AS people around the world pray for a quick resolution to the American-led invasion of Iraq, one thing is evident: The affluent among us are growing convinced we live in an increasingly unpredictable era.
In truth, times have never been predictable. But, at least for most of us, there used to be a sense of being able to make an intelligent guess of what tomorrow would be like, based on yesterdays occurrences and a general sense of what was going on today.
But now, the confusion that swirls around us threatens to engulf our deepest sense of who we are and what we can expect in our lives.
Fear often swells within us as we watch, read or listen to the news. And along with fear comes a host of other pernicious mental maladies. A wise man Frank Crane once observed, Depression, gloom, pessimism, despair, discouragement, these slay ten human beings to every one murdered by typhoid, influenza, diabetes or pneumonia. If tuberculosis is the great white plague, fear is the great black plague. Be cheerful.
But in my opinion, merely telling people to cheer up without providing tangible help is useless. Our lives are multi-dimensional, which makes perfect sense since we inhabit a multi-dimensional universe. Therefore, any practical solution to the woes of our time must be holistic.
Such a comprehensive solution must touch the spiritual, material, mental, physical, social, emotional and financial elements of our lives.
Unfortunately, I dont know enough to be able to provide my clients with solace in all those disparate areas. But I do have a level of understanding that might be helpful in some areas the last, in particular. The financial planning process can help provide a part of that overall solution.
In the simplest of terms, financial planning is the process of meeting your life goals through the proper management of your finances. Those life goals often include getting out of debt, achieving financial freedom, buying a home, having a wonderful retirement, educating your kids, giving to the poor, or just being able to travel the world in style!
If financial planning is implemented correctly, it injects a tremendous level of certainty and stability in our otherwise tumultuous world. So much so, the more affluent middle class of many countries is waking up to the realisation that working with a professional financial planner is beneficial.
I once said in an interview: Based on an estimated 9 million working Malaysians, and assuming 20 per cent of them is affluent enough to use the services of a professional financial planner, it suggests 1.8 million Malaysians might be well-served engaging a financial planner (as a money coach or mentor).
The experience of financial planners in more developed countries has been that a single planner can optimally serve between 200 and 300 individuals.
In the past, I have spoken at insurance industry conferences and met big-hitter insurance agents who have between 1,000 and 2,000 clients. I also know of experienced unit trust agents with more than 1,000 clients.
Each Malaysian financial planner will have to make his own decision as to how best to balance quantity of clients with quality of service.
More financial planners
Assuming that as the financial planning services industry in Malaysia matures, the average number of clients per planner falls to 300, then using the earlier guesstimated 1.8 million potential users, and dividing by 300 suggests Malaysia can accommodate 6,000 financial planners. We have nowhere near that number now.
There are several excellent financial planning qualifications available in Malaysia. These include the ChFC (Chartered Financial Consultant), the ChFP (Chartered Financial Practitioner) and the CFP (Certified Financial Planner).
At the end of last year, the Financial Planning Association of Malaysia had approved 961 CFPs. By the end of February, that had grown to 1,200. I do not know how many ChFCs and ChFPs there are in Malaysia, but it seems to me, if my rough, back-of-the-envelope analysis is right, there are more people needing planners than there are planners.
The situation is analogous to the male-female ratio in certain urban pockets, where there can be three, four even five eligible, single women for every eligible male. (Before I get inundated with irate mail, please note I believe in monogamy.)
But in situations where there is such a great imbalance, the few can take their pick of the many.
That is what is happening in Malaysia; with so few credentialed financial planners to go around, many people will have to resort to D-I-Y (do-it-yourself) financial planning.
The more I think about the situation, the more depressed I get. You see D-I-Y planning works best when things are calm. But in the world we live in now, chaos seems to be the order of the day. And in that situation, something more is required.
For instance, in the aftermath of the Sept 11 2001 World Trade Centre and Pentagon attacks, the American financial planning community rallied to embrace the nation. Certified financial planners from across the US provided free financial planning help to families of victims. The profession helped thousands of people begin the process of trauma recovery.
If things dont get better quickly in Iraq, Palestine and North Korea, in particular, Malaysian planners may soon find themselves inundated with pleas for help, guidance and very necessary hand-holding from an increasingly nervous, nail-biting populace. Our young Malaysian financial planning profession may have to grow up very quickly to do whats needed.
l Rajen Devadason is a certified financial planner and CEO of financial planning firm RD WealthCreation Sdn Bhd, which specialises in retirement planning for 30- to 45-year-olds. He invites feedback at firstname.lastname@example.org