3 Insurance Agents Share The Biggest Misconceptions Singaporeans Have Of The Insurance Industry

For a business that has been in existence since the 14th century, it would seem that people through the ages should have understood the importance of purchasing insurance by now. Yet, the insurance industry in Singapore tends to have a negative reputation with many people trying their best to avoid insurance companies, or the agents that work with them.

People here are often wary of the intentions of insurance agents or have fears that the insurance companies, with their financial might, will try to get out of paying on claims by finding legal loopholes.

While some of this scepticism is healthy in order to avoid getting swindled, many in the insurance industry have perhaps unfairly bore the brunt of the actions of a minority of “bad apple” agents.

DollarsAndSense spoke to three young and passionate insurance agents to get their insights on the insurance industry and to try dispel some of the misconceptions people may have of the industry.

Below are their responses to some of our questions.

Also Read: 4 Major Misconceptions Singaporeans Have About Their Critical Illness Insurance Plan

Credit: Frames Per Second

Michelle Ngiam, in her late 20s, joined the industry about three years ago, wanting to make a difference in other people’s lives and to meet people from different walks of life. She joined Advisors’ Clique, an over 400-strong agency where she is able to seek advice and bounce ideas off seniors and other agents for their experience in handling clients with complicated requirements.

DollarsAndSense (DNS): Surely you must have heard many negatives about the industry. What were your thoughts on it?

Michelle (M): When I first joined the industry at the start, there were many people who questioned my decision to become a financial advisor. Then I realised that many of these negatives were not about me as a person, rather, they were due to the nature of perception that people had about the profession.

As long as my conscience is clear and I believe I am thinking in my clients’ best interests, I am able to sleep soundly at night. I am not affected by the negatives because I am proud to be an insurance agent.

DNS: What drives/ motivates you?

M: My motto is “to always be able to sleep at night.”

We are handling our clients’ money and they have placed their trust in us. I owe it to my clients, my agency and myself to be accountable and to run my business ethically. I strongly believe that it is not about the commissions that we earn, it is about doing the right thing by our friends and family.

 DNS: We are sure there are many aspiring insurance agents. Would you be able to share how much an agent can expect to earn after gaining a few years of experience in the industry?

M: The sky is the limit! How much you earn will depend on how hard you work. A decent income that surpasses your peers is not uncommon with consistent discipline and a positive attitude. In my agency, Advisors’ Clique, we even have a few students juggling school at the same time who are able to make $100,000 in a year.

DNS: What are the most common misconceptions about financial planners and insurance agents?

M: That we are only interested in making money off our friends and family.

It is true that we do make a living with commissions made from selling policies. However, in Advisors’ Clique, we are trained to think in our clients’ best interests. Therefore, the objective should not be on how much commissions we can earn, but on how we can help our clients by providing a comprehensive approach to financial planning.

DNS: What is your approach to selling insurance products? Is there any strategy you’d like to share?

M: I don’t believe in hard-selling, it doesn’t make sense to sell anything without first knowing their ‘story’. It is only after this that I can get a good sense of their needs.

I start by doing a financial review of my clients’ current portfolio, followed by a sharing on concepts encompassing everything they will ever need to know about financial planning. It sets the basis for our discussion.

I don’t usually talk about specific products during the discussion because understanding their needs and sharing why financial planning is necessary is more important at this stage.

DNS: In this digital age, buying insurance online is becoming more prevalent. Has this affected you and how do you try to overcome this?

M: I have come across a couple of clients who prefer buying online due to two things: price and convenience. However, I have to say that it has not affected me in any way.

Financial planning is complicated and not something to be taken lightly. (Those) not in the industry cannot fully comprehend (it) due to the many aspects involved. We are experts in our field and we are constantly upgrading ourselves in our skills, strategies and knowledge of the market. Our advice is what makes us different from just purely buying a plan online.

I like to think of us as financial ‘doctors’. Our clients have a sit-down with us and we ask questions to uncover what their problems are, financially. Then comes the ‘prescription’, where we recommend and draw up plans suitable for them to meet their needs. You can’t do that with a computer.

