Saturday, May 31, 2008

Another agent for his own interest

I bumped into a good friend on my way to the AGM yesterday. He is also one of my very close client whom I had assisted with full financial plan and had taken up several policies with me. I understand his needs, budget and family situation very clearly. He promised to so call "Support" me when I cross over to an IFA for a review.

During that brief meeting, he informed me that he had taken a wholelife plan from Company "M" 2 months ago. At first instance, I don't remember any good wholelife plan from this company. Therefore, when I reached home, I immediately get my laptop and do all the comparisons. As expected, this plan gives poor value. The premium is higher, lower protection and cash value at all years, higher distribution cost and the company has a lousy investment track record.

I sms him in the morning to re-consider this plan but he told me it was his friend who is also an IFA recommending that plan to him. He thought his friend would have made comparisons for him. He will just carry on with the plan despite that he only paid 2 months premium. He then told me that 2 of his other friends also got the similar plan from him already. He told me not to worry and he will support me with an RSP.

I have a few disappointments that night. I can't sleep well and my mood is spoilt for this weekend.
1) Disappointed that he did not wait that one month for me despite his repeated promise. He have enough of Life Insurances. What he needs is a disability income or to top up his term coverage and then start accumulating his wealth.
2) Disappointed that some IFA sell plans that benefit them the most. It really disgust me. They are harming our reputation.
3) Disappointed when he claims that 2 of his friends also buy that plan from that adviser. How come he never recommend these friends to me? More people buying such plans of poor value to feed the pocket of that adviser?
4) He say he will support me with an RSP. I don't think he knows that the commission from an RSP may not even be enough to buy a plate of chicken rice for myself. Moreover, he is left with a much lower budget to invest if I am to recommend him disability income and term coverage. He may thought that I earn a lot and he is doing me a favour, not the other way round.
5) I felt I'm a lousy sales person. That adviser had earn so much more than me with 2 more friends buying similar plan without doing a financial plan and proper analysis. I had done so much and my reward is so much lesser than that adviser.
6) I am very very disappointed because I had failed my duty as his financial planner and let him fall into the trap of such advisers.

A similar disappointment happened to me few months ago when another of my very good friend purchased from Company "P".

So stressed now. That stupid CFA exam coming. Spent so much $$$, study so hard to suffer and feel like sure fail. Sometimes don't understand why I am studying so hard when others can get so much more than me when they don't do anything. So much work not done before I left the company. Yet such things happened. No mood to study now. Shitz!!!... But cannot, exam coming... Haizzz... (Dilemma)

Fireworks at the 38th NTUC Income AGM

I, being a concerned policyholder of NTUC Income and was eager to see some fireworks between the 2 Tans, I went to the 38th NTUC Income AGM in NTUC Centre today.

Here the meeting goes

I arrived at 5:40pm, registered and went for tea and Polar cream cakes and curry puff at the reception area. There are many people which I think nearly 1/3 are NTUC Income Staffs and Consultants. All of us were enjoying the scenery of the IR construction while enjoying the refreshments. I estimated that around 400 people turned up for this AGM.

The meeting started at 6:15pm as Chairman Ng Kee Choe begin his opening address and subsequent assurance regarding the Change of Bonus Scheme which is for the good of Policyholders.

Shortly after his speech, Mr Tan Kin Lian went to the nearest Microphone and began his 5 minutes talk about his meeting with Lim Boon Heng and Matthias Yeo and his decision to withdraw the collective protest. He maintains that he do not agree to the scheme but will continue to observe the company as a policyholder. There was a loud applause when he announced the decision to withdraw the collective protest. (Perhaps, mostly are NTUC Income people)

The bonus structure issue was temporarily put aside when many policyholders started scrutinising the Annual Report questioning things like investment performance, Corporate Governance, Subprime involvement, fund managers performances, expenses to SLF, bad experiences with NTUC Income, etc etc. All these dragged for about an hour. Just as I thought things were ending, the bonus issue pop out again.

There was at least 4-5 people started a debate with the board of directors asking tough questions such as policyholders must be given an option, legal actions that policyholders can take, necessity to take higher risk with Life Fund, etc... Mr Ng Kee Choe, Mr Tan Suee Chieh, Mr Matthias Yeo and Ken Ng all had a hard time answering them. Mr Tan Kin Lian also added some fire citing that the bonus structure should not apply to some policies, NTUC Income should give out their surplus fairly to Policyholders and also highlighted that the Chief Actuary and Chief Executive are new. The debate don't seem will bear any answer.

The meeting finally ended at 8:45pm after two and a half hour. I spoke to one of the union leader and he told me that this AGM is the longest out of the 15 years of NTUC Income AGMs that he attended. Most AGMs end within half an hour.

My feel about this meeting

I felt that I just came back from a show, just like the front page of the annual report. There was sufficient debate about the bonus issue as expected but the answers are all the same as if all of them have a script with them. Quite a bit of fireworks with Tan Kin Lian around and some policyholders with real funny questions. I enjoyed it very much.

But frankly telling, I feel that all debates on the bonus thingy are useless because no one will be able to tell if the decision they make today will be right or wrong at least after 10 years. Why argue? Do you think NTUC Income will change their stance after so much publicity about it? Its just like government increase GST to 7% when inflation is so high, do you think they will reduce back to 5%?

