Financial Planner/ Advisor and It's Implementation in Indonesia Law Practice
Financial planner/advisor and investment advisor are emerging professions, as investment grows in the digital era, especially for the millennial generation who unwilling to invest conventionally (for example, coming straight to the bank), or prefer the efficient platform to develop their funds.
In the recent weeks, social media and in particular the millennial generation, being surprised by a customer money management case involving PT Jouska Finansial Indonesia (Jouska ID). Many clients have complained about how Jouska ID works. One of the surprises in the case of Jouska ID's investment is about financial planner/ advisor. Jouska ID, allegedly involved in an illegal investment issue. Even though Jouska ID indeed invests client funds in legal instruments, namely stocks. However, as a matter of fact, Jouska ID and the investment management company under it does not have the relevant licenses. Therefore, according to the relevant authority that supervise financial services in Indonesia, Financial Services Authority (Otoritas Jasa Keuangan – “OJK”), the financial planner/ advisor, Jouska ID does not have the right to manage the investor funds while charging fees, since it is not an Investment Manager (Manager Investasi).
Jouska ID, along with Amarta Investa and Mahesa Strategis (another companies that have affiliation with Jouska ID) are not registered as investment-management companies or securities companies at the OJK. Jouska ID has proven did not have an operating license as a financial planning agency and only received an Online Single Submission (OSS) license from the Investment Coordinating Board (BKPM) as an education services company. In addition, as mentioned by Tongam L Tobing (Director of Policy and Investigation Support of OJK) Jouska ID has violated Law Number 8 of 1995 on the Capital Market. Jouska ID also mentioned having violated the law Number 11 of 2008 on the Information and Electronic Transactions (EIT Law) and Law Number 8 of 1999 on the Consumer Protection. Since July 24, 2020 all of Jouska ID’s activities have been suspended as the company operated without a license for several types of services.
What is Financial Planner/Advisor?
Financial Planning Standards Board Ltd. (FPSB) defines financial planning as a “process of developing strategies to help people manage their financial affairs to meet life goals.” In creating their recommendations and plans, financial planners may review all relevant aspects of a client’s situation across a breadth of financial planning activities, including inter-relationships among often conflicting objectives.
Financial Planners provide the information and analysis based on customers’ financial profile and conditions. After that, the financial planner provides a recommendation. However, the decision is entirely up to the client. The client is free to follow the recommendations given by the financial planner or not.
Furthermore, The International Association of Registered Financial Consultants (IARFC) Indonesia also has stressed that a financial advisor is prohibited from managing client’s funds and trading stocks their portfolios even with full discretion and consent from the client.
To be able to manage the customer money and buying and selling transactions, a special license is required, called Investment Manager and Broker-Dealer.
What should we concern before choosing a Financial Planner/Advisor?
1. Certification - whether the financial planner is registered with the Financial Planner Association such as FPSB, IARFC, dan APERKEI (Asosiasi Perencana Keuangan Indonesia)
for example: association that certifies a financial planner / advisor is the FPSB. In Indonesia, there is an Indonesian FPSB (FPSBI) that can issue a Certified Financial Planner (CFP) for its members. An investment company must also have a license issued by the relevant authority. CFP is an internationally recognized professional financial planner certification, this CFP is issued by FPSB Indonesia under license from FBSB based in Denver, United States.
In the case of investment advisor licensing stipulated in the Decree of the Chairman of the Capital Market Supervisory Agency Number KEP-26/PM/1996 on Investment Management Licensing jo. Circular Letter of OJK Number 7/SEOJK.04/2017 of 2017 on the Submission of Licensing Applications, Registration, Recording, Approval and Reporting by Electronics for Personnel in the Field of Investment Management
2. Qualification - whether the financial planner has a license at the relevant institution, in this case the Financial Services Authority (OJK)
The analysis of financial information obtained from a client is to determine the suitable strategies for achieving the client's financial goals. Therefore, a proper financial planner/advisor does not execute investments or manage customer funds. Most of all, every professional financial planner/advisor must have a certificate and obey the professional code of ethics. Also, Indonesia may consider to regulate further on Financial Planner/Advisors to prevent another financial planner/advisor case in the future.