Seth’s Blog on Finance

Can I Survive?

My client asked me a question which have always been on my mind since I considered leaving the rather lucrative career I had selling insurance as a tied agent – “Can you survive?”

Efforts to provide my clients the best at my own expense can often go unrecognised, so I am glad that he asked if I could earn a comfortable living after showing him how he can maximise cost-effectiveness in his financial portfolio. I appreciate the concern.

My answer to the question is yes, I believe so. I can think of a few reasons why I am able to make a living selling low-cost insurance and investments when many industry practitioners have decided to be “practical” and “realistic” when they justify the sales of high-commission-low-benefit products. Such reasons are split between my business model and my way of life.

Business Model

I have purposefully adopted a business model that suits me and my desire to provide ethical financial planning even though what benefits the client usually generates low income for the financial planner.

Many beneficial products have small but perpetual income. Beneficial products like Shield policies, certain term policies and unit trusts not only give smaller commission percentages than things like investment-linked policies (ILP), there are often no year-end bonuses. However, income generated is recurring though small.

Of course, it is still less overall, even when excluding time-value of money, than the hefty upfront commissions that high-commission products generate. However, high-commission products stop paying the agent eventually, and he will have perpetually looking for new clients for fresh income. Either that, or he reaches his “pot of gold” and retires from the scene. Not me – I aim to stop taking in new clients when I reach a sizeable and manageable group, and will focus my efforts servicing their accounts which pay me fair recurring amounts over time that do not impact their finances heavily and adversely like hefty upfront commissions.

Prospective clients are willing to meet me for proper financial planning. They recognise that I am one of the few in the market who not only provides ethical and competent advice, but also has the ability to execute proper financial plans. Thus, I have an easy time finding interested individuals online to meet me in my office for financial planning. This is a much less tedious way than insurance agents who work their guts out pestering people on the streets which you can see every day. I can thus accept a lower remuneration.

With time freed up from prospecting and running all over the place, I can take time to develop better financial plans for my clients, and to increase my financial knowledge through things like studies on financial academia.

There is demand for low-cost financial solutions and ethical advice. The average Singaporean is severely under-insured, so statistically speaking, I am able to do business with almost everyone. This link elaborates more. Selling low-cost insurance can still make for a living when there is enough volume, or when each case is big enough. A wealthier individual who needs higher than normal coverage will buy a sizeable term policy which can give good remuneration, and I have been able to do business with such individuals because of the value I bring.

Sales is not the only way to earn money. There are obvious alternatives, like fee-based planning. Then, there are not so obvious ones. Suze Orman, American financial planning guru, never had to sell a single insurance policy she felt was lousy to become a multi-millionaire celebrity extolling the benefits of low-cost term insurance. My goal is neither to become a top salesperson nor earn a six-digit annual salary. My goal is to become the best financial planner to my clients, bar none. I believe that deserved rewards will naturally come by being the best in the field.

My Way of Life

I have a passion in financial matters. My friends will probably attest to this, for they are all probably a little tired of me talking about financial planning all the time. Thus, it is a joy for me when other people meet me up to explore more regarding financial planning, as I truly enjoy discussing about such matters.

I lead a simple life, and I don’t like to spend. My ex-manager will probably scoff at this, thinking that I am stupid for having to scrimp just so I can provide ethical advice while he claims his conscience is clear in making money his top goal selling high-commission-low-benefit products. The fact is that I am unlike him and many material-chasers and do not crave for a branded car – or a car at all for that matter – or expensive housing that I can later flip for tremendous profits. Money helps with happiness and I like money, but I believe in the cliché that contentedness is happiness.

Cute photo I took while walking to my destination.

I find that cheap hawker food is often the most delicious, and I am perfectly fine with public transportation, even shunning taxis unless absolutely necessary. There are times I walk and enjoy the exercise instead of taking a bus just so I need not top up my ezlink card so often. I derive joy from saving (which probably sounds masochistic). Sometimes, there’s no other way to appreciate the idyllic things in life if we do not slow down our steps, both literally and figuratively.

My family is supportive, and we literally laughed over the pay cheque I got when I showed it to them one day. I feel content designing good financial plans for my clients, and I feel happy knowing that every entry on my payslip came from helping someone.

I was misled into bad decisions and I want to help others avoid the same thing. In my previous job, I was trained to do sales which was passed off as financial planning, armed only with products that were mediocre and often shortchanged clients. I bought such policies too, shortchanging myself. I even ruined my dad’s insurability because nobody truly cared about clients’ interests at all even though there was plenty of pretence to do so. As much as possible, I want to right the wrongs I have done, and I want to help others avoid making bad financial decisions that are difficult to reverse. With or without the existence of higher beings or karma, I feel that some things are the right thing to do regardless of rewards or punishments.

I feel that I’m young, and I feel the need to be idealistic. This very long article would probably have made many feel that I am idealistic and maybe even naive. Perhaps I am.

I remember watching the following video last year and it gave me the courage to do what I felt was right. Writing this long, long article made me think of the video again, and I think it sums up the reasons why I do what I do.

Idealism and passion can perhaps only carry someone so far. I hope that hard work, a bit of luck and perhaps providence can help me to survive while trying to be a decent person in an indecent industry.