A 21 year old person asked why my blog is against insurance agents making an honest living?
This person is mistaken. My blog wants to encourage insurance agents to make an honest living. I am against dishonest practices that take advantage of the consumers.
Honest living
a. Recommend a product that is useful and gives value to the customer
b. Earn an appropriate remuneration for your time and effort
c. Be efficient, so as to lower your cost to the consumer
d. Disclose your commission
Dishonest living
a. Exaggerate the positive points
b. Hide the negative points
c. Tell lies
d. Offer a bad or expensive product (which you would not buy yourself)
e. Earn high commission at the expense of the customer
As an insurance agent or financial adviser, you have the choice to make an honest living or a dishonest living. I encourage you to be honest. You will earn the lifelong respect and trust of your customers. You can face your conscience and say, "I am an honest person".
Tan Kin Lian
25 comments:
The trouble is many are jobless. Esp the older one, there is very few things that they can do.
They need to do something to occupy themself.
However, the structure products are just to toxic. They should not be sold at all.
Just image you loss all yr principal, and they say it is all yr fault.
From this, I hv changed my view toward agents and the companies selling them.
It is just too unethical for them to do so.
Don't mind helping people to hv some jobs to do. But they shd not harm you to this extend.
How can we trust them any more. Will never forget.
To 7:48AM,
People have very short memory. I recall that many were cheated out of their CPF savings to invest in Technology funds in the early 2000s. Some bankers even told their customer the returns are guaranteed. We know from hingsight what happened - most of these funds plunged by 80%.
But what happened in the 2005 to 2008? Investors have forgotten about the risk of investments and more importantly that they lost huge amount of money.
Humans have very short memory. One reason has to do with greed. After the economy recovers, nobody would have remembered their losses in toxic paper and history just will repeat itself.
Welcome to the real world!
Dear Mr Tan,
I wish to point out that the insurance agent however sincere he may want to follow your noble rules, is not a master of his destiny. 人在江湖身不由己.
The insurance agent sells what is available in his company's products list. To begin with those products list are invented or packaged by his superiors, and as you said, many times, many products give disproportionate profit to the insurance company and its agents.
So, much as the agent wants to sell good products (as i know the only good product is Term insurance) there's nothing to sell, so he just do the normal things insurance agents do, sell what his company ask him to sell, or resign it is that simple.
The whole industry must be cross examined by higher authorities.. The agent is just a cog in the wheel in the scheme of things. We have to go after someone at the top, rather than bottom up.
人在江湖身不由己
REX
Agents have the choice to be honest or dishonest but many choose to be dishonest.
Dishonesty means knowingly do what is wrong. Just like many tied agents they know the products are NOT good for their clients but because of commission they cook up lies and 'strategies' to sell them.They are even trained to say and what not to say and substitute truths with lies.
Example: knowingly selll wholelife or endwoment to their clients by distracting or downplay the needs of high coverage to their clients. Or by avoiding fact finding to prevent them from seeing their real needs.
Another group of 'dishonest' agents are those agents who know they are NOT qualified but pretend or hoodwink their customers that they are.This group usually use emotional or relationship, trust and pretend to be sincere and caring to cover up their lack of skills.The result is more disastrous that the real dishonest agents.
These agents must be exposed so that consumers will not be conned by their clever ruse.These agents are usually gentle, friendly, smiling but beneath the facade hides a thief , monster with sinister motive to make you buy an expensive product with high commision, against your interest..
I believe over the years this blog has exposed the evil agents and their modus operandi. Many are now aware of their rights to responsible financial planning. They now know product pushing is bad and detrimental to their interest because product pushing avoids putting clients' interest first.They now know term insurance best addresses their protection needs more effectively, effieciently and low cost.They now know wholelife and endwoment are scam products only good for the agents and that is why they are the favourites with agents.
So continue to visit this blog to be aware and be kept abreast of the latest gossips and scams of the agents and financial fruads.
