I know many financial advisers are told by their firm or institutions that they must have X number of appointments a day so that based on the law of large number, they can get Y number of sales. This is true for pure sales-type of job but I feel this is the wrong way.

Many clients consult their financial advisers to get advice. To put it the other way round, they consult their advisers in order to “tap” their brains. The rationale is that the client is too busy at work and it is economically and more time efficient to consult someone who is specialized in the certain field of work. Thus, clients consult advisers because they think the adviser is a specialist in the field. To be a specialist, the person has to study, research and constantly upgrade. Many professionals are required to constantly upgrade themselves to keep abreast with the latest findings, technology, and state of knowledge and so on.

Therefore, a financial adviser should spend a large proportion of their time in “upgrading” themselves so that they can provide value-add to their customers. However, this “upgrading” does not come cheap. There are explicit and implicit cost. The explicit cost will be the course fee, materials, books and sometimes the examination fees. The implicit cost is the opportunity cost of the lost of earnings when the time is spent studying rather than facing the client. Put it this way, staring at the books and attending courses do not bring in any revenue.

Therefore a balance is required.

Another point to note is that clients must be willing to pay a higher “price” for an adviser who is more well equipped than another. Otherwise there is no incentive for an adviser to spend the time self-studying. In many other countries, a well-educated and better equipped advisers are able to command a higher fee. But in Singapore, many clients cannot even distinguish between a fixed deposit and a structured product. I found it very hard to believe that many people claim to have been mis-sold a structured product thinking it was a fixed deposit. It is very hard to believe this is happening in modern Singapore.

With such a lack of financial education and awareness, naturally, there is no incentive for advisers to upgrade themselves since their clients cannot even distinguish an apple from an orange. There is regulation that forces advisers to upgrade themselves through the minimum CPD hours. But regulations can only do so much. If firms spent most of their CPD hours teaching their advisers the art of winning sales, it will defeat the purpose of CPD hours.  

This is Singapore! Welcome all.