Someone frequently posted comments in my blog arguing that an independent financial adviser have a better range of products to offer to the client, compared to a tied agent.
In my view, this is not a priority. More importantly, it is the integrity of the adviser that counts.
Does the adviser (i.e. tied or independent) act ethically in looking after the best interest of the client? Or does the adviser push a product that earns the highest commission?
Within any company, there is a range of products. Some offer better value to the client and pays less commission to the adviser. Others pay higher commission. Which product does the adviser recommend?
When I was in charge of NTUC Income, I made sure that all the products offer good value to the customers, and a fair rate of commission to the agent. Most of the agents recommended these good value products, even today.
but one usually cannot spot a bad agent until it is far too late. how could an ordinary person assess the agent's integrity and ethics in the first meeting? if he can do that, then he probably doesn't need any financial advice anyway.
ReplyDeletebeing independent doesn't preclude bad ethics. but at least we know there's minimal conflict of interest.
How to spot an adviser with integrity?
ReplyDelete1. Approach someone that you know personally, or recommended by a friend.
2. Alternatively, ask a few relevant questions. If the adviser can give clear and reliable answers, then you can trust this person. Do not buy due to emotive reasons.
There are good tied agents who are honest, ethical and competent.
ReplyDeleteThey don't let money or commission influence their advice to their clients.
They are agents who use need based approach to help their clients.
They also don't let promotions and pressure from their company distract their focus .
They are agents with qualifications and are always upgrading and finding ways and means to better serve their clients.
The above type are few and getting one to engage is difficult.
Getting an insurance salesman you can do with your eyes closed.
Imagine having an insurance agent like the one under "Look after your medisave account" subject below, you will be ruined.And there many of this type.
I always ask the Insurance Agent a very simple question and it always work.
ReplyDelete(a) Will you recommned this product to your own parents?
(b) Did you bought the product yourself.
(c) Show me the policy if your answer in (a) & (b) is yes.
It is not easy to engage a good adviser who is competent, ethical , honest and trustworthy and who will put your interest first before his or hers.
ReplyDelete1.For competence, one author suggests that you look at the qualifications, whether accredited and globally accepted.
2.Ethical and honest? this you may have to rely on a third party's recommendation. You can also personally judge from the appearance and the way he or she conducts themselves.
3.Whether your interest is at the heart of the engagement will depend on how the adviser approaches your needs. If a product is immediately shoved into your hand and the adviser starts to promote and extol the product's features and benefits without examining your needs first you can forget the whole thing.He or she is a salesman whose interest is to sell you something.
The approach by adviser will tell you a few things too,their competence and what their interest is, theirs or yours.
"When you ask an insurance agent to plan your retirement instead he or she will be planning theirs".
ReplyDeleteby
Annonymous
I shall give an example on an unethical financial adviser from X-Company. I would say she is trying to sell product rather than making prudent financial assessment on her clients.
ReplyDeleteDespite knowing my friend has not bought any life insurance, private shields, savings plan, investment plans, etc, I would say any average or good financial adviser should have recommended buying a life insurance first. Life insurance is a fundamental! However, the FA actually strongly recommended my friend to buy their ILP. One simple guess would be ILP will yield a better commission!
This is poor planning - Putting product before proper financial planning.
Regards
Loh Hon Chun
Have you hear of agent given up on client?
ReplyDeleteCommission aside, the agent is willing to do the case, but given up and place the case straight under direct business and do not even want the commission.
You can say it is rare, but there are clients that agents are more than happy to give up.
Client agent relations are two ways.
I am sure some of you will beg to differ, but it's okie, this is fact of life.
Every action, there is a reaction.
Just like there are black sheep, unethical agents, there are same horrible clients that do not deserve to be served.
Product selling is the worst approach when it comes to financial products.There is no way to tout it like promoting some hardwares or equipment. Financial products are solutions or means and not ends, but then most insurance agents are selling them this way.Like recently i was at the Nee Ann city an agent was trying to sell me a newly launched product,revosave by NTUC . She was so determined to present it to me and was so sure that I would like it. When i asked how did she know that it was good for me? Her reply was that it would definitely meet any of my needs because it had many features. I was wondering what was this wonder product that could cure all needs.I came to know that it was some anticipation endowment rojak with some other products.
ReplyDeleteLucky i was but some unwary customers would have bought that pitch.When I walked away she was working on another passerby.She was working on numbers and I am sure there would come a victim or sucker who might be blind or have hearing problem or who is poor on numbers or who is rich to splurge on it. For this sucker it is ok. He can afford it even the product fails him. But for the many out there every cent counts. Where each cent goes it must be calculated and planned and allocated in the most efficient way. The rule is Never have your fortune read at the roadside or in this case shopping mall. They are half day pasar malam traders.
Today Insurance companies are moving away from the kind of products that are truly for the clients' needs. They are now manufacturing products that cater to the wants and not needs
ReplyDeleteof customers. You can see from their ads they extol life style, cash back,accessibility of cash, flexibility and so forth. What can you associate with those words? Cash outflow,expenses,spendthrift , holidays,etc. They are usually used by credit card companies to encourage spending. Now the insurance companies are in that business too.Don't blame the salesmen for loading down the throat of their clients with these products. End of the day for these agents it is about commission.
Therefore you hardly get good products from one company.
If you are SERIOUS about helping your clients and you want to use the best products to meet your clients' needs, the only way is to be an FA.You will have access to good products of many companies.
Having said that, there are also abuses among the FAs. People who join FA for wrong reasons. Here we
have issues of ethics, integrity, competence and other sinister motives.
The conclusion is being an FA has more advantages and these advantages are not to you but to clients. You are in this business because of clients and not the reverse.
FA may have access to good products from many companies, but each company pays different commission for the plans recommended by the FA.
ReplyDeleteWill FA sell a plan that they are paid higher on commission offered by the respective insurer they represent?
Have access to more products from more company will not make the FA more ethical than other tied agents.
FA will also choose to recommend a product they are paid higher in commission, which is quite natural.
How different are the FA from Bancassurance agent?
It boils down to ethics,integrity and competence and customer centric.You will be alright if you have an adviser having these traits.
ReplyDeleteBut salesmen come in all shapes and sizes and of different gender. They come disguised as sheep.They may be wolves and vixens.It is difficult to see through them.