Hi Mr Tan,
May I ask how does an insurance agent from a tied company earn? Do they have a fixed income + variable commission? How do they work? How does an independent financial advisor earn monthly?
REPLY:
The insurance agent earns entirely on commission. For most regular premium product, they earn about 100% of the annual premium (over the first few years) and their agency manager earns about 50% of the premium.
If you invest $200 a month, or $2,400 a year, you can expect about $3,600 to be taken away from your savings to pay the commission of the agent and the manager. In my view, this is too high.
The actual commission depends on the type of product and the term of premium payment.
The insurance company pays a total to the independent financial adviser a total that comprises the two levels of commission plus the cost of recruiting and training the agent.
In the case of NTUC Income, the total cost is about 40% lower than the market.
This are just my guess. I think that the figures are about right.
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