When it comes to planning, i am a strong believer of trusting the person who is supposed to be an expert in the industry it’s in. When there is enough trust, alot of work can be lessen off and things can move fast. However due to human kind, some of us tend to abuse this trust and as a result, there are many others who had bad experience.

I would highly recommend that you as a consumer, need to assess your consultant inside out when it comes to financial planning for yourself. Make sure that this person is not out to earn a commision from you and what he say, he must do it himself too. If you meet an agent selling you ILP, do ask for proof of himself buying the plan too. I’m sure you dont want to buy from an agent who is insufficiently covered or worse still, doesnt even own this policy himself.

Ask him what are the type of planning he has done for himself? If he takes a second to think and tell you, it can only show that he/she is not sure of their planning and thinking of a good excuse to tell you.

Do you have a consultant who only sells you saving plan or recommend that you should start saving since young? Well not that the theory of saving since young is wrong but it’s just that if one commits too much into saving initially without fufilling the insurance coverage, the end result will only be one thing: Lapsed policy.

By lapsing, the customer is the biggest loser so that’s why i always advice my clients to tell their friends not to buy saving plan. Despite all that has been said, there are still many young people falling into the saving plan trap. Rich consultants are the one that selling you saving plan because they earn the most out of it. You hardly see them selling you term or limited pay plan because of the minimum commission.

In short i just hope to highlight to readers that trust is to be earned and not to be given so easily to your financial planer. Make sure that they are really keeping track of your insurance portfolio as a whole rather than always going for saving for long term approach.

It’s been almost 2 months since my last posts and i am deeply sorry about it. Many of my friends have asked me what happened and my reply was ‘No time’

But today i receieved an email which motivated me to want to blog more. I got an email from CPF board to invite me to write articles for their upcoming ‘Are you ready’ Campaign and i really feel very honoured to be on their invited list. They are going to launch this initiative in 9 Oct 2011 and the purpose aims to educate singaporeans on how to make key financial decisions in their lives.

So therefore the next few weeks, i am going to write a couple of articles so that they can use for the campaign and hopefully through this event, more people can be educated financially.

If you guys have any other topics or areas that you are interested to know more, you can email me or drop me a msg at the chatbox. i will listen to you and share with you my knowledge to my best ability =)

Stay tuned!

Are you totally prepared for it? Have you as a parent, gotten enough coverage for yourself first? Are you concerned about saving up for your kid’s education plan? Do you have enough saving to endure you through the initial period?

Many parents that i have met experiened one thing or another as mentioned above and most of the time, i need to sit down to spend quality time with them to do some re-adjustment of their portfolio. One of the few mistakes that i realised adults made was that they committed too much into saving for their retirement during their age when they have not enough gotten themselves insured enough.

In Singapore we were taught that we should SAVE. Therefore many insurance sales-person out there will try to make sure of this point to sell to many fresh graduates the idea of saving when young. Yes, it is true that we should be saving BUT not with any insurance company per se. They need to save up for their emergency fund first then get themselves insured and when everything are settled then they look into saving for retirement.

Think about this: one young man went to buy a 25yr saving plan when he just started working as fresh grad and he committed $200 because he is able to save $1000 per month. His salary was $1800 during then. A few years have passed and he realised that he needed protection so he approached his consultant to buy a life insurance. He was asked to buy a life insurance that costs $150. So at this point of time, he would be committing $350 out of his $1800 salary and this works out to 19% of his income! Slowly he got married and have two lovely kids. Then suddenly he passed away due to a car accident! His wife called up his agent and asked how much he was covered. Guess what! The agent said ‘Auntie, i’m sorry he did not have accident plan with us and his total coverage only $130,000″

Imagine you are the wife, how would you feel? $130,000 only! Goodness, how long can you survive for only this small amount of money with your two kids?

In the above example, if he was sold a term plan of $150k for $30/mth and a participating life plan of $150 covering $100k for death and accident, his wife will be receiving $400k in total and he was only paying $180/mth using only 10% of his salary!

Let me tell you the honest truth: This is what is happening out there to many people who commits a saving plan first and realised they may not have enough money to buy life insurance when they really need it. Their agent may not also sell them term policies or accident plan because it is firstly hard for consumer to buy the idea of life insurance and secondly commission are low for them plus the overall production the consultant brings in will be considered low.

