no more 'absolutely safe investments'

No more 'absolutely safe investments': Munich Re chief

BERLIN - In an interview with a german newspaper, sueddeutsche zeitung, mr nikolaus von bomhard, the head of the leading global reinsurer, munich re was quoted to have said:

"absolutely safe investments, which we have been accustomed to for years, no longer exist."

mr nikolaus von bomhard added;

"a state bond is no longer what it used to be - a safe investment in all respects."

my comments:

yes, one of the unthinkables happened when a 158 years' old financial institution, lehman brothers, filed for chapter 11 bankruptcy protection on september 15, 2008 which remains the largest bankruptcy filing in the annals of us history.

but with respect to mr nikolaus von bomhard, there are still absolutely safe investments available in the form of insurance products.

and with the di-ppf bill* passed by parliament effective may 01, 2011, putting monies into insurance products is still a double-confirmed safe investment.

*source:
http://www.mas.gov.sg/legislation_guidelines/deposit_insu/Deposit_Insurance_Menu.html

introducing gary tay

kindly allow me to introduce u to one of our latest 'promiselanders', mr gary tay who has just joined us.

prior to joining promiseland independent, gary has had several years of working experience in the banking industry.

and in gary's own words,

"As an independent broker and appointed representative from Monetary Authority of Singapore. I specialize in assisting clients from all walks of life in areas of investment planning, retirement planning, risk management & insurance planning as well as working with corporate clients with their key man insurance and other general insurance schemes. I seek to provide unbiased, fair and objective advice to prospective clients."

i wish gary a fruitful and fulfilling time with us at promiseland independent. by the way, gary has his own blog at:

http://sgfinancialplan.blogspot.com



my comments:

it is truly good to know that gary has chosen us over so many other financial advisory firms in singapore and over the last few years, we have seen an 'influx' of younger people joining us.

in terms of the close to 100 advisors in our company, we can see a good mix of newbies and seasoned advisors, both young and not so young. what is interesting is the fact that most of our advisors are ex-tied agents. i salute them because not only have they sacrified their years in their previous companies, but more importantly, their future stream of income in the form of recurrent commissions.

going forward, my wish is for consumers to be more discerning in their choice of financial advisers as the negative consequences in making the wrong call cannot be reversed and is usually detrimental to their financial health.

mas - new requirements to assess investment knowledge and experience of retail customers

yesterday, the monetary authority of singapore issued new requirements for intermediaries to formally assess a retail customer's investment knowledge and experience before selling certain investment products.

generally, these are SIPs or specified investment products and exclude the following:

Annex – Excluded Investment Products

Unless otherwise provided here, the terms used or referred to in this Annex shall have the same meanings assigned to them in section 2 of the Act or section 2 of the Securities and Futures Act (Cap. 289), where applicable.

“Excluded Investment Product” means:

(a) any stocks or shares issued or proposed to be issued by a corporation or body unincorporate, other than where such corporation or body unincorporate is a collective investment scheme;

(b) any unit of a share which represents ownership of the underlying share, where the underlying share is held on trust for the unit-holder by a custodian, and where –

(i) the units of shares have been previously issued, are listed for quotation or quoted on a securities exchange, and are traded on the exchange or an application has been or will be made for permission for the units of shares to be listed for quotation or quoted on a securities exchange or recognised securities exchange and the shares have been previously issued and are listed for quotation on a securities exchange or a recognised securities exchange; and

(ii) no additional consideration (other than administrative fees) is payable by the unit-holder in the event that he converts the unit of share into the underlying share;

(c) any right, option or derivative issued or proposed to be issued by a corporation or body unincorporate in respect of its own stocks or shares;

(d) any unit in a business trust;

(e) any unit in a collective investment scheme, such collective investment scheme being an arrangement:

(i) that is a trust;

(ii) that invests primarily in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes; and

(iii) all or any units of which are listed for quotation on a securities exchange;

(f) any debenture other than:

(i) asset-backed securities as defined in section 262 (3) of the Securities and Futures Act (Cap.289); or

(ii) structured notes as defined in regulation 2 (1) of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005;

(g) any life insurance policy other than investment-linked life insurance policies as defined in the First Schedule to the Insurance Act (Cap. 142); or

(h) any contract or arrangement the effect of which is that one party agrees to exchange currency at an agreed rate of exchange with another party, where such currency exchange is effected immediately,

but does not include any product specified in items (a) to (h) above that is listed for quotation or quoted only on a securities market or a futures market that is not operated by an approved exchange.

