Mr Kee Rui Xiong, Executive Director, Monetary Authority of Singapore (MAS), was the Guest-of-Honour at the 6th Annual World Financial Planning Day and CFP Conferment Ceremony 2022 in Singapore organised by the Financial Planning Association of Singapore (FPAS) with Money Playschool as an official media partner. We bring you an excerpt of his speech.
The financial advisory industry is an important partner
The World Financial Planning Day is hosted in collaboration with the Financial Planning Standards Board (FPSB), and the International Organization of Securities Commissions (IOSCO) as part of World Investor Week. It underscores the role that the financial advisory industry plays in supporting regulators to achieve better financial outcomes for consumers.
As many of you know, MAS co-chairs the MoneySense Council, which oversees Singapore’s financial education program. The aim of MoneySense is to make money matters simple for consumers. We want to help Singaporeans manage their money well, and make sound financial decisions on their own.
Together with strong support from partners, including industry associations, like FPAS, we have laid a good foundation for Singaporeans’ financial literacy. The MoneySense National Financial Capability survey 2021 found that Singapore residents generally adopted good financial behaviours in money management, and more Singaporeans have started investing.
But more can be done.
Singaporeans’ knowledge of financial concepts needs to be further improved, and more Singaporeans need to take active financial planning steps. More than half of the survey respondents had not developed a plan for retirement savings. The FA industry and financial planners will be an important partner in our journey to uplift knowledge of financial concepts and encourage long-term financial planning.
Three key investments that the FA industry can make
I would like to cover three key investments that the industry can make to propel a healthy pace of growth into the future.
The three moves that the FA industry can make are first, investing in technology; second, investing in people; and third, investing in partnerships.
Let’s start with technology. We’re heartened to see two key developments in this area and hope they can continue.
First, FA firms have been investing in digitalising their client touchpoints and business processes. One silver lining during COVID has been the acceleration of the digitalisation trends. Most, if not all, FA firms now have the capability to let their representatives conduct sales and advisory over digital channels. This provides flexibility and convenience to clients who would like to meet FA reps virtually. Indeed, most FA firms have seen an increase in virtual sales and advisory transactions over the past few years.
The second trend is the growing use of SGFinDex. Using SGFinDex can shorten the time needed for the fact-finding process. FA representatives can also obtain a more accurate picture of their client’s financial position, as it’s based on actual data, rather than client recall. This in turn allows representatives to better understand their client’s needs. We have seen some efforts to streamline the fact-finding process by linking electronic fact-finding forms with SGFinDex. We hope more of these efforts can keep going, going forward.
Technology alone cannot accomplish anything without people to use it skillfully. So the second key factor is people.
Today FPAS will be giving up its inaugural firm recognition awards to financial institutions that have shown their commitment to raising the professionalism in the industry through education. Continued improvement of industry standards will help achieve the best outcomes for Singaporeans.
We need to help the professionals grow and deepen in two areas.
First, skills. SkillsFuture, Workforce Singapore and the Institute of Banking and Finance (IBF) have jointly developed the skills framework for financial services. This framework will provide the industry with guidance on upskilling in careers such as financial analysis, and product advisory. There are also efforts to accredit and support professionals in emerging areas like sustainable finance. Earlier this year, MAS and IBF set up 12 Sustainable Finance Technical Skills and Competencies under the IBF’s skills framework for financial services. IBF has also offered and recognised a number of courses for FA representatives to take up. We encourage industry professionals to continue to keep their knowledge and skills up to date to better serve their clients.
Second for the professionals is culture and conduct. Much has been done to elevate culture and conduct standards across the industry. We have observed FA firms taking positive steps to address emerging risks, and some have implemented good practices beyond what is stipulated in MAS regulations. For example, some firms have made available pre-approved social media marketing templates for use by their representatives to address the issue of misleading online advertisements.
In the area of advisory and sales, some firms have adopted a scorecard approach for representatives where non-sales KPIs are taken into consideration in their remuneration. Such non-sales measures enable FA firms to strike a balance between achieving sales and inculcating good values among the representatives. Fostering good culture and conduct in FA firms is key to building trust and confidence in the industry and ensuring consumers’ interests are well served.
The last area is partnership. On this front, I would like to thank FPAS for its partnership with MoneySense. In Singapore, we like to eat and talk about eating so I’d like to use an analogy. The Health Promotion Board’s Healthier Dining Program is a way in which HPB hopes to improve Singaporeans’ eating habits when dining out. But HPB needs restaurants, hawker centres, and coffee shops to offer healthier food and drink options.
Similarly, MoneySense continues to work on educating consumers on good financial habits. At the same time, we need the private sector to provide consumers with financially healthier and suitable products on which they can put that knowledge into action. Our hope is that healthy and suitable products that meet the consumers’ financial health goals can also be beneficial to the industry’s growth and development.
MoneySense is currently running our 2022 campaign titled “Level Up Your Financial Health”. One of the key initiatives is a free one-to-one financial health clinic organised by MoneySense’s ground outreach arm, the Institute for Financial Literacy. The clinics would not be possible without the support of FPAS volunteers who conduct these clinics, and address questions for participants on their personal financial circumstances and speak with them on what steps they can take to embark on their retirement planning journey. So I would like to extend our thanks once again to these volunteers.
Moving from education to execution
One of MoneySense’s focus areas ahead is to move from education to execution. Nudging Singaporeans to take action. The FA industry, having direct touch points with clients has a key role to play in this.
And I would like to highlight two areas where the industry can support our efforts.
First, by encouraging clients to use tools meant to give them confidence to take tangible steps forward. One such tool is the MyMoneySense website, which can give consumers a consolidated view of their finances and help them plan ahead to achieve their life goals.
Second, by considering whether to formulate healthy norms or rules of thumb, that could better guide Singaporeans in their financial planning journey. For instance, what would a typical young working adult with a certain level of income need or a young family? These norms ideally would start with simple and low-cost products.
The behaviour insight there is that a simplified starting point can give consumers more confidence to take the first step. Fewer options helps with overcoming analysis paralysis. From there, more customised options where they are suitable for a consumer’s profile can be layered on gradually. There can be some benefits in having a set of norms that are made consistent across the industry, and we think that this could be a helpful area for the industry.
Let me conclude. Many will regard FA’s investment portfolio as a resilient one that can deliver steady investment returns through all market environments. Investing in technology, people and partnerships will be a good way to start building this resilient portfolio for the industry’s future good.
A thriving FA industry can play an important role in guiding consumers towards a higher level of financial literacy and nudging consumers to turn knowledge into action to improve their financial well-being. Healthy choices extend not only to what we eat but to our financial diet as well. In this, MoneySense has to work hand-in-hand with FPAS and other industry bodies to bring Singaporeans to its pink of financial health.
Thank you and congratulations to the award winners and CFP graduates.
Main image credit: FPAS