In Singapore, most insurance advisers that we know are usually remunerated through a commission-based structure. This means they are paid only when they sell a financial product to their clients, and do not receive a stable income each month. Very often, they bear the costs of acquiring new customers, including rent payments for hosting roadshows at shopping malls or outside MRT stations.
There are a smaller group of insurance advisers who are fee-based. These are advisers who charge a flat fee for the time they spend in helping their clients plan for their personal finance.
Beyond fee-based advisers, there is a third group – salary-based insurance advisers, who are even harder to find. There are only a handful of such advisers in Singapore.
Dennis Hoe is one such salary-based insurance adviser who stands out from the crowd of commission-based agents. Like most of us regular folks, Dennis is a salary-based adviser who works regular office hours and is entitled to annual paid leave.
Dennis is an employee of Do-It-Your-Way-Insurance (DIY Insurance), Singapore’s first life insurance comparison portal. DIY Insurance is a portal that was developed by Providend in June 2014.
The platform allows consumers to compare many different types of insurance product such as protection, savings and retirement income. You can read up more about how DIY Insurance can help you with your insurance related matters in our write-up here.
Even before joining DIY Insurance, Dennis was no stranger to the insurance industry, having worked as an agent for one of the insurers in Singapore. After one year on the job, he moved on to DIY Insurance in 2015 to become a salary-based adviser.
We spoke to Dennis to better understand what his job is about, how a regular day in the office is, and the pros and cons of being a salary-based adviser in Singapore.
DollarsAndSense (DNS): Salary-based financial advisers are a rarity in Singapore. Can you briefly share with us what this job is about?
Dennis Hoe (DH): As far as I know, Providend is the only company in the industry that adopts a compensation structure that is salary-based.
As a financial adviser at DIY Insurance, we function as part of a bigger team, rather than as self-employed individuals. The marketing function for DIY Insurance is done by my colleagues from the Brand Management department. There is no need for me to find any leads on my own.
This is probably the most significant adjustment from my previous job as a tied agent. Back then, I was responsible not just for providing financial advice to the clients whom I met, but also the additional step of soliciting for new clients myself.
Most of the leads that we have are usually generated through our DIY Insurance platform. Our potential clients submit an enquiry through our platform after having compare between insurance policies that they are interested in. My role is to follow up to better understand if the products that they are interested in are indeed suitable for them.
Following that, we will schedule a face-to-face meet up to finalise their needs before any purchase is made.
DNS: Do you feel the pressure to need to close a sale? For example, what if DIY Insurance doesn’t have enough leads?
DH: The marketing department is doing a really good job. We get a lot of enquires and as it stands, they are enough to keep us busy!
When I first started, we were getting about ten enquires a day, which was way higher than what I was used to during my time as a commission-based agent. Also, the potential clients whom I usually meet are mostly already aware of what their needs are, and are looking for someone to help them compare between plans, and to buy it through them.
Culture wise, I got a shock when I first joined. I was used to sourcing for sales and leads via roadshows and canvasing. It’s very refreshing to see people coming to us directly with the needs that they have, with no soliciting of new clients required on my part. For existing customers looking for new products to suit their evolving needs, they would call us to seek for advice.
There is no additional pressure for me to close a sale at DIY Insurance.
DNS: What are some of the advantages of being a salary-based adviser?
DH: For me personally, I enjoy the process of insurance planning, and to provide advice tailored to the various needs of my clients.
When I was a commission-based agent, I felt my role was heavily geared towards sales, and to some extent, I think this is true and inevitable. Very often, most of my time was spent on generating new leads, and this overshadowed the role of advising clients. I have also always felt the conflict of interest as a commission-based adviser. It is always a challenge in trying to strike a balance between my commission and the interest of the clients.
Here at DIY Insurance, the job is more defined around advising clients to help them craft solutions that work for them.
As a salary-based adviser today, I do not have to worry or spend any time on finding clients. Instead, my main responsibility is to advise the clients that approach us, ensure that they buy what is suitable for them, and to help them with claim-servicing, when required. We perform free consultation sessions for the clients to offer solutions which best meets their needs, as there is no additional incentive for us to close a sale.