 Therefore the next time people approach you for saving plan, tell them stop being a sales consultant, be a financial planner and i will buy from you.

Types of factors that need to be taken into consideration:
1) Will you be able to achieve 6-8% returns on your own?
2) Are you disciplined enough to keep invested for long term?
3) Are you able to handle the art (emotional) side when you are buying term?
4) How old are you when you are choosing to buy life insurance?
5) Are you willing to pump your money into a plan that yields no return for you if nothing happens?

I am sure that at this point of time many people would have disagreed with some of the pointers that i mentioned above but like i said, it’s purely my own opinion and i am not asking anyone to follow.

Buying ILP will simply solve many problems of a person who doesnt know how to invest but yet would like to do some form of small investments via insurance. But one thing for sure is that the age that you are buying the plan really plays an important part simply because of the mortality charges that you may be incurring. For someone who is 40 years and above, ILP is not suitable and he is better off buying a term insurance for itself. But for someone who is in the early 20s, ILP may not be a bad choice for them compared to term because of the long term approach that we are looking at. I have just done a comparison of a $100k coverage for death, disability and critical illness for ILP and term. What i found out was that in the long run, say 40 years, the different amount payable for the two plans are not really alot ($15k). However if at the point of time the person were to take out some money for his old age, he/she will still have either $37k (5% return) or $169k(9% return) from his/her ILP as compared to nothing from her term insurance.

Therefore looking at the example, one would prefer to get a ILP instead of term. However please take note that such cases differs from cases to cases so please don’t take it personally and think that it will suit you the most.

Another point that i want to emphasize is that for a person to buy term and invest the rest, they need to really master the science and art of investment. They need not only need to know how to pick the right funds but also to handle their emotionals during crisis. One mistake can cost them quite a bomb. We as a logical person, will also have problems convincing ourselves to buy a plan that may cost a $100/mth and there will be no cash value after 40 years. Example: Do you think a person will ever keep renting a house for his rest of whole life? I can tell you that after sometime, this person will still want to buy a house that can still contain some value after he grows old.

As for myself, i have a mixture of limited pay life insurance, term and ILP.  The purpose of having these policies is so that i can still be insured against death, disability and major illness even if i outlive myself and not working next time because i have already fully paid for my limited life insurance. When i grow old and not working anymore, i plan to cancel out my term and surrender my ILP for my retirement needs.

Therefore the morale of this article is to tell you that people’s needs are different and please do engage a committed and honest consultant to do a fact-finding with you and discover your strength and weakness and be able to plan out a bright future for you!

Recently i have my clients and friends asking me whether should they buy insurance products from banks or from me (tied agent)?

Well personally i felt that the answer is the same as you asking yourself ‘Should you go directly to manufacturer to buy products or you should buy from a distributor’ Same things but different pricing. The price that you pay if you go direct to manufacturer is so much cheaper compared to distributor where they will mark up the price by abit to earn the margin.

In our context, buying insurance from us(manufacturer) is more beneficial compared to from the bank(Distributor) 

 First of all, ask yourself this question: ‘Is the agent from the bank going to be your long term consultant or do you think the one from tied agency would possibiliy be the one staying long term?’ Which one has the incentive to do their work better? I believed the answer is quite obvious. The moment you signed on the documents inside the bank, the liability lies directly between the insurance company and yourself. The bank consultant cannot be seen inside your future financial planning process. On the other hand, the tied agency agent will continuously be there to service you making sure that you are covered for every single thing from head to toe.

Of course, i would like to make a disclaimer first by saying not all tied agency agents are Mr or Mrs nice guy/lady or they will choose to stay long term. Nevertheless tied agency agents have more incentives to do their work well. Just take a look at lehman brothers and you would know why i say so.

Second of all, ask yourself this question: ‘ How is the consultant being compensated inside the bank?’ Is it through commission by clearning sales target of different kind of products? Over in bank, most of them are rewarded based on their overall sales target for different kind of products. Meaning to say that if they failed to hit one type of products then they will not be entitled to full commission. However for tied agents, we are rewarded for any products that we recommend to our clients. We does not have a particular sales target to clear and therefore we will always recommend based on client’s need.  Again my disclaimer for this would be that tied agent MUST disclose their commission to clients to show if they have any bias towards any policies sold.