the new requirements shall be effective from january 01, 2012.

source: http://www.mas.gov.sg/news_room/press_releases/2011/MAS_requires_intermediaries_to_assess_investment_knowledge_and_experience_of_retail_customers.html

my comments:

my take is the new requirements will be positive for the industry itself, the advisers and of course, beneficial to the consumers as well.

meanwhile, we shall have to await the actual mechanics of the new requirements to be rolled-out prior to the implementation which is not that far away, on january 01, 2012.

forbes: singapore's 40 richest are now richer

in the latest rich list published by forbes asia, singapore's 40 richest are now collectively worth US$54.4 billion (S$65.5 billion).

this is up by 19% from 2010's US$45.7 billion despite a slowdown in the economy and a weak stock market.

at the top of the list is the family of the late mr ng teng fong with a combined net worth of US$8.9 billion, up by US$1.1 billion from last year and the rest of the top 10 are:

2. the late mr khoo teck puat's family US$6.7 billion
3. mr wee cho yaw US$4.2 billion
4. mr richard chandler US$4 billion
5. mr kwee liong keng and brothers US$3.9 billion
6. mr kuok khoon hong US$3.5 billion
7. mr ong beng seng and ms christina ong US$1.9 BILLION
8. mr peter lim US$1.8 billion
9. mr kwek leng beng US$1.7 billion
10. mr lee seng wee US$1.4 billion.

my comments:

anyone wishing to dispute the age old saying that the rich get richer will have to go against the riches of singapore's richest people (and all over the globe).

and at the other extreme end, there will be the masses of people who will live in poverty and it doesn't matter where they are, be it in mature economies or in the third world countries. having said this, we have a tool in financial planning that may not guarantee riches but will go a long way to prepare individuals and families to attain financial independence.

after 14 years in the financial industry, i do not know of anyone who has regretted executing a financial plan.

honda cars safe to drive but...

according to an article in today's mypaper by mr adrian lim and ms candice cai, on the latest recall over defective engine parts, owners can continue to drive their cars but should watch out for progressive signs of deterioration in performance, distributor kah motor advised.

what are the models affected?

2,811 civic and 1,402 stream models produced between 2008 and last year.

these cars are still safe to drive but owners should contact kah motor if abnormalities apprear.

in the meantime, owners should look out for the following:

a. abnormal noises generated by the bolt coming loose
b. the appearance of a warning light, if the bolt breaks and the suxiliary
belt comes off
c. the disabling of the power steering assist on the 1.8 litre civic
d. the stalling of the engine which cannot be restarted.

although owners are told to be alert to 'abnormalities', mr vincent ng, product manager of product planning and training at kah motor said no cases of engine failure stemming from this problem have been reported here.

honda also said (in an agence france-presse report) that in japan, where 63 customer reports of engine malfuncations caused by the problematic bolt but none have resulted in accidents.

my comments:

the exercise of recalling of cars is not just confined to honda but many other makes as well, both local and globally.

well, this is another 'facet' of car ownership that will have to be accepted and we also read reports of vehicles bursting into flames (including buses) like the following:

feb 06, 2011 - Bus returning to S'pore burst into flames on M'sian highway

A bus returning to Singapore from Malaysia burst into flames in the middle of an expressway near Yong Peng in Johor.

oct 29, 2010 - Bus catches fire in Tampines interchange

THE undercarriage of an off-service SBS Transit bus burst into flames yesterday afternoon at the Tampines Bus Interchange in Tampines Central 1.


16 May 2011 - SMRT bus catches fire at bus stop

SINGAPORE: On Sunday night, an SMRT bus caught fire at a bus stop near Circuit Road.

The bus service number 61 was headed towards Eunos interchange with about 30 passengers.

therefore, while commuting in vehicles, be it a car, lorry, pick-up, taxi, bus, mrt, etc, and no matter how safe travelling can be in our tiny red dot nation, we have to accept the fact that things can go wrong and if u are true to the spirit of being kiasu, don't ever leave home without insurance.

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banks should not act like insurance agents/anti-competitive

the following letters highlighted very interesting and pertinent questions and was published in today's straits times forum page:

Jul 25, 2011
Banks should not act like insurance agents

RECENTLY, my husband and I were looking to buy some insurance policies. As we had previous bad experiences buying through insurance agents who were keen on pushing only their own companies' products, we thought of buying through banks instead.

