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

[jack81]

True, provided one has the time to manage his investment regularly. Survey studies have shown that majority of the consumers do not remember what they purchased after a year for long term products like insurance, investment and savings. Majority of my clients just want the convenience of someone that would be monitoring their entire financial portfolio regularly and this person is from some reputable stable company - namely the Big 4 (Prudential, Great Easter, AIA & NTUC Income)

不讲还可以，一讲就生气... Big 4..... What's the big deal about this?

Do you mean that other agents from the other companies other then your so called Big 4 are less competent?

I'm not putting words in your mouth or statement or watever. I'm outright asking you to clarify it. Simple.

Remember Ms Theresa Tan? I provide the link for you -- http://health.asiaone.com/Health/News/Story/A1Story20100831-234887.html

She had 3 policies with Prudential but her claim for DCIS was rejected. Funny thing was her family's medical history was made known to her agents. Agents from Prudential.

So tell me, if according to you agents from your so called Big 4 (some reputable stable company) are like the above.. i'm glad I'm from a small company.

 

[Rommie2k6]

Remember Ms Theresa Tan? I provide the link for you -- http://health.asiaone.com/Health/News/Story/A1Story20100831-234887.html

She had 3 policies with Prudential but her claim for DCIS was rejected. Funny thing was her family's medical history was made known to her agents. Agents from Prudential.

While I generally agree with the comments made by jack81, it is not justified in this case. I skimmed through the article, and the woman is trying to get a CI payout for early cancer, when a CI policy is for the 30-defined CI conditions (for cancer it is usually late stage cancer).

Who is at fault? I blame the agent for not explaining things properly. I blame the consumer for not being pro-active in understanding stuff properly. Again, the agents will say consumer have no time, not interested, etc... My response to that is that if consumer don't take an active interest in their financial health, who will? Financial health is like medical health, the person who makes the biggest impact is the person himself. Doctors and financial consultants can do only do so much.

The article also stated she got some payout for her hospital bills, presumably from a shield plan. So at the end of the day, I don't see why she is bitching. Again, consumer ignorance... doesn't even know what is the role/function of various insurance products... and again the agent who sold her these stuff did a poor job in explanation.

Another nitpick was the impression that she has that CI payout is meant to replace loss of income. Since when!?! There's dedicated disability income insurance for that function. Again, consumer ignorance and in this case we see the dangers of going to tied agents, since Prudential doesn't cover DI products.

 

[HandsTied]

Since when did I started saying you cannot invest on your own?
If this guide is about everyone buying term to invest on their own, why is the topic titled "Newbie Guide: How to Find a Good Agent for Investment & Insurance?"

That is because Buy Term Invest the Rest can be done in two ways:
1) If one wishes, he can find an agent to get a good insurance quote, and then invest himself;
2) If one wishes, he can find an agent to get a good insurance quote and to help him invest.

Rommie has already stated very clearly before that one can leave it to a competent and ethical IFA to invest for those who are not financially savvy, or cannot be bothered to invest himself, but still recommends the person be financially knowledgeable enough such that he will not get fleeced. Read the earlier threads where I clarified with him on the purpose of the guide and the title. It is already very crystal clear, don't come and twist facts around when the facts are already well established.

I'm pretty sure no insurance riders can be added to non-insurance based investment products. If one totally do not wish to cover whole life for certain insurance riders (riders as in those that are not offered as standalone), then go ahead with BTIR. Go Go... I'm not stopping anyone. If you can find an investment that allows all the options of riders being added in, tell me. Oh wait - that would made it an ILP product!

Who in the world is talking about adding insurance riders to non-insurance products?!

Your circular logic is tiresome. In the first place, whole life coverage may not be necessary as BTIR provides for self-insurance.

Secondly, even if one wants whole life coverage for insurance riders, he will do well with a whole life plan rather than an ILP which becomes exceedingly expensive because of the exponentially increasing assurance charges.

And just for your info, there may be inflexibility to the insurance portion of ILP products but that's the way it is - it's designed to combine both insurance and investment. If you really want to separate it, go ahead for BTIR but don't say ILP is useless because there are people who wants everything together in 1.

There is no practical advantage for insurance and investments to be combined into one product, and it comes with a huge practical disadvantage in the hefty charges that are imposed for no reason other than to profit the salesman and his associates.

It is a term policy plus investment funds plus high unnecessary charges. Full stop. No rational, logical consumer will buy it if they know the true workings of the product and the ease in which they can replicate an ILP plan minus the charges. However, they are fooled into purchasing because the plan is made complex in 20-30 over pages of Benefit Illustration which the charges and costs are not immediately obvious to the consumer. The salesperson will either glaze over such details, or explain the features of such a policy without highlighting that there is a more cost-effective and flexible alternative.

You can sell a meal of burger, fries and drink for $10. What you don't mention is that the burger, fries and drink all cost $2 each. Either that or you will reveal the price but mention that buying the $2 fries is very troublesome when no such hassle exists.

True, provided one has the time to manage his investment regularly. Survey studies have shown that majority of the consumers do not remember what they purchased after a year for long term products like insurance, investment and savings. Majority of my clients just want the convenience of someone that would be monitoring their entire financial portfolio regularly and this person is from some reputable stable company - namely the Big 4 (Prudential, Great Easter, AIA & NTUC Income)

Regardless of how accurate your "survey studies" are, consumers forget because such products are complex. ILP takes two instruments that are commonly understood and easier to understand and merges it into a needlessly complicated product, and adds insult to injury by layering in more costs that is hard to detect because of the complexity.

Most, if not all, laymen will know what a term policy does in less than 30 minutes. Even if they forget, the Benefit Illustration of a term policy is much simpler and is straight to the point without much technical jargon or obfuscation. They are able to know exactly how much they are paying for insurance without having to dig through assurance charges. Most, if not all, laymen will also know what unit trusts do in less than 30 minutes. Even if they forget, they are able to know exactly how much they are investing at any point of time without having to refer to allocation rates.

What kind of "convenience" does ILP give? None. It is unnecessarily complex, proclaimed to be transparent but the details are not obvious to laymen, and it makes the two concepts of insurance and investment technical and difficult to understand. You are also once again pretending that someone who BTIR cannot have a person monitoring his financial portfolio for him.

True, but if you are investment savvy you may not want to spend time managing too and outsource it as well.

Yet again, you are once again pretending that someone who BTIR cannot have a person monitoring his financial portfolio for him.

1. Consumers always have the choice. Since when they don't? There are those clients even after I explained to them the charges of WL ILP, they still prefer it over WL traditional. And when if I suggest get Term and invest on their own, they find it too troublesome.

The pertinent comparison is between ILP and BTIR.

Never mind that I don't believe you suggest BTIR for your clients. I'm sure that you mispresent the difficulty of BTIR if they have found it too troublesome because it can be as simple a matter of signing up a term policy and unit trusts. It can be as "troublesome" as investing on their own, but if one doesn't want to do it himself, he can always buy term and unit trusts, which is exactly what an ILP is, minus the unnecessary charges. Once again, you are pretending that BTIR is a complicated affair that the agent cannot/will not help the client to do.