Last question that you can ask is whether bank consultants do a fact-find or rather understand you first before they sell you any products? How long do you know a bank agent before you decide to buy from them? Comparing to a tied agent where he/she will spend quality time knowing and understanding you, who do you think will recommend products based on your needs. Time spent does matter because without a proper understanding of client’s needs, it is hard to be able to properly recommend a product that suits their needs.

Involving financial planning is a time consuming decision process and many of us are not really keen on going through. Many felt that any plans will do the magic but they are all wrong. One wrong commitment may turn out disastrous in long term. It is always good to find the right agent who possesses the passion and interest in their career. Only with the right qualities, they will put your interest in the first priority because they live by the theory that if they take care of their client, their client will take care of them! =)

Note: Above are my two cents worth of thoughts. It does not constitute to any financial advice. Please do your own research before deciding on doing anything on your futre.

Taking the first step to make the choice to save is important. But it is only the stepping stone of many other crucial decisions that you have to make in order to accumulate more wealth.

Last year, a Citibank survey showed that Singaporeans were equally likely to park their extra cash in conservative products as in riskier ones. This came to show that people are stating to make conscious decision on the use of their money. However the answer to your investment depends on your investment disposition, for which one has to assess risk appetite, risk capacity and time horizon.

In recent Straits Times, newspaper reported that most Singaporeans are not ready to retire and there are ways that they are teaching the elderly on how to live longer comfortably. Well after reading these articles, it brought to my attention on the importance of parking your money in the right channel and how to grow your money in the right way.

Over here, i would like to share with you where would be best to part your money.

Conversative approach:
1) Deposit account: When i am refering to deposit account, it includes the typical saving account and fixed deposit that most banks offer.

In Singapore, most of us are getting quite low interest eg: 0.125% for normal bank account or ranging from 0.35  to 0.875% for fixed deposit. Even thought the interest is low but there are still people who likes this approach because they feel that it is better to earn less than to have the chance to lose up to 30% of their investments through uninformed decisions.

2) Government Bond: A bond is like a loan. In other word, it is a formal contract to repay borrowed money with interest at fixed interval. This form of investment is relatively safe as it promises regular payouts periodically even though the interest return is not high.

I would say that by investing in bonds are quite safe and it is better than normal bank deposits. However there are also junk bonds hence it would be a good idea to seek a professional advise before making the purchase.

Medium to High Risk approach: 
1) Structured products: In a layman term, these products involve derivatives to capitalise on the performance of an underlying asset such as a stock to give out a certain expected yield over a certain period.

Eg: Equity-linked notes with returns that could depend on the performance of a single stock,  a basket of stocks or stock indices. One of the concerns that i have for consumers is whether they know that if the product is capital guaranteed?

Over the past two years, we have seen many bank selling those structured products that had caused many others to lose their retirement funds. Eg: Mini bond.

2) Self-Investing: This is useful if you are really investment savvy. It includes stocks, unit trusts or bonds. If you can stomach even more risk, you can also invest in forex or properties. But all these comes with risk of losing more money hence it must be done carefully.

Please don’t think that by reading up a few books here and there makes you a savvy investors. Most successful investors i knew, have ‘paid’ their fair share of tution money to the stock market before they become the ‘ know-how’ investors. Therefore be smart and don’t act smart!

Investing is a life long skill that you will need if you like to retire comfortably.

3) Insurance and savings: Life insurance  products are another means by which people can build up their retirement funds. Typical products include endowment policies and investment linked or traditional life plans.

For those who may not have the discipline to set aside cash in the first place, an endowment policy is a great way to kick start the habit. Typically, such policy requires you to set aside premium every month into a policy that will either make regular payouts or lump sum payout upon maturiy of the policy.

Depending on your investment appetite, endowment policy can be either investment link related or non-investment link related. Investment link regular premium offers higher potential returns and the flexibility to adjust their funds allocation along the way.  However the flip side of such policies is that all the returns are non-guaranteed.

For those conversative consumers, a traditional endowment plan is the way to go. It helps to address those  with specific purposes whether be it in planning for retirement or children’s education.

Having to understand the type of products available, it is important to note that given the variety of products out there, they have to select properly. If you are unsure about where to start, it is imperative to seek professional advice from a reliable financial adviser. It is equally important for you to be forthcoming with relevant information for the adviser to work with.

Everything that i shared about are my two cent’s worth of knowledge. Hope it benefits you =)

But then again if we really sit down and think, is buying insurance that simple?

