Saturday, April 04, 2009

Wealth managers

Do they do a good job? Read this article.

Health care reform in the USA

Will insurers once again scupple the health-care reform? Article in Economist. 

SCMP: Details urged on Minibond saga

Lawmakers are still seeking Monetary Authority chief executive Joseph Yam Chi-kwong's disclosure of its full report on the Lehman Brothers minibonds saga, after he cited reasons of public interest in not revealing it. Raymond Ho Chung-tai, chairman of the Legislative Council subcommittee investigating the matter, said if Mr Yam insisted on his position at an April 14 hearing, he and deputy chairman Philip Wong Yu-hong would arrange a closed-door meeting to ask for an explanation.

It seems that the authority can hide the truth, by citing public interest. This seems to be the practice in Singapore as well. I hope that we can have a more honest, open society, with greater transparency.

Survey: MAS guide on treating customers fairly

MAS has issued a new guide to banks on treating customers fairly. The yardsticks are:

1. Customers have confidence that they deal with financial institutions where fair dealing is central to the corporate culture

2. Financial institutions offer products and services suitable for their target customer segments.

3. Financial institutions have competent representatives providing customers with quality advice and appropriate recommendation.

4. Customers receive clear, relevant and timely information to make informed decisions.

5. Financial institutions handle customer complaints in an independent, effective and prompt manner.

What are your views on the existing situation and the new MAS guide? Survey.

Public Service

I respect the political leaders in the democratic countries, especially those of Europe and North America. 
They entered politics as a public service. They desire to make life better for the people. They have strong  values and beliefs (whether leaning to the left, right or center) and wish to influence the future of their nation. 

They are happy to receive a remuneration of 3 to 10 times of the average wage of their ordinary people. They do not expect a remuneration that is 100 times or more (i.e. the salary paid in the private center for top exectives). 

By accepting the modest remuneration of the public service, they are able to exercise some moral control over the excessive and unjustified salaries paid in the private center.

Tan Kin Lian

Friday, April 03, 2009

HK: Relief appears to be near for Lehman minibond holders.

There are sufficient grounds for disciplinary action against some bank staff accused of misselling the minibonds, according to the Hong Kong Monetary Authority.

And market sources say the Securities and Futures Commission is pushing big banks to follow in the footsteps of Sun Hung Kai Investment and settle with disgruntled customers.

HKMA executive director Raymond Li said yesterday that "a few cases are already at a very advanced stage of investigation,'' he said adding, "Should any case be concluded we would definitely tell the public."

According to procedures, anyone accused of misselling will have at least 30 days to make a representation and another 21 days to appeal if their explanations are rejected before their case goes public. As of yesterday, the HKMA had got 20,642 complaints, and 20,443 had cleared initial assessment.

So far, files have been opened for just 5,772 cases, of which 4,178 have gone through a preliminary investigation. Only 418 complaints relating to 16 banks were referred to the SFC.

Li blamed the slow progress on the reluctance of complainants to provide useful information in most of the cases.

But he reiterated that the authority will complete investigating at least 70 percent of complaints by March 2010.

"We are recruiting more staff both part-time and those on secondment to accelerate the process," he said. About 200 staff will be involved.

Li said a client's interest was the HKMA's priority, and if a settlement without punishment was the best solution it would get the authority's support.

The Whole Truth

Dear Mr. Tan,
Some people play with words to an extent that it is difficult to know the difference between the truth and lies.

If a business reduce the benefit significantly last year, can they now say that the action has benefited the customers, because they do not need to reduce the benefit further this year?

Similarly, can the government, after increasing tax and levy,  now give a smal rebate and say that they are benefitting the taxpayer with the rebate?

I agree with your view. It is now quite difficult to tell the difference between honesty and dishonesty. Mr. S Rajaratnam once said that there are difference between "the truth, the whole truth and nothing but the truth". We have to learn what is the "whole truth".

Submitting Income Taxi by e-Filing

I submitted my income tax returns for 2008 by e-filing.

IRAS has designed a sophisticated and expensive computer system for e-filing. It must have cost a lot of money. It was supposed to make e-filing easy for the tax-payer.

Unfortunately, it was very difficult - even for an internet savvy person like me. Why? It is a matter of mindset. The experts in IRAS designed a system that is convenient for them. They forget to make it convenient for the ordinary people.

