Do you really need a financial adviser? That’s the question we’ll be exploring in a two-part series on the financial advisory landscape in Singapore. In this second part: It’s the hard truth, but many people lack the knowledge and expertise to manage their money well, which is where getting professional advice comes in useful. Let’s hear from proponent Seng Bingyang on why he’ll still say yes to a financial adviser.
Words by Seng Bingyang
Let me start by saying that you do not need a financial adviser. The truth is, there are very few things in life that we need.
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We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
But if you see yourself as an achiever and becoming financially secure and getting ahead in life are what you seek, then you might want to consider having a trusted financial adviser (FA) by your side while you conquer the world.
Here are some reasons why I feel this way:
Your financial success is too important to be solely managed by yourself
World-class athletes like Roger Federer, Tiger Woods and Manny Pacquiao all have a coach/trainer. No reasonable person would suggest that Roger Federer cannot beat his coach in a game of tennis, nor would anyone think that Manny Pacquiao is unable to outbox his coach today.
Outside the sporting arena, C-suite leaders and captains of industry hire coaches like Tony Robbins and Robin Sharma to take them to the next level.
Even if you are one of the most intelligent and financially savvy individuals out there, you can still get more out of life through proper delegation. And having an extra pair of eyes keeps you from dropping the ball.
If the above achievers see the importance of bouncing ideas off their coaches, then most people – who are less active in insurance and finance – will definitely profit even more with the right financial adviser.
[Manny Pacquiao and his trusted coach, Freddie Roach. Photo Credit: Getty Images/Chris Hyde]
Smart achievers know that their financial success is too important to leave to chance, so they work with the experts. They focus on their core competencies and entrust necessary parts (or all) of their finances to the professionals – their FAs.
Not all financial advisers are profit-driven. The true FAs sell from the heart.
Nobody enjoys being taken for a ride, or paying for something of little value. I’m aware that some people are skeptical or scared of meeting quacks who are out to make a quick buck off them.
But the truth is, there are bad eggs in every industry. It just so happens that horror stories generally travel faster than good ones. (Think about it: if you meet a good FA, would you proactively tell all your friends and family about him/her and how he/she helped you?)
Don’t let your fears and apprehensions stop you from pursuing your financial goals. There’s no point in wasting your time questioning why these “bad eggs” exist, or using these negative examples as an excuse for why you’re not managing your finances properly.
If you see the value in having a professional financial adviser, your focus should be on finding one and forging the right partnership with him/her.
A truly professional FA is one who possesses the knowledge, skills and capabilities to meet your needs, and who will:
- Try to first understand your unique situation
- Advise and make appropriate recommendations
- Respect that you are the eventual decision maker
Professional FAs will never materially benefit themselves at the expense of their clients. They service their clients from the heart and bring their “A” game to the table, every time.
True, you don’t have to go through an FA to buy insurance. But do you know what you’re really buying?
I applaud the efforts of MAS in making financial products more easily accessible to the general public. At the same time, I feel this does not negate the need for tailored financial advice from a professional FA.
For example, if you look at the compareFIRST portal that was launched recently, you’ll realise that some of the product listings generated are not always apples-to-apples comparisons. Unless you’re a savvy consumer who is familiar with all the nuances and differences in terms and conditions, it can be a challenge to select a product that is best suited for your needs.
That’s where having a trusted FA, whom you can tap on for advice and recommendations, comes in handy.
Knowing something is different from putting it into action.
You can read up and learn a lot about investing and all the different financial instruments, but are you able to piece everything into a strategic plan that will lead you towards your financial goals?
Furthermore, operating under distress (be it an illness or enormous stress at home and in the workplace) can often cause one to behave peculiarly. In the face of a tragedy, the emotional trauma will render a very capable person less effective, let alone a less financially savvy family member who is tasked to carry out your plans if you are no longer around.
That’s what your FA is for. FAs are specially trained to handle your personal finances and carry out your plans in both good and bad times. You may not know it, but you’re actually in good hands – in Singapore, licensed FAs have to pass through stringent tests and are regulated under the Financial Advisers Act.
Some FAs even take the initiative to pursue further professional studies so that they are better equipped to serve you.
It is all too easy for anyone to criticise and comment that the financial advisory industry needs more regulation, but the fact of the matter is, most financial products need to be sold. And for a social good – like insurance products for instance – we cannot create such a high barrier to entry for the job that only people with PhDs need apply.
I’ll like to raise an analogy here. What do you do when you’re sick? You can go online to look up your symptoms and try to buy some over-the-counter medicine that may help. Or you can go to the doctor and pay him for his time and medical expertise to treat your ailments properly. Same thing here – when you buy insurance, you’re compensating the FA for his time and gaining the benefit of his financial “prescription”.
No doubt about it: FAs are invaluable. The challenge is in finding the right FA to suit your needs.
Like how many loving couples find their way to each other, I believe there can be a right FA for everyone. You wouldn’t strike off all men (or women) just because you failed at your first relationship, would you? In the same way, don’t be too quick to brush off having an FA just because your first attempt didn’t work out.
Building a relationship involves trial and error, and both parties must be willing to forge this partnership in a win-win situation.
Just like how you would “shop” around for the right man or woman to settle down with, finding the right FA requires you to first of all know the characteristics that you seek in an FA.
Secondly, you have to be a discerning consumer. (I’ve noticed that many consumers have trouble differentiating truth from sincerity or friendliness. But remember, truth is truth, and sincerity is not a test of truth. A person can be sincerely wrong about something.)
Based on my beliefs and research, the following are characteristics you should look out for in your FA:
- Takes time to learn about you and your business (if applicable)
- Is responsive to your needs
- Anticipates your needs
- Has the knowledge, skills and capability to meet your needs
- Serves with integrity. Does not humour you for the sake of it.
- Is not afraid to speak up and doesn’t pull punches, but respects that you make the decisions
- Genuinely wants your business
- Respects the value and limits of your resources
- Is trustworthy and can maintain confidentiality
- Constantly upgrades himself so that your plans will always remain relevant
Which of the above is most important to you? Rank them, then go out there and find an FA who can meet your needs.
Almost everything is integrated in today’s world. You can’t be free to build a life if you are always behind on your payments. You can’t have the peace of mind to pursue your dearest goals and aspirations if you are not financially secure.
So yes, you might not need an FA. But it’s extremely useful to have one all the same.
Read Part 1 here: Say No to the Financial Adviser: “The Best FA is Myself”