I am one of the very few advisers in Singapore that charge fee for financial planning. Most advisers in Singapore do not charge any fee for planning. They are either compensated through salary or commission only. For salary, if they do not sell enough of  high margin products, they will be in trouble. For commission only, their remuneration is directly proportionally related to the kind of products they sell.

There are circumstances which it is more appropriate for a client to engage a fee-based financial planner. Firstly, it is more professional. All professional in Singapore charges a fee. Secondly, with a professional fee it implies greater liability for the adviser. The liability is greater because all plans and advice is required to be documented in writing and given to the client.  As far as the client is concerned, he or she buys a plan. That plan comes with a price tag which is a function of complexity of the client’s situation. The complexity of the plan itself depends on how well has the client manage his or her wealth in the past. Obviously for a client who has not being keeping proper records and has no idea of what is happening, will definitely have a financial plan with a high price tag. The execution of the plan may or may not involved purchasing product(s). Sometime, the execution requires an engagement with another professional such as an accountant or a lawyer. Other times it requires the help of an insurance specialist and investment specialist. Whatever the case, the plan developed and execution of the plan need not come from the same source.

MAS has mandated that all life insurance and investment products sold by financial advisers must be reasonable. To be reasonable, advisers would have to do some “financial planning” for their clients unless these clients refuse. Since a proper financial plan is not trivial and requires significant work, firms have come up with “templates” style of “Know Your Client” and pre-determined “Analysis.” Some firms go to the extend of even supplying templates “Recommendations”. All these help to reduce the work loan of the advisers and to meet regulatory requirement. But really, the main objective is often to close that sale and the “templates” are merely a means to the end. For firms with higher budget, they would invest in software to generate “template” style of reports for their clients and tell them that this is a financial plan. I find this highly unprofessional and sad. However, to be fair, the clients did not pay a single cent for any financial plan and hence there is nothing to complain even if these are merely templates.

Through my experience, here is what I have found: Normally a young graduate only require less than 3 hours of planning. This is because they would have little assets (mostly ang-bao monies accumulated for the past decades), no dependents and have not being prospected by all sort of investment/insurance salesman and hence have very few or no existing “baggage.”  When they come to see me, I would be spending most of the time educating them about financial matters. There is actually not much planning to do. Once they understood the basics of financial planning, some of them would already know what to do with their own finances. For such cases  I do not charge any fee since my part of the planning is too simple. However, I would not write any financial planning report as no fee is made.

Then there are other cases which the client has made a big mess out of their own finances. Typically these will be those who come to my office with a very thick stack of statements, policies and documents which they have no clue what they were. Some of the insurance policies have expired and they still keep it. Other times, they have no idea why they receive investment statements from a bank or come in the complain why their investment is zero. For such cases, they may need to be prepared for 30 or more hours of our time to figure out for them.

Other cases will fall in between requiring 10 to 20 hours of work.  

Thus, people who wishes to obtain a financial plan (and not another product sale) maybe need to expect between $2000 to $4000 in fee. The exemption of having no fee will be those who just started out their career and likely require just a simple dose of financial education to kick start their life.