Tan Kin Lian's Blog: Pay a fee for advice

Saturday, July 31, 2010

Pay a fee for advice

A reader sent 10 benefit illustrations from two insurance companies and asked me to analyse them, and recommend which plan offers the best value. I replied to ask if he is willing to donate $50 for each benefit illustration that I analyse. I never heard from him.

The insurance agent who sent prepared the computerized benefit illustration will earn a few hundred or thousand dollars from the consumer. The agent should be the person who spends the time to explain and guide the consumer to make the right choice. It would be unfair for the consumer to expect Mr. Tan to spend the time to read 10 benefit illustrations and give advice for free.

5 comments:

zhummmeng said...: This is the problem with consumers. They buy based on the 'best' of the products and not on their needs. The reason is they don't know their needs. The agents offer them a choice of products and the consumers are supposed to be an experts to pick out the best. The truth is the agents don't even know which the 'best'.So you see , the onus is shifted to the consumers and yet they pay hefty commission to the agents and get nothing in return.It should be the agents to say which is the best and give reasons to substantiate it.They are also liable for it too.
Well, this is the case of smart alek consumers who think they can and know how to compare. The insurance agents who passed the tikam tikam exams and years of experience are unable to compare and yet the consumers are taking upon themselves to do this task.The consumers are FOOLS indeed.
The consumers don't know their rights to competent and responsible financial planning and that is why they are doing this rubbish..
Look, consumers, the responsibility lies with agents whom you pay hefty commission to give you everything and to ensure their recommendation is appropriate and of reasonable basis. This is their accountability and fiduciary duty to you and to the law. You DON"T NEED TO DO THE COMPARISON.; July 31, 2010 5:16 PM
Wilfred said...: Mr Tan,

As many consumers only want "free" advice, financial advisers will resort to advanced selling techniques to earn a living. They will not focus in activity that has the least chance of generating a sale. Take for a simple example: Helping the client to understand complex CPF rules in order to make an informed decision will never generate a sale and thus the topic will be neglected. End of the day, it is the consumer that suffers.; July 31, 2010 5:51 PM
Spur said...: That's the big problem with local consumers --- want free & good, or cheap & good, don't want to pay for services or advice, but willing to spurge hundreds and thousands of dollars for "things" and gadgets.

During my stint in ntuc, I tried damn hard to educate customers on insurance being an expense and a transfer of catastrophic risk and more important to ensure adequate coverage, instead of being brainwashed into thinking must get back what I paid, or that insurance is equal to retirement savings. 90% of customers don't believe what I say -- still want wholelife where the coverage is not even 2 years of their salary. Or to "save" in endowments where the realistic yield is only at most 2.5% after 10 years.

After a while I give up. I just ask point-blank whether they prefer got cashback or not. Only 10% will ask me what I mean and listen to alternatives. The other 90% I just whack them with vivolife and revosave. The most popular quotations are for $50K and $100K sum assured, coz that is all most of them can afford. Some even insist to buy ILPs after the big run-up in 2009, even though I explain that they should explore lower-cost unit trusts on discount web portals, or study ETFs if they're really concerned with investing. Nope, they still believe in the goodness of social enterprise. What to do? Just sell them the high-priced ILPs that has 40% effect of deduction loh...; July 31, 2010 6:40 PM
Kenneth Yang said...: Hi Mr Tan,

If you are willing to analyse benefit illustrations for a donation, I'm sure a lot of people here will be willing to pay for it. Personally, I have joined FISCA and attended the talk but what I want to hear from you more is your insurance insights rather than on investment.

It is better to tap on your years of experience in the insurance field than on investment itself. It is a totally different sector.

I guess that reader is a stand alone case. For the amount of knowledge you have, I'm sure $50 for one benefit illustration is a good bargain!

You might want to consider holding more talks on insurance policy at FISCA. I'm sure alot more members can benefit from it.; July 31, 2010 8:22 PM
hosingping said...: Hi Mr Tan,

Since most of insurance are high cost. no point holding talks on insurance. as what you have said. to buy term ins or accident plan. so i suggest you hold more talks on investment; August 02, 2010 8:01 AM