I am also surprised to know that there are some people who really look into every page of the annual report and asked plenty of questions which we feel are so small to be noticable. But some people really ask and doubt too much to a point of doubting the capabilities of the actuaries, investment teams, directors, managements, etc
I wonder if AGMs of other insurance companies are similar like this...

Thursday, May 29, 2008

Diversification and Compounding Effect

After writing about Anne Scheiber last week, it inspired me to write about Diversification and Compounding today.

Diversification is very powerful strategy because it reduces the various types of investment risks that are present in any portfolio. By allocating your assets among different asset classes and sectors, gains in one part of the fund can lessen or even eliminate the impact of losses in another fund.
With occasional rebalancing, the returns will be better.

An illustration to show you the power of compounding and diversifcation

Scenerio A
Mr Tan invested $100,000 into a fund that returns 5% over 20 years
Eventual returns = $265,330

Scenerio B
Mr Tan invested $100,000 equally into 5 funds that returns 0%, 2.5%, 5%, 7.5% and 10%
Fund 1 @ 0% = $0
Fund 2 @ 2.5% = $32,772
Fund 3 @ 5% = $53,065
Fund 4 @ 7.5% = $84,957
Fund 5 @ 10% = $134,550
Eventual Returns = $305,344

In the above example, I had used an extreme case whereby Mr Tan lost 100% in one of his fund which is nearly impossible. You may also question me if there is a fund that can potentially returns 10%p.a, why not? S&P had returned nearly 11%p.a over the past 30 years.

1. Diversification correctly help you to reduce your risk
2. Diversification correctly help you to improve your returns
3. Diversification correctly improve your liquidity
4. Diversification with correct rebalancing boost your returns
5. Diversification, Compounding and Rebalancing with adequate time horizon can be your preferred strategy... provided you do it right...

Monday, May 26, 2008

Music on the "move"

I always admire people with creative ideas and able to think beyond the norm. These people are able to leave others with a deeper impression and stimulate our imagination to do things out of the box.

I happened to pass by Pasir Ris MRT Station this afternoon and a moving piano caught my attention. The pianist, dressed in Victorian Ballroom costume and played real good music on a piano with wheels attached below. He was cycling and making funny facial gestures with his audiences. There was many people crowding round him, taking photographs and enjoying the beautiful music at the same time.

I think thats a creative way to attract people. It had slowed down my pace, and willing to stay for a while to enjoy the music. After staying for 10 over minutes, the word "Arts Festival" came into my mind. It inspired me to log into the net and google for the words "Singapore Arts Festival".

2008 Arts Festival falls on 23rd May to 22nd June. I was surprised that this festival had been around since 1977. Heard about this festival many times but never bothered about it. As I surfed into their website(, I realised that there are so many events ranging from Music, Theatres, Dance, etc. to us to choose.

Well, I am certainly not those artistically inclined person. My encounter with music and the Art Scene started during my polytechnic days when I was a concert band player. However due to work, I have not slow down my pace to enjoy this robust Arts scene in Singapore. Maybe this is a good chance this year.

I'm not promoting Arts today, but I urge everyone to slow down our pace once a while and enjoy the beautiful Arts Scene around us. Log into their website. Take a look...

Friday, May 23, 2008

A Lendendary Woman

Go to Yahoo or Google and search for "Anne Scheiber"
She is a legendary woman who was 101 years old when she died in Jan 1995.
Whats is so legendary about her?
* Anne was an auditor in IRS till 1943 when she reached retirement age. She decided to stop work and live on a $3,150 annual government pension. She only had a savings of $5,000 when she retired.
* For the next 52 years, Anne lived quietly and simply in her small, rent-controlled apartment in New York City. She clipped coupons, shopped for discounts at the local stores, ate home a lot, living on minimum government pension.
* When she passed on in 1995, her will was opened and the larger world found out that the little woman in the tiny apartment had left a $22 million dollar estate to Yeshiva University. And that her stock investments were earning around $1 million per annum, most of which she didn't spend.

2007 recipients of the Anne Scheiber Scholarship

The magic of compounding
Anne was burned by various stock brokers, including her brother during the 1930s, and had resolved to never depend on them again. She did her own research, chose her own stocks, and by the time she passed away 52 years later, her stock choices had grown at the rate of around 17.5% per year. And the paltry five grand had mushroomed to $22,000,000 and counting. (We call this the magic of compounding)

Her investment Strategies
1) Price of shares doesn't matters
She favored firms with growing earnings and tend to ignore a stock's price to earnings ratio. She reasoned that stocks are overpriced sometimes and underpriced others but if the company's income rises year after year the buy price doesn't matter.
2) Savings Bit by bit (Dollar Cost Averaging)
She lived a very frugal lifestyle and continue to invest with her meagre pension monies.
3) Buy and hold (No market timing)
She never sold a stock in which she believed. Neither in the bear market of the '70s nor during the crash of '87 she was worried. Instead she thought the general market had gotten overpriced, and she was convinced her stocks would come back.
4) Demanding Answers (Proper research and know what she buy)
She went almost every annual shareholder's meeting and demand answers from the CEO as if she is still working as an auditor.
5) Reducing her dividend tax (Minimising Taxes)
In order to cut taxes she reinvested her dividends in tax exempt bonds. When she died, she had 60% in stocks, 30% in bonds and 10% in cash.
6) Power of Compounding (Investment with Time, not timing)
Think this is the most important strategy. She allowed her money to compound for 52 years.