2. Sorry, I did explain well in 30min but client don't understand and I have to repeat and repeat. Questions were repeated. You weren't there so don't assume.

Thanks for reaffirming the complexity of ILPs.

3. Financial consultants are licensed to sell ILP because it carries insurance elements to it, with the exception of Unit Trusts (for those with M8). However they are not licensed to give recommendations of funds and premium allocation. Clients have to decide themselves or engage a 3rd party investment consultant for advise. Financial consultants are not liable for investment strategies that went wrong for ILP products, hence will be and cannot recommend the type of investment. The right way for a financial consultant to do is to do a risk profile analysis and direct them the the table of risk classifications and let their clients select the funds within that category. Clients can request for past fund performance but must be warn that this do not indicate future performance.

Correct, so yet another point why clients should avoid the hell out of insurance agents who recommend ILPs because the agents are conveniently not liable for it! Clients have to blame their own luck even though they have consulted a so-called "financial consultant". It's like visiting a doctor and having to choose your own medication. The doctor will also tell you that he cannot specify the dosage and type of medicine, but can only point you to a particular category of pills to choose from. I'm sure everyone knows if it's a good idea to visit this kind of doctor, or engage this kind of "financial consultant".

Now, you have this Mercer portfolio thing which I feel is a baby step for the client. At least there's some form of portfolio to be found for clients gulled into buying ILPs, when previously all the policyholders have no one to hold accountable for the selection of funds because everything is deemed to be the policyholder's choice even though in reality most agents just randomly push and pick a "hot fund". However, like I have said - just because you have learnt how to crawl does not mean there are people who cannot run. I'm sure everyone knows if it's a good idea to seek financial advice on investments from someone who is unable to give financial advice on investments.

I have been writing in a very neutral stand and whenever Mercer or Prudential brought up was only to illustrate a point and should not be inferred on the surface. Please look at the bigger picture of the GENERAL consumers and not bias to a single group/type.

This guide has already violated many rules of FAA if an AGENT is to use it for his/her clients. For a DIY guide, I've nothing to say except it's not user friendly for newbie investors.

Like I've said before, ILP peddlers like you can say anything under the sun to justify your sales of such products that are needlessly expensive and complex which often leaves people underinsured and/or inadequately prepared for retirement. Unconscionable.

 

[xiaoevil]

Your personal attack is getting stale, but I will humor you. I do not have anything to do with the finance industry at all.

In case you haven't realized I have always been advocating the DIY approach, and only get an agent to manage if there is really no choice.

This means you are not even a professional financial planner. So what if one study the law or medical books and feel competent in it? If never go through state exams to obtain the license it just mean personal opinion.
You don't even know exactly how ILP benefit certain groups. BTIR does have its advantages but also its disadvantages, likewise for ILP.

 

[HandsTied]

when you mention client's lack of knowledge in finances that i'm preying on and i'm not value adding through financial planning, isn't it contradicting that because they don't know how to plan that's why i'm VALUE-ADDING their knowledge?

What kind of logic is this? If an old granny has a lack of knowledge in physiology and you sell her magic stones claiming that it can boost her health, you are value-adding to her knowledge?

So are you a financial consultant with license to give all these advise here? You can say how easy it is to meet the criteria to take M5/M9/HI/M8, but have you passed the exams to be fit and proper for giving advise?

One can study law and be expert in it but will not be allowed to practice law if he has not cleared with the authorities, have you?

A legally trained expert may not be able to practise if he is not authorised to, but he is able to give general advice on certain legal options one has, and then how to find a good lawyer to explore such options.

That is exactly what Rommie is doing here. He has much better financial knowledge that most financial salespeople have, and in a industry where 99.9% of the practitioners are commission-based, he has nothing to earn and has probably no vested interest in writing a fair, objective guide that people can follow so as not to be fleeced by dubious financial products and salespeople pretending to be consultants.

Maybe you have overlooked my post. If one will to spend $100 on a ILP @ 100k sum assured vs a $100 on a term @ 500k as to what u proposed buy high sum assured first because in future may not be able to buy, then my commission is still the same.

And maybe you have overlooked my post that reveals your flimsy justification as a red herring to how much you can earn by selling term or ILP.

If the client only has $100 budget and you sell him a $100k sum assured - he is SEVERELY UNDERINSURED. You want to give a cock-and-bull story about the prospect walking out and getting hit by a car - there you have it - you have underinsured the person such that his dependents will be worse off because you sold him an unsuitable policy. It doesn't even have to be as extreme as the prospect immediately dying after buying the policy, but he is SEVERELY UNDERINSURED from the time he buys this policy till the next time he buys another one, which can be a year, or more than a year because most people have the false sense of security that they are insured when they buy insurance policies, regardless of how much they are covered for.

And if my client purchase $50 on 250k term and $50 on investment, yes I earn half the commission but in future he is still gonna get another 250k sum assured, assuming he needs 500k. The commission just comes in sooner or later.

And what's your point? Ultimately, your client will put in $100 for term to get a decent sum of coverage, instead of having to put in $500 for comparable coverage. Your commission is still lower when you properly insure your client with term than if you used ILP.

And herein lies the beauty of BTIR. If one has a small budget, he can and should opt for spending the budget on adequately insuring himself first with all $100 into insurance, and then choosing to invest later when his budget increases. ILP at $100 neither covers him adequately, or provide good risk-adjusted return.

You can argue I earn more if client purchased a 500k WL, because i eat the commission as part of the WL premium. But client wish to combine it together for convenience.

Once again, you are pretending that BTIR is inconvenient compared to ILP when it's the same thing minus the unnecessary charges.

Of course not, why should I share with you what's good.
And to give you an illustration of what exactly if going on in the market. If customer wants to get ILP because the friend says it's good and all. Assuming after going through a financial planning and concluded that BTIR is better for customer and customer still refuse to accept the proposal. Are you telling me not to sell to this customer ILP?
So assuming I super ethical and I don't sell. The minute this customer walked out and cross the road, a car ran over him and he died on the spot.

Which is a greater evil?

Oh please, what's really happening in the market is that consumers are led to buying ILP without even knowing BTIR because even most financial salespeople don't know about it. Even if they heard of BTIR, they have warped and distorted facts about it as it presents a threat to their fat commissions and sales targets. Client will never get BTIR when it's not recommended, or when it's brought up it's misrepresented as if it can only be achieved if one is willing to endure the "inconvenience" of climbing up Mt Everest without one leg and arm.

I will throw you back the same scenario and that the client only has $100 to spare, and a $100k ILP is recommended instead of a $500k term and he dies right after signing up for the policy. The term plan is indisputably better.

You have no idea what's sales.

We don't. You are the expert salesman here.

