over my 14 years in the financial industry, i've literally seen the market share of weighted new life business by the tied channel falling substantially from a near monopoly (when i first joined promiseland independent) to just 48% as at end of the second quarter of 2011.*
*http://www.lia.org.sg/node/2754
today,it seems that more consumers are turning to bancassurance with 34% of sales and the fa channel taking another 13% with direct sales making up the remaining 5%.
why does the bancassurance channel command such a high share of the new life business market?
perhaps it may be due to the fact that most of us have a relationship with a bank or several banks and therefore, our banks (both local and foreign) have a big share of our business which is not just confined to plain vanilla savings and deposits.
and for the fa channel, we have seen our share of the pie grow substantially from just 1% in the late 90s to more than 13% at the present time.
has the basics changed?
i submit no, because there's a saying; the more things change, the more they stay the same.
although today's consumer has grown to be more educated and sophiscated, and yet, they will still have to rely on a good navigational tool in terms of choosing whom they should engage to build a road-map for their financial health and ultimately, to achieve financial independence.
my comments:
one of the keys in engaging a financial advisor lies in the latter being truly unbiased and always focused on the big picture which is serving the client's interests.
therefore, the navigational tool should point to the financial advisor to have no pre-set mindset in what to recommend or not to recommend.
in other words, the financial advisor should not have any pre-conceived 'top-of-the-head' recommendation/s and always look at the whole unvierse of solutions available in his/her arsenal of offerings from diverse product manufactures.
i say this because i have encountered many instances where the financial advisor has shown a preference of whole life over term solutions, or term over whole life, or an investment-linked policy over term, and so on and so forth.
as further proof of this, should u surf the many on-line forums, there should be clear evidence of a great divide in the on-going whole life versus term thingy or the aeons old tussle of 2 opposing camps - one being the btitr (buy term invest the rest) corner and in the other, those who propagate regular premium investment-linked products.
having said this, the other litmus test lies in determining whether the financial advisor works for himself/herself or is serving the client's interests but this is easier said than done.
it has been said repeatedly that one of the best ways to find out is to seek a financial advisor who is not commissioned based but renumerated by charging fees.
this may be opening the so-called pandora's box and i hope i say this right in that there is no perfect model for renumerating a financial advisor, although the vast majority of financial advisors do not charge fees.
a fee based approach may appeal to some while it may also be repulsive to others.
and probably one of the biggest bugbear to a fees only model is that many are not prepared to pay and there will be many more who are not able to pay. and i suspect those who need financial planning most will be the masses of people who need it but can not afford to pay any fee, no matter how 'affordable'.
the other question is in how much to pay? this is of significance because there is an urgent need to standardise the range of fees payable.
but one of the best ways to navigate the maze of engaging the right financial advisor is to sit through meetings and gauge the financial advisor's advice to be in-sync with your interests.
to recap, shortlist your financial advisor to one who is truly unbiased and go for the renumeration model that u are most comfortable with.
just my 2 cents' worth.
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