I feel sad for the people of Singapore. Most of them work hard and are frugal. They save for their future and for their children. But, when they come to retire, you do not have enough savings and are asked to continue to work longer.
What went wrong? Most of them get a poor deal from the financial products that they invested in. Take an example of a family which saves $500 a month over 35 years. They should have earned a return of 5% p.a. and received $570,000 for retirement,. But the yield obtained by most of them would probably be 2% p.a. giving them only $306,000 (or 54%). The difference of $264,000 (i.e. 46% of the total) went to pay the high earnings and profits of the financial services industry. I am not aware of any other country in the developed world where as much as 46% is taken away from the hard earned life time savings of the people.
If each family contribute $7,500 a year (i.e. $264,000 over 35 years), the total contribution from one million families would amount to nearly $8 billion a year. This is a lot of money. This is why the top executives in banks and life insurance companies can earn several million dollars a year. And in recent years, higher salaries are being paid for top executives who are willing to be unscrupulous in over-charging customers and giving them a poorer deal.
This arrangement works well for the board of directors, as their fees are benchmarked to the profits and to the government leaders whose remuneration are benchmarked to the top earners in the country. Of course, the people are condemned to a bleak financial future, but the government leaders do not seem to care.
Tan Kin Lian
Mr Tan, very true and points well made.
ReplyDeleteExcept for a handful of elites whose lives are many times better off, majority of Singaporeans are now financially worse off compared to the past, although on the surface things look modern, progressive and prosperous.
This is a very bold message
ReplyDeleteYes i feel the same way too. Not only does the government doesn't seem to care, i suspect most Singaporeans do not care as much
If you look at the CPF result since 2001 it is constant, ie. only 13% of the members made a gain of 2.5% and above and the 87% lost miserably. Is it a wonder that as many 85% of the members do not have $40K to buy CPFlife? What have the experts , the insurance agents disguised as financial consultants done for them?
ReplyDeleteIt is clear that these insurance agents are nothing more than salesmen and conmen. They are the conmen who benefited from the liberalisation of CPF. Churning and twisting were so rampant even till today.
CPF must stop allowing these conmen and conwomen insurance agents to 'invest' for the members. How could these conmen help consumers when they have only tikam tikam certificates . What do they know about life insurance planning and investment planning?
Imagine Singaporeans are still grossly under insured.Averagely only $50K...
MAS must review and do something about it before people are ruined by them, their hard earned money robbed by these insurance agents, conmen and women disguised as senior financial consultants and executive financial consultants.
Get rid of the insurance agents and chances of being 'richer' are better.
ReplyDeleteMAS should know by now and from the many evidences insurance agents are just salesmen are NOT suitable and qualified to advise and manage people's personal finance. Worse many are conmen and conwomen under the guise of financial consultants.
MAS must come up with safeguards to protect consumers from these charlatans and cheats otherwise the the country will see more old people living off the streets. Old people have been in fact been victims of these cheats. I remember these old people were cheated into buying those limited living policy and cashbacks products. It is ridiculous at their age that the cheat agents have no qualms and conscience to push to them. Today there are unscrupulous agents disguised as financial consultants still pushing and conning people to buy their annuity when the whole world knows that CPFLIFE is the best. Are they not without conscience salesmen cheats?
Mr Tan,
ReplyDeleteSo what can we do now? According to Fundsupermart, the key trend of investing in the future is increasing cost of investing due to regulatory, and they have decided to pass this cost to customer with Platform Fee. Does it mean that going forward investment in Singapore will be even more expensive?
In Memory of the CLOB Saga:
ReplyDeleteMany babyboomers and ordinary citizens including Retirees at my time invested with CLOB (Malaysian Counter)shares inspite of the warnings from our neighbour to stay clear, but no action taken until they all got clobbed and are now financially hit too!
For most people, they are willing to work hard all their life, and then have a peaceful retirement.
ReplyDeleteIs this too much to ask?
In Singapore, how many can retire peacefully?
