For many years since its independence, Singapore has been a model of excellence in governance. However, the situation has grown to be quite pathetic during in recent years. Here are some of the problems:
a) rampant cheating, e.g. land banking, toxic products
b) escalating cost of living and housing prices
c) stagnant wages, stressful and poor quality of life
d) wastefulness, such as the episode on payTV platforms
It is time for our leaders to address these issues.
Tan Kin Lian
Monday, March 15, 2010
Unwillingness to take responsibility
There is a company that advertises regularly on television that sells land banking and other products.
For the past two years, they have been offering their products to investors with an option for the purchaser to cash out at the end of 6 months with interest at 12.5%. On maturity, they find many excuses to delay the payment and kept some investors waiting for more than a year.
Several investors had lodged a complaint with the Monetary Authority of Singapore and the Commercial Affairs Department, but were told to engage their own lawyer on this matter.
This company continued its mode of operation and more unwary investors are being caught in this type of investment. I was told that several millions of dollars are being collected each month. The company was even able to produce a certificate of "Singapore Quality" issued by Spring Singapore.
Some investors asked me, "Mr. Tan, why is the Government not willing to act on this matter, when many ordinary people have complained about being cheated? Does this company have strong connections with certain people in the Government?". I replied that this is not likely to be the reason.
The likely reason is that one agency will point finger that it is the responsibility of another agency, and nobody wishes to take responsibility to act. This is quite typical of Singapore and is a shameful state of affairs.
Tan Kin Lian
For the past two years, they have been offering their products to investors with an option for the purchaser to cash out at the end of 6 months with interest at 12.5%. On maturity, they find many excuses to delay the payment and kept some investors waiting for more than a year.
Several investors had lodged a complaint with the Monetary Authority of Singapore and the Commercial Affairs Department, but were told to engage their own lawyer on this matter.
This company continued its mode of operation and more unwary investors are being caught in this type of investment. I was told that several millions of dollars are being collected each month. The company was even able to produce a certificate of "Singapore Quality" issued by Spring Singapore.
Some investors asked me, "Mr. Tan, why is the Government not willing to act on this matter, when many ordinary people have complained about being cheated? Does this company have strong connections with certain people in the Government?". I replied that this is not likely to be the reason.
The likely reason is that one agency will point finger that it is the responsibility of another agency, and nobody wishes to take responsibility to act. This is quite typical of Singapore and is a shameful state of affairs.
Tan Kin Lian
Professional fees and moral values
Several months ago, I received a letter from a big legal firm in Singapore threatening to take legal action against me for posting an article in my blog about a land banking company. The article was reproduced from the website of a UK newspaper. The article made several allegations about the operations of this land banking company that operates in Singapore.
The letter from the lawyer asked me to prove the facts that were contained in my blog. I asked if their client had written to the UK newspaper to correct the facts, but they refused to answer my question and continued to threaten and harass me.
When I related this matter to a friend, she asked the question, "Does this reputable legal firm feel ashamed of acting for a company that goes about to cheat the public?" Some time later, the legal firm suddenly dropped the matter for reasons that are not clear to me.
I now read a report about Lehman Brothers and the large fees earned by their auditors and lawyers in helping to hide the facts about the financial situation of the company during its last few months. Are the fees for these reputable firms more important than moral and ethical values?
Tan Kin Lian
The letter from the lawyer asked me to prove the facts that were contained in my blog. I asked if their client had written to the UK newspaper to correct the facts, but they refused to answer my question and continued to threaten and harass me.
When I related this matter to a friend, she asked the question, "Does this reputable legal firm feel ashamed of acting for a company that goes about to cheat the public?" Some time later, the legal firm suddenly dropped the matter for reasons that are not clear to me.
I now read a report about Lehman Brothers and the large fees earned by their auditors and lawyers in helping to hide the facts about the financial situation of the company during its last few months. Are the fees for these reputable firms more important than moral and ethical values?
Tan Kin Lian
Coffee shop and the bank
I had a bowl of wanton noodle for $2.50 at a coffee shop. I looked at the ingredients that make up this meal - noodle, soup, meat, chili and more. I thought about at the labor that went into the preparation and the rental that has to be paid for the stall. How can the stall holder survive on the profit margin that goes into this bowl of noodles?
