Tan Kin Lian's Blog: Ask the simple questions

Wednesday, September 26, 2007

Ask the simple questions

I give talks on financial matters. I always advice my attendees on the following approach towards financial products:

1. Ask a few simple questions
2. What is the cost?
3. What are the benefits?
4. What are the charges?
5. What is the yield?
6. Why is the yield so high, or so low?

Ask the adviser to explain in simple language, so that you can understand it. If it is too complicated, you should distrust and reject the product.

Lesson: Do not be shy to ask the simple, relevant questions, and to reject any product that is not clear to you.

5 comments:

Anonymous said...: In addition to Mr. Tan's,

1.Ask also how much commission is he or she recieving from this plan.

2.Is there another plan that is cheap but can address my needs better and more efficiently? Why am I not recommended the other plan as first choice and in the first place?

3.How do you know I need this plan when you have not giving me a health check?

Remember your right to ask before making the decision. If the salesman tries to evade them make up your mind to disengage the presentation.; September 20, 2007 12:27 AM
Anonymous said...: If you are buying an investment using CPF make sure there is complete disclosure;
1.What is the rate of return for OA and SA if you leave in CPF? Can you do better than these returns? How much more? What is the risk?
2.Any special concessions offered by CPF? eg . by transferring your OA to SA to earn risk free 4%.
3.What about the annuity offered by CPF? What if I leave with CPF? How much do I get each month? HOw long?
4.When buying an annuity from private insurer, make sure the insurance agent asks and analyses your financial and health circumstances.Which is more advantageous to you? Instead of telling you that private annuity pays for life. How long is 'for life'? Can i live to that age?
5. Disclosure of what the products can and cannot do.
6. Get the agent to ADVISE and GIVE OPINION whether the product is to your advantage in every aspect.Get him or her to document on the fact finding form the reasons, and to state there is no other product by the company he or she represents that is better than the one recommended.
7. Make sure there is no conflict of interest.; September 20, 2007 9:41 AM
Anonymous said...: Many never thought of CPF money as their hard earned money, probably because of its restrictive uses. Insurance salesmen exploit this attitude and play play with their money by squandering them in low return instruments, like those single premium endowment.
It is time members wake up. Whatever they do with it will be what they will get when they turn 55.Either you get a jackpot or a miserable sum depends a lot on what you do today.Remember risk is to your advantage if you know how to exploit time. Engage a qualified financial adviser to help you to grow and make your CPF work harder.
By harder I mean the return must at least double what you earn in CPF.; September 20, 2007 12:03 PM
Anonymous said...: Someone advised that never buy insurance or investment products from relatives or siblings or even spouses because you dare not or have the chance to ask questions
and difficult questions.
With strangers you not only can ask, you can query and interrogate the adviser. There is much truth in it.
Because if your relative is a lousy and incompetent adviser you got to cross your fingers that you be lucky that it is the right product recommended by your relative.
Yes, it depends on a lot of luck that you get the right stuff.; September 22, 2007 1:41 PM
Anonymous said...: Remember to get a financial health check first before signing on the dotted line because the product might not be suitable to you.
Just like going to see a doctor, he cannot prescribe the medicine before examining you.
I have observed that insurance agents are still selling products without a financial need analysis especially at roadshows in the shopping malls and mrt stations. You can see them pushing products to passerbys and occasionally an unwary sucker is baited. I saw Income agents in one of malls pestering and harassing shoppers
to buy the Revosave product.Of course many were disgusted but some
became vixtims. Never was need analysis used and the prospect was made to believe that the product was suitable for them by using some cunning presentation book.These prospects will soon regret, if not now. Down the road they will realise, on closer look, that the product does not meet any of his goals efficiently and at low cost, in terms of return and protection, because they were decieved by the cunning sales pitch.By then they will be in a dilemma,just like you read of some of the postings here, whether to cancel or to keep.Canceling the policy is loss to the policyholder.
Keeping it is big burden. Wonder if it is converted to paid up what will become of this policy.
Therefore before accepting the product one must see that the product really meets your need through an analysis of your circumstances. Not only that, it must not be expensive.It must be efficient in terms of return and protection.
Never buy or see an insurance agent at pasar malam road show.They are not professionals. Professionals don't peddle and "lelong" products at roadsides.They are more like street hookers pestering for a quickie sale.Their behaviour tells you everything.; September 26, 2007 1:25 PM