Resources

Prepared by David Lim, Jr:
A CAREER IN FINANCIAL PLANNING
Revealing independent studies and reports on starting a career in financial planning, covering all aspects from market outlook to financial rewards. If you have no experience, no certification in finance or any idea about this career, the information compiled may proved to be useful to you.

Issue #1: Insight of a Career in Financial Consultation

Issue #2: Discover the Rewards of a Career in Financial Planning

Issue #3: A Career That Makes a Difference in People

Issue #4: Six Justifiable Reasons to Make a Change in Career

Issue #5: Financial Planning Careers Balance Money and People

Issue #6: Is Your Future in Financial Planning? Get Your Answer Here!

Issue #1: Insight of a Career in Financial Consultation

(Word Count: 1,583 – reading time 6.0 min)
Financial planners (also referred as advisors or consultants) and analysts help guide businesses and individuals in making investment choices. Both carry out financial research and analysis, which they use to provide investment suggestions to clients. However, advisors and analysts differ in their clientele and in the information, they give out. Financial analysts evaluate the economic outlook of different sectors and industries for organizations that wish to invest. Financial advisors work with individual clients and focus on a wide range of personal investment needs – most financial institutions refer them as personal financial advisors.

Securities analysts are employed by insurance companies, banks, securities firms, pension and mutual funds, and other organizations interested in assisting their customers in the investment process. Analysts research industry statements and use company sales, costs, commodity prices, tax rates, and expenses to evaluate a firm’s current and projected value. Analysts also meet with executives to evaluate an organizations leadership and market outlook. In addition, analysts research whole industries, evaluating business strategies, product trends, and market competition. In order to correctly interpret a company’s success and value, analysts must also be familiar with and understand the market effect of industrial regulations and policy changes.

Using statistical software and spreadsheets, financial analysts evaluate data, identify patterns, and formulate predictions used to make recommendations about selling or buying various investment and securities products. Analysts with asset management responsibilities often make purchasing and selling decisions for their clients. Some Analysts focus on determining risk levels connected with different investment possibilities.

Some companies have investment banking divisions with teams of analysts dedicated to researching companies interested in making initial public offerings. These teams also make certain that all paperwork is filled out in accordance with the guidelines of the Securities Commission (BURSA Malaysia). In addition, they present information to investors regarding the potential of new corporations. Financial analysts are also responsible for researching the pros and cons of possible company mergers and buyouts.

Ratings analysts assess the capacity of bond issuing company’s (or governments) to fulfill loan obligations. From their findings, the analyst team gives the company or government a bond rating that is similar to an individual’s credit rating. Often finance professionals also evaluate credit, analyze budgets, and assess costs.

Personal Financial Advisors (sometimes referred to as financial consultants or financial planners) combine their experience and understanding of tax laws, insurance, and investments to help clients accomplish their short and long-range financial objectives. The items advisors typically focus on are estate planning, saving for college, retirement, as well as general investment. The typical advisor can provide recommendations in many aspects of finance, but there are some who concentrate on specific areas like asset protection, retirement or estate planning.

Advisors start by sitting down with a client looking at their financial situation to help them identify financial goals. From this information, an advisor creates a financial plan for the client that addresses problems and suggests ways to fix them, and then Identifies possible investment ideas that best meet the needs of the client. Very often, these recommendations are verbal, although some advisors prepare formal reports. Once a plan is in place, advisors generally meet with their clients on a yearly basis to revise and adjust the plan to life changes and new investment opportunities. In addition, advisors respond to questions about the impact of life changes and benefit plans on their financial situation.

There are advisors who act as brokers, buying and selling stocks, bonds, and other investment products while others recommend the services of other professionals. For instance, an advisor may recommend a particular accountant or insurance agent or lawyer. In addition, many advisors act as asset managers for their clients.

The most essential skill a financial advisor can have is the ability to attract and keep customers. Happy clients are best resource for finding more happy clients. Some advisors use seminars and finance classes to attract new customers.

Job Training and Qualifications for Financial Advisors

A bachelor’s degree is essential for financial analysts and highly recommended for personal financial advisors. Analysts should probably have a degree in business administration, accounting, finance, or statistics. In addition to training in statistics, business, and economics, and understanding of administration and accounting are strongly suggested. Additional recommendations include courses on bond valuation, risk management, and options pricing.

While there is not a particular emphasis of study preferred for personal financial advisors, a degree in economics, law, business, accounting, finance, or mathematics offers a good footing for the position. Investment, risk management, tax, and estate planning classes are vital. Financial planning degrees are also becoming more common on college campuses. Still, a large number of advisors begin in other associated fields like insurance sales, law, financial services brokerage, auditing, and accounting.

Personal financial advisors and financial analysts must have computer, analytical, mathematical and problem-solving skills. Also, because analysts and advisors must explain their findings and recommendations to others, they must have excellent presentation skills, self-confidence, maturity, as well as the ability to work alone.

Among other skills a financial analyst must possess are a strong attention to detail, a drive for research, and an understanding of tax laws, money markets, and the economy in general. In addition, people skills and salesmanship are also very important.

While not necessary to work in finance, several certification organizations offer professionals opportunities to increase their knowledge, understanding, and prestige through certification. The association of Investment management and Research offers certification as a Chartered Financial Analyst (CFA). Qualifications for certification include a completed bachelor’s degree, three years financial experience, and successful completion of three essay tests. The test, which includes topics like economics, accounting, portfolio management, asset valuation and securities analysis, is taken annually until all three are completed.

Certification for personal financial advisors includes the Certified Financial Planner designation offered by the Certified Financial Planner Board of Standards (local representative here is FPAM). Candidates must have earned the necessary education, have applicable experience in finance, pass an examination, and agree to and follow an established code of ethics. The Chartered Financial Consultant (ChFC) is another credential that is obtainable from the American College in Pennsylvania (MII is the local representative). In addition to career experience, candidates must finish eight instructional classes to qualify for certification. Annual refresher courses (usually amounting to 30 hours of studies) are required to maintain status in each of these designations.

