Some financial advisers are worried that the changes being considered by the Financial Advisory Industry Review (FAIR) might lead to a severe drop of their earnings.
There is a silver lining.
I hope that the outcome of the review will allow the financial advisers to play a more constructive role in helping the public to better manage their financial planning and to get a better yield on their savings. This would require the finance ministry and MAS to recognize the importance of tax incentives to get people to make additional savings for their retirement - which is much needed in Singapore today, due to inadequacy of the Central Provident Fund.
In many countries in the developed world, the tax regime is skewed to encourage the people to make additional savings for retirement, such as the 401(k) in the USA or the superannuation schemes in Australia. They usually take the form of deferral of tax to a future date.
If similar incentives are allowed in Singapore, the potential savings in tax to the consumer can more than offset the remuneration paid to the financial adviser. It achieves an outcome that is good for consumers and allows the advisers to earn a living by performing a useful role for which they have been trained. The government benefits when more people make adequate personal savings for retirement and rely less on state welfare.
The financial advisers can put up a case for the review panel to recommend tax incentives for long term savings in life insurance. This will allow financial advisers to find a new role and reduce their fear of loss of earnings arising from the likely changes in the remuneration structure.
Tan Kin Lian
There is a silver lining.
I hope that the outcome of the review will allow the financial advisers to play a more constructive role in helping the public to better manage their financial planning and to get a better yield on their savings. This would require the finance ministry and MAS to recognize the importance of tax incentives to get people to make additional savings for their retirement - which is much needed in Singapore today, due to inadequacy of the Central Provident Fund.
In many countries in the developed world, the tax regime is skewed to encourage the people to make additional savings for retirement, such as the 401(k) in the USA or the superannuation schemes in Australia. They usually take the form of deferral of tax to a future date.
If similar incentives are allowed in Singapore, the potential savings in tax to the consumer can more than offset the remuneration paid to the financial adviser. It achieves an outcome that is good for consumers and allows the advisers to earn a living by performing a useful role for which they have been trained. The government benefits when more people make adequate personal savings for retirement and rely less on state welfare.
The financial advisers can put up a case for the review panel to recommend tax incentives for long term savings in life insurance. This will allow financial advisers to find a new role and reduce their fear of loss of earnings arising from the likely changes in the remuneration structure.
Tan Kin Lian
3 comments:
The changes announced by MAS are long over due, but it's better late than never.
This new MD at this Regulator seems like a man of action, a man who walks the talk. Who knows, under him, Singaporeans would regain the faith and trust in MAS, trust and faith lost when the former MD was at the helm, with many investors blaming him for allowing derivative investment products to be sold to ordinary ah pek and ah um investors, who never heard of the big word D before.
Also, maybe of the good work done by TKL in this blog, about the devious ways rogue insurance agents
sell insurance products in Singapore.
Maybe this Regulator and the Insurance Companies are keeping watch intently on this blog, and realise it's better to make a friend out of TKL, after realising its influence on readers at large.
Can't beat down TKL, may as well join him.
@yuyuan
Thank you for the kind words, but I do not wish to accept any credit for this change.
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