On the 6th July 2012, for the first time after FAIR, MAS gave a speech on the financial advisory industry.
MAS says: Why do we need financial advisers? In MAS’ opinion, financial adviser’s main roles are not to sell products. Instead, financial advisers’ roles are to impart basis financial planning skills; draw up saving plan, build investment portfolio, what kind of insurance protection is needed. A financial adviser is like a teacher.
In the industry, it is well-known that the financial adviser is a salesperson. The evidence is that he or she is often judged by the amount of revenue brought in. Product manufacturers, agencies and IFAs run incentives purely based on sales brought in. Nobody runs incentive based on how many clients the adviser ‘taught’. Personally when helping my own clients in their personal financial planning, huge amount of time is spent on education. Once the clients understood the education part, their decisions become automatic – most of the time. In addition, I believe the advisers’ role isn’t about doing paper work that does not add value to the advisory process. In a school setting, the teaching’s role is to teach and not to do paper work (although I am aware of MOE’s goal is to teach less and learn more). Yet, I feel that the adviser’s role right now is to fill up endless paper work that provides no value. Also, much of the on-going ‘servicing’ shouldn’t be done by the adviser. For example, it is common for policyholders to ‘blame’ their advisers for not reminding them that their policy is lapsing. In the first place, the responsibility to pay in time is a responsibility of the consumer. If the patient refuses to eat his medication in time, should the doctor be blamed? If a student refuses to study, should the teacher be blamed for the student’s failure in exam? Similarly, the adviser shouldn’t be involved when GIRO deduction fails, policy lapses because of non-payment or reminding clients to fill up the CKA annually which is regulatory requirement but offer no value add to the consumer. The industry is very sick. Advisers are not advisers. They are sales people, clerks and punching bags. They are certainty not teachers.
Below is a video which shows that clients these days wants to be educated and thus reinforcing MAS’ opinion that a financial adviser is like a teacher:
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