What is a system that is convenient for ordinary people? Just provide a simple form to ask me to submit the details of my income and claim. Use a format that is convenient for the tax payer to fill in - not a format that is convenient for IRAS to do their workflow.

But, I have to commend IRAS for one excellent aspect of the system. They display the information that they have, taken from various sources, that are relevant for my tax computation. This includes my chartiable donations and topping up of CPF account for family members. I appreciate it very much. 

I hope that IRAS will take my suggestion about making it easy for me to submit their annual return, especially for items that are not captured by IRAS.

Tan Kin Lian

Additional comments
It is easy to use e-filing, if you do not need to provide additional sources of income or other charges. However, it is quite troublesome to provide the additional information, for example on property, life insurance policies and deductions, as they are designed to be helpful to IRAS and not customer friendly. It is also difficult to search for the right places to provide the information, as they are placed all over several web pages and tabs.

Buy Term Insurance

Dear Mr. Tan,
May I know which company you'd recommend for buying "Term", "Decreasing Term" and "Living Benefit" policies you described in your FAQ:

You can buy Term insurance from NTUC Income (they call it i-Term). But do not allow them to convince you to buy other life insurance policies.

You can also buy i-Term from Philips Securities. They sell i-Term offered by NTUC Income. You can find out from their website. All the best!

Relief loan is similar to early withdrawal from CPF

I have proposed that retrenched workers should be allowed to take a relief loan, offered by a Government agency,  at an interest rate of 2.5% per annum. This should also be available to workers who suffered a drop of earnings due to a reduction in working hours.

This relief loan is similar to an unemployment benefit, but has to be repaid in the future. Interest on the loan can be accumulated with the principal. The borrower has the incentive to repay the loan earlier, to avoid incurring interest charges.

My proposal is similar to early withdrawal from the CPF. The loan incurs interest charge of 2.5%, which is similar to the interest earned on CPF savings.  There is no additional cost to the borrower under my proposed relief loan scheme.

My proposal is intended to protect the integrity of the CPF as a saving plan for retirement.  There is a reminder on the borrower to repay the relief loan. However, if the loan is not repaid, it will be repaid from the CPF savings at the time of its withdrawal.

My proposal will also offer relief to the retrenched worker in the case where there is no CPF savings to withdraw from, e.g. where the savings have been fully used to buy a property.

Tan Kin Lian

Thursday, April 02, 2009

Ready Pool of Part Time Workers

To employers. There is a ready pool of part time workers. They are willing to work for $6 to $9 per hour. You can choose a worker that stays near your place of business, and likes the type of work that you do. Go to this portal

Click on employer. Sign up and select your workers. You can send a SMS for them to call you.

Intelligence Quiz

You can buy my book at $7.90 at the bookstores mentinoned in this website.
You can also view other applciations here.

Wednesday, April 01, 2009

Compensation for Credit Linked Notes

If you have not been offfered or have rejected an inadequate offer of compensation, and you wish to lodge a complaint with FIDREC or take legal action, please provide your particulars in this survey.

10 highest paid politicians in the world


Annual salaries in USD

1. Lee Hsien Loong - Singapore   Salary in dollars - $2.47 million
2. Donald Tsang Yum-Kuen - Hong Kong Salary in dollars - $516,000
3. Barack Obama - United States Salary in dollars - $400,000
4. Brian Cowen - Ireland Salary in dollars - $341,000
5. Nicolas Sarkozy - France Salary in dollars - $318,000
6. Angela Merkel - Germany Salary in dollars - $303,000
7. Gordon Brown - UK Salary in dollars - $279,000
8. Stephen Harper - Canada Salary in dollars - $246,000
9. Taro Aso - Japan Salary in dollars - $243,000
10. Kevin Rudd - Australia Salary in dollars - $229,000

Where to get financial advice

Here are some general tips, but written for the UK situation.

A sense of loss for a Singaporean

Hi Mr Tan,
I have been following with interest your blog on and off especially during the period of "minibonds". I respect your sense of social justice and your courage and willingness to fight for the underdogs.

I myself have always been neutral to politics. I only write today because on the spur of the moment, I want to pass a few observations about the passing away of the Singapore I grew up in.

I am in my 30s. When I am young, I felt that the government was willing to develop us Singaporeans. Life was simple, relations with people were sincere.

