Author Archive

Posted on July 12, 2010 - by Eng Tiang Chuan

Windfall For Jumping Ship

The good times are back! And it has spread to the life industry; in the form of firms dangling top dollars to lure top performers. The Straits Times article – Windfall for jumping ship, published on 10th July 2010 highlighted this phenomenon.

According to the article, “total compensation package could range from a few hundred thousand dollars to $1 million on top of usual commissions”. And “to sweeten the deal, the insurer will pay a portion of about 30% of the compensation package as an upfront cash incentive when the agent joins the firm”. These are to compensate the agents for losing the renewal commissions on the old policies when they jump ship. Of course there are no free lunches in this world. The package is tied to a sales quota.

The article also pointed out the risk of policy churning. Policy churning is the surrendering of an old policy and using the proceeds to buy a new policy to generate commissions for the agent. Read more…

Posted on June 29, 2010 - by Eng Tiang Chuan

It Comes From Within

If you have been approached by an Independent Financial Adviser (IFA) before, you would probably been told that IFAs can offer products from many providers and put client’s interest first. There is a fact and an opinion in the statement. The fact is that IFAs does have access to many different products from different providers while putting client’s interest is an opinion. Having access to different does not mean the IFA will put the client’s interest first and source for the best deal. The adviser might take advantage of the situation and opt for the products with the best commission structure instead!

In an Straits Times article on 26th June 2010, Excuse me, are you an independent adviser?, the issue of volume bonus was raised by Lorna Tan. Read more…

Posted on April 17, 2010 - by Eng Tiang Chuan

A Super Return Fund?

There was a report on Wednesday’s (13th April) edition of The Straits Times about the staggering returns that a novice fund produced in 2009 (Novice investment fund outperforms big guns). I decided to check out that fund’s website.

According to the article, the fund was named by Thomson Reuters as the “best performing Singapore-registered fund”. The fund returned 155% in 2009 vs the 30% produced by the MSCI Asia index. The article also mentioned about the good individual returns produced by the fund managers from “over the six years to September 2007″. There was no mention of the 2008 returns. The following are the returns listed on the website.

Read more…

Posted on April 6, 2010 - by Eng Tiang Chuan

Scams Are Getting Around The System

In Singapore, many consumers have the impression that products sold here are safe due to the strict regulations. However, contrary to popular belief, not all regulations are stringent. Ironically, scammers have made use of this thinking to con others.

Take the example of landbanking. In the UK, landbanking is considered as a form of Collective Investment Scheme (CIS) and the relevant administrative and legal setup is necessary to continue sale to the public. However, no landbanking company has done that and landbanking per se is not allowed. It makes one wonder why would a legitimate business avoid the regulations. The situation here is different. Landbanking activities are not regulated and roadshows and advertisements are a common sight. Sadly, UK media reports about how landbanking companies have been having a field day in Singapore when their activities are banned in the UK have surfaced. Recently, one prominent firm have been placed under the MAS Investor’s Alert List. Read more…

Posted on September 19, 2009 - by Eng Tiang Chuan

CPF LIFE – How It Works

CPF Board has recently released more details on the CPF LIFE Scheme. The CPF Life Payout Estimator and Information Booklet can be found on their website here – CPF LIFE Website. I’ve done some comparison between the CPF LIFE vs Commercial Annuity already, I’ll do some simple comparison between payouts under the new CPF LIFE vs Minimum Sum Scheme (MMS).

The Minimum Sum Scheme

Depending on your birthday, the corresponding  Minimum Sum (MS) will be different for different ages. This MS would provide a monthly payout that would last approximately 20 years. The prevailing Minimum Sum (MS) is $117,000.

The Draw Down Age (DDA), ie when you can start receiving the payout, is different for different ages.

