Busy = Good Business?

My mother asked me today, "What business are you doing? Why need to work till midnight so often? You business so good meh?"
A friend also asked me over the phone today, "Wah. Saw your blog recently that you are taking the last train home everyday. Your business must be real good! right?"

Is my business really that good? Busy = Good business? Busy? Yes, I'm very busy. Good business? I can say "Not really". Contradicting? Let me tell you why.

As an FA, we attended lots of training. There are new product launches, fund managers investment updates, providers briefings, Company's trainings, Branch meetings, sub-group sharings, conducting trainings for new advisers, etc. There are sure to have something almost everyday and it can take up 3-4 hours of our time.

As an FA, we adopt the international 6 steps approach in Financial Planning. Client-Planner Introduction, Fact-finding, Plan development, Recommendation, Implemenation and Review. Each client, meet at least 3-4 times before implementation. Not like a roadshow, 1 time close.

As an FA, we do a lot of research. We represent as many as 10 Life Insurance Companies, 20 General Insurance Companies and probably over 30 Fund houses. We are expected by clients to do product and investment comparisons. Comparisons can sometimes take up quite a bit of time. Proper comparison also means proper understanding of each product and we need time to study these products.

As an FA, we have more paperwork. Due to compliances issues, we learn to use more forms than a tied agent. Due to unfamilarity of each forms by different insurers, we sometimes missed out 1 column or 1 form and got rejected by the insurer for resubmission. We have to log down each meeting with clients for future audits. We are required to track our own income and expenses for income tax purpose as well as compliation of training hours for MAS license renewal, etc.

As an FA, we have to work harder in prospecting because insurance company will not help us in generating businesses and do any marketing for us. Most people we prospect will most probably not even hear of our companies before. They may hear about Great Eastern, AIA, but never IPP, Finexis, PIAS, etc

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So, is busy = good business? Yes. If each case size is big enough or we are charging large enough fee for each planning.

I'm busier but happier at the same time because deep inside me, I know this is the right platform to give Financial Advice. There are a lot of job satisfaction and I do it with pride.

I tried explaining to my parent about my job and what I do but they live in the era where an agents sell insurance by sweet talk. They know I can't talk well. Thats why they will always tell me to go get a job and a salary...


Footnote: I'm not trying to say that FA are more professional or what because there are also many FA who sell by sweet talk and know nothing about Financial Planning.

Consequences of No Insurance

I went Malaysia to visit a well known Chinese Physician for a routine check recently. I heard about his reputation and want to improve my health from the Chinese Medicine perspective. This Chinese Physician is quite well known in Malaysia with people all over Malaysia seeking his advice. The queue was long and I waited over 4 hours in his clinic.


The 4 hours wait was worthwhile because this doctor is really fantastic. He diagnosed my back problem by just looking at my urine, fingernails and pulse. He can even pinpoint which part of my back was always in pain. He also explained to me how my kidneys are affected and how it subsequently affects my mental alertness. He told me all my problems without me telling him any. He gave me a prescriptions of about 16 chinese herbs to be eaten every 4-5 days but the bad news is "I have to look for him in Malaysia once every 2 weeks. For my health, I think I have to sacrifice my precious time.

Anyway, my topic is not on the above.

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After my checkup, I was invited to a friend's friend house to take a look at his insurance policies. His name is Mr Teo. He is a Malaysian, worked as a air-con fitter in Singapore as a contract worker. He rides a motorbike to Singapore daily to work.

When I reached his Johor Jaya home, he was moving around with his hands. He met an accident with another Malaysia Car while on his way to work in Jurong 2 months ago. The accident was serious and he is not expected to stand within 6 months and to work within 1 year. He is now in a very bad financial situation and was harassed by his Singapore friend and hospital over the medical bill he incurred.

He was unconscious after the accident and was sent to NUH. He stayed 2 days in ICU and 13 days in a normal C ward. Total bill he incurred was around $30k as he was unsubsidized. The hospital require a guarantor when he was warded. Due to the life and death situation, his Singapore friend decided to be his guarantor for the bill, thinking that his company or some insurance will help pay this bill eventually.