That Singapore is no more. In almost any job I have worked, foreigners equal Singaporeans in number, sometimes they exceed. Even when you interact with people, the locals don't care for and about the locals. Money is all everyone thinks about. Perhaps it is because we are all forced to struggle with the influx of so many FTs.

When we need employers to give us a chance, we find that the job has gone to some more experienced FT. But they were given chances, even sponsored to take courses, back in their own countries to hone the skills that they have today. 

All familial ties are no more; we have became disposable entities to our companies and our bosses. It is a very lope-sided system where the employer is king. Even some bosses, used to maids, treat employees in the same disposable manner. Forget about receiving any training, you are paid to serve them. Retrenchment and dismissal is sometimes the excuse of poor senior management. The same goes for the present government.

I am neither bitter nor resigned. I am just sad that I cannot identify this country with the one I knew and grew up in. You might tell me I am being sentimental, we must all adapt to the world, there is no free lunch. Yes I have heard that many times. And home-grown Singaporeans are largely a docile bunch willing to bend over backwards with the govt. But why does it seem that the govt makes our problems worse instead of better?

You are very capable man. By writing to you, I don't dare to aspire for anything. I have signed your petitions and I have written encouraging messages on your blog. I just want to share with you, Singaporean to Singaporean, the loss of the soul and essence of my country.

High charges give poor return

A participant at the CASE forum gave this statement. He said that he had invested in unit trusts for the past many years. Two years ago, on his retirement, he calculated the return on these unit trusts and found that it gave an average of about 3% annually. This is a poor return, considering the long period of investment. He has decided that to avoid all types of investments.

If he had invested for such a long period, his return should have been more than 6% annually. It is likely that his fund was badly managed, e.g. in speculative investments, or had high charges that are taken away from his return.

There is a segment of the fund management industry that behaved unethically. The fund manager takes away big fees, but were not able to achieve a good return to the investors.  The fees take away a large part of the return and gave a poor net return to the investor.

Many life insurance products also offer a poor return, of 3% annually or less. Considering that inflation must have been around this level, the poor return is just able to match inflation. For investors who took our their money earlier, the high front end fees led to a big loss of their savings.

Be careful of bad financial products. Many financial products fall in this category!

Proposal to solve the global economic crisis

We are facing a global economic and financial crisis. People are scared to spend. They want to save money, in case they lose their job and need the money to spend at that time. 

The reduction in consumption is causing the economy to slow down badly. Businesses are hurt. They are not able to get encough sales to pay their expenses. They have to close down and retrench their employees. This will lead to a downward spiral.

The collapse of the value of property and other assets cause people to feel poor. They also cut down their spendings. 

Actually, the people still own the same houses and assets. They now believe that these assets are worth little, when one year ago, they thought that the assets are worth two or three times more. 

All this is just a matter of the mind. It is also called confidence. If we can get people to believe that they are rich, that their assets are worth more than they can fetch today, we can revive the global economy. 

Read this proposal.

Tackling the credit crunch

Many small businesses find it difficult to get credit from the banks. Here is my proposed solution.

Tuesday, March 31, 2009

Local transport within a town

Is there a need to create a local transport service (using light bus or private cars) to serve a town? Give your views in this survey.
Here are the survey results.

Handling injury claims

Dear Mr. Tan

Mark Lim, Executive Director of GIA has posted a comment to my views about motor insurance claims. I thank Mr. Lim's for his comments.

I think that Mr. Lim as not understood the part of my comments regarding personal injury claims. The increase in personal injury claims is not because of fraud by lawyers, doctors, workshops and members of the public working together. I never said or implied this.

I do not know why Mr. Lim is suggesting that I should make a police report. I put the increase down to injured parties being better informed of their legal rights. Even if the injury was a minor one, the injured party has the right to seek legal recourse. So, in the example given by me, there was nothing wrong in the conduct of the workshop owner referring the injured motorist and his wife to a lawyer to claim for damages. There is no criminal misconduct.

In the past some insurers have screamed fraud at some of the soft tissue injury claims, but a further anlysis and examination by their own appointed specialists revealed nothing untoward and the injured parties were awarded damages by the courts.

