Author Archive

Posted on March 11, 2010 - by Wilfred Ling

Should you terminate your lemons?

I have many clients who bought unsuitable products and as a result have to postpone their retirement for many years. Let’s say if they had just bought simple products, they would have retired at age 55. But because of the unsuitable products, they have to postpone their retirement to age 70.

Most of the time the unsuitability arises due to two reasons:

1. The product has an extreme high expense ratio and thus much of the returns are taken away through effect of deductions and Read more…

Posted on January 31, 2010 - by Wilfred Ling

What is a junk Will?

When comes to Will writing, some people either do a DIY Will or get a lawyer to do it. Most of the time the Will is either invalid or is valid but practically useless. Why? A Will is merely a tool. If the tool is used wrongly, it is a rubbish tool. An analogy is like buying an insurance product:

If you ask an insurance salesperson for specific product advice, the insurance person can give product advice and help you transact it. However, it does not mean that the insurance product is suitable. You may have bought an insurance product that is exactly what you wanted but whether is it suitable is quite another story. That’s why countless people have bought junk insurance products that are as good as no insurance. Read more…

Posted on January 13, 2010 - by Wilfred Ling

Best recommendations may involve DIY

I have done many financial plans for fee-paying clients. Often at the end of the plan, I’ll make some recommendations. Most of these recommendations require the clients to do it themselves simply because I cannot do it. For example, revoking unnecessary life insurance nominations is one example. Other times it involved buying a product directly from the product manufacturer. I believe that to achieve financial independence, everyone must be prepared to do their part.

They cannot outsource everything to a financial planner. The financial planner can clarify the direction and provide the recommendations. But at the end of the day, it is the clients that own their own wealth – they must do their part by doing the DIY bit. They can ask me whom they can ask or approach to do the DIY and I’ll give them as much information as possible. But I cannot handhold all clients to do everything. There are some common transactions that I can refer to other professionals that I have prior arrangement with. But I don’t have referral arrangement in everything. Read more…

Posted on January 8, 2010 - by Wilfred Ling

Another reason why financial advisers must sell expensive product

Everybody I know is concerned about their salary because they want to save for retirement. Financial advisers are no different from the human being next door. They need to earn a living as well. Unfortunately, such clients are going to be sold expensive product. Why? It has to do with low levels of productivity.

Productivity is the amount of output for each unit of input. For financial adviser, the “input” is the time spent on the case. The “output” is what he needs to earn. Let’s reverse engineer this situation.

Let’s say he needs to earn $5000 a month in take home pay to feed his wife, children and save money for retirement. Let’s say that the gross profit margin is 70%. Read more…

Posted on January 6, 2010 - by Wilfred Ling

Why engaging a financial adviser may not help?

Many people who engage financial advisers on investments have some unrealistic expectations. How well a portfolio can perform depends 99% on the investor himself. So regardless of how good a financial adviser is, if the investor does not do a proper job, it is guaranteed that the portfolio will lose money on a long run. The following are some of my thoughts speaking from real life experience with clients: Read more…

Posted on December 13, 2009 - by Wilfred Ling

Question on medical insurance with low claim amount

“Dear Wilfred, For the past 20 years I paid my medical insurance product called Z faithfully without any claims. Recently I was admitted to hospital at a private hospital. The bill came up to be $X,XXX.. I was dismayed that I could only claim a shocking $XXX (10 times less than the original bill). The insurer cited technicalities as an excuse. I want to complain to CASE. I am writing this so the public is made aware of such pitfalls in their medical insurance. Regards – J”

Dear J,
Read more…

Posted on December 9, 2009 - by Wilfred Ling

The Commoditization Trap VI (Bureaucrats)

I want to write something about how bureaucrats have trapped financial advisers severely and at times to the detriment to their clients. Bureaucrats often imposed a long list of requirements for the sake of compliance. They also impose how advisers are remunerated.

First, the most obvious way which Bureaucrats trap advisers is the fact that advisers rely purely on bureaucrats to pay them the commissions. Advisers’ entire pay checks solely rely on these bureaucrats. Advisers cannot easily go to another company like salaried staff because of the lost of recurring commissions. So how are commission rate determined? Read more…

Posted on November 22, 2009 - by Wilfred Ling

Singapore recession over ?!?!

I read that Singapore recession is over! See the ChannelNewsAsia link HERE. We had a positive GDP growth in two consecutive quarters! Is this for real? Seems like a dream!

It seems this recession was like forever but actually it was just a year ago when all things just keep on collapsing and big names like Lehman Brothers went kaput while AIG had to be bailout wiping out shareholders’ value to almost nil. Remember those couple of months that prices of market indices just keep on coming down every day by 2% and it just keep on going on and on like as if it would be like this forever. Read more…

Posted on November 10, 2009 - by Wilfred Ling

Hard to find financial planner in Singapore?

I was told by someone that it is extremely difficult to find financial planner in Singapore. This person studied in United States during undergraduate days and was familiar with concept of financial planning in US. She did her financial plan just after graduation. Many years later, she needed to redo the financial planning again but had great difficulty finding a financial planner in Singapore. So she and her husband had to DIY for a long time up to a point they couldn’t cope with DIY because of busy schedule and a expanding family. She also laments the fact that unlike in US, there is a lack of no-load unit trust and index funds. Here are my comments: Read more…

Posted on November 5, 2009 - by Wilfred Ling

What can happen to Sembawang Music Centre will happen to financial advisers

In the news is Sembawang Music Centre. It is going through liquidation and bankruptcy. The reasons as reported in the press were: rising cost of rental, general decline in the industry and the emergence of close substitutes such as online music and video downloads. The decline in the industry was evidenced by Tower Records closing in 2006 while HMV is currently downgrading to a smaller 12,000 square feet from its 17,000 square feet space.

I find the financial industry to be over saturated and is in for a major decline as well. These are the reasons: Read more…