There are 15,000 financial advisers (or insurance agents) in Singapore. They make a living by selling life insurance policies and earn a commission on the sales.
It is all right to earn commission on products that benefit the consumers. Unfortunately, many of the products currently marketed as "investment products" give a poor return for their long term savings of the consumers.
The solution is for insurance companies to design "investment products" that give good value to consumers. The insurance agents can earn a commission by selling these products, and the customer still benefits.
In my view, the "investment type" products should give insurance protection and offer a long term yield of 4% per annum. This yield is possible by investing in the right long term assets and keeping expenses, including commission, at a modest level. This yield will give a modest real return above the long term rate of inflation (2% to 3%). It is possible to create a product that meets this criteria, and offer it for financial advisers to sell to the consumers. This will be a win-win solution.
The financial advisers can also offer advice on financial planning, budgeting, debt management and early withdrawal of CPF, for an appropriate fee, say $50 to $100 an hour. This type of advice is suitable for the individuals and help them in a positive way.
For debt-management or early CPF withdrawal, the fee can be fixed at $200 with a 70% subsidy to be provided from government funding. The consumer pays $60 and the financial adviser earns $200, with $140 funded by the government.
It will help financial advisers to move to a new platform of giving fee-based advice, and can help them to make a living appropriate to the time that they have spent to acquire the financial advisory knowledge.
It is all right to earn commission on products that benefit the consumers. Unfortunately, many of the products currently marketed as "investment products" give a poor return for their long term savings of the consumers.
The solution is for insurance companies to design "investment products" that give good value to consumers. The insurance agents can earn a commission by selling these products, and the customer still benefits.
In my view, the "investment type" products should give insurance protection and offer a long term yield of 4% per annum. This yield is possible by investing in the right long term assets and keeping expenses, including commission, at a modest level. This yield will give a modest real return above the long term rate of inflation (2% to 3%). It is possible to create a product that meets this criteria, and offer it for financial advisers to sell to the consumers. This will be a win-win solution.
The financial advisers can also offer advice on financial planning, budgeting, debt management and early withdrawal of CPF, for an appropriate fee, say $50 to $100 an hour. This type of advice is suitable for the individuals and help them in a positive way.
For debt-management or early CPF withdrawal, the fee can be fixed at $200 with a 70% subsidy to be provided from government funding. The consumer pays $60 and the financial adviser earns $200, with $140 funded by the government.
It will help financial advisers to move to a new platform of giving fee-based advice, and can help them to make a living appropriate to the time that they have spent to acquire the financial advisory knowledge.
4 comments:
Go through the financial planning or check up to determine the cause or ailments and identify the best solution or products to address the problem. This should be the approach and not being peddled a product.
This is the way so called 'financial planning' is conducted, push the product upfront and wrap around the product with 'fact find' conducted AFTER the sale to justify the recommendation.
Friends, don't be conned into this. This is crap and YOU invariably end up as the CASH COWS of the insurance salesmen and their company.
Insurance companies are looking for cash cows like you to milk. It has been like this, isn't it?
Some companies focus on young cows peddling to them like regular ILPs.
While the young adult cows they are peddled regular , limited wholelife and endwoment and anticipated endwoment.
While the pre-retirement cows are peddled the dubious retirement products.
These cash cows are being peddled with products. None of them has ever been approached with their needs in mind.
Be careful, you might be the next cash cow. Rustlers are on the prowl.
Hi Mr. Tan - you made good suggestions but unfortunately it will fall to deaf ears.
During a recent meeting with the MAS FAIR panel, the alliance of 15000-strong agents have stated clearly that they ain't budging - at the best they will do is have more in-house training and set-up more in-house appeal channels for consumers should consumers feel that they have been mis-sold.
If FAIR made any changes to the current system and structure, then there will be mass exodus of agents and MAS has to deal with the consequences.
The presentation to FAIR panel basically tell them:
1. Commission structure and rate should be maintained.
2. Three-tier structure is as flat as it can go.
3. Average policy charges only 120% and not 160% commission.
4. Fee-based system will break agent's rice bowl, so it cannot be a good replacement for commission based system - so everything should remain status quo.
5. Consumers rejects fee-based system (according to surveys)
6. Agents today are more hardworking and productive than before because of commission-based system and they are not heartless millionaire salesperson.
As far as one can tell, the FAIR panel has actually no concrete solution to the commission-based system, other than fee-based system. With no solid plan against 15000 commission-based agents, FAIR will have no choice but to accept the fact that nothing can be changed.
Sad but true - by end of the year, this "big bang" will end up with nothing more than a whimper and die a natural death.
Anon,September 06, 2012 4:29 AM,
Unfortunately the concern is about the consumers not getting the fair deal and NOT about the agents' rice bowl is broken or not. If the agents are good they can adapt to the changes. Because many are not UP to the standard they will be weeded out and this is also the objective of FAIR. The thread of mas exodus is a figment of imagination and does not at all move the regulator.These unqualified salesmen can be deployed to other industries..some can work as construction workers, man the counter at FASTfood or work as dishwashers or as toilet cleaners or bus SBS drivers or go back to their old job as receptionists, secretaries, engineers etc etc..There are plenty of opportunities for them . They can help to reduce the reliance on foreign workers.
In Australia and NZ many former insurance salesmen enter other industries.
In Australia...does the regulator care a hoot? What about New Zealand? many left because they can't measure up. India? 500 companies closed shop. Was the regulator threatened into giving in to these unethical salesmen? NO...instead India is banning commission for insurance products as well. No regulator should bow to the demand of people who are NOT fit for the industry.This is not a fall back industry to serve the the drop outs of other industry or the charlatans to get rich quick. Tell me, can the doctors and lawyers make the kind of money the agents make without formal 4/5 years of vigorous studies. Can the doctors and lawyers solicit for business at roadsides or in the back lanes? Only insurance agents and they do anything, stoop to anything to make the money.They have a code of ethics to abide and breaching them is serious.
Therefore it is not the agents that is of concern but the consumers. As regulator if the consumers are being abused it must do something. In Singapore, consumers are sold wrong products and unsuitable to meet their goals because of the cost of the high commission that consumers become under insured and saving rubbish for their retirement.There is conflict of interest.
As for the managers they are useless unqualified to manage . They add cost to the products.
Therefore in fell swoop MAS can wipe out the industry of salesmen and managers and the system and CEOs of their high salary too.
It is now or never.
IMPORTANT: TEN OUT OF 10 PEOPLE REVIEWED ARE UNDER INSURED; HAVE THE WRONG PRODUCTS; PRODUCTS ARE HIGH COMMISSION PRODUCTS SOLD BY FRIENDS OR RELATIVES; INEFFICIENT AND USELESS.
Post a Comment