Your retirement kenna robbed since the day you bought your first wholelife or endowment plan. If you have bought from other companies other than ntuc the return of these products after 30 years is 2-3%. NTUC GAVE(emphasis intended) about 4% for endowment and 5%+ for single premium.. But this is the past and the future for ntuc is no different from the other companies.
ReplyDeleteThose who bought these products then please look at the projection and you will feel cheated. Worse you based your hope of retirement on those figures what is your situation today? Cannot retire, right? got to work for next 10 years , right?
The future is worse for these products. That is why these cheat insurance companies and their conmen and women salesmen must be stopped from cheating unwary consumers into buying these products or else history will repeat and this time disastrous.
WHOLE LIFE AND ENDOWMENT PRODUCTS ARE VERY VERY POOR INSTRUMENTS FOR PROTECTION AND SAVING.
It looks like the only way is to work hard becuase your hard earned money cannot work hard anymore and not only this it is being stolen by insurance agents pretending to groww for you.
ReplyDeletePlease ah, don't expect MAS to regulate financial investment problems for retirement. Officials are only concerned with short-term economic growth, so that their pay packets would grow bigger, what do they care about the retiree's predicament.
ReplyDeleteRetirees have to plan themselves,
very sad yes, but this is Singapore,
no such as pensions for us.
Rex comments as follows,
ReplyDeletealthough i have nothing to do with the insurance industry, the insurance agent bashing theme has gone overboard in my opinion. I see so many readers cursing the insurance agents.
The big issue is not about the insurance agents. The big issue is the government's failure to regulate the insurance industry.
The government in pursuing a free wheeling policy for the financial industry, has allowed all sorts of bad products to be conceived by greedy people, the product designers of the insurance companies!!
The insurance agents are just the cogs in the wheel. The problem, is like cigarettes. There is no use to blame the cigarette seller. To stop the cancer all the cigarettes should be banned. All the unscrupulous, poor yield, cheating products should be banned. It is pointless to go after the insurance agents, you can't bash all of them because at the end of the day, the product is still Legal and therefore there will always be willing buyer and willing sellers.
So for those who bash insurance agents, save your bashing for the people who approved such products, and to the government with a practically ineffective and idle regulatory arm. As Mr Tan mentioned in another thread, it is far better to be a Malaysian in this respect. Their government and regulator takes very good care of the citizens and prevents cheating.
REX
is this a singaporean problem or a global problem ?
ReplyDeleteSometimes I am puzzled why people still buy whole life and endowment insurance despite so much bad publicity. It also doesn't need knowledge of actuary conclude that these products are useless and very poor and inefficient as risk management tools or as saving vehicle. Or is it becuase consumers are so dumb that they leave it to the so called trusted insurance agents. This is where everything will go wrong.. trusting the agent is a big mistake. Other than the dishonest insurance agents the incompetent agents will do even greater damage becuase you trust the agents so much that you entrust your fortune to him or her. Eg. I know of man in his 60s trusted his agent that he agreed to take up a $200000 limited payment living plan and paid nearly $20K for it after his agent convinced him about leaving a legacy to his gown up children.A legacy with a Critical illness plan? When they found out and sought the help of a planner that the policy was quickly aborted by exercising the freelook. What legacy when your children are already grown up and financially independent? What the big deal about $200K. Worse, wrong product to use. A good legacy should be more like a million or 2 and it is so much efficient if term is used. Today there term products that can cover you till 99 years old. Alternatively, saving up the $20K in regular investment vehicle is even better.
ReplyDeleteTrusting your insurance agents is to your peril. First they are not qualified and secondly buying a product wihtout your needs being examined carefully is doomed from the start.This is waht happened to many. They got their first insurance when they started working. And the agent friend sold them a wrong product or wrong amount that it becomes a burden and eventually given up. What a waste or loss.
Reply to eeee
ReplyDeleteThis problem exists in many countries, but is worse in Singapore than most other countries, due to the "light touch" approach of our regulators.
I mentioned that I am not aware about any other advanced countries where 46% is taken away from the unwary investors.