Since most banks are now positioning themselves as one-stop centres offering a suite of financial products, we thought they would be independent. We were wrong.

We visited DBS Bank and it was aggressively pushing only Aviva's products. We tried OCBC Bank and it was pushing Great Eastern's products. We tried United Overseas Bank and Standard Chartered Bank as well and came out ruffled as their insurance consultants were pushing Prudential's products. In other words, we had no choice.

The bank staff told us that the insurance companies they were representing were the best and their products offered the best value. But how would we know if this is true if we cannot make any direct comparisons and decide for ourselves?

Are banks independent if each pushes only one insurance company's products? Or have they become agents of the insurance companies? Are banks driven by customers' needs and interests or by the commissions paid by insurance companies?

Shouldn't the Monetary Authority of Singapore make banks stick to their banking business and stop behaving like insurance agents?

Jessie Loy (Ms)

Jul 25, 2011
Anti-competitive

'Almost all car dealers insist buyers take up motor loans and insurance from companies they have tied up with.'

MR LEONG SZE HIAN: 'I bought a new car recently and was told by the manufacturer's sole agent that I must take up its motor insurance policy with an insurance company. This was despite the fact that I could get a cheaper net motor insurance premium and a lower claims excess from another insurance company. This is clearly anti-competitive behaviour, which I understand is prevalent in the motor industry here. Thus, is it any wonder that motor insurance premiums have been going up in recent years, when consumers are forced to take up more expensive policies with less benefits in the event of a claim? My understanding is that almost all car dealers insist buyers take up motor loans and insurance from companies they have tied up with. What this means is that even if the buyer can obtain a car loan with better terms, he cannot do so.'

my comments:

firstly, going by ms jessie loy's question to the monetary authority of singapore for banks to stick to their 'knitting' or core business, there is no restriction for banks to sell insurance or for that matter, other investments also.

the fact is that the bancassurance channel has enjoyed a surge in their share of new life insurance business in the 1st quarter 0f 2011 with 37% market share, up by 14 percentage points from that achieved in the same period of previous year.

but what is really interesting is mr leong's experience on the purchase of his new car that leaves him with little or no choice in terms of taking up motor loans and insurance from the same car dealer.

would this not beg the question of being anti-competitive?

aia - launch of family first series

aia has just launched their aia family first series products which are investment-linked policies.

the aia family first series offers 2 affordable plans with premiums starting from $100.00 monthly, aia family first protect and aia family first invest.

aia family first protect focuses on providing high protection during income-earning years with the flexibility to decrease protection and place greater emphasis on investment as customers approach retirement and their protection needs decline with these features:

Affordable cover

Receive one of the highest amounts of cover per dollar for the premiums you pay
For instance, a 33-year-old father supporting his wife, young child and mother could meet all his life protection needs for only $9.35^ a day – or about the price of a meal for two at a food centre.

The amount of cover you need, when you need it

Choose to have high protection (and low investment) during your income-earning years, and low protection (and high investment) as you get closer to your retirement
Get an even greater level of protection with optional riders that cover the unexpected things in life – accidents, disabilities and hospitalisation

Flexible investment to meet your financial goals

Choose from a wide range of investment funds suitable to your risk profile, each managed by a professional Fund Manager
Switch funds at any time to benefit from the ones that are performing well
Make top-ups to increase your investment amount
Have access to your cash any time after the first policy year through partial withdrawals – which will be most ideal during your retirement years


aia family first invest is for customers who are already well protected, and offers them the opportunity to focus primarily on growing their wealth namely:

Flexible investment to meet financial goals

Choose from a wide range of investment funds suitable to your risk profile, each managed by a professional Fund Manager
Switch funds at any time to benefit from the ones that are performing well
Make top-ups to increase your investment amount
Have access to your cash any time after the first policy year through partial withdrawals – which will be most ideal during your retirement years

Affordable premiums to suit budget

Start with as little as S$100 a month, and make top-ups at any time. There’s no need to save up a lump sum to invest -- you can get started now to maximise your time in the market.

important notes:

aia family first protect and aia family first invest are Investment-linked Plans (ILP) offered by American International Assurance Company, Limited, Singapore Branch (“AIA”), which invests in ILP sub-fund(s). Investments in this plan are subject to investment risks including the possible loss of the principal amount invested. The performance of the ILP sub-fund(s) is not guaranteed and the value of the units in the ILP sub-fund(s) and the income accruing to the units, if any, may fall or rise. Past performance is not necessarily indicative of the future performance of the ILP sub-fund(s). You should seek advice from an AIA Financial Services Consultant and read the product summary before deciding whether the product is suitable for you. A product summary relating to the ILP fund(s) is available and may be obtained from your AIA Financial Services Consultant. A potential investor should read the product summary before deciding whether to subscribe for units in the ILP fund(s). All insurance applications are subject to AIA’s underwriting and acceptance.