Whatever you want to think, it's a extra service available to customers. You can still engage others for investment recommendation. The advice by Mercer is only to provide investment strategy for those who do not know how to allocate the premiums and what funds to choose, so choose the model portfolio. It's just like the WL investment strategy (with about 50% bond) stated somewhere in the contract which belongs to lower risk level.

It's a baby step forward. Consumers are still better off with real financial planners who can give them proper advice.

I believe iAdvisor also pointed out this:

Solely distribute doesn't mean solely advice on one company's product. For e.g., Prudential don't do general insurance and my client wants to get travel insurance. I can always refer the client to someone I know that does it. Whether I get referral fee or not, I make sure my client pays the standard premium off the shelf.
If my client want to invest in shares, ETFs, REITs, I can always ask him to approach the relevant, trusted connections that I have.

Oh please, even if we talk about ILPs, there are even better ILPs out there. If we talk about whole life policies, there are even better whole life policies out there. But yet somehow the only kind of policies you will sell is your own company's - why is that? I'm sure you have some cock and bull story to say that your company's products are the best, or the outright lie that "all insurance products are similar".

 

[HandsTied]

This means you are not even a professional financial planner.

Neither are you. You are just authorised and contracted to promote insurance products.

You don't even know exactly how ILP benefit certain groups. BTIR does have its advantages but also its disadvantages, likewise for ILP.

Let's limit advantages of ILP/BTIR to clients' POV. I know that you have many advantages to gain from ILPs, and will suffer many disadvantages due to BTIR.

 

[xiaoevil]

HandsTied wrote:

That is because Buy Term Invest the Rest can be done in two ways:
1) If one wishes, he can find an agent to get a good insurance quote, and then invest himself;
2) If one wishes, he can find an agent to get a good insurance quote and to help him invest.

Rommie has already stated very clearly before that one can leave it to a competent and ethical IFA to invest for those who are not financially savvy, or cannot be bothered to invest himself, but still recommends the person be financially knowledgeable enough such that he will not get fleeced. Read the earlier threads where I clarified with him on the purpose of the guide and the title. It is already very crystal clear, don't come and twist facts around when the facts are already well established.


Who in the world is talking about adding insurance riders to non-insurance products?!
If you invest into ETFs and buy term, there are certain riders in the market that has higher maximum age expiry than the term itself, so tell me where to add these riders?

Your circular logic is tiresome. In the first place, whole life coverage may not be necessary as BTIR provides for self-insurance.

Secondly, even if one wants whole life coverage for insurance riders, he will do well with a whole life plan rather than an ILP which becomes exceedingly expensive because of the exponentially increasing assurance charges.

I have field-tested ILP vs WL and even after mentioning the charges of ILP, clients still chose ILP as their first place and purchase WL at a later stage. I have highlighted that ILP (Insurance portion) is only meant up to 55yo and to be reduced to zero. And because I clearly told them must reduce, they have WL as their next plan. But why do they still choose ILP first? Why don't just go for WL + ILP (Death Benefit of 110% of premium = 1% charge)? Reason - Too troublesome. And now it's the case of doctor prescribing medicine to patient and patient refuses to eat the medicine, you gonna force a gun at patient?

There is no practical advantage for insurance and investments to be combined into one product, and it comes with a huge practical disadvantage in the hefty charges that are imposed for no reason other than to profit the salesman and his associates.
This is so not true. Effect of deduction is the same but the distribution costs is actually higher.


It is a term policy plus investment funds plus high unnecessary charges. Full stop. No rational, logical consumer will buy it if they know the true workings of the product and the ease in which they can replicate an ILP plan minus the charges.
When you said ease of replicating, have you actually conducted a survey? Do you know customers are already complaining why buying ONE policy they received so many letters? They ask why can't just consolidate everything together? Customers know should diversify investment and on different companies but majority just remain at one preferred choice due to convenience. And to roomie for keep saying I never justify the benefit of ILP to be better than BTIR - I have, it's convenience not the figures people care. Just ask yourself this, why are so many elderly still keeping their money in bank when it is obvious the value is reducing due to inflation? You tell them figures or guaranteed they still don't want because they want ready cash. Likewise, there are those who preferred WL over ILP or term becoz they don't want to lump insurance with investment and not going to go into the hustle of investing for hedging sum assured's value against inflation, just let WL to do its job of hedging against inflation. And in nowhere of my post I condemned BTIR. I am voicing that it is totally bias to say ILP has no advantages. Period


However, they are fooled into purchasing because the plan is made complex in 20-30 over pages of Benefit Illustration which the charges and costs are not immediately obvious to the consumer. The salesperson will either glaze over such details, or explain the features of such a policy without highlighting that there is a more cost-effective and flexible alternative.

The charges table are spread across a few pages and it's very clearly written compared to WL and term where you have no idea how you are being charged. ILP is the most transparent product - this is said by MAS, Moneysense and many authorities.


You can sell a meal of burger, fries and drink for $10. What you don't mention is that the burger, fries and drink all cost $2 each. Either that or you will reveal the price but mention that buying the $2 fries is very troublesome when no such hassle exists.

I can calculate to you exact how the effect of deduction and distribution costs is affecting your premium coming in for ILP products but for anything else, I can't tell you how much are the actual charges because it is not mandate to disclose by LIA or MAS.

 

[xiaoevil]

HandsTied wrote:

Regardless of how accurate your "survey studies" are, consumers forget because such products are complex. ILP takes two instruments that are commonly understood and easier to understand and merges it into a needlessly complicated product, and adds insult to injury by layering in more costs that is hard to detect because of the complexity.
There is no hidden charges. Charges are all black and white unlike traditional products.


Most, if not all, laymen will know what a term policy does in less than 30 minutes. Even if they forget, the Benefit Illustration of a term policy is much simpler and is straight to the point without much technical jargon or obfuscation. They are able to know exactly how much they are paying for insurance without having to dig through assurance charges.
Agree.


Most, if not all, laymen will also know what unit trusts do in less than 30 minutes. Even if they forget, they are able to know exactly how much they are investing at any point of time without having to refer to allocation rates.

Disagree. If my client fully comprehend what unit trust does, they would not be even asking me how to start investing. Unit trusts are for those who wish to invest but don't know how to. If they can comprehend it, they should be doing their own investment portfolio or even getting ETFs, REITs, Shares with dividends, etc.

What kind of "convenience" does ILP give? None. It is unnecessarily complex, proclaimed to be transparent but the details are not obvious to laymen, and it makes the two concepts of insurance and investment technical and difficult to understand. You are also once again pretending that someone who BTIR cannot have a person monitoring his financial portfolio for him.

I am not pretending but clearly I won't have the direct access to buy/sell ETFs, REITs, shares for my clients if I were to recommend them such investment tools. The broker may or may not be closely monitoring my client's portfolio. I loose the control to the entire portolio. This is the convenience I'm talking about.
Put it simply this way. I bought product A from Prudential agent A and product B from Prudential agent B, after which I would want to transfer all the polices to just 1 agent to handle it for convenience.

Yet again, you are once again pretending that someone who BTIR cannot have a person monitoring his financial portfolio for him.

