“In the modern commercial world, the development of any industry is not determined by the product or service provider, but by the consumer; whether a consumer can gain from the service determines his/her spending behavior, which in turn determines if the service provider can make profit and survive. But the service provider has the initiative ……” William Xia said in his article published in < Xing Bao Economy monthly HK > in 2005, which outlines the responsibilities and obligations of financial institutions to ensure the healthy development of the financial planning industry.

Banks and other financial institutions are keeping innovative in their financial products, so consumers see more and more kinds of financial products. This is not a bad thing in itself. With the opening of the financial market and the coming of foreign banks, financial consumers will inevitably face more and more complex financial products. According to overseas experience, new financial products always come with changing economic conditions. The reason is simple, the financial institutions are product suppliers, they only design sellable products based on market needs. But as to the financial consumers, does it mean that they have “planned their finance” once they have bought some products? Can this kind of financial planning “maximize their personal benefit”? When the clients have decided to buy the financial products, is there an overall lifetime financial plan outlining effective investment options based on risk control, savings, needed return for long-term financial goals and asset allocation.

A lot of people worry about the competitive advantage of foreign banks in terms of financial product renovation, and the consequent pressure on local banks. From my point of view, the experience of foreign banks in terms of financial planning business is not necessarily always a successful experience. As the Executive Chairman of ipac securities, one of the largest financial planning company in Australia, Arum Abey commented in The “Sydney Morning Herald”: “The financial organizations have come at this from a product distribution viewpoint. They say: ‘we have a product, we want to sell this product and because this product involves some complexity we need to employ people who can give some advice to sell this product.’ There is nothing wrong with that, but it’s not financial planning.”

A product-oriented financial planning approach can not reflect the benefits of real financial planning to consumers, and it may not be good for the healthy development of the industry in a long run. Local banks should not have blind faith in the so-called competitive advantage of foreign banks’ product, but need to improve our own financial planning business in terms of services and procedures, so as to make the business beneficial to our society, as well as to ensure a healthy development of the business.