Table 1 MMS DDA

Assuming a CPF member aged 55 having the MS of $117,000 fully in cash, he can start receiving a monthly payout of $1,040 for about 20 years. The interest rate is assumed to be 4% per annum. Read more…

Posted on September 11, 2009 - by Eng Tiang Chuan

Investing With A Gambler’s Mentality

“Do you play the stock market?” “Which stock are you playing now?” Do these sentences sound familiar to you? Many ‘investors’ invest (speculate is a better word..) with a gambler’s mentality, attempting to ‘play’ the market through series of buy and sell. By associating investing with the word ‘play’, investment becomes a game, just like gambling. In any game or sport, different players come with different level of skills and thus, they can be ranked accordingly. Unlike a sports player whose level skills can be evidently displayed in a couple of hours, it could take years to tell apart an investor with ’skill’ and an investor with luck.

A colleague shared with me during a discussion that her client was looking for an IPO fund, ie a soon-to-be-launched fund that is still collecting money. A private banker has recommended such an IPO fund before to the client and he has made money buying into such an IPO fund and selling after a few months. Many stock punters like to bid for IPO stocks and sell them to earn a quick buck. especially during a bull market. No though is given to the fundamentals or asset allocation considerations. This particular banker has successfully sold the idea of a new fund having similar features to an IPO stock. And why sell such an IPO fund=IPO stock idea? The fund can be sold after a few months. And the reason for this type of frequent buying and selling should be very clear. Read more…

Posted on August 24, 2009 - by Eng Tiang Chuan

The Almost Perfect Contrarian Indicator

Advisers are constantly bombarded with email updates and sales kits from fund houses, especially the well performing ones. The account managers are just doing their job promoting their funds. This can also be a good source of information for advisers, be it for performance ranking, latest economic conditions or even academic information. However, adviser must conduct their own due diligence as no fund house would criticize their own funds. Not all advisers do that.

Hot funds are promoted aggressively by fund houses. I remembered a particular fund which managed to do well in 2008 being marketed very aggressively. Performance updates were sent out regularly and numerous product trainings were given. Some advisers were sold and they too promoted this fund heavily to their clients. During a recent in house investment training, an update on this fund was given. Most were shocked by the poor performance. Few knew about it because the performance updates has stopped some time ago, presumably due to the under-performance.

China funds were also promoted heavily recently. And what happened to the Chinese market? Read more…

Posted on August 16, 2009 - by Eng Tiang Chuan

Why Singaporeans Fall Prey to Scams

A couple of weeks back, I received the same sms from 2 friends on the $49 worth of free calls by the 3 telephone operators to celebrate singaporean’s sending out 60 billion local smses. I smell a rat immediately and ask my friend:”Are u sure?”. Both gave the same reply:” No harm trying!”

About 2 years back, a friend was approached to join the Swiss Cash scam. When warned about high possibility of it being a scam, the reply was again “No harm trying”…

Recently, a more innovative “scam” have surfaced. This company sells you gold at a much higher cost compared to the market price. It then guarantees you a 2% interest every month and a buy back at the original bought price when you decide to sell. Many people, including churches, have expressed interest. No harm trying…

A typical scammer will present his scam in this way: Read more…

Posted on June 25, 2009 - by Eng Tiang Chuan

Rebalance Your Way To Better Investment Performance

Is it too early to sound the death knell for long term investment? Can we recover if we lost 10 years of growth in a single bear market?  We offer proof that rebalancing can help. Read the article Rebalance Your Way To Better Investment Performance to find out more.

Posted on June 22, 2009 - by Eng Tiang Chuan

Going crazy over investment loses

The ongoing legal tussle between tycoon Oei Hong Leong and Citibank was reported in the Prime News section in today’s edition of The Straits Times. Such lawsuits have been reported in the past and more such lawsuits can be expected after the market meltdown, according to The Straits Times.

From our conversations with High Networth Individuals (HWI) with accounts in private banks, unlike Mr Oei who is a savvy investor, many of them don’t have the faintest idea on what they are buying into. Scores of HWI investors have been burned badly in this crisis, many of them suffering far worse loses then retail investors. The reason was leverage. Read more…