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Question: How to be ethical when the pie is so small? PDF Print E-mail
Written by Wilfred Ling   
Friday, 04 February 2011

Question: Dear Wilfred, since the ratio of adviser to taxpayers is 1:48 it means that there are just too many advisers in Singapore. How could an adviser who only wants to be ethical earn a decent living other than to quit the industry altogether?

Answer: Singapore is indeed being flooded with financial advisers. That is why there are so much cheating, twisting and churning. But I got good news for the ethical financial advisers. Majority of Singaporeans are underinsured. The LIA statistics always tell us that majority of the sales are conducted full or partial fact find but the sum assured sold is a pathetic sum. This is a clear evidence of industry-wide misrepresentation.

Here is the good news. Ethical financial advisers who sincerely want to only sell suitable products will find that the ENTIRE population is their market because almost everybody is underinsured (due to being mis-sold rubbish). Well, the commissions for a disability income or a term or a shield plan may just pay $100. But if we assumed there are 900,000 individuals who are underinsured, we are looking at a $90 million industry to be shared by how many people? I think the number of financial advisers who wants to be ethical is just not more than 1 at this moment.

This is a lucrative business. Huge market potential. In practice, how to earn a living selling suitable product? I think we need to go for volume. So if say the adviser can meet 3 clients a day and for each client just earns just a $100 in commission ($100 in commission is pathetic because the average commission expected per policy is at least $1000). Assuming 20 working days, we are looking at 100x3x20 = $6000. Not forgetting the small peanuts recurring commissions from shield plans will add on over the years. I think it is a viable business model. But for this business to be viable, there are a few things must happen:

  1. The adviser must be highly productive. This means they must be spending time in front of their clients most of the time. Should not be spending time on the road traveling (example) or waiting. Thus, clients must be able to come to the office and not spend more than 2 hours. Why 2 hours? Because three clients means 6 hours of consultation per day. I think this is the maximum time that a financial adviser can endure not forgetting the tons of paper work that the adviser must handle as well.
  2. Clients must have already being quite well educated in insurance planning prior to meeting the adviser. This means the adviser must not be wasting time explaining the basics of insurance planning. Otherwise, the adviser will be take up too much time explaining to the client and thus not able to achieve the 3 clients per day target. This education before meeting can be achieved say through FAQs or to attend a pre-recorded online seminar that explains the basic foundation of insurance planning.
  3. Leads generation have to be really effective because we are looking at volume. I felt that is the most difficult part because Singaporeans are greedy and will only be motivated if there are free-gifts or shopping vouchers.

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Anonymous   | |2011-02-04 00:27:45
NTUC agents are giving free vouchers for regular premium products. Why regular premium products? I found the answer from a ethical insider agent. The company want to push regular premium products because the commissions for the agents are attractive and these products have also high APIs whcih the company needs for yearly production. Worse the customers are the dumb pnes who are easily swayed by gifts and buy dumb products that neither protect them adequately or give decent return but the agents say the returns are attractive. Yes , attractive compared to the bank FD rates.If their products can give 2% they are more attractive than the bank rate, right? That is assuming the dumb customers keep their money in the bank for 25 years.
You can't beat them. They are so good at lying and conning especially when there is free gifts to bind the customers.
temperament  - "Free-Gift"   | |2011-02-04 09:07:27
You said,
3."--------- I felt that is the most difficult part because Singaporeans are greedy and will only be motivated if there are free-gifts or shopping vouchers."

I think you are right and wrong at the same time.

Not only Singaporeans, all the people in the world. Who does not like to have a "free lunch"? (including you and I).
So all business now use this "free lunch" natural psychology defect of the human race more and more often to bait and trap you.
Caveat Emptor always is applicable to everybody.
TIPS: You can use the same tatics; only the products you sell make sure they really create value for your clients, after the "free lunch", O. K.
Wilfred   |SAdministrator |2011-02-04 09:13:34
Suitable products normally earn very low in commissions. Due to the low margins, it is not possible to give a "free lunch". On the other hand, all toxic assets are of high commissions. So salesmen can easily throw in a microwave oven, iPAD, iPOD and what have you. If you are in the industry, you will know what I mean.
temperament   | |2011-02-04 10:04:04
Interesting - must be very careful of the "free lunch". The bigger the "free lunch" the more "poison" the product on sale/offer; just like purchasing a private property beside insurance.
On the other hand, I think some "free lunches"(with products on offer)are genuine; though usually they will be snapped up in no time. If not the "free lunch" is usually available until it loses it's effectiveness on consumers.
Ha! Ha! That's life.
Anonymous   | |2011-02-04 10:13:05
Unfortunately, high commission toxic assets are not allowed in the insurance industry.