The Watchman
Make those agents who qualfied for mdrt or cot awards search their conscience whether they 'earned' these awards through honest and ethical means and have put their clients' interest first.
I bet you it is safe to say none of them.
The problem with these awards is that they are based on commission and NOT how many lives or people whom you have helped in planning their financial life.These awards encourage malpractices and dishonesty.
You don't need PhD intelligence to know how to qualify for these awards.By selling term products? Can peanut term products although good for their clients, earn high commission? Of course, not. Only you need 2 kinds of products, the wholelife and endowment or regular ILPs. These products can earn them at least 50% of the premium you pay in the first year.These agents are NOT planning your goals but theirs' when they sell you these products.
Don't be naive and get conned by these dishonest agents. Please think twice when you see these insurance agents with these mdrt or cot or tot marks or logos on tehir name card . These marks are marks of conmen and women. Believe me you, whatever they do it is very predictable that the product they 'recommend' WILL be wholelife , endowment or regular ILPs.Be wary. Some are more cunning and they will confuse you and tehn they go for the kill. Deal with them at arms length. Make every agent a suspect and watch them , their spiel, their appraoch and their body language. Play safe. This is not to say that there are no honest and competent advisers. They are gems hard to find in a sea of dishonest ones.
REX,
Are you an insurance agent who is stuck with your company? You are out of touch with Singapore's progress. The FAA permits you to join an Independent Financial Adviser company which you can represents your client's interest. As an insurance agent, you are the Agent of your Principal (which is your company). Read Law of Agency as tested under your CMFAS M9.
This being said, many IFA firms are setup by managers of previous insurance agencies and they operate no better than insurance agents.
Not all IFA firms are created equal. Some are more equal than others.
So Rex, you must be another agent who is familair with CMFAS 9 about the law of principal and agents. From your interpretation , tied agents MUST SELL all the products that are manufactured by the insurance companies, right?
So this is representing the principal's interest and not the clients' interest and the agents can committ misconduct with the blessing from their principal. Good, the law says both are liable jointly or severally. In the minibond case what the RMs did the banks are liable too because the RMs are agents of the banks.
AS you have said not all things are created equal and so are the products. Agents must be able to distinguish the good products from the bad ones. This is called due diligence and duty of care .Agents owe that to their clients and NOT DUMP ON THEM, log stocks and barrels. The ethical , competent and honest ones will evaluate first before recommendation, not sell.This issue will be addressed by the new FAA guidelines.Secondly agents must MAKE SURE that the products suit their clients and meet their clients' goals, right? This is called reasonable basis.This is already addressed in section 27 of the FAA.
Mr. REX, the agents deliberately and willfully ignored and breached these laws by peddling and product pushing.I am sure your agent did that to you or you did that to your customers.
The FA firms' agents are no differnce from the tied agents. These agents are a bunch of scammers who joined FAs for wrong reasons, more products to dump on their clients and NOT MORE SOLUTIONS.
The Watchman
Hi Mr. Tan, I am guessing that I am the mentioned 21-year-old.
I do agree with your points about being honest versus being unethical, but what I am concerned about is the following paragraph that you wrote:
"I advise people not to buy all of these types of insurance policies, including critical illness policy, which pays high commission. It is all right to buy term insurance policy (where the premium is low) or a single premium policy, where the commisison is less than 3%."
It does seem to me that you are advising people to buy products that give as little commission to the agent as possible, whereas I personally believe that consumers should purchase what is most suitable for themselves. As long as the consumer gets something beneficial and suitable, I believe that the commission earned by the agent is justified.
Also, I wish to respectfully enquire if you have acted out on your concerns of high commissions during your 30-year tenure as chief executive of NTUC Income. Pardon me if I appear ignorant of any past efforts on your pat, but such commission schemes have been around for many years, and I'm curious to know why you are talking about it now after you have retired.
