Financial planners vital in helping Malaysians rebuild their financial standing post-pandemic – BNM Assistant Governor

“The critical role of financial planning is often overlooked. But one lesson that we can take from the recent pandemic and economic crisis is that a sound financial management and planning is critical in weathering the storm. It is your role now as Registered Financial Planners and Shariah Registered Financial Planners to take the stage in helping Malaysians manage and rebuild their financial standing post-pandemic and be prepared for the future,” said Dr Norhana Endut, Assistant Governor of Bank Negara Malaysia.

Dr Norhana Endut was speaking at the 9th MFPC Graduation Ceremony for graduates from the Class of 2019 to 2022. The ceremony, organised by the Malaysian Financial Planning Councilm was postponed due to the pandemic since 2020.

We bring you highlights of the speech here:

Malaysians must build financial resilience

Malaysians must build financial resilience by equipping themselves with the necessary knowledge and tools to manage their finances. Financial resilience is critical in a time of economic uncertainty and in a shock-prone world. It provides households with the ability to withstand the negative financial impact in periods of shocks.

“This is where you, as practitioners, play a vital role by professionally advising, educating and guiding your clients to ensure they are on the right track to secure a better future for themselves and their loved ones,” she said.

A comprehensive and effective financial plan is crucial to help an individual or a family build financial resilience. Having sound and resilient finances is especially critical in navigating through the current challenges, such as rising cost of living and periods of low return on non-financial assets. And these challenges are on the back of depleting buffers for some of the households, given the hardship experienced during the pandemic.

Importantly, beyond ensuring the ability to sustain their well-being in the face of financial adversity, strong finances allow individuals and households to take reasonable risks, to invest and engage in economic activities. It allows individuals to take opportunities for growth to achieve their full potential, and this not only contributes to enhancing their productivity and livelihood, but also adds value to the nation.

Financial Education Network initiatives

Bank Negara Malaysia (BNM) is also committed to educating the public, and inspiring and instilling sustained behavioural change through our Financial Education Network initiatives.

The Financial Education Network (FEN) is an inter-agency platform of eight partners and comprises two Ministries and government-related agencies, including BNM. FEN is committed to raising the level of financial literacy in Malaysia. MFPC is listed as FEN’s partner that supports FEN’s initiatives.

FEN is focused on shaping healthy financial attitudes from a young age, increasing access to tools and resources to help individuals manage their finances, and working across the spectrum of society to help individuals attain financial security through sound financial planning and by cultivating sensible financial habits.

To date, FEN has undertaken about 700 financial education programmes and initiatives, with more than 60 million interactions through its various outreach programmes. All these initiatives are part of a five-year National Strategy for Financial Literacy plan developed in 2019, which, among its aims, is to empower Malaysians to plan ahead to secure a sustainable future.

Looking ahead into the future, it is important for us to be agile and to continuously innovate in facing emerging challenges and the fast-changing environment. While the pandemic taught us the importance of economic and financial resilience, it also paved the way for the rapid adoption of digital financial services.

This is evidenced by the World Bank’s finding in their Global Findex 2021 report, which revealed that 79% of Malaysian adults use digital payments, of which 42% did so for the first time after the pandemic.

Improving digital financial literacy

While the rising importance of digital financial services is welcomed, the adoption of such services without sufficient understanding and knowledge could pose risks to consumers. Malaysian consumers are vulnerable to the manipulation of online fraud due to the low level of digital financial literacy.

Common mistakes that led to consumers being scammed include sharing bank account passwords or PIN numbers, not paying attention to the legitimacy of a website before making transactions and also clicking on suspicious links – all of these enable scammers to commit fraud more easily.

“In our recent publication of the Financial Stability Report, we shared some of the findings of the Financial Capability and Demand survey which Bank Negara conducted recently. Among other findings from the survey, a troubling finding is that more than a third, or 37%, of respondents stated that they have no issue or are willing to share their bank accounts passwords or PIN numbers with their close friends. This reflects the lack of understanding on the importance of vigilance and safeguarding our banking information,” she said.

As financial transactions and services become increasingly digitalised, Malaysians must learn to be more responsible in managing their financial information, well-informed and sensible in assessing investment opportunities, while at the same time increasing their vigilance against scams.

This is where you, as practitioners, could enhance your role as consumer advocates. It is important for financial planners to continuously provide awareness and alert clients against the latest frauds and scams. Public awareness, alongside preventive measures and coordinated enforcement actions, must be elevated to combat this crime and safeguard the hard-earned finances of Malaysians.

Crucial not to downplay the importance of professional advice

Financial planners play the important role of defusing biases that lead to common financial mistakes among consumers and help mediate in joint decision-making. This is especially true for vulnerable consumers who largely lack the capability to fully understand and comprehend the risk-return assessments, not only of complex financial products and services but sometimes even those basic ones.

“One financial decision can have far-reaching consequences on their current and future livelihood. It is, therefore, crucial not to downplay the importance of professional advice in improving the quality of life and the wellbeing of individuals and households.”

Dr Norhana Endut, Assistant Governor of Bank Negara Malaysia

*Main pic credit: Zukiman Mohamad

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