Im a FA for 14yrs. And an avid TWS reader. Im surprised that you will take up such a piece and write such a single sided viewpoint for a topic that is very dynamic. Articles like this does not educate, it create fear in consumers. Some minority might be spurred to be more hands on with their finances. But the majority end up getting more confused, distrustful and started investing in things they do not completely understand even if no commissions go to an agent. There is a reason why people pay for advice. Please don't paint the industry in a bad light.
The competition between term and whole life, endowments vs investments is already old story... an unbiased FA will know that you need to have a mixture of some into your financial planning. Different family has different needs, budget and financial goals. And many singaporeans are actually risk adversed (probably because they read too many such articles) they end up preferring to stick with low risk endowments. You should write to encourage them to take educated calculated risk on their monies. Whole life is great for people who doesnt wish to continue paying beyond retirement, term as the name implies is meant for a period of time. It is great for boosting coverage when one has dependents and mortgages. Whole life and endowment plans provide guarantees for consumers who are risk adverse. Endowment IS a force savings because there are indeed many people who are poor stewards of money and if given flexibility, will likely squander all their monies before retirement age. Protection planning for children is also different now after the introduction of cancer drug list. Shield plans are no longer sufficient but given the low premium for whole life for children, who can say that term is definitely the best solution for a newborn?
Financial advisors act as a bridge between consumers and solutions, we are solutions providers. What you have written, is a biased opinion.
To really refute the article and affirm it is "biased", you have to specify how an endowment/ILP provides better value add to anyone compared to "Buy Term Invest Rest", and under risk-averse case, investing in low cost market-indices based ETF.
Or, how, in given high-interest rate environment, is it better to have whole life plans (with substantially higher cash outlay in earlier periods), than protection plans serving the same purpose.
To paraphrase the (IMO hardly biased) article, any FA with the customers' best interest in mind will seek to provide the best suited protection needed and most value per dollar of premium spent - and when it comes to investment, introducing products the best risk-weighted return (many studies have shown low-cost ETFs generally outperform any ILP/endowment in reward vs risk). It is just too bad FAs are not incentivised to provide such service with the current FA commision/compensation system.
So what's really your basis of saying this article is biased?
I don't think you understand my comment. I said there is room and space for different solutions for different type of people and circumstances. Don't think my statement said anything about ILP or buy term invest the rest is good or bad. The title itself is already a bias statement, does all insurance agent pitches the same way? You should discern between a good and bad agent maybe. But this article is trying to pinpoint that if your agent is asking you to buy this,this and this, beware.
And which part of this article analyses very clearly that if you buy term and invest in a particular ETF you will get $x return? It just made blanket statements. How many people has the money, time and knowledge to park in X term, Y etf, Z reading up on what they should buy? It is great for people to have more knowledge and are confident about their investments. it is also ok for those who doesnt have such capacity to lean on professionals who HAVE to earn a cut for their time, effort and experience.
The article isn't written on a neutral ground. In this context, it is obviously written based on this 3rd party who claim to be a cut above the rest... How is this unbiased?
I'm the CEO of Havend and having been in the industry for the past 25 years do not intend to belittle the work of good advisers who constantly put client's best interest first. Perhaps allow me to share what my firm and I strongly advocate on insurance.
1. Insurance is an important risk management tool to support our financial plan which is to achieve financial independence.
2. However, insurance is best used for protection and not for savings or investments. As there is no financial instrument that can protect like insurance, but there are better investment and saving instrument in the market in terms of returns and flexibility.
3. It is bad to be under- or having excessive insurance. Under-insuring will result in financial hardship when life crisis strikes, and over-insuring comes at a cost of sacrificing our current lifestyle (cannot enjoy life in the now) and reduce our ability to save for the future.
4. Hence, having adequate coverage is key. We should buy as much insurance cover as we need but pay as little premium (expense) as we can. Term insurance is the most suitable because it is cost-effective as compared to Whole life and investment linked policies (ILP). For the average working folks, Term insurance is also the only way to have adequate protection because of its affordability.
5. It does not mean there is no role for endowment or whole life policies in one's insurance plan, but as these are costlier and lower return albeit lower risk, it might suit some under certain circumstances but should only be considered after all the core protection needs are met. However, we do not recommend ILP, as we strongly believe there are better investment options.
We have documented our insurance philosophy in this ebook for anyone who is interested to know, https://havend.com/publications/.
What we notice is that many people understands the importance of insurance advice but are often afraid of the process of advice because of the fear of being mis-sold, over-sold or pressured-sold. And this is due the conflict of interest caused by sales commission. As trusted advisers, we have to mitigate these conflict of interest so that client's interest comes first. For us at Havend, we put in place 5 control measures to mitigate such conflict of interest and offers a money-back guarantee to give assurance that clients will not be over-sold what they do not need. https://havend.com/about-us/transparent-practices/#mitigation.
Lol, I start to wonder if a "Financial Advisor" is the same as an Insurance Agent. I can't believe there are "Financial Advisors" recommending their clients to buy ILP.
Which means you are not very aware there are different titles for the agents out there. Hence you are not familiar when i said investment, i did not mention anything about ILP. I also cannot believe there are still agents AND bankers who recommend ILPs especially to retiring folks, but the reality is there are such people. There are also people who sell investments under the pretense that it is a guaranteed return. There are good and bad cops in every occupation and sector.