I'm not an insurance agent. I am just using common sense. There is no doubt that many agents are unscrupulous. But why do we all forget that from the onset, the products are desgined by the marketing side, not the agents. All the materials including training for these so called unscrupulou agents, come from their masters. Why let these criminals go scot free?
For example you catch someone selling cocaine and you hang him. Do you solve the problem? You will get another seller after a while. Should you not go after the mastermind? There has to be a top down review of this profiteering system in the insurance industry. We are all wasting our time blaming the agents. Government should step in. Consumer's asscociation should step in. But we have a government who don't care so wht can we do.
I would just avoid these agents and be careful but I would suggest that we must have a balanced understanding that this bad products should be stopped at the up stream side.
The invisible forces behind are more evil than the physical person you see in front of you peddling the product, yes?
REX
REX,
In this industry, the insurance agent now can become an IFA to DO THE RIGHT THING for his clients. If all insurance agents think like this and LEAVE their agencies, those "Masterminds" will die of natural death.
BUT a huge number of insurance agents continue to serve their Masters happily and willingly. Why? It is an open secret that the commission rate as a tied agent is higher than as an IFA.
So whose fault? Obviously the insurance agent is greedy.
Cannot trust IFA.
They act as an "Introducer" to sec firms.
Why do such unethical things to the clients?
Never trust Sec firms.
Be very careful about the Sec firms.
Never trust IFAs.
Once bitten twice shy.
(Once bitten by a snake, you will be very fearful even when u see a string for the next ten years".)
Would not forget at least for the next ten years.
Hi Seth,
You can make a living selling Term insurance. You have to be productive to sell a few Term insurance or single premium policies a day, earning an average of $100 per policy.
Many people make a living selling motor insurance, and earn an average of $100 per policy.
You do not need to earn $1,000 or $2,000 a policy and earn enough just by selling 2 policies a month. You are over-charging the customers and hiding it in the complex product.
I suppose that it is true that you can earn a living selling just only Term insurance and single premiums nothing of the complex products that give poor return and reward the insurance companies unfairly. The biggest problem however, is that those complex, bad products, designed by the greedy marketing departments, are sanctioned by government so there will always be people willing to give it a go and sell.
Its like cigarettes, government allows it.
Just sell lah, you can't die immediately from cigarettes, sell lah. Same with bad insurance products, you can't die immediately, you die a slow death... 5 years 10 years..20 years... THE GOVERNMENT SHOULD PUT A STOP TO SUCH NONSENSE.
In my opinion this is the only effective way, top down, don't waste time cursing and swearing at the agents. The designers of the schemes should be stopped. Cigarettes - bad insurance porducts - chewing gum - all these SHOULD BE BANNED OR ELSE STRICTLY CONTROLLED TO PROTECT CONSUMERS AND SOCIETY!
REX
MAS is in deep snore.
LIA (Life Insurance Association of singapore)has released its report for the 2nd quarter sales result. Overalll increase but the dismal revelation of the conduct of the insurance agents.
LIA revealed that the sum assured sold was only $48,000 and the death claim was only $39,000.
No wonder Singaporeans are under insured. What do you think is the reason? Of course, if insurance agents pushed only high commission products like wholelife and endowment, how to be adeqautely covered.Who can afford $500,000 of whole life coverage?
Second sickening fact is only $39,000 for death claim .I wonder what the poor family of the deceased will be thinking. Do they think the deceased didn't love them enough to leave enough money for them .Or did the gtreedy agent short change the deceased? Whatever, $39K is certainly not enough to bury him and to clear his debts let alone to provide the dependents.
What can be the reasons for the under insurance?
Product pushing and whole life and endwoment are the reasons.Another reason is the greedy agents avoided fact finding and need analysis so that they could peddle the high commission products. There is no need to justify the recommendation on the reasonable basis. The insured, the deceased bought the product with his eyes open big big so that agents could earn the high commission.
Is LIA concerned? It looks like MAS and LIA look after each other's interest. Pretend not to know and become ostrich , dunno anything , can't see anything.