In my personal opinion, getting an life insurance is a simple task but not easy. Other than there are many things that you must understand before you make a decision. Eg: what’s the term and conditions, any exclusion, pros & cons, interest rate and guarantee or non guarantee portion.  I have to say that maintaining the  budget to keep the policy in force is also another factor to consider. Hence i need to say that it is not easy simple because for generally, most people doesn’t view insurance as their most important expenses. To them, buying insurance is good to have when you have spare cash and when they got retrenched or pay cut, the first thing to cut is insurance!

The same theory goes for driving a car. It is simple to drive on the road since you only need to step the accelerater and it will drive automatically however you need to master all the road signs and understand all types of road condtions to be able to drive safely. It is not easy though. Buying a car is simple. Just go to showroom and select a car that you fancy and pay the deposit to drive off.  However is it easy to maintain the car? No! Many people i know are struggling to keep up with the expenses. They have became a ‘car slave’

In driving, we hire a private or school instructor to teach us how to drive and in the insurance context, we engage a financial consultant to share with us all his knowledge and understanding of the products so that we can make the whole process a breeze. Therefore i must emphasize that the financial consultant that you are seeing (bank, tied agent or IFA) must make sure that he does a fact find with you first and follow by introducing and explaining all types of suitable products for you before you sign anything with him. Another important aspect that you need to take note is whether did he disclose how much commission is he getting from the plan he is recommending you? However if you notice that this person only has one plan for you and never tell you anything about his reason for recommendation then you should know what to do with him(dump him!) Sometime if the agent doesn’t bother to even ask you about your spending habits and are only concerned about how much you can save, you know that this person is just another salesperson out there.

A good financial consultant in my personl opinion is someone who bothers to upgrade himself constantly in this industry. Be it taking CHFC or general insurance, it will definitely value add the client in one way or another. Sometime by attending outside course where it increases general knowledge, it is also benefical to the clients. He/She must also be willing to be open with his own financial habits because at least you know that this person practises what he preachs. He must also possess a spirit of listening and understanding your whole financial situation and constantly follow up with you. If the person after one appointment never bother to follow up then again you can move on looking for other sincere consultants. Most importantly the consultant itself must believe in its own products. Ask for his own policies and see how much he/she is covered. If he can’t show you then i believe he himself also doesn’t believe much in insurance planning.

So after looking from the other point of view, do you still think buying insurance is a difficult task? It is a difficult task if there is no proper consultant advising you on all aspects (logic & emotional) when choosing a plan. The million dollar question right now is whether have you been able to find ‘the one’ to help you to make the process more simpler =)

Anyway i realised that many of my clients and friends are not aware that CPF website actually has a new financial section known as: IM$avvy financial portal. Hence i thought of using this opportunity to create more awareness for them.

Have you heard of MoneySENSE? It is a national financial education programme launched by Mr Lee Hsien Loong, then Deputy Prime Minister and Chairman of the MAS on 16 Oct 2003.  MoneySENSE brings together industry and public sector initiatives to enhance the basic financial literacy of consumers.

The MoneySENSE programme covers 3 tiers of financial literacy:

• Tier I - Basic Money Management - which covers skills in budgeting and saving, and provides tips on the responsible use of credit;
• Tier II - Financial Planning - to equip Singaporeans with the skills and knowledge to plan for their long-term financial needs; and
• Tier III - Investment Know-How - which imparts knowledge about the different investment products and skills for investing

The IM$avvy financial portal is managed by Central Provident Fund Board supported by MoneySense.  This website aims to promote and educate members of public in financial literary. IM$avvy contains many interactive things such as forum, videos etc. One of the latest update is the addition of $avvy Blog Corner.

As a financial consultant, I have been asked to contribute my articles on the CPF Board’s IM$avvy website. Ever since i met up with CPF Board committee, i have started to contribute on their website: www.imsavvy.sg

So if you have not visited their website, do it now! It only takes you one minute to click and you realise there are so many things that you can gain from there =)

Happy reading!

Cheers =)

This report really serve as a wake-up call for ALL singaporeans to realise the important of having a good insurance coverage. Basically we buy insurance is mainly so that we can provide enough cash to maintain dependent’s living standard and to cover any outstanding debts and funeral expenses. This is to avoid any financial burden that we could possibly left behind for our family members.

