FIMM is keeping it simple and going back to basics to reach a wider audience and making its content easier to digest. —Image by rawpixel.com on Freepik
THERE is a severe lack of financial literacy in Malaysia, as any number of news reports, surveys and polls reveal.
Furthermore, basic investing knowledge is lacking — a problem that cuts across all age groups. As Malaysia ages, the problem amplifies since retirement savings as measured by the EPF’s basic quantum savings benchmark are insufficient to retire “gracefully”.
Keeping it simple and going back to basics is how the Federation of Investment Managers Malaysia (FIMM), which regulates the marketing and distribution of unit trust schemes and private retirement schemes (PRS), is achieving a wider audience and making its content easier to digest.
According to FIMM CEO Kaleon Leong Rahan at a recent media event, most Malaysians lack basic financial education and do not understand investment risks. “In schools, children are taught the basics of savings but there is a lack of education on investing,” he says.
Unit trust funds and PRS are safer investment options compared to the stock market or cryptocurrencies but there are still risks. Kaleon points out that reaching out to different segments of society entails using different methods.
FIMM uses social media, mainstream media platforms and animation to educate the masses. There is an emphasis on pictures or animation verses text-heavy content.
“We want people to know their rights as investors, that they have a right to information and service for the fees they pay as part of their investment,” he says.
In 2023, the total assets under management (AUM) of unit trust funds, PRS, wholesale funds and exchange-traded funds managed by FIMM members stood at RM611.4bil with 1,996 funds. About half of the AUM were in mixed assets, equities comprised 22.5%, bonds (15.9%) and money market funds (11.4%).
Kaleon says another group the FIMM is targeting is those with retirement savings to expand their knowledge of unit trusts. “There are different funds for different risk profiles and we want to educate investors on that,” he adds.
The internet and social media can be both a help and a hindrance when it comes to being informed or educated on investing.
“We worry about where the information comes from with many not aware of the red flags. With technology, investing becomes easy and convenient, as people can execute their investment decisions through their mobile phones.
“We want to make the public aware of these pitfalls and be wary of where they get their information from,” Kaleon says, observing that it is not just young adults but also investors who can be misled.
Part of the outreach and education efforts include sharing research and surveys carried out by FIMM, which can be either turned into the more traditional reports carried by the media or shared over social media.
Kaleon points out that most of these resources are open to the public and that the media is more than welcome to use it.
Among the key takeaways from a survey on potential market segments for unit trusts and PRS were inflation worries, working after retirement, an increased awareness of saving, but limited by high living costs, and saving for emergencies rather than retirement.
The survey from late 2023 to early 2024 also showed that the Covid-19 pandemic prompted a shift in the behaviour of Malaysians and priorities regarding income, saving and retirement strategies.
The survey noted how financial resilience and effective financial planning is critical and that understanding how Malaysians’ financial attitudes and behaviours have evolved is essential, with FIMM particularly focused on identifying opportunities for unit trust and PRS providers as well as how to cater to these evolving needs.
The pandemic also forced Malaysian investors to reassess their investment priorities, with many more focused on maintaining cash reserves and adjusting their portfolios.
The survey showed young investors are beginning to invest in products such as ASNB although the typical investor is aged 30 and above with middle-to-upper income levels residing in market centres.
Investors who invest in unit trust, PRS and ASNB tend to be more optimistic of their future and that of the country despite challenges, these investors are also better prepared for retirement.
The contribution of unit trust and PRS schemes to the Malaysian capital market is significant, as evident by the growth in net asset value.
Next year, the International Investment Funds Association (IIFA) conference will be held in Malaysia, which last hosted it in 2003.
“It is a major event and is the body that represents fund management globally. Malaysia is also represented on the board of the IIFA. We hope that the conference will help to spotlight Malaysia’s fund management industry,” he says.
This article first appeared in Star Biz7 weekly edition.