This is not a contract of insurance. The precise terms and conditions of this plan, including exclusions whereby the benefits under your policy may not be paid out, are specified in the policy contract. You are advised to read the policy contract.

Buying a life insurance policy is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value payable may be less than the total premiums paid.

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aia - latest singapore nationwide protection survey

in a latest aia singapore nationwide protection survey conducted by the nielsen company in june 2011, the key findings are not surprising (at least to me) and looks pretty consistent with many other surveys conducted previously by other companies.

the survery polled 1,013 singaporeans and permanent residents aged between 20 to 60 years old.

some of the key findings:

a. close to 6 in 10 singaporeans believe they have done well to prepare
for their dependents' financial protection needs, the reality is that
fewer than 2 in 10 actually have done so.

b. 1 in 5 who do not own life insurance do not see the need for it.

sex and zen

well, the movie that's caught many eyeballs is finally here. and the board of film censors* has exercised a good dose of liberalism in allowing the film to be passed albeit with an R21 rating but there was a good 27 minutes of footage snipped off the original version.

even then, i suspect the theme of 'sex' (being the second oldest profession in the world) has always been alluring and probably not a few adults will open their wallets to catch it on the big screen of our local cinemas.

*BFC: From Censors to Classifiers

The Board of Film Censors (BFC) comprises a chairman and a group of classifiers who classify films and videos submitted to the board, as governed under the Films Act. The chairman is Ms Amy Chua.

The BFC classifies films, videos and video games based on content guidelines drawn up in consultation with the community and industry. These guidelines reflect the social norms and values of Singapore’s multi-racial society. The aim of classification is to protect the young while providing more choice for adults. This is done by providing a comprehensive rating system with consumer advice.

One misconception about the board is that its function is to edit films. Over the years, the BFC has moved away from censorship to classification. This means that the BFC views films and classifies them into age-appropriate ratings. Classification allows films to be suitably rated for different audiences . Video games classification, introduced in 2008, is also aimed at providing more choice for adults while protecting the young.

Source: http://www.mda.gov.sg/Industry/Films/Classification/Pages/BoardofFilmClassification.aspx

my comments:

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hsbc insurance - launch of mortgage protector campaign

here's another bite of good news and this time, it's from hsbc insurance via the following email which we received this morning:

Dear Valued Partners,

Please find enclosed the Green Paper on the captioned and its attachment for your information and circulation to your advisers please.

This is a 6 months campaign.

Customers will enjoy a 20% perpetual discount off their MortgageProtector premiums for single life and 14% for joint lives for all application submitted during the campaign period.

A Benefit Illustration software (ver B11.00c) specific to this campaign will be released to you on 18 July 2011 (Monday). Please use this illustration software for all new proposals during this campaign period.

Please find enclosed the Green Paper on the captioned and its attachment for your information and circulation to your channel please.

Green Papers 2011/14c Launch of the “MortgageProtector Campaign”

(See attached file: Green Paper 2011 14c Launch of the MortgageProtector Campaign IFA.pdf.zip)

Jason Tan
VP - Independent Channel | HSBC Insurance (Singapore) Pte. Limited
10 Eunos Road 8, #11-01 Singapore Post Centre, Singapore 408600.
_____________________________________________________________________________________________

Phone (65) 6225 6111
DID (65) 6319 3997
HP (65) 9820 2816
Fax (65) 6221 2188
Email jasontan@hsbc.com.sg

my comments:

hsbc mortgage protector is a mortgage reducting term assurance plan which can be applied to both single lives and joint lives.

with the perpetural discount*, hsbc mortgage protector is now even more competitive versus the competition. but do take note that the generous discounts apply only within the campaign period.

*terms and conditions apply

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axa life - customer campaign on ci benefit rider

i have a piece of good news for consumers because we have just received this email notification from axa life:

Dear Business Partners

We are pleased to share with you an exciting Customer Campaign on Critical Illness Benefit Rider (CIB).

