Dear Mr Tan,
The illustration shows the Total Distribution cost, which comprises of several items.
I have been trying to get my sales person (a.k.a. financial planner) to disclose to me the commission rate that is paid to him, but it seems that his managers are unwilling to disclose such information to me.
Based on your past experience in the insurance field, is it common industry practice to only provide Total Distribution Cost in the benefit illustration?
I have also found this phrase from a website which mentioned the following:
" By law, insurance companies must reveal all costs and charges associated with the product you are buying. This includes, specifically, the distribution costs which include any commission the insurance company will pay to your adviser. These details are shown in the benefits illustration of your product."
Would you suggest that I consult MAS on this matter, since the website mentioned the phrase "by law", although so far I have not seen the details of their commission structure?
Again, thank you very much for your kind attention. My wife and I feel very much empowered by the insights you have shared in your blog.
REPLY:
I think that it is a good idea for you to consult MAS on this matter. Another organisation that you can address the matter, when it comes to a dispute, is FIDReC.
In my opinion, it is difficult for the adviser to give you a breakdown of the distribution cost to each dollar and cents.
ReplyDeleteThe figures are likely to be derived from their acturial with complicating formulaes.
You probably will like to look into the effect of deduction column which depicts the opportunity cost of putting into the insurance plan.
I do agree with Mr. Tan. You should bring up to the authority, MAS, to complain about non disclosure. I believe the agent not only didn't disclose the commission, he or she might have also not disclosed other essential material facts that were crucial to your making the decision.
ReplyDeleteUnder the FAA, disclosure is an important part of the advisory process. If it is breached you have reason to lodge a complain because your decision might have been otherwise.