Though personal financial advisors do not need to be licensed in most part of the world, in Malaysia and Singapore, they must be licensed. In addition, legal advice cannot be given unless the advisor is licensed to do so. Many advisors who lack these qualifications offer clients the services of other licensed professionals.

Financial analysts can move up to positions as finance or portfolio managers that oversee all the investments of a corporation or customer. Upward movement for personal financial advisors is typically accomplished by expanding your clientele; however, those who work for organizations can advance by filling management positions.

Job and Employment Opportunities.

Because of the expansion of both individual and business investment, jobs for financial analysts and personal financial advisors will continue to grow through the next decade. As the number of people involved in investment increases, and as the next generation of retirees begins to think more seriously about the future both analysts and advisors will have the opportunity to provide them the financial services they need. The increased life expectancy also forced retirees to plan for more years of retirement. As the international securities economy expands, so will the need for advisors and analysts who understand it.

Another catalyst for growth in the financial services industry is deregulation. In the past few years insurance companies, banks and brokerages have been able to broaden the services they provide to include investment advice. Many banks are becoming involved in brokerage and investment activities and need qualified financial analysts to support new customers.

The demand for personal financial advisors will likely outstrip average demand for all other occupations over the next decade. The increase in EPF savings nationwide and other individually managed retirement accounts will likely persist. As investment activity of all kinds increase, people will seek out the expertise of qualified financial advisors to assist in their investment planning. Certified professionals are among those with the greatest outlook.

The demand for financial analysts will likely keep stride with the average demand for all other occupations over the next decade. Because of the expanding popularity of the mutual fund, mutual fund companies will have to hire more and more analysts that can make investment suggestions for the different funds.

Investment banking will also continue to require the services of qualified financial analysts to generate funds and assess mergers and buyouts. Although, the demand for financial analysts may be limited by the fact that more companies are outsourcing research to independent firms, which may lead to a reduction in internal research positions.

The need for financial analysts in investment banking is tied heavily to the performance of the stock market, and thus can vary widely. Likewise, corporate downsizing could possibly lead to the reduction of analyst positions throughout the industry. Elite job opportunities will be few and highly contested.

Historical Earnings

In 2006, the average annual salary for a financial analyst was $87,100. The salary of middle half ranged from $73,600 to $86,620 while the bottom 10th brought in less than $54,570 and the top 10th earning in excess of $118,060.

There are financial planners or consultants whose incomes reach well into the hundreds of thousands of ringgits each year, while the average stood at $220,580 in the year 2005-2008. Source: Bank Negara Malaysia, NAMLifa and FPAM.

By Editor, Financial Planning Association of Malaysia

Issue #2: Discover the Rewards of a Career in Financial Planning

(Word Count: 648 – reading time 3.0 min)
While working as an intern for a Certified Financial Planner, Angie Ng was called into a meeting with a widow. Among the client's concerns was the potential impact of the family's unstable financial picture on her daughter's dream of attending college.

Asked to research the matter, Angie generated a list of scholarship options and helped present it to the woman and her daughter. Two months later, the mother called to say her daughter was headed to the University of South Carolina with a scholarship in hand.

The client's gratitude reinforced Angie's decision to enter the financial planning profession, an increasingly popular option for students seeking a career based on helping people live their dreams.

What is Financial Planning?

A relatively young profession, financial planning emerged as a unique discipline about 30 years ago. Financial planning is the process of determining how an individual can meet life goals through the proper management of his or her financial resources. A financial planner/advisor takes a "big picture" view of a client's financial situation and makes recommendations based on the client's needs in areas such as budgeting and saving, taxes, investments, insurance, and retirement planning.

Working as a Financial Planner

Recognizing financial planning's occupational benefits, the 2001 Jobs Rated Almanac ranked financial planning as the top career choice in the country. The survey considered a number of factors while ranking hundreds of jobs and concluded that financial consultants enjoy relatively low stress, have a high earning potential and enjoy a high degree of workplace autonomy. The personal satisfaction element cannot be underestimated.
"Frequently, I find that people are just overwhelmed and need direction, so it's my job to listen, understand their situation and offer some options that will help them," said Jesse Lau, a recent graduate. "It's fulfilling to be able to help people do better, and it's not just about their finances. It's about blending the financial side with the other sides of clients' lives so that they can achieve their goals."

Future Career Prospects

Particularly within the last decade, demand for financial consultants has risen as individuals have had to assume more responsibility for their own retirement and other financial decisions.

"Over the next 15 to 20 years, the profession should experience significant growth, and practitioners should see increased income potential," said Dr. Chiew, president of Asia Registered Financial Consultant based in Kuala Lumpur.

But for those who want big firm experience, the opportunities are plentiful and growing fast. Firms such as American Express Financial Advisors, Merrill Lynch, May Bank, RHB Bank actively recruit CFP certificants to staff their expanding advisory divisions.

Starting Salary Range

It's hard to pinpoint starting salary in this field. Many entrants begin by selling commissioned-based financial service products, so salary is determined by sales ability. However, there are a growing number of positions for these graduates in other departments of financial planning firms.

Why Consider a Career in Financial Planning? Here are Just a Few Reasons!

• Increased investment by businesses and individuals is expected to result in faster-than-average employment growth (increase 21-35%) of financial advisors through 2010. This occupation will benefit as baby boomers save for retirement and a generally better-educated and wealthier population requires investment advice.

• In addition, people are living longer and must plan to finance more years of retirement. The rapid expansion of self-directed retirement plans, such as the EPF plans, is expected to continue. Most of the money in these plans is invested in mutual funds.

• As the number of mutual funds and the amount of assets invested in the funds increases, mutual fund companies will need increase numbers of financial analysts to recommend which financial products the funds should buy or sell.

• Growth in retirement plans will also increase demand for personal financial advisors to provide advice on how to invest this money. The median annual earnings of personal financial advisors were $220,580 in 2005.

By Editor, Financial Planning Association of Malaysia

Issue #3: A Career That Makes a Difference in People

(Word Count: 343 – reading time 1.5 min)
As baby boomers (work force in the 40’s) start their migration to the necessary next stage of life, i.e. retirement, their well-documented lack of preparation and financial savvy puts a whole new meaning to the words "financial planning". Providing expert financial help is increasingly a task that's not just about making money, but about helping people be ready to live the rest of their lives.