Someone who BTIR most likely will not have the same person monitoring the financial plan and the investment plans together.


The pertinent comparison is between ILP and BTIR.

Never mind that I don't believe you suggest BTIR for your clients. I'm sure that you mispresent the difficulty of BTIR if they have found it too troublesome because it can be as simple a matter of signing up a term policy and unit trusts. It can be as "troublesome" as investing on their own, but if one doesn't want to do it himself, he can always buy term and unit trusts, which is exactly what an ILP is, minus the unnecessary charges. Once again, you are pretending that BTIR is a complicated affair that the agent cannot/will not help the client to do.

Sorry, but I have not explain BTIR to any clients so how to misrepresent?

Thanks for reaffirming the complexity of ILPs.

Term and Unit trust by itself is very simple. But to explain why term till 65yo and why invest this amount. Why comparing to an ILP/WL in front of client - this is the complexity. When you have tried explaining BTIR to your client successfully vs ILP and WL then talk louder here.

Correct, so yet another point why clients should avoid the hell out of insurance agents who recommend ILPs because the agents are conveniently not liable for it!
They are liable for it if clients cannot take risk and consultant go recommend ILP or unit trust. A proper financial consultant would know better than to advise something that do not match client's risk profile. If there is a mismatch, client must be given thorough explanation as to why the mismatch and agree to it. If client do not agree, you can never sell the ILP. In fact, all recommendations given by a financial consultant - he/she is liable for it even if it's 20-30 years later.


Clients have to blame their own luck even though they have consulted a so-called "financial consultant". It's like visiting a doctor and having to choose your own medication. The doctor will also tell you that he cannot specify the dosage and type of medicine, but can only point you to a particular category of pills to choose from. I'm sure everyone knows if it's a good idea to visit this kind of doctor, or engage this kind of "financial consultant".
The biggest problem is not this, it is client refuse to listen to the BTIR concept and stick to ILP, believing it can cover them for life. I do not believe ILP to be a WL plan, unless no withdrawal of units have been made. Even so, the policy can lapse at old age. ILP is meant to compliment WL policy.

Now, you have this Mercer portfolio thing which I feel is a baby step for the client.
It is.
At least there's some form of portfolio to be found for clients gulled into buying ILPs, when previously all the policyholders have no one to hold accountable for the selection of funds because everything is deemed to be the policyholder's choice even though in reality most agents just randomly push and pick a "hot fund".
Don't assume randomness in all agents. Like the unlicensed roomie who created a proven formula, there are those who did the same as well but at the risk of their license. These agents are the ones who are willing to give good advise when permitted to. (Clarification on agents with M8 needed but those without M8 clearly cannot recommend funds.)

However, like I have said - just because you have learnt how to crawl does not mean there are people who cannot run. I'm sure everyone knows if it's a good idea to seek financial advice on investments from someone who is unable to give financial advice on investments.
There are many ways to go around this and only newbie agents don't know how.

Like I've said before, ILP peddlers like you can say anything under the sun to justify your sales of such products that are needlessly expensive and complex which often leaves people underinsured and/or inadequately prepared for retirement. Unconscionable.
I do not know since when i become ILP product pusher. Enlighten me please.

 

[xiaoevil]

HandsTied wrote:
What kind of logic is this? If an old granny has a lack of knowledge in physiology and you sell her magic stones claiming that it can boost her health, you are value-adding to her knowledge?

You are twisting my definition of value-adding. When someone with no knowledge of financial planning sits down with me, I am sure he/she has something to gain POSITIVELY. At least to learn about Cash flow management, Debt reducing strategies, cultivating savings habit by setting up new bank savings account, calculating sum assured, education planning for kids, retirement planning, what the difference between medishield and pte shield plan, what's deductibles and co-insurance, etc. You are telling me all these are poison?

A legally trained expert may not be able to practise if he is not authorised to, but he is able to give general advice on certain legal options one has, and then how to find a good lawyer to explore such options.

That is exactly what Rommie is doing here. He has much better financial knowledge that most financial salespeople have, and in a industry where 99.9% of the practitioners are commission-based, he has nothing to earn and has probably no vested interest in writing a fair, objective guide that people can follow so as not to be fleeced by dubious financial products and salespeople pretending to be consultants.

It is never fair when there's bias towards ONE best way for ALL.


And maybe you have overlooked my post that reveals your flimsy justification as a red herring to how much you can earn by selling term or ILP.

If the client only has $100 budget and you sell him a $100k sum assured - he is SEVERELY UNDERINSURED. You want to give a cock-and-bull story about the prospect walking out and getting hit by a car - there you have it - you have underinsured the person such that his dependents will be worse off because you sold him an unsuitable policy. It doesn't even have to be as extreme as the prospect immediately dying after buying the policy, but he is SEVERELY UNDERINSURED from the time he buys this policy till the next time he buys another one, which can be a year, or more than a year because most people have the false sense of security that they are insured when they buy insurance policies, regardless of how much they are covered for.

You are taking my point out of its context when I was mentioning that supposed I recommend BTIR but client do not want it, wants only ILP. And you were asking me that as a doctor I should not give in to what client wants and walk away. So walking away leave the person NO INSURANCE.

And what's your point? Ultimately, your client will put in $100 for term to get a decent sum of coverage, instead of having to put in $500 for comparable coverage. Your commission is still lower when you properly insure your client with term than if you used ILP.
You have no idea the kind of commission from single premium ILP can give, there are trailer commission to it as well. My commission do not become a lot lesser. In fact, the client will be happy to buy more insurance when money is profited. If you understand sales, you would know there are a lot of opportunities to make money, don't have to cause people to be underinsured or squeeze any money out of one.


And herein lies the beauty of BTIR. If one has a small budget, he can and should opt for spending the budget on adequately insuring himself first with all $100 into insurance, and then choosing to invest later when his budget increases. ILP at $100 neither covers him adequately, or provide good risk-adjusted return.

Once again, you are pretending that BTIR is inconvenient compared to ILP when it's the same thing minus the unnecessary charges.

And do you know what is the BIGGEST RISK of term insurance? If you forgot to pay your premium, there's no premium holiday or whatsoever. Your policy may not be able to reinstate.


Oh please, what's really happening in the market is that consumers are led to buying ILP without even knowing BTIR because even most financial salespeople don't know about it. Even if they heard of BTIR, they have warped and distorted facts about it as it presents a threat to their fat commissions and sales targets. Client will never get BTIR when it's not recommended, or when it's brought up it's misrepresented as if it can only be achieved if one is willing to endure the "inconvenience" of climbing up Mt Everest without one leg and arm.

What's happening in the market does not condone u to disregard ILP's advantages totally.

I will throw you back the same scenario and that the client only has $100 to spare, and a $100k ILP is recommended instead of a $500k term and he dies right after signing up for the policy. The term plan is indisputably better.

We don't. You are the expert salesman here.

