Will EPF’s i-Invest hurt unit trust agents’ future?

Unit trust consultants bag a hefty commission for both cash and EPF withdrawals, ranging from 1.5% to 2.75%


THE Employees Provident Fund’s (EPF) introduction of direct online subscription of unit trusts will erode the income of agents, but the move by the country’s largest pension fund is unlikely to create a firestorm to the role of financial consultants.

Unit trust agents have been banking on their clients’ EPF withdrawals to reap steady commission as customers have ready cash in their retirement funds.

Worries heightened that EPF’s i-Invest, which allows members below the age of 55 to invest directly with sales charges ranging from zero to 0.5% of the transaction amount, would minute the roles of unit trust agents.

In the past, commission-based roles like insurance agents and remisiers had taken a hit after securities firms and insurance providers introduced online transactions, making these roles less critical.

Unit trust consultant Shanty Nur Shaffizan Mohd Shafee said EPF’s move could have a slight effect on the agents’ income.

“However, we do have our market segmentations. We are not worried about it. We still have retail investors. Not all of our investors come from the EPF. Some of our clients come from cash investors.

“For myself, I have the full licence as a financial advisor. I also have private retirement scheme licence and a few others too. So, those help to cover my income,” she told The Malaysian Reserve.

According to the Federation of Investment Managers Malaysia’s figures as of May this year, there are a total of 672 approved funds with 663.3 billion total units in circulation.

There are 20.66 millions accounts in total, not inclusive of those operating under a nominee account system with a net asset value of RM459.89 billion or 26.63% of Bursa Malaysia’s market capitalisation of RM1.72 trillion as of May.

Unit trust consultants bag a hefty commission for both cash and EPF withdrawals, ranging from 1.5% to 2.75%. Other positions like agency supervisor, agency manager and group agency managers get different commissions percentage.

A unit trust consultant, who wished to be known as Md Zakhir, said he is not worried as the market is still very huge.

“Every day, I still meet people. And even for banks, they have their own unit trusts and they still look for consultants because we are the ones that really go into the unit trusts.

“We are also not focusing on EPF alone. We also have cash investments. With cash investments, (it) is almost like double commission. So far, I’m not affected at the moment. I think for the next five to 10 years, (I) will still not be affected,” he said.

i-Invest allows members to invest directly in unit trust funds offered by EPF-approved fund management institutions.

EPF CEO Tunku Alizakri Alias said it will empower members to take control of their investments and make transactions at nearly zero cost.

The EPF has enforced a maximum cap of 0.5% on sales charges for the online investment facility, while offline and traditional transactions through agents currently carry sales charges of 3%.

Tunku Alizakri said EPF members who are interested in utilising i-Invest should continue to exercise caution when making any investment decision.

Members should arm themselves with the right information or seek professional advice before committing to any transaction, he said.

EPF members can transfer up to 30% of the amount in excess of basic savings from their EPF Account 1 to be invested in the qualified funds.

They can also open an account to invest in unit trust funds with any fund management institution through the new facility.

Meanwhile, members aged 55 years and above can use the i-Invest platform via Akaun 55 or Akaun Emas through the i-Akaun portal as a mode of withdrawal, subject to maintaining a minimum of RM1,000 in their account.

For the period of 2019/2020, a total of 389 funds from categories including equity, mixed assets, bonds, money market and property trusts are approved under the EPF’s Members Investment Scheme.