Newbie Guide: How to Find a Good Agent for Investment & Insurance?

[matchy]

i jus wondering...since TS say IFA are fair and better than most financial advisor...den why are there still "All good financial advisers are IFA, but not all IFA are good financial advisers"..

lets put it this way, u are saying that if i approach a HP shop which offer all three telco services, that shop will be the better than the rest right?


what if these ppl bad luck, alway kena those bad IFA?

wouldnt they be better off taking up from tied or bank agent? chances are that they might perform better in term of service?

 

[Rommie2k6]

i jus wondering...since TS say IFA are fair and better than most financial advisor...den why are there still "All good financial advisers are IFA, but not all IFA are good financial advisers"..

lets put it this way, u are saying that if i approach a HP shop which offer all three telco services, that shop will be the better than the rest right?


what if these ppl bad luck, alway kena those bad IFA?

wouldnt they be better off taking up from tied or bank agent? chances are that they might perform better in term of service?

The phrase "All good financial advisers are IFA, but not all IFA are good financial advisers" basically means that you just because you engage an IFA you cannot straight away assume that he/she is competent or ethical and not trying to rip you off. However, all good financial advisers in reality must be IFA, because one of the condition to be "good" is the ability to provide impartial advice, and you cannot do it when you are only selling a product from one insurance company (like a tied agent or bank).

If you don't understand the phrase let me you give you an another analogous example which may help make more sense "all guys are humans, but not all humans are guys" (there's girls also who are human). Hope that clears things up

Never engage a tied agent or bank relationship manager. These people are confirmed to give lousy advice that only serves their interest NOT yours.

 

[Cashcow]

I can't help but feel that ts has a great prejudice and misunderstanding on insurance.

But I leave it to the rest to decide.

 

[Rommie2k6]

I can't help but feel that ts has a great prejudice and misunderstanding on insurance.

But I leave it to the rest to decide.

Care to back it up with some evidence? Perhaps you would like to make a correction to anything you disagree with?

Anyone with a vested interest in selling high commission insurance products would obviously say that. I have not yet met any financially savvy and financially educated person who claims silly stuff like "use insurance for investment".
P.S. I'm not implying that you are making this claim, just giving a general example.

AND... if you realized I did highlight the good insurance products. The thread is not about "don't buy any insurance at all".

EDIT: And I have already challenged many insurance agents (in other posts) on this board to upload a benefit illustration if they think and insist that the product they are selling are good ones (especially on endowments, wholelife, ilp). So far nobody has uploaded a sample benefit illustration.

 

[RoLanTo]

TS, how to invest stocks in 210/mth in your example?

BTW, the 2 types of insurance you mentioned are the most impt (HS).. kind to do product vs product comparison?

 

[Rommie2k6]

TS, how to invest stocks in 210/mth in your example?

BTW, the 2 types of insurance you mentioned are the most impt (HS).. kind to do product vs product comparison?

You would need to draw out a portfolio before investing in stocks. However, for such small amounts you are probably left only with unit trust since ETF you need at least three figure sum per transaction if not the commission cost is quite high.

Last I checked, there's not alot of variations between H&S Shield Plans and their Riders. So not much diff. I would probably just go for the leading ones on the market, e.g.
- NTUC Enhanced Income Shield with Assist Rider
- Aviva MyShield with MyShield Plus Option A (not Option B)

And make sure it is a medisave-approved shield plan (i.e. can use medisave to pay premium). And a few general criteria to check:
1) Shield plan is on "as charged" basis with no individual limits
2) Shield plan is guaranteed renewable for life (i.e. they won't take you off the plan after a certain old age like 85 yrs)
3) Shield plan rider helps to cover cost of co-insurance but not both co-insurance & deductible
4) Shield plan rider does not need to cover misc stuff like hospitalization cash, CI payout, whatever stuff the insurer comes up with that sounds good but is not value for money

Examples of stuff not to get:
- GE SupremeHealth with TotalShield rider (The basic SupremeHealth policy is OK but the TotalShield rider offer first dollar coverage which is not value-for-money and not affordable in the later years of one's life).

 

[monoceros]

I agreed with most of what you have researched. However, I have to point out you've probably overlooked the fact that the $2000 fee charged by providend actually cost less than those commission based "adviser" who supposedly give you "free" advice. Take for example a $30,000 ILP, a comms based adviser will get 50% comms for the first year just by selling the product, that's $15,000! You're paying more by engaging them and you don't even know. I have no association with Providend, but I do know they'll refund you whatever commission they get from their recommended products. I still think a fee-based structure is the way to go, as far as the financial well-being of the market is concerned.