This has led to some dramatic changes in the financial services industry, and the careers surrounding it have changed, with many people being drawn to work as financial consultants or advisors as much to help others as to earn a good living. Gone are the days of stockbrokers racing the clock to time individual trades for clients. Instead, financial services professionals now are groomed to take a full service approach to their clients’ finances – helping them in all aspects of their financial life. What that means to those considering a career in financial planning is new opportunities.

“What can be more rewarding than knowing you’ve helped a client have their dream retirement and sending their kids to top-notch colleges?” asks Michelle Tang, a financial associate for an independent financial boutique, SFP Financial based in Singapore.

Those choosing a career as a financial services professional often enter the industry after spending 20, 30 or even 40 years doing something else. People from all walks of life, such as teachers, doctors and lawyers have started second careers as financial consultants.

A number of factors, including the current economic recovery, have turned the financial services industry into a highly competitive marketplace. What’s more, local surveys reports that “faster-than-average” employment growth is expected in the industry through 2012. To prepare for the growth, many firms are relying on their own niche to attract candidates who fit their culture to serve their clients.

Those who have entered the financial services profession are happy with their choice. According to the College for Financial Planning’s 2005-2007 Survey of Trends in the Financial Planning Industry, 98 percent of respondents reported that they were either satisfied or very satisfied with their profession.

By Editor, Financial Planning Association of Singapore

Issue #4: Six Justifiable Reasons to Make a Change in Career

(Word Count: 438 – reading time 2.0 min)
The average person can expect to change careers several times in his or her lifetime. One reason for all these career changes is that people often don't make informed choices. While making an informed decision regarding your career is a good way to help insure that the career you choose is right for you, it doesn't guarantee it. Even if you follow all the prescribed steps and choose a career that is right for you, it may not remain your best choice forever. Here are some reasons to consider leaving your current career for a new one.
You Should Consider a Career Change If;

• Your Life Has Changed
  When you chose your career your life may have been different than it is today. For example, you may have been single then and now you have a family. The crazy schedule or the frequent travel that is typical of your career may not suit your new lifestyle. You should look for an occupation that is more "family friendly."
  
  
• The Job Outlook in Your Field Has Worsened
  Things looked promising for your field when you entered it. Due to changes in technology, the economy, or the industry you work in, job opportunities are no longer plentiful. You should look for an occupation that has a better outlook.
  
  
• You Are Experiencing Job Burnout
  Once upon a time you loved going to work everyday. You no longer feel that way. You can't stand doing your job anymore and changing employers hasn't helped. It could be time to find a career that will inspire you.
  
  
• Your Job is Too Stressful
  Some occupations are inherently stressful. After a while the stress can become too much to handle. To preserve your mental and physical health, you may have to find a career that is less stressful.
  
  
• You Find Your Work Boring
  When you did your initial research, the occupation you ultimately chose had a lot of advancement opportunities. Now that you've been working in that field, you've climbed as far up the ladder as you can go, and you miss the challenges you once faced. A career change can provide you with the challenge you crave.
  
• You Want to Earn More Money
  You may be surprised to learn that money isn't at the top of the list when it comes to job satisfaction. Therefore, don't be surprised if a career that will bring you higher earnings isn't one you will find particularly satisfying. That said, if other reasons are leading you to consider a career change, higher earnings should be something you consider when you choose a new career.

By Dawn Rosenberg McKay (Career Planning Professional, Author)

Issue #5: Financial Planning Careers Balance Money and People

(Word Count: 461 – reading time 2.0 min)
For many of us, the words "financial" and "planning" are rarely seen in the same sentence. It's not that we don't want a secure financial future; it's just that…well fill in your own excuse here! But for those people with a knack for this dark art and those with great people skills the world of financial planning is a career oyster waiting to be cracked open. Planners do different things, so there's a lot to pick from within the career.

The Job

"The reality is we do a number of different things," says Michael Branham, certified financial planner and director of career development with the Financial Planning Association of Minnesota (www.fpamn.org).

The title "financial planner" can refer to anybody in the financial services arena, including brokers, comprehensive planners or insurance agents.

"I try to quarterback helping people reach their financial and personal objectives," adds Nate Wenner, certified financial planner and director of public relations for FPA Minnesota.

"We're sort of like therapists," observes Branham. "We help people through the good times and the bad times." While financial planners need to be good with figures, what attracted Wenner to the career wasn't crunching numbers it was helping people. "I enjoy getting to know them and getting to know what's important to them," he says.

Demand and Growth

"The Financial Planning profession is growing rapidly, as the need in the community for financial help is growing," observes Wenner. "Our profession needs more people who enjoy and are good at helping others, and can serve those needs. Not just salespeople, but those who truly want to listen, advise and help consumers take action, using their own financial talents." While there is a demand for financial planners, the key is going to be getting enthusiastic planners in specific niches that are best for them.

Career Development

Starting out as a new financial planner can be hard work. "It's not easy," says Wenner. "A lot of people try to do this right out of school and they find that they have to be planners and they have to be salespeople." Wenner suggests working with another, more experienced planner to learn the trade. "A lot of us got in the business that way and we're still seeing that," says Wenner.

One of the Financial Planning Association's goals is helping new planners become successful. To that end, they will match planners and employers. Students are welcome to attend FPA meetings at local chapter in Malaysia.

"They can learn about the practical aspects of the career," says Wenner. Further, the FPA can help student planners get internships. "Because the failure rate is so high – predominantly due to career seekers’ unwillingness to withstand high frequency of rejection, they need to go into it with their eyes wide open," says Wenner.

By Robert Elsenpeter (Columnist for Star Tribune Sales and Marketing)

Issue #6: Is Your Future in Financial Planning? Get Your Answer Here!

(Word Count: 900 – reading time 3.5 min)
The job goes by a lot of names, including financial planner, financial advisor and personal financial consultant, but it's rarely called what it typically is: financial products sales.