REX,
ReplyDeleteso there is nothing wrong with drug trafficking , right? After all these drugs are not produced by them . They are just runners.But without the runners the drug won't reach the users, the customers, right?
Similarly, these insurance agents joined the industry with one thing in mind...to get rich quick.. This is what is promoted at the recruitment business promotion seminar.Isn't it what this business is all about , how to fleece the stupid customers with rotten products. And to make the agent bolder give them higher commission so that they can lie through their teeth without their conscience being pricked. ( oh, I forgot only people without conscience joined this business)
Decent people will NOT do such thing.AS MAS stipulated that the sellers must do due diligence on the product before being sold to the customers. Did the agents do, interested to do? Where is the fiduciary duty? Even their own friends they have no qualms to con, what about people at large.
REX, we don't bash for no reason.MAS is clamping on them also not without reason. Wait till the commission is banned and let's us hear what tunes these chameleon insurance agents will sing about the wholelife and endowment products.
Singapore's priority is survival, hence the short-term policies. It's a great place to do business as liabilities can be offloaded to the individuals with ease. All that is needed is a 10 page legal mumbo-jumbo that individuals sign and it's all perfectly legal.
ReplyDeleteIn the Singapore context, you are responsible for your actions as what inspired me:
ReplyDeleteby Harvey Mackay:
“If you fail to plan, you plan to fail”
REX comments as follows,
ReplyDeleteActually even if 46% is taken away from unwary investors, in reality, not all the 46% is feeding the CEO's. Maybe about 20% of the proceeds feeds the average insurance agent runners, he/she might not be super rich, but just able to get by better than most people, but not really filthy rich.
Think of it another way, if everything were to be super clean, then numerous people will be out of job. Like if you close down cigarette industry, accountants, clerks, logistics officers, etc. all will be much poorer and retrenchements and unemployment increases. Same with Prostitution, it is legal. How to manage the situation? We are already so desperate in creating jobs that we have to stoop down to opening two stupid casinos.
I suspect this could be one of the unwritten reasons why the government doesnt care too much about these bad value products, and adopts a "you people please open eye big big" don't care attitude.
another analogy, if everybody start eating "healthy food", thousands of people will be out of job, those selling "unhealthy" food! Furthermore there is not enough healthy food in this world if EVERYbody looks out for "healthy" food only. So, thank you and please keep eating some unhealthy food some of you out there ha ha ha ha.
Therefore, by the same token, in a warped, cynical yet logical way, it appears to be NECESSARY for certain numbers of people to be invested in poor products in order to keep afloat another group of people. As long as it is legal, like cigarettes, you die a slow death, who cares. Could this warped logic be the basis of government think tanks?
rex
Now I know why our govt allowed the foreign thrash to be paid more and to continue heading NTUC Income and disregarded policyholders complaints. This govt must go!
ReplyDeleteToday, ntuc income has many senior VPs or aka GMs and VPs. 20 of them SVPs plus another 20 VPs Why need so many? So good profit, ah. Is it to make the CE look great? He prefers to be known as CE than CEO. Isn't something strange? If you add up the salary of the new management it is in the millions per month. Agree?
ReplyDeleteWhere does the money come from? from the union? from tax payers? from the chairman's pocket?
If it is not from them it must be from some suckers. And the suckers are the consumers and the policyholders who are paying and financing them from the Revosave, Vivolife etc they bought.
Wake up and know how life insurance companies operate. If you are the lenders or investors do you get fair deals? Is 2% after 25 years a fair deal? Don't be a sucker.
dear mr tan..i agree with your post..what can we singaporeans do to counter this problem?
ReplyDeletei went across e casueway and found this etiqa takaful islamic deposit offered by maybank for annual interest rate of 5.5-8% (need to lock for at least 5 years)..do you think this is a worthwhile investment/savings plan?
We have elections to come within 2 years. Vote wisely. The GRC system can be a double edged sword.
ReplyDeleteCurrently bad non-performing and sleeping MPs can be covered by good ones. So they piggy back on that.