Well. Can we achieve something legendary like her? Its actually quite possible but we have to be disciplined and start early...

Tuesday, May 20, 2008

Signing up for AMD?

There are a few things I always discuss with my clients whenever we discuss about taxation and Estate Plan during our review sessions. One of the issue I'll bring out is the Advance Medical Directives (AMD).

There are around 4,000 people who signed up for AMD over the past 2 years. I like to reinforce that there are people who are independent and do not want their lives artificially prolonged should they become unconscious while terminally ill..

So what is AMD?
The AMD is designed to provide autonomy for patients to determine in advance of their wish to die naturally and with dignity when death is imminent and when they lose their capacity to decide or communicate. It legally registers the views and wishes.

What do you mean by Terminal Illnesses?
An incurable condition caused by injury or disease from which there is no reasonable prospect of a temporary or permanent recovery where death would be imminent regardless of the use of extraordinary life-sustaining treatment and where such use would only serve to postpone the moment of death of the patient.

What do you mean by "Extraordinary life-sustaining treatment"?
Any medical procedure or measure which will only prolong the process of dying for terminally ill patients when death is imminent but excludes palliative care.
Palliative care is the provision of reasonable medical procedures for relieving pain, suffering or discomfort and the reasonable provision of food and water.

How to make an AMD?
1) Complete the AMD form
* Go take from your polyclinic or download from
2) Find a valid witness to your private clinic or polyclinic
* 2 witnesses needed and one of them must be a doctor
* See below for Criteria of the other witness you find
3) The doctor will explain the AMD and act as your first witness
* Pass the form to the doctor and tell him your intention
* You will pay a consultation fee to the doctor
4) Return the form to the Registrar of AMD
Send the form to:
The Registry of Advance Medical Directives
Ministry of Health,College of Medicine Building,
16 College Road,
Singapore 169854
5) Wait for an acknowledgement from the Registrar
* Call them if you didn't hear from them after 1 month
Tel: 6325 9136
Fax: 6325 9212

What shall be the Criteria of your witness?
a) Is not a beneficiary under the patient's will or any policy of insurance
b) has no interest under any instrument which the patient is the donor, settlor or grantor
c) would not be entitled to an interest in the estate of the patient on the patient's death intestate
d) would not be entitled to an interest in the moneys of the patient held in the CPF or other provident fund on the death of the patient
e) has not registered an objection under section 10(1) of the AMD Act 1996

Is it expensive to sign up AMD?
You don't need a lawyer to write the AMD. Its Free! Only need to pay a small consultation fee to the doctor.

Should I sign up for an AMD?
Its up to you. However its better that you discuss it with your spouse first. If after signing up, you wish to revoke it, you still can do so anytime.

Info partially extracted from and

Saturday, May 17, 2008

Uncertainties tied by going untied

The day I made a decision
I had finally decided to join this particular FA firm after a lot analysis and comparisons. I had chosen this firm because of the company's financial strength, good reputation, activity based team, knowledgable manager and fair compensation structure. May not be the best choice but I feel at ease and comfortable with the place.

My Excitement on being untied
As the day come closer to being untied, my feeling are mixed with excitement and uncertainty. I am excited because I know I will start a new lease of life in this profession with pride and dignity. I am able to add better value to people around me with the range of Financial Solutions compared to the past. I am able to work towards charging a fee for the work that I used to do for my clients. I have my aspirations to be a well soughted Financial Planner in Singapore. I want to get write books which people can easily understand my financial planning concepts, give lectures in universities, making this industry more professional and ensuring more people are getting the proper advices. I well aware that I'm not that intelligent and that capable yet, thats why I never stop learning and think how to work towards my dreams and aspirations.

I survived the industry out of chance...
It was by chance that I survived this industry. I would have been out of the industry 1 year after I joined because I simply can't close big policies like my peers do. I did a lot of term and medical insurance which I cannot well sustain my income. I could not convince people to invest their money. I am not able to apply certain concepts which my colleagues taught me. Some of them even feel that I'm stubborn and negative. I worked very hard, but the income was depressing.

The depressing Days
In my early days, I ate plain rice with one vegetable for lunch everyday over nearly 3 months after depleting my 3 months worth emergency fund. My income was supported by my childhood piggy bank savings. I went to the MRT Station putting in 10 cents after 10 cents to accumulate $1 and press the reject button on the ticket machine, so that I can have a dollar coin instead of 10 ten cent coin. I didn't have money to buy a pair of shoe and I remembered clearly how I wept outside Ma Guang Medical Centre along Middle Road on one rainy day when my socks were soaked because my shoe was badly torn. I got no one to turn to and I felt I have ruined my life. The company saved me when they sold nearly 250 policyholders to me and sent me to Army Camps and present to the Army boys convincing them on our Endowment plans. My commission increased and my life improved. Subsequently, with time, I have more general insurance business and my income stablised.

