Tan Kin Lian's Blog: Selling profitable products

Thursday, January 31, 2008

Selling profitable products

Mr. Tan,

Was the NTUC Income Limited Premium Whole Life introduced when you were still CEO of Income? If yes, can you give a comment why you allow such a bad product to be launched when you were in office?

Is it because while in office, you have to ensure good revenue for the company and hence has to sell PROFITABLE product? If so, how can the public be very sure that your new "campaign" against your own company is not due to some hidden agenda? (Not particularly to this product)

When you were in office, why did you allow your company to sell endowments, whole life to the public and have the agent earn a big commission? You should have eliminated all participating products and fire all your agents. Can you explain?

I like to bring to your reminder that your insurance agents were responsible in bringing Income to this level of success. Without them,you cannot never have achieved what you had achieved. Do not forget that your success was due to the hardwork of many AGENTS for without sales, you will have no salary when you were CEO.

For your information, I was not and I am not a NTUC Income agent.

REPLY

I have covered this point on a few occasions in the past.

During my time, the Income agents sell products at a modest level of commission and were able to bring products at lower cost to the customers. This was an efficient means of marketing at that time.

The endowment and whole life policies sold in the past gave much better value to the policyholders compared to similar products in the market.

During my time, I was not concerned about selling PROFITABLE products, because most of the profits go back to the policyholders. I was only concerned about offering products that serve the needs of the policyholders and are fairly priced.

In today's environment, there are more efficient ways for customers to take care of their financial future. I recommend that they buy Term insurance and invest the difference.

Agents can continue to make a living by acting honestly, giving good advice, in the interest of the consumer. Do not exploit the ignorance of the consumer.

16 comments:

Anonymous said...: Mr Tan, I can see that someone from NTUC Income is attacking you personally.

Although this person claims to be not an agent, he could be from the new management.

Please continue to write your blog, and help the public be aware about how to make the proper decision on insurance. They should not fall prey to the clever words of the insurance agent.

I hope that the new management of NTUC will continue your principle of offering products that are fairly priced, and are good for policyholders.

From a loyal NTUC policyholder; January 31, 2008 9:38 AM
Anonymous said...: Mr. Tan, i salute you for your guts
to come out to speak the truth about products that are not good for the consumers, even it means criticising the company you once helmed.
Once a upon a time the brand name was associated with affordability, value for money, with the ordinary folks, with the less fortunate. Today many people still think it is the same NTUC but it is not so.
Therefore there is a need to correct this mistaken impression lest the new management leverages on Mr.Tan's expense and tarnishes it.; January 31, 2008 9:54 AM
Anonymous said...: +1 Logical and well said.; January 31, 2008 10:42 AM
Anonymous said...: Hi Mr Tan, the person who attacked you talk about some "hidden agenda". Do you have any hidden agenda?; January 31, 2008 11:51 AM
Anonymous said...: There is no campaign against ntuc but objective evaluation of thier products. Mr. Tan is not a "spear and shield" salesman like some of Ntuc salesmen. Ntuc agents are also known as 'eat chicken pro chicken and eat duck pro duck" salespeople. You NEVER get good and objective advice from them. They are in for the money and definitely not for you, the customers.
The hidden agenda, if Mr. Tan has, is for the benefits and safety of the buying public.; January 31, 2008 1:45 PM
Anonymous said...: With due respect to Mr Tan, I do not believe entirely in Mr Tan's reasons as listed. Firstly, what is the definition of modest commission? Perhaps we should clarify this point. Maybe a comparison of the whole life plan commissions offered by Mr Tan and other companies can be listed in the blog for transparency. Secondly selling a better product than others doesn't mean it is right to do. If the concept of whole life is lousy as advocated, Mr Tan should not have marketed and sold it. That being said, we should examine these two points and evaluate if it remains the same today. Does Income products carry lower commission and give better returns. If so, what Mr Tan had said is superfluous; i.e. it is a fact that carries no meaning. What also remains as a fact is that Mr Tan was the CEO of Income and had benefited greatly in terms of high salary from the sales of his agents. FYI, I am just a normal consumer who also Buy Term Invest the Rest. I wish to challenge Mr Tan to counter my points openly in his blog.

HK; January 31, 2008 8:04 PM
Anonymous said...: Before Mr. Tan gives his I would like to say a few things about wholelife today and yesterday.
Yesterday's NTUC whole life was good in that they gave better return and good coverage at affordable premium.They happened to be in the time of high interest rate.Commission for agents at that time was also lower than the competitors. Products were value for money.
Today, the interest environment has changed.It is low.Even cutting the agents' commission to make up the low interest rate the return is still low.To worsen it, the insurers employ different tactics to market.Increase the commission and use dubious marketing language to confuse the customers to buy these lousy products As a result customers suffer from low coverage.
Commission can work wonders and is the only means that the agents can be motivated to promote .Agents would promote even shit as long they are given enough commission. The point is these people are in this business to make money and they don't care whether the customers die with cash or not for their loved ones. They care two hoots. These type of product are now flooding the market with NTUC leading the charge.
There are alternatives to whole life but unfortunately the agents are not motivated to recommend term because of low commission. As a result customers suffer from low coverage.Today, singaporean are still grossly under insured despite having dedicated insurance agents or pretend to be dedicated. I have seen the lots of them and they are the top agents.; January 31, 2008 10:28 PM
Anonymous said...: Buying Term and Invest the Rest works well only if the person understands the true nature of investing well and is not foolish enough to buy gimmicky funds with high expense ratios. It also requires setting up a separate sinking fund to build up a medical fund from the time one starts working till his retirement. Otherwise this strategy will not work IMHO. To suggest this strategy to everyone is too simplistic and idealistic. I think a viable way to get more people to practice this strategy well is for Mr Tan to give educational talks and start a Buy Term Invest the Rest movement. With his years of experience, this will garner momentum. Just merely telling everyone to buy Term is irresponsible.

