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Financial Planning / Wealth Management

Defining a profession

by Edward Chung

Christophe Lee, chief executive officer, Sun Hung Kai Financial Management

Although a relatively new industry, financial planning already offers a myriad of companies all staking claim to the title. Christophe Lee of Sun Hung Kai Financial Management explains to Edward Chung that greater awareness is needed of the types of services offered under this banner

Personal wealth management is set to become a major growth area over the coming years according to Christophe Lee, Chief Executive Officer of Sun Hung Kai Financial Management, although the role needs to be better defined to the general public.

"The term 'financial planner' has really been abused and misused," he says. "Insurance companies, retail banks and various financial institutions all use this term, yet the services that they offer all differ. Indeed, to the casual observer, it might seem that a financial planner is just another name for an insurance sales guy."

Lee adds that the role demands that financial planners need to ensure that clients receive specific financial advice, placing a great deal of responsibility on the shoulders of the planner.
"Firstly, the planner must clearly understand the client's current financial position - not just how much money the client has, but the makeup in terms of equities, investments and pensions, plus the client's family and working situation," Mr Lee explains. "Then he must ascertain the client's needs and targets. Perhaps the client has children to send to university or wants to buy a car or house. Is there a gap between the client's financial position and his aims? If there is, how can we make up the shortfall, and if there isn't, how can we make the most of his wealth? Elements such as insurance and tax management also play a key part in financial planning."

Apart from the interpersonal skills required in all customer service positions, strong analytical skills are also important. It is this overall analysis of a client's finances that distinguishes true financial planners, according to Mr Lee.

"It is only once we have ascertained all of the background details of a client that we can make a value-based recommendation on what he should be doing with his money," he says. "In this way we differ greatly from other 'financial planners,' who in many cases may recommend a product without understanding the client's needs or risk profile. For example, you might pop into a bank and express an interest in European funds. You will probably be shown a few funds that the bank offers, along with some accompanying data - and then have to make your choice based on that.

"In Hong Kong there are close to 2,000 authorized funds, so clearly a client will need a little extra guidance, not to mention impartiality. Conversely, many banks are actively telling their staff not to give advice, because doing so may have significant legal ramifications."

Adding value to wealth management

The realm of wealth management has only become accessible to a wider audience in recent years which Lee believes bodes well for opportunities within this field; previously it was the sole domain of the high-net-worth individual, served by private banks.

"Even people with net positions starting from $100,000 should look into planning their money properly," he says. "In this aspect, we differ significantly from the private banks, which set the financial requirements bar much higher as regards to what clients they will service. As a result, the profile of investors they handle will be different, in that they are primarily interested in wealth preservation and trusts rather than insurance and savings."

Sun Hung Kai Financial Management was launched last year as a medium to provide financial planning and wealth management services to individual investors, and currently employs about 30 financial planners. Since the industry is relatively new, Lee explains that most financial planners are recruited from other firms, and that very few financial planners actually started off in that position.

"Even Independent Financial Advisors only started appearing in Hong Kong in the early 1990s, mainly to service expatriates with tax advice, which is indicative of how young the industry is," he says. "Therefore, even the most experienced financial planners will have only been in the business for about five to 10 years."

This in turn explains the paucity of recognized industry qualifications and regulations that has led to the confusion over the 'financial planner' tag. It was only last October that the first batch of financial planners were awarded Certified Financial Planner (CFP) status by the Institute of Financial Planners of Hong Kong (IFPHK), an affiliate of the International CFP Council.

"Before this there was no real industry recognized qualification that financial planners could attain," Lee recalls. "Hence anyone could set up shop and claim to offer these services. Even now, although the qualification can be obtained and is valuable in its own right, it is not a requirement to operate in this industry."

As a result, many financial planners are not CFP certified, although in Sun Hung Kai's case Mr Lee believes that their existing professional requirements are more than adequate.
"Our financial planners are required to obtain their Technical Representative license from the Confederation of Insurance Brokers (CIB) in addition to their Investment Representative or Dealer Representative license from the SFC," he explains. "This is because their role involves completing transactions for and giving specific advice on insurance, funds, equities and other securities."



Taken from Career Times 13 September 2002

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