Pros And Cons Of Getting Insurance From Just One Financial Adviser

This article first appeared on fundMyLife, the platform that connects financial planning questions to the right advisers.

As the saying goes “Don’t put all your eggs in one basket.” Diversification is a fundamental investing and risk management concept. Does this apply to financial planning and insurance as well?

Throughout our lives, we inevitably meet a lot of financial advisers, and there is always a question of whether to engage more advisers or stick with the one(s) you already have. This is especially true when we move from one life stage to next.

In this article, let’s explore the pros and cons of having just one financial adviser for your financial planning needs.

Read Also: The Art Of Effective Diversification For Your Investment Portfolio

Pros Of Having Just One Financial Adviser

# 1 No Need To Repeat Yourself

Having just one financial adviser, especially if that person is great, is all you need. They understands all of your financial needs and advises you on suitable products. You do not need to keep repeating your entire financial situation and life goals to different financial advisers, which can be repetitive and tiring. Furthermore, if you have just one financial adviser, you just need to update one person n cases of changes in life stages, like job situation, financial situation, health concerns, etc.

Furthermore, if you have any private matters you do not wish to talk about often, it’s easier to have a single person to handle everything. The less people who know, the better.

# 2 No Redundancy

While being under-insured is a big problem, being over-insured is also an issue that is less discussed. Being over-insured poses a problem because you’re paying more than you should, limiting cash flow for other purposes like investments.

This happens commonly when you buy policies from multiple people, who are not aware of what existing policies you have. Typically, the policies you own sit in drawers, untouched for a while. This is worse when you get them for reasons other than personal, e.g., to “support” a friend or family who has gone into the financial planning industry.

By sticking to a single financial adviser, you avoid this possible redundancy.

# 3 Single Point Of Contact

Picture this: you bought a life insurance from A, health insurance from B, and a personal accident policy from C. After that, let’s say you get into trouble, like an accident, sickness, etc, you’d have to recall who can help you with your incident.

During a claims situation, it is ideal that a single person who has access to your entire insurance portfolio. The last thing you want to do when disaster strikes is needing to figure out who handles which policy.

Read Also: Why Investors Need To Diversify Their Dividend Income, And How They Can Do It

Cons Of Having Just One Financial Adviser

# 1 All Eggs Are In One Basket

While having a single point of contact is convenient and useful, it also exposes you to risks as well. For example, a common issue consumers face is their financial advisers leaving the industry. Your policies would become orphan policies, a term that refers to policies without any servicing adviser. At best, if your adviser is responsible, he/she refers you to a reliable colleague. At worst, you’re left hanging and when it is time to make claims you’d have to take extra steps to contact the representative the company assigned to you.

Another possible risk is that your adviser becomes unwell and has to take a break from his/her job. It would be a bad timing if you need to make your claims during their downtime.

# 2 Limited Range Of Products

Unless your financial adviser is from an independent financial advisory, your choice of plans depends on the company your adviser is from. As such, it might not be a bad idea to engage multiple advisers to obtain specific products from different companies. With apps such as PolicyPal, IOLO, and TrueCover, it’s much easier nowadays to keep track of all your policies.

However, this does not imply that sticking to one company’s products is a bad thing. Products are competitive across the board. Most of the time, the differentiating factors lie usually in gimmicks. For example, wellness programs like AIA Vitality, or partnerships between Prudential and genetic testing company MyDNA. On a related note, the debate of tied adviser vs independent financial adviser is a completely separate issue, which we will explore another time.

Get Answers To Insurance And Financial Planning Questions

We hope that you have a better idea of how having just one financial adviser can be both a boon and bane. However, no matter whether it’s just one financial adviser that you engage, or several of them for different products, it’s definitely way more important to have people you can trust.

If you want to engage more financial advisers, or if you haven’t found the right one, consider the curated pool of advisers on fundMyLife. Head over to fundMyLife and get personalised answers to your financial planning questions.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect you to the right financial planners in a private and anonymous manner, based on your financial planning questions. 

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