I then thought about the charge of $50 that my bank imposes on a late payment on a credit card and the charge of $80 to transfer a small sum of money. How much does it cost the bank to handle each transaction? It seems to take less labor that making a bowl of noodle.
The banks, which makes billions of dollars of profit a year, forget that many people in Singapore have to work 8 hours a day to earn $50, which is the amount that they charge for a small banking service. Perhaps our Government, which gives the licence to the bank to operate the essential banking service, also forgets this point.
We cannot rely on the free market to determine the banking fees, as there is virtually no competition and the banks are happy to operate a cartel on these excessive charges. The Government has to regulate the fees charged by banks for essential banking services to be at a reasonable level.
Tan Kin Lian
I then thought about the charge of $50 that my bank imposes on a late payment on a credit card and the charge of $80 to transfer a small sum of money. How much does it cost the bank to handle each transaction? It seems to take less labor that making a bowl of noodle.
The banks, which makes billions of dollars of profit a year, forget that many people in Singapore have to work 8 hours a day to earn $50, which is the amount that they charge for a small banking service. Perhaps our Government, which gives the licence to the bank to operate the essential banking service, also forgets this point.
We cannot rely on the free market to determine the banking fees, as there is virtually no competition and the banks are happy to operate a cartel on these excessive charges. The Government has to regulate the fees charged by banks for essential banking services to be at a reasonable level.
Tan Kin Lian
Interest in a sales career
Hi Mr Tan,
I have read your book <Practical Guide on Financial Planning>. I really love the book and find the information very useful and practical compare to many other books i have read. It is very simple to understand too. After reading the book, I have decided to seek your advice of asking you questions regarding about my upcoming career after my national service.
I have decided to go on sales career path and have the intention to become a property agent or an insurance agent. However, I am quite confuse now after reading your book as it makes me feel that a Finacial Planners or advisers are more like having a commision interest at heart rather than wanting to help the customer. May I ask, are most advisers more interested to earn commission rather than to help customers by buying the best product that suit them most.
Is it true that a property agent will earn more money than a successful financial planner? My interest has always been in sales and wanting to become an entrepreneur and run a business of my own in the future. I also have the interest in investment and business related issues. I feel that being an financial planner is the most suitable job for me based on my interest.
REPLY
You can be a financial planning and act ethically to sell the products that are good for consumers, and earn a modest amount of commission to make a living. It is up to you to decide on whether you wish to sell products to earn more commission or to sell the products that give the best long term value to customers.
I have read your book <Practical Guide on Financial Planning>. I really love the book and find the information very useful and practical compare to many other books i have read. It is very simple to understand too. After reading the book, I have decided to seek your advice of asking you questions regarding about my upcoming career after my national service.
I have decided to go on sales career path and have the intention to become a property agent or an insurance agent. However, I am quite confuse now after reading your book as it makes me feel that a Finacial Planners or advisers are more like having a commision interest at heart rather than wanting to help the customer. May I ask, are most advisers more interested to earn commission rather than to help customers by buying the best product that suit them most.
Is it true that a property agent will earn more money than a successful financial planner? My interest has always been in sales and wanting to become an entrepreneur and run a business of my own in the future. I also have the interest in investment and business related issues. I feel that being an financial planner is the most suitable job for me based on my interest.
REPLY
You can be a financial planning and act ethically to sell the products that are good for consumers, and earn a modest amount of commission to make a living. It is up to you to decide on whether you wish to sell products to earn more commission or to sell the products that give the best long term value to customers.
A few countries have banned the payment of commission on financial products. Singapore may follow this trend in the future. Under the new system, the financial adviser will be paid a fee charged transparently to the consumer. This is like paying a fee to the doctor for medical advice. At that time, the conflict of interest will be removed.
It is also all right to be a property agent.
Wish you all the best in your career.
Opposition chief tells Singaporeans: Don't be afraid
INTERVIEW -
Kenneth Jeyaretnam, whose late father and veteran opposition leader
was bankrupted in defamation lawsuits by the ruling People's Action Party (PAP),
said his two-year-old Reform Party was encouraging people
to come out and offer different views.
