Independence, Ethics and Competency

Having experienced both a tied agency environment as well as an Independent one, I can proclaim that the Independent distribution model is still the best for clients. As I have read in an online forum, “all good financial advisers are IFA”, which reflects my sentiments. The person who wrote this line also quickly followed up in the same sentence – ” but not all IFA are good financial advisers”.

This cannot be further away from the truth.

One would be hasty to conclude that his adviser is a good one just because he is Independent. On the same online forum, I recently discovered that even an IFA representative does not even know the difference between a rider that pays a Total and Permanent Disability (TPD) benefit from Disability Income Insurance!

Such a mistake is easily made by a layperson. This is perfectly understandable as the terms may seem confusing. For a practitioner however, it is quite inexcusable, but the standards in this industry is so appalling I am not surprised by much anymore. Regulators have mandated tests, and the textbooks for such tests have even took the effort to dedicate an entire section on Disability Income, as well as an entire subsection on the specific differences between Disability Income and TPD. Yet, practitioners who have supposedly passed these (simple) tests cannot differentiate between the two. What a joke.

In my opinion, there are three criteria that clients can look out for in an adviser.

Merely being Independent and having a wide range of financial solutions isn’t enough. The adviser can even be ethical but without proper competency, how can he properly benefit his clients?

People should look towards advisers falling under X. For existing practitioners and people looking to join the industry who have emailed me, you should realise that moving to an Independent platform isn’t enough.

Thumbs up to keep me writing more!

6 responses.

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  • Reply
    Micky Neo said 2255 days ago:

    Agreed, FA are best for clients.
    But how is it for the advisers?
    I suppose FA can only market by their own FA firm name, which is relatively less heard of compared to the big GE, AIA, Pru, Income.
    Also, I feel the ability for tied to reach out to prospects is stronger too.

    • Reply
      Seth said 2255 days ago:

      It almost always comes back to two things in this business:
      1) Is this the best for the client?
      2) Is this the best for business?

      I think some of my colleagues can attest to the fact that I ignore 2) and set out to do 1). I believe that remuneration comes naturally.

  • Reply
    Gary Tay said 2255 days ago:

    The marketing for FA firms can work for or against the adviser, some prospects are willing to meet up to find out more about one company’s offering if it is less prominent in Singapore. Traditional powerhouses have tarnished their reputation and many people filter them out very quickly.

    Do agree with Seth on the competency and ethnics part. I personally have an NTUC adviser whom i found to be highly professional despite him being a tied agent.. so i seriously think not all tied agents are bad.

    • Reply
      Seth said 2255 days ago:

      Competent and ethical but still in tied agency means not competent nor ethical at all.

      Competency includes being able to execute a proper financial plan. This is not doable in a tied agency. Being ethical includes providing – or perhaps just making known – the best solution to the client. This again, is not doable because 9 out of 10 times the case will go to another company.

      You cannot be fully competent and ethical in a tied environment.

  • Reply
    Micky Neo said 2250 days ago:

    One can be competent and ethical in a tied environment, howver they are limited by the products and services available to them.

    I like FA platform, guess it’ll take a while to grow. Good that you’re already ahead of the business Seth.

    • Reply
      Seth said 2247 days ago:

      Thanks for the comment Micky, but a tied agent who is competent and ethical, by virtue of his ethics, would have moved to an Independent platform for the interests of his clients.

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