Navigating the Singapore Financial Advisory Maze

I've been talking to 3 financial advisors to date, all claiming to be independent and not fed by varying commissions or fees paid by product providers such as insurance companies [Prudential/Aviva/Great Eastern Life etc] and fund management companies [Schroder/Aberdeen/Fidelity etc]. One is purely fee based - all commissions and sales charges are either refunded or waived; one has a fixed rate for all funds and sells only low commissions paying term insurance policies; the last one has "Referral Cuts" and fixed salary from the product provider as long as the product he sold remains in force, meaning that the customer hold on to the product.

The first one's company offers limited product ranges, hence he can't match better deals on insurance and the returns on the best funds out there. Thus, he had no choice but to price himself out of the competition. His company's fees are reasonable for working adults but definitely not for a poor student like me.

The second financial advisor is the one that i like the best, so far. He wrote a book which i've read, and understood to be very insightful. His office has some of the most advance investment technologies which can demonstrate quotes and figures almost instantly. The ways with which he earns his living are put up on the company's webpage and are reasonable for small investors like me. His insurance philosophy is refreshingly new and highly relevant to reality, as oppose to other insurance theories out there. His idea of actively managing and rebalancing a diversified portfolio that matches my risk tolerance level is not new, but his mathematical concepts; like risk-return ratio, expense ratio and value-averaging [instead of Dollar-cost Averaging] are really interesting as they provide much more assurance and growth possibilities than the first. The only downside is again the range of products that he offers, though larger than the first, it is still not the largest one around.

The third guy is my sister's financial advisor. He has one glib tongue and is highly persuasive. He is one sales master and the session with him is rather stressful as I have to be on the constant look out for any sales trap that he is trying to get me into using emotional selling techniques. Nonetheless, he is the only financial advisor that stated that my retirement goal [age 45] is a achievable target [the former 2 both seem sceptical of my goal]. He is also the only one that has a very structured approach to providing tailored lifetime financial advice: a booklet that allows him to note down everything about me at the onset of our meeting. That includes my life and financial goals, expense habits, current assets and debts, and the immediate tasks that he has to do. He offers a comprehensive range of products that are highly competitive in terms of their costs and historical returns. The only catch is that he is lacking tremendously in transparency. When asked about his means of remuneration, he was evasive and mentioned "referral cuts" and fixed monthly salaries from product providing companies [kind of like commissions don't you think?]. He also frowns on his customers who would prefer comprehensive knowledge on the products that he is proposing. This lack of transparency certainly warrants my disapproval.

The first financial advisor is certainly out because his company has priced itself out of the competition and its range is too limited. The second is my favourite but i'll have to meet up with the third to see if he can beat the second one on insurance premiums and what "20 page analysis report" he will produce tomorrow. I'll need detail information on how he earns his keep again, just to double check on what he told me the last time, and forget about me buying anything first, 'cos i will have to double check everything for at least a week. He would do well to let me have a copy of the report, because if he wouldn't it is really "bye bye" to him due to his severe lack of transparency.

Sometimes the members of the local financial advisory industry are really tricky in their dealing methods, but i suspect that this is largely the same everywhere. To find out more about the the local financial advisory scene and its latest happenings, check out www.mas.gov.sg or simply call them up for further clarifications.

Most would deem the entire process of investigation too cumbersome. But there is no point in shunning away from financial advisors and their works, because one day they will search you out. It's just a matter of time. Better start now and begin to navigate the Singapore Financial Advisory Maze than to remain ignorant about it. Remember, the most risky thing to do is to keep your hard earned cash in the bank, to be eroded year after year by inflation. But before you take the plunge, always shop around, and around, and around. It may take some initial efforts, but it'll be worthed it upon reaching your retirement goal.