Financial planners earn a living by helping people sort through and choose investments,  insurance and other financial products. They do retirement planning, college funding,  estate planning and general investment analysis.

Obtaining New Business

Finding clients who need those services and building a customer base is crucial to experiencing success as a financial planner or advisor because referrals from satisfied clients are an important source of new business. Whether you find new clients by giving seminars or lectures, through social or business contacts or simply by cold calling, find them you must.

Having a broad social network is one reason that many successful financial planners enter the field after working in a related occupation such as accountant, auditor, insurance sales agent, lawyer, or securities, commodities and financial services sales agent. Yet, there are many advisors that built a fortune in this field with minimal social network.

What Education Will Lead to Employment?

Financial planning employers look for candidates with a bachelor's degrees in accounting, finance, economics, business, mathematics or law. Courses in investments, taxes, estate planning and risk management are also helpful. Programs in financial planning are becoming more widely available in colleges and universities.

Advisors usually seek the Certified Financial Planner (CFP), the Registered Financial Consultant (RFC) and Chartered Financial Consultant (ChFC) designations.

Generally, a license is not required to work as a personal financial advisor, but advisors who sell stocks, bonds, mutual funds or insurance may need licenses from Bank Negara and/or Securities Commission, BURSA.

Where Do Advisors Work?

More than half of all financial advisors work for finance and insurance companies, including securities and commodity brokers, banks, insurance carriers and financial investment firms. However, four out of 10 personal financial advisors are self employed, operating small investment advisory firms, usually in urban areas.

According to the surveys done by recruitment agencies, the overall employment of personal financial advisors is expected to increase faster than the average (by 27% or more) for all occupations through 2014. This is a result of the increased investment by businesses and individuals, the rising number of self-directed retirement plans and the growing number of seniors. Personal financial advisors will benefit greatly as baby boomers save for retirement and as a better educated and wealthier population requires investment advice. In addition, people are living longer and must plan to finance more years of retirement.

Is financial planning the right career for you? Take this quiz to help you find out:
Quiz:

1. How comfortable are you with making sales?
A. I could sell my grandmother a ticket to a Star Wars movie with no guarantee that she'll enjoy the performance.
B. I could sell my grandmother that Star Wars movie ticket, but I would feel guilty if she didn't like the show.
C. Only a bad person would sell his or her grandmother a Star Wars movie ticket.
 
2. At what stage of life are you?
A. I just graduated from college.
B. I've been out of school for a few years.
C. I've been in my line of work for several years, but I'm ready for a change.

3. How much of an extrovert are you?
A. I have been the president of nearly every club I have ever joined.
B. I have enough friends to make me happy.
C. A good book, a room to myself and no interruptions is my idea of heaven.

4. You could be described as:
A. both analytical and a good communicator.
B. analytical, but not a good communicator, or a good communicator, but not analytical.
C. neither analytical, nor a good communicator.

5. At work, I prefer to do my job:
A. completely independently
B. somewhat independently.
C. as part of a team.

6. What appeals most to me about becoming a planner is:
A. the challenge of building a client base.
B. the creation of my own business.
C. the analysis of investments.

7. According to the findings of FPAM, the median annual income for financial planners was $220,580 in 2007 - this includes commission income. How do you feel about that?
A. I've never been average and I'll earn more than the median.
B. That would work for me.
C. Working for commissions only makes me nervous.

Results

If you answered mostly As, then financial planning could be the right career for you. You're energized, rather than terrified, by the idea of earnings a substantial amount of your compensation through commissions. If you have the right connections and the energy level to work that network, you could succeed in this tough career.

If you answered mostly Bs, then you need a back-up plan. Financial planning might work, but you're likely to end up among the 80% of planners who, according to William F. Cole's "The Complete Financial Advisor" (2006), are in the business for less than five years. When sales don't work out, what will you do next and how will you sell yourself to your next employer?

If you answered mostly Cs, don't even think about financial planning. If you love the portfolio analysis side, consider working as a financial analyst. If math is your strong subject, go into financial engineering or quantitative analysis. You'll make more money without having to sell all day long.

By Dona DeZube (Author, Column Writer)

Resources

Prepared by David Lim, Jr:
FINANCIAL FREEDOM THROUGH FINANCIAL PLANNING
Revealing the secrets of accumulating wealth and securing assets that are commonly practiced by rich people all over the World. If money is a serious subject in your life, the information unfold to you is something you cannot afford to miss out – you don’t need to have a lot of money to start your journey to prosperity!

Issue #1: What You Should Know About Financial Planning?

Issue #2: A Survey of Common Mistakes!

Issue #3: Your Rights as a Financial Planning Client

Issue #4: 10 Questions to Ask When Choosing a Financial Planner

Issue #5: Simple Steps to Planning Your Finances Effectively

Issue #6: 8 Common Mistakes in Money Handling

Issue #7: How to Sort Out Your Own Financial Issues?

Issue #8: Power Keys to Financial Success

Issue #9: Investing Right for Beginner

Issue #10: Let Your Money Go to Work While Your Sleep!

Issue #1: What You Should Know About Financial Planning?

(Word Count: 948 – reading time 4.5 min)
You may have come across the term "financial planning" recently and wondered what it means. You may have decided to start your own financial plan but you're not sure how. Or you may feel it's time you went to a financial planner/consultant for some professional advice. Whatever your situation, the following information can help you decide what's right for you.

What Is Financial Planning?

Financial planning is the process of meeting your life goals through the proper management of your finances. It is a process that consists of specific steps that help you ascertain your financial condition objectively. 

The financial planning process consists of six steps that help you take a big picture, look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals.

The process involves gathering relevant information, setting life goals, examining your current financial status and coming up with a strategy or plan on how you can meet your current situation and future plans.

The Benefits of Financial Planning

Financial planning should provide direction and meaning to all your financial decisions. By viewing each financial decision as part of a whole, you can consider its short and long term effects on your life goals. You can therefore adapt more easily to life changes and feel more secure that your goals are on track.

Can You Do Your Own Financial Planning?

Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, you may decide to seek help from a professional financial planner/advisor if:

• you need expertise you don't possess in certain areas of your finances. For example, a planner/advisor can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances. 
  
  
• you want to get a professional opinion about the financial plan you developed for yourself. 
  
  
• you don't feel you have the time to spare to do your own financial planning. 
  
  
• you have an immediate need or unexpected life event such as a birth, inheritance or major illness. 
  
  
• you feel that a professional adviser could help you improve on how you are currently managing your finances. 
  
  
• you know that you need to improve your current financial situation but don't know where to start. 

What Is A Financial Planner?

A financial planner or consultant is someone who uses the financial planning process to help you figure out how to meet your life goals. The planner can take a "big picture" view of your financial situation and make financial planning recommendations that are right for you. The planner can look at all of your needs including budgeting and saving, taxes, investments, insurance and retirement planning. Or, the planner may work with you on a single financial issue but within the context of your overall situation. This big picture approach to your financial goals sets the planner apart from other financial advisers, who may have been trained to focus on a particular area of your financial life.

Be Sure You're Getting Financial Planning Advice

The government does not regulate financial planners as financial planners; instead, it regulates planners by the services they provide. For example, a planner/advisor that also provides securities transactions or advice is regulated as a stockbroker or investment adviser. As a result, the term "financial planner" may be used inaccurately. To be sure that you are getting financial planning advice, ask if the adviser follows the six steps described below.

The Financial Planning Process

The financial planning process consists of the following six steps:

1. Establishing and defining the client-planner relationship

The financial planner/advisor should clearly explain or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made.

2. Gathering client data, including goals

The financial planner/advisor should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need.

3. Analyzing and evaluating your financial status

The financial planner/advisor should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

4. Developing and presenting financial planning recommendations and/or alternatives

The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.

5. Implementing the financial planning recommendations

You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your "coach," coordinating the whole process with you and other professionals such as attorneys or stockbrokers.

6. Monitoring the financial planning recommendations

You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

By Editor, Financial Planning Association of Malaysia

Issue #2: A Survey of Common Mistakes!

(Word Count: 167 – reading time 1.0 min)
A long term survey done by the CFP Board (USA) denotes that many people, with or without the help of a financial expert make the following mistakes when it comes to planning their own finances in all areas, regardless the stages of their lives – single, married or retiring soon. Some of them may seem “common sense” but these mistakes do not choose its victim!

1. Do not set measurable financial goals. 

2. Make a financial decision without understanding its effect on other financial issues. 

3. Neglect to re-evaluate their financial plan periodically. 

4. Look for quick financial fix instead of a long-term strategy.

5. Expect unrealistic returns on investment. 

6. Think that financial planning is only for the wealthy.

7. Think that financial planning is only necessary when they get older. 

8. Confuse financial planning with investing.

9. Think that financial planning is primarily tax planning. 

10. Wait until a money crisis occurs to begin financial planning. 

11. Think that using a financial planner/advisor means losing control.

By Jeremy Vohwinkle (Registered Financial Planner)

Issue #3: Your Rights as a Financial Planning Client

(Word Count: 702 – reading time 3.0 min)
Working with a financial planner/advisor can be an extremely rewarding and valuable experience for you and your family. If you've decided to work with a financial planner, it's important to understand your rights in this professional relationship.

This section describes the kind of treatment you deserve from your financial planner, and helps you recognize when he or she is putting your interests and needs first. You can take an active role in shaping your financial future when you know your rights and what to expect from your financial planner.

You Have the Right to an Advisor Who Has Integrity

Trust between you and your financial planner/advisor is central to a successful financial planning relationship. You rely on your planner's honesty, professionalism and abilities to achieve your financial and life goals. When you know that your planner takes his or her professional obligations seriously, and places principles over personal gain, you can develop the type of partnership that is crucial to the success of any professional relationship.

You Have The Right to Objective Advice

Your needs should be at the heart of all recommendations made by your financial planner/advisor. Your planner should use his or her experience and judgment to carefully consider your situation, and provide you with advice that best meets your goals. Sometimes, this objectivity may require the planner to explain that your goals are unrealistic given your current resources and financial commitments. Your planner may then suggest alternative goals or priorities.

You Have The Right to an Advisor Who is Competent

You have the right to expect your planner to demonstrate an appropriate level of knowledge to offer financial planning advice, such as attainment of proper certification. Your planner should complete continuing education courses as part of his or her ongoing commitment to competency.

You Have The Right to Be Treated Fairly

Your planner should treat you the same way he or she would like to be treated in a professional relationship. This involves clearly stating what services will be provided and at what price. The planner should also explain the risks associated with his or her financial recommendations and any potential conflicts of interest. For example, does the planner gain personally or financially from your purchase of a particular product or from the outcome of a suggested strategy?

You Have The Right to Privacy

To get the best results from your financial planning relationship, you need to divulge relevant personal and financial information to your financial planner on a regular basis. Your planner should keep this information in confidence, only sharing it with others to conduct business on your behalf, at your consent, or when ordered to do so by the courts.

You Have The Right to an Advisor Who is Professional

Your planner/advisor should not provide investment advice or stock brokerage service unless he or she is properly qualified and licensed to do so, as required by law. If your situation requires expertise that your planner does not possess, he or she should suggest other professionals who may assist you.

You Have The Right to an Advisor Who is Diligent

Your financial planner should discuss your goals and objectives with you and explain what you can expect from the relationship before engaging you as a client. Once the planner has determined that he or she (or his or her staff and/or network of related professionals) can assist you and has gathered sufficient information, the planner should make - and, if appropriate implement - recommendations that are suitable for you. A diligent planner investigates the products or services he or she recommends. A diligent planner also closely supervises any staff working with you.

If you would like to better manage your financial situation, a professional financial planner may be able to help you. Knowing how a planner should work with you, and how you will be treated as a financial planning client, will put you in the driver's seat when it comes to taking control of your financial future.

If you are currently working with a financial planner/advisor and are unsatisfied with the relationship, talk to the planner about your concerns. If you cannot mutually agree on how to improve the situation, you may want to find another planner.

