The Brilliant Mind of the Modern Financier

Mr Moustafa Elbaadwihi(Left) is a graduate from Asia Pacific University where he earned a degree in International Business Management while studying at KDU Management Development Corporation(KMDC) to obtain his certification as a financial planner, and is currently a vice principal at the Galaxy International School.

Of TV Shows & The Glee of Teaching

I was afforded a great pleasure to sit down with Mr Moustafa, in a quaint café atop the Kinokuniya bookstore. I was thoroughly impressed with his excellent competence and articulation of speech, and naturally held him in high esteem. Needless to say, I was awestruck by how impressively this man carried himself throughout the interview.

As the interview began, Mr Moustafa described his interest in finance and economics where he managed to cultivate an understanding of how these two areas of knowledge have the potential of explaining a lot of the things that happen around us, and their potential in quenching our thirst for answers. He then proceeded to expand upon this by stating that politics have the ability to spill-over into the financial world. In discussing politics further, he revealed himself to be a major fan of House of Cards—with it being, in his opinion, a close representation of the American political system. This fact gave the impressive a rather human quality—with that, he gives a positive review of the show, despite it being a little draggy—he was interested in how Claire (a character in the show) would be taking over as president.

I thought it was a curious thing—a person having qualifications in finance and business deciding to adopt a vocation as a vice principal at an international school. “It was a coincidence actually, I was on a trip to Kazakhstan for debate training in 2016 to assist with establishing international debating in the country. The school that was hosting me, offered me a position as an English language teacher and a vice principal”. I began to see the nexus between his ambition in debate and his ensuing career path, as debating has its roots etched into the elementary aspects of education. He explained that during his sixth form years, debating became very much an addiction of his—it empowered him, and he had to constantly be prepared with an arsenal of knowledge in order to do well in a 15-minute preparation time for a debate. Through debating, he has met many likeminded people who are good at what they do and tend to be very active in their interests in politics, finance, and general consulting. In that sort of environment, he describes it to be sort of a cult where you develop certain practices and that way of life becomes very much a comfort. He shared with me his very first experience for the Grand Finals Debate at Taylors College, in which the topic of debate was Heaven and Hell and their existence. He told me how exhilarating it was to be engaged in a philosophical discussion on whether people were driven by intrinsic moral values and whether or not punishment and reward are necessary evils to get people to do what’s right. Debate has an effect of enhancing your personal education, when it makes you ponder some of the most difficult questions in society. That sort of thrill from learning would explain why Mr Moustafa wants to be involved in the process that shapes the bright minds of tomorrow.

Education, much like any other field of work, has a duality. Mr Moustafa described a day in the life of an educator as rote and routine. The day starts at 8AM, and in the long hours of his work he checks uniforms and attendance, manages discipline, and provides counselling. To compensate for his work’s uniformity, he professed that one of the most rewarding aspects of being an educator is that you get to play a critical role in the development of the student, having a unique access to their lives and the inner workings of their brains, which he hopes to influence by teaching them more than what they learn in textbooks. He further states that they might disclose a personal problem, and being able to counsel a student is very rewarding. It was something that he could not experience until much later in his life, and having that support system helped him to discover what he liked.


The Elusive World of a Financial Planner

The interview continued with me asking Mr Moustafa how he had become a financial planner, and why he decided to pursue the CFP (Certified Financial Planner) certification. His answer led me to conclude that much of this man’s choices seemed to be governed by the law of chance, because the career move of obtaining the CFP happened upon him by coincidence. He was introduced to the world of finance simply because he had a friend that was doing it. The financial industry demands a great deal from the people they employ, and Mr Moustafa explained that engineers are suited to a career in finance because they possess most of the qualities that make a financier: they are meticulous, they pay attention to detail, and are —most importantly—analytical.

To begin a career in finance, the first step, Mr Moustafa explains, is to determine where exactly in finance you want to be—is it to be a wealth advisor in a bank, a financial planner with a firm, or to work back-end in an insurance agency that designs products. After establishing the first step, you then cater your choice of degree to that specific job role. Each financial institution would have their own requirements as to what professional certification is required of their applicants, and the general consensus is that having a professional certification in finance is often necessary in addition to a bachelor’s degree. To summarise, determine where you want to end up, and then determine the required professional certification.

The Secret of Financial Planning: Thinking Before You Spend

Mr Moustafa had a great deal to say when I had asked him what were the common pitfalls when one makes when making financial plans. “They overestimate everything—how much money they have, their ability to save, and they underestimate the impact of an expense”. Generally, what the public has to realise is that most of the spending decisions that they make are reflexive and do not usually include a great amount of thought, especially for the long term. He gave me an illustration that involves iPhone users having fallen victim to the seemingly attractive financing method that many service providers offer. “The iPhone 7 starts from RM 60, and let’s say you sign up for a 24-month contract, RM 60 goes to financing the phone, and then they tell you that you have to get a minimum plan of RM 158 a month. However, you don’t find it suspicious because most of the time this would be allowed because everyone needs to get a phone plan anyway, so what’s another RM60?” That expense is then further exacerbated because it can accumulate to about RM6000 by the end of the 24-month period, which can further grow because of roaming and travelling expenses. The overall impact of that expense is that eventually, your brain would be more concerned with servicing a debt, which robs your focus from making more money.