The other advantage is that I now work regular working hours and have a fixed salary and CPF contribution. This stability helps me avoid having to worry about sharp fluctuations in my monthly income, which is what you experience as a commission-based agent.
DNS: All these sounds good. But I am sure there are disadvantages being a salary-based adviser
DH: For a salary-based adviser, our income does not fluctuate much. This is both good and bad. It’s good in the sense that you can achieve financial stability. However, neither does it grow too quickly, even if you are meeting a lot of clients.
If you contrast this to a commission-based agent, whose remuneration structure is based on sales, the sky is the limit for them. Simply put, based on the same volume of transactions completed, a commission-based agent will be able to earn a lot more compared to a salary-based adviser.
Nevertheless, it’s a conscious decision I have made because it helps me avoid a lot of the uncertainty and intense competition that comes with being a commission-based agent.
DNS: Do you find it difficult to explain to the people around you that you are a salary-based adviser? What are the first questions they usually ask you?
DH: When I explained this to my friends, most were rather shocked. Some of my friends in the banking sector did ask me why I chose to forgo the higher remuneration, since being a commission-based agent could have enabled me to make a lot more.
There is no easy answer to this. I agree not everyone will feel this way. But having been there, and done that, I’ve felt that being a salary-based financial adviser is more suited for me.
DNS: Share with us how a regular day is like for you?
DH: We meet clients on a daily basis so our days are typically filled with appointments. For clients who need further underwriting for their health situation, we also help them follow up on the documents required. In addition, we also liaise with some of our clients through emails and over the phone.
DNS: What are some common misconceptions that people have when it comes to DIY Insurance?
DH: Some people think that being an online portal, DIY Insurance does not provide our clients with financial advice. This is untrue.
My role today at DIY Insurance primarily revolved around advising the clients who have engaged us. If fact, I find myself doing much more advisory work today as compared to the past, when I was a commission-based agent who had to spend most of my time finding new leads.
Hence, it’s a misconception that buying online means having to forgo receiving personalised advice.
The other misconception that some people have is that they think buying through DIY Insurance means they have to do everything by themselves, including handling their insurance claims. This is not true. In fact, we have a dedicated team that helps all our clients with claim processing and this is a structure that we have in place within the company.
DNS: For any aspiring adviser, what would you advise them if they are considering between being a salary-based adviser or a commission-based agent?
DH: In my view, being a salary-based adviser gives you a lot more opportunities to focus on insurance planning and advising clients on their financial plans.
Having a basic salary also helps in removing the conflict of interest. As your income is stable, there is less of a need to make the insurance sale. As DIYInsurance derives most of its leads online, I do not need to source for my own leads. This allows me the privilege to spend a majority of my time in the work of advising clients.
When it comes to commission-based agents, the need to find and sell to your leads takes centre stage. However, being a commission-based agent helps you become effective in a sales role.
For aspiring advisers intending to join the industry, it’s important for them to know what their priorities are. For ambitious individuals, being a commission-based agent does offer the opportunity to earn a high income very quickly.
On the other hand, individuals who are more interested in helping clients formulate solutions, and seeking the stability of a fixed salary might be better suited to be a salary-based adviser.
Simply put, you need to be clear about why you are joining the industry.
A Salary-Based Adviser Is An Exception, Rather Than The Norm
Having spoken to Dennis, one thought that came to mind was just how unique his perspective is on insurance planning.
While most advisers would look at the financial advisory space as one which is primarily sales-based, Dennis is exposed to a different side of the industry, where the clients whom he regularly meets are people who actually want to buy insurance coverage, and approach him (through DIY Insurance) to find the best solution that covers their needs.
The other area to take note is the structure of remuneration. For an individual who wants to achieve high earnings, being a commission-based agent gives the person the best chance to achieve financial success. That’s because remuneration is tied to output. The more you sell, the higher your income will be.
For aspiring salary-based advisers, high remuneration should not be the reason behind wanting to become a financial adviser. Rather, it is about liking the nature of the job, where the bulk of the work is tied to advising individuals on what’s the optimal coverage that they need, as opposed to selling them coverage. You will get to meet many individuals with unique needs, and find personal satisfaction in servicing them well, without necessarily taking on the high-risk high-reward commission-based pay structure.