Saturday, November 03, 2012

Buying an endowment policy

    • Dear Mr Tan,
      I am considering buying a saving endowment policy for my daughter. Would like to ask what is the difference between buying insurance from a bank and agent?

  • 5 minutes ago
    Tan Kin Lian
    • Most endowment policies give a poor return to the consumer, due to the high charges taken to pay commission to the agent and other expenses. This applies to buying from an agent or the bank - the charges are the same.

      You can attend the education talks organised by FISCA here

      You can join FISCA as a member and enjoy discounts on the talks

      To join as a member, register here:

      The membership fee is $36 a year, and you can access the website and get a newsletter twice a month.

A late entrant to the Gold bar scheme

Mr. Chan (not his real name) advised his wife to stay way from the Genneva Gold scheme. She did. After a year, the wife got angry with Mr. Chan because her friends invested in Genneva Gold and received their monthly payout and also the buyback payments. They were making a good return.

The wife decided to ignore Mr. Chan. Her family joined her to put in all of their savings into the scheme, and to make up for the lost time. Genneva Gold was raided by by authority six months later, and all their savings got stuck. Mrs. Chan and her family do not know if they will get back their investments and gold bars.

Friday, November 02, 2012

Financial advisers should not sell unregulated products

Read this letter

I have heard of many cases where financial advisers are selling non-regulated products, such as the Genneva Gold scheme and land banking products.

Perhaps MAS should ban financial advisers from selling non-regulated products, as the consumers may not be aware about the difference between regulated and non-regulated products?

Thursday, November 01, 2012

The authority should have acted earlier

Dear Mr Tan
I refer to this comment on your blog at 1.57 pm on 26 April. It is quite obvious from it that the authority (not sure which ministry as you did not mention it but definitely a Minister or Ministry is involved since you mentioned it). 

Now that your "allegation" is proven to be true, I wonder whether you will pursue the matter with the person and/ or the Minister or Ministry. As Chiam See Tong mentioned before, our leaders must take responsibility. They have been taking credit and rewards for doing many things right and deservedly so. But when things go wrong they have to learn to and must take the responsibility. That is why they are the government. That is the role of the government. 

I was quite disappointed to see our DPM / Minister of Finance issuing warning in Parliament two weeks after the company was raided. It seems like it is an act to "wash their hands" over the matter. Although each individual has to be held accountable for their own actions the authority is there to help maintain and ensure law and order. The authority has the power and resources to do what ordinary citizens are unable or unwilling to do. In this case, the authority must have been aware of the operation of the operator. Otherwise it would not be placed on the alert list. 

But having put them on the alert list, it their job done? Or is it just so that again they can "wash their hands" if things turn nasty. They can simply point to the list and say "see, we warned you, it is on the list"? This does seem unprofessional and lack of courage to do the right thing. To pre-empt disaster and tragedy. Which is the hallmark of a government; one which Singapore is well known for but I am unsure now.

POSTING IN TKL BLOG ON April 26, 2012 1:57 PM 
"One of the underlings was angry at my posting. She told me rudely to make a Police report, rather than to post this vague allegation in my blog.

I wanted her, and her minister, to know that I had made a report to the Commercial Affairs Department on another alleged fraud. This report was made in conjunction with another person, who had painfully investigated the alleged fraud for quite some time, and had compiled a dossier of documents that provide evidence of the offence.

The CAD officer decided, after over two months, that there was insufficient evidence for them to investigate the matter.

We learned later, that the CAD officer did not even call up the alleged offender to ask him to give an explanation to the issues that were raised.

If a carefully prepared report with documentary evidence could be ignored in this manner, there is little chance for my "suspicion" to be given any consideration.

In case the underling and her minister does not know, the ordinary citizens do not have the authority, power or resources to carry out any investigation or enquiry.

I wish to post this comment here, so that the underling can report this state of affairs to her minister.

I did not post the comments from the underling, as she has a habit of attacking me in my blog and Facebook. She was quite rude in challenging my views and did so just for the sake of rebuttal. I suspect that she is under orders to monitor my blog. "

Problem with Incomeshield claim

Mr. Tan, please paste this in your blog

The Editor
Today - Voices

NTUC Income’s letter (WHY NTUC Income rejected claim) failed to disclose the salient facts evident in my correspondences  and email exchanges with Income’s officers. These letters are enclosed for the benefit of the Editor. As Income has confused your readers,  I am compelled to straighten the record.