"Firstly, do not be afraid. You have a right to exercise, to have a say, in how your country is run,"
Jeyaretnam told Reuters in an interview at his apartment...
"Singapore is not going to collapse.
Competition in politics is as necessary as it is in economics to ensure efficiency."
said his two-year-old Reform Party was encouraging people
to come out and offer different views.
"Firstly, do not be afraid. You have a right to exercise, to have a say, in how your country is run,"
Jeyaretnam told Reuters in an interview at his apartment...
"Singapore is not going to collapse.
Competition in politics is as necessary as it is in economics to ensure efficiency."
Commission paid to financial advisers
Dear Mr. Tan,
First UK, then Australia is next to cut commission. When will Singapore follow?
By Elizabeth Fry
Published: June 28 2009 17:32 | Last updated: June 28 2009 17:32
The large funds running Australia’s $A1,000bn (£490bn, €573bn, $800bn) superannuation industry have finally bowed to public and political pressure and moved to scrap commissions charged by financial advisers in favour of transparent upfront fees.
The charter has been developed by the Investment and Financial Services Association and has to some extent pre-empted new government regulations that are likely to be introduced following the federal government’s first ever review of the world’s fourth largest pension market.
As of early next year, the commission system will cease altogether. This is likely to be well received by investors who are deeply distrustful of the way “super” funds bundle their fees and administration charges together to hide the cost of each service. They are equally distrustful of financial planners who demand upfront or trail (annual) commissions for selling particular financial products.
Once the charter is approved by regulators, super funds and advisers will be forced to differentiate between real advice and general plan service. For the first time superannuation investors will have the choice to opt in or opt out of advice payments depending on their circumstances.
Investors will be charged with instructing financial planners on how much advice they want and are prepared to pay for. Thus, they will be able to see what they are paying for and can match that payment with the value they get for advice.
Richard Gilbert, chief executive of the IFSA, says: “The charter makes a major statement to the industry. The commissions were the focus of a debate that raged for seven years. We were distressed by the tenor of the debate and the only way to fix it was to deliver a result.”
In his view this puts Australia firmly in the lead in terms of disclosure and investor friendliness.
“Commissions aren’t often disclosed in Asia, there is not a lot of transparency around commissions and brokerage for the US 401k plans and in the UK the commission figures are high,” says Mr Gilbert.
The charter, which applies only to the IFSA’s members, who make up the lion’s share of Australia’s retail and wholesale superannuation, fund management and life insurance industries, has not stopped at restructuring fees and abolishing commissions.
Under the new code, funds will be accountable for misleading advertising and it is specific about what can and cannot be said.
All promotional and advertising material must provide actual past performance figures so that super members can be confident that the information they see relates to an actual investment option.
And while it is currently common practice for some in the industry to use performance data based on averages to promote or advertise products, the use of average or aggregated performance and fee data has been banned following funds’ poor performance in the wake of the global financial crisis.
“Advertising is a very big deal,” says Mr Gilbert. “We were forecasting future returns for 40 years based on past performance when 16 of those years saw a bull market,” he says.
“Using past performance and fee information as the basis of projecting future investment outcome is misleading. The returns over the last 18 months have especially highlighted the risks of making long-term projections.”
Other significant measures contained in the charter include making performance reporting an industry-wide standard so consumers can compare “apples with apples”.
In addition to better disclosure, better reporting and stringent marketing rules Mr Gilbert expects the charter to foster competition. He wants to see the rules around default super funds changed.
“The retail funds in Australia have been locked out of the mandatory super scheme for default funds and there are monopolies and oligopolies developing and for which rent is being charged. We want to be in that competitive race,” he says.
He is referring to last year’s decision by the Australian Industrial Relations Commission, which returned many key industry funds to default fund status.
This decision effectively resulted in a return to the “closed” system of 1992, designed to benefit industry funds that the AIRC was historically linked to at the expense of competitors that could offer more features.
Industry funds, which account for about half the workforce, claim competition for default funds will only become a reality when the retail funds perform as well as the industry funds do. The new code may go some way to help achieve that.
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