Why the uncertainty?
Because I have 9 fears and 1 feel...
1) I fear that history will repeat itself again
2) I fear that my dreams and aspirations will be gone
3) I fear that the remuneration for being honest and always put clients interest first will not be sufficient to justify me staying in the industry.
4) I fear this industry is a sunsetting industry
5) I fear that my income will always be pegged to a junior executive even when I'm old
6) I fear that I'm not able to retire myself when I always tell people how to save and invest for retirement.
7) I fear that it'll be too late for me to switch back to my old job after another few years of trying. 8) I fear working 8-5 job and working under some lady bosses which I cannot endure
9) I fear losing my family when I cannot get a proper income
10) I feel that I survived this industry out of chance and not out of own capabilities.

Rational Vs Emotion
I am a person with a rationale mind but emotional heart.
My mind calculated my chance of success and it tells me that it is stupid to give up my renewal commissions which was like God given in the past. I should close my eyes, shut my heart and sell whatever the company told me to. Apply whatever selling concepts to people whom I met. I can leave the industry after a few years of good renewal commission, join another industry and continue to get my passive income while on another job. I think I'll live a good life by doing what others are doing and don't analyse so much.

But SHUCKs..., I'm an emotional animal. I have conflicts whenever I try to close my eyes and do what the others are doing. I am not happy and don't feel proud of my job. I keep trying to be different by upgrading and inventing financial planning worksheets. I find it hard to promote certain plans and I don't really feel happy even after I closed the case. I refused to move out of this industry even though I don't feel positive because I loved what I'm currently doing and I find it hard to remove the emotional baggage of leaving all my policyholders behind. I had spent so much time and money achieving my CFP, Life Insurance Diploma and Estate Planning Course, I will have wasted them all if I give up now.

No return now
Since I had already decided to go untied and to remain in the industry, I cannot look back now. I am no longer a young boy who can u-turn and start fresh again and again. If I am to make this a viable career, I must be able to find people with larger premiums to invest, build up my portfolio fast, stablises my income with Term Insurances and General Insurances. Its super tough with my current sales capabilities but I really don't want to think anymore. My heart just told me "Just do it!"

Thursday, May 15, 2008

Super Complicated Plan

I attended a training session arranged by one of the major Insurance Company recently. The session talks about this Annuity Plan that uses the Investment Concept to ensure a guaranteed income for the annuitant.

I thought that packaging of investment into an annuity is a good concept and heard that this plan was well received in matured countries like Japan and US. I was quite excited to know more as I thought such a plan will encourage people to take up some risk via an investment, yet still get the guarantee from the Insurance company that they will get an income for life.

We were shown why Singaporeans need to plan and blar blar blar in the first half of the session. Coming to 2nd half, I began to get deeper and deeper into confusion. I'm still confused because I never expect a plan to be designed till such complication.

Use an example to confuse you (Its okay to give up half-way)
50yrs old, male invested $100,000 into this plan. Just like to write a bit to show you how complicating this plan can be.

1) The $100k lumpsum is invested into a rather balanced/growth portfolio. This actual Investment value in the policy at any time is called "Account Value"(AC)
2) If the person choose to take out the refund immediately, he will get a 4% of his premium over next 25 years. It will be $4,000/yr. We call this "Gross Withdrawal Amount" (GWA)
3) If the person choose to take out the refund 5 to 10 years later, he will get a loyalty bonus equal to 25% to 50% of this premium to his "Gross Withdrawal Benefit" (GWB). GWB is like an invisible account to calculate GWA.
4) Person can opt for "Income for Life" after age 65 to mimic as an annuity plan, but the guaranteed withdrawal amount will be based on the GWB at that time.
5) There is a chance for the GWA to increase provided that his AC exceeds the original GWB on every 5th policy year.
6) If AC exceeds current GWB but below original GWB, the years to maturity will be extended instead of an increase of GWA. The term used is Potential for "Step Up"
7) Unless your investment grow at a rate of at least 8%p.a, I don't see a good chance of the GWA will be stepped up.
8) The evaluation date is exactly on every 5th policy anniversary. If the 5th year is a lousy year, then sorry. You are unlucky and you won't get a step up that year.
9) The worst case for this plan that the Client only get $100k out of his $100k that he put in. 0% yield.
10) Of course, the best case is that if the investment grow at 8% p.a and the GWA enjoys "Step up"

Confused? Let me show you their High Charges
* Confused? There are more to it. Scenerios all changed when you choose partial withdrawal, early redemption, annual top up, etc
* To justify the confusion, their charges must be high. Fund management fee as high as 1.65%. Account management fee of 1.8% and fund hedging fee of 0.25%. The yearly charges is as high as 3.7% p.a.
* I did not check out the commission structure. I believe it must be quite attractive considering the cost involved.

* The plan is so complicating that nobody will every remember what they purchased after 1 week. As a trained adviser myself, I find it hard to remember the features.
* There are so many things to lock you up your hard earned money and worst case scenerio is that you only get back your money after 25 years.
* The payout is not fantastically high. 4% of the investment amount is small. If your fund grow at 6%p.a and you take 4% yearly, your principal remaining will logically be intact or more than the $100k you put in.
* The charges involved are very high. The returns after charges even if the person choose not to take out any GWA till 80 yrs old is barely 5.24% when your fund actually performed 9%.
* If your fund really grow at 8%p.a, your own investment outside this plan will surely do better.

