50A couple of weeks ago, one of my marketing team actually highlighted an article that was about bagging a top or good insurance agent in Singapore.
So I browsed it. I thought, 'Meh'.
...And then it turns out I WROTE THE ARTICLE.
My team had sent it through a sub-link [e.g. how Finance.sg and Feedspot will sometimes feature my articles] and I DID NOT RECOGNIZE IT.
(I am a total loser)
So. That was a little embarrassing. 2 years of additional experience really changes a lot.
Seeing as this article existed, and I have the benefit of another year and a half of experiences and time from which I wrote this article, I thought that I would write a little sequel, a little upgrade.
1) Addressing Conflict of Interest.
The Answer To: "How to ensure I don't get screwed over by a greedy agent?"
The number one way to really make sure you have a really great insurance agent is someone who organically always brings up the conflict of interest and wants to make it a priority to deal with.
a) Between Products
Conflict of interest comes when offered products offer higher commissions compared to alternative, available products that may be suitable.
This has been explored quite often by Finance Bloggers, though usually not very well.
[Though some people like this are probably to blame.]
Bluntly speaking, it is a very common misconception that the commissions are vastly different between product types (e.g. Whole Life, Term, ILPs, etc). What really causes the disparity is the cost of the product.
For example, in quite a few companies that I offer, it wouldn't be uncommon to see Term Insurance policies have
a) Higher offerings on bonuses than whole life plans.
b) Higher percentage on commissions
But seeing as whole life plans are typically more expensive, an advisor would have justify why a more expensive solution makes sense compared to a cheaper solution for the same problem.
Some common ways to address conflict of interest between myself and clients are:
i) Duration - how long the policy and value of the policy lasts
ii) Range - range of coverage, ability to claim, under what circumstances, in the future, etc.
iii) Features - such as guaranteed purchase or convertability features, amongs others.
All these factors have additional financial value AND meet certain needs better, which may be able to justify any conflict of interest and align it instead.
b) Between Companies
This is of course only applicable to consultants who can offer products from multiple companies, or people from IFAs or FAs.
The reason there's even anything to write about this is because despite 'Independent', or 'Independence', most IFAs do not offer the exact same commissions for the exact same products.
They typically do fall within a range, but the fact that there is a difference at all creates a conflict of interest.
You have to get a consultant who can justify or at least have a conversation about any potential conflict of interest here, otherwise you may end up getting the highest-commissioned plan in any of the categories rather than one in your best interest.
2) Professional Responsiveness.
The Answer To: "Why am I paying an Agent for? Should I do it myself or get rebated?"
I'd like to talk about this one a bit more because it's not my forte.
We seek out consultants for empathy, expertise, clarification and ongoing service. 4 things, at the very least. This saves people both time and money. For example, I was recently in a position where I could save a client over $16,000 for the same type of plan across his tenure.
My total pay across a 6 year period would likely not even have been $700. Creating saving and value for clients in all aspects of their lives - especially insurance and investing: is what it means to be a consultant.
If it were just expertise alone, we could look up reliable sources and robots on the internet. But that's not what we want, nor what gets results in the long term. At least, not according to Dalbar, where the average DIY Investor doesn't invest longer than 3.27 years and doesn't own insurance more than 6 years. But for the clarification and service, sometimes it can be difficult to get an insurance agent who has a professional response. This includes, for example, acknowledging an objection that you may have as a 'unknowledgeable' layman.
If you have an objection, which you feel is very valid, even if you're not the expert in this case, sometimes a poor consultant will wave you off.
They will disregard you entirely, they will tell you 'no need to worry about it, you should just rely on me entirely.' They may not address or acknowledge the objection very well at all.
On the flipside, I do experience or hear secondhand 'intelligent' laymen bargaining for rebates from time to time, especially amongst lawyers. It's not great or feels great from a consultant's point of view, but you can see why they might not respect the idea of paying you the entire commission. Out of the 4 things, you might not be able to meet most of them. Ergo, they want to pay you less.
If a consultant believes he has met the proper criteria or has a promise to meet future criteria (e.g. claims etc), he should state it regardless of an 'unknowledgeable' or a 'intelligent' layman. Put the cards out on the table, discuss where your value most shines and make an arrangement work. Neither ducking it (to questions) nor expressing resentment (to rebates or other forms of your value being questioned) is a better professional response.
3) Well Versed (outside of their world)
The Answer to: 'Is this agent going to be around in the long term?'
One of the easiest ways to answer this question is to see how they approach the business in the long term, through their knowledge of the rest of the world.
This is slightly different from product of company knowledge, because its not about the product or the value of their offerings. It's about understanding how it links up to the bigger picture in relation to holistic financial planning.
What does your insurance agent or financial consultant understand about the various offerings there are in Singapore? For example, a) The fact that you can purchase insurance online through direct purchase b) There are other agencies which have more or different offerings or agency-only offerings c) Or structures like Money Owl
d) Etc. A good insurance agent will show you that they know how to see outside of their own world, outside of their own company.
This will show you that they are aware of what they are up against in their business and how they can conduct their professional service in the long term.
They can also acknowledge weaknesses of their product or weaknesses of themselves as consultants, and all these little things will help add to a very fruitful long-term professional relationship.
4) Lack of Hypocrisy
The Answer to: Is this the right agent for me?
Most clients reach this stage after acknowledging the product is good and useful. This is where its important for them to consider whether they want a relationship with the insurance agent/financial consultant. I.E: Whether they have the same values.
If the consultant suggest that you buy a specific plan, do they do plans like that for themselves? [Especially if they are in the same demographic as you, in relation to age or income.]
This is important because you want to understand where the motivation comes from. You want to make sure that you are not just signing up with someone who is glamorous, who speaks very well and quickly, who has a nice pen or car.
The most basic example, of course, is if someone tells you to buy a whole life plan, and they happen to be in mostly the same demographics as you, and the same logic they used on you to purchase a whole life plan applies to them. If they don't have a whole life plan, or have difficulty being upfront and transparent with you about their plans, then that's a pretty huge red flag. So ask. The alternative to them being a hypocrite is simply speaking, they're just not in the same scenario as you, so they can't treat a financial solution for themselves in the exact same was as they can treat you. A doctor who suffers from arthritis does not diagnose a patient with cancer in the exact same way as he treats his arthritis, so that seems like a fairly reasonable comparison.
But if the conversation gets difficult, uncomfortable or even unanswerable [frankly speaking, a financial planner should have knowledge of his OWN financial plans at his fingertips], you may want to look elsewhere for a better consultant.
Like right here, maybe? ;)
As one of the Top Financial Bloggers in Singapore (Feedspot, Withcontent.co), I would be happy to answer any emails and questions you may have, as I have been doing for my readers over the past few years - especially about Insurance and Investing, as it is my forte of personal and professional knowledge.
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Money Maverick is a Licensed Financial Consultant with MAS, who specializes in Investments and Critical Illness Insurance.
The views on his blog are strictly of his own opinion and have no affiliation to any of the companies he works with.
Here are some of my resources on:
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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
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