From the letters and emails, it is abundantly clear that when I chose to be C-warded, I had intended to claim under my CPF Medishield. In my letter dated 05/10/12, among others, I stated:  …. “I refer to your
letter of 02/10/12 relating to my hospitalization claims.
Please note that my claims are against my CPF Medishield Basic which I signed on since day one of inception including when it was migrated to your company.
In all the hospitalizations I am claiming I was a C Ward patient with full subsidy. Hence there is no basis to reject my claims. 
Attached please see my July letter mailed to your office which evidently may have misplaced….

 My letter of 04/07/12 asked NTUC Income to process the claims under my medishield which was migrated from CPF to NTUC Income many years ago. Income was hence my service provider and it is supposed to play this role as required by CPF as “one-stop processing centre…”.

So when Income chooses to unilaterally terminate (retroactively to 01/01/12 and jeopardizing my coverage/protection) my Enhanced Incomeshield basic for frivolous reason and after a long time lag of four months, they are still my service provider (until I am informed otherwise as they did when they first “took over my policy” from CPF) . Instead of processing my claims under my Medishield, they told me to get the hospitals to re-bill to CPFB even though I have repeatedly told them that I was not aware nor in the loop when the hospital billed them under “Enhanced Incomeshield basic”. I also had no knowledge of what bills were sent and when. 

To make matter confusing, I was told by their email: … “You will remain insured under Basic Medishield if you satisfy the  CPF’s eligibility criteria.”  Mr Pui Sr VP of Income has since inserted some mitigate in an attempt to damage-control the point I was raising about Income’s duty to check out and advise me. 

Afterall until there was policy  cancellation or re-nomination (my Medishield), Income is still my service provider. Together with GE, Income was keen to takeover my CPF policies and they cannot just drop the matter without the courtesy of informing me. Also in his second and last paragraph, Mr Pui mentions that Income understands that I met CPFB’s criteria. That being the case why did not Income said so upfront despite the many email exchanges; in the process causing so much anxieties to their client?

A week after my first hospitalization, an SMS advises that my claim will be processed within 14 days. After much chasing and prodding, NTUC Income replied some four months later followed in quick succession cancellation of my upgraded policy ignoring my request for delay action so as not to jeopardise my lower tier coverage. Is this the usual performance standard we are to live with?

To-date NTUC Income has yet to inform me officially that they are no longer my service provider for my CPF Medishield basic.

James Wong (Wong Chee Wah)

How to stop a Ponzi

There were a few Ponzi schemes that were allowed to grow until to a large size, before they were stopped by the relevant authority. The late action had caused many investors to lose their hard earned savings, amounting to tens or hundred of million dollars. The Sunshine Empire is just one example, which has been prosecuted. If the authority had acted earlier, less investors would have been affected.

Which government agency is responsible to act on these investment scams? Should it be the Monetary Authority of Singapore, the Commercial Affairs Department or other agency?

The MAS said that they do not have the resources to investigate every investment scheme. I do not accept this reasoning. The Police does not have the resources to prevent or investigate every crime either. But it is still their duty to investigate a crime, if there is sufficient lead, and to pay more attention to the serious crimes.

Many of the investment scams could have been investigated early on the possible infringement of the regulations on deposit taking or money laundering, which are administered by the MAS. When MAS becomes aware of a scheme, e.g. when it places the scheme on its Investors Alert list, they could request the directors of the company promoting the scheme to visit MAS for a "discussion" on their schemes. This action is likely to lead to the early cessation of any potential scam.

If the directors refuse to cooperative, MAS could make a request to CAD for a more thorough investigation.   While the civil servants in MAS may not have the skill and resources to investigate a potential crime the people in CAD are more equipped to handle this task. I would expect that a request from MAS to CAD would be accorded with a higher degree of respect, compared to a complaint from the general public.

While MAS will not act on all investment schemes, they can and should act on schemes that are actively advertised, involve large number of investors and offer returns that are "too good to be true".

I hope that the MAS and CAD will learn from the lessons of several investment scams that had occurred in Singapore in recent years, and take pro-active action to prevent future scams of a similar nature from happening in the future.

Tan Kin Lian

Wednesday, October 31, 2012

Ponzi - how it can pay an attractive return

A Ponzi is an investment scheme which pays an attractive return, way above what can be earned in the market.  The promoter of the scheme pays the attractive return by using the money invested by the new investors to pay the return to the old investors.

