Personally, I feel that people need a specialist financial adviser, not an order taker or sales promoter. In today's context, there is great stigma and skepticism on a financial adviser's intention and competency. Can the market be blamed? Perhaps not.
For starters, you rarely hear people praise their advisers but when someone feels 'cheated' they make it a point to make it known to the public. This is similar to how some people get the impression that doing investments is a lost cause. They hear stories of their so and so lose money but they never heard anything when people make money. To make matters worse, the barriers of entry to this career is so low, you get many many financial advisers. It's inevitable that every industry has its black sheep. The more people in a career, the proportion of black to white sheep increases. I choose to believe they make the minority but you only hear the bad news. For instance, while we do not read about people getting cheated by bankers or financial advisers everyday. On the rare occasion when they do, they appear in the news. I've NEVER read an article on the super adviser that helps people in the news EVER. It's as if they don't exist...
So what is my purpose for saying this? In my opinion, the key function of getting a financial adviser is so that they can help you become richer, safer and free-er. It's important to highlight that I do not think that everyone needs a financial adviser to manage every aspect of their finances. The truth is, you only see an accountant, lawyer or doctor for specific needs that you can't manage on your own. You will not part with professional fees if you feel you can do it yourself or do a better job.
In this article, I hope to share my views of what a value-adding financial adviser can do for end consumers and hopefully, give you a different perspective on how you select your own adviser.
Richer
Essentially, a financial adviser should either help you pay lesser or earn more money as compared to you doing it on your own. For example, in the case of an adviser representing multiple insurers, they can compare plans to identify the most cost effective or the most comprehensive in benefits. Even in wealth accumulation, if you are the hard core saver sort, your own efforts will probably take double of what a good adviser can do for you to attain the same goal, eg: sufficient funds for retirement. Of course, skeptics will always scoff that they can invest better. Why do you think I mentioned that rational beings would not part with professional fees if they can do it themselves or do a better job?
Reality Check!
The fact of the matter is there are many people who either have lost money doing it themselves or simply have no interest to do so. So really it's a question of whether you think your adviser can make you richer in the protection portion or the wealth accumulation portion, and you get the adviser for that. If your adviser makes you richer in both then good for you. If it's none then don't hire the adviser.
Safer
It's important to understand that insurance is for wealth preservation while investment is for wealth accumulation. A lot of people mix this up. Occupations like CEOs, directors, and specialists like doctors, lawyers, accountants, etc have engaged advisory services too. Ever wondered why these people earning top dollars need financial advisers too? Surely the CEO and directors will have their own private investments?
Wealth Preservation Solutions
There are many solutions out there that ensures that wealth can still be accumulated even when a person suffers involuntary retirement especially when illness strikes. Most financial instruments that financial advisers carry allows for benefits like waivers to be added into the plan to ensure that the plan carries on even when unexpected illness occurs. Ultimately even if you are awesome at investing, you need to have the active income to invest unless you have already retired. You can't do so if you are sick and there's a high chance you won't be willing to risk your protection payouts when the possibility of working becomes uncertain. Needless to say, the pure vanilla protection plans can also future proof your income when unfortunate events take you by surprise.
'Free-er'
Thesaurus actually told me there's no such word as 'free-er'. But I think people will get it. Financial planning is something that does not interest a lot of people. In fact, Singapore's financial literacy is relatively low. I'm fairly certain that most of my clients enjoy working with me because I allow them to focus on doing stuff they enjoy and leave the 'boring' financial management to me. Some blatantly told me they have no interest in financial planning at all. This is only possible if I prove to be reliable, competent and trustworthy. So effectively what I'm saying is that your adviser must be able to give you a peace of mind and do things better than you can on your own. For example, say you do invest on your own. If your return is similar to what the adviser can achieve for you net of fees, then perhaps you are better off letting your adviser invest for you while you spend your free time on your hobbies. Of course, if you can outperform or enjoy doing it, then you should keep going.
Saving time and doing what we like is important
I personally have experienced some enquiries where prospects did some research online, yet they still ended up asking for products that isn't the best fit for their needs. There will naturally be blindspots because this isn't their job to know. Effectively, a reliable adviser might have saved them time. For the rest of us, the level of interest is simply low. We try to read a little and be a little more interested because we are educated enough to understand the existence of inflation. Yet we all know the reason why we might purchase from the first banker we meet or at the roadshow because we happened to stop by. Many of us just want to get it over and done with.
Of course, if this is unlike you, and you happen to the interested few, then you might be the minority whom I mentioned can do better on your own. It's not a MUST to get an adviser you know?
Summary
In summary, your financial adviser should make you walk away feeling richer, safer and free-er or at least one of the 3. If not, you should really think twice.
Richer - You either pay lesser or earn better
Safer - You protect yourself against unexpected events where you can no longer independently secure your future
'Free-er' - You have more time to do the things you like because you 'hired' someone to off-load the parts you have no interest in
If you haven't met someone who can help you with the above mentioned, you can also drop me a message.
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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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