IFAs and Banks sold them before. Most insurers avoided them except AIG and Great Eastern.

Speaks alot about their risks management for their clients.
Wilfred   |SAdministrator |2011-02-04 10:24:37
High commission toxic assets continue to be sold by everyone especially the IFAs and banks. These are in fact approved by MAS. I have blogged about these before a few times but delete it subsequently because of complains from the product manufacturers about what I wrote as I have no money to engage lawyers. So consumers please buy with your EYES BIG BIG.
Anonymous   | |2011-02-04 10:48:47
If you check the ntuc products that enjoy vouchers and free gifts you can see they are toxic. The free gifts to get extra pull from comatose customers and to blind the greedy customers.
These are the products:
Revosave? isn't is toxic? isn't this a Reverse saving plan?
Reach? another toxic save to lose
Vivolink ;;scam regular ILP to fool the uninitiated and blur sotong customers.
Vivolife;;a limited payment WL to limit your coverage and condemned you to low return..
these products have common characteristics......high commission...
high APIs....poor return....poor protection
To cover up these negatives thtey use gifts to blur and distract the sotong comatose customers.Don't beleive? ask them and I bet they won't dare to tell you or pretend they don't know..
amylauschke   |Registered |2011-02-04 21:46:49
It is natural logic, the less the commission pays, the agent is less likely to be able to buy the customer free lunch. The more commission he is offered from the sale of the toxic product, he is more motivated to sell. So I really don't understand what temperament is talking about?
temperament   | |2011-02-04 22:39:43
Hi amylauschke,
I am not talking about agent per se.
I am talking about business tatic base on human's weakness hankering after "free lunch" - human's greed.
Everyone of us may be a victim at least once in our life time or more than one time.
You can disagree but the fact is all businesses in the world apply this tactic on us, since time immemorial.
Ha! Ha!
Anonymous  - re:   | |2011-02-05 11:33:49
I think you are shallow and the real retard to think that only the insurance agents are hankering after the pie in the financial markets.

You forgot about banks RMs, Private Bankers, alternative investments marketing agents (land banking, wine etc), stock brokerages etc.

All of the above also uses many different products to go after a piece of the the consumers available budget and life savings even.

To say the least, some of them are even unregulated products that seems too good to be true to begin with.

Insurance Agents to begin with, can never offer any high toxic products to begin with in that same shoe. Only IFAs, Banks and Brokerages can offer it as a cross segment offering as part of their businesses.

Therefore if you look at it, an Insurance Adviser or Agent in their primary role will look towards your protection coverage first which probably begins with less than 10% of your monthly pay.

Whereas, IFAs, Banks (using their big brands) and independedent fee based advisoers (using their noble sounding titles) ask not just for that bit BUT they will ask you to invest your entire life savings with them so they may charge fees, and earn commissions as well as service / wrap fees.

So take a real step back and look hard, if you truly think that insurance agents are the only people after the pie, you are definitely wrong.

If you think insurance agents are "bad", think again, there are bigger sharks in the water.

People who lost their life savings in the Lehman issue, landbanking, stocks and shares, structured products.... have you not the lesson from them?

