This is not to say that the insurance industry is the same as a used car lot, but there are some similarities to be drawn. Consider financial advisors as the car and yourself the buyer, there are good advisors, and not so good advisors. Those that have your best interest at heart, offering productive advice and recommendations tailored to your needs, and those that prioritize a high commission over a happy client in the long run. If you’ve ever arranged for a meeting with a financial advisor, you know it can be a bit daunting, not only because you are planning for your life and the well being of your loved ones but because you may not fully understand what’s best for you. For example, let’s assume your advisor is walking you through all the benefits of whole life insurance (as many of them do), but your friend recommends you explore a buy a term life policy and invest the rest strategy. Juggling the pros and cons of each, it’s natural to trust the paid advice of an advisor, but are they offering what’s best for you? Provided this asymmetric nature of knowledge in the insurance industry between the advisor and client, you’re likely setting foot on an uneven playing ground.
An often scrutinized facet of the financial advisory is the aggressive recruitment techniques of insurance agents and financial advisors. As a recent university graduate, two of my first job offers came from insurance agencies, their main draw being the fresh network of family and friends I could add to their client base. A larger team means a greater reach and ultimately, more sales. The majority of financial advisors in Singapore can be considered self-employed, working on a pure commission basis, simply put; they get paid when they sell products on behalf of the agency they represent.