Did anyone read the Straits Times forum titled Agents shouldn't take on dual roles” dated 8 Oct 2009. After reading the letter, I still don’t understand what the reader is saying but the message was very clear: the remuneration of the property agent is both unfair and complex. At the end of the day, it is the consumers who are at the raw end of the stick.

Property agents are like insurance agents and almost all financial advisers (some claim to be “independent”). At the end of the day, they only earn for closing the deal rather than for service rendered. There is always a vested interest for the agent to push their clients to transact. Many property buyers and sellers think that the agent represents their clients. Really? In practice how can this be when the agents have vested interest? The conflict of interest already exists from the onset because these agents earn nothing until the deal is closed.

Other thing to note is that property agents tend to earn more in commission if the property price is large because commission is quoted in percentage. But is it true that larger property means more work? How about the smaller property? Does it mean smaller property means less work? Will the client’s interest be served fairly despite the smaller commission for a cheaper property?

Similarly, how insurance agents and financial advisers are remunerated is unfair and at times detrimental to the clients’ interest. What is the difference between selling a term insurance of $1,000,000 (earning $200 in commission) compared with selling a whole life $300,000 (earning $5000 in commission)? The difference is that the former subjects the client to undergo so many medical examinations and test while the later with little or no medical examination.  With the poor state of health these days, it is highly likely the application for term will be rejected or accepted with special terms. The client is also likely not to take up the policy in view of the special terms and the adviser will also get scolding and complain.  That’s why you seldom see adviser recommending a high sum assured for term.  

So who suffers at the end of the day? It is the consumers who shall pay the price and they thought they were getting “free” advice.