Read this webpage here: http://www.investopedia.com/articles/basics/04/022704.asp
Although it seems to be written in American context, it seems quite relevant to Singapore. Here are my comments:
- The article stated that it is a misconception that financial adviser work for free. This I agree.
- The article says that some commission-based advisers are tempted to engaging their clients in active trading and in an unethical practice of churning. In Singapore, churning is not only unethical but illegal. Unfortunately churning is highly rampant in Singapore. These churners earn big bucks and sometime give “rebates” to CPF investors. Rebating commissions for CPF investment is illegal in Singapore. Yet, many CPF members ask their advisers to churn their CPF investments and in turn ask the adviser to “rebate” them their commissions which effectively act like a premature CPF withdrawn. I have only one word for these investors: foolish to churn in order to make premature CPF withdrawn. When the time comes at age 55, they would realised that they don't have enough CPF Minimum Sum for retirement. So what's next? Ask the MP for help? Who is going to support this investor? Taxpayer money obviously.
- The article says that due to technological advances, many investors could “Do-It-Yourself” (DIY) but many investors end up “believing” many untrue “free” information from the Internet. Thus the need for professional help is still relevant.
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