Who is the sucker at the end of the day?
The consumers, the policyholders.!!!
The Watchman
Mr. Tan, I don't believe in selling unsuitable products to clients, and a buy term invest the difference strategy isn't for everyone.
Also, I think you have overlooked my question regarding your 30-year tenure as chief executive in NTUC Income. Since you are so against whole life policies, I am curious to know what have you done during your term in NTUC. As far as I know NTUC has always been selling whole life policies.
This career is a very tiring career. If you choose to be honest, you must have a strong passion for it. It can be depressing to see people around you making several thousands for 1 policy when you need 10 to earn the same income. (This is the result for selling term compared to Whole Life or ILPs)
I believe that I'm very hardworking and an above average adviser in term of knowledge but I'm able to earn a very modest income. Some people argued that I'm receiving commissions and hence not ethical. I only know of Providend being a true commission-free IFA. Why call us unethical?
I have to say that its not easy to earn that $100/day. For those who are not in the industry, 1 shield plan requires us to complete nearly
a) 8 pages of proposal form,
b) 23 pages of Know your client + advise and reason form.
c) 1 page of meeting log
d) Photocopy all forms, submit original, open a file specially for this client, keep 7 years for audit purpose.
e) Lastly, I have to key his info into the database
This are the work I do before I even submit to the insurer for underwriting which again can be frustrating and tedious. We must also not forget about the after sales services that comes later. Its hard work especially when you have hundreds of clients on hand. The best thing is "The client thought we earns a lot of money from them" for this 1 shield plan.
End of the day, are all these numberous administrative work stopping all sort of high cost plans to be marketed? I doubt so and the honest one will continue to suffer. Who should put a stop to all these? Insurance agent or MAS?
I think most of the people nowadays are simply not used to hard work and working for money. Adrian, let me give you a comparison; my father, stopped schooling after primary six to be an apprentice in a woodworking machinery workshop.
At the tender age of 13, he wakes up at 6am every morning, work throughout the day till 9pm, all for the opportunity to learn a skill and a pittance of ~80 NT (30 years ago) a month. His work includes getting his hands black and greasy every day, hurling 200kg machine parts onto trucks, creating screw threads manually onto the hundreds of screw holes into the machines every day. How tedious and tiring his work really is, you have to experience it yourself. But he bit the bullet, worked hard and learnt.
Up till now, at the age of 56, he still works in his factory from 9 to 11pm every day, even though he no longer needs to. Which work, is harder?
Just to add,
For the years that followed, he worked hard every day, became a master in his field, set up a company, and is now a pretty wealthy person I would say.
I have asked him several times which line or business I should enter when I grow up. His reply is always: "It doesn’t matter. As long as you work hard and are outstanding in your field, any line can make money".
Thanks Mr. Tan, for constantly drilling into us the old values of working hard and make a living honesty.
To all whole life sellers, you SURE your work per policy is worth thousands? And you SURE you don't feel a 'somethings wrong' feeling when you close the deal?
To Watchman,
The low sum assured and low death claim tell you waht the insurance agents have been doing. They have short changed their customers for their own gain. Obviously the products these despeicable , no conscience agents sold to their customers were whole life and endowment which benefit the agents only. Their customers were left under insured while the agents enjoyed their ill gotten commision.
MAS must put a stop to this and recognise what commission has caused. The deputy MD of market conduct had sounded the warning before to LIA but it fell on deaf ears or it was ignored.MAS must take the action, not talk but action.
To Adrain,
I sympathise with you. They say good people always suffer only evil people gain.
Press on. There is light at the end of the tunnel.
I wonder why MAS is still sleeping. Have they not seen enough proof what the insurance agents are doing the despicable things? They push products to make quick commission from products they cannot justify.MAS must get rid of these unethical practices of the agents.MAS must enforce the laws stringently.
