Hi. My name is Ka Hoe, and I’m the founder of J Advisory. And today I’m going to talk to you about another very common topic which even I, when I started out have this misconception. So over here, I want to share with everyone that a Financial Advisor and a Financial Planner are actually 2 totally different role. It can be the same person but it is a different role.
So what do I mean? A Financial Advisor generally is somebody who helps you to manage and grow your funds. So if let’s say you’re going to put aside money for retirement, put aside money for your children’s education or any short term financial goal, that is a job of a Financial Advisor.
So what they do is that they will help you to work out a plan and eventually put work you towards putting that money aside and help you to manage, to hit the return that they help you to set out to do right. So what I mean by that is that essentially they are responsible to help you to manage your fund overall, if it’s doing well, if it’s not doing well, then they will get your feedback and this happens every year so that you guys can continue to make sure that whatever funds you a aside is on track to meet your goals.
So what does a Financial Planner do? So a Financial Planner generally is somebody who works out the entire holistic overview of your financial and so far I’ve seen also a lot of Financial Planner helps to take charge of the insurance portion as well. So, generally as the name speaks for itself right, Financial Planner, so it helps them to work out a whole entire plan from the cash flow (management), the insurance planning, some simple tax planning, debt management even retirement & education planning and estate planning, but so far I’ve seen most of them after they help the client piece up the whole financial plan, they help them to execute the insurance portion as well.
Can this 2 role be the same person? Yours truly, happens to be doing the financial plan, the execution of the insurance portion and also helping to manage the fund. So technically I have to call myself a Financial Planner and a Financial Advisor. But don’t you think that’s very confusing.
Let me know what you think, you know because sometimes when for simplicity (sake), I started putting the term Financial Advisor because ‘advise’…. ‘financial’, I thought is supposed to advise financial matters but later then I realized that hey, you know is a different role and I needed to put Financial Planner. So, actually right now I have to put all two, right. So comment in the section below and let me know what do you think. Should we have something simpler or not? Take care, guys.
But most importantly, I forgot to mention in the video is that, regardless of what ever name you call us, the question you need to ask is “Is there an alignment of interest between the Financial person with you as a client?”. Why is this an important question, can be sum up by what the market is feeling frustrated about now.
So what do I mean? In general, as a client , we trust that the Financial person will take care of us, matching our needs with the solution needed. This is how Miss Linnet Lee of CEO of FPAM sums it up, and I quote “Is the Financial person Client-Centric or Pocket-Centric?”.
I personally have experience this before, days when I am just a client. I was about to purchase my son’s education plan & I specifically ask for a plan which is flexible & can potentially hit a 6-8% return per year. But I was recommended a traditional savings plan. And when push further , I was advised to put 50% of my child’s education savings in traditional savings plan & 50% more in a Investment Link plan.
I couldn’t figure out why I was given such solution then. But after being in the industry, I found out that a traditional savings plan carries a higher commission payout to the agent. (To be fair, at that time, I was dealing with an insurance agent rather than a Financial Planner).
When I found out after 2 years into the plan, I decided to terminate it because it wasn’t fulfilling my needs. And when I decided to join the Financial Planning industry, I decided that I am going to be ‘Client-Centric’ planner & not allow my clients to be put through this ordeal, even though I maybe earning lesser initially.