When the popular support goes against the PAP one day, the GRC will bring down ministers who would have won if they were on their own.
Give them a kick in the ass. Vote other so that the PM has to "fix the opposition" not the Singapore people by increasing GST from 5% to 7% immediately after the last elections.
We need more people who cares about Singapore and not their own pocket and their millions every year pegged to the highest earners.
Vote for a better future for you, your family and everyone else in Singapore. Especially the poor and disadvantage.
I'd always remember the remark by Dr Vivian Balakrishnan in reply to Dr Lily Neo during Parliament to increase the payout to the needy and destitute said angrily, "How much do you want! Do you want three meals in a hawker centre, food court or restaurant"
We don't need that kind of "leader".
Spread the message, vote wisely for the future of Singapore.
After last election in 2006, this government gave themselves a pay raise of more than 50%. In comparsion the payout to help the poor under the Public Assistance was increased a mere $30 per month to $360 after being asked by a MP. The best is that the minister incharge commented “How much do you want? Do you want three meals in a hawker centre, food court or restaurant?”
ReplyDeleteYou want this government to provide better regulation in the financial industry? We know what their response will be "you went in with your eyes wide open, so who is to be blamed?"
Last time, people work hard and look forward to their retirement. Now, the government is telling the people via the state media that working until you die is the right thing to do. Now, the word retirement is seen as a dirty word to those people who blindly accept whatever nonsense that are being preached via the state media without thinking.
I feel sad whenever I see those elderly people searching for soft drink cans in the rubbish bin. Is this what they get for contributing to our nation's progress, I wonder?
They remind me of Boxer, the work horse, in the Animal Farm. Boxer worked hard and looked forward to his retirement in the farm but only to be played out by the pigs. Boxer was sent to the slaughter house instead of the veterinary when he fell sick while working tirelessly to build the windmill.
Merlion
to me all kinds of conman r conman.
ReplyDeletei deal with them with extra care n if need to, i'd be a bigger B*tch than them.
I am one of those who feel cheated by the low yields on my policy from Great Eastern and Prudential. It is time MAS audit their books and give us a good answer on whether we have indeed been short changed. Our regulatory framework must clearly dictate how the returns must be distributed in a just manner, instead of unfair distributions. If the present Gov is unable to get MAS to work for us, it is only just we ask ourselves whether they deserve to continue leading Singapore.
ReplyDeleteGabriel
everything govt protect you.
ReplyDeleteeverything govt check for you.
no wonder singaporeans very naive.
i prefer that singaporeans get chopped carrot earlier on so that they grow up and become more street smart.
too much order can be a bad thing.
Don't buy any wholelife or endowment product from any company. They are ALL scam products.
ReplyDeleteIt's no use pointing fingers and blaming the government, the agents, the insurance companies, the financial institution and etc...
ReplyDeleteInstead of wasting time bashing and blaming, why not take charge of your own finances? Read up and invest in your mind.
Improve your financial literacy and like what Robert Kiyosaki of Rich Dad Poor Dad said "Mind your own business" because if you don't others will.
Grow up people, don't wait to be spoon fed. The world does not revolve around you or stop just because you've made a bad decision. At some point in life, everyone makes a bad decision, the important thing is what have you learnt from it and are you ready to move on with the lessons learnt so that you'll be wiser next time.
Don't everything that goes wrong, run to the government for help. A person may have aged physically but not necessary in the way they think.
Adults may not cry and run to papa and mama when something goes wrong but many a times their actions and thinking reflect that of a kid. For example running to the government when things goes wrong. C'mon start growing up and act like an adult.
Stop bashing, Start growing.
PS: i'm not with any banks or FI. Jus another S'porean.
//As long as it is legal, like cigarettes, you die a slow death, who cares. //
ReplyDeletePerhaps it is time for insurance products to come with a financial health warning like what is mandated for cigarattes. The warning could be like "46% of your money will go to my pocket". This warning should be highlighted clearly and in bold.
Then, no consumers would have any legitimate grounds to complain about being cheated.
Anon, April 04, 2010 3:09 PM,
ReplyDeleteI agree with you that we should take charge of our finances. But how many are like you? Can the factory workers become financially savvy? Can the toilet cleaners understand insurance like you? Can the man in the streets be as savvy like you? Reading Robert Kiyosaki's book just let you be aware only but not expert who can design and structure own portfolio, who can perform self need analysis to determine the appropriate product and amount.
If all can be like you why should we pay the insurance agents for doing nothing except form filling.
Worse for paying form filling and get rotten products which don't address our needs. Now you understand why we 'bash' the agents. Not that we are masochists or sadists but don't you think people must be alerted of the craps the insurance agents are providing and yet earning large commission for F work.
Anon, are you sure you are as savvy as you are making us to think you are? Are you savvy after reading Robert Kiyosaki"s books? If you think you are let me tell you you are just scratching the surface. I suggest you pick up a book on investment fundamentals and start reading as PRIMER.
In fact there exist many warnings but the insurance agents don't disclose or warn you.
ReplyDeleteThe latest warning MAS expects all the agents to highlight to the customers who choose product advice or option 3 that by choosing product advice the customers will lose all rights to advice and to recourse in the future.This means die is the customer's business thereafter.
Also customers will be made to acknowledge in his or her own handwriting that by choosing no advice or product advice he or she will relinquish all rights to recourse.
Let's watch whether insurers and their agents do this and warn the customers against the disadvantages of not disclosing and only want product advice.
Last Saturday I went to a bank with my wife to place some FD. There were a huge group of insurance agents standing inside the bank trying to tout endowment products to those waiting customers. How I know they are insurance agent? They are wearing identity badges from the insurance company and I suppose they are there due to some strategic tie up between the insurance company and that bank.
ReplyDeleteThese guys are openly trying to convince those unsuspecting uncles and aunties that their 5 yr / 10 yrs endowment are better than the bank's FD rate. Oh my god, what has the world become? Now even a trip to the bank can also become a potential trap.
Why is it that 26 out of 30 comments are from "Anonymous"?
ReplyDeleteRex comments on Vincent Teo post as follows,
ReplyDeleteplease note that 5 year and 10 year endowment maturity payments ARE indeed better than the FD interest rate. The FD interest rate is only about 1%. The 5 year policies typically pay between 2 to 3% depending on the projection.
The issue of it being not as lucrative as shares (divident 5%) or other instruments, or the issue of high commissions paid to agents, or liquidity sacrificed, or poor claims-premium ratio, is well understood, yes these are not good value for money..
Nonetheless, you cannot say that these products pay less than bank fixed deposits, that is falsehood.
rex
Rex comments on wayne post as follows,
ReplyDeletePeople remain anonymous or give fancy names like :Wayne: which means nothing, for various reasons. We have a repressive government who has the capability to dig up everything about your past and give you trouble if you give them trouble openly.
We don't have a proper democracy.
People disdain anti government individuals and distance themselves from such activities.
People need to keep their jobs and remain on the good books of their bosses.
Anonymity makes sense in these circumstances.
An anonymous writer can write excellent, objective posts, in the same way that a known famous person can write and speak utter rubbish. One should judge mail by its content.
The negative feeling against people who write anonymously, is a fabrication by the ruling party.
It is actually a non-issue.
rex
"better than the bank" cannot be used by insurance agents to make a comparison and yet it is openly used.
ReplyDeleteWhat is MAS doing ? This warning was issued by MAS on 28 January 2010 to stop insurance companies from misleading and misrepresenting their products becuase bank rate is risk free and liquid whereas the insurance products are not.Also it misrepresents to the customers that it is the benchmark to beat.
Vincent Teo,
ReplyDeletedid the agents appear harassing? Touting is harassing. If they were you can lodge a complain with MAS about the bank. Banks are supposed to separate the bank telling and sale of products.
Thanks Rex for the explanation. I respect the wish for anonymity.
