facebookIs an independent financial advisor better than one working with an insurance company (say prudential). Do they have vested interests ? - Seedly

Alan Seow

18 Apr 2019

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Is an independent financial advisor better than one working with an insurance company (say prudential). Do they have vested interests ?

Discussion (2)

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Daniel Lee (CFP®)

07 Jul 2018

Independent Wealth Management Consultant at Promiseland Independent Pte Ltd

I second what was mentioned by Tat Tian, To add on:

IMO, an IFA will be in a better position to see and plan things based on your "big picture" and at the end of the day it is the quality of planning that matters and less so about the company and product itself.

Please do not make the mistake of isolating your financial plan and addressing each component independently of one another - Example: Planning for your insurance portfolio without thinking about the consequences it may have on your investment porfolio, etc. That is a key reason why people FAIL in managing their finances.

To provide you with an anology, imagine now that your financial plan itself takes the form of a sailboat.

In general, the purpose of finance - be it corporate or personal finance - is to get you from point A to Point B.

Point A being your present state - where you are today

Point B being your desired state - where you want to be in the future

To get from point A to point B, you're riding on a sailboat that you've built for yourself overtime. There are two key components to a sailboat:

1) The sail - represents things that contribute to your financial success (e.g. investments, savings, lottery winning, job promotion, etc)

2) The boat - represents things that prevent you from drowning due to an unplanned event (e.g. death, disability, illness, retrenchment, etc)

The reason why people FAIL at managing their finances is because they like to isolate their financial plan into different components and address them indepedently of one another. Because of this they end up with two common type of sailboats.

1) Big Sail Small Boat: Gets you from point A to point B very quickly but also overturn very easily (once that happen its game over)

2) Big Boat Small Sail: Prevents the boat from overturning but moves extremely slow and because of that they cant get to point B on time

As IFAs are not limited to the products of a single company, they are in a better position to address both your sail and your boat, someone who can see things from the bigger picture and provide appropriate planning and strategy that will ensure your financial success.

However do be careful as within the IFA industry itself, there are different focuses depending on the advisors themselves. Some might choose to focus on insurance alone while some might choose only to focus on investment alone. So do take the time to "shop" around and find the right advisor for you. For not everyone is suited to be your advisor at the end of the day and it is important to hear the different philosophies and values of the different advisors before deciding on which advisor is best suited to help you manage and plan for your finances.

If i may do some self promoting, I'm an IFA who practices full financial planning, to help you understand what full financial planning is you can visit my website: https://www.sgifa.net/services and learn more about the importance of planning and strategizing base on the big picture. Hopefully the information on my website will help you make an informed decision for that is the reason why it is being created in the first place :)

Cheers

Loh Tat Tian

07 Jul 2018

Founder at PolicyWoke (We Buy Insurance Policies)

All FAs paid (whether be it fixed cost or commission or salaried) have vested interest (technically speaking).

Rather, its more important to see if your needs are fulfilled by the products, and the service that is rendered (and whether he intends to stay in the industry, what are the planning the person has done.

IFAs have an advantage in the sense that they can compare different companies insurance plans and have access to them. But still, the skillset (in terms of T&C and highlight of clauses, planning of your needs) of the FA is more important than the products. The intent of the FA (selling only or covering your most important needs) should be your factor.

Tied Agencies have faster news source and can be more farmiliar with their own products pros and cons. (and easily handled since all products are under one company).

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