by Ryan Ong
A LOT of Singaporeans think Financial Advisers (FA) only sell insurance, but that isn’t all they do in this day and age. While insurance is part of the financial planning they do, most FAs take a holistic long-term view. Many prefer to work at building lifelong relationships, helping their clients all the way to retirement; and that means they need to do more than sell policies. Here are some other things you can get them to do for you:
What exactly is a Financial Adviser (FA)?
In Singapore, FAs are licensed by the Monetary Authority of Singapore (MAS) under the Financial Advisers Act. Depending on the qualifications they’ve received (FAs do plenty of tests and exams to qualify), different FAs are authorised to offer different types of financial products, and dispense different types of financial advice. Insurance policies are just one aspect of their work.
Most FAs can also do the following:
1. Compare insurance products to give you the best solution for your needs
It might surprise you to learn that some FAs don’t just sell products from one insurer. Because insurance is just one facet of what they do for you, some FAs are willing to compare different policies for you depending on your lifestyle needs and affordability to suit your needs and get a better deal.
Some Manulife FAs, for example, will compare different insurance policies to make sure you get the right products within your budget. They can end up recommending or selling policies from other insurers, if they feel it’s a better fit for your portfolio*.
This isn’t to say FAs who work with specific insurers are bad; they are just more focused on helping certain demographics. But if you’d feel better with an adviser who will compare across the industry for you, know that there are many who will.
(*That’s why a lot of new FAs, who often seek to help families and friends as their first clients, tend to end up with the Manulife Financial Advisers; it lets them pick from a wider range of options, to deal with the individual cases that they’re intimately familiar with).
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2. Help with your retirement planning
For most Singaporeans, retirement planning is quite straightforward (just decide who gets the house, the car, and nominate someone to get your remaining CPF monies).
However, FAs would be around to help if your legacy planning is more complicated. For example, if you pass away unexpectedly and your 15-year-old child is to inherit the house. Or if you own a business, which is to be inherited by two or more children; and you want to establish rules on whether and when that business can be broken up and sold.
Most FAs know the proper safeguards when handling retirement planning, and can at least refer you to the most appropriate and cost-effective experts to help.
3. Check up on other investments you’re considering
Different FAs will, depending on their network and qualifications, offer different depths of service. However, all of them understand how to build your portfolio for retirement or other purposes. They will know the right level of risk, and whether a given asset fits your portfolio.
This makes FAs a useful source of advice, if you are considering different investment opportunities. For example, if you want to invest money to help your children open their own café, your FA can determine how this will impact your portfolio, and make changes accordingly (or frankly advise you against it, if that’s what must be done).
FAs can also research alternative investments you’re considering, such as gold exchange-traded funds or property investments, and determine if they are viable additions to your portfolio.
Due to their extensive involvement in the finance industry, FAs are also more aware of potential scams, or entities on the MAS watch list (these entities often rebrand themselves to confuse the public).
4. Continuously rebalance your portfolio to fit life’s changing circumstances
Proper retirement planning is not done in a single session. You’ll need to rebalance your portfolio (the various assets that make up your wealth) on a regular basis.
One example of this is age: As you get older, your portfolio should shift from growing your wealth to protecting it. This means exchanging riskier, high return assets, such as equities, to safer assets like Singapore Savings Bonds, or even simple fixed deposits.
Also, your changing financial situation can require quick, drastic changes. If you’re suddenly retrenched, for example, you may need to change your insurance policy to something with lower premiums.
You can get your FA to do formulaic and calendar based rebalancing, to deal with these.
Formulaic rebalancing means your FA can recommend changes to the assets in your portfolio, when they no longer meet a planned asset allocation (this happens as a result of changing values among various assets, from stocks to cash).
Calendar based rebalancing is often done annually or semi-annually. Your FA will rebalance your portfolio, will deal with your changing age, along with new needs such as sending your children to university, or buying a new house.
5. One-stop value-added information source
What are the implications to your housing loan when the American Federal Reserve imposes an interest rate hike? What does it mean for Singapore Savings Bonds when the Singapore Government Securities Yield falls?
If you don’t have the time to find out, your FA is a quick source. Besides being able to explain how current events are going to impact your portfolio (or your wallet), FAs are the most common intermediary between the finance industry and the lay person. They’re a good way to get smart about fluctuations in the market, and to better understand the financial world.
In personal finance, bad decisions often come from a lack of understanding; FAs explain situations, which reduces drastic mistakes like selling off your assets in a panic.
If something in the news alarms you, be sure to call them before you react.
This is an editorial series done in partnership with Manulife Financial Advisers.
Featured image by Sean Chong.
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