Monday, March 15, 2010
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.
Sunday, March 14, 2010
High pay of Singapore Government Leaders - a view by Rex
REX comments as follows,
I have heard of the "sour grapes" argument several times before. Some people think that commenting on Minister's pay is a sign of "jealousy". I don't think so. "Jealousy" means you don't have something, you want something others have. In the bible it is called covetousness, and it is one of the sins under the Ten Commandments.
It is not jealousy because, I don't even want $3 million a YEAR. It is good enough for me to have $100,000 a YEAR to be comfortable (even less, if i have been already working for 30 years, since i have accumulated wealth already). I cannot be jealous of something i don't need. What I am going to do with 3 million a year? There is a law of diminishing returns. Too much of something IS COMPLETELY USELESS. It is a waste of resources. It is like forgetting to close the tap, the water just wastes away, it could hae been put to better users. THAT IS THE WHOLE POINT. Not Jealousy.
Another reader suggested that our PM is much better than President Obama, so he deserves his salary. Even if I agree with the reason he gave (which I don't), where do we stop - pay LHL 5 times Obama's salary? Why not 6 times? Why not 10 times? How about 100 times? How do you calculate the number that leads to their salaries, if they are so good?
I went to the Minsitery of Finance Singapore Budget website and check out the Prime Minister's Office staff costs. It was only about 0.3 % of the Total 2010 Budget of Expenditure of Singapore. Oh yes, if you compute salaries by relating to budget of the country, you may say 0.3% is peanuts. But this is unfair playing with statistics.
I give example: An agent who spent 1 hour selling a $1 million house gets commission of 2%($20,000). He coud spent the same time to sell a $100,000 house and get only $2,000. Is there significant difference between the efforts made selling a bigger house and a smaller house, to justify such a huge commission? Commission is a dirty word, because the percentage cuts are pegged to items which don't necessarily relate to the effort put in. Same as in the political scenario as per the salary.
Finally, the argument that "we should move on and stop grumbling about their salary". It is none of my business if CEO of XYZ company gets paid huge amounts. It is a commercial entity and the company is profit driven and can pay him what they like to. However, minister's salary are TAXPAYERS money at source. Taxpayers money can be allocated to many other areas of development in a country, unlike a commercial private company which is duty bpund only to make profits and nothing else.
Open your eyes big big.
Do not be like a deaf frog, cannot hear.
Do not be like sheep ready to be led to slaughter, day after day, year after year.
REX
I have heard of the "sour grapes" argument several times before. Some people think that commenting on Minister's pay is a sign of "jealousy". I don't think so. "Jealousy" means you don't have something, you want something others have. In the bible it is called covetousness, and it is one of the sins under the Ten Commandments.
It is not jealousy because, I don't even want $3 million a YEAR. It is good enough for me to have $100,000 a YEAR to be comfortable (even less, if i have been already working for 30 years, since i have accumulated wealth already). I cannot be jealous of something i don't need. What I am going to do with 3 million a year? There is a law of diminishing returns. Too much of something IS COMPLETELY USELESS. It is a waste of resources. It is like forgetting to close the tap, the water just wastes away, it could hae been put to better users. THAT IS THE WHOLE POINT. Not Jealousy.
Another reader suggested that our PM is much better than President Obama, so he deserves his salary. Even if I agree with the reason he gave (which I don't), where do we stop - pay LHL 5 times Obama's salary? Why not 6 times? Why not 10 times? How about 100 times? How do you calculate the number that leads to their salaries, if they are so good?
I went to the Minsitery of Finance Singapore Budget website and check out the Prime Minister's Office staff costs. It was only about 0.3 % of the Total 2010 Budget of Expenditure of Singapore. Oh yes, if you compute salaries by relating to budget of the country, you may say 0.3% is peanuts. But this is unfair playing with statistics.
I give example: An agent who spent 1 hour selling a $1 million house gets commission of 2%($20,000). He coud spent the same time to sell a $100,000 house and get only $2,000. Is there significant difference between the efforts made selling a bigger house and a smaller house, to justify such a huge commission? Commission is a dirty word, because the percentage cuts are pegged to items which don't necessarily relate to the effort put in. Same as in the political scenario as per the salary.
Finally, the argument that "we should move on and stop grumbling about their salary". It is none of my business if CEO of XYZ company gets paid huge amounts. It is a commercial entity and the company is profit driven and can pay him what they like to. However, minister's salary are TAXPAYERS money at source. Taxpayers money can be allocated to many other areas of development in a country, unlike a commercial private company which is duty bpund only to make profits and nothing else.
Open your eyes big big.
Do not be like a deaf frog, cannot hear.
Do not be like sheep ready to be led to slaughter, day after day, year after year.
REX
Review of GST
Malaysia has decided to defer the implementation of GST (goods and services tax or value added tax) for the forseeable future. They cited the burden and difficulty to low and middle income earners. A similar move by Hong Kong a few years ago was shelved for the same reason.
Why is GST, which is a part of the taxation landscape in the western countries, not acceptable to these Asian countries? I guess the key reason is the lack of a minimum wage and the wide disparity of income in the Asian countries. In this economic environment, GST will be a burden to the low income earners.
I have another strong objection to GST. It is a wasteful tax. It adds to the cost of doing business. The actual cost to business (and ultimately paid by consumers) is much higher than the revenue collected by the state. This situation applies to Singapore as well.
I suggest that GST in Singapore should be replaced by a flat rate tax of 4 percent on salaries and profits. A special approach will have to be taken for investment income (to be discussed separately). The employer can be allowed to recover the flat rate tax of 4% on salaries earned above $1,000 per month and will absorb this cost for employees earning below this salary.
Tan Kin Lian
Why is GST, which is a part of the taxation landscape in the western countries, not acceptable to these Asian countries? I guess the key reason is the lack of a minimum wage and the wide disparity of income in the Asian countries. In this economic environment, GST will be a burden to the low income earners.
I have another strong objection to GST. It is a wasteful tax. It adds to the cost of doing business. The actual cost to business (and ultimately paid by consumers) is much higher than the revenue collected by the state. This situation applies to Singapore as well.
I suggest that GST in Singapore should be replaced by a flat rate tax of 4 percent on salaries and profits. A special approach will have to be taken for investment income (to be discussed separately). The employer can be allowed to recover the flat rate tax of 4% on salaries earned above $1,000 per month and will absorb this cost for employees earning below this salary.
Tan Kin Lian
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