Yawn! I do recommend term plans but in very short period of 10 years that's meant to be converted to WL/ILP, if you must ask.

It's a baby step forward. Consumers are still better off with real financial planners who can give them proper advice.

Tell me what status mark can distinguish a REAL financial planners from the fakes? Maybe you guys should write a guide on this instead of praising BTIR.

Oh please, even if we talk about ILPs, there are even better ILPs out there. If we talk about whole life policies, there are even better whole life policies out there. But yet somehow the only kind of policies you will sell is your own company's - why is that? I'm sure you have some cock and bull story to say that your company's products are the best, or the outright lie that "all insurance products are similar".

I don't think I have dismiss any companies' products. If my client want to do product comparison - go ahead. Even if I know my company's product at that point in time is the best - go ahead and compare. Because what's best product in the market will never stay the best. Go compare agents instead.

 

[xiaoevil]

HandsTied wrote:

Neither are you. You are just authorised and contracted to promote insurance products.

From what I know the authorities label me as professional and label roomie as unprofessional and not allow to give financial advise to the masses. Anyone can advise their own friends but on a public forum like this - Nope. Totally illegal.

Let's limit advantages of ILP/BTIR to clients' POV. I know that you have many advantages to gain from ILPs, and will suffer many disadvantages due to BTIR.

I really don't care how much I earn out of my friends. Btw, I don't do Road Show which is generally product selling. I don't see myself recommending a 25 years WL plan to one of my client at age 50+. I recommended 10 years limited payment which is the least commission I would get compared to a 15 and 25 years limited payment. I don't see why I should further justify that my clients are benefiting and not suffering. If in the first place they never plan with me, I believe they suffer more.

 

[xiaoevil]

Rommie2k6 wrote:

Well... I guess you're right from a "certain point of view". But for some cases value-adding means product churning, encouraged to termination old policy and shield plan, and such "value" does more harm than good.

This is not the value adding I am referring to. Refer to my reply to HandsTied.

Appeal to authority? Oh please stop your fallacious arguments. If you have a point to make, disprove the posts I have made on BTIR vs WL using reason.

Refer to the reply to HandsTied that BTIR is not superior to WL but neither WL is superior to BTIR. Enough said.

If you think that the finance industry has any standard like that of the law industry, you are sorely mistaken. There is no real regulation and enforcement in the finance industry, which is why O-level grads can sell toxic products.

That's probably true... if so why do you still recommend ILP? Don't quote consumer preference again. As a consultant you are supposed to provide advice in the best interest of the client, not advice to make the client feel happy.

At least I'm glad I'm not those who solely sell savings plan only. And ILP is not a toxic product. In my point of view, there's no toxic products, only bad recommendations. Refer to my reply to HandsTied why sometime you can't force your recommendation onto client.

Yes, you are to walk away. Just as a doctor who will ask you to leave the clinic if you insist on him to prescribe you inappropriate toxic medication.

I don't think doctors sell poison and illegal drugs like 'ice' and those toxic medication. ILP is an approved drug. All financial products before marketed have to be approved by MAS. So if you want to blame the insurance companies for selling ILP, blame MAS for approving.

Strawman argument. Stop distorting the issue at hand which is BTIR vs WL/ILP.

In theory I agree that BTIR can result in better returns to the extent of self insured but there are a lot of hidden risks you did not mention. Term insurance has risk too which I replied to HandsTied about APL feature. Investment itself is already an inherent risk. In the first place why BTIR is not marketed because there is no proper contract for it. You can say companies want to make profit which is why instead of leveled term insurance in ILP, it's renewable term charges based on age attained. Which is why ILP is good for younger people but extremely disadvantage for older people. And ya, I forget to add in this for HandsTied, Go compare the premium for leveled term insurance and yearly renewable term insurance. The advantages for yearly renewable is that you to not pay upfront the insurance risk of your age group. One very transparent product in showing increasing premium is Medical insurance, premium increasing according to age group.

SHOW ME THE DETAILS OF THE MERCER PLAN. As I have challenged you before, show it here if not I will simply assume (quite justifiably so) that it's just another gimmick Prudential has created to make their products sell better.

You can call it a gimmick if you wish but like you said, there are those unethical agents. This portfolio solution will be best if they use it compared to anyhow selecting funds for clients.

Yayaya... you will only do the ethical thing when you know their client is armed with knowledge. Will you recommend ETFs for BTIR if a client comes to you with ILP or WL?

Yes I would. In fact, I encourage people to diversify into shares with dividends, ETFs and REITs. But I did warn them to find a broker that's reliable because I won't be managing it for them on the first hand basis, definitely I can't perform transactions or bull/sell.

 

[xiaoevil]

Rommie2k6 wrote:

Which is why in Part 6 of my guide, my first preference is to DIY. Yes, it's true that you run the risk of your IFA "dying out" on you, but how high is the probability of that?

There is still the risk. I always recommend my clients to have 2 reliable and trusted advisers. I can be the deceased of the next car accident appearing on news.

Your appeal to authority arguments (again) are irrelevant to the topic at hand. I have challenged you and you have failed to show why ILP/WL is better than BTIR for most cases. Instead, you have cited excuses in the execution of BTIR (which is not justified) and invoked fallacious argument (like what you have been doing in the past few posts).

I won't be showing you figures but even without generating quotations, I know at the back of my mind ILP gives higher sum assured compared to WL and BTIR for the young age group.

Life is imperfect. The finance industry is extremely not perfect. In the ideal world from the consumer's perspective, there won't be commissioned agents selling toxic products and unit trust / ETF won't be allowed to charge exorbitant fees (>1% expense ratio). But reality is neither is true. Why? I suspect it's the way the system was originally setup, to serve the interests of the agents/brokers/fund managers, and not the clients. MAS handling of the minibond fiasco is downright pathetic compared to other regulators like in HK. I think that speak tons about the quality of regulation, enforcement and ethics in Singapore. Short answer is that there is effectively NONE.

If you don't pay consultants huge commission, who would want to work in this line - truthfully speaking. People rather work in bank to get a fixed salary + small commission. And your point was tied agents rank better than personal banker in your POV. Insurance is something that 99.9% of the people will never walk into insurance companies to buy, unless something unfortunate has happened to them or their loved ones. Insurance is something that you have to get it when you don't need it, so that you have it when you need it. If you wait for people to have the need to buy insurance, this country would suffer as a lot would be seeking help from the MPs because underinsured or nothing insured. FC still have to make a living dude, we are not saints.

 

[Rommie2k6]

There is still the risk. I always recommend my clients to have 2 reliable and trusted advisers. I can be the deceased of the next car accident appearing on news.

Fair enough. If consumer can find 2 ethical IFA I do agree that is a good "succession planning" practice. However, I think finding 1 ethical IFA is already a challenge. I am curious though... I have never heard of a person being served by two agents simultaneously on the same product. How does that work?

I won't be showing you figures but even without generating quotations, I know at the back of my mind ILP gives higher sum assured compared to WL and BTIR for the young age group.

