To highlight the importance of financial planning and its relevance to the ordinary man-in-the-street, I want to cite a real life example of a tragic case in which a 87 years old grandmother was forced out of the HDB flat by her grandson. The case is summarized as follows:

I have many clients who bought unsuitable products and as a result have to postpone their retirement for many years. Let’s say if they had just bought simple products, they would have retired at age 55. But because of the unsuitable products, they have to postpone their retirement to age 70.

Most of the time the unsuitability arises due to two reasons:

I was introduced to some funds by a fund management house. The funds are all simple products that do not appear to contain toxic assets. They are easy to understand. More importantly, these funds outperformed most of their peers over the last few years based on extreme low management fees and simplicity. Unfortunately they are only offered to Accredited Investors or high networth individuals. I asked them why they could sell these funds to the man-in-the-street in other countries but not in Singapore. They told me it is because of MAS’ rules. To offer to retail investors in Singapore, the fund house must manage funds of at least $500 million in Singapore.

“Dear Wilfred, can you tell me the very one thing which clients will find most unusual if they engage your service? – J”

Dear J,

The one thing that clients will be shocked when they engage me are the fees I charged. For example, the financial planning fee I charge ranges from $X to $Y while the retainer service is minimum $5000 per year. Let me explain.

New rules in HDB will increase complexity for man-in-the-street and more job security for civil servants. One of the most ridiculous policy is with regard to the computation of the amount a person is permitted to borrow from HDB if this is the second concessionary loan. The complexity also means greater job security for professional financial planner because nobody else could understand. Why? Read more (clients only, login required).

Your networth is a balance sheet listing your assets and liabilities. The difference for both is called the net worth. However, the net worth or balance sheet contains many “off-balance sheet” items. Today, I’ll write about the most common off-balance sheet item. I will give an example:

Many people buys disability insurance thinking it is a good plan. What they don’t know is that the definition of disability is very strict. Normally this is referred to as “Total and Permanent Disability” or TPD for short. They come in various names like “Permanent & Total Disability”, “Enhanced Disability”, “Deferred Disability”, etc. The various names also indicate how the payout going to be. Some will only start paying at the end of 5th year and others start paying at the end of 10th year. Others would pay a single lump sum while others pay installment over 3 years. Many would cap the total payout to $x million in aggregate of all insurance policies bought by the policyholder (not necessary from the same company). Many of my clients bought this kind of plans from other financial advisers thinking it is good. Some say they will be compensated every year if they have disability. But a check shows they have bought into a TPD plan which pays an installment. So what is the claim statistic for TPD?

The Office of the Public Guardian will turn live on 1 March 2010. This BIG happening is the latest who-ha among professional financial planners as it will also mean that the much awaited Lasting Power of Attorney under the Mental Capacity Act will also turn live on 1 March 2010. This latest and powerful tool will be added to the arsenal of tools which professional financial planners can use for clients' retirement planning. Financial advisers who are still trying to prospect their clients to buy some silly insurance products and exotic investments just because of that silly commission do not realised what they are missing out in their ability to help their clients. There have been many talks in town among professionals on how to utilize the Lasting Power of Attorney and many innovative and exciting ideas have been brought up. It is an indeed one big leap for Singapore.

There was a case recently in which IRAS requested payment and penalty for income tax owned by a dead man. What’s intriguing is that the man was already dead for 18 years. Fortunately, the family members had documentary proof stored in their storeroom that the tax was already paid just one year after the man died (think: the family actually stored this document for 17 years!). IRAS apologised for the mistake in Straits Times forum page. So what’s going on and how to learn from this?

I attended a talk conducted by the Special Needs Trust Company Limited or SNTC. SNTC is the only non-profit trust company in Singapore set up to provide trust services for the benefit of persons with special needs (PSN). SNTC is jointly supported by the Ministry of Community Development, Youth and Sports (MCYS) and National Council of Social Service (NCSS). SNTC partners with the Insolvency and Public Trustee Office to manage the assets.

It was just not too long ago when many consumers were wondering whether their insurers will be collapsing. The days of long queue of people wanting to surrender their insurance policies were like just yesterday. In February 2010 issue of the INVEST magazine, Wilfred Ling was interviewed on his opinion on the situation now. He also provide his comments on MAS' latest proposal on the Policy Owners' Protection Fund (PPF). The PDF softcopy of the cover article is available for those who subscribes to my mailing list - HERE to sign up.

I am unsure whether the Singapore government realises one particular vulnerable group in Singapore who are potential gambling addicts. These are the retirees. One article HERE shows that in the state of Florida, it was found that retirees comprise 34% of regular casino visitors. Moreover, these regular gambling addicts when on unnoticed until it is too late.

Retirees definitely can afford that $100 entrance fee afterall having worked so long, how could they not afford it? Unfortunately, a retiree have no way to recoup their losses because they have no more future income. Someone asked me whether is it possible to prevent this by buying an annuity so that the bulk of the money is locked up with the insurer. I personally do not think this will work because the annuity can be surrendered with capital refunded. So how?

Not everybody going to like this blog posting but as usual, it is only my opinion. I know of a number of financial advisers who will write financial planning reports for their prospect. I have seen some of these fake reports. Here are my observations of these fake reports:

I heard of this word "para-planners" a few times. But I didn't really have the time to investigate what this really means especially in Singapore's context. So, what exactly are para-planners?