SINGAPORE: Financial advisers in Singapore don’t have a great reputation.
A survey by the CFA Institute found that only 10 per cent of Singapore retail investors believe their investment advisers have their clients’ interests at heart.
Given Singapore’s reputation as a financial services hub, some may find this lack of trust troubling.
But if you’ve lived in Singapore long enough, you probably would have experienced the unique displeasure of being hounded at shopping centres and MRT stations to fill up “surveys” and listen to financial plan sales pitches.
Or you may have been contacted out of the blue by a long lost friend, who turned out to be more interested in the state of your investment portfolio than in how you’re doing.
Irritating prospecting methods aside, it also doesn’t help that we see posts on social media by consumers who expressed regret buying ultimately unsuitable financial products, interrupted by photos of yet another new car, incentive trip or gala dinner posted by financial advisers.
More recently, financial advisers were also found lurking on Tinder where lonely hearts try to find love, causing a heated debate over the merits of meeting people on false pretence, and the ethics (or lack thereof) of the industry as a whole.
Perhaps it’s worth taking some time to discuss what’s the best way (if not Tinder) for advisers and clients to cultivate a long-term, mutually beneficial and fruitful relationship.
FINANCIAL AGENTS HATE THESE TACTICS TOO
To be fair, many of the prospecting methods consumers hate so much are just as torturous for financial advisers.
Paying money to rent a booth and stand all day, only to be greeted with mostly rejections, is physically and emotionally draining.
It also can’t feel good to have to call up your entire phone contacts’ list, alienating a large chunk of friends in the process.
Insurance agents might even feel uncomfortable swiping right on Tinder and leading people on, only to give the other party a rude shock when he or she pulls out a financial plan over what was supposed to be a date.
So, why do so many continue to do it?
BUT GUESS WHAT? SOMETIMES THEY WORK
For the most part, those who get enough results to make it worth their while will continue doing it. You might think one out of 30 conversion rate seems poor, but it simply means that to get 10 sales, you just need to approach 300 people.
Anecdotally, many learn such methods from their mentors and peers.
Someone who joins an agency that values aggressive and unconventional lead generation as the chief way to climb up the sales charts and win a seat on the Million Dollar Roundtable, will be tempted to do the same, even if they don’t see initial results or have misgivings.
But these poor methods to get a customer to sign on the dotted line aside, I would argue we should distinguish these from the quality of financial advisory. You might just meet a competent financial adviser.
As with all relationships, trust is key in forging a productive relationship with one’s financial adviser.
There is no doubt such methods create poor first impressions. If someone needs to resort to deception, roadshow surveys or cold calling, they probably would not have a lot of referrals or repeat clients, the thinking might go.
You might be concerned that such a financial adviser would not be completely forthright in recommending products for you.
Even if the financial adviser strove to provide advice that were completely in your interest, the impression has been established and doubts will linger.
NOT ALL FINANCIAL ADVISERS ARE THE SAME
With a large life insurance and critical illness coverage gap, rising healthcare costs and increasing life expectancy, the work of financial advisers to help Singaporean prepare for retirement and have peace of mind is more crucial than ever.
It would be unfair to tar all financial advisers and insurance agents with the same brush just because of a few black sheep.
Every day, the majority of the roughly over 20,000 financial advisers go about doing important work with little fanfare – educating clients, helping customers with claims, and keeping themselves abreast of the latest developments in the market.
It is the small portion of bad apples who receive disproportionate outrage on social media.
CHANGING THE STATE OF AFFAIRS
Given the presence (and persistence) of this bunch, it wouldn’t be productive to simply point fingers at or resorting to blaming and shaming, if we want things to change for the better.
We can and should all take responsibility, whether we’re a consumer, financial adviser, or insurer.
Financial advisers can seek out positive role models whom you can learn from to build a sustainable, ethical business you can be proud of.
Financial advisers should have the courage to reject methods that don’t feel right, with the understanding that the single-minded pursuit of short-term gain is self-defeating, and the only way to build a successful, sustainable financial advisory practice is to build it right.
Annoying nine people just to find one person who might need your financial advice should not be seen as “success”.
Accepting such collateral damage devalues the financial advisory profession, and wouldn’t lead to establishing a virtuous cycle of finding suitable clients, ensuring they have a good experience and winning quality referrals – which leads to finding more suitable clients.
Towards this end, financial advisers today can’t merely be salespeople. They need to continually add tools to their repertoire, acquiring soft skills like written communication, active listening, social media literacy as well as hard skills like knowledge about various aspects of personal finance beyond products they sell, including the CPF system, estate planning, and debt management.
This ensures a steady stream of customers that don’t just come from good marketing, but from repeat clients and referrals because of quality, indispensable service rendered.
As consumers, we can do our part by reporting these unethical and illegal practices we encounter to insurance companies or the Monetary Authority of Singapore.
Conversely, we can support good financial advisers by genuinely sharing our good experiences with those around us who are in need of financial advice or are in the market for financial products.
Insurers and financial advisory firms can also do better to recruit the kinds of talent who not only have the aptitude for a career in the industry, but prioritise those who uphold consumer trust and have hearts in the right place.
All it takes is one errant representative to undo the trust painstakingly built up over the years.
GIVING YOURSELF A CHANCE
Just as the quote on marriage goes: “You shouldn’t marry someone you can live with – marry someone you cannot live without.”
Likewise, don’t buy an insurance policy or investment product just because an agent is pushing it.
The right financial adviser can help you identify your needs and find a suitable financial plan but you should always feel free to say no.
Sim Kang Heong is the co-founder and content lead at DollarsAndSense.sg, Singapore’s leading personal finance website.