I see... I guess I'll just have to take your word for it. We can drop this topic now since you are unwilling to discuss it any further.

If you don't pay consultants huge commission, who would want to work in this line - truthfully speaking. People rather work in bank to get a fixed salary + small commission. And your point was tied agents rank better than personal banker in your POV. Insurance is something that 99.9% of the people will never walk into insurance companies to buy, unless something unfortunate has happened to them or their loved ones. Insurance is something that you have to get it when you don't need it, so that you have it when you need it. If you wait for people to have the need to buy insurance, this country would suffer as a lot would be seeking help from the MPs because underinsured or nothing insured. FC still have to make a living dude, we are not saints.

Unfortunately in the process of making a living, these financial "consultant" salesmen tell toxic products like ILP that sit quietly and explodes during retirement, where the client needs the money/coverage the most. I think in these cases, people are better off leaving their money in FD because with ILP (and it has happened before), people can get zero cash value due to increasing mortality charges and underperformance of ILP UT vs the projected values. At least in a Fixed Deposit, I won't lose my money!

 

[Rommie2k6]

Refer to the reply to HandsTied that BTIR is not superior to WL but neither WL is superior to BTIR. Enough said.

Wasn't that what I also said for the case of BTIR for conservative investor vs WL, that it is a less clear-cut decision? I did list my opinion that BTIR is still better and the reasons why. I leave it up to the consumer to decide for themselves.

At least I'm glad I'm not those who solely sell savings plan only. And ILP is not a toxic product. In my point of view, there's no toxic products, only bad recommendations. Refer to my reply to HandsTied why sometime you can't force your recommendation onto client.

What do you mean by "saving plans"? Endowment? ILP is the most toxic products because it is BTIR in expensive wrappers where clients bear the full risk of investment under very adverse situations (namely high fees and expenses), and because people who buy ILP are financially uneducated, they will rely on their agents to "manage" for them. That will often end up disastrously (may the agent's fault through excessive churning, may be the expensive fees fault... I cannot pass judgment), and then their cash value can go to zero during their twilight years. If that is not toxic, then what is?

Consumers should google "ILP time-bomb". Many cases have been reported on Tan Kin Lian blog.

I don't think doctors sell poison and illegal drugs like 'ice' and those toxic medication. ILP is an approved drug. All financial products before marketed have to be approved by MAS. So if you want to blame the insurance companies for selling ILP, blame MAS for approving.

Just because it is "approved" financial product, doesn't mean that it's good. In fact the latest CPF restrictions on "approved" unit trust only made matters worse since index funds are no longer included! Yes, I blame MAS partly for this ILP fiasco... but seriously given their lack of standard what do you expect? But I also blame agents for selling ILP knowing that it will do more harm than good for the client (especially during their retirement).

In theory I agree that BTIR can result in better returns to the extent of self insured but there are a lot of hidden risks you did not mention. Term insurance has risk too which I replied to HandsTied about APL feature.

I am not sure what this APL feature you are referring to (I did a search on the page but nothing came up). You will have to elaborate on this. To my knowledge there is no hidden risks that is unique to Term but not ILP and WL, with the exception of investment risk but that can be managed.

Investment itself is already an inherent risk. In the first place why BTIR is not marketed because there is no proper contract for it. You can say companies want to make profit which is why instead of leveled term insurance in ILP, it's renewable term charges based on age attained. Which is why ILP is good for younger people but extremely disadvantage for older people

Unfortunately most people who buy ILP hold it till they are old, and that's when mortality charges eat into their cash value.

And ya, I forget to add in this for HandsTied, Go compare the premium for leveled term insurance and yearly renewable term insurance. The advantages for yearly renewable is that you to not pay upfront the insurance risk of your age group. One very transparent product in showing increasing premium is Medical insurance, premium increasing according to age group.

Yes, notice how it exponentially increases for yearly renewable term. Personally, I prefer to have level term because of the predictability in costs and also in planning for future finances. Given the high risks of retrenchment and employment in Singapore, I rather pay more when I am younger and financially more able than when I am old. Renewable term runs the risk of having too expensive premium in the late years (e.g. 55-65).

You can call it a gimmick if you wish but like you said, there are those unethical agents. This portfolio solution will be best if they use it compared to anyhow selecting funds for clients.

Without showing the details of Mercer's portfolio solution, you have no basis for your claims.

Yes I would. In fact, I encourage people to diversify into shares with dividends, ETFs and REITs. But I did warn them to find a broker that's reliable because I won't be managing it for them on the first hand basis, definitely I can't perform transactions or bull/sell.

If so, why do you even sell ILP? Why not just sell Term and ask clients to invest the rest? Btw, it is untrue that agents cannot manage investment. Again, your limitations as a tied agent does not apply to IFA. I know for a fact that IFA can recommend unit trust. Not sure if they can recommend ETFs listed on stock market though....

 

[iAdvisor]

Thank you for your neutral stand, I am checking with MAS to provide an official reply on this issue. The MAIN reason why Prudential engage Mercer is because of the inability to give investment strategy advise. If it's so simple as to getting M8, I'm sure Prudential will make it compulsory for all its agents to take M8. There may be other reasons behind engaging Mercer but that's speculation.
Nevertheless, I will post the reply from MAS within 7 days as stated by their auto-reply.

With M8 you are allow to do collective investment product. But the advisor bare the risk. As I mention, we are not financial analyst/economist or anyone who have enough knowledge to recommend investment product such as which fund to buy. If client were to lose $, and complaint to MAS, without proper explanation/reasons and many more, MAS will definitely do something to the advisor. Can even result in revoking ur license. But we are nobody, how can our explanations/reasons be powerful enough? I guess thats how mercer comes into play for prudential

To answer Rommie2k6, I dun think we can recommend ETF as its not under the collective investment category. Our upper-hand is that we can recommend all sorts of funds from all type of company (insurances or fund houses). But as I mention above, we need to have enough basis to do such recommendation.

But I see no need in this for my client. If they are financially sound, they will be better off doing their own investment. I rather they do their own, instead of paying me a small fee and risk my career. save their $, save my job.
If they are not, they probably have not understand the risk involved in investing. They can verbally say ok for now, but 1 day if they were to lose big time, i still have to bare all responsibility. I will also feel bad as an advisor to them.

Is ILP toxic or not, it will have to depend on the salesperson and the client. If the disadvantages are make known to the clients (like what xiaoevil mention), and client still choose to keep.If client really keep as investment, then the protection value should be minimum. So that such charges will be the lowest and have the maximum gain. But sadly, most of the time, I see a high protection value in the policy. Simply because, some of them still have the mindset of keeping it as life plan. If the ILP is front load, then it will be still good to certain group of consumer.

I think we have lose focus to what this thread is for.
Xiaoevil could have done all as he mention, and client still wants it. Im a sales person as well, I understand that at times, we might have mention the disadvantage, but of cos, it will seems reasonable, to compensate for the 'features' of the product. As such, its up to ones conscious to define. We are nobody to judge. But for me, I see no advantage in ILP, as I can separate them as 2 type of policy, to reduce the overall cost and achieve what ILP intend to achieve. Such can be a better option in longer terms.

