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Savvier investors may see value in self-directed investments. The growth of this investor segment can spur the growth of low cost execution-only or distribution-only business models. EPF e-members investment scheme (e-MIS) is already paving the way for self-directed investments, by allowing its members to withdraw and invest their savings in private sector funds through its online platform. In addition, the introduction of e-services platforms in 2020 will also enable the growth of online distribution of capital market products.
Broad advice will be relevant to investors seeking general investment recommendations in selected industries, asset classes or products that may be considered for their overall investment portfolio. By enabling this category of advisory model, investors can benefit from qualified investment experts.
As the industry evolves in complexity, especially in aspects of retirement, there is greater demand for personal advice – one that prioritises outcomes for individual investors vis-à-vis their risk profile and helps them meet their investment goals. Although it is still small in size, there has been traction with DIMs and FPs who provide personal advice. DIMs adopt a more standardised and automated approach to personal advice in addition to managing one’s portfolio, while FPs provide individually customised advice based on investor needs and risk appetite. There is also an emerging trend of hybrid advisory models that integrate human interaction with automated advisory. As the demand for wealth management advisory grows, there would be opportunities for more intermediaries to shift their focus towards providing personal advice. Growth in this category of advisory model can offer investors greater variety and quality of personal advice.
The SC will also conduct a joint review with BNM towards consolidating the licensing regime between FPs and financial advisers (FAs), which are regulated by the SC and BNM respectively. This takes into consideration that a sizeable number of FPs and FAs are dual-licensed today and are therefore subjected to dual regulations. This will enable the consolidated FPs and FAs to offer a wider range of financial advisory and planning services to consumers and investors, as well as reduce the regulatory costs for intermediaries.
To facilitate the spectrum of investment advisory models in Malaysia, the SC’s regulatory framework will need to evolve. This entails a more streamlined and modularised licensing regime, complemented by regulations and regulatory expectations on the various types of advisory models that are clearer and more distinct. There are also various other factors to be considered, including the implications on current business models in the market, commercial viability and talent needs. Moving forward, an extensive regulator- industry collaboration will be fundamental to shape the investment advisory landscape.
3.2.3 ENABLING GREATER EFFICIENCIES THROUGH MARKET INFRASTRUCTURES
The ease of the investing process and ease of access to reliable investmest information are powerful components that contribute to investor empowerment. Technology has made investor empowerment more prominent. Globally, various types of fund management and information infrastructure that enhance both investor experience and efficiencies within the fund management industry have emerged.
The emergence of information infrastructures to centralise fund information in a repository for the fund management industry provides investors with greater awareness on available investments and enables better comparability of fund performance. This is similar in principle to the Bond+Sukuk Information Exchange (BIX) in Malaysia.
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