One of the “fun part” of doing financial planning is that I get to see how people manage their money. It is a privilege of seeing people’s common ways of managing money and as well as unusual ways of how people spent their money. For individuals themselves, they will never know what are the “common ways” and the “unusual ways” because they will never disclose their full financial details to their … [Read more...]
You are viewing articles categorised under Unethical sales process
The financial advisory industry in Singapore is notorious for mis-selling. I hope to highlight this issue through this blog
Mis-selling of another insurance
Here is a real case of a person who bought a rip-off insurance policy. A bank sold the idea of providing the customer’s kid with a monthly income should the parent dies or has TPD. Actually this is what we called a Monthly Income Benefit. Here was what the person bought: Premium: $34.75 per month Coverage term: 20 years No cash value. Monthly benefit: $1000 per month during the last 36 … [Read more...]
Mis-selling of medical insurance when buying directly
I have a case in which the client bought a medical insurance from the insurer directly. He went to the insurer without any financial adviser. The insurer had two products. One only covers up to age 75 while another life time cover. The life time cover is an integrated shield plan in which claims is highly efficient because it is integrated into MOH’s Mediclaim system. If I am the adviser I would … [Read more...]
Mark-up by 15% and discount by 15%
I was handling a financial planning case. My client borrowed a home loan from a bank. One of the condition set by the bank is that the borrower must buy a mortgage insurance from the bank. The bank also offers 15% discount on the insurance premium to make the client happy. I checked the benefit illustration quoted by the bank and it was underwritten by Insurer X. I am able to quote mortgage … [Read more...]
Free advice is going to cost you your entire HDB flat!
Everybody I know is concerned about their salary because they want to save for retirement. Financial advisers are no different from the human being next door. They need to earn a living as well. Unfortunately, such clients are going to be sold expensive product. Why? It has to do with low levels of productivity. Productivity is the amount of output for each unit of input. For financial adviser, … [Read more...]
The Difference between value and price in financial services
Many people do not differentiate between value and price. Price is what you pay and value is what you get. For financial services, one must determine the value of an advice otherwise any price you pay (whether in fees or commissions) will be exorbitant. From my experience, most Singaporeans do not understand this and as a result make two serious mistakes: either (1) Paying for worthless advice … [Read more...]
Finexis ‘dumping’ AXA FutureProtector at $0 for first year
Some of you may have read that US often accuse China of “dumping” cheap products into the US market. Not too long ago, China also accused US of “dumping” cheap products into the China market. What is “dumping” really? The act of a company “dumping” their products is by selling their products at below cost of production. The company does this to enlarge its market share. On surface it appears to be … [Read more...]
Zurich Vista ‘Bonus Units’ is a gimmick
Zurich Vista provides a whopping additional 62.5% bonus units during the first 18 months for premium SGD 3,200 per month. These additional units are often the selling points used. But I will show you that the Zurich Vista's bonus units is merely a marketing gimmick. To analyze Zurich Vista, I used the following parameters: Premium = 3200 monthly ROI = 9% per annum or 9%/12 monthly Expense … [Read more...]
How could a financial institution pay 100% of the annual premium year in commission?
Has anyone wondered how is it that insurance company could pay more than 100% of its first year regular premium insurance in commission? I never figured it out until now. When an insurance company pays commissions, it will book this payment an amount owed to the insurance company by the policyholder. Thus, the policyholder “borrows” this amount from the insurance company in order to pay … [Read more...]
Why financial advisers must abandon their clients?
I often hear of complains from clients that their previous advisers stop contacting them after a few years. Clients often felt that their advisers were just out to make money but did not bother about after sales service. I would like to write about this from a new perspective. Let’s say the adviser need to earn $4000 per month in earnings. Assuming a banding rate of 70%, the gross revenue to … [Read more...]
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