The customer is what matters for advisory services

August 01, 2023 | 14:00
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In an interview with VIR’s Lam Phong, chairman of the Vietnam Financial Consultants Association (VFCA), Le Minh Nghia, sheds light on the significant demand for personal financial investment, accumulation, and protection among the Vietnamese population, giving rise to a burgeoning industry of personal financial advisory services.

How do you assess the potential of the financial advisory market in Vietnam?

The customer is what matters for advisory services
Le Minh Nghia - Chairman of the Vietnam Financial Consultants Association (VFCA)

The financial advisory market in Vietnam holds significant potential. With an estimated 50 million people projected to be part of the middle class by 2050, and expectations of becoming the 10th largest consumer market globally by 2030 - surpassing Germany and the UK, Vietnam offers promising opportunities.

Additionally, the country boasts a high and sustained GDP growth rate of 5-7 per cent per year, with a per capita GDP approaching $4,000. These factors indicate a substantial demand for investment, accumulation, and financial protection for individuals and families, with personal financial advisory services expected to thrive.

As personal financial management gains traction in Vietnam and formal advisory services remain scarce, what direction do you believe is crucial for the future development of such services in the near term?

The development of personal financial advisory services in Vietnam requires a focused approach. One of the primary challenges lies in the absence of official programmes or curricula dedicated to improving financial literacy and providing personalised financial planning advice. To address this gap and cater to the growing financial market, it is crucial to raise awareness about the importance of personal finance and improve the financial literacy of the population.

By enhancing financial literacy, individuals are more likely to utilise a broader range of financial products, thereby contributing to the growth of the financial sector and overall economic development. To support this goal, the government, in collaboration with relevant agencies, should promptly enact legal documents that emphasise financial literacy and personal financial planning in financial advisory services.

Additionally, establishing a comprehensive and long-term national strategic programme for financial education would be beneficial.

Furthermore, adopting an independent advisory model is vital to ensure customer interests are prioritised. In developed financial markets like the UK and US, independent advisory companies hold a significant market share, and Vietnam should follow this trend to avoid conflicts of interest.

In light of the diverse array of financial advisory services available in the market, what advice would you offer to individuals and businesses seeking to utilise such services?

When seeking financial advisory services, individuals and businesses should prioritise firms that put customer interests above all else. Following the fiduciary duty principle, financial advisors must always recommend the most cost-effective and optimal products for the customer’s benefit. Engaging independent advisory companies would be a prudent choice, as they tend to be free from potential conflicts of interest associated with selling specific products.

For those considering services from companies with potential conflicts, it is essential to inquire about the fee structure and seek transparency regarding any conflicts of interest with the advisors.

Customers should also conduct research on advisors’ education, experience, professional qualifications, and current work status. Requesting detailed written agreements with advisors’ signatures is recommended to ensure clarity and protection.

However, customers should possess basic financial knowledge and understand their rights and obligations when using financial advisory services. They should be clear about their financial goals and consider advisory opinions as reference points, synthesising various opinions to determine the optimal financial plan for themselves.

What measures has the VFCA implemented to support the development of a robust personal financial advisory market in Vietnam?

The VFCA has taken remarkable strides to bolster Vietnam’s personal financial advisory market. Back in February, they kickstarted the process of drafting comprehensive standards for personal financial planning. These standards, crafted by a team of Certified Financial Planning experts in collaboration with top financial professionals, adhere to the highest global practices.

Covering crucial aspects like training, competency, ethics, and profession, these standards have been unveiled and submitted for feedback to relevant government bodies, including the Ministry of Finance, the Central Economic Commission, the State Securities Commission, and the Vietnam Banks Association.

The response has been positive, with both regulatory and professional bodies acknowledging the significance of establishing uniform standards to elevate financial advisory practices and enhance financial literacy nationwide. We are determined to work with economic and financial experts to put the final touches on the standards, ensuring they align perfectly with Vietnam’s evolving development landscape.

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