FSC to promote independent financial advisors

The Financial Services Commission is expected to devise a policy that enables financial professionals to start their own investment advisory ventures, in the second half of this year, according to the country’s regulators on Sunday.

The FSC will seek to introduce a revised law to boost independent financial advisory services in the local capital market for legislation by the end of May.

The IFA revision will allow employees of financial services companies to set up and operate investment advisory firms completely independent from their former employers with the sole purpose of helping maximize returns on customers’ asset portfolios.

This is not only to spur investment services customized to individual assets and needs, but also to minimize conflicts of interest between employers and licensed asset managers in business.

Korea’s IFA policy will follow that of the U.S., the U.K. and Japan where 60 percent of equity funds are marketed and managed through independent advisory services companies.

“With the emergence of (tax-efficient) individual savings accounts and increasing demand for higher-yielding financial products amid low-interest rates and an ageing population, a highly professional and customized investment advisory is called for,” an industry source said.

Also, observers pointed out that technology such as rapid data analyses through machine learning has enabled asset managers to improve statistics for investment recommendations and forecasts.

The number of ISA subscribers reached more than 658,000 since its introduction last week, according to the financial regulatory body.

However, given its subscription rate of 460,000 won ($395) per capita, the savings account has not garnered as much attention as initially expected due to low public interest in asset management.

The financial regulator has urged financial companies to provide investment services customized to individual needs and not just products that the firms believe they can sell.

By Park Hyong-ki (hkp@heraldcorp.com)