* Avoid such plan. Get an adviser to show you how to invest on your own. He will help you to strategize and construct a portfolio with regular reviews and rebalancing.
* The work he do is more and yet charges much lessor than they do.
* The only disadvantage is "No Capital Guarantee" for your $100,000. Frankly, the chance of losing $100,000 with a horizon of 25 yrs in a diversified portfolio is very low. You decide yourself...
* Why these Insurance Companies make plan until so complicating? Can they be made simpler for a layman to remember what they purchased???

Monday, May 12, 2008

Cost of Life Insurance

Definition of Insurance
I flipped through my Times-Chambers Dictionary to look for the definition of Insurance and it was defined as follows:

"Insurance is a guarantee that you will receive money if something is lost or damaged, or receive a replacement for it, by a financial company in return for regular payments you make to them."

It did not specify what was lost or damaged. It can be a hard asset or even a life. As most of us are likely to relate about loss of a human life when we talk about insurance, I like to talk about the ways where we can get money from the Financial or Insurance Company when a life is unfortunately lost.

Each type of insurance have their purpose, strengths and flaws. There are cheap and expensive ways to get covered. I just like to share with you the type of Insurance plans you can get in Singapore and I'll rank from the most expensive ways to the cheapest with the Premium:Coverage Ratio.

The 10 Insurance Plans to get money if a human life is lost

1) Single Premium Endowment/Investment Linked Plan
<~$400k Lumpsum for $100k cover. Ratio - 4:1>
* Main purpose is to maximise current assets, not protection.
* The cover is more like a special benefit than an insurance.
* Eg, you save $100k, you get a 25% extra coverage from the Premium you put in.

2) Single Premium Life Insurance including Universal Life plan
<. Pending premium info. Ratio estimated to be 1:15>
* Such Plans are normally for high networth people who are ready to plough in a large premium to ensure coverage for life. Eg $150k for a $2 million cover.
* They get it as part of Estate Planning Purpose. Part of this single premium will grow in size and part of it to pay off the insurance premium.

3) Endowment Plan
<~$250/mth for $100k cover till age 65. Ratio - 1:400>
* The ratio is terrible but some people are told to get protection via an Endowment Plan. It is a lousy choice because its main purpose is to save, not protect.
* The ratio will be worst for a Cash-back Endowment Plan

4) Whole Life Insurance Plan with Limited Premium chosen
<~ $200/mth for $100k wholelife cover. Premium payable till age 65. Ratio - 1:500>
* The $100k will grow with the Bonus declared by the Insurance Company
* There will be some savings component and cover is for Life
* The premium payable will be higher if Premium Term is shorten

5) Whole Life Insurance Plan without Limited Premium
<~$170/mth for $100k cover. Premium payable till age 85 or 99 Ratio - 1:588>
* As described for Limited Premium Life Insurance Plan

6) Term Plan with Whole Life Cover
<~$75/mth for $100k Whole Life Cover. Ratio - 1:1,333>
* The $100k cover will remain as $100k till age 99

7) Term Plan covering till X years
<~25/mth for $100k cover till age 65. Ratio - 1:4,000>
* The $100k cover will remain as $100k till age 65
* Renewability is possible for some plans at end of the term

8) Decreasing Term Plan covering till X years
<~$15/mth for $100k cover till age 65. Ratio - 1:6,667>
* The cover will decrease Proportionally over the years from age 30 to 65.
* One is not allowed to renew at end of the term.

9) Yearly Renewable Term Plan
<~$8/mth for $100k cover. Premium goes up with age. Ratio - 1:12,500>
* Often added as a rider in a Whole Life plan or ILP. Premium get very much higher as the insured gets older.

10) Group Yearly Renewable Term plan
< ~$6/mth for $100k cover. Premium goes up with age. Ratio - 1:16,667>
* As described above on Yearly Renewable Term plan, except that it was taken on a group basis.
* Sometimes under an organisation, sometimes under a company where group discounts are given.
* If the group is to be disbanded or if ones leave the group, the insurance may not be portable.

Conclusion - Insurance Can be Real Cheap!!!
* If there are people who are still grossly underinsured, citing premium as the main concern. Show them how cheap Insurance can be.
* It is also to show why few people want to recommend a Term Insurance.
* If I want to be super rich, I'll show them the choices from no. 01.
* If I want to be super poor, I'll show them the choices from no. 10.
* Life is hard as a Financial Consultant. If we show people no. 08 or 09, we can even be blamed for being unethical or greedy by some people just because we did not recommending no. 10.

Saturday, May 10, 2008

TKL and TSC (2)

For this posting, I just like to voice how I feel about TSC. First, I have to say that my views will be rather narrow because I did not work closely with TSC before. I'm talking only from my personal Financial Consultant point of view.

Morale Booster after TSC came in
There was a fresh breath of air for the Consultants when TSC came in Feb07. We were invited to the Esplanade. We felt different compared to the Kreta Ayer environment. He gave a fantastic speech and we suddenly feel that a bright future is ahead of us. The declaration he made in Esplanade was published on Newspaper. My impression that day is that NTUC Income will change and a revolution is on the way.

