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6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps

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FIMM Combined Examination FCE

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1 Introduction: The FIMM Combined Examination (FCE)

0.1 FCE Exam Facts, Registration Rules and How to Use This Guide

2 Chapter 1: Understanding Collective Investment Schemes in Malaysia

1.1 What a Collective Investment Scheme Is and How Malaysian CIS Are Classified 1.2 Investment-Linked Funds Are Not UTS; Industry Growth and History 1.3 Participants in the CIS Ecosystem: Unit Holders, Managers, Trustees, Distributors and Regulators

3 Chapter 2: Introduction to UTS and PRS

2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare 2.2 Types of Funds: By Asset Class, Fund Structure and Investment Objective 2.3 Methods of Investing and Dollar Cost Averaging 2.4 Benefits and Disadvantages of Investing in UTS and PRS 2.5 Understanding Risk and the Risks of Investing in Schemes 2.6 Shariah-Compliant Schemes, Their Risks and the Role of the Shariah Advisory Council

4 Chapter 3: Regulatory Framework

3.1 The Regulatory Framework: The SC, Other Regulators and FIMM's Dual Role 3.2 Legislation, SC Guidelines and FIMM Rules Governing UTS and PRS 3.3 Regulation of Scheme Providers and Oversight Functions 3.4 The Deed, the Prospectus or Disclosure Document, and the Product Highlights Sheet 3.5 Portfolio Constraints: Permitted Investments, Liquidity, Borrowing and Exposure Limits 3.6 Regulations for Other CIS: Real Estate Investment Trusts and Exchange-Traded Funds 3.7 Regulation and Duties of the Scheme Trustee 3.8 Regulation of Marketing and Distribution: Distributor Categories, Collection Points and Agency Structure 3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation

5 Chapter 4 (Part 1): Marketing and Distribution — Disclosure and Transactions

4.1 Servicing Investors and the Contents of the Prospectus and Disclosure Document 4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance 4.3 The Purchase Process and Suitability Assessment Before Personal Advice 4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching 4.5 Financing the Purchase of UTS: Process, Safeguards and the Risk Disclosure Statement 4.6 EPF Transfers and Withdrawals for Investment in Approved Unit Trust Funds

6 Chapter 4 (Part 2): Marketing and Distribution — Distributions, Reporting and Service

4.7 Distributable Income, Distributions and NAV, "Buying" a Distribution and Taxation 4.8 Reporting to Investors: Confirmations, Statements, and Semi-Annual and Annual Reports 4.9 Marketing Principles, Delivering Quality Service and Handling Complaints 4.10 The Effect of Inflation, Taxation and Investment Costs on Returns 4.11 Investment Alternatives to UTS and PRS

7 Chapter 5: Code of Ethics

5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics 5.2 Core Principle 1: Honesty and Integrity 5.3 Core Principle 2: Professionalism 5.4 Core Principles 3 to 5 and Non-Compliance: Conflicts, Disclosure, Confidentiality and Misconduct

8 Chapter 6: Personal Financial Planning

6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps 6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant 6.3 The Consultant's Role in Investment Planning and Advising Clients Through the Life Cycle

9 Chapter 7A: Features and Operations of UTS

7A.1 Structure of a UTS, the Trust Deed, the Parties and Modifying the Deed 7A.2 UTS Fees, Charges and Expenses, and the Management Expense Ratio 7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices 7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units 7A.5 Unit Splits, Distributions and Their Effect on NAV 7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors 7A.7 Operational Aspects of Shariah-Compliant UTS and PRS and the Shariah Contracts Between the Parties 7A.8 Borrowing to Invest in UTS and the Risks of Loan Financing

10 Chapter 7B (Part 1): The Pension Landscape and the PRS Framework

7B.1 The Malaysian Pension Landscape and the Adequacy of Retirement Savings 7B.2 The World Bank's Five-Pillar Pension Framework in the Malaysian Context 7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities 7B.4 Why Malaysia Needs PRS: Ageing, Longevity Risk and the Benefits of PRS 7B.5 The PRS Framework and the Private Pension Administrator (PPA) 7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

11 Chapter 7B (Part 2): PRS Operations

7B.7 The PRS Default Option and Tax Incentives for Members and Employers 7B.8 The PRS Account Structure (Sub-Accounts A and B) and Vesting 7B.9 PRS Withdrawals: Pre-Retirement, Retirement, Permanent Departure, Incapacity and Death 7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability) 7B.11 Unclaimed Monies, Death of a Member and PRS Nomination 7B.12 PRS Funds: Number, Core and Non-Core Funds, Objectives, Risk Profiles, Asset Classes, Authorisation and Naming 7B.13 PRS Fees, Charges and Expenses 7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps

Key Takeaways Explain This Topic AI

Part 2 of Schedule 2 of the CMSA defines financial planning as analysing another person's financial circumstances and providing a plan to meet their financial needs and objectives, including any investment plan in securities, whether or not a fee is charged.