I thought I am supposed to see his Insurance policies when I reached his house, I was instead shown a stack of medical bills. When I asked for his policies, he only passed me a certificate of Insurance for his Motor Insurance. When I asked him about the Workman Compensation that his employer supposed to get for him, he told me, his employer confirmed their Workman Comp don't cover journey to work. When I asked on the verdict of the accident, he told me that the other party claims that Mr Teo is in the wrong and hence insurance in dispute. When I asked if he has any other insurance in Malaysia or Singapore, he said no.

I felt quite sad for Mr Teo as I don't know how to help him. He is currently weaving ketupat with his wife at home to help finance the family expenses. He has 2 young boys age between 4-6 yrs old. He was harassed by his friend and hospital over the $30k almost daily. He is still required to go for follow-up treatments in NUH but has no money for it. He is not sure if he can move over to the Malaysia Hospital. He do not have much savings and he will not be able to pay this bill even if he sell his home away. He is feeling very sad because he is uncertain when he can really work again and the trouble he caused for his Singapore friend.

When I asked him why he never thought of getting an insurance before I left. He gave me this answer.
"I never thought such thing will happen to me. Insurance is too expensive and is only for the rich."

When I asked him if he knows Insurance can be cheap. He answered,
"I was recommended by agents a few times and each time was recommended policies with over few hundred dollars premium, you call that cheap?"

Singapore and Malaysia alike. Many agents like to focus more on Life Insurances and ILPs without a proper fact-finding. Thats why people shun agents as they thought insurance are too expensive for them.

8 Pearls of Investment Wisdom

I did not post much lately because I have been very so busy over the past 2 weeks that I have to take the last train home almost everyday. Last night, on my way back, I noticed the Aberdeen bear on the MRT train and I find it so cute. I'm not a teddy bear lover, but the fur looks so soft that I really like to get one and put it beside my bed.


Anyway, the topic is not on the bear. its on the 8 investment tips I learnt on the MRT train as I walk down the cabins. Just to share these tips with you.

1) Volatility is not something to fear, but something to embrace
Its normal for market to be volatile at times. As long you know that you are investing right and know why you invest, don't let the volatile market affect our emotions.

2) Think Long Term
As an investor, we should align our time horizon accordingly. Over short term, price movemets are as good as random, while long term trend tell a different story.

3) Know the difference between gambling and investing
Successful investing is hard and often dull, requiring discipline and lots of study. If you approach investment like entering the casino, you are in trouble.

4) Be contrarian
Try rushing for the exit in crowded market and you might get trampled. This concept applies to behaviour in the stock market. Selling or buying behind everyone else is a sure formula for poor investment performance.

5) Consider the difference between price and value
Some people consider a $10 share as expensive and a 10 cents share as cheap. We cannot value a share by its price alone. Understand why a share is priced at $10 or 10cent before you invest.

6) Be humble, the stock market is smarter than you
If you think you are smarter than the rest and can predict the stock market over the next few months, try apply some humility and ask yourself honestly whether you are smarter than the millions of people who are also trying to predict the market like you do.

7) Avoid things you don't understand
Financial instruments are getting complicating. Think about shares as you read a book; if you don't understand it, put it down. If you know what you buy, you can sleep better at night.

8) Do your homework. Know more than others
If a woodpecker peck everywhere on a tree, it will not get any food. Do your research, know where to peck and focus on it, you shall be rewarded. Its prudent to diversify, but don't over diversify or diversify for the sake of it. If you know more than the average, you have a slight edge as to know where to put your money into.

End of Beijing Olympics

Just watched the spectacular closing ceremony of the Beijing Olympics on TV an hour ago. I was really impressed with how the Chinese managed the whole event. They really did a great job from clearing the pollution, organising the games, the opening and closing ceremonies, etc. "Well Done, China!!!"

I spent quite a bit of time on TV this year watching the games and I'm always lookout for sportsman from Singapore and their respective results. Our Team Singapore accomplised 2 outstanding performances this year. First is Tao Li who finished 5th in the 100m butterfly event and the Table Tennis girls winning Silver for the Team event.