HK; January 31, 2008 11:53 PM
Anonymous said...: Does that mean the whole life policies bought more than ten years ago are good value for money even now? I need to know as I am contemplating giving them up after reading that whole life policies are not value for money. I will definitely not buy whole life now but what about those that I bought more than ten years ago? They were good value then but will they still be good value now since the commissions were low then so does it mean that more of my money will be going into investment or can the new management adjust it to a low value policy now?
Thanks for the answer.; February 01, 2008 3:48 AM
Anonymous said...: I am not suggesting you do all alone. For the savvy you may DIY.
I have emphasised that the adviser is very important. He is your partner in your journey of investing.If you have the right partner from the start everyhting will go well but if you have insurance salesman you are finished. The adviser is supposed to be your expert to guide you. You pay him advisory fee, don't you?
To Mr. 3.48am, it depends on your age and how much cash value your policy has gathered. If you are young you can consider cutting losses which may not be much and you still have many years to go. If you are in your forties or early fifties keep it till sixties or convert to paid up at reduced sum assured.There are also other things to consider. Seek an adviser to look into your current situation before making that decision.; February 01, 2008 9:09 AM
Anonymous said...: Thanks Zhumeng for your advice. The problem is when I talk to NTUC Income adviser they will say keep it. But when I talk to other companies adviser they will advise that I surrender it and buy their policies. How can I contact you for an objective view. I really need to decide soon as I have dragged my feet over this for quite some months already and do not want to lose more.
Thanks; February 02, 2008 3:53 AM
Anonymous said...: I wish to point out this: Since the new management took over, the sales brought in by agents have been breaking records, some months thrice as much.

From the simple accounting, the higher sales will mean more to support the expenses of the office. As a co-operative, Income is bound to re-distribute the profits to policyholders. With higher economies of scales from higher business volume, does is really matter the amount of commission paid to agents?

As the new management has not even completed a year and declare a bonus and surplus, why jump the gun to talk that the returns are not good?

When looking at these things, do not just harp at the commission paid to the agents. They used to be much lower then, but it is still lower by industry standard.

So long as the increased brings in more volume to support the vast staff strength built up by Mr Tan K L, the net effect should be positive.

Let's see if that's true....; February 04, 2008 10:09 AM
Anonymous said...: More revenue does mean more sale but more sale doesn't mean more profit.
Profit is sales less cost and other expenses.Higher expenses mean less net profit. How to declare higher bonus? Talking about accounting.Enron was very good at accounting. It was triple A rated accounting for some years until "percha lobang". So don't talk about accounting.
Simple accounting is; profit=sales- cost of goods-other expenses.
Profit= Sales - agents' commission - senior management salaries-admin. staff-expenditure on upgrading-legal loss-other screwed ups.
This also translates to greedy agents who preyed on unwary customers on revosave and vivolife.; February 04, 2008 10:36 PM
Anonymous said...: When Creative Technology was trying to capture just 10% of the market from Apple it had to spend millions and millions of marketing dollars to achieve that but it took a toll on its margin.It came to its senses that margin was more important than market share and volume.
Likewise it was unprecedented in the industry that so much money poured into promoting the lousy product revosave and now vivolife, the question is does the volume of business justify the expenditure. As you say time will tell. The breakeven point for this kind of product is at least 6 years.If after 2 years customers found out that these are screwed up products decide to lapse them. What happened? Someone is going to wipe his backside and say that is not his baby anymore. I have brought it to #1.That was my goal,. I have achieved it. I have transformed it, physically and financially, albiet a big hole.; February 04, 2008 10:52 PM
Anonymous said...: Yes, it was the same with the giant mergers of then Compaq and Digital. They want to be a 50 billion dollar company. They achieved that! Revenue per year 60 billion US dollars. Profit? They made a loss! Revenue does not mean profit. If they spend 20 dollars to earn 15 dollars, it is still a loss.; February 05, 2008 9:47 PM
Anonymous said...: This is exactly NTUC is trying to do but it can't fool the policyholders.
They can see it and in fact many have stopped supporting NTUC since Mr. Tan left. Many have also realized that the new products, revosave and vivolife are nothing but lousy products with new wrapping. Both products don't benefit the customers as compared to simple products without the dressing up frills.People are realising that the frills are not free and they are paying for those garbage frills for nothing. Customers can see and calculate that the return is so low. How to live life to the fullest when the return is so low? The commission makes the insurance agents live life to the fullest at the expense of the customers.
You notice during Mr. Tan's time all quotations showed the yield or return of the products. It was transparent. He wasn't a afraid. But now revosave and vivolife don't show the yield and leave the customers to wonder and the agents to bullshit. They don't even disclose the return because they are afraid to show how poor the return of these products. Many agents don' know how to use the financial calculator. How can they be called consultant. It is laughing stock. It is a joke.How can you trust them with your finances?
The truth is the returns of revosave and vivolife are miserable.When you question them they distract you with the meaningless like lifestyle,liquidity ,save for rainy and enjoy on sunny day. Isn't
this to confuse you? They tell lies and half truths.
Stop before you get hurt financially and lose your retirement to them.; February 06, 2008 1:31 AM

Thursday, January 31, 2008

Selling profitable products

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