 

[monoceros]

I can't help but feel that ts has a great prejudice and misunderstanding on insurance.

But I leave it to the rest to decide.

Perhaps the question should be why the prejudice against insurance agent? In most (not ALL but majority) cases, a simple term insurance is sufficient enough coverage, and it's cheap. Why isn't it recommended? Because agents don't earn much by selling them. I could go on, but I simply want to say so far, I've not seen a single insurance agent recommending term insurance. You probably have, you're the lucky few.

 

[focus1974]

2. Providend http://www.providend.com/
Personal Experience
I cold-called Providend and asked for an IFA referral. The "Emissary", Ms Madeline Chong (what's with the big sounding "Emissary" term btw?) informed me that Providend charged $2000 for Comprehensive Financial Planning. Look, I'm not a high net worth client and at this stage of my life, no financial advice is worth $2000. So, I said I am looking for product specific advice... but no no, the $2000 fee is non-negotiable. Needless to say I hung up since this wasn't getting anywhere. My impression is that Providend caters only to high net worth and serious clients. See, poor guy like me was turned off by the $2000 fee. While I think a fee-based renumeration system is ok, I think $2000 is excessive, especially when they charge me even before I get to see the IFA. What happen if the IFA is the "Wolf in Sheep Skin" type? Do I get a refund them?

Quite Right on this Emissary.
I have a bad run-in with her too when I was searching for some firm to manage my money. She sounded arrogant when I called in to request for an appointment(which was what their website told me to do if I want to know more about their service). Without responding to my request for the appointment, she told me in a condenscending tone the appointment will be made if I have minimum $200k to let them manage. I can't remember the exact conversation but let's say I had trouble making an appointment with them even when I sounded like I was begging for it.

Anyway, the good thing is the CEO Christopher was very customer-service oriented and call back to apologised.

In the end, I put all my money in the swiss banks and is happy ever since

 

[zhiz22]

I can't help but feel that ts has a great prejudice and misunderstanding on insurance.

But I leave it to the rest to decide.

An ex ceo of insurance company can also start to whack insurance companies and claim that most insurance plans are bad......

Well, personally I feel that although they seems righteous and enlightening ppl, they can simply cause financial disaster to those who follow accordingly but mess it up due to lack of knowledge.

I wonder if they would sleep well...

 

[Rommie2k6]

I agreed with most of what you have researched. However, I have to point out you've probably overlooked the fact that the $2000 fee charged by providend actually cost less than those commission based "adviser" who supposedly give you "free" advice. Take for example a $30,000 ILP, a comms based adviser will get 50% comms for the first year just by selling the product, that's $15,000! You're paying more by engaging them and you don't even know. I have no association with Providend, but I do know they'll refund you whatever commission they get from their recommended products. I still think a fee-based structure is the way to go, as far as the financial well-being of the market is concerned.

I know another pretty decent IFA (he maintains a blog) and he doesn't charge an upfront $2000. I'm sorry, but paying $2000 even before I can judge whether Providend IFA is competent and ethical is really too much, even lawyers don't charge that much on the first consultation. But I do agree it is about the same commission as if the person buys an expensive insurance like ILP.

The "refund" of commission is not bad, but I would not take it to equate that the company is honest and ethical. So don't let your guard down. There is also a "volume bonus" that is almost impossible to verify, and works by giving a large commission to all the IFAs in a particular company if they promote certain products from insurance company issuing out the volume bonus.

 

[Cashcow]

Financial planning is not a simple math problem like 1 + 1. Depending on the client's budget, objective and risk appetite, there will be a more suitable solution that can be planned for him. That's what financial planning is.

But if you just read thru ts's posts, he recommend BTIR as the ONLY solution, the one-size-fits-all solution and other policies are just unnecessary products of the insurance company to sux money from the policy owners. From here, I feel that he is very extreme on his views and can't accept that there may be a better solution for different ppl.

Whether his view is a biased generalization or not, I once again leave it to others to judge.

 

[Rommie2k6]

Financial planning is not a simple math problem like 1 + 1. Depending on the client's budget, objective and risk appetite, there will be a more suitable solution that can be planned for him. That's what financial planning is.

But if you just read thru ts's posts, he recommend BTIR as the ONLY solution, the one-size-fits-all solution and other policies are just unnecessary products of the insurance company to sux money from the policy owners. From here, I feel that he is very extreme on his views and can't accept that there may be a better solution for different ppl.