By Editor, Financial Planning Association of Singapore

Issue #4: 10 Questions to Ask When Choosing a Financial Planner

(Word Count: 958 – reading time 5.0 min)
You may be considering help from a financial planner/advisor for a number of reasons, whether it's deciding to buy a new home, planning for retirement or your children's education, or simply not having the time or expertise to get your finances in order. Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.

The questions in this section will help you interview and evaluate several financial planners to find the one that's right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose business style suits your financial planning needs. An interview checklist has been included for your convenience.

1. What experience do you have?

Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has a minimum of three years experience counseling individuals on their financial needs.

2. What are your qualifications?

The term "financial planner" is used by many financial professionals. Ask the planner/advisor what qualifies him to offer financial planning advice and whether he holds a financial planning designation such as the CFP, RFP, ChFC. Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation.

3. What services do you offer?

The services a financial planner/advisor offers depend on a number of factors including credentials, licenses and areas of expertise. Financial planners cannot sell insurance or securities products without the proper licenses. Some consultants offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.

4. What is your approach to financial planning?

Ask the financial planner about the type of clients and financial situations she typically likes to work with. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed. Make sure the planner's viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

5. Will you be the only person working with me?

The financial planner/advisor may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.

6. How will I pay for your services?

As part of your financial planning agreement, the financial planner/advisor should clearly tell you in writing how she will be paid for the services to be provided. Planners can be paid in several ways:

• a salary paid by the company for which the planner works. The planner's employer receives payment from you or others, either in fees or commissions, in order to pay the planner's salary. 
• fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income. 
• commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product. 
  
• a combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations. 

7. How much do you typically charge?

While the amount you pay the planner/advisor will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include the planner's hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8. Could anyone besides me benefit from your recommendations?

Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.

9. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?

Several government and professional regulatory keep records on the disciplinary history of financial planners. Ask what organizations the planner is regulated by, and contact these groups to conduct a background check.

10. Can I have it in writing?

Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.

By Editor, Financial Planning Association of Singapore

Issue #5: Simple Steps to Planning Your Finances Effectively

(Word Count: 412 – reading time 1.5 min)
Planning your finances has many benefits. Whether you do it yourself or you hire a professional, the important thing is to know that a good plan can help you turn around your financial outlook and can take care of many problems created by bad debts or past mistakes. To make the most of financial planning, it's important to do it properly and take full control of your situation.

Step 1

Make a list of your short- and long-term goals. Include anything that requires a significant investment, such as travel, buying a new house, going back to school or getting a new car. List as many reasons as you can think of as to why and how planning and saving will benefit you. The clearer you are of your direction and goals, the easier it will be to pursue them.

Step 2

Protect yourself and your loved ones in case of accidents, loss of a job or a major catastrophe. Having a financial plan in place will allow you to take the pressure off and enjoy everyday life without worrying so much about what will happen if a crisis hits. Protective financial planning can include anything from buying life insurance to having an emergency savings account.

Step 3

Take charge of your debt. One--if not the main--benefit of financial planning is the ability to take control of what you owe. If you want to pay off your debt as soon as possible, you will need a good plan to help you decide how to allocate your money directly to where it is most needed.

Step 4

Use financial planning to get a new business off the ground. Not only will you need a good business plan in order to get a business loan in the first place, but you will also need a budget in order to spend your money wisely once it's available. Knowing what to invest in and what to avoid when starting a new business can benefit you, especially during the first year.

Step 5

Review your plans regularly. As you move toward your goals, it is likely your plans will change or need revising. Don't be afraid to start anew. As long as you are still working toward your goal, taking a different route is entirely acceptable.

By Editor, Financial Planning Association of Singapore

Issue #6: 8 Common Mistakes in Money Handling

(Word Count: 762 – reading time 3.0 min)
I recently attended a really great seminar about financial planning, money management, and retirement planning. It was interesting how the speaker started out the seminar, because instead of jumping into the key points of the discussion, he started discussing the most common mistakes people make with their money. The basic point is that you cannot really effectively save, plan, or use your money if you continue to make the same mistakes with your money.

Here are the eight most common mistakes made and how to avoid them.

Mistake #1

The first most common mistake people make with their money is to pile up their debt. When you pile up debt, you create an enormous financial setback for yourself that is both extremely difficult to get out of and which also costs you more money in the long run through accrued interest. It is extremely important to use your credit cards responsibly. Building good credit can help you qualify for lower interest rates on loans, but charging your cards to the max and not paying them off destroys your credit and puts you deeper into debt. Pay in cash instead to keep spending within your means.

Mistake #2

The second most common mistake people make with their money is not making sure that they are fully covered by their insurance. The financial fallouts caused by emergency insurance situations can be devastating. Be sure you stay fully covered with auto, homeowners (or renters), health care and disability insurance at all times. If you have a family, you should also have life insurance coverage.

Mistake #3

The third most common mistake that people make with their money is to put-off saving and investing. When it comes to saving and investing your money, time can be your best friend. The purpose of saving and investing your money is to take advantage of compound earnings. The longer that you save and the earlier that you start investing the faster you can reach your financial goals. Waiting just makes it much harder to meet the same goal. So find a way to start saving and investing today.

Mistake #4

The fourth most common mistake that people make with their money is also not setting aside a small amount of money for an emergency fund. In addition to your saving account, you need to set up a small slush found that is only used for emergencies. This will help you to avoid taking money out of your savings and regular checking account when an emergency situation arises. Try to contribute the same amount to his account each month, just as you do with your normal savings account.

Mistake #5

The fifth most common mistake that people make with their money is missing their employer match into their long term saving account. An employer contribution to your EPF is “free money”! If your employer offers EPF, make sure you take full advantage of it. Contribute enough money into your EPF by your employer is crucial or else you are giving away free money.

Mistake #6

The sixth most common mistake that people make with their money is not setting up automatic payments for savings or investment plans. When you base your investments or savings contributions on the amount of money you have at the end of the month, you will get nowhere fast. Instead, set up an automatic plan that takes money out of every paycheck - and you will be surprised how quickly your accounts will grow on their own.