Due to the attractive return, the inflow of money from new investors far exceed the payout to the old investors, so the promoter is able to pocket the difference.

Right from the start, the promoter already runs a deficit. For example, the money owing to investors is say $50 million. Next month, $5 million is due to be paid out to the old investors. But if new investors put in $15 million, the promoter can pay out the return and pocket the difference of $10 million. The promoter now owes $65 million to the investors, but there are no funds to back up this obligation.

The old investors may find the return so attractive that they reinvest their savings on redemption.

A Ponzi will continue to grow as more money flows in. When the new money stops coming in, the promoter is likely to run away, leaving the investors with a total loss of their investments.

Read this story about how the Ponzi first started, by a person called Charles Ponzi. As he created this scheme, his name was given to describe the scheme.

My experience with Standard Chartered Bank

The marketeer of Standard Chartered Bank went to a lot of trouble to get me to sign up for their credit cards.

The marketeer later told me that the bank will not pay her any fee for the cards sold to me, as I belonged to the older age group. It seemed that the bank wanted to target the young people who are likely to roll over their credit line and pay interest of 2% per month, plus a late payment fee of $50 (or whatever is the amount).

I am reluctant to start using the card until I got my GIRO authorization arranged. I had to get the GIRO form from their branch. After submitting the authorization forms, I did not hear from the bank for more than one month. I called their hotline and they said, "no record of GIRO arrangement".

I suspect that they are not really keen to have me spend on the credit card and pay by GIRO. Perhaps they are waiting for me to pay late, so they can impose their fees.

Tan Kin Lian's website

I have posted many articles on financial planning, investments and insurance in my website,

You can view the latest article here:

You can search for all articles on a specific topic, e.g. "property" or "health" by typing the keyword in the search box. These articles may be written some time ago, but they are still relevant today.

Expedite probe on gold buyback firm for the sake of investors

DPM and Finance Minister Tharman Shanmugaratnam's parliamentary reply
("Tharman warns operators of gold buy-back schemes against fraud"; Oct 17)
and the replies by the Monetary Authority of Singapore 
("MAS spells out regulatory criteria"; Oct 20
 "MAS explains extent of its alert list"; last Saturday)
have not comforted investors like me
who bought into the gold buyback scheme offered by Genneva,
which is currently under investigation.
Mr Tharman's reply suggested that the authorities indicated a recognition
of the heightened risk of non-discerning investors
putting money into seemingly high-yielding schemes
in the current low interest rate environment.
Yet, it seems that
there was no corresponding increase in regulatory oversight.
Ow Bin Bing (Ms)

Buying a property to stay

Here are some tips about buying a property to stay for the long term.

Things to avoid:
1. Never buy a property and hope to become rich due to appreciation. You can also be poor
2. Never buy a property to rent out as an investment, unless you do not need to take a loan.
3. Never buy a property more than 5 years of your income. It will be a burden to service it.

Remember, making an investment on borrowed money in very risky, and that includes buying a property. The only exception is a home that you intend to stay and the mortgage payment is within your budget. Do allow for the possibility of loss of your job.

An honest view from a financial planner

Hi Mr. Tan,
I sold this policy to one of my good friends just a few short months back, and I went to re-download the BI from my company’s portal.
Honestly, I thought that I was doing my friend a good deed, because he approached me and told me that he wanted to buy insurance while he was young and the premium is cheap. He was looking at investments, and since he was still young and inexperienced with trading equities and bonds/ETF’s, I suggested that he buy this ILP which keeps the mortality charge constant for the whole duration of the policy. 
I really thought I was giving my friend a good deal. I calculated the mortality charge for him, and it would remain slightly less than $9 per month all the way until the policy expires when he reaches 60. After inspection of the BI, I realised that a similar term policy with bonds/ETFs investments would do far better. 
I told him that the ILP would take about 7-10 years to break even, so he cannot terminate the policy beforehand. I was taught this by my manager. While this holds true, it is only a half truth. If you look at the 5% return column, he would only break even from the 21st year onwards!! The fault lies in the fact that we chose a high life coverage for him, whereby less premium would go into investment of units. However, looking at it from a macro perspective, no matter what kind of coverage we choose and how we mix and match the numbers, an ILP will never beat returns had you invest by yourself. The effect of deductions in this case is horrendous.
Although my friend is not paying a large sum of money ($110/mth), and is willing to do this to support me, I think that I’m shortchanging him. And I’m very disappointed because I thought I was doing the right thing and it turns out that the company is eating a lot more money from him that I could ever imagine..
Mr. Tan, agents are trained to sell, and trained in the manners of product knowledge. But we are not trained in the financial knowledge and how to boost our clients returns. I feel that the companies should upgrade our knowledge regarding increasing wealth for our clients the ethical way.

