BUSINESS MODEL

January - March 2010

By Alvin Yap

The Home of Financial Planners

At A.D. FINANCIAL, we start our Relationship by listening to you and putting YOU FIRST.

his caption signifies our approach and commitment as an independent adviser to all our clients. Established since 2002, we are currently one of Malaysias largest and fastest growing fee- and commission-based independent financial planning firm. Our practice approach has always been our value proposition to highly complex wealthy clients as well as high net worth clients. These two groups of clients have been successful in their wealth accumulation strategies which have made them extremely wealthy and highly esteemed in society. As a company, our conviction and the approach to our practice is ...

One of Malaysias premier financial planning firms since 2002 A leader in providing comprehensive financial services for mass affluent to high net worth individuals Authorised and Paid-Up Capital: RM1 million Holder of: License No: CMSL/A0186/2007 Capital Markets Services License (Financial Planning) Capital Markets Services License (Dealing in Securities Unit Trust Products) Bank Negara Malaysia licensed Financial Adviser FIMM Registered Corporate Unit Trust Adviser (CUTA) Registration No: CUTA 704
lastly, wealth distribution via generational wealth strategies for perpetuity purposes to their beneficiaries. Our P.A.D model illustrates this concept and emphasizes wealth preservation above wealth accumulation and distribution. P stands for preservation, A for accumulation and D for distribution; in that order. The next diagram clearly spells our approach to this segment of clients.

If its worth striving for, its worth preserving.

This belief persistently reminds us that hard earned wealth must be preserved and protected for posterity. Hence to have wealth that lasts for generations to come, these clients need to develop critical thinking of wealth preservation strategies which will back their wealth accumulation with better tactical asset class allocation with multi diversification strategies to manage risk for return. And

Critical Thinking ...

Chronology of planning for High Complex and Wealthy / High Net Worth clients ...

PRESERVATION

ACCUMULATION

DISTRIBUTION

(P)
Preserve wha you have earned. Protect wealth from any potential liability.

(A)
To further accumulate what has been preserved. Enhanced Famly Wealth for Generations.

(D)
Effective distribution, prevention of asset shrinkage, maintenance of confidentiality and certainty of heirs. Generational Wealth Strategy for minors, squandering and spendthrift tendencies.
The 4E Journal

27

Mass Affluent Clients High Net Worth Clients Highly Complex & Wealthy Clients
Independent Advice Fee-Based Advisory Services
Advisory service is clearly our forte which we have developed through many years of experience in solving the various problems faced by our highy complex/ high net worth individuals. The diagram below shows the advisory services that we offer to our three different categories of clientele. All advisory services are chargeable and our advisory fees are dependent on the complexities of each client/individual. The fees are calculated based on the following four methodologies.

Financial Planning Retirement & Education Fund Planning Insurance Planning Investment Planning Estate Planning Cash Flow Management Family Office Services Family Trust Planning Generational Wealth Strategies Asset Protection & Preservation Planning Business Succession Planning Corporate Will Planning More than one family (feuds & squandering heirs) Many offshore assets Too many companies offshore and onshore Vulnerable to lawsuits/bankruptcy Many proxies/nominees Muslim Converts and its complexities

they exit the company, they will have lots of unencumbered assets but unable to determine their net worth, and they may face the possibility of having squandering heirs. The asset based fees are at 0.3 percent to 0.7 percent for the lowest range, while the mid range fee is between 0.8 percent to 1.8 percent, while the upper range fee is up to 3 percent of their gross net worth. For clients whom we have regular engagements and whose files are in our custody. This fee structure is also used for modular engagements, for example, a three- to six-month

engagement, and are usually less complex, for instance, feasibility studies on the vulnerability of the current structure of corporate set-up with their partners, lawful strategies for asset protection in the event of a lawsuit, and special child planning. Hybrid This fee model can be a combination of any of the above.

Retainer

Typically our advisory fee ranges from RM30,000 to RM80,000 per client, for three to five months of work depending on the complexities of the case. The highest fee we have billed to date is RM280,000.

Time Cost

Asset Based

For mass affluent clients with wealth that have low to moderate complexities. For example, one family, full-time employment, and if business owners, up to three companies, no offshore assets, will planning instead of will writing, some encumbered assets and no vulnerability to asset shrinkage and lawsuits upon death. We charged between RM350/hour to RM550/hour For highly complex and wealthy as well as high net worth clients with wealth that have moderate to high complexities. For example, clients who have more than one family; family feuds; many business and proxies arrangement with business partners; many offshore assets; are vulnerable to lawsuit and asset shrinkage upon death; and run successful family business, but are unable to pass down the baton to the next generation. In the event that

Independent Solutions Multiple Product Providers

As an independent and licensed financial planning firm, A.D. Financial partners and collaborates with major industry players to provide better and a greater variety of choices to clients demanding more depth and diversity to available financial products. In other words, we represent the clients interest by sourcing for the best products to meet their financial needs rather than representing a single product provider only. We currently have: 8 Onshore Life Assurance Companies > 10 General Insurance Companies > 20 Unit Trust Management Companies > 200 Onshore Unit Trust Funds > 400 Offshore International Investment Funds Local & International Trust Companies Offshore Life & General Insurance Companies

Complex and Wealthy/High Net Worth Muslim and non-Muslim clients, Family Office Services, Personal Life dealing with life insurance products, Corporate Risk dealing with general insurance product and Investment Planning divisions. In addition, we conduct weekly product providers training and core group meetings as well as regular seminars and events for both our financial planners and their clients. We also have a dedicated division to assist our financial planners in their compliance and licensing requirements. A.D. Financial also invests heavily in its back-end infrastructure support to enable the provision of biweekly commission payouts, online Client Management System (CMS), personalised email addresses, online news bulletin/ file library, SMS and email notifications, financial planning tools, investment analysis software and many more. All this is done to ensure our financial planners are competent, profitable and have a distinct advantage in the marketplace. As one of the premier financial planning firms in the country, we have always benchmarked ourselves against our peers in the industry. The following table shows how we fare against other independent financial planning firms in Malaysia. We strive to maintain our leading edge in providing the best financial planning practice model and to be the last stop for aspiring financial planners searching for a firm to build and grow their business. If you are a CFP/RFP designee aspiring to practise independent financial planning, we welcome you to get in touch with us to explore how we can help you realise your dreams. Alvin Yap is the CEO of A.D. Financial Sdn Bhd (formerly known as A.D. Capital Sdn. Bhd). For more information, do contact him at: +60-3-7956 8833 or email him at: info@ adfinancial.com.my

And more will be added in the future.

Home for Financial Planners

Every aspiring financial planner will want to be in a firm that allows them to grow and provide them every chance of success. At A.D. Financial, providing the best to our financial planners is at the core of everything we do. We currently have five specialised divisions all in house to support our financial planners. They are: Wealth Preservation Advisory for Highly

Competitor Analysis* -- Independent Firms Comparison Matrix (as at September 1, 2009)

How We Fare?

Company Type Assisted Advisory Model Commission Model Advisory Commission Product Commission Full Range of Financial Products Licenses Affiliation Model Overriding Model Professional Firm Alliance Financial Planning Specialist Team Equity and Ownership of Clients Independent Model

A.D.

Up to 55% 60% - 80%

60% - 80%

60% - 80% CMSL(FP) ? ?

10% - 15% 60% - 80% FA, CMSL(FP) ? ? ? ?

FA, CMSL(FP) & CUTA FA, CMSL(FP) & CUTA Producer & Ownership Producer & Ownership

*Aspiring financial planners are advised to verify the contents of this table with each FA firm before affiliating themselves

The 4E Journal

29