In a country that has an extremely high financial advisor to population ratio (259:1) compared to other countries such as Australia (1,222:1) and the United State (1,003:1), it is not surprising to know that there has been backlash against financial advisors in Singapore in recent years.
At the same time, it would be premature to say that financial advisors are not required in the industry. In spite of the fact that technology have caught up with the financial sector, with people now able to buy insurance directly through platform such as DIYInsurance, advisors still play a very important role in helping serve our financial needs.
Help Them Help You
One main reason why financial advisors have a less-than-savory reputation is due to clients’ expectations not being managed appropriately. One of the easiest ways to manage your own expectations is to educate yourself on the basics first, before letting the financial planner assist in executing your plans.
However, a lot of people fall into the trap of being too lazy or busy to even learn the basics of finance. For example, they are not interested to find out about the details of the insurance products that they have bought, or the risk they are exposed to when buying a certain investment. They then subsequently expect their financial advisors to shoulder all the responsibility of their financial planning, and to help them make good financial decisions.
A worst-case scenario example
A Pioneer Generation auntie has no clue about financial products. She meets an advisor at her neighbourhood bank branch, who happens to care more about his commissions than her financial well-being. Since she expects that someone else will do 100% of the work for her, she is vulnerable to any suggestion the financial advisor gives.
If you belong to Gen X or Y (or even after), and have easy access to web-based resources, there is no excuse for not doing your own homework first before speaking to any advisor. Understand your own lifetime financial goal, rather than allow an advisor to determine that for you.
Think about it: Would you rely fully on a car dealer to choose for you which car model/colour/etc you would like, or even point out all scratches/defects (without you looking and asking for yourself)? The same logic applies to financial products – spend some time to understand what you are looking for, and learn the basics about these financial products.
Here Are Simple Areas That Financial Advisors Can Help You In
Save Time For You: If you hold down a 9-to-6 job, have children, and 1000 other things to worry about, the last thing you have time to do is compare cashflows between products on an Excel spreadsheet. This is where financial planners are extremely useful – Once you have a good idea of what you want, ask your financial advisor to do the math and explain it to you.
Find A Trustworthy One: The benefit of having so many financial planners around is you probably already have a friend that is one. You can save yourself huge headaches in the future if you know you can trust your financial advisor. You will be helping his or her career as well. Win-win!
Helping You To Understand: The original purpose of advisors was to simplify complex policies for the layman, thereby facilitating product sales. If you have trouble understanding interest rate/basic finance concepts, ask them to explain it in detail for you. Do not feel embarrassed – this is their livelihood, not yours. If they can’t be bothered explaining it to you, or brush off your questions, take note.
Valuable Information Source: Advisors can provide information gleaned from experience that cannot be found in brochures. For example, an experienced advisor could provide insight on which insurance firms have the most hassle-free claim procedures.
Last but not least, financial advisors are important because you can rely on them to service your claims when the need arises. Even if you are savvy with these claims, it is possible that you would not be in the condition to do so, or make the right decision when the time comes.
For example, an unfortunate accident may require you to seek immediate medical attention while your spouse or family may not be knowledgeable enough to make the claims. Having a trusted agent you (or your family) can call immediately to handle these things would help.
If there is one takeaway from this article – always remember financial advisors are wonderful information providers, but they cannot provide all the answers. Work together with them, but not rely on them.
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