Looking at that figure i also realised that 70% of my clients have insured themselves to about $180,000 for their death and disability coverage. As for their major illness coverage,  the average would work out to be about $100,000. Don’t misunderstood me by saying that i never recommend the right product for them but rather it is mainly because of their budget.

Sometimes no doubt we should insure a higher amount for our clients but most of the time, we still need to depend on their comfortable level of comittment. I can’t possibly force my client to buy a policy that cost more than 20% of their take-home salary just because i feel that it is important for them to have. I need to take into consideration of their pocket. Some will also argued saying that i should recommend term insurance instead for them but however the thing is that most people prefer to have some cash value taken back at the end of their old age if nothing happen to them. It is hard to convince them to throw 5% of their salary into ‘big sea’ without any hope of return.

In Singapore, i believed that although there are a growing population of people who are a firm believer of insurance but there are still much to improve in term of mindset and perspective. They need to realise for themselves that insurance is an alternative way to transfer their risk to insurance company and to reduce their liablity. Actually if we are talking about saving money, i think buying insurance is one of the best way to ‘save’ money for a purpose.

Take this for example: You put aside $100 for a life policies which gives you $100,000 death & TPD coverage. So one year you will put around $1,200. Let say if all of the sudden you die after two years, how much do you think your family will be paid? They will be paid a min. of $100,ooo! You put in $2400 and your family get back $100,000 so can i just say that you have ‘earned’ $97,600 for your loved ones! Isn’t that amazing? I am sure your family member will remember what you have done for them when you were alive.

To me, having a good hospitalisation insurance and life insurance is very crucial. In fact, the first policy that i normally share with my clients will be a life insurance. My belief is that you should always fufill your needs first before talking about wants (saving for long term needs) However sad to say that most people often end up getting a large amount of endownment plan first before planning for their insurance needs.

I have met many people in this situation and what i normally do after that was to restructure their insurance porfolio and to maximise their money for all the necessary coverage. I do worked with IFA adviser in the sense that if i can’t fufill my client’s needs using my company products, i will pass to my IFA friend to help her with it. Through such method, i am able to provide a more sound advise for all my clients.

Let’s hope that more and more people will place more emphasize on the needs of a good insurance and stop thinking that we all financial advisers are just out to earn quick buck. Not all are bad apples! At least i still care alot for my client’s pocket than mine  =)

Many fresh graduates often have this question in mind: ” Should i go into a sales job?” The answers often will be: “i don’t have sales experience and it is too shameful to beg people to buy from you something’

Well i had to admit that i used to have such thinking before but thank god that i am someone who will go ahead to do what i think it is correct without thinking much about the consequences. My philosophy in life is the same as Nike: “Just do it” Well i wouldn’t that such thinking is good because there are many things in life that have to go through the thinking system before proceeding before it leads to a disasterous results. Eg: following people to do illegal earnings such as collecting soccer bets or even worse taking drugs.

But in life, there are many situations that requires us to take action immediately and don’t bother so much about other things. Eg: Today there is a super good offer of 50% off regular price and it lasts for only one day. So happen that this thing is something that is good to have but not a MUST. The question is:  ” Will you buy or you will think again”

Many times, good jobs offer are presented in front of you but because of certain people’s opinion, it actually makes you to think twice about the offer. End of the day, you got to ask yourselves: ” Is your future more important or people’s opinion important” Outsider normally does not have relevant experience in the area so i wonder what makes their opinion so important. I mean unless they have been there done that, if not i won’t think much about their comments. I mean we can always listen but ultimately must follow our heart and dreams.

People said that sales line is tough and it is not good. But have you ever think about what will happen if the economy has no sales activities going on? I can assure you that the next moment, the world economy will go into recession. That is why personally sales job is something very crucial and important. The fact that it is important to the world, it means that if you can succeed in sales, you are excellent in anything! More importantly, doing the right kind of sales can bring you to the level of wealth that you desired!

All of us are born salesman! From the moment you start calling your parents to buy things for you, you are already selling to them. Eg: Get good result will buy presents. The kid is trying to sell the product (result) to the parent in exchange for money (presents). Another classic example: A guy going after a girl with romantic dinner and intelligent conversation. The same thing the guy is selling himself to the girl, hoping that she will accept him as bf. Therefore with all these example in life, we all should be quite comfortable in doing sales.

So the next time if you have friends that have similar questions in mind, please share with them my example and give them encouragement to go ahead with sales jobs =)