So stop being a retard and low IQ to believe that insurance agents are the only competitors. Your friendly IFAs or bank RMs are probably holding onto the largest portion of your personal savings with no guaranteed payout when you die or fall sick.
Anonymous   | |2011-02-05 12:04:24
While insurance agents may not be sharks, a title reserved for private bankers, they are the worse because they are like piranhas nibbling at speed of sound/light and a huge number of them where got chance for the rest.Sharks have special diets but these insurance agents don't they wack every thing that comes before them. Who makes the largest of their victims? The poor man in the street, the old folks, aunties and uncles and the vulnerable uneducated...because of the type of victims they go for this makes them very despicable. These people need them the most for help with their finances instead they are robbed in broad daylight and under their nose.
These agents need to eliminated completely..of course so are the other predators like buayas who peddle the unregulated 'investment' products' with get rich quick spiel.
The answer is remove the commission..the the first step and watch what these predators , piranhas, buayas have u[p their sleeves.
Anonymous  - re:   | |2011-02-05 12:09:25
Anonymous wrote:
While insurance agents may not be sharks, a title reserved for private bankers, they are the worse because they are like piranhas nibbling at speed of sound/light and a huge number of them where got chance for the rest.Sharks have special diets but these insurance agents don't they wack every thing that comes before them. Who makes the largest of their victims? The poor man in the street, the old folks, aunties and uncles and the vulnerable uneducated...because of the type of victims they go for this makes them very despicable. These people need them the most for help with their finances instead they are robbed in broad daylight and under their nose.
These agents need to eliminated completely..of course so are the other predators like buayas who peddle the unregulated 'investment' products' with get rich quick spiel.
The answer is remove the commission..the the first step and watch what these predators , piranhas, buayas have u[p their sleeves.

Oh you must have forgotten that in the Lehman saga, many of the investors are less educated and old aunties and uncles who bought into the investment through the banks? The banks that they trusted to be too branded to fail in their product offerings?

The commission will never be removed.... not even for independent advisers... never.
Anonymous   | |2011-02-05 12:22:18
heh heh, there is no such thing as free vouchers or free lunch or free gifts. They are all fully paid and covered by your overpriced premiums for bullshit products. That's why even when the par fund yields 6% p.a. over 20 years, your cash value only yields 2.5%. That's why after giving you "free gifts" like Bali trip or home entertainment system or microwave oven, the insurers still got more than enough money to send 500 of their top-selling agents to Barcelona, London, Paris and New York for incentive trips. How I know? Coz I was one of those salesman who enjoyed many all-expenses paid holidays before.

The only way to make your money work hard (and not simply hantam bola) is to learn, understand and work with basic financial instruments like equities, bonds, money market, low-geared property, and term insurance. The more fancy or packaged it is (e.g. wholelife, endowment, regular-ILPs, universal life, structured deposits, dual currency, derivatives etc), the more likely you are the one kenna ketoh.
Wilfred  - re:   |SAdministrator |2011-02-05 12:26:24
Anonymous wrote:
How I know? Coz I was one of those salesman who enjoyed many all-expenses paid holidays before.

May I know where are you working now? Have you given up the financial industry or are you still in the industry?
Anonymous   | |2011-02-05 12:45:54
I was all along working in the ang-moh insurance companies for about 26 years.

I'm now semi-retired, managing my own portfolio and a couple of small rental properties. Yeah I know some of it is hell money. What to do? Just donate 10%-20% of monthly takings to various charity.
Anonymous   | |2011-02-05 13:02:22
At least you've waken up or now your conscience pricking you that in the past your earnings were ill gotten and you atoning your past mistakes by giving to charity...who in there might be your victims.Not too late while you have life.
But for the many out there who are still happily fleecing and milking their best friends, relatives and siblings, the old aunties, the poor they will be sent to 18 level could be at barcelona, bali kuta beach, london etc sydney etc. They can spend their ill gotten money in hell ..
Anonymous  - re:   | |2011-02-05 12:55:30
Anonymous wrote:
heh heh, there is no such thing as free vouchers or free lunch or free gifts. They are all fully paid and covered by your overpriced premiums for bullshit products. That's why even when the par fund yields 6% p.a. over 20 years, your cash value only yields 2.5%. That's why after giving you "free gifts" like Bali trip or home entertainment system or microwave oven, the insurers still got more than enough money to send 500 of their top-selling agents to Barcelona, London, Paris and New York for incentive trips. How I know? Coz I was one of those salesman who enjoyed many all-expenses paid holidays before.

The only way to make your money work hard (and not simply hantam bola) is to learn, understand and work with basic financial instruments like equities, bonds, money market, low-geared property, and term insurance. The more fancy or packaged it is (e.g. wholelife, endowment, regular-ILPs, universal life, structured deposits, dual currency, derivatives etc), the more likely you are the one kenna ketoh.

