Last Updated on 10, April 2014
From my experience, I found most of my clients are paying higher fee than they should. As I charged based on the time spent, I found myself spending a large proportion of work on organising the client’s data. Clients engaged me to analyse and provide advice to them on how to achieve their financial goals. Clients do not engage me to help them do filing and organising their financial data which is merely a clerical job. Sometime, I could spend up to an additional 10 hours of unproductive work organising and figuring out the missing data even before analysis. This translates to thousands of dollars of unnecessary cost to the client. Moreover, I do not find such a “clerical” work enjoyable as I prefer to do what I like best which is to help my client achieve their financial goals.
To lower the financial planning fee and to increase my productivity, clients should ensure their data are well organised before engaging me. Here are some tips that will be helpful to you if you wish to engage my service:
- Make sure all insurance policy documents are submitted to me. For missing documents, you should request a duplicate copy from the insurer. The most common missing policy documents are:
- Medishield Basic certificates;
- Dependent Protection Scheme certificates showing the sum assured and bonus sum assured;
- Home Protection Scheme (HPS) certificates showing the sum assured run-down illustration; and
- Eldershield Basic certificates.
- Obtain and submit to me the latest post-sales benefit illustrations of existing life insurances. Common mistake is to submit to me the bonus statements which only provide partial information. The post-sales benefit illustrations would have included previously declared bonuses and thus are more useful.
- For Investment-linked policies (ILPs), remember to submit to me the latest market values and fund allocation statements.
- Ensure important correspondences with insurers are submitted to me. Important correspondence are:
- Endorsements including special terms, adding or removing of riders;
- Amendments/Acknowledgement of nominations
- Do not make duplicate copies of insurance policies. I only need the original copies. If duplicate copies are made, this will generate large amount of papers which I have to figure out what are the duplicates. This will increase the amount of time spent in unproductive work which is ultimately born by the client.
- If you are working as uniform personnel, I would like to see all your Personal Accident insurances including those which are group plans.
- Do not submit any documents to me relating to financial products that are already terminated, sold or matured. The most common mistakes are:
- Submitting to me endowment policy document that matured;
- Submitting to me related documents (such as nominations, GIRO and all correspondences) on life insurance policies that were already matured or terminated.
- Submitting to me old investment statements that are irrelevant because these products were already sold or completely worthless.
- Do not submit to me financial institution’s direct marketing mailers. Unless these marketing mailers help to clarify the purpose of the product that was already bought, these advertising mailers are not useful to me. You should not be paying me to read junk mails!
- Use the spreadsheet template provided to supply me with the required financial details such as assets, liabilities, income and expenses. Do not use your own template as I will have to transfer the information to mine. As this can cause transfer errors, I would have to spent time double checking for these errors which translate to higher cost to the client.
- When you fill up the Excel sheets I provide to fill up your income, expenses, assets and liabilities, two common mistakes made are:
- “Rounding” these figures to the nearest whole numbers. Rounding to the nearest whole numbers increases the errors in the cash flow statements and networth. These errors are amplified if compounded over many decades in my calculation for retirement planning. For example, if the latest CPF-OA balance is $142,123 but the figure entered into the Excel sheet is “$150K”, an error of 5.54% is being introduced. If similar errors were introduced in other accounts, the cumulative errors can be significantly large.
- Sometime due to laziness, the client entered an estimated figure into the Excel sheet eventhough the exact figure can be determined. Use the latest statement from the financial institution as the basis.
- I need to see the mortgage agreement (if any). The information I look for are: the borrowers and whether are they borrowing jointly and severally, identity of the guarantors, tenors and the initial loan amount. The latest installment amount should be obtained from the bank’s latest statement. Although very rare, the loan agreement could actually NOT specify the loan amount and the tenor. This may happen for refinancing. Ensure a written document is obtained from the bank specify exactly what is the loan and tenor of the existing loan.
- For Income tax return, a common mistake is to submit to me the income tax acknowledgement for internet filing. I am looking for the latest Income Tax Notice of Assessment (NOA). A softcopy can be obtained from IRAS using SingPass.
- CPF Nominations. Regardless of whether you think you had done a CPF Nomination or otherwise, I would require evidence of such. Login to CPF website and use SingPass to obtain such CPF Nomination. Common complain is that the CPF Nomination information cannot be printed from the website. You can do a screen capture and print out the capture instead.
- If you are a government pensioner who enjoy life-long medical benefits:
- I would need to see the evidence of such and in which scheme;
- You should also submit to me the terms and conditions of your life-long benefits. You can obtain such documents from your Human Resource department.
- For individuals who enjoy defined contribution or defined benefit scheme from their employers, submit to me the evidence of such and the latest statements.
- If you own a property jointly with another person, submit to me evidence of such and whether it is joint-tenancy or tenancy-in-common. For HDB flat, you can login to HDB website using your SingPass to get such information.
- For business owners, it is likely your largest asset is your business. Try to obtain a formal valuation of your business.
- Finally, it is common that the desire to engage me for professional financial planning is being initiated by one of the spouse. The other spouse has no interest in the entire exercise. I encountered a case in which the unwilling spouse slept in front of me due to disinterest and causing much embarrassment to the other. It will do well to have both persons being willing parties so as to have an effective financial planning exercise.
The kind of information that I look for is part and parcel of fact finding. While it appears to be troublesome to some, having obtain all the information and documents are important not just for me but for you. This exercise improves your financial security and provides you with greater assurances of knowing exactly what you have and what you do not have.
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