Independence Day for Unit Trust Consultants

Posted in Malaysia Financial News, Malaysia Investment |

FMUTM had finally proposed to the Securities Commission to allow unit trust agents to represent more than one unit trust management company.

FEDERATION of Malaysian Unit Trust Managers (FMUTM) has proposed that individual unit trust agents and licensed financial planners be allowed to become independent unit trust agents(IUTAs) who can represent more than one unit trust management company. It has also proposed that a group of individuals be allowed to form an independent unit trust dealing company, provided that at least one of the directors holds a valid financial planning licence.

(source: http://biz.thestar.com.my)

This is good for the consumers several ways. Firstly, this would allow the clients to select investment funds from more than one company, though more choices don’t necessary means better choices.

Secondly, when unit trust agents are independent, they can recommend the most suitable funds according to the risk profiles of their clients, since they no longer have any vested interest in the companies. However, this only holds true if the commission for all funds are the same.

Thirdly, this will greatly increase the competency of the agents and financial planners, as they will need to really study a great deal more about the market, and read up on the funds that is available on the market. Though, it’s good to know about all the funds, I guess it’s wiser to just focus on the top performing funds, since 20% of the funds are giving investors 80% of the returns.

This seems to be a very healthy progression for the unit trust industry in Malaysia.

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