Tan Kin Lian's Blog: Watch out for signs of a bad financial adviser

Thursday, November 26, 2009

Watch out for signs of a bad financial adviser

Dear Mr. Tan,

I am a fan of your blog. It is very informative and has tons of information.

Sometime this year,I started to watch a show on CNBC called "The Suze Orman Show".
Although it is targeted at American, I think some sections work for foreigners as well. Recently,she made a list of warning signs of a bad financial advisor and below is the website: http://www.cnbc.com/id/33914402?slide=1

14 comments:

Anonymous said...: Insurance agents are salesmen and women. They are only interested in selling you something. That something could be anything that will give them high commission.
Their goals are to earn as much money or commission to qaulify for mdrt , to qualify for incentive trips. The fastest way to earn as much is to sell only products with high commission.
Products with high commission are wholelife, limited pay whole life, endowment, cashback anticipated endowment and regular ILPs.
These product are useless product in terms of protection saving becuase a big chunk of your premium has gone to pay the agents and the companies' expenses leaving very little for saving.Is it a wonder why your cash value takes 20-25 years to break even? Is it good saving plan which takes so long to breakeven? Is it a good plan your saving loses its purchasing power to inflation after 30 years?
Think about it.
The salesmen insurance agents are NEVER interested in your needs , only theirs. They are NOT interested to be qualified even becuase they are only interested to sell something to make a commission.

The Watchman; November 26, 2009 12:36 PM
Anonymous said...: watchman, your view is too extreme. i have met some decent one though not many.

watchyou; November 26, 2009 1:47 PM
Anonymous said...: I think people are angry with agents in general because of the big fees they are earning and the big ticket items they are selling. However, don't we in one way or another bought things after persuasion by the sales staff from the stores and find them useless after we bring them home? We are not too bothered because these are lesser in price and we do not bother with their profit margins (which in some case can be 100% of the cost price of items). That's we need to learn to be accountable for your own decisions and the ONLY way is to learn to weigh the consequences of your purchases and not blame the sales staff.; November 26, 2009 2:54 PM
Anonymous said...: insurance agents, housing agents are salesman...similar to doctors, beauticians, contractors who are selling you treatments or solutions which may not work! Think back to basics and do not push responsibilty; November 26, 2009 2:56 PM
Anonymous said...: Something which I never understood about insurance.

In various investment funds portals show that it is possible to run a web portal selling unit trusts and other instruments at a significantly discounted rate.

Why is it that there doesn't seem to be one for insurance?

The sites like NTUC income advertise that they have an online service. If you use it however, you find that it works more like a referral service.

And you don't enjoy any substantial discount as compared to if you have been sold a policy by an agent.; November 26, 2009 4:22 PM
Anonymous said...: Actually in US, there are also certain critics of Suze Orman and Dave. The first is that level term insurance does not take into consideration of inflation.

Some term policies allow you to continue renew it even if your health slips. However the premiums for these kind of policies get so high that most people in that situation are forced to drop the policy just when they need the protection the most.

Everyone keeps telling that investing is a long term strategy and if you stick with it, you do ok in the long run. But when the market is right back to where it was 10 years ago, that "long term" business doesn't wash.

If you are interested, you can read this book called "Bank on yourself" by Pamela G.Yellen, published in 2009.; November 26, 2009 4:57 PM
Anonymous said...: When it comes to integrity & ethics among agents, reps of FIs, and "financial planners" in S'pore, the 80:20 rule breaks down. It is more like 99:1 -- 99% of them will push higher commission stuff that they can sell irregardless whether it is in customer's best interest or even to honestly highlight other more appropriate methods / products which the agent is not able to sell.

E.g.1 Push high-cost regular-premium ILPs instead of unit trusts / ETFs or even single-premium ILPs when customer wants to maximise investment returns.

E.g.2 Focus "financial planning" on whatever customer budget and push expensive wholelife CI cover without considering (a) job security, (b) emergency savings of at least 6-12mths, (c) whether have comprehensive H&S insurance including family members first. Hence customer ends up with (i) sum assured insufficient to provide for dependents if bad thing really happens, (ii) low yield upon surrender even after 30-40yrs, (iii) 99% chance will surrender anyway by retirement age thus overpaying the insurance company for "wholelife" cover.

Below is actual email from Company M agent. Note the enticement of 13%pa and 30%pa returns, way beyond the official upper-end of LIA's 9%pa (which is already too optimistic). And also offer to help "pay for taxes, not from your pocket". I leave it to readers to form their own views.

