Wednesday, April 14, 2010

Singapore Talking - COE, 10.30 pm Sunday 18 April

I have been invited to be in the panel on Singapore Talking this Sunday at 10.30 pm on Mediacorp TV. The topic is on the high price of COE. I will be giving my views about moderating the fluctuation in price of COE and more importantly, about making public transport and taxis more comfortable and affordable.

Confrontational politics

Read this letter by Chee Soon Juan, published in the Straits Times

Interactive Health Tutorials

Visit this website.

Good signages to show directions

It is important to provide good signages to help people to find their way.  In recent years, there is too much focus on getting revenue for advertisements that result in signages being hidden or difficult to find. Here are some examples:

1. Whole buses are now being painted as a moving advertisement. It is difficult for the commuter to know if it is a public bus.
2. There are many advertisements in MRT stations and bus interchanges that the essential signages, such as EXIT and PLATFORM number, are difficult to find.
3. Even gantry gates of car parks are being converted into advertisements for property agencies.

When I visit an unfamiliar place, I have a lot of difficulty to find the way due to poor signages, but I get distracted by many advertisements.

There has to be a balance between the desire for advertising revenue and the need to give property signages and instructions to commuters. I hope that the regulatory authority comes into the picture. If the transport operators are restricted in their advertisements, it will create opportunity for other media, such as the newspapers and the television. This may be better for all.

Tan Kin Lian

Consumers can force reforms

Read this post in FISCA about the work being done by the Consumer Union of USA to force reform of bad practices. Join FISCA to strengthen consumer protection and education!

Send an email to TKL

kinlian@gmail.com

New MRT interchange stations

The best interchange stations were at City Hall and Raffles Place. It was possible to change from one line to another on the same level. This was possible as the two lines were developed at the same time.

The worst interchange stations were at Outram Park and Dhoby Ghaut. The commuter has to walk a long distance to change from one line to another. Similarly, the walking distance between the two lines at Bishan is quite far. When a new line is built at a later time, after an existing line is operational, it is necessary to build the station at a distance from the existing station, due to safety and engineering reasons.

But there is another approach that allows the interchange stations to be build close together to reduce the walking time. In developing the new station, it is possible to build a new platform for the existing line, and to divert the existing line to use the new platform at a later date. I hope that the engineers consider this possiblity, so that the walking distance is reduced.

Tan Kin Lian

Polite drivers

Recently, I found a few instances of polite drivers on the roads in Singapore. On two occasions, I had to change lane at the last minute, due to unfamiliarity with the road. The cars behind slowed down to let me pass. They did not sound the horn.

On another occasion, I was waiting to make a left turn. I was temporarily distracted and waited much longer than needed. The car behind waited for one minute before sounding the horn softly to remind me. It was quite nice of the driver.

Tan Kin Lian

Autograph session for Financial Planning Book

I will be at MPH at Citilink Mall (1 Raffles Link, Basement B1-26A) at 7.pm to 8.30 pm on Friday 16 April for an autograph session of my book, Practical Guide on Financial Planning. If you are interested to buy an autographed copy of my book, please turn up for this session - no need to pre-register. Pass the word around to your friends.

Land banking story on Channel NewsAsia

Channel NewsAsia interviewed me for a story on land banking. It will be telecast on Sunday 18 April, 9.30 pm. A staff of a land banking company has also said that the boss of that company has also be interviewed.

Adjudication in FIDREC

Some people have complained that they were unfairly treated at the FIDREC adjudication hearing. Perhaps they form a minority and that other cases had been handled satisfactorily and fairly. I invite you to share your story in this survey. I may use some of these stories to provide feedback to the appropirate persons, but will not reveal your identity.

Transport woes in Singapore

Read this article.

My comment
The solution is to improve public transport in Singapore and to make better use of taxis. More taxis should be put on the road and the cost of taxi fares should be reduced, e.g. by removing some of the tax on taxis and treating them as public transport.

Selling life insurance

There were some questions asked about how a life insurance agent can make a living, if the agent only sell term insurance to earn a low rate of commission.

Here is my answer. Similar to a general insurance agent or a stockbroker or a doctor. Earn a remuneration that is based on the value of the service that is given to the client, and not a high rate of commission that exploits the ignorance of the client.

A general insurance agent earns a commission of 15% on the premium that is paid to cover the risk. In Europe, the commission for motor insurance has decreased to 5% of premium, as the premium is high and the work involved is routine. The insurance agent can still make a living.

A stockbroker charges a commission of 0.3% of the invested sum, share between the firm and the remisier. They do not have to take away  150% of the annual amount of savings.

The doctor earns a fee based on the time spent on consultation and a markup on the medication. Due to competition, the fee is reduced to a rate that the ordinary people can afford. The doctor has to pay the rental of the clinic and the staff to man the reception.