I was having lunch in the coffeeshop last week and I overheard 2 uncles talking quite loudly over coffee. "The Xiao Long Nu (Dragon girls) are quite good har. Singapore buy them over and win the Silver." The other uncle replied, "Ya. These China Girls are really good".

I think its rather hard for some people to accept that they are true Singaporeans. Frankly, when I was watching the Prize Presentation Ceremony for the Table Tennis Team and the National Anthem of China was being played, I wondered how does Li, Wang and Feng feel? I imagined myself to be a Chinese National but hearing Majulah Singapura. Somehow odd because I knew deep inside me, I'm a Singaporean, with all my friends, loved ones here. Won't they feel the same like me?

Singapore brought all these foreign sportsman to our homeland specifically for the purpose of someday bring pride to the Country in major sporting events. These players know they can make a lot of money if they succeed. They become Singaporeans for this purpose. Our government knows that our people may never see sporting excellence with true Singaporeans.

If Singapore never dangle a single carrot, I doubt any sportsman from anywhere will come and treat this country as home.

I'm happy for Team Singapore performances. I'm happy for the Silver medal won but I'm surely not as thrilled if I'm able to see a true Singaporean on the Olympics podium one day...

Different parts of our body age at different times

Find this article pretty interesting... How many parts of your body have started to age?

BRAIN - Starts ageing at 20
As we get older, the number of nerve cells - or neurons - in the brain decrease. We start with around 100 billion, but in our 20s this number starts to decline. By 40, we could be losing up to 10,000 per day, affecting memory, co-ordination and brain function.

LUNGS - Start ageing at 20
Lung capacity slowly starts to decrease from the age of 20. By the age of 40, some people are already experiencing breathlessness. This is partly because the muscles and the rib cage which control breathing stiffen up.

SKIN - Starts ageing mid-20s
The skin starts to age naturally in your mid-20s.

MUSCLES - Start ageing at 30
Muscle is constantly being built up and broken down, a process which is well balanced in young adults. However, by the time we're 30, breakdown is greater than buildup, explains Professor Robert Moots. Once adults reach 40, they start to lose between 0.5 and 2 per cent of their muscle each year. Regular exercise can help prevent this.

HAIR - Starts ageing at 30
Male hair loss usually begins in the 30s. Hair is made in tiny pouches just under the skin's surface, known as follices. A hair normally grows from each follicle for about three years, is then shed, and a new hair grows. Most people will have some grey hair by the age of 35. When we are young, our hair is coloured by the pigments produced by cells in the hair follicle known as melanocytes.

BREASTS - Start ageing at 35
BY their mid-30s, women's breasts start losing tissue and fat, reducing size and fullness. Sagging starts properly at 40 and the areola(the area surrounding the nipple) can shrink considerably.

FERTILITY - Starts ageing at 35
Female fertility begins to decline after 35, as the number and quality of eggs in the ovaries start to fall. The lining of the womb may become thinner, making it less likely for a fertilised egg to take, and also creating an environment hostile to sperm.

BONES - Start ageing at 35
'Throughout our life, old bone is broken down by cells called osteoclasts and replaced by bone-building cells called osteoblasts - a process called bone turnover,' explains Robert Moots, professor of rheumatology at Aintree University Hospital in Liverpool. Children's bone growth is rapid - the skeleton takes just two years to renewitself completely. In adults, this can take ten years. Until our mid-20s, bone density is still increasing. But at 35 bone loss begins as part of the natural ageing process.

TEETH - Start ageing at 40
As we age, we produce less saliva, which washes away bacteria, so teeth and gums are more vulnerable to decay. Receding gums - when tissue is lost from gums around the teeth - is common in adults over 40.

EYES - Start ageing at 40
Glasses are the norm for many over-40s as failing eyesight kicks in - usually long-sightedness, affecting our ability to see objects up close.

HEART - Starts ageing at 40
The heart pumps blood less effectively around the body as we get older. This is because blood vessels become less elastic, while arteries can harden or become blocked because of fatty deposits forming on the coronary arteries - caused by eating too much saturated fat. The blood supply to the heart is then reduced, resulting in painful angina. Men over 45 and women over 55 are at greater risk of a heart attack.

