The majority of Singaporeans, even if they had tertiary education, do not have formal education in matters of personal finance. But few would doubt the necessity to have at least a fundamental understanding of insurance, budgeting, retirement planning, and the financial instruments and products out there that will help reach one’s life goals.
As someone reading DollarsAndSense, you probably fall into the category of people who are interested to improve your own personal finance knowledge. You might know of someone who thinks that this whole “finance” thing is too complicated for mere mortals to comprehend, and that we are better off leaving it to the professionals – financial planners.
In this article, we examine what are the requirements and qualifications necessary to become a financial advisor, and we explain what the weird characters (like CFC or ChFC) on a financial advisor’s namecard really mean.
Licensing For Financial Planners In Singapore
In Singapore, financial planners are licensed and regulated by the Monetary Authority of Singapore (MAS) under the Financial Advisers Act (FAA). MAS sets out minimum requirements to be an appointed representative of a financial adviser.
In this context, appointed representative is what you think of as agents, while financial adviser refers to the entity (an insurance company or financial advisory firm) licensed to provide services like “advising others on investment products, issuance of research reports covering investment products, marketing of any collective investment schemes, as well as arranging life policies for others”.
It is important to note that the FAA deals with insurance and related products with an investment element. Thus, it does not regulate activities like general insurance policies (which are regarded as consumption-based), deposit-taking products offered by banks (which are generally well-understood and low-risk), and loans or mortgages (which do not contain an investment element).
In 2002, MAS introduced a licensing framework and launched a modular examination known as the Capital Markets and Financial Advisory Services Examination (CMFAS Exam). Advisers who wish to be employed by the financial advisers to carry out advisory services are required to pass the requisite CMFAS modules and meet a set of basic criteria.
Source: Singapore Statutes Online
As you can see, the requirements are pretty straightforward.
First, you must be at least 21 years old.
Next, you need to have at least:
– GCE ‘A’ Level certificate with three H2 passes and two H1 passes;
– Or an International Bacclaureate (IB) diploma;
– Or a polytechnic diploma; or equivalent academic qualifications.
Finally, you must have sat for and passed modules 5 to 9A from the CMFAS Exam, namely:
– Rules and Regulations for Financial Advisory Services (M5),
– Securities Products and Analysis (M6)
– Collective Investment Schemes (M8)
– Life Insurance and Investment-Linked Policies (M9)
– Life Insurance and Investment-Linked Policies II (M9A)
These examinations are self-study, but there are private schools that offer courses to help you prepare for them. You can find out more about CMFAS and the examinations process.
After you’ve set for the requisite papers, you can log a notification with MAS and begin work as a financial advisory representative.
Continuing Professional Development
In order to contribute to the success of their agents and maintain a higher level of customer satisfaction, individual financial advisory firms and banks typically have professional development programmes for agents under them to go for. These could include product training seminars, workshops on prospecting, Toastmasters clubs, or even things like Neurolinguistic Programming.
Additional Certifications For Financial Planners
So, what about titles like Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), Associate Financial Consultant (AFC), or Chartered Life Underwriter (CLU)? These are internationally recognised certifications that signify an agent’s knowledge in finance, insurance and investment. These are not required by MAS for providing financial advisory services.
You can refer to the websites of each accreditation organisation to find out more about what it takes to earn these titles, including syllabus and code of conduct that candidates need to undertake. Some of these accreditations require agents to pay an annual fee to continue to use and keep the title.
As you can see, having the basic requirements to become an agent is not that hard, though some might tell you that the exams are no joke. Additional professional accreditation also signifies an agent’s wish to further hone their knowledge and improve their capabilities.
But at the end of the day, one can have multiple titles to their name but still be a lousy financial adviser who does not properly serve their clients or care to utilise their knowledge to give the best advise. Conversely, an good agent may not have any fancy titles but be truly loved and appreciated by their clients for their stellar advice and service.
Get Personalised Answers To Your Insurance Queries
DollarsAndSense is teaming up with fundMyLife to help get your insurance questions answered – for free. You can get personalised answers from a pool of handpicked, professional advisors. You can find out more about advisors on fundMyLife.