Over the Chinese New Year break, I've had some very interesting discussions with friends on 2 topics.

1. Future trends developing in society that might catch a lot of people off guard in their later years.

2. Buyer remorse and skepticism of the financial services sector because of poor advice coupled with lack of financial literacy.

Generally, these two issues lead back to a fundamental problem which is a low financial literacy in the country. There was this hilarious moment when my friends actually said they needed to thank their initial FAs because they would not have taught themselves how to invest had their investments (externally managed) not perform so disappointingly.

How exactly do buyer remorse manifest in financial purchases?

In my opinion, buyer remorse usually happens when consumers have a sketchy idea about what they want. Very often, the general picture of wanting to earn a higher return with as little risk as necessary is a constant. However, when needs are too broad, you get instances where solutions with unnecessary features get proposed. Some of such solutions would be anticipated endowment solutions where a cashback feature (often unused) compromises the returns but appear very appealing to a young adult starting out... until they calculate the annualised return later on when one becomes more financially aware.

In this article, I hope to help you reduce your chances of buyer remorse by highlighting the 5 long term trends developing in Singapore. If you manage your wealth with these future pitfalls in mind, there's a high chance you won't encounter a situation where your financial decisions today seem like 2 steps forward and 1 step back.

1. Growing life expectancy in Singapore

It's interesting that whenever the topic of life expectancy comes up, clients like to tell me they won't live beyond 85. I am not sure if they honestly believe this or they are saying so because they don't want to look into solutions that cater for extended longevity.

There is a growing number of Centurions in Singapore. My friends in healthcare are telling me that there are more and more patients above 100 and we haven't factored in the healthy ones not in hospitals...

2. Medical advancements enable us to live longer & healthier

According to the Bloomberg Health Index, Singapore ranks as the 8th healthiest country in the world in 2020. First in South East Asia. It also ranks first in terms of being the most efficient healthcare system after special adjustments catered for the COVID19 pandemic.

What does good health and good healthcare mean to us?

It basically means we are living longer, healthier and fitter. Unlike the past where a 25 year old fresh graduate is expected to work for 40 years (from 25 - 65) and then finance their retirement for 20 years (65 - 85), now we are likely to require financing our retirement for another 35 - 40 years. On top of this, we should also note that active and passive aging was probably determined as 65 - 75 for active retirement and 75 - 85 as passive retirement. Now active aging might mean 65 - 85 and passive aging might be 85 - 100.

Life wouldn't be much fun if you have lots of time and energy on your hands but not enough money to enjoy your freedom.

3. Rise of Gig Economy and a greater desire for mid career flexibility

At the point of writing, I personally know of individuals who took a gap year to pursue their Masters degree or travel and also women who decided to stop work to personally take care of their new born. With a rise in opportunities to earn money without a conventional job, I foresee that this will be a growing trend.

4. Technology advancement and easy access leading to information overload

Recently I was having this discussion with a few industry practitioners about whether AI (artificial intelligence) could one day replace human advisors. In my opinion it can't YET because AI hasn't progressed to the point it can replace human interpretation of complex data. AI can register products and specifications, but until the technology can adopt creative analysis to components such as track records of par performance, highlight policy wordings that might concern clients' needs and other interpretive data, the value of the human advisor still exists.

However, there's a developing trend of more consumers relying on comparison websites and other direct to consumer avenues to make financial purchases. In the past when technology is less prevalent, the issue of imperfect information provides a huge opportunity for mis-selling. Moving forward, in our information overload age, I'd like to bring up the issue originally identified by Benjamin Ang, of Mis-Buying.

I've personally have to engage prospects who come to me for quotations of certain solutions they wanted because they 'did their research online.' They were pretty clear they simply wanted a quotation and potentially somebody to transact for them. However, most of the time, the appointment would end with prospects leaving with a new set of considerations, new solutions because their research isn't thorough. It's like a sick patient googling medical solutions online and going to a doctor for a prescription. Only to find out that there are more suitable medications outside of their google search. Hence, for those consumers who happen to find someone happy to transact with no questions asked, they will probably end up with an inferior, sometimes unsuitable solution.

5. Early retirement is increasingly possible

As education opportunities continue to open up for a wider majority of Singaporeans, more and more people are getting higher remuneration earlier. Coupled with a wider access for retail investors to financial instruments that can yield massive returns like Cryptocurrencies or Leveraged endowments (riskier as well), early retirement is no longer limited to business owners or stock investors.

How are these information useful to you?

• Given that life expectancy is expected to stretch beyond 85 and we will be fitter at an older age than what we are presently accustomed to, wealth preservation tools that can provide life long income might be an area of interest.

• We also would need to factor in considerations of our total savings given that a longer lifespan would mean being exposed to bigger inflation numbers.

• Our generation needs to realise the impact of life expectancy issues early to take preventive measures. Otherwise, our children will be the next sandwich generation.

• If we wish to be part of the group that might wish to break out of the typical 40 year 9-5 working mould and stop work mid career to pursue other goals, we need to start building additional income early.

• Utilizing idle funds in the bank to build income generating pots will come a long way to provide income replacement options when we decide to stop working and also give us courage to switch careers in pursuit of self actualization.

• As of now, DIY solutions for complex financial instruments mostly in wealth accumulation is still very nascent. A human advisor can still make a significant difference if you work with the right one.

Reduce Buyer Remorse

From my experience, consumers avoid financial planning mainly because they either don't see the need to take action or are fearful they make the wrong financial commitment. Often, it is perceived that doing nothing is safe.

Frankly, most of us know we should make our idle funds work harder for us. Even if we may have enough for our present lifestyles, most of us work hard because we want a better life. Such aspirational wants may translate to moving from a HDB to a Condo or being able to bring our family to good restaurants weekly.

Highlighting the key trends developing in Singapore would help guide you in the right direction and hopefully give you more confidence in your financial decision making. As long as you agree with the trends identified in this article, your financial commitments are unlikely to give you buyer remorse 3 - 10 years from now...

After reading this article, you may have some questions or wish to be hand-held through your financial planning journey. You can reach me by dropping me a message.

Be sure to share the article if you feel this information is helpful. You will enable a lot more people to learn about retirement planning. About Janice I specialize in portfolio optimization (ensuring you get maximum value for every dollar you put in) and retirement planning. Clients look for me primarily to outsource their retirement planning needs so that they can focus on other aspects of life that interests them. Many of whom are very good in earning their incomes in their respective professions and wish to ensure their monies continue to work harder while they focus on what they are good at. Refer to client testimonials here. I've helped many clients who are referred to me reduce the costs they are paying for their insurance or help provide solutions when they deem they are stuck with huge commitments bought when they were younger but unsuitable for their present life stages. You can reach me at 94313076 or my social media accounts on Facebook and Instagram.

Disclaimer: The content created are based on my personal opinions and may not be representative to everyone or any organisation. If you have any doubts or queries pertaining to insurance or investment, please seek professional advice from a trusted adviser in an official setting. You may also reach out to me if you do not have a present adviser using the message box under 'Let's Talk'.