Professionalism in the finance industry

Posted on 07 March 2011

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  • HP

    Hey Wilfred
    You can have your old job back.
    This time we give you a car.

  • Landon Leo

    Wilfred.

    Hats of to you from the bottom of my heart. So far you had been very bold with your convictions.

  • http://newnation.sg Shihan

    Question from a viewer:

    – IFA’s are shut down for compliance issues far more often than the “big” guys. Is Wilfred promoting the more seedy part of the industry?

    – Working for a larger corporation gives an agent/planner/consultant a better grasp of internal policy and that allows them to get their clients better deals/faster claims/ Why would anyone choose an IFA?

    – How does he justify charging for consultation if he can’t guarantee success? Wouldn’t it be best to have an agent whose income is pegged to the client’s investment value?

    – Isn’t it strangely arrogant to assume that all commissioned staff are motivated solely by the sale and that all IFAs are ethical based on something as ambiguous as commission VS salary?

    – When representing several different companies, isn’t it in the IFA’s best interest to sell the plan with the highest commission and not the “best” plan for the client?

    – Isn’t Mr Ling a commissioned agent as well? Just that he charges extra for advice?

    • Seth

      – True, there are fly-by-night operations that one should be wary about, which goes to show that one should have due diligence when picking an IFA firm to deal with. In the first place, there is a difference between an IFA firm and a FA firm. Fly-by-night operations will not choose to be “Independent” because of the strict regulations.

      “Big” guys run afoul of regulations too. Consider the recent case of the new RNF regulations not being properly adhered to by a large insurance company and several banks. In fact, misselling occurs very rampantly in so-called “big boys” in the industry.

      The sad thing is that being compliant doesn’t mean being ethical. There are plenty of dubious financial products being sold despite them being compliant.

      – How would working for a large corporation give a better grasp of internal policy? If anything, one would expect the degree of bureaucracy to be proportional to the size of any organisation.

      That aside, tied agents like to talk about “better deals/claims” with no basis. IFAs can negotiate with insurance companies for better deals and claims the same way a tied agent can. In fact, an IFA can be familiar with different insurers and hence get the best deal for the client. For example, he can know that Company A will impose higher premiums on someone with a higher BMI, and Company B is more paranoid on blood pressure, and help the client get the best deal possible based on his condition. If someone with a high BMI approaches a tied agent from Company A – true, this tied agent may have an exceedingly good grasp on his company’s policy on charging higher premiums for high BMI people… And do what? Negotiate with the underwriters? An IFA can do that, or better still, bring the client to other insurers.

      – Does a doctor guarantee success if you pay him for consultation?
      Does a lawyer guarantee success if you pay him to fight a legal case?

      – Commissions are an inherent clash of interest. Tied agents who can only distribute a certain type of product is also a clash of interest.

      These clashes of interests can be minimized. IFAs minimise the clash of interest in distribution. Fees minimise the clash of interest in remuneration. The industry should evolve to a more progressive system.

      Not all IFAs are ethical, but all ethical financial advisers are IFAs.

      – Again, one must practise due diligence in picking his/her financial adviser.

      There is also a difference between and IFA and a normal FA. Both can distribute products from multiple companies, but the FA company does not need to justify his recommendation of the highest commission product. An “Independent” FA by regulation needs to justify his recommendations.

      Again, no all IFAs are ethical, but all ethical financial advisers are IFAs.

  • http://www.wilfredling.com Wilfred Ling

    Shihan,

    There is an intensive related discussion Tied Agent’s Dilemma

  • http://newnation.sg Shihan

    The reader says you’re dodging the question. :) He/She wants some answers!

    • Seth

      The reader is probably a tied agent just trying to cast aspersions on the IFA platform to defend his own regressive system.

      He is completely right that the IFA system is not perfect. No system is perfect. However, it is a much better distribution model than the tied system.

  • joel

    Well,selling insurance is still a sales job.Call yourselves whatever you like,you re still a salesman.A salesman is a salesman and only a fool or a liar will say that they are not motivated by commissions.Theres nothing wrong in that!Salesman are professionals.Whether you follow the model of Joe Gerard,Tom Hopkins,Ben Feldman,George Soros,Mary Chien or Lee Kuan Yew,nothing happen until the Saleman sells his goods or ideas!A doctor is a professional.In the modern context he promotes “Drug Therapy” But always remember there are other therapies available like Chinese Medicine(5000yrs history),Ayuveda,Homeopathy,Persian medicines.Arabic Medicines,Herbology and others therapies that are cheaper and can be better than what the Doctor has to offer!Are doctors really not motivated by money? eheheehh maybe but i doubt so!So the bottom line is this.Try your best not to hurt anyone,its OK to be greedy!!Tell to the Morgans,Schiff,Warburg,Rockerfellars,Lehman or even Rothschild not to be greedy !!Heheheh they will give you a tight SLAP !Be something like Jim Roger(the former partner of Soros)!who is now in Singapore.Who put it clearly that the American Economy is going under! and the US dollars is history!—-So,Leave the salesman alone,Let him do what needs to be done!!Without him,we all,especially you managers and directors are NOTHING!!

    • http://newnation.sg Shihan

      You may want to consider paragraphing. Dumb people like myself cannot read through your sarcasm.

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