Financial planning has a great role in managing wealth and life savings of Australians including Muslim Australians. It is a process of determining how to best meet one’s financial goal through the proper management of financial resources.
A Muslim financial planner can advise and add value by thoroughly considering relevant circumstances and developing strategies to help reach desired goals in accordance with the norms of Islam. Increasingly, Muslim financial planners are required to advise the clientele of Islamic financial services providers in Australia.
Wealth management and financial planning are highly regulated in Australia. Unfortunately, it is a bit hard to understand the intricacies of State and Federal legislation as well as ever-changing rules and regulations. Hence, you might need a level of professional advice to gainfully manage your wealth.
Muslims may obtain advice and benefit from Islamic financial planners in a wide range of issues including finance, investment, superannuation, self-managed superannuation funds, taxation, insurance and estate planning. All this requires specific knowledge and expertise in legislation, regulations, markets, finance including Islamic finance. An appropriate financial advice can simplify your life and provide a sense of security about your current and future financial position.
For a proper financial advice, one should investigate if the planner is licensed, has the required qualification with possible specialisation, is a member of a professional body, who owns the financial product and how they are remunerated either charging a fee for service or receiving a commission on the sale of the product recommended for clients. Generally speaking, service fees are preferred as upfront or trail commissions may have conflict of interest with product issuers.
Australia has a large financial planning industry. More than 4,500 licensees are authorised to provide advice, with almost 3,300 of those authorised to provide personal advice. More than 4,600 licensees are authorised to deal in financial products including deposits, insurance, managed investment schemes, securities, superannuation and margin lending.
Almost 93% of licensees are authorised to undertake more than one financial services activity. Of these, more than 70% are authorised both to offer financial advice and to deal in a financial product. Australian banks and AMP control 80% of the financial planning market.
The Future of Financial Advice (FOFA) law is operative as of 1 July 2014 which regulates the financial planning industry in Australia.
FOFA rules require a financial adviser to act in the best interest of his or her client by identifying the subject matter of the advice sought; identifying the objectives of the client; making reasonable inquiries to obtain complete and accurate information; declining to provide advice in the absence of required expertise; conducting reasonable investigation to meet the objective of clients and providing advice relevant to client’s circumstances. A financial planner does not have to use his or her expertise to advise other areas of potential risk or benefit for the best interest of clients.
Under FOFA, if the remuneration paid to advisers could not reasonably be expected to influence the choice of financial product recommended, then it would not be a conflicted remuneration and hence, not banned. All payments related to the provision of general advice are prohibited unless the adviser operates under the business name or trademark of the product issuer.
Australian Muslim population as well as their level of wealth are on the rise. These demographic and economic phenomena represent opportunities for Muslim financial planners to create wealth and achieve higher living standards for all Australians.