Keynote Address at the 7th MFPC International Conference on Islamic Wealth Management & Financial Planning 2020
5 August 2020  |   By: Datuk Syed Zaid Albar, Chairman, Securities Commission Malaysia
Keynote Address
by Datuk Syed Zaid Albar
Chairman of Securities Commission Malaysia
at the 7th MFPC International Conference
on Islamic Wealth Management & Financial Planning 2020
“Driving Sustainable and Responsible Investment”
5 August 2020

Good morning Ladies and Gentlemen, and Distinguished guests, and

1.

Thank you to the Malaysian Financial Planning Council (MFPC) for inviting me to deliver this keynote address at the seventh MFPC Conference on Islamic Wealth Management and Financial Planning 2020.

2. I really would like to applaud the MFPC and the supporting partners for organising this year's conference at the time of the new normal when we all have to meet virtually.
3.

And it provides us of an opportunity to both reflect and look ahead and in the next couple of minutes, I'll be reflecting on 4 points:

  • First, Importance of Financial Planning in these uncertain times
  • Second, The setting of Industry Priorities
  • Third, Trends in Sustainable Finance, and
  • Fourth, Enhancing Malaysia's SRI ecosystem
4. So with that in mind, let's look and remind ourselves of the importance of Financial Planning in these uncertain times. There are three main elements to the markets, there's the 'economy', the 'markets' and the investors.
5. On the economic front, over the last five months, not only have we seen the Coronavirus change everybody's lives not just here in Malaysia and abroad, but we've also seen the new dynamics and accelerated new trends – all within a short span of time. And so, on the economic terms, we are not yet out of the woods.
6. On to the markets, what a remarkable recovery we saw from that huge decline leading to lows in around mid-March. And the remarkable recovery and equally huge rebound in the markets - Lots of volatilities, more uncertainties ahead.
7. And that brings me to the third element that I've mentioned, that is investors. Investors have to look at both the economy and markets; to see how these now impact their investment priorities, that they have to overcome the fear and the euphoria of seeing these wild gyrations in these statistics. And 'sitting on top of all' that is you; the financial planner. You are the bridge between capital market products, and investors, you are the one, and it's your responsibility to provide sound financial advice to investors on both the markets and economic front.
8.

Which brings me to the second point, setting Industry Priorities. Financial planners, in particular, must always be prepared for the unexpected situation, your advice should be holistic, so that come what may, the investors would be able to cope, and we at the Securities Commission Malaysia, are acutely aware of the role that we are playing, in helping you set those industry priorities. We spearheaded a three-year joint action plan with the various financial planning associations guided by five strategic priorities, and what we need to do are three things:

  • One - enhance professionalism in the industry;
  • Two - build a talent pipeline;
  • Three - improve investor access, for example through digital technologies
9.

And in order to achieve that, enhance professionalism increase the talent pipeline, and improve investor access, we at the SC will take steps to:

  • streamline industry best practices;
  • raise the bar on those professional standards and conduct requirements; and
  • provide a greater promotion of the financial planning profession, so that you can really rise above the unlicensed activities that characterise the industry in the past.
10. On to the talent issue more specifically, it is also important to enable the mobility of financial professionals within a financial group. And when you consider how few financial planning professionals we have, you can see just how important it is to enhance the talent pipeline. We have 23 million Malaysians of working age, but the pool of qualified financial planners is just 1,000. And so you can see, just how much more we need to grow that talent pipeline, if we are going to cater to all Malaysians of working age.
11. So, looking ahead, I'm hoping that we achieve with these three points, in streamlining industry best practices, raising the bar on professional standards and greater promotion of the financial planning profession; that we can then therefore, bring benefits to your clients and to the markets at large. And this includes the Islamic capital market products with advice elements encompassing ESG and sustainable and responsible investments (SRI).
12. And that brings me on to the third of the 4 points that I wanted to touch on today, that is Trends in Sustainable Finance. Now, even as you watched funds flow out en mass from the markets, USD385 billion flowed out of the fund management industry in the first quarter. Huge amount. But at the same time, the sustainable fund universe… attracted net inflow of USD46 billion. So clearly, that wasn't enough to make up to the outflows, but you can see that investors are increasingly looking at aligning their investment returns with social goals, and it is critical that we are all part of that. The Malaysian Islamic capital markets stands to benefit significantly from all that in fact, from that close alignment, that we know are intrinsic to Shariah principle with sustainable and socially responsible finance.
13. So, on to my fourth and final point in this brief remarks, and that is how we are enhancing Malaysia's SRI ecosystem. Now, the SRI ecosystem, and the SRI is the key focus in the Malaysian Capital Market, we have understood from the start that we need to do more to facilitate a regulatory framework which will ensure the growth and success of these socially responsible investments. For example, through the framework for the SRI sukuk and SRI funds, the sukuk framework was revised just in November last year to spur more innovation within this asset class.
14. We've developed the SRI Roadmap for the Malaysian capital market to incorporate the sustainability not just in the way that companies operate, but also in advisory services, and to help the financial planner like you, give provide proper advice to clients on their SRI investment selection.
15. We also, intend to incorporate ESG criteria in the Shariah screening methodology for public listed companies (PLCs) which will help provide a platform for those PLCs which do have sustainable practices, as well as allow the investors to find it more easily. And, we're working closely with the market participants to design an innovative waqf framework and fund structure... to channel returns towards projects which have a positive social impact.
16.

So, overall I've covered these four important areas… the importance of financial planning in uncertain times, setting industry priorities, trends in sustainable finance and how we are enhancing Malaysia's SRI ecosystem. This pandemic shows us just how a singular event can disrupt existing social norms overnight. And now it's up to 'you' /to ensure that your clients are acrossed these issues, that you collaborate, work togethe to overcome the challenges, and to rediscover what we can do, towards a more resilient, a more sustainable and a more inclusive future.

'Have' a great conference, and bear these points in mind and we look forward to building a sustainable financial planning industry in Malaysia as well.

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