Saturday, August 9, 2008

Which hat are we wearing?

I had the opportunity to rub shoulders with many knowledgeable and qualified Financial Planners during my CFP course, financial seminars as well as fund managers updates etc. I also like to visit blogs of fellow planners and financial forums to understand how they conduct their businesses.

I believe that many of them have the knowledge, qualities and ethnics to be a true Financial Planner. I even considered some to be specialist in their own field. I have a lot of respect for them and I enjoyed walking alongside these advisers.

However, I am always confused whether we are wearing a Consultant hat or a Sales hat. If we are really wearing a Consultant hat, then people should be paying us for consulting us. If we are wearing a Sales hat, then we should not be bothered in giving consultancy services.

I met some of my ex-colleagues recently and I saw them holding on to a pile of policies and bags of gifts for the purchase of these policies. Inevitably, in my mind, I was wondering what hat were they wearing? Did these people buy for the gift or buy for the needs. Did these people buy after a proper fact-finding?

I had an observation during my course of work. A bread winner for a small family of 4 easily need close to a million dollar of dependency needs and probably $200k of Critical Illnesses Coverage and some Disability Income benefits to cover their expenses, etc. Probably 9.5 out of 10 have not met these criterias.

It is not easy to adopt a fee for Consultancy because the acceptance level by the general public is low. Even if they're willing to pay, the range is probably $50 to $70 for a full planning of around 2-3 sessions. 3 sessions of meet-ups, analysis of plan, plan recommendations and comparisons easily take up 5-6 hours of the advisers time. It means the hourly rate of the adviser is as low as $10. Its the same rate I engage a part-time maid to my house.

Of course, we can up the rate to as high as $1,000 per planning or $200/hour, etc, but to charge $200/hr, we must be a specialist and the cream of all advisers. We should also be in the company with the proper system and tools to justify this fee. Of course, the target market must be towards the higher end as well.

So will there be a day whereby Advisers can really wear a consultancy hat and earn a decent income. The day may come but can be quite sometimes ahead. We are still in the era when advices came free from everywhere and when gifts are rampantly used to entice people getting a policy. Which hat do you think the public see us as wearing?

My mind was mixed as I chatted with these ex-colleagues. I know what policies they sold, I know what premium size entitled them to the gifts. I believe that these client of theirs probably did not go through a proper planning. Their income come so much easier compared to a consultant. A consultant went through the whole process of financial planning with proper documentations and audit traits. He probably used four times the time and get half the income compared to them. A consultant was asked probably 10 times more questions than them because he really dug all the worms that relates to their financial plan.

I asked a very well known personality in our field of why good advisers left the industry a year ago. He answered, "Because they forgot to wear the Sales Hat... They need to change Hat and not insist on wearing one." His words carved deep in my heart and thats why I believe we must change hat for the right occasions. The person insisting to wear only the consultant hat may suffer and the person insisting to wear only the sales hat may make the client suffer. There must be a balance.

Yes. We are consultants, but there are nothing wrong taking the sales hat to wear when needed as long as we conduct our business ethically and be true to God and to ourselves. Mr Lee Kuan Yew wore both hats very well for he had convinced people around the world to Singapore for investment. If not for his ability and Salesmanship, Singapore will not be celebrating its 43rd Birthday with such style today.


Anonymous said...

The Consultant cannot do one thing that the successful Salesman can: give discounts. As much as BTITR fans curse and swear at Salesmen who anyhow sell, they love the rebates and gifts that these Salesmen give.

On one hand, curse and swear at salesmen. On the other hand, flock to them for discounts. It's no wonder the Salesman is still in business. When the people who claim to hate Salesmen are givnig them business, you know t's a gone case.

wilfred.ling said...


You just need to find prospects who themselves earn a living by charging fees. There are many of these professionals like lawyers, accountants, doctors, professional engineers, many IT consultants, interior designers, etc

If they reject you, it will be due to other reasons and not necessarily due to the fees.

wilfred.ling said...

I forgot to add that it is important to associate yourself frequently with friends and peers who are able to provide positive encouragement and at the same time willing to share their skills and knowledge to you (and vice-versa). Financial advisory industry in Singapore is exploding but it also mean that working as a team with other like minded peers is of utmost importance.

Anonymous said...

MAS should make it compulsory that every person who wants to take up an insurance plan should go through a proper fact-find and analysis.

If proper factfind is conducted, there should not be cases of plans like revosave, 3G or whatever funny plans being sold out there.

Khiat Han Hwee Adrian said...

Hi Wilfred,

My views always seems to contrast with my peers as I always against certain type of plans of high cost.

I tends not to give too much comments nowadays in order not to influence the rest. It is not easy to find like-minded people.

btw, I did not post many anonymous comments in this posting because I feel that the comments are just too personal.

Anonymous said...

Adrain, now you know. An insurance salesman is still an unethical salesman whereever he or she goes or whatever name they are called. Names or titles or companies they don't change the evil, unscruple, the greed and all the malpractice in them . These traits have been deeply entrenched, etched to the bone, that almost impossible to remove. Unless they go brainwashing like undergoing a CFP course and cleansing that they can be free from all these evils.
Whole life Product selling and pushing are still their way.
Maybe you should join wilfred as he claims to operate fee practicing outfit. You will be better off.
Before you start having ideas about joining the crowd speak to wilfred.

Anonymous said...

True story:

Adviser has a client that complains day in day out about his previous agent that he's unhappy with. Some malpractice involved. Adviser buey tahan the constant whining, so helped the client to write a complain letter to MAS and pass to client to let him sign. Due to reasons best known to the client himself, he never sent in that letter. It appears that he suddenly became a kind hearted and forgiving person. The whining stopped ^_^

When the people who whine day in day out about evil agents never bother to write in to air their grivances, it's no wonder MAS isn't doing anything. If you've really encountered any wrongdoing by your agent, why not sign off the complaint with your own name? It's a valid complaint, right?

To the guy who mentioned CFP, it's not a course on ethics. Big companies' key executives may have CFA, but this doesn't stop them from pocketing money if they are really determined to.

Anonymous said...

1.22am, what i meant is the CFP course may help the unethical agents to acquire some real financial skills so that they can earn a living by proper means. These agents have no such skill and maybe because of this they resort to selling which inevitably leads to unethical means. Of course nothing stops a man from cheating if he is already bent on cheating another man even he is the most qualified but without honesty.
What you said about whining by some people is true. People get soft when temper cools down and reverse the decision.That is why these people are always victims.People are forgetful. That why insurance salesmen are still around. People are idiot . That is why they get cheated again and again. No end, otherwise SGX would have closed down long ago.

Anonymous said...

I dub such ball-less people the Tan KL fans. Whenever Tan KL mentions BTITR and criticises unethical insurance agents, these people howl in support of their savior.

However, when Tan KL mentions writing to MAS, these people are shockingly quiet and crawled back into the hole they came from, only to emerge when their savior mentions BTITR again.

Want justice? Sign off a letter to the authorities with your name. Simple as that. If a cleaner messes up your corridor, you DON'T spend hours thinking that the town council's stupid for hiring useless people. You shoot a letter and TELL the town council and put the cleaning company OUT OF BUSINESS.

For those individuals who think they know it all and want to bypass the insurance agent, NTUC has something called the direct business channel. Just don't come back and whine when you or your family cannot handle the claims officers on your own.

In the meantime, your savior's waiting for your multiple letters to MAS.