The change in Environment?
* I feel that TKL is more of the traditional, Asian type of boss, hardworking, caring and hands on to everything. TSC is different, my feel of him is of more hype and modern type of boss.
* He try to change the way people view us and how we view ourselves. It is like changing from the neighbourhood shophouses type of environment towards the Shenton Way environment with his modernisation towards the company.
(I don't argue if modernisation is necessary, but I can feel like NTUC Income is less of an old fashioned, auntie, uncle type of company)

He is good at giving speeches
* I think his public speaking ability is fantastic. He never fails to convince the consultants whenever he goes up for a speech. He is very good in motivating and making the Consultants feel good and confident. The consultants feel great after each meeting and meetings are no longer boring.

His emphasis on Sales
I can see that his core emphasis is Sales. He treats the consultants very well. He do not hesitate to reward the good ones by coming out with a lot of motivating sales contest. He invites many external trainers to train the Consultants. He published the good ones, full page in Newspaper. The feel good factor is there. No wonder he gained quite a bit of supporters within the Consultants.

My encounters with him
* My encounters with him are 2 emails, a short greeting at Income Centre and a handshake during an incentive trip.
* I put up a proposal to improve the Business Centre when he newly joined. He thanked me and told me to greet him and introduce myself when I meet up with him. I'm too shy to do so.
* He always acknowledge my emails promptly and thank me whenever I suggested something.

Feel good factor over. How I feel of him after a year
* He keep telling us that NTUC Income will transform but I have no idea how he will transform NTUC Income as he described. There don't seems to be concrete actions or change except the renovations and many sales contests that keep pushing us.
* Too many contest and emphasis on Sales seems to make the Consultants focus on selling other than doing a proper review. Consultants start to avoid policies like Incomeshield and Term Policies because they need to get their Sales quick.
* There are grievances but he don't seems to hear and don't seem bothered to address. Only see him during major meetings every 2 months. We sometimes don't know if he is listening or doing something about it. He seems near but yet so far when we are voicing out our ideas and grievences.
* He seems to be telling us "You, as a Financial Consultants, just focus on your sales. Don't bother too much on what we are doing at our end."
* He came out with innovative things like the change in Mission, Vision, etc. But I only see things happening on paper and speeches.

His image is a disadvantage to him in NTUC Income
* NTUC Income have long build up the image of frugality and caring type of Insurance company. He appeared in the Press, sometimes with a wine glass, relaxed and seemingly enjoying life.
* He lacks the cooperative image that people preceive. People started to think that he is too commercialized and don't care for them anymore.
* For the older Policyholders, he may looks like a spendthrift. For the younger ones, he may looks quite cool.
* The Policyholder base of NTUC Income is generally from the older age group. This, may be a disadvantage to him. But of course, the good point is that he may be able to attract more younger ones in future.

His achievements
* I think he improved in changing the NTUC Income Image towards modernization. Unfortunately he was dragged down a bit by allegations that he overspent and the recent saga of the Change in Bonus Scheme thingy.
* He improved the morale of the Consultants and improve sales and market share. He managed to stretch the ability of almost every Consultants in the small sales force. But I don't know how far stretched can they go when new recruitment seems to remain relatively low.
* He put in a lot of attention on Training and professionalism. Capabilities of Consultants improved as a whole. Frankly telling, everyday, we are pushing for Sales, not sure how much they learn are being applied.
* He also seems to line up a strong management team with vast experience.

The Future
* I'm not sure. He did build up a vision for us but no mention at all of what he is going to do. This is call "Uncertainty". Maybe I'm thinking too much.
Will he deliver? I really don't know. Its "Faith" that he will because I cannot see the concrete steps in going towards that vision.

(The above are just opinion from where I'm standing, about my boss. It is not meant to credit or discredit him.)

Friday, May 9, 2008


Some short notes
I have never indicate in my blog that I am from NTUC Income since the blog started 18 months ago. I should be proud to say that I am from NTUC Income, the only Singapore Cooperative Insurer. But I do not want my blog to be associated to Sales, I decided to keep mum about where I am from. However, I will be leaving in 23 days time.

Today, I am not writing about my history or about NTUC Income.
I just like to comment on the difference between the two CEOs whom I had the privilege to work with, Mr Tan Kin Lian(TKL) and Mr Tan Suee Chieh(TSC) during my 5 years term in NTUC Income.

Today, I like to write about TKL first. I'll write about TSC in future postings.

The boss who brings NTUC Income to where it is today
TKL is the man responsible for where NTUC Income is today. To achieve this feat, this person must have certain level of intelligence and capabilities. He is well respected for his strong principles, straight talking and hardworking nature.

TKL is the boss who will goes deep into the ground, listen to every staff as low as a clerk and tell us straight what is workable and what is not. Trust me!!! He can reply to your emails at 2am in the morning and the internal forum at 5am in the morning when you post at 4am. He have a good heart and care for the older advisers who had previously work hard for the company.