Personal financial planning is a process, not a product; it is comprehensive, seeks maximum utility, recognises the individual and acknowledges the cycles of life.

The five areas of financial planning are cash management, risk management and insurance planning, investment planning, tax planning, and retirement and estate planning.

The six steps of financial planning start with establishing and defining the client-planner relationship and end with monitoring the recommendations.

Managing cash is an area of financial planning, not one of the six steps, which is a distinction FIMM's practice question tests.

Last updated: October 2026

What Financial Planning Means

In some countries people use a financial planner as routinely as an accountant or lawyer, and personal financial planning is a profession in its own right.

Statutory definition: Part 2 of Schedule 2 of the CMSA defines financial planning as analysing the financial circumstances of another person and providing a plan to meet that person's financial needs and objectives, including any investment plan in securities, whether or not a fee is charged.

In everyday terms, financial planning is meeting life goals within a time frame by managing present and future finances : buying a home, saving for children's education, retiring comfortably. The planner takes a "big picture" view and may advise on budgeting, saving more, tax, wealth creation and preservation, rearranging investments, risk management and retirement.

Malaysian UTS and PRS Consultants already assess clients' finances and objectives to find suitable schemes. The study guide sees this investment analysis as complementing the growth of the financial planning profession, as unit trusts did in other countries.

Why Plan?

An effective personal financial plan helps to:

  • give a roadmap for medium- and long-term objectives;
  • improve or maintain present and future lifestyle;
  • protect assets from uncertainty such as market volatility and inflation; and

ensure adequate income when needed, for example after retirement.

Five Features of Personal Financial Planning

  • Feature Meaning
  • It is a process A service , not a product, built on listening, consultation and interactive assessment
  • It is comprehensive All of the client's needs are explored and explained
  • It seeks maximum utility "Utility" means usefulness: concrete results that satisfy the client
  • It recognises the individual Plans are customised; two clients are unlikely to get identical plans

It acknowledges the cycles of life Not a static document; updated regularly as needs change, with the portfolio reviewed

The Five Areas of Financial Planning

Area What it covers

Cash management (budgeting) Comparing income with spending, separating essential and non-essential spending, and deciding how much to save

Risk management and insurance planning Identifying sources and extent of financial, physical and personal loss, and strategies to manage exposure

Investment planning Deciding how to invest current assets and future savings for short- and long-term goals, given finances and risk tolerance; goals get a monetary value and time frame . In Malaysia, plans most often target retirement, children's education and wealth accumulation

Tax planning Strategies to reduce, time or shift current or future income tax, consistent with overall goals

Retirement and estate planning A plan for savings, investments and passive income in retirement; estate planning to preserve, manage and distribute assets during life and after death, including if the client becomes incapacitated

The Six Steps of Financial Planning

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Step 1: Establish and define the client-planner relationship

Explain the services to be provided.

Define each party's responsibilities .

Explain fees in full and who pays them.

Agree the duration of the relationship and how decisions will be made.

Step 2: Understand the client and gather data, including goals

Work with the client to define personal and financial goals and time frames .

Obtain information such as income, spending, cash flow, assets, liabilities and obligations; risk profile, appetite and tolerance; existing insurance, investments and estate plans.

Step 3: Analyse and evaluate the client's financial status

Assess whether the client can meet the goals and identify surpluses or shortfalls . If spending exceeds income, cash flow analysis helps cut non-essential spending.

Step 4: Develop and present recommendations and/or alternatives

Formulate strategies and recommendations, explain them so the client can decide, listen to concerns, and revise where needed.

Step 5: Implement the recommendations

Agree how they will be carried out. The planner may implement them or help the client, coordinating with other professionals such as lawyers and stockbrokers .

Step 6: Monitor the recommendations

Agree who monitors progress. If it is the planner, report regularly at agreed intervals, reviewing the client's situation and adjusting for life changes.

Exam Trap: Areas vs Steps

FIMM's practice question lists four items and asks which are steps : establishing the relationship, understanding the client and gathering data, and analysing financial status are steps; "manage cash" is an area , not a step.

Applying It

Puan Rina, 38, wants to buy a bigger home in five years and fund two children's university education. Using the six steps, a planner would agree the scope and fees (step 1), collect her income, expenses, EPF and insurance details and her risk tolerance (step 2), find a monthly surplus of RM1,200 but no emergency fund (step 3), recommend an emergency fund first, then regular investing in education-focused funds and a down-payment savings plan (step 4), help her open the accounts and set up standing instructions (step 5), and review annually or when her circumstances change (step 6).