A friend highlighted this article to me a few days ago and I had quite a reaction to it.
The following are quotes from the article (bold emphasis added by me) and my comments:
An ad-hoc alliance of about 15,000 financial advisers and managers are hoping to sway a review panel, which is considering, among other things, doing away with the commission model that most insurance and financial advisory firms use.
It is entirely expected that all 13,000 tied agents would fight tooth and nail against the ban of commissions. Why? It’s simple – nobody would want to pay a fee to a person who is a sales representative of a product manufacturer. The old model worked because it was merely the transaction of products – advice is given “free” and the client will take up the product if he is persuaded enough, earning the agent commissions. The other 2,000 advisers probably come from financial advisory firms which are new-age financial sales agencies, just that they have more products to sell.
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I held a talk over the past weekend on “How Young Working Adults Can Avoid Buying Costly Financial Products”. I feel strongly about people being misled into being shortchanged by the industry and hence I wanted to share my experiences and knowledge on how people can avoid it.
Singapore has a population of about 5 million while the number of practitioners in the financial advisory industry can be estimated to be about 20,000 to 30,000. This includes tied insurance agents, Financial Adviser firm representatives and banks’ financial services personnel. It is a considerably large number for our population size. How so?
Let’s look at how we compare to other countries:
|Country||Population||No. of Advisers1||Ratio|
NTUC Income recently debuted its first ever bond issue of $600 million 15-year bonds which was open to the public and corporate entities. The coupon rate was 3.65% and NTUC Income has the option to redeem the bonds in full at the end of 10 years.
Oversubscribed would be an understatement: the subscription rate was 15 times its $600 million offer, a cool $9 billion which attests to the attractiveness of the returns vis-à-vis the strong credit rating of NTUC Income. (And that’s a lot of money wanting to be invested.)