Rammie2k6 is just highlighting the benefit of his way of planning his life. BTIR has its advantage, but i do see some pitfall in this as well. But all are perception of individual, on how to plan. One could say to cover more risk by insurance, the other to say self-insured is better option. Theres no right or wrong in these 2 option IMO. 1 is more risk adverse, the other is risk taker.

I will say, a person who advocate BTIR, has its own planning. They only need the advisor to sell them what they want, as they can't purchase on their own. They are also looking after their own saving and investment growth.

But if the person still require an advisor to plan out their life, BTIR will not suits them. Such person clearly has limited knowledge on investment, and even after explanation, not many will really understand the risk. verbal understanding and real lost is 2 different emotional impact. If advisor were to implement a BTIR for clients like them, (advisor are not top investor), if its a wrong or bad choice of investment, a whole bunch of clients is going to be affected. My conscious will not allow me to do that. Thats y i chose to be an IFA, as I will be able to source out the best fit product (at that point of time), to help the client to my best ability, depending on their knowledge and ability.

 

[Rommie2k6]

With M8 you are allow to do collective investment product. But the advisor bare the risk. As I mention, we are not financial analyst/economist or anyone who have enough knowledge to recommend investment product such as which fund to buy. If client were to lose $, and complaint to MAS, without proper explanation/reasons and many more, MAS will definitely do something to the advisor. Can even result in revoking ur license. But we are nobody, how can our explanations/reasons be powerful enough? I guess thats how mercer comes into play for prudential

If what you say is true, then that's totally ridiculous. You as an IFA can get intro trouble by recommending unit trusts, but not a tied agent who sells ILP? And ILP is way more lemon and toxic a product than unit trust...

Plus, I see that you *and* MAS have a fundamental misconception on what investment truly is. Why is there an assumption that financial consultant (even ethical professionals) have special skills in picking funds? There is none... that's a proven fact by decades of economic research. How hard can it be to recommend a portfolio of index funds? I don't see the logic behind holding adviser's responsible for market fluctuations. Totally ridiculous. But if that's MAS rules, then it's quite sad.

Just as a rant, no wonder that organization is always so full of crap. Putting out useless nonsensical regulations all the time...

To answer Rommie2k6, I dun think we can recommend ETF as its not under the collective investment category. Our upper-hand is that we can recommend all sorts of funds from all type of company (insurances or fund houses). But as I mention above, we need to have enough basis to do such recommendation.

Again, if true another ridiculous MAS regulation. Unit trust is considered a collective investment category and ETFs are not? There's no functional difference between the two... one is a closed-end mutual fund, and the other is an open-end mutual fund. It seems that MAS is run by idiots.

... If they are not, they probably have not understand the risk involved in investing. They can verbally say ok for now, but 1 day if they were to lose big time, i still have to bare all responsibility. I will also feel bad as an advisor to them.

I think this stems from the lack of financial education on the consumer part. One thing that financial consultants don't do in this country is to provide proper education to consumers, for e.g. not to panic sell when the market crashes. If you ever read books on financial planning written for a financial adviser or a more "sophisticated" client, you will realize that educating the client on what investment and clearing up all misconceptions is critical to ensure that clients don't do stupid stuff during a market time. Personally, I don't see how they clients can "lose big time", as long as they remain invested throughout. Of course, you can say that you don't want to do business with such emotional clients because they cause more trouble than they are worth in trailer and wrap fees. That of course is your prerogative, and I probably may even agree with you if I am in this line.

Is ILP toxic or not... If client really keep as investment, then the protection value should be minimum... If the ILP is front load, then it will be still good to certain group of consumer.

Fair enough, maybe if you sell ILP as a pure investment product by making the protection portion to zero, making it effectively a Prudential-branded unit trust with no protection component. But then I would ask... why not just recommend unit trust? There's more variety and choices and arguably lower fees. Of course, if the person is a tied agent then it's truly nothing they can do since they can only sell products from their finance industry.

But all are perception of individual, on how to plan...

Indeed my opinion it is the perception that consumers have that stem from misconceptions about BTIR and managing finances in general that is probably the hardest part to overcome. Having people like xiaoevil come around and propagate the myths and half-truths only ensures that things remain at status quo - a state of consumer ignorance which is fresh for the picking by "saavy" agents. However, if you put the baseless and subjective perceptions aside, you will come to the conclusion that BTIR is indeed superior for most consumers. Just do the maths...

But if the person still require an advisor to plan out their life, BTIR will not suits them. Such person clearly has limited knowledge on investment, and even after explanation, not many will really understand the risk. verbal understanding and real lost is 2 different emotional impact. If advisor were to implement a BTIR for clients like them, (advisor are not top investor), if its a wrong or bad choice of investment, a whole bunch of clients is going to be affected. My conscious will not allow me to do that. Thats y i chose to be an IFA, as I will be able to source out the best fit product (at that point of time), to help the client to my best ability, depending on their knowledge and ability.

There is partial truth in this, but I do not think you can generalize people who prefer an IFA to execute BTIR to have limited knowledge about investment. If I am a high net-worth accredited individual, I may hire an IFA to manage my finances and pay a modest trailer fee, in exchange to access for accredited-investor products, advanced tax management planning, and it's always helpful to have a second-opinion from a professional in the finance industry.

And again, you have this misconception that it is your job to pick superior funds. Nobody can do that. If any IFA tries to sell his/her service that he can pick superior funds, that would be a strong hint of ethical misconduct.

 

[Rommie2k6]

As a side rant, an article from today just shows how pathetic the state of financial education is in Singapore:

http://www.channelnewsasia.com/stories/singaporelocalnews/view/1108237/1/.html



SINGAPORE: Singaporeans believe that they will have to work for as long as they can to supplement their retirement income. This is according to a survey by Citibank Singapore.

The bank added that respondents think their CPF savings are insufficient to support them through retirement.

According to the survey, seven in 10 believe their CPF savings will provide only some or little of their retirement income.

In response to that, Singaporeans are turning to alternative means to take them through their silver years.

Citibank said that the alternatives could include proceeds from investment and insurance products.

Out of these products, the survey found that the most popular is whole life insurance.

Some 86 per cent of respondents currently hold or intend to purchase whole life insurance.

It added that the next most popular products are endowment plans.

Overall, 52 per cent of respondents said they would continue to work for as long as possible.

Citibank Singapore's Head of Wealth Management, Shrikant Bhat, commented that as the life expectancy of Singaporeans increases, so will the amount of savings they need for retirement and there is awareness that they may have to postpone their retirement.



A majority of those surveyed into to use WL policy and Endowment as *investment* products for retirement. Cashcow and xiaoevil not to worry, you will get a stream of willing clients to buy your products!

 

[Cashcow]

I never in the first place worry that there is no client. Clients are there and you just have to make the effort to approach them.