I also believe that the computer cannot replace the human touch. I have clients who turned into good friends, and friends who became my clients. Our relationships grow based on mutual trust and this is what drives me to do my best for them. It makes what I do enjoyable because of the friendships that are forged.

 Michelle ended off saying “people don’t go in to try the insurance industry, the insurance industry tries you.” Her advice to aspiring agents who want to enjoy a rewarding career in the field is to work in an agency with like-minded agents, stay true to your ethics and be disciplined.

Also Read: 5 Ways Singaporeans Can Avoid Overspending On Health Insurance

Credit: Vicky Vaswani Facebook 

Vicky Vaswani, in his mid-20s, has been in the insurance industry for over 7 years already. He started working in this line to achieve passive income, time freedom and to interact with people. A realist, Vicky began the interview stating he likes to “inspire and enlighten others to take action to do something they wouldn’t have done had I not been there.”

DNS: Agents get paid varying amounts of commissions for selling different products. Do you think they would be more incentivised to sell products that give them the best profits?

V: It has to be a win-win situation for both the client and the agent. The product that is the most sold in the industry, hospital plans, have the lowest commission. If (agents only sold products with best commissions), then hospital plans would be the least sold. I sell what i feel is best for my client, to the best of my knowledge, at that period of time in his financial journey.

DNS: What drives/ motivates you?

V: Inspiring and enlightening others to take action. Nobody wakes up one day wanting to buy insurance. They need to be inspired and enlightened to take action. Hopefully by me, if not by someone else. And hopefully before it’s too late.

DNS: This is always a question that people who want to enter the insurance industry ask – how much can you expect to earn after being in the industry for a few years?

V: I can’t say for sure, but personally, I was able to earn $50,000 in the first year at the age of 21, $100,000 a year after 5 years. I then went to study and was able to pull in about $100,000 at age 26. (this could have been higher, maybe closer to $200,000 per year or $500,000 a year if you move into management position and start building your own team.)

DNS: What are the most common misconceptions about financial planners and insurance agents?

V: I have no idea, but would love to see (what others have to say).

DNS: What is your approach to closing sales? Is there any strategy you’d like to share?

V: If you help enough people get what they want, you will eventually get what you want. The key word is EVENTUALLY, it may not be straight away, but sooner rather than later. Also, if you think and act in the client’s best interest, and if the time is right and they have the means to finance the product and it fits their needs, 9 out of 10 times, they will buy what you are selling.

DNS: In this digital age, buying insurance online is becoming more prevalent. Has this affected you and how do you try to overcome this?

V: Yes. Some people are better off buying on the internet as they are more savvy, it saves them money. Others are not, so they (still) need me.

When you go on a date, you don’t marry every single girl you date, similarly not everyone you meet to do financial planning becomes your client. Some will and some won’t. You wish those that don’t all the best, and you treasure those who do.

Before ending, Vicky said everyone should read a book titled “the good that financial planners do”. And he even advised us to do a review on the book!

Also Read: 4 Simple Steps To Managing Your Insurance Policies

Credit: Daniel Tay Facebook 

Daniel Tay, in his 30s, joined the industry by literally joining the person who sold him insurance policies. His reasoning was simple – he knew very little about money management and he could “learn best when he taught it to others”. Daniel is a fee-based advisor.

DNS: Surely you must have heard many negatives about the industry. What were your thoughts on it?

Daniel (D): When I first joined, my relatives doubted I would succeed in this industry, because I was not an extrovert and not a salesperson. However, in the agency I joined, I found that there were many types of (successful people with different) personalities and characters. It takes a certain type of person to approach people at MRT stations, road shows, to do street surveys and knock on doors. That is certainly one way to get clients, but it is not the only way. A better way of getting clients is to first create value for others before expecting an opportunity to be given to you.

DNS: What drives/ motivates you?

D: In Singapore, everyone is worried about money and the cost of living. Through my experience, knowledge and connections, I have created a process that helps people to worry less about money. What drives me is the desire to bring this process to as many people as I can.

DNS: Do you think about commissions when you sell products to your customers?

