Why won’t my MPF broker give investment advice and what can I do about it?
It’s technical and it’s complicated, but it’s important to understand and understanding will help you make better investment decisions for your retirement. So let’s attempt to deconstruct the technicalities.
In very simple terms, your broker, subject to fulfilling relevant requirements, will be a registered individual or ”Subsidiary Intermediaries (SI)” for the carrying on of MPF related regulated activity on behalf of a “Principal Intermediary (PI)”. The technical nature of PIs and Sis is not overly important however the individuals need to be one of the following three:
- Licensed by the SFC to carry on Type 1 or Type 4 regulated activity, or both
- Registered under Hong Kong’s Banking Ordinance to carry on Type 1 or Type 4 regulated activity, or both; or
- A licensed long term individual insurance agent, a licensed long term insurance agency or a licensed long term technical representative under the Insurance Ordinance.
Once the individual is registered with the MPFA then he or she is then permitted to engage in MPF sales and marketing to individuals and employers, which according to the Mandatory Provident Fund Schemes Authority (MPFA) includes assisting in the following:
(a) Joining a particular registered scheme;
(b) Participating in a particular registered scheme as an employer;
(c) Paying contributions (including voluntary contributions) to a particular registered scheme, or investing in a particular constituent fund of a particular registered scheme, and the amounts contributed/invested;
(d) Transferring accrued benefits from one registered scheme to another, or from a constituent fund of a registered scheme to another constituent fund of the registered scheme, and the amounts transferred;
(e) Transferring benefits from an occupational retirement scheme to a particular registered scheme and the amounts transferred; and
(f) Whether, or when, to make a claim for the payment of accrued benefits from a registered scheme, and the amount of such a claim.
While not necessarily a comprehensive list of cans and cannots, what is notable by its absence is an ability to proffer in investment advice, and that’s why an MPF broker won’t give you explicit investment advice. Registered individuals or SIs cannot give you investment advice UNLESS they are also licensed through the Securities and Futures Commission (SFC) to undertake Type 1 or Type 4 regulated activities.
The good news is that most MPF trustees and administrators recognize the importance of education and the investment advice gap so provide investment tools and resources which are easy to use.
MPF fund platforms such as www.mympfchoice.com were created to assist users gain a better understanding of one’s MPF needs and to discover which funds best suit or have the most competitive fees. Take advantage of these tools and within a few clicks you’ll be making better investment choices with or without the need of an appropriately licensed broker.