It was yesterday.
I was initially wrote a highly technical article with a comparison between an Early Critical Illness Insurance (ECI) Private plan VERSUS a very popular Group Term Insurance ECI…
…However, the end product turned out really skewed and it could actually be summarized in two paragraphs.
It wasn’t great content. It was a blunder.
With about 32 hours to write a new article from scratch, it did make me think about the many blunders throughout my career.
While it has been flattering to have very satisfied clients as shown below (with the shamelessly same screenshot as to get Seedly to give me an AMA or a Panel spot already), the reality is that my career has been far from smooth sailing.
I’ve made mistakes and I think that my current clients are the beneficiaries. I’d like to share with you some of them, as well as how you can apply them in your every day life even if you’re not in my position.
1) Never trust your money to someone who knows less than you do
In 2017 when Seedly was still young and uppity, so was Money Maverick – green horned and fresh faced from the industry.
There was someone requesting quotes for an Early Critical Illness Insurance (ECI) policy, and I made appeals to the person to meet up with her so I could enthusiastically pitch my product over the other comparisons she was making.
She narrowed it down to my policy and an NTUC agent’s policy, and the questions began flooding in. Being a young FA, pitching was something you’re trained for. Objection handling takes experience.
She was an auditor and she checked the policy contract through and through with full understanding, unlike most people today who are unable to read financial documents.
It turned out that quite a few of my answers were wrong.
I hadn’t missold exactly, but I had done something worse in the eyes of my manager – I undersold. The policy was better than I thought and my information was wrong.
And of course, there’s nothing worse for a client than having a better understanding of the policy than the person who is trying to sell it to you.
A job, by definition – is a task that requires a solution.
If you can’t provide the best solution, you won’t get paid.
And as a consumer, you identify best solutions to the best of your knowledge.
That’s why many of you use compare tools, get recommendations from your loved ones, etc.
Be it your banker, FA, broker, real estate agent or even in relation to anything else you typically buy – something is very wrong if you know more than them.
It’s the same if you’re buying a computer or a car.
Unless it saves you TIME, never trust your money to someone who knows less than you do.
2) Never take investment advice from someone who isn’t a successful investor
In late 2016 when I first joined, a new fund came out.
I had never invested outside of lending money to private local businesses here prior to that, so I was very excited when I heard that the fund would be paying out a high dividend of 7.2 cents per unit.
I didn’t even know what that meant, to be honest. I just assumed it meant 7.2%. That was how limited my investment knowledge was at the time.
I did want to sell something that was so hyped, so I went to look up on it online.
Here were some of the pointers I got off various blogs and forum pages.
1) Dividends = profits.
2) Profits are paid out when things are going well.
3) People like profits.
This would later turn out to be my first and most significant investment blunder.
The share price dropped by over 23% in a year, which made the dividend unsustainable for the price of the unit being bought at a ridiculously low price, which created a vicious cycle of paying out of the NAV.
Not only did I suffer badly, but my first few clients suffered. Many of them had follow up appointments discussing the future of the fund, as well as redirecting their money towards better funds.
Eventually, I started reading professional reports and books by successful and rich people before adopting my styles and strategies. I also learnt how to discern between poor sources and good sources of financial information.
I do tell this to my clients now and I’ll tell this to you, if you’re reading this – most of your research is going to be online.
If you search to justify your confirmation bias, you’re going to find it.
If you search to get the mass opinion of people who are not richer, smarter, more successful or better investors than you, you’re going to end up with the same result as them.
For Finance, the majority rule is simply not true. Most people are not rich. Ergo, most people know nothing about becoming richer.
Mind you, it’s not something I enjoy saying. But if you’re genuinely serious about improving your financial state, this is true.
Which is also why I lean towards professionals, and obviously towards my service.
Don’t take investment advice from people who you’re not even aiming to be like.
And if you’re aiming low, aim higher.
3) Never forget to read the TnC, and clarify everything
One of my blunders last year was quite horrific. I’ll share this now.
For those of you who didn’t know, Money Maverick’s Achilles Heel is Credit Cards (CC).
That’s right. If you wanted to make me look foolish, stupid or clueless, CC is the absolute way to go.
I sold a policy successfully to a client and he paid by CC. He asked if he would be charged interest on it, and based on what the advertisement said – I told him no.
… As it turns out, there’s like an Effective Interest Rate, which is apparently not the same as an actual interest rate, a starting processing fee, other processing fees…
Thankfully he free-looked the policy, wasn’t charged a dime and I rightfully lost a client while being grateful that I didn’t lose anything else in the process.
Because it could have been far more ugly.
Whether it’s your credit card, bank account, insurance, investments, loans, CPF – always read the terms and conditions, and then CLARIFY what you don’t understand.
My clients ask me a zillion questions when they take home a policy and often they get it wrong (which is why I wrote this article, for starters)
And because I don’t have a lot of credibility saying to clarify after admitting to a mistake - if you’re questioning a professional on a certain area, take the time out to ask what their experience in that area is.
Asking them questions is free much like asking the warranty of a phone is free.
You’ll be able to tell from their responses the depth of their experience and if you’re comfortable with it. [Refer to Rule 1].
4a) Never put off your insurance
The biggest mistake that haunts me today is probably still this one, which is why I’ll write about it a little more.
I had a client who wanted to get critical illness coverage for her son in NS.
She was talking to other FAs as well, which was well within her means to do so.
But she was torn by decision paralysis.
I was a nobody in the insurance industry. I didn’t want to come across as pushy, since she had already taken a liking to me.
Several months passed from the time we first talked, and the decision was made for her. Her son collapsed during NS and while he eventually recovered, he was diagnosed with heart issues.
