GET INSIGHT INTO FINANCIAL PLANNING

WE NOTE with great concern your report, “Tighten rules, Government tells EPF” (The Star, Aug 8) that EPF contributors have lost more than half a billion ringgit investing in unit trusts.

Firstly, we would like to point out that computing returns in investment is a more complex function than normally thought.

The nature of investment, whether it is long, medium or short term, the period over which the returns are measured, the risks attached to an investment product and the benchmark against which the returns should be measured are just some of the considerations taken into account when finance professionals discuss returns to get a full, proper and true picture of the performance of the investment.

Secondly, to generalize whether investment in unit trusts is beneficial or harmful to the EPF contributors is simplistic.

Again, many factors have to be taken into consideration in assessing the appropriateness of an investment for an investor including his position in the life cycle, his level of affluence and his risk appetite.

For example, an EPF contributor in his early 40s in a high-paying job compared to one who is a small wage earner who is about to retire (all other things remain equal) will have to be advised differently on how aggressively an investment policy they should pursue.

In addition all categories of investors need to be properly advised on the details of each investment including the risk structure and the fees involved.

The Financial Planning Association Of Malaysia (FPAM) has always advocated the importance of a proper and comprehensive approach in structuring one’s financial plan.

This will enable one to have a more accurate picture of one’s current financial position, one’s capacity to undertake risks (and its corresponding expected returns) and what will constitute a suitable asset allocation structure for one.

For those who have not embarked on proper financial planning and still treat investment as something to dabble in from time to time, we strongly advise that it is time to treat financial planning seriously as it will determine how well you live your retirement years. For interested members of the public, our association together with Securities Industry Development Centre (SIDC) have published a booklet, “Insights To Choosing a Financial Planner” which could be downloaded from our website at or obtained from our office at 16th Floor, HP Towers, 12 Jalan Gelenggang, Damansara Heights, Kuala Lumpur.

FPAM would also be happy to work closely with institutional bodies, including EPF, to advise members of the public on financial planning which includes in this particular context, investment and retirement planning.

U CHEN HOCK,
President,
Financial Planning Association of Malaysia, Kuala Lumpur.