Wrong perspective. Looks like you have to learn more.

Equities are not necessarily basic. Please do not mislead with words like "basic" when such instruments do require a much larger amount of study and research.

Cash is basic. You save cash in Fix Dep, you get Cash + Interest. That is basic.

Equities, bonds, stocks are not basic.

Geeze... precisely you are the kind of people that truly mislead the people around you to believe that.

And you put Insurance Plans to compare with Investment instruments in your comment! Another wrong perspective, reflects your poor understanding. It is as stupid as using a microwave oven to store ice cream.

You are the real danger to the public.
Anonymous   | |2011-02-05 13:19:51
ntuc agents need vouchers and gifts to con their customers. That is what they have been doing with the new ceo who only cares for APIs..He is so obssessed with being #1 that he will doing anything to get it. His sales champions also will do anything to push the high commission for him.Surprised SM Goh knew about that he had to remind all of them to remember the roots, the original goals of mtuc was to cater to ordinary poor people and not meant for agents and ceo to enrich themselves.
Wil  - Don't be too full of yourself   | |2011-02-06 15:44:45
I seriously think you are too full of yourself. There is definitely more than 1 so-called ethical adviser. I am really sick of your postings. I learnt from your colleagues and those product providers that you are just a bitter person, not welcomed in the company and in the industry. So good then clients also kena poached by others? Wahahaha.. To me and many others, you are just a miseable loser who is struggling and hardly make enough to provide for your family. I shall not waste time commenting further.. Wahahah...
Anonymous   | |2011-02-06 16:53:55
There are certainly more than 1 but only 1% are ethical . The other 99% are conmen and women who will not bat an eyelid when they rob their customers in broad daylight.. They are dead without conscience and morals.Even their own mother they rob too.
Anonymous   | |2011-02-06 19:38:53
I am not surprised that his colleagues are not happy with him because his postings expose what they do and what kind of people they are.As for the product providers he is unlike other salesmen who only cares for the commission and NOT what they can do for their clients. IN other words salesmen don't do due diligence but just dump on their clients and regurgitate the words of the product providers. This is the sickness of the industry where the all the salesmen are not interest in the clients' goals but for themselves. He is not popular because he is telling the truth and the truth hurts.
Anonymous   | |2011-02-07 09:59:53
I am Wilfred's colleague and I can share what I see and experience first-hand working with him. Contrary to being un-welcomed, advisers often seek Wilfred's views and advice from Insurance to Estate to Investment. Basically the whole package under financial planning. I wonder who u have been talking to...
As for the product providers, it's true that he is un-welcomed, especially from a particular insurer whom I believe have 'black-listed' him and is monitoring his blog. They would raise all kinds of threats if they see something that is not to their liking. As for other insurers, he is often demanding. If you are his client, who would u prefer? An adviser who is lenient on the insurer or one who is demanding?
Anonymous   | |2011-02-07 10:08:16
That is looking after your clients..You want the best for them and therefore need to check the products before swallowing hooks lines and sinkers, right? Not surprised he is unpopular with product providers..We need people like Wilfred to expose them too.
amylauschke   |Registered |2011-02-07 19:07:13
I totally identify with Wilfred and I am sure his stand on the best for his clients is not an easy one to adopt. Imagine a large corporation is not happy that you expose their "packaged" products as not suitable for the clients, and they are ever ready to shoot you down. How stressful can that be!
But on the other hand, I know Wilfred is doing what he's is doing fearlessly, because he has his own principles in doing his job.
Thank you Wilfred.
Anonymous   | |2011-02-07 19:19:17
The insurance companies are the worse.They only push scam products that benefit themselves and their agents..Both work hard to cheat the consumers.
Anonymous   | |2011-02-07 23:25:08
Wake up... would you love a person who label others sweepingly as " retards" "low IQ" ?? I think not.

Objectively, I strongly believe he will still earn commission for any product you take up from him after advisory.

So please don't come here and blur the lines and say YOU are different from the rest of the advisers as commission earners. Look at your tables and fees... "Commissions earned from product purchases (excluding Medisave purchases) can be used to pay for all fees for Step 1-5."