Customer Campaign on Critical Illness Benefit Rider (CIB)

A discount of 15% will apply to the premium on Critical Illness Benefit Rider (CIB) that is attached to either Term Protector or Term Protector (to age) plan.

Campiagn period from 16 July to 19 September 2011 (both dates inclusive). Cases must be incepted by 30 Dec 2011.

All applications taking part in the CIB Campaign must attached with the Client's Acknowledgement Form new business (as attached) together with the proposal form for submission.

Thanks & Regards

Sylvia Koh
Assistant Manager, Alliance Distribution
AXA Life Insurance Singapore Pte Ltd
8 Shenton Way #27-02
AXA Tower Singapore 068811
sylvia.koh@axa.com.sg

DID: +65 6880 5519
Fax: +65 6880 5482

my comments:

with the perpetual discount*, consumers will be reaping the benefit of paying much, much lower premiums than before the discount campaign.

according to axa life, with the discount applied, their pricing is very competitive against the competition especially for those in the middle age group.

*terms and conditions apply

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ntuc-income: closure of capital plus (CPN23)

just launched 2 days ago and we received this urgent email notification from ntuc-income yesterday evening:

Dear Partners,

We have received overwhelming response for our recent tranche of Capital Plus (CPN23). Thank you for your support!

This is to inform that the subscription for CPN23 will be closed tomorrow, 13 July 2011, at 5 pm.

Please ensure that the applications you hold on hand reach our office (75 Bras Basah Road, NTUC Income Centre, Level 7) by 5 pm tomorrow.


Thank you.


Regards,

Regina Lim
Account Manager, Financial Advisers, Sales Division
t: (65) 6866 7260 fa hotline: (65) 9746 2663
www.income.com.sg

my comments:

perhaps this early closure of the current tranche of capital plus (the fastest on record) may not be too surprising because of the ultra-low interest on savings environment.

with a guaranteed 1.4% return on maturity after 2 years definitely beats putting extra cash into any bank's savings account.

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ntuc-income: relaunch of capital plus (CPN23)

this email notification was sent to us on friday afternoon:

Dear Partners

We are relaunching a new tranche of Capital Plus (CPN23) with effect next monday, 11 July 2011.

CPN23 will be opened to all policyholders and new applicants. It has a policy term of 2 years and a guaranteed yield of 1.4% p.a. upon maturity.

More details of the plan can be found in the application form and FAQ attached.

Please note that this is a very small tranche of Capital Plus (CPN23) and we anticipate that it will be fully subscribed in a very short time from the launch.

Application will be closed once we have reached the sales allocation.


Regards,

Shawn Goh
Head, Financial Advisers, Sales Division
FA Hotline: (65) 9746-2663 | www.income.com.sg

my comments:

what is capital plus (CPN23)?

capital plus (CPN23) is a non-participating single premium endowment product. it has a short tenure of just 2 years and a fully guaranteed return of 1.4% upon maturity of the plan. it also provides insurance coverage for death and total and permanent disability.

with a relatively small subscription target, i believe this latest tranche of capital plus will be taken up pretty quickly.

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tokio marine life insurance - launch of enhanced endowment products

today, i attended a soft launch* of tokio marine life insurance's enhanced endowment products.

the 2 products are:

a. tm education (lp)
b. tm nest egg (lp)

what is tm education (lp)?

this is a juvenile limited premium participation endowment plan with limited premium options of 5, 10 or 15 years for policy term of up to ages 20, 21, 22 or 23 next birthday.

policyholders have the option of receiving the benefits in one lump sum or over several years to coincide with when the tuition fees (and other expenses) are due.

what is tm nest egg (lp)?

this is a limited premium participation endowment plan with limited premium options of 5, 10, 15, 20 and 25 years dependent on policy term options of 10, 15, 20, 25 and 30 years. minimum entry age 1 year age next birthday and up to maximum entry age of 70 years age next birthday (less policy term).

on maturity, the sum assured plus any attaching bonuses will be payable. alternatively, the maturity amount payable may be converted into a yearly payment while the remaining balance earns a non-guaranteed interest rate at 3.75%**. the amount may be paid over any period from 3 to 25 years.

*official launch date - july 11, 2011

**the interest rate of 3.75% is subject to change according to prevailing market conditions.

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