KUALA LUMPUR: Malaysia’s economy is projected to remain on a moderate growth trajectory of 4-5% this year, underpinned by firm consumer and investment spending and recovery in external trade.

Securities Commission (SC) chairman Datuk Seri Dr Awang Adek Hussin said this will attract more foreign flows and investors into the domestic capital market, giving financial planners opportunities to expand their client base and help existing clients grow their wealth.

In his address at the Financial Planning Association of Malaysia (FPAM)’s Annual Signature Financial Planning Symposium 2024 themed “Navigating the Financial Landscape” today, he said the Malaysian economy continued to grow moderately in 2023, supported by a resilient domestic private sector activity despite challenging global trade conditions.

“Total market capitalisation expanded to RM1.8 trillion as of the end of last year, up from RM1.74 trillion at the end of 2022. Fund management‘s total assets under management hit a new high of RM975.5 billion, up 7.6% from RM906.5 billion in 2022, surpassing the RM951.1 billion recorded in 2021, a record-breaking year, he said, adding that (on Tuesday) stock market capitalisation touched RM2 trillion for the first time, with the benchmark index exceeding the 1,600-point psychological level since 2022. The market has gone up more than 10% thus far this year.

Awang Adek said the industry has seen good growth in the number of firms over the past few years by more than 32% since 2015, and navigating the winds of change and seizing the opportunities will require greater professionalism among financial planners and firms.

The release of the Firm Operating Standards handbook by FPAM, he said, is a positive step towards professionalising the industry. The handbook will act as a guide to help firms establish a stable foundation and implement good conduct that prioritises the needs of their clients.

“Furthermore, the SC has issued the revised Guidelines on Conduct for Capital Market Intermediaries to elevate standards of professionalism and integrity. This will assist in attracting and retaining the next generation of long-term clients.

“The revised guidelines reinforce the role of an intermediary’s board and senior management in inculcating a corporate culture, where clients’ interests are prioritised.

“It also clarifies the SC’s expectations of an intermediary’s duty to act honestly and fairly, without misleading or deceiving clients. In addition, the revisions reframe obligations to ensure that intermediaries exercise care, skill and diligence and consider the client’s interest when providing personal advice to clients,” he said.

Awang Adek said the revisions are effective only from October, to give intermediaries enough time to ensure compliance.

Meanwhile, Bernama reported Awang Adek as stating that Malaysia is set to draw more foreign inflows as Asia's largest intergenerational wealth transfer which is on the cards.

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 symposium.

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

Furthermore, 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% 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 or sustainable and socially 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 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% since 2015.