High income and integrity

A young graduate is torn between the attraction of becoming a financial adviser, with the promise by the agency manager of 3 to 4 times of the typical earnings, and the knowledge that she might be causing harm to her friends and relatives. The agency manager had advised her to approach the people she knows and get them to switch to the investment-linked policy that is actively sold by their insurance company. She realized that this policy has a high deduction from the consumers.

She asked for my views on this important choice. Should she take up the job to be a financial adviser?

REPLY
The easiest way to earn a lot of money is to sell products that give a large margin to the seller (i.e. the financial adviser and the insurance company), but this must surely be at the expense of the buyer. There is no magic that can give a good income to the seller without harming the buyer.

Some new financial advisers do not know that they are doing harm to their friends and family members, because they have been misled by the agency manager. Some financial advisers know the truth, but they only take care of their own interest and do not bother about the people that they are harming.

It is easy to fool consumers to switch to a new investment-linked policy. I have seen many cases where the financial adviser tells half truths and blatant lies to an unsavvy customer, such as:

• They can earn 9% projected return (This is not true, as the 9% is just an assumption which is too optimistic in the uncertain environment today)
• The adviser does not tell the client that there is a big deduction that can reduce the yield of 9% to 4% or lower. If the yield of 9% is too optimistic, the net yield will be terribly low.

It is blatant dishonesty, but seem to be quite common. Many people are just taken for a ride. By acting dishonestly, the financial adviser can earn a high income, and the agency manager can also take a big cut. It also earns a big profit for the insurance company.

You have to decide for yourself which route you wish to take. It depends on your conscience. I believe that it is better to earn less, but in an honest way. You can also talk to your parents and get their advice.

Tan Kin Lian