The New Year just past and so has my birthday. Reflecting on the coming year, I thought an article before Chinese New Year might be the perfect time to share my views on my outlook for the year and opportunities ahead.
1. The Gold Standard of advisory is a hybrid of service and competency
This is something I feel very strongly about. It's a belief system that resonated with me since I started out in banking, partly because of the stigma this industry comes with. As a fresh graduate from one of the 3 local schools, there's always an opportunity cost when it comes to choosing a 'more socially recognised career' as compared to selecting an industry that frankly you don't need your degree to enter. It didn't help that the closest person to me constantly tried to encourage me to transit to a non-sales role. Nothing malicious and she's proud of my achievements, simply because in her view, sales isn't a specialization. Unlike medicine, law, accountancy, etc... you don't need a specialized degree to get started, much less excel in it. To a certain extent, I agree with her.
It's only after I started doing more and more advisory work that I suddenly see a greater value & satisfaction from my work. Advisory is a skilled job. You need knowledge, constant up-skilling and specialization to do it well. If you are wondering if advisory and selling (a financial product) has any difference at all... advisory involves a process of providing a plan to help individuals achieve their goals with the appropriate utilization of solutions in the most optimal manner. Selling involves making a selected product sound like a suitable solution regardless of the need.
"I believe I can find an agent that is both competent and also makes me feel like an important client."
Said that same person, a couple of months after I introduced her to my agent friend back in the days when I viewed myself as more competent at selling than advising. She felt that my agent friend was competent but too mass market. Having worked in the bank and serviced both premier and mass market clients, I agree that client experience can always be improved. That one liner, has stayed with me till today. If you want good clients, you need to be deserving. Likewise, advisors are entitled to choose good clients too.
This is the story of how my gold standard definition is shaped. I also believe that if everyone followed this model, this industry's stigma would cease to exist and more passive business will come without the need to pretend to catch up with long lost friends or chase people around shopping malls.
2. Leverage is the new buzz word for the retail market
For the entire 2019, my Facebook is filled with ads talking about how you can buy 2 properties using your HDB and also how you can own multiple properties with no money down. I bothered to attend a couple of these talks just to know how it works. What amazed me was the turn out at these events, it's impressive. Leverage is nothing new in the financial space. The wealthy utilizes this to get richer all the time. In higher segments of priority banking, you can use leverage to invest bigger quantum on your investment funds to get higher dividend income, net returns and even leave money behind for your loved ones while you spend your liquid cash.
What is noteworthy on the other hand is how increasingly accessible these tools are to the retail market. With greater information availability, tools become more accessible and new opportunities have opened up new ways towards upwards mobility. Having said that, these presentations tend to make it sound too easy and there's little mention of the risks most of the time. It's almost as if life doesn't throw curve balls. I just want to say that there're a ton of viable solutions in the market that can make money and we just need to assess both the upside as well as the risks.
Obviously debt instruments are not evil if not the wealthy won't embrace it. It might be worth knowing that most of the time, the rich can afford their purchases without leverage and only borrow so they do no need to use their own money. If you are leveraging to fund investments because you don't have the money, it might be your red flag to reconsider your decision.
3. You can protect yourself better in 2020
Early 2019, Aviva introduced MyCore CI plan that provided some CI and death coverage for people with conditions like high blood pressure, high cholesterol and diabetes. Towards the end of 2019, AIA rolled out a new critical illness plan which entails pre-early coverage. To give you an idea of some claimable pre-early benefits include but not limited to Type 2 Diabetes Mellitus, Chronic Rheumatic Heart Disease and Benign Tumours with suspected malignancy. This year, AXA rolled out a new cancer cover for cancer survivors. All in all, my belief is that critical illness coverage will see an even better shift as medical advancement improves.
To provide some context, CI coverage was limited to advanced stages many years back. Later on, they included early stage coverage so that people can get payouts even when critical illnesses haven't reached the advanced stages. After all, early detection means a better chance at recovery. Even more recently, there's multipay plans that allows for multiple CI claims to circumvent the problem of not being able to secure coverage after a major illness. Now, we see the introduction of pre-early benefits as well as an increased willingness of insurers to protect people with pre-existing conditions. Of course, despite the optimism communicated, there will still be situations where coverage is declined. Speak to an advisor to understand more.
This shift in CI coverage tells us we can improve our personal protection benefits and more importantly, we need to review our existing insurance policies. If a person function with the assumption that they have already done what they need and abstain from meeting advisors, they may not even be aware of the advancement made in protection plans. Additionally, protection coverage premiums is ever changing as well. Due to the competitiveness of the insurance market place, you may be able to secure lower premiums with better coverage simply by reviewing your policies.
Summary
2020 will be an exciting year for me. I'm looking forward to it. To sum it all up,
I see 2020 as a year where I would further shape my ideal advisory practice. Clients can look forward to more touch points and events from me.
The idea of leverage will only be more prominent in 2020 and in years to come. There's no reason why it'll die down. In fact, as yields and interest rates continue to stay unattractive, more people will be drawn to riskier assets. Just be mindful of the risks and make informed choices!
Protection coverage in 2020 will only get better. More people with pre-existing conditions will have opportunities to seek coverage in areas that they may be denied previously. More importantly, it's a good reminder to review your policies and see if you can be better protected or to weed out outdated plans.
This is just a brief overview of my general outlook. You can drop me a message if you would like a more detailed discussion. Alternatively, speak to a trusted advisor of your choice. I once wrote about my views on my ideal advisory practice. You can read it in this article,
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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'.
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