Monday, April 29, 2013

Why I don't believe in financial advisors

My impression of financial advisors has never been good. Generally, if you managed to pass a few MAS exam papers after graduating from the university, you can work in the banks or financial institutes as financial consultants, advisors or planners. Most of these so-called financial advisors are nothing more than salesperson interested in selling you only unit trusts and expensive insurance policies. Typically, they would first calculate your retirement needs and then systematically work on your fear of having insufficient monies in your twilight years. Once they managed to convince you that you are under insured or inadequately invested, they will then hard sell you expensive financial products. All these years, I have witnessed too many of such sales tactics. Although I will not say these tactics are unethical, what I want to point out is that too often, these financial advisors don't add value to consumers. Instead of addressing the needs of customers, many financial advisors sold financial products in order to earn higher commissions.

Focus on value-add, not sales
Most of the financial advisors in Singapore don't receive fixed salaries and draw their incomes based purely on commission fees. This means that they have to sell expensive financial products to clients in order to survive. Obviously given such situation, the financial advisor will be more interested in earning your money, rather than help you earn money! Sure, there are many 3rd party financial advisors who claimed to be independent and charge clients fixed fees not linked to product sales. However, I see no point in paying them good money just to advise me on what type of insurance or unit trusts to buy. Given that all the information is now available on the internet and that Singaporeans are becoming more discerning, the financial industry has to mature and evolve. Financial advisors need to provide value-added services and educate clients on investing. Selling financial products alone will not help clients to improve their investment knowledge at all.

Empowerment through financial education
The key to building wealth is financial knowledge. To keep making money, you must have the knowledge, skill and competency to generate wealth. Financial products are just tools for making money. The advisors who sold the products to you are not interested to help you grow. They are only interested to grow their fat wallets. Don't be fooled into buying irrelevant financial which will make you regret later. You are only throwing away good money. Always remember: You, alone, is responsible to grow your money, and knowledge is empowerment. Enhance your financial knowledge through ebooks. Don't let others take advantage of you.

Magically yours

7 comments:

  1. Well, I don't agree with you totally. Many financial advisor helps a lot to consumers in all possible ways. I too have received a great experience from my financial advisor.
    --Lorn Austin

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  2. Heck, I got the sales pitch just trying to open a bank account in Singapore.

    Some advisors can be good, but you are ultimately your own best advisor. Do your due diligence, do your own research, and stay advised as to what is going on in the world. Not many (western) advisors would have recommended gold twelve years ago. They would have said it was kooky. But they were dead wrong. Look out for your own money and keep it safe from various sticky-fingered government goons.

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  3. Could you elaborate more abt your following statement:

    " Financial advisors need to provide value-added services and educate clients on investing. Selling financial products alone will not help clients to improve their investment knowledge at all."

    Are you suggesting financial advisers start to operate as equity investment firms that conduct seminars to their clients? I do know of at least a firm that is doing that successfully in Singapore. However the average consumer in need of some basic insurance/retirement planning would all probably have to adopt a DYI approach as fees can cost between $2,000 - $5,000 a year before commissions for a qualified financial advisor who is able to value add by ur definitions.

    BTW, have u been a financial advisor urself? There are certainly inherent problems in the industry that needs to be resolved. Do agree that many FA now are sales oriented however do feel your comments are a bit lopsided.


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  4. Pretty good article.I just came across your site and wanted to say that I have really enjoyed reading your blog posts about financial advisor.

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  5. No. I dont agree with this
    A certified financial advisor is a person who receives special training to assist people manage their money. An advisor (CFA) can guide people budget for significant life goals like purchasing a house & retiring.

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  6. Financial adviser are here for our help and they do it very well. But some of them aren't good enough. Although we've to believe them.

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  7. For some people, managing financial concerns is annoying as well as a fantastic level of undesired discipline. Of these individuals, the true issue will likely be choosing the right expert, as an alternative to getting in touch with help one particular. Other people elect to accept the actual monetary choices which in turn we cross in our lifestyles, including investment and getting property, and might show creativity enough to function with no advisor. Strangely enough, a lot of those who're many wanting to seek out help are in fact quite experienced in monetary problems. We should choose a reliable and trustworthy financial advisor.

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