Suddenly, her options became woefully limited and very expensive. Other FAs had either given up on her prior to this or if they hadn’t already, opted to give up now.
I did everything I could but underwriting from two companies showed that he was thoroughly uninsurable.
Her son continues to remain uninsured. He was 19. He’s just a kid with his whole life ahead of him.
He’s at an age where the entirety of all Cis are completely open to him (because some Cis never show up past a particular age).
He’ll never be able to buy insurance for himself. Or his children...under his name at any rate.
And if anything worse happens, he’s a ticking time bomb for being a long-term financial burden to the very people who wanted to buy insurance for him in the first place.
For a long time, this haunted me because I didn’t have a conviction in the importance of insurance back then.
I was just a salesperson.
I thought: ‘If they buy from you, they buy lo. What will be will be, no matter how long it takes for them to decide. Besides, it’ll probably be more expensive by the time they make up their mind.’
I didn’t treat it seriously enough and assumed that they had all the time to make these decisions.
I think a lot of FAs who are particularly convicted do so much more from an experience than the constant stream of being told during trainings that it’s important. It only takes one experience and one regret to change your mindset towards something. But by that time, it’s too late.
Usually what happens is that someone must suffer for your mistake.
You might say it’s a silly thing to make a big deal out of.
I was inexperienced and I did everything that I could subsequently. The mother was so grateful that I even tried, that she ended up getting term policies from me for the rest of her family – two daughters, her husband and herself.
Well - I show up for reviews and he greets me and I smile back and I’m reminded.
If anything happens to him, it’s on me. Because I didn’t do everything that I could, and it was my job to do everything that I could.
My wrong attitude will cost this family, the very family that I’m serving right now, whose home I’m resting at right now and drinking their iced tea.
4b) Comparing Policies
Some people are insistent on comparing policies to save a considerable amount of money for the same value over time (true). Some people are insistent that policies are essentially identical, and trust matters more (also true).
From my experience, my compromise is very simple:
1) First, you put a value to the weight of that trust from the first person who provides a solution to your insurance, which can be changed over time (depending how good this advisor is at following up with you).
2) You buy the policy. Following which you have between 14 and 21 days to do all the comparing you want.
3) You free-look the policy you bought if its inferior to the one you made a final decision on, and stick to it, while accounting for the weight of trust of your old advisor versus your new one.
The reason for this is very simple – you can only claim insurance when crap happens unexpectedly.
If you don’t believe that crap can happen to you unexpectedly, you shouldn’t shell out a cent on insurance. Not a single cent.
If you believe that crap can happen to you unexpectedly, even now – you should have urgency in picking. out your policy and you should be covered while doing that.
The insurance will cover you for death during your free-look period, and it will start the countdown for your waiting period.
It’s often said not to ask a barber if you need a haircut, but sorry. A barber has seen way more than someone who isn’t in the business of constantly thinking and engaging with hair for at least 50 hours a week. Like I showed in the example above – we’ve seen it all. And people with more experience than me have seen much, much worse.
If you’re serious about insurance, you’ll get it done within your free-look period. Your advisor should convey that belief to you, or its on him (or her).
Otherwise, it’s on you.
5) Never stop owning your mistakes
I hope people can tell that I’ve gained experience and knowledge.
Each time - what I love about this industry is that every year I get better, and there is a moment where I think ‘I’ve really got this down. I’m so good at this. There’s really nothing else that’s going to surprise me.’
And I get lambasted by reality almost immediately.
The financial industry changes rapidly. 3 months can make all the difference between a good fund and a bad one, or a good plan and a great plan (they get upgraded).
Client needs also change, and market trends change – like in recent years with Recurring Critical Illness Plans (e.g. Aviva Multipay) and Perpetual Savings Plans (e.g. Manulife ReadyBuilder). There were no such things a short 5 years ago.
Now it is all that people consider.
Change dramatically increases the probability that I will continue to make mistakes in the future.
I’ve thought about quitting. I’ve thought about blaming others. I’ve thought that mistakes were circumstantial.
Ultimately, the healthiest thing I’ve found to do is to own it and carry it with me.
My investing skill has also gone up considerably, where I have a decent understanding of every single instrument and every single asset class. And I have a unconventional portfolio size and growth beyond my peers, competitors and colleagues.
With acceptance of your mistakes comes the questioning and reflection, followed by the capacity to grow.
One of the fascinating things that I enjoy seeing is people who have learnt a bit more than they did yesterday, and they view some of their past decisions as mistakes.
The people who own them are looking for solutions, or how to improve.
The people who don’t are fond of blame. Of stirring hatred towards everything that could be responsible for what is happening to them.
Which group of people do you think will end up rich or successful?
I do not know if I will end up rich or successful by society’s definition. I believe that I will make mistakes and some of them will have disastrous consequences.
But that’s the wonderful thing about the finance world. It’s a contact sport. The more you do, the more mistakes you make and the more you grow. You enjoy the personal and intellectual growth almost as much as you do the actual growing of your monies.
Whatever happens, I will have no regrets, if I follow my rules.
They are offered from a professional and personal perspective, which will be undoubtedly useful to you.
I hope you will consider them as well.
Here are some of my resources on:
3) Retirement and Leverage: Leveraging a Private Annuity, Pros and Cons (ft. Jamus Lim)
4) Spending and Saving: The Biggest Spending Mistakes You DIDNT Even Know you were Making (and how to avoid them)
5) Job Assessment: A Case Study on How a $6k/mth GIrl makes MUCH more money than a $10k/mth Guy
6) Financial Optimisation: How I Avoid the Largest 'Fees' of All