ReplyDeleteGenerally, I feel most of us are inclined to run to government for help/ shelter whenever there is trouble. "Govt, pls help me with this and that." I find we Singaporeans in general are "street-smart" enough, just that whenever Gov's namesake is brought into the picture, the tendency to trust is higher. As such, financial planners/ agents probably work on this soft-spot of people to make their way through.
For the record, I was in this industry for 2.5 years. I started with bright hopes of "helping people plan for retirement" but things were not a bed of roses. I finally decided to leave but still educate my own circle of friends in the way I believe is right.
My suggestion is this: if you have been part of this discussion, and you truly believe in your principles, then educate your own friends/ relatives about them. This is a movement that needs to start from the ground, not the Gov.
Usually, this is how I gauge whether the planners/ agents are geniuine after their "pitch":-
Question to ask yourself: Have you been "SOLD" or "TAUGHT"?
==> If "SOLD", then no point to carry on with the "salesman".
==> If "TAUGHT", then can consider to carry on with the "teacher/planner".
Question to ask the agent:
a) How much is your commission for the first year?
==> If he/she answers without a second thought, then it may be that he/she is genuine.
==> If he/she does not know or tries to wriggle his/her way out without a direct answer, then it is either
(i) he/she does not know or unsure (knowledge not sufficient or lazy to find out).
(ii) does not wish to diclose (not really honest)
Other question I usually ask is about SRS.
Reply to Wayne
ReplyDeleteIn my view, the Government has a duty to pass some laws and regulations to protect the consumer from unfair practices.
It is easy for consumers to be cheated or misled with false promises, such as land banking, time sharing and similar products. Some of these products are designed to "cheat" consumers.
While I do not expect the Government to be vigilent in stopping these products, I do expect them to take action when complaints are lodged. This is how problems are identified and soluations are found.
To Rex,
ReplyDeleteIf just comparing purely between returns, yes I do agree that 5 - 10 yrs endowment indeed give better return. However it is a lousy comparison, definitely not apple to apple comparison. Just like I can say, buying stocks may/will give you a higher return than FD.
FD does not penalise me to potentially lose part of my capital if I make early withdrawal, maybe only interest. There are also no similar 5 - 10 yrs FD in the market to make similar comparison.
To Anon 1:10 pm
These insurance agents just try to mingle with the waiting crowd. I saw a couple of uncles and aunties seemed interested. As the bank is currently offering one of the highest FD rates (esp for senior citizens with $25k or more), many people were there to open FD account. I am not sure whether these old folks need to buy those 5 - 10 yrs lock-in products, just for a few percent more in interest.
For me, I was just standing beside these agents when they are trying to sell their wares. Hence I manage to hear whatever they were saying. Somehow they never approach me as I may have a fierce look. I don't think I can complain them to MAS when I have not been approached.
Mr Tan KL,
ReplyDeleteI agree with you that the Government has a duty to pass some laws and regulations to protect the consumer from unfair practices.
Big companies or ogranisations know that generally the small time customer is helpless and can't do much to seek redress for any misselling or misleading representation by their company. From your postings on the landbanking clearly show that those companies simply has no intention of returning the money to the investors. However, I believe it would be a different story if a large and financially sound institution actually bought those landbanking product and wanted out later.
This reminds me of the NKF saga. The old NKF threatened to sue those small fly unless they withdrawn their claim about the old NKF management. The old NKF also tried to sue SPH but failed and as we know the rest is history.
My point is ordinary layman should be protected from being bully by companies which are out there to cheat. The only fault the ordinary layman has is just to make a reasonable return for their investment from their money.
Merlion
REX comments to Wayne post:
ReplyDeleteGenerally citizens should not complain too much and expect too much of the government, and I agree that citizens to some extend has some responsbility in many things.
But we have an exceptional government which is paid ridiculous salaries 5 time President of USA. Much is given, much is expected.
If they draw such high salaries, we expect them to be exceptionally efficient and outstanding in all things, responsive, creative and responsible. But there are too many things not right in singapore nowadays, any thinking person can see it.
The government and media continues to play the old record of how good they HAD BEEN and that's about all they do nowadays.
rex