Clause 7.2 of the Financial Advisers Act (which is a law) requires the financial adviser to "take into account alternative investment options" when recommending an insurance policy to a client.
Most of the investment linked policies recommended and sold by financial advisers (including insurance agents who are covered under the same law) have an Effect of Deduction of 30% or more of the accumulated premium. An alternative investment option, such as the STI Exchange Traded Fund, which carry similar risks to the ILP, have charges that amount to less than 10% of the accumulated premium.
Has the financial adviser met with the requirement to 'take into account alternative investment option" that has similar risks and a much lower charge? Has the financial adviser met the requirement of 7.3 to explain to the consumer the basis of his recommendation?
This is a danger facing many financial advisers. If a customer were to sue them under the act, they stand the risk of having to compensate the customer for the loss and even to lose their licence for failing to comply with the Act.
http://www.fisca.sg/ArticleDisplay.aspx?ID=445&Name=Financial-Advisers-could-get-into-serious-trouble&Type=H
Most of the investment linked policies recommended and sold by financial advisers (including insurance agents who are covered under the same law) have an Effect of Deduction of 30% or more of the accumulated premium. An alternative investment option, such as the STI Exchange Traded Fund, which carry similar risks to the ILP, have charges that amount to less than 10% of the accumulated premium.
Has the financial adviser met with the requirement to 'take into account alternative investment option" that has similar risks and a much lower charge? Has the financial adviser met the requirement of 7.3 to explain to the consumer the basis of his recommendation?
This is a danger facing many financial advisers. If a customer were to sue them under the act, they stand the risk of having to compensate the customer for the loss and even to lose their licence for failing to comply with the Act.
http://www.fisca.sg/ArticleDisplay.aspx?ID=445&Name=Financial-Advisers-could-get-into-serious-trouble&Type=H
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