Seth,
yes, not every product is suitable for everyone but the problem is the insurance agents are selling whole life product as a cure all product for everyone; the one size fits all .They push these products because they can earn high commission and disregard the clients' needs resulting in under insurance. Have you read the LIA report? $49K summ assured was sold in the second quarter; death claim was only $39K. Do you think these amounts are enough to take care of your loved ones if you die? Your family have to eat grass or sent to the monks or become beggars or the widow has to prostitute herself to fend for the children. This happens because of the selfish and no conscience insurance agents who only think of robbing their cleints of the commission.They are worse than drug pushers.
Why so low? The agents didn't care, didn't put the clients' interest first. The agents only care about the commission and they ONLY push products with high commission. They avoided mentioning term even though these product s can help the clients address their protection needs.
Worse, todays' wholelife products are very bad in term of protection and return unlike the old WLs. They are expensive and the return is so miserable they are neither good as risk managemnt product nor a good saving plan. That is why "buy term and invest the rest"(BTITR) is a better strategy for the consumers. It is also better to seperate the protection and saving.During the recent economic crisis many were forced to surrender their whole life policies resulting in loss of protection but with BTITR it will not happen. There are also many weaknesses of WL and one of which is low protection. LIA statistics is a testimony.
Be an ethical adviser to advise and not an insurance agent who pushes and peddles useless wholelife , endowment and regular ILP products and also scam products like cashback anticipated endwoment.
I strongly believed that the Insurance industy needs a revolution.
First, at those so call motivational seminars conducted by Insurance companies, agents are exposed to the wrong kind of message.
'Agent XXX became a millionaire at the age of 26.'
'Agent YYY was retrenched and made millions in 3 years'
And the fact is that some of the top agents does make it. They are like a religion and preach to other agents to do the same. The very reason of joining the industry is rooted in a wrong motivation.
I still believe that there are good people around in this industry who makes honest living but with so many black sheeps, the whites are fast becoming extinct.
Someone comment on the amount of work needed to fill up the paperwork. That's is exact reason why I:
1. Make a trip down to NTUC Income office for advise
2. Research around the net on my own
3. Perform personal financial analysis
4. Fill up my own Aviva Term Plan form
5. Mail the form and giro form out on my own.
At the recruitemnt seminar this is what they tell the wannabees. You can make millions in life insurance. I wonder where the million is coming from. From the ceo? They tell you it is THE reason why you should join. There is no trade where you can make the million , only in life insurance.
Is the speaker wrong? No, he is telling the truth.He is speaking from experience, observation, hearsay.
That is what life insurance has been all these times. That is why you have the benchmarks like mdrt , cot tot, to measure how much you have made or robbed or stolen or cheated. These marks of ill gotten gains have been the indsutry standards for years and every seminar will urge you to achieve them. The training department in the inusrance companies will also teach you how to achieve them.
MAS is wasting its effort. No company is going the way MAS wants them to go, ie. to deliver a fair dealing outcome to consumers. The insurance agents are robbing them. Tell me how to give a fair dealing. Is fair dealing been taught or the culture imbued? No, it is all the time HOW to rob the consumers and achieve mdrt, cot or tot or become millionaire. The agents or salesmen are taught all the 5 Cs to make the consumers buy. The agents are given fanciful tiltles to fool the consumers.They are salesmen and women disguised. They are thieves in fanciful suits.
The industry is turning to dishonest means. It already started with that end in mind, right at the recruitment seminar.
Beware of these charlatans.
If the insurance agents don't rob consumers how can they qualify for mdrt or tot. Isn't selling them wholelife and endwoment that they don't need or usless robbing the consumers, especailly knowingly sell to them?.
Actually mdrt and cot and tot agents are awarded for robbing their clients. These are the despicable agents consumers must be wary of for they don't add value to your life but deplete your life. Many have found out too late.
MAS, do what is right and clean up the industry of product pushers and peddlers. They are the cause of the fiasco. They short change the customers of their rights to responsible financial planning.
Enought is enough. Time to clean them up and free the industry of them so that it is safe for consumers.
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