D: I don’t think about commissions anymore, because I don’t sell insurance products anymore. Instead, I charge a fee for financial planning. When insurance products need to be purchased, my teammate (who is paid a fixed salary) makes the recommendations. When my teammate meets my clients, I sit on my clients’ side and represent them. I analyse the products from the perspective of a client and with a financial planner’s knowledge. 

I created this system because I was not satisfied with the commission-based system. However, it is unrealistic to expect a commission-based financial advisor not to think about how they are paid. They are running a business and, in order to run a sustainable business, you need to know how much money you’re making from each sale. Otherwise, you’re not very good at business, are you?

DNS: How much can you expect to earn after being in the industry for a few years?

D: It really depends on a lot of factors. It really is true that you can decide how much you want to earn. You just need to have a plan to achieve it, and be willing to do what is necessary. 

That said, looking at the average: If you’re commission-based, by and large, the first 2 years will be about building up your business and stabilising it. By the 3rd year, you can expect a yearly revenue of about $30,000 to $50,000. By the 7th year, you can expect a yearly revenue of about $60,000 to $80,000. Of course, how much of that revenue becomes personal income depends on your business costs. 

DNS: What are the most common misconceptions about financial planners and insurance agents?

D: The most common misconception is that they all do the same thing, and that they are all paid the same way. The second misconception is when sometimes people refer to an insurance agent as “my agent”. 

Insurance agents are agents of insurance companies. According to their contract, they are required to always act in the interests of the companies they represent. They are not their clients’ agents. 

As such, the insurance agent’s job is to sell insurance products from their particular company only. 

Financial advisors represent IFAs or brokers which are companies that distribute insurance products from multiple companies. But there are no IFAs or brokers that can sell ALL the insurance products in the market, mainly because some insurers do not sell their products through IFAs. 

Both insurance agents and financial advisors tend to be paid to sell insurance products, and they are therefore paid by commission. But there is a third type: financial planners. They tend to be paid both by fees and commission. 

As the use of titles on namecards is not entirely regulated, you cannot tell who is which just by their namecard or what they call themselves. The best way to find out who is which is to ask them how they are paid.  

DNS: What is your approach to closing sales? Is there any strategy you’d like to share?

D: While I don’t sell insurance products, I do sell my financial planning services. The first meeting with a potential client is complimentary. It is for both of us to see if there is a mutual fit between what they are looking for and the service that I can provide. If there is, then we proceed to do business together. Before starting any work, I collect a deposit from the client. This tells me that they are interested, and not just looking for free advice. 

Next, we proceed to collect their financial information to ascertain their current position. In the next phase, I show the clients where they currently stand in relation to each of their financial goals. And we proceed to discuss strategies to help them achieve each of their goals. In the final stage, I put together all these strategies into a single page action plan which lists out the actions they need to take and when. 

At the end of the process, the client can choose how to implement their action plan. They can 1) implement it on their own; 2) implement it through their own insurance agent or financial advisor; 3) implement it through my team mate.

DNS: What percentage of agents do you think are “crooked”?

D: In 2012, MAS conducted a mystery shopping exercise. The results are telling. The results show that about 30% of recommendations made were suitable for the client, and 30% were unsuitable. The remaining 40% may be suitable.

From this, we can gather that 30% of agents are crooked, 30% are straight, and the remaining 40% lie somewhere in between.

You can read the report here.

DNS: In this digital age, buying insurance online is becoming more prevalent. Has this affected you and how do you try to overcome this?

D: I don’t see this as something to be overcome, but rather, to be welcomed. I am all for changes that make it easier for clients to buy adequate income replacement or asset protection. In fact, I often encourage my clients to buy direct from insurers as it is better for them from a financial perspective. However, many clients still prefer to get their insurance through my team as they prefer to have someone explain the details to them. They prefer to have a trusted advisor they can speak to for their insurance. 

Daniel gave us an insightful view into the industry and he concluded saying he “looked forward to the day when all insurance products are available online and direct from insurers”.

What are some other misconceptions? 

These agents share with us some misconceptions that they feel people have about the industry. What are some other misconceptions that you think there are in the industry. Share it with us on our Facebook Page. Or discuss it with other like-minded individuals on the open Insurance Discussion SG Facebook Group.

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