Addressing the need for a holistic approach to wealth management

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on May 14, 2018 – May 20, 2018

There is an urgent need for more holistic planning solutions in Malaysia’s wealth management industry, said Phang Kar Yew, executive director of wealth management firm Harveston Financial Group.

According to Phang, the term “wealth management” in Malaysia is often perceived as investment advisory services. However, wealth management is more than just investment; it encompasses retirement planning, life and health insurance, education funding, tax planning, estate planning and succession planning.

“This misconception happens among most Malaysians because the majority of the wealth management practitioners in Malaysia — agents, consultants and private bankers — only focus on investment products. In fact, more than 90% of them are not offering a holistic approach to wealth management and not addressing the overall needs of their clients,” he said at the 2018 Harveston Wealth Management Conference media briefing.

He added that many Malaysians, especially high-net-worth individuals, tended to delegate their financial affairs to several unrelated advisers. However, there was often little or no coordination between the practices of the advisers, which may lead to missing links in their wealth management needs.

“It is increasingly important today given that their wealth is now very diverse. Many of them build their business outside the country, which means that they own a lot of assets overseas as well. Proper holistic wealth management is necessary for them to ensure compliance in different jurisdictions and that they are tax efficient,” said Phang.

Ryan Yap, manager at Allianz Life Insurance Malaysia Bhd, concurs, adding that proper wealth management and financial planning could help Malaysians avoid future complications such as unclaimed assets, which is a significant problem in the country.

“Last year, it was reported that RM6 billion was not claimed at the Registrar of Unclaimed Money. A huge chunk of that are policies that have matured but remain unclaimed, which is unfortunate as the money was intended for their beneficiaries. If they had prepared better, this would not have happened,” he said.

Last June, Life Insurance Association of Malaysia reported that 516,728 mature life policies amounting to RM327 million had not been claimed over the last five years.

Chan Ai Mei, chief marketing and distribution officer at Affin Hwang Asset Management Bhd, said a holistic financial approach was pertinent in today’s investment landscape, particularly due to the increasing market noise and volatility.

“The first quarter of this year has been remarkably turbulent, where we saw markets rocked by escalated trade tensions between the US and China as well as a repricing of assets as central banks raised rates and treasury yields rose. We think volatility is here to stay for the rest of 2018 and investors should stick to their long-term objectives and diversify their portfolios across asset classes to weather the storms ahead,” she said.

To help Malaysians understand comprehensive wealth management, its issues and developing opportunities, Harveston will be holding the country’s first integrated holistic wealth management conference on June 9 at Berjaya Times Square.

“This is the first time in Malaysian history an independent financial advisory firm is organising a conference that covers the entire spectrum of a person’s pre-retirement and post-retirement wealth management stages. We hope that this initiative will spark more productive sessions in the future,” said Derick Tan, CEO of Harveston Financial Group.

Established in 2009, Harveston Financial Group has 50 advisers serving 5,000 clients, who comprise mass affluent individuals and business owners.

The inaugural conference will cover topics like investment strategies, insurance, estate planning, business succession planning and healthcare. It will include presentations, case studies and panel discussions designed to address some of the challenging questions Malaysians face in wealth management.