Get off your moral high horse.

Your so called "independent" mode of charging fees and retainers are just one way to ensure that EVEN if clients don't purchase products through you, will ensure that you are paid hundreds of dollars of fees.

You justify by your training to deserve those fees, but your processes are not much different in essence to those that are prescribed under the MAS and LIA guidelines.

Aren't the rest of the practitioners in the industry under the same regulatory requirements of training?

So look at yourself before you start pointing fingers at others.
Salesperson   | |2011-02-14 00:48:39
I used to be a financial adviser in a major local bank in Singapore for about 2 years. Due to banks paying us a basic salary, we were given quotas to hit.

Many of the sales force, who belong to the CMI category, left because of the unachievable targets set by bank. (Eg. to produce $50,000 APE before earning commissions). Any tied agents will tell you that $50,000 APE will translate to at least a 5 figure income easily. The bank's justification is because of the leads provided and the walk in crowds, the commission is generally lower.

Many personal bankers, mostly who are well educated, degree qualified, and well presented are struggling to hit their productions. This results in further churning/misselling just to keep their jobs.

Wilfred is right to point out that the existing model does not encourage professionalism in the industry. Especially when many of the Bank Managers themselves achieve their status by being top conmen in the past. Its a classic case of the blind leading the blind.

Anyway, ask any man on the street, no one has ever heard of professional certification of Chfc or CFP, some people dont even know what CPF can do, let alone CFP. This is unlike in the US, where CFP is held in similar regard as a CFA ( Chartered Finnacial Analyst).

With no incentive to strive for professionalism, and having to market products that even most advisers will NOT buy themselves, a financial adviser will always remain a sales person aka "con man"

In the end, the people who suffer the most are the ethical advisers who want to make a living, as well as the end consumer who ends up purchasing rubbish.

Salesperson   | |2011-02-14 01:37:45
Ethics is only valued in an industry where the advisers and clients value it. And when it is a Win-win scenario for advisers to be ethical

Ask any insurance agent, are the advisers they respect those MDRT,COT,TOT or those ethical financial advisers who eat peanuts selling term insurance and shield plan then being forced to leave the industry because of low production?

Ask any consumer, whether they want to pay $$$ for financial advice or pay $300 monthly for an endowment they dont need from fairprice to get a free PSP? Who need advice when every uncle auntie can log in their online stock broking account to buy Genting, wilmar stock nowadays?

It always take 2 hands to clap. Ethics will NEVER occur in an enviroment where Advisers have conflicts of interests due to commissioned based environment, and where Consumers DONT CARE.

Would hope to hear your views on this?
Wilfred   |SAdministrator |2011-02-14 08:52:27
Only the regulator can save the industry. The ball is entirely in the government's court as free market has broken down long ago.
Anonymous   | |2011-02-14 11:54:03
How come you don't want to earn like the *** as reported in **** ? From a respectable **** to a salesman seems alright if the job can earn him lots of money.So people are willing to do anything for money.Don't blame the insurance agents becoming conmn
and cheats to get what they want. One day the drug traffickers will be also become respectable rich men driving expensive car and living in condo.

*** Update from Moderator: I have to remove some words as it could be defamatory since it was clearly referring to a specific individual.
Anonymous   | |2011-02-14 16:58:09
Wilfred ,
i am sure you have what it takes to be successful as those insurance salesmen as featured in Lorna Tan's Sunday Time Invest. The only thing you don't have is guts to lie, to con, to cheat and you have ethics and most of all the CONSCIENCE.
For that matter many advisers have successful traits BUT they don't want to stoop low to do all those evil things in the pursuit of money, to rob their fellow human beings of the necessary protection and retirement.
You have done the right thing.
Not Anonymous  - Scot-free Insurance Agents   | |2011-04-01 16:33:31
Every now and then we get to hear insurance scam in the news..some agents get punished some don't. The latter is due to the fact that these victims do not want to go through the hassle of reporting..or the losses are not 'too big' Yet some managed to rescue themselves in time. Its this last point we'd like to stress. Care to share? thnxx
Also to the insurance agents out there..lets kill the unethical ones..
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