In this respect, I agree with Senior Counsel Michael Hwang (in his letter in the ST Forum) that if there was nothing the lawyers and doctors would not be able to make out something and the courts would not have agreed.

We need to think out of the box regarding the escalating personal injury claims. For example, when I was heading the Claims Department in NTUC Income, we had a unit that took the pro-active approach in handling personal injury claims. Injured parties were offered fair compensation even before they submit their claims. We also give them a list of running down firms which were not in the NTUC Income's legal panel for them to check on the fairness of our offers. In taking this approach, we saved on legal costs which can add 50% to 100% to the final payout amounts on those cases that we closed successfully..

If insurers cannot handled the personal injury cover profitably, maybe this portion should be handed over to the State like in New Zealand, (where the State handles and the claims are paid out on a no fault basis.)

I have just received an affirmation last week (24/3/2009) from Mr. Tan Kin Lian, that "[w]hile you were in Income, we must have made more than $40 million in profits over the few years that you headed the department." So I do know what I am talking about!"

Freddy Neo
Former general manager, NTUC Income

Housing crisis in USA


Some analysts said that the subprime problem and credit crunch is caused by the fall in the housing prices in USA. If this problem is not solved, the financial system will continue to be under great risk.

What can be done to solve the housing crisis in USA? Some measures being proposed include the following:

a) Government to take over the mortgages
b) Help for borrowers to repay their debts
c) Incentives to encourage new buyers of houses

What is the solution? Singapore faced a similar crisis between 1996 to 2003, when the property market dropped by 30% for private and HDB properties. An effective measure was introduced by MAS, which stablilised the market and led to a recovery in 2007.

What is this measure? Perhaps a similar measure can be introduced in USA ?

The MAS allowed a borrower to refinance a mortgage loan with the CPF savings taking lower priority. The lender does not have to worry that the property price has fallen below the purchase price leading to negative equity, as the CPF savings is exposed first. This allows the lender to take a long term view and give time for the housing price to recover (which happened subsequently).

Individual legal action in Subordinate Court

I am discussing with a lawyer to take up individual legal action in the subordinate court against a financial institution for mis-selling of the minibond or credit linked note. The claim can be for an amount up to $250,000. The legal fees and cost, including payment to the defendent's lawyer, will be capped not exceeding $10,000. 

As this is an individual action, the claim can move quickly as it does not involve a class action. If you are keen to consider this option, please provide your particulars in this survey

We will arrange a meeting to explain the approach and consequences. You can consider this approach, if your investment is between $100,000 to $250,000. 

Monday, March 30, 2009

Survey: Work from home

Are you ready to work from home?  Survey.

Here are the survey results.

Restructuring of the bonus

Dear Mr. Tan
NTUC said that the restructuring of the bonus allowed them to maintain the bonus last year. What does this mean? How does the restructuring help the policyholders get a better return?

I do not understand their statement. I suggest that you attend the annual general meeting of NTUC Income and ask the chairman to explain this statement. 

Here is my guess. As Income has reduced the bonus sharply last year, perhaps there is no need for them to make a further reduction.  But, I suspect that the special bonus will be cut this time, quite drastically.

But, for the older series which was not affected  last year, I read that the bonus will be restructured this year, i.e. the bonus will be cut as well. 

Generally, it is fair for bonus to be reduced in a bad year, provided that the reduction is done fairly. I did not like the approach taken in the bonus restructuring, as it is difficult to maintain transparency and fairness. Some policies were cut, and others were not. Some were cut more than others. I also do not like the high expenses that were incurred and paid out of the insurance fund.

This is why I decided to terminate two of my policies where the bonus were cut, even though I had to suffer a penalty. I am now considering to terminate my remaining life insurance policies.  

Bad working experience with a global bank

Hi Mr Tan
I joined an insurance company recently and left within a year. The way the head of the life division managed was totally unacceptable to me. Due to the financial crisis, they reduced the headcount by half. I took the retrenchment package and left.

It was a very bad experience to work with this global bank but realised that the dark side of the truth. I am not surprised why the world financial system came to a sudden breakdown. Many so-called highcaliber management were only keen to spend, take fat bonus and use creative was to present result and figures. They cover up the losses and shown the revenue figures. To me, the bubble should have been burst long ago.


ERP shift congestion to other roads. Read here.

Sunday, March 29, 2009

Intelligence Quiz

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