He maintains an internal forum which Consultants and Staffs are able to bring out their ideas or problems. TKL make sure all problems are rectified and grievences acknowledged. Because of this internal forum, I had a chance to have lunch with him for winning some Commonsense Award where he encourages staffs to write commonsense solution for difficult problems.

He touches my heart
If he only choose to meet up with good sales consultants, I'll never have the chance to talk to him directly because I never have a fantastic sales record. I'm very touched because I feel that I'm a very very small staff and he talks and listen to my ideas wholehearted and patiently and not even a critisism of how stupid the idea it may be. His PA then contacted me to attend a S-League match with him shortly after the lunch. Again. I felt very touched though I did not go for the match due to some family matters.

My idea contribution to the company stopped
I started to respect him a lot and I always try to think of ways to improve the company via the forum. (Until the day, my immediate manager told me to mind my own business and not to spend time in forum. He warns me not to rock the boat when everything is calm. Why? Because my sales was just moderate) I felt sad because I was sincerely in coming with new ideas, hoping that someone will adopt or acknowledge one day. But this is also the problem under his helm, some managers are afraid to see problem and just hope to work till retirement.

Consultants began to feel lost
He somehow lost the hearts of the Consultants in 2005 and 06. The Consultants felt lost due to the emergence of direct business where he tried very hard to develop. Perks are given for people who buy from Office direct and telemarketers started calling Consultants' clients as he declare that Policyholders belongs to the Company, not the Consultants. Salary capping news started to spread and news of Stanley Jeremiah left. We thought Stanley Jeremiah is a capable man who will help NTUC Income to grow. His departure shocked us and we feel that no capable man can work with him. Our commission was cut as Gifts like MP3 and Cameras are given during his time and lower commission is given when we sell larger policies. Half of the gift cost were to be paid by Consultants.

Consultants were unhappy. Morale was low. Recruitment was at all time low, Departure of Consultants were at all time high. NTUC Income are left with a significantly small sales force by early 2007 before TSC came. Training was conducted by largely part-time trainers resulting that the quality and knowledge of Consultants remains at a certain level. Market Share kept declining during that 2 years.

What might be his weaknesses?
Sometimes I just feel that he holds on to his principles too strongly that people will just follow to all his orders and avoid questioning him against his principle. My impression is that many staffs in NTUC Income are quite scared of him. This may stem innovation in the company as people tends to do only things that he believes in.

His blog
I visited his blog almost daily. I used to contribute to his blog until I realised that what I write are not what his readers want to see. His readers are extremely negative towards Financial Consultants and many of his blog articles emphasizes on "High Commission" by agents. For a layman who read his blog, all consultants in Singapore suddenly become unethical, greedy bunch of people. I felt very unfair for many good Consultants who work hard, round the clock, carrying out claims and all sort of requests from the customers. Many also kept upgrading themselves to ensure that their clients get the most appropriate advices.

There are nothing wrong with his views and I understand that he holds his principles strongly. What I hope are more sensitivity towards how his postings will affect both the good and bad advisers. His intention might be to get rid of the bad advisers, but unfortunately, the good ones will be gone first before the bad ones because the good ones normally do not sell excessive Life Insurances for high commissions.

(The photo above is still proudly standing on my study room display cabinet where all my visitors will look upon whenever they come to my house)

Wednesday, May 7, 2008

Why Food Prices keep going up???

It was reported in newspapers and TV almost every other day that Living Expenses globally are going up in an unsustainable fashion. It is especially painful when Food is one of it because food has to be consumed no matter who and where the person lives. It will also affect anyone except those who live in the Jungle. (Ermm.. Eg, Mas Selamat will not be affected if he is hiding well in SAF restricted areas consuming leftover combat rations from the Army)

I like to share a few points which I believe should be one of those contributing factors which make the food prices escalate over the past 1 year.

1) Emergence of China, India, Brazil and Russia
* The BRICs are getting more affluent. Many flocked from countryside to cities seeking employment. Their diet changed drastically in the city environment.
* An affluence diet consist of larger amount of meat and poultry.
* This increased demand leads to an increased demand for animal feeds consisting of corn, maize, wheat, etc
* This demand is not in pace with the growing affluent population in these emerging countries.

2) Reduction of suitable ground for farming
* Many farming grounds are forced to be abandoned due to declining water supply.
* There was little pressure to search for new farming ground in the past. But today, due to city-countryside income disparity and lacking of Government subsidies, many farmers had already left their post. It had created a smaller supply of labour as well.

3) Food are grown for Energy
* Fuel prices are escalating. Demand for alternative fuel like biofuel increased.
* Many agricultural products such as Corns are grown for biofuels and thus decrease possible supply in the market

4) Declining Inventories globally
* Food stockpile in most countrie declined due to pressure from their people on the rising food price.
* They have to release their inventories to prevent a larger hike of food price in their country.

5) Rising Oil Prices
* Higher energy price equates to higher logistical cost which will be passed down to the consumers
* Inventory carrying cost also rise due to higher demand for warehouses

6) Freak Weather
* Global warming are creating havoc in the world and humans find it hard to predict its pattern.
* Its either too much water or too much heat
* A lot of crops are killed by the weather

7) Technology peaking in the agriculture world
* Technology had averted a food crisis in the 1970s when more food are being produced by new technologies.
* The technology used are pretty much the same today and productivity are near their peak. Productivity improvements are not able to catch up with the increased demand.

