On 9 & 10 May 2012, I conducted marathon workshops on estate planning. This is my first time doing so as I was unsure how the response would be. Each workshop lasted 6 hours. Altogether, there were 16 individuals who attended this talk. I consider it to be a well-received workshop. Below were some of the comments made on the feedback forms:

This morning, I gave a talk to parents whose children are attending the Grace Orchard School. Grace Orchard School caters to students who have been diagnosed with Mild Intellectual Disability and those with Mild Autism Spectrum Disorders.

My purpose of the talk is to introduce to these parents what is meant to have a financial plan for their children with special needs. My topic was on "How to use SNTC Trusteeship Scheme". There were about 35 attendees. Here are the photos:

A professional financial practitioner does not work alone. He works as a team. More than merely a team member, the professional financial practitioner is the one who exhibits the leadership quality to lead the team. An analogy is that the general medical practitioner does not work alone but relies on other professionals.

Someone informed me of a research done by three researchers from Wharton,Harvard Business School and Harvard University relating to commission-based agents in the India life insurance market. The following were some observations:

In our first experiment, we randomly vary both the stated belief of the customer as to which product is most suitable, as well information the client provides about his or her actual needs. Thus, we have some treatments where the customer has an initial preference for term insurance but where whole insurance is actually the more suitable product, and vice versa (whole insurance could be a suitable product for an individual who has diffculty committing to saving). If an agent's role is to match clients to suitable products, only the latter information should affect agent recommendations. In fact, we find agents are just as responsive to consumers self-reported (and incorrect) beliefs as they are to consumers needs..... We view this result as important because it suggests that agents have a strong incentive to cater to the initial preferences of customers in order to close the sale; contradicting the initial preference of customers, even when they are wrong, may not be a good sales strategy.

The Straits Times forum page (online and paper version) continues to receive letters on people who either support or oppose the assumed direction in banning commissions earned by advisers. Therefore, I will also just keep on writing the same subject on my blog. For today, I want to write on why consumers are mainly at fault why the fees charged by financial planners are so high. Yup, my fees are very high too.

Recently, I have been asked about the fee-based model and whether is it viable. In the past, few advisers asked me this question because it is more lucrative to sell products. Although MAS did not say commission will be removed, it appears that the industry thinks this is the direction. So many firms and advisers have started to prepare themselves for the change. I was asked again and again whether is fee-based viable and exactly how much should advisers be charging? There are many ways to calculate how much the advisers should be charging. My blog readers would have read it from my past articles. The fee is dependent on a combination of the adviser’s expertise, experience and business cost. Today, I’ll give another perspective to how much an adviser should be charging based on a comparative approach.

I just submitted the letter to MAS:

Dear Sir,

RE: Feedback for Financial Advisory Industry Review (FAIR)

As a full time fee-based professional financial planner for many years, I bring with me significant experience which I want to share with the committee. I am a CFA charterholder, Chartered Financial Consultant and as well as an ISO 22222 (SCI) certified person. I am an Appointed Representative.

1a. Currently, any person who possesses 4 GCE “O” Level credit passes can become an FA representative.  Is this sufficient? If not, what do you think is an appropriate educational requirement for representatives, and should exceptions be made for existing and/ or older representatives?

These days, many consumers are highly educated. Financial representatives should possess a tertiary education as they would have to demonstrate the possession of a minimum intellectual capability.  The tertiary education I recommend is at the university level. In my experience as a practitioner for many years, financial planning has becoming highly complex. I do not think a diploma holder is sufficient to meet today’s demands.  These days, the financial practitioner must be able to grasp:

I read this article with amusement “FEE-BASED” IS A FOUR LETTER WORD FOR FINANCIAL ADVISOR CLIENTS. In the article it stated that:

About 64 percent of respondents had a negative reaction to the phrase “fee-based.” ... Here are a few investors do like: savings, growth, goal, insured, portfolio, appreciation, return, results, trust and no fee.

This afternoon, I conducted an investment workshop entitled “Money Supply and Economics” at my office. Despite it being the second time I am conducting a workshop on the same topic, it was well attended with many questions from the attendees. I had deliberately capped the size of the workshop as I wanted more interaction with the attendees. Nevertheless, I think the room is getting a bit small for my workshops :)

The topic was not an easy topic and so I had spent quite a lot of time trying to make it easily digestible for the lay person! This group of attendees asked many interesting questions such as:

There was a business times article entitled “Estate planning: Private bankers or lawyers?” It was an article on engaging lawyers and private bankers for estate planning.

Many people think that setting up a trust is estate planning – it is not. Trust is one of the many tools and products used by an estate planner in implementing an estate plan. But these tools are not estate planning. The financial industry got it wrong when it gave the impression that buying an insurance policy (product) is financial planning. Similarly many people thought that writing a Will or setting up a trust is estate planning.

The following was published on the ST Forum Online on 31/3/2012: HERE

AS A fee-based financial practitioner for many years, I take issue with the reported comments by Mr Vincent Ee, vice-president of the Association of Financial Advisers Singapore ('Financial advisers seek gradual changes'; Thursday).

He said financial advisers who are paid a fee for their advice, rather than commissions based on the products they sell, would be 'interested only in coming up with a nice report and charging a fee'.

Today I gave a 1 hour talk to members of the Down Syndrome Association on financial planning for persons with special needs. Special Needs Trust Company was also there to give a 1/2 hour talk. Representative from Center for Enabled Living was present to answer questions relating to Special Needs Saving Scheme.

I SUPPORT the Monetary Authority of Singapore's review of the commission-based structure of financial advisers ('Financial advisory sector faces shake-up'; Tuesday).

Many advisers and firms have their doubts, anticipating that clients will be unwilling to pay for advice.

But that is the case because the main focus of financial advisers now is product sales. As a fee-based financial practitioner for many years, I have had no problems finding clients who are willing to pay fees for advice as long as they understand that the client-adviser relationship is not focused on products.

I wrote in 2009 that financial advisers were commoditized. I also wrote and predicted that the industry will consolidate because of being completely commoditized. You just need to search on what I wrote using google search: HERE.

Now financial advisers are commoditized to the extent of possibility not able to earn their commission! Why does this happen?

Yesterday, the Managing Director of Monetary Authority of Singapore announced possible sweeping changes to the financial industry at the anniversary gala dinner hosted by the Life Insurance Association. It was also reported by the Straits Times Financial advisory sector faces shake-up Mr. Ravi Menon spoke of the need to put customers’ interested first. The following topics were addressed: