Tan Kin Lian's Blog: Tips from an ex-financial adviser

Monday, October 20, 2008

Tips from an ex-financial adviser

Dear Mr. Tan,
I used to work as an independent Financial Advisor. I wish to share my views on Insurance and Investment. I have now left the industry.

Protection Coverage
1) I believe that a person should buy some limited life insurance coverage for $100 k.
2) The rest should be based on group term insurance.
3) I was being taught the cover for critical illness, disability and death should be 10 times of your annual income, or at least $ 400k.

Investment
1) I believe that the best kind of investment is still unit trust, which allows good diversification. It is best to buy through an online portal and to avoid any financial advisor, thus saving on the commission.
3) It is better to have a regular saving plan and cost averaging.

M

8 comments:

Crazy Aries said...: you forgot to mention a good health insurance plan to coverage for hospitalisation expenses.

ps. those who do not know much about insurance, critical illness policy that insurance agent selling you is not a Health Insurance Plan.; October 20, 2008 11:20 AM
Anonymous said...: It is best to avoid the insurers as well. You will never find out, only your family will. By the time your family finds out, you will be dead and gone. So much for peace of mind.; October 20, 2008 1:13 PM
Anonymous said...: It is not surprising that you left the industry. You are confused and your general recommendation is not appropriate. This is the sort of things the insurance agents are doing.
I hope after this MINIBOMB we will go after the insurance agents for mis-selling and misrepresenting.This is a larger group than RMs and they commit these crimes even more rampantly especially at roadshows.
MAS should also check on these salespeople. They are also product pushers and they anyhow sell products with high commission ignoring the needs of the consumers. They are as despicable as the RMs.; October 20, 2008 2:09 PM
Anonymous said...: Unit trusts are only Bull Market instruments , not suitable for bear market situations; October 20, 2008 2:22 PM
Anonymous said...: Bravo to the ex-IFA ! Good pointers. In fact, I thot even $50,000 life insurance on a limited-pay platform will suffice. Have really big term cover for the balance shortfall.

Bravo to vfocus on the H&S :) It is so very important to have this one.

I may add that one should also have a decent Personal Accident Plan, an affordable one, like abt $100 per year kind. That should make your protection ring more complete.

On investment, I like RSP... :) Go for it!; October 20, 2008 4:30 PM
Anonymous said...: Good that you have left the industry. With your knowledge about protection coverage, you will do more harm to your innocent clients and the industry.; October 21, 2008 12:05 AM
Anonymous said...: thank goodness, judging from the "advice" posted, i am glad you left the industry early.

if i followed to your "advice" and happened to meet an accident yesterday, i dunno what my family will do.

i tried to support the postings here, but your knowledge makes a mockery of an IFA - your advice does more harm than good.

wish you the best in your other career.; October 21, 2008 12:22 AM
Anonymous said...: Dear ex-financial adviser,

You are behind the times in your view of Insurance & Investment. The advice that you have given is rubbish in today's times.

Insurance
---------
No one is safe from the reality of insurer failure eg. AIG near collapse. What you have put into an insurer may not be recovered if they go bust. It is a reality with the AIG situation.
The AXA case (cancer policy holder not compensated due to technicality) also frightens me. If an insurer does not honour its contract, what good is insurance?
I would rather keep my cash (vs paying premiums) and migrate to a country where healthcare is universal (hint: Australia) or cheap (Malaysia or Thailand). Think about it!

Investment
----------
Diversification dilutes your returns and unit trusts offers a poorer return than direct share investment (management fees and commissions eat into your return). Both are a loser's game ie. playing to avoid losing rather than winning.
I believe property investments are a better method of making money. HDB & Condo investments provide a higher overall return longer term than investing in sharemarket. Only thing is how? Everyone has their secrets about property investing but my general tips are:-
1. Location, location & location.
2. Market timing.
3. Site potential.
4. Tenure.
5. Undervaluation.

If you can understand what I'm saying - good for you! If not, I'm sorry (for you)!

In short, I would rather hit 1 or 2 winning home runs than to score several insignificant points. Don't forget, shares can be short sold (thus depressing their value) but how do you short sell a property? Of course, you can't!; October 23, 2008 1:57 PM