Financial planning gets tepid response

UNLIKE in other countries in the region, most financial planning services in Brunei Darussalam are provided free of charge and many of its citizens are not taking full advantage of them.

Financial service planners in the Sultanate undoubtedly have an image problem, and according to Ida Nazrena Hj Bujang, a personal wealth manager at BICB Capital, the idea that such services are made available so that companies can use them to market certain financial products is a misconception.

There are some qualified financial planners who charge for their services in line with practices of financial advisors in the region, Ida acknowledged, but most are readily available for free.

"A few reasons come to mind why Bruneians are not making use of these services. One is that most do not understand what financial planning is, what it can do and how it can help improve the quality of our lives," she explained. "Financial planning encompasses so many things, such as having good cash management, managing debts effectively, building and protecting wealth and distributing the wealth efficiently.

"Financial planning has also been misinterpreted as a way for some companies to market certain financial products. This misconception is giving the public second thoughts about going to see a financial planner," Ida told The Brunei Times.

Keeping in mind the now widely-accepted notion that current contribution rates for the state pension scheme, better known as Employees' Trust Fund (Tabung Amanah Pekerja or TAP) is inadequate to sustain even a modest lifestyle for most Bruneians, financial planning services could prove useful more than ever, experts say.

"We think that the majority of Bruneians would not have sufficient TAP funds to (live on after retirement) based on the current contribution," said Chong Wan Ching, head of BICB Capital.

A study conducted by TAP and Universiti Brunei Darussalam, which saw extensive surveys on 90,000 TAP members, estimated that as of January 2007, 70 per cent of its members get by on a monthly income of $1,500 and below.

The findings suggested that pensioners may also end up heavily reliant on the retirement income reserved for them by the government.

"For those on TAP, we would suggest that they talk to a financial planner to determine how much they would need to have by 55 years old for them to live the lifestyle that they want. Once the amount is determined, it is important to discuss the best course of action to achieve the amount based on his or her current financial situation," said Wan Ching.

"Early action is essential for the success of the retirement plan. Also, while planning for retirement, it is important to take into account the possible events that might disrupt the plan," she added.

The 2007 survey also found that out of 445 workers, 67.4 per cent found the TAP contribution rates insufficient, while 54.2 per cent of employers were satisfied with the current rates. Despite the fact that 53.2 per cent said they were in support of raising the rates, only 7.8 per cent actually assented to chipping in above five per cent towards their employees' TAP.

"Some companies may have their own retirement fund contribution in addition to TAP," said Ida. "Of course, some companies may be too small to start such an undertaking, but they could tie the performance of the staff to the increment in employer's TAP contribution as done by some companies in Malaysia," she said, adding that this is one way companies can gain staff loyalty.

The Brunei Times