KIDNEYS - Starts ageing at 50
With kidneys, the number of filtering units (nephrons) that remove waste from the bloodstream starts to reduce in middle age.

PROSTATE - Starts ageing at 50
The prostate often becomes enlarged with age, leading to problems such as increased need to urinate, says Professor Roger Kirby, director of the Prostate Centre in London. This is known as benign prostatic hyperplasia and affects half of men over 50, but rarely those under 40. It occurs when the prostate absorbs large amounts of the male sex hormone testosterone, which increases the growth of cells in the prostate. A normal prostate is the size of a walnut, but the condition can increase this to the size of a tangerine.

HEARING - Starts ageing mid-50s
More than half of people over 60 lose hearing because of their age, according to the Royal National Institute for the Deaf.

GUT - Starts ageing at 55.
A healthy gut has a good balance betwee harmful and 'friendly' bacteria. But levels of friendly bacteria in the gut drop significantly after 55, particularly in the large intestine, says Tom MacDonald, professor of immunology at Barts And The London medical school. As a result, we suffer from poor digestion and an increased risk of gut disease. Constipation is more likely as we age, as the flow of digestive juices from the stomach, liver, pancreas and small intestine slows down.

TASTE AND SMELL - Start ageing at 60
We start out in life with about 10,000 taste buds scattered on the tongue. This number can halve later in life. After we turn 60, taste and smell gradually decline, partly as a result of the normal ageing process.

BLADDER - Starts ageing at 65
Loss of bladder control is more likely when you hit 65. Women are more vulnerable to bladder problems as, after the menopause, declining oestrogen levels make tissues in the urethra - the tube through which urine passes - thinner and weaker, reducing bladder support. Bladder capacity in an older adult generally is about half that of a younger person - about two cups in a 30-year-old and one cup in a 70-year-old....

VOICE - Starts ageing at 65
Our voices become quieter and hoarser with age. The soft tissues in the voice box (larynx) weaken, affecting the pitch, loudness and quality of the voice. A woman's voice may become huskier and lower in pitch, whereas a man's might become thinner and higher.

LIVER - Starts ageing at 70
This is the only organ in the body which seems to defy the aging process.

Misunderstandings or Misled???

I encountered a cases of an agent and a case of a bank Relationship Managers who had planned for 2 old folks this week. I really don't know if they are cases of misunderstandings or being misled.

1st Case - 5% guaranteed Returns???
One of my client called me last Friday and asked if I am able to offer a plan that gives over 5% guaranteed returns. I told her that only her CPF minimum sum is able to give such guaranteed returns. She insisted that her sister had purchased a plan that gives 5% guaranteed returns and claims that her sister is very investment savvy and won't be wrong about it.

I told her to call back and asked her sister on the inital outlay and the returns shown in the benefit illustration. She called back and told me $50,000 and around $75,300 after 10 years. Her sister still insisted that this returns is guaranteed. My client told me that if I don't offer it, she will buy from that agent. I didn't argue much and I used a very soft and firm voice to answer her, " Madam XXX, Trust me, check it out first. Give me a chance to go through that plan with you if you really want to get it from that agent"

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So whats wrong with this figure?
* The agent had used simple interest to calculate this yield. 5% surely sounds more attractive.
* Secondly she did not highlight to the old lady about the non-guaranteed portion of the plan. The actual returns is 4.18%.
* There is actually nothing wrong with this plan but I really have no idea how the old lady can get misled. Does the problem lies with the lady or the agent? Your guess...


2nd Case - Deposit money become buying an Endowment Plan
* I visited my client today for a financial review for her son. During the review, I get to know that my client who is a housewife had purchased a 10 years endowment plan of $10,000 a year when she went to the bank to deposit some money.
* My client insisted that the RM told her it is a 5 years limited premium term plan which proves to be untrue after going through the BI and Policy schedule.
* From my understanding about my client's profile, she is not working but has a lumpsum of money and don't wish to take much risk.
* End of 10 years, the non guaranteed returns is $113k. A potential returns of $13k. A non guaranteed yield of 2.2% basis 5.25% investment returns of the insurance company.

