Monday, October 29, 2007

Inappropriate Advice (2)

The 2nd Inappropriate Advice that I heard is from NTUC Income with their revosave plan.

Step 1:
Ask "What is your fixed yearly expenses?" Eg, Road-tax, Car Insurances, Life Insurances, etc
Eg: $2,500
Step 2:
Based on your yearly expenses, we have a savings plan that can pay off your yearly fixed cost, let you have a free insurance and at the same time, savings. For $2,500 cash-back, your insurance cover will be $50,000 and your yearly premium is only $3,600
Step 3:
Not bad, I pay $3,600, get back $2,500 yearly, free $50,000 insurance cover and yet able to save. I'll get it!!!

Why Inappropriate Advice?
1) If ones have intention to save $3,600 and get back $2,500 yearly, the person might as well save $1,100 a year. Why lock yourself up with a $3,600 plan and the adviser make a big commission.
2) If one withdraw his cashback yearly, the eventual yield on maturity is less than 2%. With such rate, might as well save in bank.
3) Best returns for such plan is to invest and withdrawal option should be chosen only in years of hardship or real needs to the money.
4) Not sure if the customer knows that he will get significantly lesser money than he put on maturity if he chose withdrawal option yearly.


Anonymous said...

This are all the sucking Financial Advisors.

Best thing do ourself reading on Financial Management.

Why depend on blood sucking financial advisors who are not there to help you but cheat you.

Best thing , leave the money in bank Fixed D. Interest might be low. But you dont get sucked by suckers.

Anonymous said...

Hey Dr Khiat.

You did not reply to this posting.

Anonymous said...

Adrain, you are frank to reveal this in your blog. You must fight what is uinethjical even it is coming from your colleagues. I would get sick that my colleagues are doing such thing . It is as good as cheating. The approach to sell revosave is blatantly a con job
Adtrain, this is waht ntuc agents are doing. If you tell lies to 10 people few will buy your lies. It's numbers game they say about insurance.
As CFP your duty is to ensure level playing field. I don't ask that you become a 'whistle blower' but i encourage you set good example and uphold the practice standards which are lofty standards in the world.
Another is the vivolife. You watch out and listen to your colleagues and you be shocked sick, peng san.