Tan Kin Lian's Blog: Buying a financial product

Friday, September 28, 2007

Buying a financial product

One commentor in my blog frequently recommended to see a financial adviser who can give a financial health assessment. He is strongly against insurance agents who sell products.

Here are my views on this matter:

1. Most people can sort out their financial priorities on thier own, by reading the relevant FAQ.

2. They can buy invest in the cost products, such as term insurance or low cost funds.

3. They can see an agent to help them to source for the best product.

4. They need to see a financial adviser only if they are wealthy or have tax and other legal issues to sort out.

5. They need to learn how to identify bad and costly products, and avoid them. If they use an adviser or agent, make sure you get an honest one, who looks after your interest.

7 comments:

Anonymous said...: Mr. Tan, I want to rebut your views
about buying financial products point by point.
1. Most people do not know about the financial products;They appear to know but often have no idea how and which products can best meet their needs and efficiently too.Some insurance agents don't even know let alone customers.
2.They have no idea which products carry low cost;they do not know what is expense ratio;low distribution cost, front end load and etc etc.
3. The agents are useless and often have conflict of interest. If you get a dishonest agent the client is even worst off.
4.The rich don't need financial adviser but ironically they have the means and believe in engaging one to help them.
The poor need a good adviser MOST
and BADLY but often landed up getting an insurance agent who gives them the worst advice and get loaded with useless products. This is the tragedy of the poor.
5. Most people can't distinguish
and are unable to compare products because they have no knowledge.
6 . You are right, Mr. Tan .The adviser must not only be HONEST but
COMPETENT as well and with the interest of the client at heart. Honesty without the COMPETENCE can also be very disastrous. I have seen many lives destroyed because they trusted their adviser with their life saving and got ruined by wrong and incompetent advice. Some even get cheated
Mr. Tan , I am not rebutting for the sake of rebutting but to bring out the realities that exist in the real world.There are some who know what they are doing, only SOME.I believe this is a fair statement.; September 28, 2007 10:12 PM
Thomas Phua's Blog said...: This gentleman rebutting here is most likely to be from FA firm, using this blog to run down the insurance agents.

Every profession, there are black sheep, by presenting onself to be righteous will not make oneself look good.

The rebuttal is quite obvious.; September 29, 2007 8:13 AM
Anonymous said...: Consumers protection Act(Fair Trading) will receive approval soon and financial products are included.
Authority had in the past resisted the Act to include financial products as there are already in existence avenues for consumers to seek redress. But to include it now will mean easier for consumers to take rogue insurance agents, bank consultants, financial advisers and whatever disguises these people take, to court. For many of these salesmen, days are numbered if they don't buck up .; September 29, 2007 12:32 PM
Anonymous said...: Some years ago I helped review a lady's insurance and investment. ( I am not an agent, a freind of this lady).This lady had $25K CPF Special Account invested in a single premium endowment called CAPITAL PLUS by NTUC INCOME.
Analysing the illustration I found the product returned only 3.5%.
I was shocked and asked her why she invested in that product to lose money. I asked her if she knew CPF was paying 4% for Special Account.
She told me she had no idea about any of those things. The agent didn't tell her about the CPF and the product only returned 3.5%. She was shown how much she would get after 7 years and some insurance coverage only. She didn't know she would lose.
I advised her to sue the insurance agent but she said she didn't want because that would ruin his career and caused difficulty for him as he was her family's freind.
This lady was a middle aged and a low income earner as you can see from low balance in her Special Account.She purchased from him, trusting him in every thing the agent told her.She had no idea about investment and she put her trust in her family's friend.
The point I wish to raise here is
there are alot of unscrupulous agents around.There are honest and trustworthy ones too but if they are incompetent they are no different ,they can cause damage too. Trust and honesty alone is not good enough. Look at this poor low income earner.What she needed was someone to help grow her retirement fund but instead she got someone who cheated her. Even she suffered loss she was reluctant to bring him to justice.
Another point is the poor are often at the losing end and they are easy victims of insurance agents.The insurance agents won't dare to touch the rich because there is no way to get near to them unless you are good.; September 29, 2007 3:08 PM
Anonymous said...: I disagree with the gentleman of 8.13.
I think his views are fair and his condemnation of insurance agents is incidental.There are rogue agents,you must agree. Highlighting their modus operandi helps create an awareness of such tactics used by them.If we consumers notice any of these telltale signs when encountering an insurance agent we should be on our guard.I believe this gentleman is sharing his experience with all of us.; September 29, 2007 9:11 PM
Anonymous said...: Mr. Anonymous of 3.08pm, you should help her to report to CASE or MAS. You cannot allow this unscrupulous agent to go scotch free. This is an obvious case of cheating and mis-selling . The lady's interest was
compromised.
By reporting to authority and get the agent's license revoked will serve a strong warning to all insurance agents.; October 01, 2007 12:49 AM
Anonymous said...: Best Products to invest:(4 risk averse clients)
1. Single Premium---no risk
a) If using CPF----Transfer to Special Account for 5% first $20K
and the rest at 1% plus rate of 10year bond.(subject to cap of MMS)

b)Aviva BIG-E guaranteed 3.5%
Both above products with no lock in.

2.Best Term Insurance products
a) NTUC INCOME
b) AXA

3. Best ILPS
a) INCOME combined funds

4. Best regular investment ILPs/UTs
a)FAs' and Banks' RSP
b) Income's ID2 or ID7
5.Best variable insurance ILP
a) AXA

6.WORST CATEGORY.----All endowment and wholelife products
7.MOST CONDEMNED PRODUCTs; Anticipated, Revosave and Prucash and all cashback products.
8.Worst insurance agents: dishonest and incompetent
9.Most condemned insurance agents:
Sincere but incompetent salesman.
10.Good insurance agents: honest,sincere , competent and have clients' interest at heart.
11. Best insurance agents:
Honest,sincere,competent,
have clients' needs at heart,
use Need Based Approach with
analysis; October 01, 2007 12:41 PM