Financial planning around the world – On the ground in Indonesia

When Australian financial planner Cameron Knox was 24, an English financial planning company specialising in the expatriate market sent him to help look after the financial needs of expatriates in Kuwait, Qatar the Philippines and finally, Indonesia.

Twelve years later, Knox owns and runs Pacific Financial Services (PFS) - one of south east Asia's largest financial planning practices and is the President Director of PT. PFS Duta Manajemen Investasi, an Investment Advisory Company in Indonesia.

Established in 1988, PFS employs 13 expatriate consultants and 30 local staff to service 1000 clients in 52 countries. PFS now manages a healthy $US50 million worldwide.

PT. PFS Duta Manajemen Investasi is one of the few investment advisory firms to be licensed by Indonesia's Bapepam, the Capital Markets/ Securities Board.

"There really are no other pure financial planning practices in Indonesia," says Knox. "Most business is via banks or insurance companies, although there are quite a few mutual funds. Several of the banks have in house financial planning services, although these are still somewhat limited."

PFS primarily services expatriates worldwide - which Knox says is currently the main market in Indonesia. "The majority of financial planning performed in Indonesia is for expatriates by expatriates," he says.

Knox says his business is more like a small European private bank - offering not only traditional financial planning services like portfolio management, savings and investment plans and retirement planning; but also private banking, property finance, foreign currency mortgages, cash management accounts, offshore trusts and companies, portfolio analysis and taxation advice.

"We sit with our clients - who are usually high net worth executives - and after understanding their requirements we explain the most effective strategy to achieve their goals," says Knox. "Then we out source to fund managers and/or private banks. We sublease nearly all the investment decision-making process to external experts, hence we receive numerous research papers but do not normally make the actual investment allocation decision."

Business is good for PFS, although it is hard to understand how, given the state of affairs in Indonesia and the political tension between Australia and Indonesia.

However, Knox says, "The political tension exists only on a government to government level. It has no affect on our business in any way shape or form, except to drive some of our competition out. The Indonesian people are tremendously loyal, diligent and supportive. Most of them don't care about the problems which exist with Australia - they simply get on with life."

Knox is interested in helping Indonesia to develop the financial planning industry so that it can service Indonesians and has held several promising discussions with the country's Capital Markets Supervisory Board to that end. However, he says there is work to be done in helping the general population to understand what investing is all about.

"The cultural issues are significant in that the majority of people only utilise cash and property as investment alternatives; hence the mutual fund industry has yet to really catch on. There is no doubt some of our business is unique to Indonesia, however we are really attempting to transfer knowledge in respect of investing to the general population."

And it is no mean feat. "There are 200 million plus people here," he says.

To help progress the industry on another front, Knox is also working to develop a financial planning association, similar to the FPA in Australia.

"It would be really good if there could be an international affiliation section within the FPA in Australia," he says. "As things stand at the moment, I can't be a foreign listed member of the FPA because I don't practice within Australia."

The absence of a professional association also means that there are no formal financial planner education and training programs and no organisation that formally oversees compliance. Knox is one of only a handful of non-nationals to have sat and passed Indonesia's Committee for Capital Markets professional standards examination, which he says is the country's only real requirement. He also holds a Diploma of Financial Planning from Deakin University and a

Bachelor of Commerce from the University of Melbourne. His financial consultants are mainly recruited from university graduates who have had significant practical experience and continuing education is done in house.

"We hold training and professional development programs for our consultants," he says. "PFS Duta Manajemen Investasi has two Indonesian directors who both lecture in finance at university and who have both retired from the Securities Board, so they are well qualified to deliver education. Each month we bring in 20-30 graduate students and talk to them about banking and finance. It is good for us and good for them."

Servicing executive clients worldwide sounds like a tough call- and it might be if not for some pretty sophisticated technological support. PFS has a large computer literate, bilingual administrative staff and boasts 50 personal computers, cable access to the Internet and Oracle database software.

"I work in a multi-storey office building in a modern street in the heart of Jakarta," says Knox. "The Internet is pervasive - not just at PFS, but throughout the country. And yet within 200 metres, empty blocks of land are rapidly reverting back to the jungle. It is one of Indonesia's many conundrums."