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Malaysia Context: Financial Planner’s Fee Structure

If you have been meeting more than one Licensed Financial Planner in Malaysia, you may find yourself confused with the various fee structure charged by the respective financial planning companies. Unlike the Medical and the legal sector, the financial planning firm fee structure is not regulated (yet).

Do not sweat because you are not alone.

I have asked the same question before I settle down with my current firm. So, I went around the country talking to planners, marketers, and their directors of another financial planning firm to understand why they do what they do (their value) and their expectations between all stakeholders involved.

All the financial planning firms I talked to are fee-based except one – fee-only. Most of these fee-based firm operates similarly like how an agency would as the total sales commission received from their principal is the same.

You may ask if all the sales commission is the same, how come the fee structure is not the same? Like any profit-taking company, they are affected by various factors.

For a fee-only financial planning firm, their operation is similar to how an accounting firm would. Their only income is the fee collected from the client and no other form of compensation (direct/indirect) from other financial product providers. Hence, the value and work required from the client will determine the fee charged.

How Financial Firm Charge their Clients?

Now that you know how the two types of financial planning firms operate in Malaysia. You will want to know how they charge you as a client and how it could affect your cost in engaging a Licensed Financial Planner.

To paint a better picture. Let me give you a matrix on fees collected by Fee-Based Planner versus Fee-Only Planner to ease your reading experience:

Typical Fee Structure for a Fee-Based Planner

Service / ProductAdvisory FeeAnnual Wrap / Management FeeUp Front Fee / Commission
Comprehensive Financial PlanningYes
InvestmentYesYesYes
Will WritingYesYes
Trust Set UpYesYes
InsuranceYesYes
Other Financial AdvisoryYesDepends

Do take note. Some fee-based planners may omit the advisory fee charged because they can compensate it by recommending financial products to you and get paid through commissions or incentives.

Since compensation can vary, therefore the tendency of being bias might occur or a situation where the tendency a conflict of interest could happen. Therefore, ask for details and clarify it before you sign the dotted line.

Typical Fee Structure for Fee-Only Planner

Service / ProductAdvisory FeeAnnual Wrap / Management FeeUp Front Fee / Commission
Comprehensive Financial PlanningYes
InvestmentYesYes
Will WritingYes
Trust Set UpYes
InsuranceYes
Other Financial AdvisoryYes
I hope the above tables can give you an overview of how the respective financial firm operates. If you have further inquiries understanding how the bill charges, you are welcome to seek clarification. Always ask how are the planner being compensated and if you are satisfied with how they are being compensated then you are good to go.

As you noticed, I have been focusing all my write up on how the financial planning industry works. I have readers asking why I do not write something that directly impacts the customers? Like which investment to make or which financial products would be beneficial to them. I smiled. Thank you for reaching out.

I will be covering financial planning products in the future. Do not worry. Nevertheless, I am not in a hurry to do that because most of these financial products are well-explained by existing financial bloggers, licensed financial planners that write, or perhaps Financial YouTube Celebrities.

Next article, I will share with you my thought process on why I choose to focus my writing on the industry. I look forward to clearing the air with everyone before I continue walking the path less taken.
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