission Malaysia
Location: Kuala Lumpur
Theme: The Role of Compliance and Ethics in Risk Management
Delivered: 8 December 2022

Note: This is the speech as drafted and may differ from the delivered version

Key Highlights:

During his keynote address at the MFPC Professional & Ethics Forum 2022 that took place earlier today, SC Chairman Dato' Seri Dr. Awang Adek emphasised three key areas that will ensure a well-prepared and thriving financial planning industry for the long term. These include maintaining high standards of professionalism, upholding duty of care and embracing innovation. Here are highlights from his speech:
  • The financial planning industry must remain vigilant to prepare for any eventuality and ready to handle the risks ahead.
  • The first key principle is professionalism. This will ensure clients trust that the best possible outcome will be delivered, irrespective of any situation.
  • The second key principle is Upholding of Care to provide quality advice to clients.
  • For the SC, the notion of a vulnerable investor is a key priority to ensure a more inclusive capital market.
  • The third key principle is embracing innovation to enhance effectiveness and efficiency and better serve clients.
  • Institute of Capital Market Research (ICMR) survey: Millennials and Gen Zs are more inclined to use robo-advisory services.
  • Financial planners and advisers must ensure that their clients do not fall prey to unlicensed schemes and activities.

Speech as delivered:
Ybhg Prof. Datuk Dr. Syed Othman, Pengerusi Lembaga Penasihat MFPC,

Encik Vincent Kwo Shih Kang, Presiden MFPC,

Cik Chung Kar Yin, Pengarah Eksekutif,

Tuan-tuan dan puan-puan,
Assalamualaikum warramatullahi wabarakatuh dan salam sejahtera.
  1. Pertama sekali, saya ingin mengucapkan terima kasih kepada Malaysian Financial Planning Council atas undangan untuk saya menyampaikan ucapan pembukaan di e-Forum tahun ini.
  2. Tema forum pada kali ini, yang menekankan pematuhan dan amalan beretika akan memastikan industri perancangan kewangan negara yang lebih teguh serta mampan. Saya percaya penasihat yang berintegriti dan beretika, adalah rakan kongsi paling sesuai untuk memastikan matlamat kewangan pelabur dicapai, dan kepentingan mereka dijaga.
Tenets for a robust Financial Planning Industry

Ladies and gentlemen,

  1. As an open economy, Malaysia is not immune to external headwinds. With global growth anticipated to moderate in the coming year, a challenging and uncertain environment lies ahead.
  2. Under these circumstances, it is imperative that the industry remains vigilant to prepare for every eventuality. We must be ready to handle the risks ahead and stay resilient in the face of oncoming challenges.
  3. Therefore, I would like to focus my remarks on three key areas that will ensure a well-prepared and thriving financial planning industry for the long term. These are maintaining high standards of professionalism, upholding duty of care, and embracing innovation.
Enhance professionalism in practice
Ladies and gentlemen,

    1. The first key principle is professionalism. Stronger client relationships are created when financial planners behave professionally in providing their services.  This will ensure clients trust that the best possible outcome will be delivered, irrespective of any situation, including market movements.
    2. As per the Securities Commission Malaysia’s conduct guidelines, intermediaries are expected to uphold good practices centred upon fair treatment of clients. This involves acting honestly, fairly, and in the best interests of clients. 
    3. FPs must also endeavour to identify and avoid any actual or potential conflict of interests. This includes disclosing any conflict of interest, and taking reasonable steps to ensure fair treatment of clients, before proceeding with any transactions. This should be engrained in your DNA and day-to-day processes.
    4. The MFPC itself has made great strides towards enhancing industry standards by introducing its own Code of Ethics. This ensures registered financial planners (RFP) anchor their practices on a common set of standards across the board. More importantly, continued enforcement of the code is vital to ensure MFPC members sustain their levels of professionalism.
    5. Aside from the typical qualifications, a true mark of a professional is continuous learning and development to maintain relevance and higher standards. Learning is a lifelong journey. Hence, financial planners must push to enrich themselves and their firms with greater knowledge. This will not only equip them with the relevant soft and hard skills, but it will also ensure they meet SC’s expectations.
    6. An industry that displays exemplary professionalism will attract quality talent as well. In order to promote financial planning as a career path, the industry has received funding from the Capital Market Development Fund (CMDF), as well as funds for Capital Market Services Representative’s License (CMSRL) scholarships. I urge practitioners and MFPC to utilise this funding wisely to develop high quality and professional financial planners of the future.
    Uphold responsibility for duty of care

    Ladies and gentlemen,

    1. Financial planners also need to uphold their responsibility to provide quality advice to clients. In addition, please strive to ensure that clients are always aware of the fees they are expected to pay for each service sought.
    2. It is fundamental that financial plans consider clients’ unique needs and circumstances. This includes ensuring that vulnerable investors are catered for, especially at the planning and distribution stages of the product lifecycle. For distributors, training and guidance are needed to identify, assess and address investor vulnerability through clear communication. It is incumbent upon you to ensure that no aspect of your business is unfairly exploiting any customer biases or vulnerability.
    3. For the SC, the notion of a vulnerable investor is a key priority to ensure a more inclusive capital market. This means that all investors are served, irrespective of their circumstances.
    4. After all, the end goal in designing, selling or advising on financial products and services, is to produce good quality outcomes.
    5. Ultimately, financial planners should avoid foreseeable harm by matching the right solutions with their clients’ suitability and investment objectives.
    6. This is also in line with the Islamic concept of Maqasid - al Shariah, which promotes the attainment of benefits and prevention of harm. It calls for better community inclusivity as well as facilitating investments for socially beneficial outcomes.

    Embrace innovation to better serve clients
    Ladies and gentlemen,

    1. Thirdly, financial planners need to embrace technology to better serve clients. Digital tools can enhance the effectiveness and efficiency of your services. They would also appeal to more technology-savvy investors, such as the younger generation.
    2. In fact, a survey by the Institute of Capital Market Research (ICMR) highlighted that millennials and Gen Zs are more inclined to use robo-advisory services. But as their portfolio grows, they would prefer to interact with a human advisor.
    3. This suggests robo-advisory services can be complementary tools to financial planners to get more people to start investing early. Planners can then deliver more personalised services that requires a human touch. This is especially as investor needs evolve and grow more sophisticated over time.
    4. As such, ladies and gentlemen, robo-advisory services and other technology driven services should not be viewed as competition. By attracting new investors, they can co-exist with services that offer more bespoke advice. As the pool of investors grows with more diverse needs, this will ultimately feed into your businesses as well as the wider industry.
    5. In this age of digitalisation and disruption, it is also heartening to note that MFPC is rethinking its e-learning management system. Given funding of RM1.5 million from CMDF over 5 years, we hope that this platform’s expansion, will also support the growth and promotion of Shariah Financial Planning to local and regional markets.

    Ladies and gentlemen,

    1. All planners and advisers must aim to uphold the highest standards in carrying out their duties. Do not lose sight of your responsibilities. This includes protecting your clients and ensuring they do not fall prey to unlicensed schemes and activities. Scams are a menace of great concern and must be eradicated to avoid losses – financial as well as reputational.
    2. In building a trusted industry, there is also much to be gained from the experience and wisdom of others. Looking at the line up of speakers today, I believe there will be significant learning opportunities throughout the programme.
    3. My hope is that the industry takes this opportunity to redefine themselves as professionals in the same vein as other noble professions, which is an aspiration that the SC shares for all licensed persons.
    4. I wish you all a fruitful and engaging forum ahead.

    Terima kasih and thank you.
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