There are 15,000 financial advisers (or insurance agents) in Singapore. They make a living by selling life insurance policies and earn a commission on the sales.
It is all right to earn commission on products that benefit the consumers. Unfortunately, many of the products currently marketed as "investment products" give a poor return for their long term savings of the consumers.
The solution is for insurance companies to design "investment products" that give good value to consumers. The insurance agents can earn a commission by selling these products, and the customer still benefits.
In my view, the "investment type" products should give insurance protection and offer a long term yield of 4% per annum. This yield is possible by investing in the right long term assets and keeping expenses, including commission, at a modest level. This yield will give a modest real return above the long term rate of inflation (2% to 3%). It is possible to create a product that meets this criteria, and offer it for financial advisers to sell to the consumers. This will be a win-win solution.
The financial advisers can also offer advice on financial planning, budgeting, debt management and early withdrawal of CPF, for an appropriate fee, say $50 to $100 an hour. This type of advice is suitable for the individuals and help them in a positive way.
For debt-management or early CPF withdrawal, the fee can be fixed at $200 with a 70% subsidy to be provided from government funding. The consumer pays $60 and the financial adviser earns $200, with $140 funded by the government.
It will help financial advisers to move to a new platform of giving fee-based advice, and can help them to make a living appropriate to the time that they have spent to acquire the financial advisory knowledge.
It is all right to earn commission on products that benefit the consumers. Unfortunately, many of the products currently marketed as "investment products" give a poor return for their long term savings of the consumers.
The solution is for insurance companies to design "investment products" that give good value to consumers. The insurance agents can earn a commission by selling these products, and the customer still benefits.
In my view, the "investment type" products should give insurance protection and offer a long term yield of 4% per annum. This yield is possible by investing in the right long term assets and keeping expenses, including commission, at a modest level. This yield will give a modest real return above the long term rate of inflation (2% to 3%). It is possible to create a product that meets this criteria, and offer it for financial advisers to sell to the consumers. This will be a win-win solution.
The financial advisers can also offer advice on financial planning, budgeting, debt management and early withdrawal of CPF, for an appropriate fee, say $50 to $100 an hour. This type of advice is suitable for the individuals and help them in a positive way.
For debt-management or early CPF withdrawal, the fee can be fixed at $200 with a 70% subsidy to be provided from government funding. The consumer pays $60 and the financial adviser earns $200, with $140 funded by the government.
It will help financial advisers to move to a new platform of giving fee-based advice, and can help them to make a living appropriate to the time that they have spent to acquire the financial advisory knowledge.
:.
0 comments:
Post a Comment