Financial Planning 101
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Linnet Lee, the CEO of Financial Planning Association of Malaysia tells that financial planning is for everyone
Linnet Lee, Chief Executive Officer of Financial Planning Association of Malaysia (FPAM), was not a finance major and learned to work her way up to where she is now. She started her career as a secretary, handling operations and administration before she ventured into doing pharmaceutical sales.
“I did pharmaceutical sales for four years and I’m proud to say that I qualified for all the annual incentive trips! While I was working there, I learned about doing ‘ethical sales’. You know why? Because dealing with doctors is a serious business, it involves patients’ lives!”
“After that, I was an Associate Manager of a high-end electrical and electronic company for retail and projects. Previously the business unit was unprofitable. When I took the job, my boss said ‘This unit is not making money, so it’s very simple – you make it or you leave it’. But I stayed on, and the unit turned to a unit with double digit PBIT (profit before interest and tax). Interestingly, it also had a million ringgit turnover annually. I obviously didn’t do this by myself, I had a great team that worked with me,” Linnet said enthusiastically.
ETHICAL CLIENT-CENTRIC APPROACH
Linnet started her journey in financial industry as a unit trust consultant and at that time, she needed to manage her time as a working mother. In doing sales, Linnet believed that the more ethical you were, the more clients you would get.
“During my early years in the financial industry, I learned a lot and picked up many practices to avoid when selling financial products. For example, pretending to be from a bank to secure appointments, getting prospects by pinching name cards from restaurant or hotel reception desks, selling unit trusts by performance, as well as hard selling where you stayed at a client’s office or house and refused to budge until you got a sale. All these short term unethical practices yielded short term and painful results,” advised Linnet.
After five years of marketing unit trust, insurance and estate planning, Linnet has mastered a client-centric approach which has provided her with long-term clients. Linnet then progressed into financial planning.
“At this point, I started helping my agency leader to do training and amazingly, I found that I had a knack for it. By then, my daughter was more independent and it allowed me to explore employment as a trainer-cum-programme developer. I became an independent workshop facilitator for about three years doing training and sales coaching for selected financial institutions, agency groups as well as lectured specific modules of the CFP programmes.”
She has been a member of FPAM since 2002 and has participated in its consumer financial education through media groups such as ASTRO, BERNAMA and BFM89.9.
As the CEO of the association, Linnet’s dream is to nurture her members to become sought-after and trusted CFP professionals in terms of ethics and competency in their areas of expertise. “They will then help Malaysians become more financially-savvy in managing their own monies and this will result in Malaysians attaining a better life and achieving their life goals.” said Linnet.
“On the home front, I would like to strengthen the foundation of FPAM to be able to sustain and serve its growing membership. At the same time, I would like to create a conducive working environment for my team members to contribute their skills, grow their experience in becoming more financially-savvy with their personal finances.” she added.
FINANCIAL PLANNING PROFESSION
According to Linnet, it is a noble profession whereby being ethical ensures you long term clients and a consistent income growth. “In the consumer world, there is a tendency to highlight strength of products and downplay its weaknesses, unless the consumer knows the right questions to ask. Furthermore, having gone through nerve-wrecking financial woes personally, I found that it is better to have the right knowledge when making informed decisions.”
“This is why I took up the CFP programme, completing all six modules of earlier years. After that I took up the Challenge Status for my Islamic Financial Planning (IFP) Certification. Being on-track in my financial life gives me peace of mind about my future and achieving my goals. It also helps me serve my clients better.”
Linnet believes that every Malaysian should have the same opportunity to have financial knowledge and be more discerning about their personal finances so they can understand which financial products and services suits their needs.
“Working solo was a nightmare,” said Linnet. During the time that she was working alone, she struggled with paperwork at night as following-up with clients was time consuming for her. “Having a systematic way of working with clients and getting extra help from the administrator on the appointment scheduling is important as it frees my time to work on my clients’ cases and have deep conversations with them on what they want out of life.”
THOUGHTS ON GEN-Y
Linnet claimed that every generation has their own set of financial planning challenges. “The foundation of financial planning is having a solid budget and sticking to it. Discipline, discipline and discipline. Keeping a watchful eye on expenses and planning for tomorrow through temporary delayed gratification.”
“The challenges for our Gen-Y is mainly consumerism, having protective parents who attempt to provide everything for the kids and being in the era of easy credit.” said Linnet.
In addition to that, she said, “Many young adults enter working life with debts from PTPTN. They also take loans to invest Amanah Saham instead of using their own money. Then, the moment they get their pay cheques, they will be offered credit cards from banks. Is it any wonder why debts are their nemesis? Not forgetting their need for instant gratification which is readily available in the form of online-everything.”
“Other than that, they have parents who provide them with almost everything including their own future financial planning! Gen-Y will live a better life if they are taught responsibility and management of their own finances. The most important thing is that Gen-Y should start saving their own money. It’s always better to use your own money rather than taking loans.”
“If you are a first time home buyer, consider buying a small and affordable property. I myself started with a 640 sq. ft. home that we bought at RM60k for our own stay, and then upgraded to a single storey corner lot and rented out our first home. The property we rented out was to generate income to pay instalments, and we finally sold it for RM85k. We paid off the loan and the surplus was plonked into a double storey in Bandar Utama.”
Below are reccomended steps for first time buyers:
- Know when, where, and the price of the property you want to buy.
- Work out acquisition costs: Legal fees, bank processing fees, transfer fees and add it in your down payment. That is the target amount you must have.
- Check out the instalments payable and ensure you have enough from your income to pay for it.
- Do a credit check with CCRIS, CTOS or RAMCI to ensure your credit store is good since the bank decides the quantum and interest rate based on the report. The better your report is, the better terms you will get from the banks. (Please bear in mind that your record will stay for 12-24 months and the reports will show your payment behaviour for that duration).
“As for the property market, prices may drop if the economy continues to be at the current level. Higher end properties will be vying for buyers. This will be a good opportunity for those who started saving 5 years ago to buy a property because they have a wider choice range.”
COMMON MISCONCEPTION IN FINANCIAL PLANNING
Myth No 1: Financial planning is only for the rich.
Myth No 2: All financial planners are selling unit trust or insurance only – which is not true,” laughs Linnet.
“If you think you don’t have enough to live on, you definitely need a financial plan which will show you where your leakages are and how to plug it, making sure your savings are in the right investments to achieve your life goals. The rich are more concerned about wealth management and planning because they have enough of everything, they just want to make more.”
“For the rest who think they are mere mortals doomed to financial doldrums, all is not lost. Set smaller financial goals for yourselves and build on affordable self-rewards to make the journey worth taking. If you need help, get a Licensed Financial Planner registered with Securities Commission who is fully certified in financial planning such as CFP CERT ™ or IFP®.” Linnet concluded.
“Last but not least, if you plan to work with a financial planner, remember to ask these key questions:
- How much experience do you have in financial planning?
- Are registered with Securities Commission?
- What are your credentials?
- How much are your fees and the scope of service you offer for the fees you charge?
Also be sure to cross check the information given with Securities Commission website as well as our Association’s website, just to be sure.