Whether his view is a biased generalization or not, I once again leave it to others to judge.

I admit it may be a bit extreme, but it is not necessarily wrong. The problem with people who claim that BTIR is not good are usually people who have a vested interest in selling the alternative products. And these people have a vested interest for consumers to remain financially illiterate so that they can prey on their ignorance and help "manage" their money.

In my opinion every decently educated person (which includes the majority of younger people) can do BTIR if they educate themselves. For the older aunties and uncles it may be not so. The problem is that people are too scared and have too many misconceptions of what financial planning is and perceiving that only experts can do it. And it does not help that "financial planners" add fuel by scaring them about the risk of DIY using one-sided data.

The plain truth is that the finance industry thrives on the masses believing that "financial planners" can add value to managing people's money (especially in investments). The sad truth is that these "financial planners" (especially fund managers) have close to zero value to add and many are just milking money for their own benefit.

I personally also have an IFA who I engage to do financial planning even though I do have some degree of financial literacy. I always look at my IFA as a "second opinion" guy and I am in control of my money and not the other way round of him controlling my money. When you are not financially literate it becomes easy for financial planners to take advantage of you.



AND.... for the record you can always engage an IFA to implement a BTIR strategy for you. So cashcow your point is basically pointless. I have stated this in my original post, and this method is a good compromise for those who are too scared or too uncertain to do DIY BTIR. A good IFA will also help ensure that your BTIR plan is executed properly.

2. The OK Way: Hire a Competent & Ethical Independent Financial Adviser.
For those people who feel that they cannot handle investments for whatever reasons, it is best to hire an independent financial adviser (IFA) to help oversee your investments. However, it is important to choose an ethical agent that will not milk you of your money. Which is why perhaps re-reading Part 1 might be a good idea if you are still a bit fuzzy. Even if you are "outsourcing" your investments to an IFA, I would still recommend at least going through some basic books (see the list above). Nothing is better than having your own education in investing, because it is only through educating yourself that you will be able to identify a lousy product or a con-job when it comes along.

 

[FireHobbit]

I love your detailed explaination.

 

[stevetan2010]

I wonder if this thread could be made into a sticky post or something. Very good thread to simply let it fade off.

 

[Ap3s]

thanks for the effort. it might seems focused on the idea of BTIR, but still a good read nonetheless. thumb up!
anw, not sure if my question is related to this thread.

if i'm alrdy on a whole life limited pay insurance and i feel that the coverage is not enough in my later years, can i buy another life insurance from the same company? that means can i do double claim from each policy to max out my coverage in event of accident or death?

term insurance premium increases significantly as one ages. learning to invest takes time as well. and it might take quite some time before one finally gains profit or might even incur losses. so, is buying life insurance a safer route to take?

 

[Cashcow]

thanks for the effort. it might seems focused on the idea of BTIR, but still a good read nonetheless. thumb up!
anw, not sure if my question is related to this thread.

if i'm alrdy on a whole life limited pay insurance and i feel that the coverage is not enough in my later years, can i buy another life insurance from the same company? that means can i do double claim from each policy to max out my coverage in event of accident or death?

term insurance premium increases significantly as one ages. learning to invest takes time as well. and it might take quite some time before one finally gains profit or might even incur losses. so, is buying life insurance a safer route to take?

Why dun you just increase the sum assured on your existing policy? But I believe this will subject to underwriting.

 

[Rommie2k6]

thanks for the effort. it might seems focused on the idea of BTIR, but still a good read nonetheless. thumb up!
anw, not sure if my question is related to this thread.

if i'm alrdy on a whole life limited pay insurance and i feel that the coverage is not enough in my later years, can i buy another life insurance from the same company? that means can i do double claim from each policy to max out my coverage in event of accident or death?

term insurance premium increases significantly as one ages. learning to invest takes time as well. and it might take quite some time before one finally gains profit or might even incur losses. so, is buying life insurance a safer route to take?

Yes, you can always buy new insurance policies subjected to medical underwriting. So for e.g. if you hold NTUC Limited Pay Wholelife and want to buy NTUC Term Insurance it is fine. You can claim for both policies, and I'm not sure what you mean by "double claim".

Learning to invest needs some time. Maybe set aside half a day each week for 2-3 months to read up on a few books. After it, that's it. I don't see how one would need to learn for years... Insurance is for protection not for investment, but I guess this is probably the nth time you are hearing me repeating this. If you are relying on Traditional Wholelife for investment it means that you will more interested in the "surrender value". Good luck with that, policy nowadays take 20+ years to break even.