Mistake #7

The seventh most common mistake that people make with their money is co-signing for loans. The next time a friend or family member asks you to vouch for them on a loan, politely run the other way. When a bank requires a co-signer, it's because the person applying has no credible history of paying debts on time. If the person who received the loan is late on payments or simply doesn't pay up, you'll be responsible - and this will damage your credit.

Mistake #8

The eighth most common mistake that people make with their money is getting "upside-down" on their car loans. This happens when people purchase and finance new vehicles they cannot truly afford. Since new cars depreciate quickly, and your finance term may extend longer than 5 years, you may owe more on the loan than the car is worth — which is called being "upside-down" on the loan. To get the most for your money, put at least 30% down or, better yet, buy used cars and drive it till it dies.

By Jeremy Vohwinkle (Registered Financial Planner)

Issue #7: How to Sort Out Your Own Financial Issues?

(Word Count: 361 – reading time 1.5 min)
So many people around the world have financial problems. Here are some great steps to sort out your own finances, regardless your current financial status quo.
Start planning a list or spreadsheet. Start a list of all your financial expenses. Gather all your home finances, car insurance, big-ticket installments, school and so on. You need to take account of everything and come to your final number. If you live by a budget then becoming your own financial planner/advisor will be easier than your think. Make sure that you also account for everyday expenses also.

Then, compare income to expenses. Take note of all your total income. This is your yearly pay or income. Budget all expenses and make sure that you are not spending more than your brining in every month. It helps if you pay all your bills on time cause that should build your credit report. This will make it easier to get loans or good deals in such a new car. But before all of that you must calculate all expenses after you pay a yearly tax (if you unsure your tax payable, take 15% as a safe assumption). It’s not hard so save money if you have a higher income every year.

Once you had compared your income to expenses, analyze all total information. Take an estimate of what your future might consist of. I mean, are you going to college? If so, that is going to cost money. Do you want to own a house? That’s also more expenses. When you are your own financial planner keep in mind that it’s going to take some time to calculate everything.

You just start building a small habit of managing your own money. Start easy and small, allocate just 15 minutes per day learning more about your own finances or any lessons on financial planning.

Here are some good advice;

• If you have having a problem being your own financial planner you can always outsource the idea.
• Financial planners can work for credit unions, banks and companies that specialize in offering financial advice. But many financial planners work for themselves.
• Take note all everything closely

By Jeremy Vohwinkle (Registered Financial Planner)

Issue #8: Power Keys to Financial Success

(Word Count: 749 – reading time 3.0 min)

Although making resolutions to improve your financial situation is a good thing to do at any time of year, many people find it easier at the beginning of a new year. Regardless of when you begin, the basics remain the same. Here are my top nine keys to getting ahead into financial prosperity.

1. Get Paid What You're Worth and Spend Less Than You Earn

It sounds simplistic, but many people struggle with this first basic rule. Make sure you know what your job is worth in the marketplace, by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company, for what you do. Being underpaid even a thousand ringgit a year can have a significant cumulative effect over the course of your working life.
No matter how much or how little you're paid, you'll never get ahead if you spend more than you earn. Often it's easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. It doesn't always have to involve making big sacrifices.

2. Stick to a Budget

One of my favorite subjects: budgeting. It's not a four-letter word. How can you know where your money is going if you don't budget? How can you set spending and saving goals if you don't know where your money is going? You need a budget whether you make thousands or hundreds of thousands a year.

3. Pay Off Credit Card Debt

Credit card debt is the number one obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it's so easy to forget that it's real money we're dealing with when we whip them out to pay for a purchase, large or small. Despite our good resolves to pay the balance off quickly, the reality is that we often don't, and end up paying far more for things than we would have paid if we had used cash.

4. Have a Saving Plan

You've heard it before: Pay yourself first! If you wait until you've met all your other financial obligations before seeing what's left over for saving, chances are you'll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.

5. Invest!

If you're contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better. If you are totally unfamiliar with any investment tool, you can start off with mutual funds as they are easy, liquid, flexible, safe, yet allow investors to earn up to 10%-25% in return annually.

6. Maximize Your Employment Benefits

Employment benefits like a EPF plan, flexible spending accounts, medical and dental insurance, etc., are worth big bucks. Make sure you're maximizing yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.

7. Review Your Insurance Coverage

Too many people are talked into paying too much for life and disability insurance, whether it's by adding these coverage to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents. On the other hand, it's important that you have enough insurance to protect your dependents and your income in the case of death or disability.

8. Update Your Will

92% of Malaysians don't have a will. If you have dependents, no matter how little or how much you own, you need a will. If your situation isn't too complicated you can even do your own with software like WillMaker from Nolo Press. Protect your loved ones. Write a will.

9. Keep Good Records

If you don't keep good records, you're probably not claiming all your allowable income tax deductions and credits. Set up a system now and use it all year. It's much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.

Reality Check

How are you doing on the top nine list? If you're not doing at least six of the nine, resolve to make improvements. Choose one area at a time and set a goal for incorporating all ten into your lifestyle.

By Joshua Kennon (Author, Investor, Entrepreneur)

Issue #9: Investing Right for Beginner

(Word Count: 839 – reading time 3.5 min)
Do you hear co-workers or friends talking about their investments and wonder how they got started? How'd they come up with the money to invest? How'd they know what to invest in? Many people don't know where to start, so they never start at all.

The vast amount of information about investing, the wide array of investment choices, and the risk are intimidating and can prevent you from taking those first steps. It doesn't have to be that way. You only need to know a few basics in order to begin investing in your future.

Basic Assumptions

First, some assumptions. This article assumes you have your credit card debt under control. It makes no sense to invest in stocks, bonds, or mutual funds if you have thousands of ringgit in credit card debt at interest rates in excess of 10%. You don't have to be completely debt-free, but you should be making serious inroads into your debt each month, and you should be paying very low interest rates on that debt. This article also assumes you have an emergency fund of at least three months worth of basic living expenses (preferably six months worth) in case of a job loss, disability, etc. 

Where Do I Find the Money to Invest?

