Financial planning is a relatively recent phenomenon in Hong Kong. Before 1997, when everything from the inflation rate to economic growth was sky-high, long-term planning for personal financial goals seldom crossed people's minds. Then, after 2000, the ability to invest dwindled due to both the property market collapse and plummeting interest rates. That is why HKSAR residents began to recognise the importance of financial management which, as with personal goals such as marriage, children's education and retirement, can be planned.
While banks, insurance companies and investment houses tend to promote their own brands, financial institutions that co-operate with different service providers can pick appropriate items from different menus to design a balanced selection for their clients. As a result, financial planning is coming into its own. "The competitive edge is [its] independent position," emphasises Alan Tsang, director and chief executive officer of AMTD Financial Planning Ltd.
Although financial institutions are all expanding in today's market, Mr Tsang does not anticipate very keen competition because "the market has high potential and much room for development." Instead, the industry should work together to strengthen basic concepts and, he says, "to ensure the clients see the importance of financial planning and understand what services we are providing - and how we are going to help".
Essentially, the process is built on mutual trust. At AMTD, financial planners first collect information from clients through telephone conversations or personal interviews. Data collection also helps clients understand the process and learn about the company's background. Such information is processed and each proposal screened by the management before being presented to clients. "It is important to take care of clients' concerns [and] their long-term goals. We always remind our financial planners to be patient," Mr Tsang notes.
In addition, financial planners should prioritise problems and needs instead of suggesting all the solutions "in one go". Mr Tsang explains that clients' confidence is first strengthened by creating a short-term goal which is relatively easy to achieve. For example, in a case where a client suffers from negative assets, priority should be given to short- or long-term target savings plans.
High potential and much room for development
Although the financial planning boom clearly points to a considerable number of job openings, job-seekers should beware. Financial institutions are not interested in hiring people who merely possess the know-how to sell products. Rather, financial planning is like a thorough medical examination: it aims to investigate the client's needs completely before proposing solutions.
In particular, professional financial planning requires extensive product knowledge and experience. The right candidates are therefore hard to find, according to Mr Tsang. Candidates already in the industry may be familiar with selling products in certain areas like savings, insurance or investment funds, but do not often have experience in providing one-stop services.
Therefore, training is important, as financial planners handle several hundred products from different brands. In AMTD, training in product knowledge, sales and communication skills, customer service, compliance and codes of ethics is available on a monthly basis. In addition, financial planners also need training to fulfill their continued professional development requirements and obtain license renewal from the appropriate authorities.
Today, AMTD already boasts over 100 financial planners, although the firm plans to employ 200 by the end of 2004. Current targets include both experienced and inexperienced candidates. While experienced employees may help promote different financial products they know well, professionally trained financial planners provide comprehensive financial planning services. In particular, more university graduates are joining the industry and Mr Tsang hopes that "the quality of financial planners will be improved in future".
Like other sales people, a financial planner's career path starts at the front line and rises to management level. At AMTD, promotion leads to positions such as senior financial planner, financial planning manager in charge of a small team, senior manager and, ultimately, vice president.
Mr Tsang says a financial planner's income can be "very attractive", but salary packages depend greatly on individual background and experience, as well as sales volume. However, employees can certainly earn more if they work harder. A basic salary is offered, but a larger proportion of income is received in the form of commissions. AMTD prefers to offer average commission rates for a longer duration, as opposed to high rates for the first two years, because the service "is a long-term commitment to clients".
Currently, on average, financial planners take home HK$20-25,000 per month for the first year, provided that a certain quota is met. Since the income is accumulative, one in every two financial planners may be able to make over HK$30,000 per month. A financial planning manager performing steadilty usually earns HK$500-600,000 annually. However, earning more than HK$1 million per annum is not uncommon for successful managers.
In some countries, financial planning services are fee-based. While Mr Tsang agrees with the concept, he says financial plans' market value is the determining factor. Looking objectively at how this practice might work in Hong Kong, he believes that shifting from commission-based to fee-based financial services is possible.