While you are self-educating on investment, you can always park your savings in a money market fund until you have designed your portfolio and are ready to execute your investment plan.

 

[RoLanTo]

You would need to draw out a portfolio before investing in stocks. However, for such small amounts you are probably left only with unit trust since ETF you need at least three figure sum per transaction if not the commission cost is quite high.

Last I checked, there's not alot of variations between H&S Shield Plans and their Riders. So not much diff. I would probably just go for the leading ones on the market, e.g.
- NTUC Enhanced Income Shield with Assist Rider
- Aviva MyShield with MyShield Plus Option A (not Option B)

And make sure it is a medisave-approved shield plan (i.e. can use medisave to pay premium). And a few general criteria to check:
1) Shield plan is on "as charged" basis with no individual limits
2) Shield plan is guaranteed renewable for life (i.e. they won't take you off the plan after a certain old age like 85 yrs)
3) Shield plan rider helps to cover cost of co-insurance but not both co-insurance & deductible
4) Shield plan rider does not need to cover misc stuff like hospitalization cash, CI payout, whatever stuff the insurer comes up with that sounds good but is not value for money

Examples of stuff not to get:
- GE SupremeHealth with TotalShield rider (The basic SupremeHealth policy is OK but the TotalShield rider offer first dollar coverage which is not value-for-money and not affordable in the later years of one's life).

Hi TS, thanks for the reply.
Yesterday i finally had a chat with my gf bro who is an IFA. we did a comparison of the aviva n ntuc shield plan for my parents and myself.. it works out ntuc is more cost-effective (cheaper).. the problem is, as for the 4 points u mentioned above, are they TRUE for ntuc plan? or may varies depend on how insurance agent package it? Also, may i know your opinion on buying Preferred or Advantage plan?

for the ETF, are you referring to the etf counters that we can buy thru the SGX (normal trading platform).. i see 1 unit is like 2.950.. means 1 lot around 2975 inclu transaction charges... dont seems very feasible for me in monthly investing.. (i cant fork out near 3k/mth for investment)

 

[RoLanTo]

Hi All,

Just to share some of my experience of my chat with IFA (gf's bro). Basically, what i want to acheive are the shieldplans for myself n my parents and assess my existing insurance coverage.

sheildplans are pretty straight-forward, we compare with our existing aia healthshield plan B with NTUC enhance-incomeshield+rider and Aviva..
end results, ntuc is cheaper (rider) and more coverage (more ex in medisave) compare to our old plans. As my parents are 50s.. i think upgrading them to a better plan seems to be a sensible idea.. so i decided upgrade for 3 of us.. my younger brother, i leave in original plan and let him decide for himself in future since he is in NS now. haha..

Next, about my existing insurance assessment.. since i already bought some life policies few years ago. So, we just assess if the sum insured and the coverage is sufficient anot.. Basically, i have about 120k CI coverage and 200k death coverage.. we worked out the amount needed to support my parents or any outstanding cost for about 20 years which is around 400k, so he suggest to me just get a term insurance till 65 with 200k coverage will do.. a rough estimation by him is about 30-35/mth, so its ok for my budget. As this 400k doesn't cover my mortgage loan which i dun have any at this moment, he agree on my plan on getting a depriciating term insurance (with CI) which equate the mortgage amount to cover it in future..

The above basically cover my higher priorities. There are 5 which he shared with me.. H&S, death, CI/MI, income replacement-disability, p. accident..

i feel the P-accident is the lowest priority until i dun even wan to spend a cent on it.. he also tell me dun buy, cos it just works like some form of consolation when u lose some parts of your body.. the more logical 1 is the income-replacement/disability insurance. he told me its optional, but good for young guys who are in the building stage of wealth cos its provide some form of income protection if u are disabled from work, maybe still can get 75% of your monthly income.. He told me he/his company is not carrying this product, but will ask his friends to help generate the quote..

His last few comments stun me, he said most FA including his friends wont reccomend income protection policies as they are 1 of the lowest paid stuffs, so he said maybe his friends also dun wanna do it for me cos earn nothing yet still must service me.. i dunnoe how true is this.. But anyway, i dun think he earn much from my side too cos only buy term insurance and govt shield plans.. Thanks bro

My last question will be, is those income protection plan important in your opinion? how about the 1 provided by GE?