Malaysia to attract more foreign inflows as rich baby boomers pass on wealth worth US$1.9 trillion

KUALA LUMPUR - Malaysia is set to draw more foreign inflows as Asia's largest intergenerational wealth transfer is on the cards, said Securities Commission Malaysia (SC) chairman Datuk Seri Awang Adek Hussin.

He said that according to HSBC Bank, Asia's wealthy baby boomers are expected to pass on about US$1.9 trillion of wealth to future generations in the coming years.

"The financial planning industry is well placed to capitalise on this opportunity due to long-term relationships built over the years," he said at the Financial Planning Symposium 2024 organised by the Financial Planning Association of Malaysia (FPAM).

Moreover, this opportunity not only promises to elevate the quality of financial planners' services but also broadens their client base.

Awang Adek pointed out the growing interest in sustainability among millennial investors, something which financial planners could potentially tap into.

A survey by the Institute of Capital Market Research revealed that more than 70 per cent of millennials and Gen Z are likely to invest in options that also promote sustainability.

"While many investors have good intentions, they may lack knowledge about sustainable investments like environmental, social and corporate governance (ESG) or Sustainable and Responsible Investment (SRI) Funds, which we in the capital markets industry may be used to.

"As such, financial planners must increase their understanding and develop their capabilities in this area," he said.

To facilitate this, the SC and the Federation of Investment Managers Malaysia will issue a comprehensive guide to assist planners and consultants in navigating the complexities of Socially Responsible Investment (SRI) Funds.

This guide aims to ensure that SRI considerations become a routine component of financial advice.

According to Awang Adek, the financial planning sector has seen a notable improvement in the number of firms, with an increase of more than 32 per cent since 2015.

"In this regard, the release of the firm's operating standard by the Financial Planning Association of Malaysia (FPAM) is a positive step towards professionalising the industry.

"It serves as a guide to support firms in establishing a solid foundation and promoting good conduct that prioritises client needs,” he said.

Awang Adek said on the regulatory side, the SC has issued revised Guidelines on Conduct for Capital Market Intermediaries to elevate standards of professionalism and integrity, which will assist firms in attracting and retaining long-term clients.

The revised guidelines will come into effect on Oct 1, 2024, allowing sufficient time for capital market intermediaries to make preparations to meet the new requirements.

"Financial planners should thoroughly review and take necessary steps to ensure compliance, especially with regards to personal advise obligations," he said.

He also called financial planners to protect their clients, ensuring that they do not fall prey to unlicensed schemes and activities.

Between 2019 and 2023, the SC received over 3,000 complaints and inquiries related to unlicensed activities and scams, a 321 per cent rise from under 800 complaints in 2019.

He said the SC also recognises that smaller firms may struggle with market profiling.

"Hence, I am pleased to announce that Capital Markets Malaysia, the SC’s promotional arm, will work in tandem with the SC to provide a platform to profile financial planning firms further.

"This will serve as a contact point for prospective investors to connect with firms for various financial planning needs," he said. - BERNAMA