Life insurance sales can also be made using the above approaches. Many people need a large amount of term insurance, say $500,000. They also need disability insurance and medical expense insurance. They can afford to spend up to 2% of their earnings (say $500 to $800 a year) to cover these personal risks. A 15% commision on this premium can be quite attractive.

The life insurance companies have to change its mode of marketing. Most importantly, they have to remember their responsibility to provide good value products and take care of the financial well-being of their clients.

Tan Kin Lian

Experience of an insurance agent

Dear Mr. Tan,
As im currently a new agent with one of the big insurance companies in Singapore, im finding its a lot different from what I was told or expected.
For example at the start we were told to emphasize needs based selling in order to meet the needs of our clients (basically what the MAS regulations said). Later I found out that nobody does needs based selling and all we do is get clients to sign on empty forms so we can go back to the office to fill them up later. End result : Client is clueless about what their needs are and how we are meeting them, if at all. Instead of talking to them about what THEY want, we spend our time giving presentations about interest rates and talking about how our relative racked up a huge hospital bill without insurance to pay for it.


The commission structure is also highly flawed and contributes to the high turnover rate of agents in the industry. There is absolutely zero incentive or point for agents to recommend products with lower commission rates. In fact, meeting a client to sell a term plan actually loses an agent money(unless it is a very big term plan) because the commission rate is simply not high enough to pay for the time + bus/MRT fare involved.

In my case, neither I or my colleagues were ever given product training on anything but the products with the highest commission rates. Also, this is actually a job that requires you to spend money in order to make money. The problem is that for most new agents, they will not be able to set sufficient appointments or close enough cases to make money for the first 1-2 months at least, unless they have a lot of contacts who are interested. The end result is they spend hundreds of dollars in food and transport expenses, and in the end all they keep hearing is "I'm not interested", and quit because they are heavily in the red and still can't find people who wants to buy insurance. It would be better if new agents were given a basic allowance of $400-500 for living expenses till they are seasoned enough to close cases on a regular basis.

With the high turnover rate of agents in the industry there is a high incentive to simply not train agents properly since a manager is spending too much time training someone who, according to statistics, will quit in a month or two anyway. Simply give them basic training, send them on whatever appointments they can make, and see if it works out. If not, oh well, go recruit more people. I was given a few days of training total, only a few hours of which was product related, and was told to go to my first appointment with the aim to do a presentation and simply convince him to buy and not ask questions. I ended up making stuff up when the client started asking about things I was not taught about. I felt pathetic.

As it is I am currently in the unenviable situation where I spend money travelling back and fro my office, making phone calls, doing surveys, doing coldcalls, mainly to hear phones ringing that people never seem to pick up (I never had any idea how under-utilzied handphones were in Singapore before) and I am not even able to set a single appointment because people keep postponing or simply dissapear off the radar and never pick up their phones again. All of this is costing me money and worst of all I cannot see a way to improve my situation. I do not have any senior agents I can look to for guidance since they are all busy rushing to meet quotas and my manager just keeps telling me to go out, do more surveys, make more phone calls, find and meet people, etc, but it is simply not working.

I have no clue where, exactly, I am supposed to find people interested in buying insurance or doing investments since almost everyone i meet simply recoils in horror at the mere mention of "savings" "investments" "protection" or any other key word that you can possibly use.

A scary amount of middle aged adults still believe themselves immortal and that they cannot possibly get hospitalized or worse, affecting their ability to provide for their family. Most young working adults simply go from paycheck to paycheck, saving $0 every month and heading straight for disaster the moment a situation calls for usage of emergency funds which do not exist, or they just dump a token amount into their bank account every month that dissapears into the newest xbox or ipod the moment they get enough. Most young working adults do not even have a clue what medishield or medisave is, other than that it is something CPF related.

I feel like im constantly rolling dice and seeing if I can get a lucky combination just to find a single interested person. I would like to continue on in this line of advising people on financial planning, but I do not see how as most people simply want to go through life without any financial planning or insurance protection at all. And actually I don't even know whether what im doing can be considered financial planning anyway.

How to spot a ponzi scheme

An early example of a ponzi scheme in Singapore was the Gemini Chit Fund that was promoted 40 years ago. Here is a brief story about this it. A more recent example is the Sunshine Empire.

In a ponzi scheme, the promoter promised you an attractive return. The early investors received that return. They were excited and put in more money. They encouraged their friends to join in the investment. The promoter was able to use the money received later to pay off the attractive return to the earlier investors. As long as more money came in, compared to the payouts, the promoter was able to continue to operate the sheme. During this time, the promoter was also able to siphon off the surplus into their pockets. When the ponzi scheme collapsed, all the remaining investors lost all of their money.

In terms of size, nothing beats the ponzi scheme operated by Bernie Madoff in USA, as described in this story.

There are many ponzi schemes now being operated in Singapore today. The mode of operation is the same. The story could be the fantastic growth of land plots, wine, industrical chemicals or other products. Heard them?