Dear Mr Tan, pls feel free to edit / censor to hide company & individual names.
-------------------------------
"Jeffrey Ng" jeffrey.ng@manulife.com.sg
18-11-09 10:51 PM

To
cc
Subject
Save on your taxes if you earn $60,000 or more

Dear XXXXXXXX,

On 15 Nov 09, The Straits Times provide tips on using the Supplementary Retirement Account to reduce personal taxes and thus increase savings.

“Anyone earning $60,000 a year will reap significant tax savings if they put some money into an SRS account.” If you earn $60,000 annually and contribute $9,000 into your SRS account, you will save $612 on the next tax notice.

Or if your annual income is $100,000 and contributes $10,000, you will reduce your next tax bill by $1,400.

Additionally, by investing these monies yearly for the next 10 years, your $90,000 would have grown to:

$136,736 with returns of 9% or
$165,777 with returns of 13% or
$383,575 with returns of 30%.

Call me now not just to take advantage of the SRS, but to pay for taxes (not from your pocket)! Thank you.

Best regards,
Jeffrey Ng
Email : jng210@gmail.com
Hp : +65 9766 5151; November 26, 2009 6:03 PM
Anonymous said...: Kin Lian,

Wishing you and your family Merry Christmas and a Happy New Year.

May the God of the Christians Jesus Christ bless you in all your endeavours. Amen. Alaluya!; November 26, 2009 6:05 PM
Anonymous said...: You mean insurance products invest in something else?
You mean WL will not increase in mortality cost?
You mean WL takes inflation into consideration? How?
Come on, look closely. It is here insurance agents and their company short change you and they don't want to tell you or cheated you.
Actually you pay more for less protection.
IS THE CASH VALUE YOURS?
Please answer the above questions. They are just a few.
I am no fan of Suze Orman.

There are a few decent agents and 99.5% of them are either outright cheats, dishonest , grossly or indecently incompetent or both.

The Watchman; November 26, 2009 8:54 PM
Anonymous said...: November 26, 2009 6:03 PM,
I agree with you that insurance agents cheat the consumers of protection and saving by dumping on them products with high commission.
The recent few LIA reports even confirm them.Only $37K sum assured was sold by insurance agents. What is this? Some companies dare call this short fall opportunities. It is really shameless. This short fall was created by the agents themselves so that they will have future business.
What is review to insurance agents?
Review means to them selling more wholelife insurance.
Said many times insurance agents have no desire to put the interest of consumers first. They deliberatley sell wholelife to create shortfall becuase the agents know that consumers cannot afford to fully meet their needs.Knowing that their customers are insufficiently covered they got the cheek to tell their customers that they will review the customers' insurance the next time WHEN THEY HAVE MONEY(to buy wholelife).
I wonder how many consumers know about this.If you are wondering whether you have been short changed or mis-sold the best place to have your insurance policies checked is FISCA. Go and find out if your agents cheat on you.; November 26, 2009 11:27 PM
Anonymous said...: November 26, 2009 6:03 PM,
send the email to MAS and let MAS know there are a lot of charlatan insurance agents in the industry. Blow the whistle on this jeffrey. He shouldn't be around to 'plunder' consumers using this tactic to prey on the greed of customers.; November 27, 2009 11:15 AM
zhummmeng said...: You have to be careful of insurance agents with mdrt, cot or tot qualifications.If you know how they got them you won't want to have anything to do with them. I can guarantee that they will push expensive products with high commission to you.They don't care whether these product can meet your goals or not.They only want to earn enough commission and fast to qualify for these dubious awards.
Please , open your eyes and ask a lot of questions. First ask them, ' are u a mdrt agent? If the answer is yes, be extra careful. If you don't want to take risk nicely tell them you have to talk to your mother or something to get away.I am not disparaging them. it is very true.If you have an agent friend ask him or her about some of these malpractices that are going on in the company and industry.These agents would even stoop to begging you to help them to achieve these awards unashamedly. It is so effective preying on your sympathy that some agents use this 'begging and pleading' as selling strategy.
Always use a qualified and honest adviser.These advisers will tell you what they will do for you upfront so that as you go along with them you will understand their work. Normally they tell you the first meeting is to gather data and information and identify objectives and goals. NO PRODUCT even mentioned becuase they do not know your needs yet until after the analysis and recommendation that the product or products and options will be mentioned.
It serves you well to think carefully. Your financial future depends on the adviser you use. If you get a salesman you are doomed from the start.; November 28, 2009 1:38 PM
Anonymous said...: in my company the mdrt agents are the worse in term of ethics. They will do anyhting, anyhting for money.; November 28, 2009 8:05 PM
Anonymous said...: don't worry, retribution will come to these agents. Ill gotten money is poisonous and they will be poisoned.; November 28, 2009 11:49 PM