 

[iAdvisor]

If what you say is true, then that's totally ridiculous. You as an IFA can get intro trouble by recommending unit trusts, but not a tied agent who sells ILP? And ILP is way more lemon and toxic a product than unit trust...

Yes, they can get into trouble, if without a proper basis on the recommendation. That is y mercer is in place to support them in such action.

Plus, I see that you *and* MAS have a fundamental misconception on what investment truly is. Why is there an assumption that financial consultant (even ethical professionals) have special skills in picking funds? There is none... that's a proven fact by decades of economic research. How hard can it be to recommend a portfolio of index funds? I don't see the logic behind holding adviser's responsible for market fluctuations. Totally ridiculous. But if that's MAS rules, then it's quite sad.

The government authorities are there to ensure that things are going the right way. And of cos, to provide a means for consumer/client/citizen to address their concern. I will hope all my clients are like you, but sometimes, consumer will still blame advisors for lost, even if its due to economic crisis like 2008. Its not excatly a rule from MAS, but MAS will demand explanation on our action. Of cos, they will side consumer more. So please be nice to ur advisor if he/she is serving u well.

Just as a rant, no wonder that organization is always so full of crap. Putting out useless nonsensical regulations all the time...

Again, if true another ridiculous MAS regulation. Unit trust is considered a collective investment category and ETFs are not? There's no functional difference between the two... one is a closed-end mutual fund, and the other is an open-end mutual fund. It seems that MAS is run by idiots.

Sorry Rommie2k6. Its my insufficient knowledge in ETF. I tot its not consider collective investment. I have double check on our investment platform. ETF are allowed. Sorry my bad.

I think this stems from the lack of financial education on the consumer part. One thing that financial consultants don't do in this country is to provide proper education to consumers, for e.g. not to panic sell when the market crashes. If you ever read books on financial planning written for a financial adviser or a more "sophisticated" client, you will realize that educating the client on what investment and clearing up all misconceptions is critical to ensure that clients don't do stupid stuff during a market time. Personally, I don't see how they clients can "lose big time", as long as they remain invested throughout. Of course, you can say that you don't want to do business with such emotional clients because they cause more trouble than they are worth in trailer and wrap fees. That of course is your prerogative, and I probably may even agree with you if I am in this line.

I can see that you should be quite an investor urself. if say, our clients are not sound in investment. After giving them the financial knowledge, strategy, etc they invested and make paper lost. Just paper lost but how many of them will have the right set of mind to see that, 'its ok, its just the up and downs in investment'. Even if its just 10-20% lost due to economic crisis, such lost could be very big to them since they traditional make 0.125% from banks. At that very moment, they will be cursing and swearing at us for the wrong advice. Most people result in blaming others first when encountering problems. Some of them might even complaint to MAS, saying advisors' advice cause them to lose money.

What you say is very true. The lack of financial knowledge in our society. This can be quite a tricky advice at times. I usually dun 'advise' on investment, but give them information onto this. lent them books, or ask them to find out more. My advise on investment is only, if it fits the risk level and objective of my client.

Fair enough, maybe if you sell ILP as a pure investment product by making the protection portion to zero, making it effectively a Prudential-branded unit trust with no protection component. But then I would ask... why not just recommend unit trust? There's more variety and choices and arguably lower fees. Of course, if the person is a tied agent then it's truly nothing they can do since they can only sell products from their finance industry.

Yup, thats completely true. Thats y I always sold seperately. Anw, just a note, many companies start to be more aware that people realize the pitfall in such ILP, and came out with those pure investment plan. those that comes with coverage that depend on the premium paid or cash value. these are what we call front-load. Such plan will have advantage as its regular investment, without involving high transactional cost monthly. and of cost, the protection is really 'free' since its like no protection as well. In fact, some banks that pushes out such regular investment product, are from insurance companies as well.

Indeed my opinion it is the perception that consumers have that stem from misconceptions about BTIR and managing finances in general that is probably the hardest part to overcome. Having people like xiaoevil come around and propagate the myths and half-truths only ensures that things remain at status quo - a state of consumer ignorance which is fresh for the picking by "saavy" agents. However, if you put the baseless and subjective perceptions aside, you will come to the conclusion that BTIR is indeed superior for most consumers. Just do the maths...

Well, till the day if i can convince my wife to do good investment instead of banks deposit. I will have the confident to overcome such perception But for me, I do not strongly agree on BTIR as I do believe contain certain pitfall/risk as well. Im a more balanced investor. I dun believe in fully self-insured in the old age as that will really leaves the future untold. I prefer a small portion of the need to be covered with insurance (WLP), and makes the rest of my cash work harder.

There is partial truth in this, but I do not think you can generalize people who prefer an IFA to execute BTIR to have limited knowledge about investment. If I am a high net-worth accredited individual, I may hire an IFA to manage my finances and pay a modest trailer fee, in exchange to access for accredited-investor products, advanced tax management planning, and it's always helpful to have a second-opinion from a professional in the finance industry.

And again, you have this misconception that it is your job to pick superior funds. Nobody can do that. If any IFA tries to sell his/her service that he can pick superior funds, that would be a strong hint of ethical misconduct.

Thats very true. But at the same time, from experience, such high net-worth individual usually will just buy anything that might make sense to them. They will not be under the BTIR category. To them, we are just serving the last 2 letter 'IR'.

Mistake, i dun mean its our job. But many will tot we are ADVISOR so we should advice. Many client of mine will wan me to advice which funds to buy. Sometimes, we are also in very difficult position in this. haiz....

 

[iAdvisor]

As a side rant, an article from today just shows how pathetic the state of financial education is in Singapore:

http://www.channelnewsasia.com/stories/singaporelocalnews/view/1108237/1/.html



SINGAPORE: Singaporeans believe that they will have to work for as long as they can to supplement their retirement income. This is according to a survey by Citibank Singapore.

The bank added that respondents think their CPF savings are insufficient to support them through retirement.

According to the survey, seven in 10 believe their CPF savings will provide only some or little of their retirement income.

In response to that, Singaporeans are turning to alternative means to take them through their silver years.

Citibank said that the alternatives could include proceeds from investment and insurance products.

Out of these products, the survey found that the most popular is whole life insurance.

Some 86 per cent of respondents currently hold or intend to purchase whole life insurance.

It added that the next most popular products are endowment plans.

Overall, 52 per cent of respondents said they would continue to work for as long as possible.

Citibank Singapore's Head of Wealth Management, Shrikant Bhat, commented that as the life expectancy of Singaporeans increases, so will the amount of savings they need for retirement and there is awareness that they may have to postpone their retirement.



A majority of those surveyed into to use WL policy and Endowment as *investment* products for retirement. Cashcow and xiaoevil not to worry, you will get a stream of willing clients to buy your products!

That is just sad. Many still thought that a WLP is for investment and returns at old age. Wrong instrument on wrong need.

As for endowment, if its annuity, I think its fine. At least, its an option for retirement.