Expect proper advice from an independent financial adviser

A consumer asked my advice about a disability insurance product offered by an independent financial adviser. The adviser recommended one product and did not give the benefit illustration.

I asked the consumer to get the following explanation from the adviser:

a) What is the coverage under the product
b) What is the premium rate charged by several insurers offering the same product?
c) Which product does the adviser recommend, and why?
d) How much commission does the adviser get from selling the product?
e) Provide the benefit illustration

The adviser owes a duty to give proper advice to the consumer. The consumer should not expect someone else to explain the product, when it is the adviser that is earning the commission from selling the product.

If the adviser is not able to give clear explanation about the product, the consumer should not buy the product.

If the consumer wants confirmation, the consumer can approach FISCA (www.fisca.sg) to get the assistance of a knowledgeable volunteer to go through the benefit illustration and verify the points against the explanation given by the adviser to the consumer. An administration fee of $50 is payable for this assistance (which does not amount to financial advice).

Tan Kin Lian

Photos of Vientiane, Laos

Need for new consumer agency in USA

The vested interests wish to kill reform but President Obama is determined to set up a consumer protection agency. It will require banks to offer low risk simple versions of mortgages and credit cards. Read this report.

I hope that America succeeds in this reform and that other countries (especially Singapore) will follow soon.

Features of a good investment linked policy

A good investment linked policy has the following features:

a) offers term insurance and critical illness coverage at guaranteed rates for fixed or decreasing coverage
b) allows savings to be invested in an equity or money market fund with an upfront charge of 2% or less
c) have an annual fund management fee of not more than 1% (for equity) or 0.5% (for money market fund)
d) have a fixed upfront fee and a monthly administration fee

This product to be explained in a brochure that can be downloaded from the website. The product is kept simple and is easy to understand. It can be bought over the counter or through the internet.

This policy allows the consumer to meet its protection and savings needs in an insurance policy that offers fair, competitive and transparent charges.