The first question for many people is "where do I get the money to invest?" There are plenty of stock mutual funds (unit trusts) that allow you to invest with $1,000 or more. Use your next bonus at work, or your income tax refund, or put in some overtime for extra cash. If you just can't come up with $500 to start your portfolio, many funds will allow you to skip the initial lump sum investment if you sign up for automatic monthly withdrawals of $50 to $100 from your checking account.

How Do I Choose an Investment?

You're ready for some long-term investments. How do you choose? The first step is to know what your goals are. Are you saving for a house? A college education? Retirement? The type of investment you choose will depend on the amount of time available before you need the money. Stocks are considered long-term investments, and it's best to plan on holding stocks or stock mutual funds for five years or longer. If you need the money sooner than this, you may reduce your return by cashing in when the stock's value is down.

How Do I Determine My Risk Tolerance?

Next, you need to know your risk tolerance. If you hide your money under your mattress because you don't trust the bank, then you're probably not going to feel comfortable investing in volatile technology stocks. Public Mutual’s Investment Risk Test can help you determine what level of risk you can tolerate.

How Do I Choose an Investment?

How do you decide where to put your money? Most experts recommend spreading your money over several different types of investments to reduce risk, because typically one type of investment does well when another doesn't. For example, usually when returns on stocks and stock mutual funds are high, returns on bonds are low, and vice versa. By having money in both types of funds, you're more likely to get a decent combined return if one category takes a downturn. Your asset allocation should be tailored to your risk tolerance and the number of years before you'll need to withdraw the money from your investments.

For beginning investors, I recommend stock mutual funds instead of stocks in individual companies. Why? It's all about risk. A well-chosen stock mutual fund is less risky than an individual stock because mutual funds invest in many companies, thus spreading out the risk. If one company does poorly, the fund as a whole may still have a good return. If you buy stock in one company and the company does poorly, you lose money.
Where Do I Find Information About Stocks and Mutual Funds?

Once you're ready to start choosing a fund to invest in, there are many excellent Web sites to help you. My personal favorite is MorningStar (Malaysia Edition), the respected mutual fund rating company. Their powerful Fund Selector allows you to search for mutual funds based on what's important to you. For instance, if you want a list of funds that allow initial investments of $1,000 or more, you can click on the appropriate box, leave all the other boxes as is, and you'll get a list of funds that accept initial investments of $1,000 or more, with their YTD return, expense ratio – the amount of administrative and other expenses that the fund manager deducts from your return each year, their MorningStar rating, and more. Click on an individual fund name and get detailed information about that fund.

Once you've chosen a fund you feel comfortable with, call their hotline number and request a prospectus (a description of the fund, its investments, and the returns it's earned in the past) and an investor's kit. Fill out the form, send in your money, and voila! You're an investor.

By Joshua Kennon (Author, Investor, Entrepreneur)

Issue #10: Let Your Money Go to Work While You Sleep!

(Word Count: 648 – reading time 2.5 min)
We can go back in history and look great civilizations. Whether it was Genghis Khan, Atilla the Hun, Hannibal, Constantine, The Greek Empire, Roman Empire, British Empire, Russia or any other global power and we know from facts that their fall was caused from within and not by being conquered. Military History tells us that the great generals of history conquered foreign lands but brought into their control the resources of those lands and the inhabitants. Our history books are full of illustrations of battles won, lands conquered, lootings, riches, gold and just about any contrivance that the human mind is capable of creating was a precursor of what we might be facing today.

What Was the Common Thread? Greed, pure and simple greed. Classic movies, with Charlton Heston and Victor Mature have depicted the “glorious days” of past civilizations. The screens were full of the “spoils of war”. Peasants were always the losers, just as in today’s society, the losers or the one’s that are paying the heavy price of “fiscal mismanagement” are the average people. Could education about the monetary system have changed the course of history? I don’t know that answer, but we do know that “lack of knowledge” of the monetary system kept the “masses” always in “serfdom” to royalty. Taking a look back at history and relating it to our present day situation, we can see “history repeating” itself. Do you remember when Jimmy Carter left office? Do you remember what the prime rate of interest was? Shades of our forefathers, would you believe that we were paying in excess of twenty-percent (20%) interest in our time.

The Rule of “72”

Whenever I conduct a seminar or workshop, I always give the students a lesson on the “rule of 72”. I am always amazed at how many have never heard this expression let alone what it means. I can begin by simply saying this. If, Mother has $100,000 and she puts it into a very safe “bank account”, she is content for the bank to pay her a modest four (4%) return on her investment. Well, divide that four percent (4%) into seventy two (72) . The answer is simple. It is eighteen (18). So this means that it takes, dear old “Mom” eighteen (18) years for her $100,000 to double.

Wow, what a deal ! But, now let’s look at the credit card companies that have the nerve to charge twenty percent (20%) interest on a credit card. Hmmmm, that amounts to three and one half years. So, because Jimmy Carter was so in-experienced in “fiscal policy” and his tenure as President allowed for such usurious rates to become reality, this opened the door for usury to become a part of our daily lives.

Of course, promoters, bankers, credit card companies and lobbyists all claimed that consumers of all walks of life (even if some don’t qualified) needed credit and this was a result of what was needed. Well, if that is the case, then why the big, disparity in credit profiles and why do banks and credit card companies continually keep average folks in this credit life-time “imprisonment”. Usury was banned by Constantinople but our country’s leaders were not even aware of what had been the demise in other civilizations. It was high interest rates then and it is high interest rates today. Present day credit card rates for the average person and how under the “rule of 72” it is IMPOSSIBLE for anyone to get out of debt.

Perhaps, you are now beginning to see where this article is going. Maybe, just maybe our “dilution in purchasing power – ability to spend” just might be the result of high interest rates, foreclosures, repossessions, divorce, sickness and the high unemployment rates today. The moral: Start saving into any investment vehicle that gives you (at least) 10% return per annum, that way, your money is double every seven years – perhaps your salary might not be able to pull this stunt within next seven years. Question, if your money is doubled every seven years, should you be concerning over inflation, deflation and global economic slowdown?

By Regis Sauger (Licensed Mortgage Broker, Columnist, Speaker)