Updated: Sep 28
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.