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Planners embrace new regime

Published on Friday, 20 Nov 2009
Financial planners are under pressure to ensure their industry upholds professional standards.
Photo: Bloomberg
Rosetta Fong
Rainbow Pan

With many people still cautious about making financial planning choices, never before has so much attention been directed at Hong Kong's wealth management industry as in the past year. As regulators keep a close watch on industry practitioners, compliance and understanding regulations have become increasingly important to all financial planning providers, large and small.

Carrie Leung Ka-lai, chief executive of the Hong Kong Institute of Bankers, said in view of the changing banking landscape, the importance of continuous professional development and education had gained increasing attention. Leung believes tougher compliance regulations, closer internal monitoring and higher professional standards will lead to new opportunities for financial planners.

Companies operating as independent financial advisers say new regulations have provided many wealth management practitioners with a chance to focus on upholding and improving professional industry standards.

For instance, at Convoy Financial Services, stringent compliance requirements are not only in place to protect the client, they are also in place to protect the financial adviser.

"When someone joins Convoy we point out we are not just helping them with their career path within the company, we are helping them build a career path within the industry," said Rosetta Fong Sut-sam, chief executive officer at Convoy Financial Services. She said those who failed to take compliance and regulation issues seriously were required to complete additional training until they met the company's stringent standards. According to Fong, the negative publicity arising from regulatory action, reprimands, fines and other public sanctions inevitably damages a firm's reputation, which leads to loss of investor confidence and clients. Failure to comply with regulations could also mean the end of an adviser's career. 

Conversely, those who strive to go beyond compliance requirements and provide suitable products and investment advice earn their clients' trust and confidence. In addition, investment advisory firms that have built up a good reputation will more easily attract talented staff.

"For some time our goal has been to operate our compliance and regulation standards above those required by the various regulatory bodies," Fong said.

Compliance initiatives include an in-house legal and compliance department to monitor client/adviser processes.

The company also subjects itself to an annual compliance audit carried out by one of the "big four" auditing firms. Fong said Convoy had implemented additional processes for clients over 65 to ensure any financial plan was in line with their risk profile and lifestyle requirements. Additional checking processes are also applied to those that wish to invest more than 30 per cent of their monthly income to ensure they can meet their short-term financial requirements.

A strong compliance culture also plays an important role in ipac Financial Planning Hong Kong's operations and processes.

Regardless of their qualifications, at ipac, financial planners are not allowed to provide clients with advice until they have completed ipac's internal regulation and compliance training programmes. Members of staff, including management, are also required to attend ipac's regular compulsory compliance training.

According to Rainbow Pan, chief executive at ipac Financial Planning Hong Kong, compliance training is backed up with a comprehensive annual compliance test.

"As financial planners we need to take compliance issues very seriously," Pan said. "We have a duty of care for our clients. This should involve a thorough examination of a client's needs and goals. Just as a caring doctor or lawyer will try their best to do what is right for their client or patient, we need to be thorough in our consultancy, accurate in our diagnoses and effective in the administration of our services."

To further strengthen the client centric approach, each financial plan compiled for a client is thoroughly checked by an experienced ipac professional familiar with compliance regulations.


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