When a good or service becomes a commodity, sellers are not able to differential themselves from each other. So they compete on price alone. It does not mean that the value of these service and good is the same as the market price (which is defined as the price which buyers are willing to buy). For example, many financial advisers provide advice for free in hope that their prospect will buy their commodity. While the market price of the advice is $0, the advice is definitely not worthless. In today’s newspaper (24th December 2009) is a front page article on another type of commoditization called the The Monopoly’s Ultimate Commoditization.

It has three characteristics:

1. The “seller” is a monopoly. There is no other seller in the market other than itself. It has no competition. It is the sole provider of its services.

2. It is commoditized because it is not able to differentiate itself from other monopoly of the same kind in other countries. Most buyers do not see it provide much value add anyway.

3. It is an “ultimate” because both the market price and the value are truly zero. What does it mean by the value is zero? It means that it really does not do anything other than to issue Circulars which is printed from commoditized printers such as inkjet, laser printers and as well as electronic mails called E-mails.

So which seller am I talking about that fit the description?

In today’s article called “Quick-profit advisers get CPF warning” it was reported that there exists an organized gang of rogue financial advisers who park themselves in various financial institutions to “help” CPF members “withdraw” their CPF monies through the practice of churning. This is clearly an illegal offence. These rogue financial advisers are also associated with loan sharks.

The greatest joke in the industry is that the Ultimate Bureaucrat just issue Circulars warning them not to do it again. It was reported that 7 of such rogue financial advisers were issued Circulars to change their job (suspension of their MAS license means telling them to change to another occupation). Well done! The Ultimate Bureaucrat shares three characteristics:

1. It is a monopoly in the industry of regulation. There is no other regulator because by definition there is only one government in a country.

2. It is not able to differentiate from other regulators such as acting quickly to prosecute these rogue gangs. Instead, it acted similarly as other regulators in only issuing Circulars printed on commoditized printers.

3. Finally, the role of the Ultimate Bureaucrat is to punish the wrong doers because it is the only entity that has the authority to do that (i.e. a monopoly in prosecuting criminals). Yet, it only issue Circulars to criminals telling them to change occupation. Perhaps the Ultimate Bureaucrat thinks it is a Career Coach? Therefore, it did not punish these rogue gang of financial advisers. Since it did not discharge its responsibility, the service which the Ultimate Bureaucrat provides is truly worthless in value.

From these arguments, our Ultimate Bureaucrat is a monopoly that is also trapped in the Commoditization Trap except that it also earns the prestigious title of “The Monopoly’s Ultimate Commoditization”

What does it mean to the man in the street? Oh yes, the implication is far reaching. It means that the man-in-the-street must not take things for granted and assume that the Ultimate Bureaucrat will take care of them. The man-in-the-street must start to do its own planning to achieve financial independence so as to escape from the Commoditization Trap. To do that, they must take charge and stop procrastination. Nobody owns anyone a living. By not planning, the man-in-the-street is just lazy and if things don’t turn out well such as unable to retire, they cannot blame the Ultimate Bureaucrat.

What planning am I talking about? It is called financial planning. If you do not know how to do a comprehensive financial plan, it is time you engage a Circulars Interpreter to help you navigate and interpret complex rules which the Ultimate Bureaucrat has created. Who are these Circulars Interpreters? They are called the fee-based financial planners.