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So whats wrong with this plan?
* I don't know why my client insisted that its a 5 years plan. I don't know what the RM told her.
* The endowment yield is only 2.2% after 10 years. It cannot beat the current inflation of 4% at all.
* My client is not working, what if she cannot fork out the money in any year or need to withdraw the cash? Surrender penalty is tremendous for such plan.
* The RM told her to put in as yearly premium. She will lose everything if she terminate it now.

** I am angry because my client will be stuck to this plan for the next 10 years. I also get to know how some RMs earn so much money now. A 10 years, $10/yr endowment plan is able to give better commission compared to a 10 yrs $100k lumpsum investments **

A day with the old folks

I woke up last Saturday morning in darkness. I can't remember when was the last time I woke up without seeing sunlight. I normally feel lethargic in the morning but I was instead feeling so fresh that day because it was my first time doing volunteer work for old folks. My previous experiences are with Children. I'd joined a group of Volunteers from the church and a few of my colleagues.

We gathered at Blk 42A in Circuit Road at 8:15am. That place brought back some memories of my first experience trying to woo a girl who stayed at Blk 37. I remembered travelling diligently from Pasir Ris to Circuit road almost every few days that time but eventually I still failed in my mission.

We were given a briefing by the leader and was assigned to our respective old folks. There was around 40 old folks and 20 volunteers. Most of the old folks are in their 70s and 80s where many of them live alone in those 1 room flats around Circuit Road. I was assigned to an elderly couple in their 70s. The Husband, Mr Lai was down with stroke a few years ago and seems to have some degree of dementia. His wife, Mdm Loh was a cheerful lady and her smile looks real beautiful.

We mingled at the void deck for a while before the bus picked us up to Qian Hu Fish Farm at Sungei Tengah. We spent about 45 minutes walking through the farm before going to the fish spa where we allowed the fish to nibble our feets over the next 20 minutes. We rested for a while before we proceed for lunch at Pagi Sore Indonesia Resturant at Yuan Ching Road.


The old folks were so happy to see such good spread of food around them and they really enjoyed themselves. Many of them, including Mr Lai started to sing after the meal. WOW... Mr Lai got so excited and he stood up to sing with all this strength. Frankly, I was quite worried because he was actually very frail and seems to run out of breath at one stage. Thank God, nothing happened and everyone just had fun. We left the resturant around 1:30pm and reached Circuit Road at 2pm. The old folks was all so happy and thanked us endlessly when they alighted from the coaches.

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It was really a great experience for me but I had some mixed feeling after the event. These old folks are actually very cheerful people, they are not those grumpy old man or woman that we probably imagined. I also heard many stories from them related to their past and children. I really admire them for their perservance in their younger days and how they brought up 6-7 children at a time.
One of them looked at me and said,"My children never treated me that this". Another told me,"God will bless you because you bother to bring old people like us out".

I think it will be a matter of time we will be just like them. Old, weak and feeling lonely. Our children may forget us especially when we cannot take good care of ourselves. We are in a society where we have less children and our population aging. I just wonder if anyone will bring me out for fresh air when I'm old and frail.

My job is to help people around me to plan for them by saving or investing for the old man or old lady they will be in future. What a meaningful job I'm in... Thank God again...

$100/mth Term or $100/mth Whole Life

If you are 30 yrs old and is a man,
You can get as low as $23,000 coverage for a Critical Illnesses Whole Life Plan. (One of the Limited Premium Whole Life Plan)
You can get as high as $215,000 coverage for Critical Illnesses until 65 yrs old (One of the CI Term Plan)

If you are 40 yrs old and is a man,
You can get as low as $18,000 coverage for CI Whole Life Plan.
You can get as high as $130,000 coverage for CI Term Plan till 65 yrs old.

For advisers who had recommended both plans before. Touch your heart, ask yourself, is it easier to tell a client take up a $100/mth Whole Life plan or a $100/mth Term plan. My experience told me "The $100/mth WL plan is easier."

What is happening now is that people are already spending $300-$400/mth buying Whole Life plans, its hard to tell them add $100/mth more on Term plan. They may say its not feasible to spend $500 on insurance alone. They didn't realise that 70% of premium are on Whole Life plan which gives them less than 30% of their needed cover.