People often forget the compounding effect money has on your finances, because you apportion your wealth to service an iPhone plan, and then perhaps you would require a MacBook, and if you are older then you have to factor in rent or even furniture, and at the end of the day, what is left of your income? He stresses that you have to consider the full blow of what an expense can bring to your future. Financial planning also reflects psychological well-being because when you’re stressed, you are less likely to be able to focus on making more money, or taking your next career step because you have to meet the financial obligations that you have undertaken. A lot of your future becomes encumbered, as you would be more inclined to accept a job that overworks you, and possibly be a job that stagnates your career because your main concern would be meeting your rent. These are the things that most people often miss out—the plight of “short-termism”.

What Mr Moustafa strongly urges is that people start to plan their finances from the day they make their first ringgit. This general piece of wisdom should be complemented with the idea that we should save and spend the rest, rather than the other way around. He then began to break down the mechanics of financial planning and offered advice on how to properly structure your finances. “Your funds can be apportioned into the short term—where you have funds that are readily liquid-able and funds that area reserved for emergencies—and the long term, which is the money that you cannot touch for a period of time”.

The income you get and set aside for the short term can be placed in unit trusts or fixed deposits, and this income is what cushions you from unexpected emergencies that can be anything from getting into a random accident or paying for a flight that you might have missed. Learning how to divide your wealth in levels of differing priorities is the first step to ensuring that you have money to save, and the nature of fixed deposits is that they prevent you from succumbing to the threat of irrational spending as you’d have to approach the bank and terminate that contract to liquidate the funds. The wall between your wealth and spending is built because you are safeguarded from spending wealth that is too tedious to access. Putting income into long-term investments then affords you the ability to buy a house, finance the education of your children, and especially a fund for retirement. Another underestimation that most of the public forgets is how harsh retirement can actually get. The Malaysian government requires every employee to set aside a percentage of their income to be accessed when they retire at the age of 55, and realistically 23% of your income will not be sufficient to protect you from all the years that you are going to be unemployed and alive. Mr Moustafa revealed a dated statistic that 90% of people who withdrew their EPF’s as a lump sum finishes it within the first five years. This only strengthens the necessity of saving at a very young age, and when one is able to.

Despite offering financial wisdom on how to avoid many financial mistakes and how to properly classify your income, he does agree that in today’s digital age, it is much more difficult to save your wealth because with social media—in particular, Instagram—you have the pressure to use your wealth and paint a pretty picture of your life. He stressed that it is pivotal to dispel this inclination because what you see in social media are only the curated parts that people willingly reveal to you; No one wants to disclose the grimmer aspects of their life. In addition, we have to understand that people might have come from richer families or become successful a lot earlier in life, thus being able to afford coveted glamour, but for most of us we shouldn’t incur an expense with a fortune we do not have. “Stop thinking that you have to do what everyone else does. You don’t have to go out for drinks every weekend and you do not need to travel at every holiday”. Being a financial planner means setting priorities. Would you save now and attain financial independence in 5 years or concede to spending and be financially stable in 10?

Can Millennials Live a Stable Life at 30?

Yes, they can, I’ve done the math. If you start working at 25, you have 5 years to work, assuming you’re earning the median wage of 2500 a month, save 1000 of that income and that comes to about 12,000 a year and 60 thousand in 5 years”. That income you save can go towards down payment for both a car and a house. All you have to do is to resist the temptation—stop spending on iPhones and iPads. Mr Moustafa does acknowledge the fact that it has indeed become more difficult to save due to the recent cuts in subsidies for both oil and sugar and the imposition of the GST. To be able to afford the life your parents had is undoubtedly more difficult and challenging now, but it is possible.

People also have this belief that hiring a financial planner is reserved for those who have millions but he quickly corrected this thought and asserts that if you want to hire a financial planner, what you have to do is to determine what you want your financial planner to achieve for you. What Mr Moustafa claims is that financiers promise to provide you the prospect of hedging one’s wealth against inflation, and not to make you more money. There is a myriad of options that you can choose to undertake, one of which requires a minimum of 10 thousand pounds, and it is for financial planners that specialise in exclusive wealth management. There are also options if you only desire service from a boutique advisor instead of someone more established. If you are Muslim, and only want to invest in sharia compliant options, then you would opt for an Islamic financial planner.

A Conclusion

Throughout the interview, I enjoyed discussing about the various financial traps that the unsuspecting public fall into (I myself have admittedly fallen to a few of those traps), and also reconciled the need for the public to be more forward-looking when it comes to committing toward an expense—by understanding the full extent of its impacts. He concluded the interview with one final afterword: “Financial planning is something that starts early, it is as simple as making a spreadsheet to keep track of your finances, and you don’t have to shop every time there is a sale, because it is money you would not have otherwise spent, and therefore not something you need!”

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The Brilliant Mind of the Modern Financier