Updated: Apr 23, 2019
In my daily work, I get to meet countless clients during my cold calling visits, and encountered one of the most frequent question of all; “What am I?”
I realised that is a huge confusion on what does a financial advisor(me) do that is different from their insurance agent. I recollected a most memorable conversation with a 72-year old aunty Lim when I knocked on her door one day.
Her first question was “阿弟，你是做什么的?”
In my mind, I thought maybe I could assure her that I am a superhero, like “All Might” in the popular anime series My Hero Academia. (You will appreciate my humour if you are a manga fan)
I totally understood her question, the lines have blurred between financial advisors(or planners) and insurance agents. Some may say they are both, which is not technically wrong, as the word “advisor” in a broad term refers to anyone who advises you financially,
Insurance agent or advisor or superhero?
Let me start by introducing a term “fiduciary” that you might see on articles but is too lazy to google it.
What are fiduciaries? According to http://en.wikipedia.org/wiki/Fiduciary:
A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary and a principal. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.
Allow me to simplify this in english; “If you want someone to advise you financially, you make sure that this “someone” owns a legal license and even more importantly,has the moral principle that he or she is acting in your best interest.”
Sounds easy enough, right? Wrong!!
Checking the license part is the easy one, they will even show it to you before you even ask for it.
The tough part is HOW can you tell whether that someone is morally ethical after only meeting for just a few minutes?
Do you know that not every financial professionals are required by law to act in their client’s best interest. (Read Why there is no fiduciary duties between financial advisers and clients in Singapore?
Legally, not all insurance agents，brokers and even advisors are required to serve in a fiduciary manner, as they represent themselves or their company, they are only required to provide you (their client) with the most fitting “suit-your-need” financial product.
In some occasions, this may become an issue when they are selling preferred products and working more as a salesperson than an advisor, or you may be inflating or misrepresenting your needs.
An advisor who serves in a fiduciary capacity goes beyond finding you the most fitting “suit-your-need” financial product, they put your needs first, and provides you advice and recommendations that will benefit you first. It’s all about you, not me. (I hope by now you can figure out why I thought of being a superhero?)
How do you know if you have found a financial advisor who acts like a superhero?
I guess some of you may trust your instincts but here’s what I would recommend after your initial instincts speak to you;
Unless what you are buying is something that every Singaporean need(for eg. Eldershield) don’t make any hasty decisions
Be honest about what you can afford
Be realistic on what you want to achieve
Do a thorough research on the company that the advisor is working for
If you are internet savvy, (which i guessed you are, since you have found my article), do your Googling homework
Talk to your advisor, try to understand where their loyalty and moral values lies. An advisor should be open to sharing with you their business philosophy, how they choose investments, what their process looks like, any potential conflicts of interest they face, or even how they are paid.
Now back to Aunty Lim, I replied Aunty Lim with a smile,
“林安娣, 我是您的财务顾问。” （“Aunty, I am your financial advisor.”）