So what will advisers ask people to get?
$100/mth Whole Life plan or $100/mth term plan?
I think it will be the one that is easier to sell and the one that gives a better remuneration?
Worst still, there are people trying to mix Investment with Insurance by selling ILPs with low allocation rate where the allocation charges are not even shown in the Benefit Illustrations...
Ya, nearly forgotten, we can ask for as high as $300 or even $500/mth for a WL or ILP. We can almost never do it with Term.

Just doing my job
After my death claim experience and seeing the widow's tears, I worry that I need to make a death claim again. If I delivered a $23,000 cheque to the widow at that time, I'll feel very sad because I had let the deceased's family down. If I delivered a $215,000 cheque, I think I had done a better job.

If you look at me like a saleman when I try to convince you on that $100/mth term plan, I got nothing to say. My objective is simple and clear. I will deliver that cheque to your family if you are not around anymore. I really just want to do my job and by doing my job, I feed my family.

More funds delisted from CPFIS

Following CPF Board’s announced changes on the expense ratio criterion of funds for inclusion under the CPF Investment Scheme, funds that have exceeded the median expense ratio cap in their respective risk category will be de-listed from CPFIS i.e. cease to accept new CPF monies.

The Expenses Ratio Criteria are as such:
Higher risk - 1.95%
Medium to High Risk - 1.75%
Low to Medium Risk - 1.15%
Lower Risk - 0.65%

The recent announced affected funds:
1) LionGlobal Southeast Asia Fund
2) Fidelity Asian Special Situations Fund (USD)
3) Fidelity European Aggressive Fund (EUR)
4) Fidelity South East Asia Fund (USD)
5) Fidelity Taiwan Fund (USD)
6) Fidelity FPS Global Growth Fund (USD)
7) Fidelity Target 2020 Fund (SGD)
8) Henderson Global Technology Fund
9) Henderson Global Balanced Fund
10) Henderson Pacific Dragon Fund
11) Henderson European Fund
12) Henderson European Property Securities Fund
13) Henderson Japanese Equity Fund
14) Henderson Global Property Equities Fund
15) Henderson Asia-Pacific Property Equities Fund

Will it affect you?
CPF members who have already invested in such funds will not be required to redeem their investments. For those with an existing CPF-OA Regular Savings Plan (RSP) arrangements for the above mentioned funds, the arrangement will be ceased.

Other criteria for funds to be selected in the CPFIS
a. Top 25 percentile in their global peer group
b. Expense ratio lower than median of existing CPFIS funds in its risk category.
c. Preferably have a track record of at least 3 years.

How I feel?
* I have lesser funds to contruct a proper portfolio for my clients now. There are actually several good funds with good track record but not able to meet the low expense ratio and was taken out from the CPFIS.
* I hope MAS and CPF board will take a stronger view on performance instead of on cost. Low cost doesn't means better performance and sometimes better performance actually comes with higher cost.

Financial Help? $$$

Anyone wants to try call this number and find out how they can help one with Financial Problem???

I had seen this in many housing estates lately. Maybe some CPF Investment Churning Cases brewing again.

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.

08/08/2008

Its such a nice number. I just came back from a friend's place watching the Opening Ceremony of the Beijing Olympic Games. Just want to ensure this day and the Triple "8" stays in my blog.

Today is also the 8th Day of the 7th Lunar month where everyone go buy the $8 million Toto. 8th is also one of my favourite number... Good luck to everyone who visits my blog... "Huat Ah!!!"

Property Investment in Singapore. (2)

In my previous posting, I shared why Singaporeans like properties so much, especially those who feel they can afford it. I'm not here to argue that properties are not good investments. What I want to point out is my observation that Singaporeans get property out of "Gut Feeling" that property prices will go up and "Fear" that they will lose out the opportunity.

They are overestimating the returns and underestimating the risk. They feel that rental income is almost guaranteed in Singapore when foreign talents are everywhere. They feel that prices will never go down because land is scarce is Singapore. They feel that rental income is sufficient to pay off their mortgage loans and yet getting a profit after some years. Sounds like a perfect investment and nothing should go wrong.