Im a FA for 14yrs. And an avid TWS reader. Im surprised that you will take up such a piece and write such a single sided viewpoint for a topic that is very dynamic. Articles like this does not educate, it create fear in consumers. Some minority might be spurred to be more hands on with their finances. But the majority end up getting more confused, distrustful and started investing in things they do not completely understand even if no commissions go to an agent. There is a reason why people pay for advice. Please don't paint the industry in a bad light.
The competition between term and whole life, endowments vs investments is already old story... an unbiased FA will know that you need to have a mixture of some into your financial planning. Different family has different needs, budget and financial goals. And many singaporeans are actually risk adversed (probably because they read too many such articles) they end up preferring to stick with low risk endowments. You should write to encourage them to take educated calculated risk on their monies. Whole life is great for people who doesnt wish to continue paying beyond retirement, term as the name implies is meant for a period of time. It is great for boosting coverage when one has dependents and mortgages. Whole life and endowment plans provide guarantees for consumers who are risk adverse. Endowment IS a force savings because there are indeed many people who are poor stewards of money and if given flexibility, will likely squander all their monies before retirement age. Protection planning for children is also different now after the introduction of cancer drug list. Shield plans are no longer sufficient but given the low premium for whole life for children, who can say that term is definitely the best solution for a newborn?
Financial advisors act as a bridge between consumers and solutions, we are solutions providers. What you have written, is a biased opinion.
Here comes said angry comment rofl
To really refute the article and affirm it is "biased", you have to specify how an endowment/ILP provides better value add to anyone compared to "Buy Term Invest Rest", and under risk-averse case, investing in low cost market-indices based ETF.
Or, how, in given high-interest rate environment, is it better to have whole life plans (with substantially higher cash outlay in earlier periods), than protection plans serving the same purpose.
To paraphrase the (IMO hardly biased) article, any FA with the customers' best interest in mind will seek to provide the best suited protection needed and most value per dollar of premium spent - and when it comes to investment, introducing products the best risk-weighted return (many studies have shown low-cost ETFs generally outperform any ILP/endowment in reward vs risk). It is just too bad FAs are not incentivised to provide such service with the current FA commision/compensation system.
So what's really your basis of saying this article is biased?
I don't think you understand my comment. I said there is room and space for different solutions for different type of people and circumstances. Don't think my statement said anything about ILP or buy term invest the rest is good or bad. The title itself is already a bias statement, does all insurance agent pitches the same way? You should discern between a good and bad agent maybe. But this article is trying to pinpoint that if your agent is asking you to buy this,this and this, beware.
And which part of this article analyses very clearly that if you buy term and invest in a particular ETF you will get $x return? It just made blanket statements. How many people has the money, time and knowledge to park in X term, Y etf, Z reading up on what they should buy? It is great for people to have more knowledge and are confident about their investments. it is also ok for those who doesnt have such capacity to lean on professionals who HAVE to earn a cut for their time, effort and experience.
The article isn't written on a neutral ground. In this context, it is obviously written based on this 3rd party who claim to be a cut above the rest... How is this unbiased?
I'm the CEO of Havend and having been in the industry for the past 25 years do not intend to belittle the work of good advisers who constantly put client's best interest first. Perhaps allow me to share what my firm and I strongly advocate on insurance.
1. Insurance is an important risk management tool to support our financial plan which is to achieve financial independence.
2. However, insurance is best used for protection and not for savings or investments. As there is no financial instrument that can protect like insurance, but there are better investment and saving instrument in the market in terms of returns and flexibility.
3. It is bad to be under- or having excessive insurance. Under-insuring will result in financial hardship when life crisis strikes, and over-insuring comes at a cost of sacrificing our current lifestyle (cannot enjoy life in the now) and reduce our ability to save for the future.
4. Hence, having adequate coverage is key. We should buy as much insurance cover as we need but pay as little premium (expense) as we can. Term insurance is the most suitable because it is cost-effective as compared to Whole life and investment linked policies (ILP). For the average working folks, Term insurance is also the only way to have adequate protection because of its affordability.
5. It does not mean there is no role for endowment or whole life policies in one's insurance plan, but as these are costlier and lower return albeit lower risk, it might suit some under certain circumstances but should only be considered after all the core protection needs are met. However, we do not recommend ILP, as we strongly believe there are better investment options.
We have documented our insurance philosophy in this ebook for anyone who is interested to know, https://havend.com/publications/.
What we notice is that many people understands the importance of insurance advice but are often afraid of the process of advice because of the fear of being mis-sold, over-sold or pressured-sold. And this is due the conflict of interest caused by sales commission. As trusted advisers, we have to mitigate these conflict of interest so that client's interest comes first. For us at Havend, we put in place 5 control measures to mitigate such conflict of interest and offers a money-back guarantee to give assurance that clients will not be over-sold what they do not need. https://havend.com/about-us/transparent-practices/#mitigation.
Lol, I start to wonder if a "Financial Advisor" is the same as an Insurance Agent. I can't believe there are "Financial Advisors" recommending their clients to buy ILP.
Which means you are not very aware there are different titles for the agents out there. Hence you are not familiar when i said investment, i did not mention anything about ILP. I also cannot believe there are still agents AND bankers who recommend ILPs especially to retiring folks, but the reality is there are such people. There are also people who sell investments under the pretense that it is a guaranteed return. There are good and bad cops in every occupation and sector.
I worked part time as a Financial adviser and I agree these are on point 👍