8) Speculations
* Traders in the futures market speculated on the prices of food and bet that it will keep going up. It created a false impression on actual demand and force food prices to go up.
* Some farmers are keeping stock in expectation of higher food prices. This reduce supply in the market and force the price to go up further.
* Consumers fear also caused them to stockpile more food in their home and create more pressure to the market supply.

Monday, May 5, 2008

Cut yr salary, give you fat bonus. You want???

There was a lot of comments in my previous posting on the "NTUC Income Change of Bonus System" I like to share my views again on a different perspective.

I can understand why everyone is unhappy about the change. It is just like you are told that your salary will be cut this year and I will give you a fat bonus at the end of the year. Everyone will of course want the high salary and not the fat bonus because we are risk averse and want to see money faster. Fat Bonus or not are not guaranteed and you will surely be afraid that you will never see it.

Now, there is this big boss, willing to stand up and fight for the rights of the workers. As most people are followers, many people will naturally want to follow him since there is a clear leader.
With a clear leader, people will be bolder, speak louder and build their thoughts on one extreme towards their leader's view.

Sometimes we may not know the motive of the leader but sometimes we need to be rationale and think why such a unpopular move is taken. Try to look at 2 sides. Say, if a company cannot sustain the high wages in one year due to a bad patch and went insolvent. Everyone will lose their job. If the company adopt a variable wage system, their variable cost comes down and everyone keep their job.

This is just an analogy, for NTUC Income case, it slightly different. The bonus system need to be changed because the life fund need to be stronger and more resilient to withstand changes in the investment markets better. The correct bonus practice have to be in line with industry practice and for prudent actuarial practice. The investment climate compared to 10-15 yrs ago is totally different. Bonds and equities returns are too far apart that they cannot ignore. If they cannot give the right bonus to policyholders over long term, they will lose business to the others who are able to adopt a higher equity allocation in their investments.

A government can make unpopular decisions like raising minister's salary, plant extra ERPs, raise GST in high inflationary conditions, build casinos, etc As there are no strong oppositions in Singapore, there are practically nothing that Singaporeans can do. Singaporeans generally also trust our leaders, thats why their reactions are not so strong.

NTUC Income is a corporation, not government. They don't have the power to force a legislation down the throat of the people. There was also a lot of mistrust with the company because such mistrust was breeded like Andes Mosquitoes in someone's blog for over 1 year. From observation, the enemies of all the Mosquitoes are towards NTUC Income. Now, a rare opportunity comes, naturally, all the mosquitoes are fully ready to attack the company.

I do not want to say who is right or wrong now. I just like to try putting on a more balanced view towards this issue. Of course, you can have your own views just like I hold on to mine.

Melody & Patches 1st Birthday Celebration

Melody and Patches celebrated their 1st Birthday at their Parents place last Saturday.

Melody and Patches are both Minilops and are twins. Melody was adopted by me and is a fair Lady, Patches was adopted by another family and is a handsome gentleman. They were separated 5 weeks after birth and they met again last Saturday.

Look at Patches. His fur is real soft. He is a curious and active rabbit. He look forward our pettings and hugs.

Soon after they meet, they bond immediately. Something I never achieve for my Melody with Local Rabbit "Lovely".

My heart really melted when I saw Patches grooming Melody. A feeling I really can't describe.
Patches is the one with more Brown fur.

These are Patches and Melody's parents

This is their Father (above). Look at how he enjoys our petting.

This is Mother(above). She has a trademark resting position which Patches follows. Melody never rest like that before. Looks like she is laying Eggs, right?

They have another sister. Borned about 1/2 year earlier than Melody and Patches. The photo was just so well taken, isn't it?

Saturday, May 3, 2008

Conversation with a retired teacher

I met a retired teacher this afternoon and we chatted over a cup of tea. We discussed about leading a meaningful retirement and about how many young people like us find it hard to save adequately.

After complaining that people of our generation find it hard to save, he began to share his concept of savings that he adopts since he was a boy. What are his concepts?

1) The concept of "70-20-10" salary allocation

* Ever since he get an allowance from his parents as a young boy, he allocates his allowance strictly according to the 3 numbers.
a) 70 refers to 70% of his salary that he used for whatever necessary family expenses
b) 20 refers to 20% of his salary that he put aside as savings before spending
c) 10 refers to 10% of his salary that he put aside to pamper himself like going for a holiday and for his hobbies.
* The 3 numbers subconsciously allowed him to save a considerable amount for his retirement today and yet enjoying his life when he was working.

2) The concept of feeding a Beggar at home

* He always imagine that if he does not keep to his first concept and spends unnecessarily, he will become a beggar when he is old because he had failed to save.
* So whenever he has a strong urge to buy something which he may not need, he will tell himself that there is a beggar at home that he needs to feed today. Go back and feed the beggar first before deciding if he still wants to buy that item.
* 90% of the time, he will not go back to buy that item unless he really likes it a lot.
* This concept had stopped him from buying a lot of things which may not be necessary

What an interesting day chatting with him and I feel that this old concept can still be applied in our generation. Except that, in our generation, we must also know how to invest it properly.