A senior financial practitioner told me a bad experience he had with a client. He spent many hours and effort with a client advising on investment. After much effort and time, the client bought from him S$50,000.

Later on, the client complained that the sales charge was expensive compared with the bank. Apparently, the client bought the exact recommended fund from a bank with amount S$500,000! The practitioner was so furious because the client used the knowledge and advice from him but went on to purchase the product from another.

From the financial practitioner point of view, he has been made used of and he felt cheated and short changed.

From the client point of view, he did “reward” the practitioner by buying a little bit although the bulk of the money went into buying from someone else.

What do I think? I’ll just send an invoice to the client charging him the time spent regardless of whether any products were purchased or not.

That senior financial practitioner’s experience is all too common. While there are many reasons why all advisers faced the same problem, the underlying root cause is because remuneration through commissions is an inefficient way of rewarding advice. It is inefficient both to adviser and client. Sometime the client pays too much and sometime pays too little or none at all. For the adviser, sometime he is paid too much and sometime paid too little or none at all.

I felt that financial practitioners should really consider an alternative model of earning a living.