I just like to point out some of the risk in Singapore Properties.

1) Property Prices correlation to government policies

* Singapore is small and any government decision can affect prices very quickly. Some of the policies that push prices steeply over the years are the decision to build the Integrated Resort and usage of foreign talents to beef up the Singapore population . If they decided to impose certain taxes, foreign talents don't come in as fast or if IR don't do well as expected; those who had already gain may sell and as more developers completed their projects, there will be excess supply.

2) Property Prices correlation to the Singapore Economy

* This applies to every country but Singapore are probably more vulnerable because a lot of our properties are purchased and rented by foreigners. Around 23% of the Singapore population are foreigners. I'm not sure what will be the effect if 20% of these foreigners decided to leave Singapore. There are just 500+k foreigners in 1995 during the last property boom. Today, it stand at over 1 million.

3) Over optimism of Singaporeans.

Singaporeans have not really go through a recession and our government is still painting a very very nice picture of the future. This generation is untested towards a prolonged economic downturn. Salaries of those middle and high income group went up considerably and they believe things will continue to be as it is. Some of them over-geared in their borrowings and stretched their budget to the limits. To them its sure win investment because property prices can only go up.

4) The prices could already be at the high end.

The news of Park Central@AMK prompted to me to write this. I somehow feel that $650k for a 5 room flat is a bit on the high end. Well, its obvious that most people don't think like me judging that the flats there is already 4 times oversubscribed.

Disclaimer: I'm not trying to say that property is not a good investment. I only like to share the risk involved in getting a property. Work out your sums and priorities with your Financial Planner before going into this big investment. Take it as a long term investment and not betting that it will give you a quick profit because wrong timing can means you must have the financial resources to sustain it.

Property Investment in Singapore. (1)

I noticed a shift of Singaporeans perspective towards Property Investments over the past few years. Even till today, as I went through the Financial Plans of my clients, most of them with surplus in their income are considering getting another property in the next 1-3 years.

Another observation I have on these people are that they do not have a Retirement or Children Education Plan properly structured. Ironically, many of them are very risk adverse that they refuse to invest into the Financial market. They believe that the property investments can help fund all these long term plans.

I had a few debates with my clients with regards to the viability of property investment in Singapore. This is a collection of their views:
1) Singapore Population is going towards 6.5million. Shortage is inevitable. Property Price can only go up, not down over long term because of land shortages.
2) Property Investment is a lower risk investment compared to the Financial Market because, even if prices went down, they can still fetch a rental income to help pay off the loan.
3) Rental Income is like a annuity. They can depends on rental income for retirement and yet getting an appreciation on their property for their legacy.
4) They claimed to lose money money in Shares / Unit Trust. Financial market is a lousy place to put their money.
5) Property Investment is the best way to make themselves rich fastest. They can leverage by taking a loan and get a quick profit with the least amount of money.

I can empathized with their thoughts. There are too many push factor forcing them to buy an investment property. Its hot money, hot coffee house topic. Its typical psychological investors behaviour. They are paying way above valuation. Is it the peak of this asset class? Well. I'll share more in my next posting few days later...

Insurers' Participating Fund Returns

I had just completed my compliation on the historical performance of the Life Participating Fund of our local Insurers. I had also complied the approximate weightings of their investment allocations. From my observation, asset allocation should be the main reason why the returns are so different.


* AsiaLife is the most consistent performer followed by Prudential and NTUC Income.
* Manulife returns are greatly enhanced by their 2006 performance.
* UOB Assurance performed the worst of all. From my understanding, much of their Life Participating fund are managed by UOB Asset Management. They assured that they will buck up this year.
* AIA are less bullish on the market. Their large bonds allocation may probably help them ride through the market downturn for 2008. Not surprising if they get best returns in 2008.
* No info on Aviva 2007 returns, hence cannot calculate the 3 years simple average.

Tips: Compare the Investment Rate of Returns used in the Benefit Illustration of the Insurers with this table. They may not be able to declare the bonus according to that returns if their participating funds performed below that rate regularly.