The CMFAS papers are structured in a way to boost the insurance companies’ profits. While the companies and agents keep saying that we are helping our clients; we are only boosting the company’s profits. I know this is the same for the banking industry as well, and that consumer interests are always placed below the company’s bottom line. While this probably can never change due to human greed, however I hope that FISCA is able to work with MAS to help the lay people generate more wealth the ethical way.
I am more than willing to join the MAS to stamp out such practices, but I am a nobody. I hope that more things can be done for the finance industry in Singapore. I am getting disillusioned with the financial products sales line, and I don’t suppose I will be in sales for very much longer. However, I want to help as many people as possible know the industry better and for them to know better ways to boost their returns.

    Derrick (not his real name)


Tuesday, October 30, 2012

Confusing interest rate

For the sake of consumers, the regulators should disallow banks from offering products with confusing interest rates.

Gangnam Style

Monday, October 29, 2012

Accreditation of bloggers

I agree with Professor Ang Peng Hwa, in the report "Engaging bloggers and non-mainstream outlets" (Oct 27), that there are good reasons to grant them press accreditation, though not only due to space and time constraints at press events.
Over the past months, prominent bloggers here have almost unequivocally rejected the proposal to have an Internet code of conduct, mainly because they feel that it is a veiled effort to curtail free speech online.

Bhavan Jaipragas

Finance sector should not be too large

Finance, literally bids rocket scientists away from the satellite industry," Bank for International Settlements economists warned, saying that it competes for people with high qualifications.... "The result is that people who might have become scientists, who in another age dreamt of curing cancer or flying to Mars, today dream of becoming hedge fund managers." "Overall the lesson is that big and fast-growing financial sectors can be very costly for the rest of the economy.

Sunday, October 28, 2012

Paying off the "insiders"

Mr. Lim (not his real name) invested in several plots of land in Canada. During the first two years, the local agent who sold the plots to him provided good service and kept him informed about developments in the project. After the Canadian company got into financial difficulty, the agent continued to update him on the developments.

Recently, the agent stopped updating him and even discouraged him from pursuing his trying to seek legal advice. The agent told him that "all is lost" and it is best to write off the loss. Mr. Lim wanted the agent to give him the names of other investors who had bought similar plots of land, as he wanted to contact them to take joint action.

The agent  refused to give the names of these investors to Mr. Lim and claimed that they do not wish to pursue their claims. The behavior and non-cooperation of the agent surprised Mr. Lim.

I told Mr. Lim that the agent, being an insider, had probably been paid off by the promoter and in return had probably signed an agreement not to provide further information to the investors. It is easy for the promoter to pay off a few "insiders" who had the information to round up the unhappy investors.

Mr. Lim agreed with my assessment. He regretted placing his trust in the agent earlier.

Genneva Gold in Malaysia

Many people are involved in this scheme and the amount invested are large.

Real estate investment trusts (REITS)

Investing in REITS are like investing in properties, but they offer two advantages:

a) You do not have to bother about managing the tenancy, handling repairs, looking for tenants, collecting rents
b) You can a better return - many REITS give a dividend yield of more than 5%, compared to a yield of 2% on renting your property.

Find out more about REITS in

Facecard for business and professionals

Facecard is great to keep in touch with your university and polytechnics friends. It can also help you in your career or business!
You give your business card to people that you meet because you want them to know you and to contact you when there is a business or career opportunity. The trouble is that most of your contacts cannot find your name card when they need to find you!
Here is a better way. Create your name card in the Internet Cloud!

Pursuit of success and happiness

The late Dr. Richard Teo shared his life story before he passed away. This should get our young generation to reflect about success and happiness.

Keep in touch with friends for a lifetime!

Your years in polytechnic and university are the best time to make friends and keep in touch with them for life. How do you keep contact, when they change their e-mail address, mobile numbers and move from one job to another? Here is the ultimate solution. Create a Facecard.

Gold never glitters for investors

Here is an update of the investigation into the gold trading firms in Malaysia.

Many investors have also been caught in similar schemes in Singapore, but the news of the investigation here have been sketchy and sparce.

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