There are numerous surveys that showed that consumers are unwilling to pay a fee for financial advice. The latest one was an online survey conducted by MAS which showed that 80% of the respondents are not keen to pay for financial advice. But the question is - what exactly is ‘advice’ in the minds of these respondents?
The respondent to the survey questions will answer based on his personal experience. If we ask the individual “Will you pay for financial advice?”, he or she will answer based on his past experience with financial advisers. Usually the mental picture of a financial adviser goes like this:
- Mental image 1: A financial adviser is the one who hangs around at bus interchanges in groups pretending to conduct surveys but ends up selling insurance products. (In other words, a financial adviser is a pretender.) Would anyone want to pay fees to a pretender?
- Mental image 2: A financial adviser is one who hangs around in IT shows in groups offering free iPads if customers buy some insurance products. (In other words, a financial adviser offers free goodies.) Would anyone want to pay fees to someone who offers free gifts?
- Mental image 3: A financial adviser is the one who sold me a saving plan 20 years ago but the plan matured at half of that initially promised. (In other words, a financial adviser is one who made an empty promise.) Would anyone want to pay fees to a financial adviser who made empty promises?
- Mental image 4: A financial adviser is the one who recommends the customer a 20 years lock-in product (e.g. endowment) when the customer wanted to open a 1-year fixed deposit. (In other words, a financial adviser locks people’s money for decades.) Would anyone want to pay a fee to someone who will lock up your money for decades when you can only wait for 1 year?
- Mental image 5: A financial adviser is one who sells China equity fund to an 80 years old grandma who uses all her life saving and cannot even understand English. Would anyone want to pay fees to such an adviser?
As you can see, why would anyone wants to pay fee for financial advice when there is such negative images of financial advisers? The truth is that these are the images in people’s mind. It is quite surprising that none of the survey had 100% of the respondents refusing to pay fees.
If the survey questions were structured in the following format, I am very sure the results will be very positive:
- Are you willing to pay fee to someone to help you uncover mistakes in your CPF account?
- Are you willing to pay fee to someone to help you uncover mistakes in your existing mortgage agreement?
- Are you willing to pay fee to someone to help you uncover issues with your overseas investment properties?
- Are you willing to pay fee to someone to tell you that you have an invalid Will?
- Are you willing to pay fee to someone to tell you that you have made a dangerous investments which will be ‘sure-lose’ on a long run?
I don’t think the results will show 100% will be willing to pay fee but I am sure a very large majority will be willing to pay fee if the questions were structured in the above manner.
I am conducting a seminar which I will show how I uncover serious problems for clients through a professional financial planning process. Some examples of problems uncovered include:
- CPF mistakes
- Mistakes in an existing mortgage agreement
- Issues with overseas investment properties
- Invalid Wills
- Dangerous investments and many more!
The seminar is held on 2 Feb 2013 (Saturday) 9:30am. To register, go to Professional Financial Planning Preview Talk. Early bird discount and group discount available.
Update on 1 August 2013: See Buying an IT gadget to get free insurance or buy insurance to get free IT gadget?
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