Poll Results: Best Financial Advisory Firms in Singapore 2011

According the unofficial polls, the best financial advisory firms for financial advisors in Singapore are:

1. Finexis Advisory 42.86% (6 votes)

2. IPP Financial Advisers 21.43% (3 votes)

3. PIAS 21.43% (3 votes)

Strangely, according the unofficial polls, financial advisory firms which rank highest for firms much needed for improvements also include: 

1. Finexis Advisory 81.25% (13 votes)

2. IPP Financial Advisers 18.75% (3 votes)

By reading this post you acknowledge that the above poll results is based on information contributed from public sources without independent verification. 

We do not assume responsibility for the accuracy or completeness of this information or such information.

You further acknowledge that you are expected not to place undue reliance on the poll results. For more accuracy, turn up for an interview with the firm to establish your own opinion. Before you do that, remember to do your due diligence by reading up on the interview prospectus.

A Successful Financial Advisor

What does it mean to be a successful financial advisor in Singapore?

Success is a relative word that has been used and abused many times over.

Used by people to abuse other people into doing whatever they want them to do.

Before going any further, lets first take a look at the dictionary for its meaning of success.

According to one of the definitions found in Dictionary.com,

Success = The favorable outcome of something attempted

When you don't define what success means to you, i.e. the favorable outcome you personally want, it is very easy to find yourself subscribing to other people's standards of success.

Everyone needs a direction. When a person finds himself lacking in an inner compass, he will tend to look to others for direction.

In the life insurance & financial advisory industry, it is the same.

If you don't decide strongly for yourself the favorable outcome you want out of this career, your 'success' will likely come from others' definition of success.

In Singapore, if you want to be seen as a successful financial advisor by your industry peers, you must at least hit MDRT (Million Dollar Round Table).

Currently, the criteria to qualify for MDRT is to produce SGD$110,900 of commissions for the year.

Not a million dollars like most outsiders instinctively think.

It doesn't matter what you do to hit MDRT, you simply MUST hit this MDRT.

When you have achieved MDRT for the year, you will receive the stamp of success by fellow financial advisors and management.

You get a MDRT certificate which you can frame up for display.

You can also order a MDRT plaque to show off to your clients.

If those are not enough reminders to yourself that you are successful, you can still order a MDRT pen to bring to outdoor appointments.

Over to the clients' end.

Clients don't get whats the big deal about MDRT.

It doesn't mean anything to them.

When a client's advisor gets MDRT, it doesn't mean service to them will improve, it doesn't mean their investment portfolios will rise, it doesn't mean their insurance payouts will increase, it doesn't even guarantee that the advisor will be in the industry when they need to rebalance their portfolios or make an insurance claim.

But in the financial advisors' circle, MDRT means the world and is their main reason for existence.

What happened?

The financial advisor is supposed to take care of the client in areas of financial services.

How did the financial advisor end up valuing an award more than a client?

In desperate attempts to qualify for MDRT, I have even heard of managers teaching financial advisors to tell their clients to help them out for MDRT.

The MDRT award is supposed to be a byproduct of good financial advisory practice but in many cases, the client seems to have been displaced and become instead THE byproduct of the financial advisor's MDRT pursuit.

Lets take a look at the 2 groups of people who are integral in shaping financial advisors' behavior.

Clients and Management.

Clients

What are the favorable outcomes that clients want when dealing with their financial advisors?

Most clients I have come into contact with actually have rather simple needs.

They just need their advisor to give proper and objective advice, be reachable when they need to reach him/her and provide follow-up service from time to time.

If an advisor can fulfill the above and continue to stay to be of service, the relationship is already considered a success.

Unlike what managers always tell their advisors, MDRT is not a requirement for client to feel the advisor's commitment and competence. You don't have to match your client's incomes. Have you ever walked into an appointment and your client ask you about your income to compare with you?

Don't fall for what your manager tells you. Whatever he tells you, always ask yourself whether is he making any sense.

Management

What are the favorable outcomes that management want? How can they get the outcomes fulfilled from advisors?

Management also have simple needs.

They want more financial advisors to join them and they want all of these financial advisors to work.

To them, that is what success means:

More Financial Advisors X More Production per Financial Advisor = Much More Money for each Director

MDRT is a double advantage tool for the management.

It can be used to recruit more advisors and it is also a means to make financial advisors keep to a certain level of production.

1. Recruitment

Every company will like to boast to potential recruits that they are possibly the BIGGEST FA firm / life insurance agency in Singapore with the HIGHEST ratio of MDRT-ers.

It makes the company look really competent and more people are likely to join.

Unknown to potential recruits, it doesn't matter how the MDRTs were achieved, MDRTs can easily be produced with creative means to show up for the company's portfolio.

2. Keep to a certain level of production

Airy fairy MDRTs are good enough to show on a company's CV but aren't sufficient to pay for the directors' salaries. 

They want solid MDRTs being produced too.

It is not by chance that every advisor feels compelled to adhere to MDRT standard.

The financial advisory work environment is cleverly structured to equate the financial advisor's self-worth to his / her production.

When you enter an insurance agency / FA firm's office, the only wall art pieces you will see are production charts.

These charts list every individual's production for the month and year.

Everyone can see how much you have produced to date and whether you have hit MDRT or not.

In some companies you can see each advisor's name and production clearly even when you are standing 10 metres away from the production charts.

It won't come as a surprise if in future LCD billboard screens are placed outside of the building, broadcasting to every passerby the company's production and flashing pictures of all those who have already hit MDRT.

When you walk past your colleague in office, especially close to end of the year, the question you are most likely to be asked is not "How are you?"

Its "How far are you from MDRT?"

In the office, financial advisory work is termed as running for production.

Running for production is like playing a game of snake and ladder.

When you climb up the production ladder, during team meetings your manager will ask all your colleagues to clap hands for you and get you to explain your production success of the month.

When you slide down the production snake, they will take turns to ask you with intense looks of concern, " Are you ok? What happened?". In worse case scenarios, managers punish advisors with low production by ignoring their emails, texts, calls when these advisors need their managers' approval for client servicing like countersigning on documents, online approval of trades, advice for special cases etc.

This is all done to reinforce that production = good, decreased production = you are not ok, you better do something about it. Or else...

This intensifies greatly towards the end of the year, as the closing date of MDRT qualification draws near.

Precisely because of this, even some top producers fear the loss in face from fallen production grace.

The maintenance of yearly sales accolades achievement is used as a whip on themselves to go on and on.

The very running of production for the sake of sales accolades is damaging for both the financial advisor and the client.

Financial advisors only see themselves as worthwhile as their production achievements and take production figures very personally.

While clients, who are actually supposed to be the financial advisor's focus, are being displaced and become byproducts of this MDRT race.

If MAS bans the usage and promotion of sales accolades, it may actually cut down on the number of complaint cases FIDReC has to handle.

The hierarchy in this whole financial advisory business is supposed to be:

1. Client

2. Advisor

3. Management

But with clever propaganda and structured environment, the actual hierarchy of needs fulfilled has often become:

1. Management

2. Advisor

3. Client

Bear in mind, MDRT is really not the root of evil here. It is simply a tool that has been misused.

Both good advisors and not-so-good advisors can produce MDRTs.

The key lies in who/which was the byproduct in the process. The client or the award?

It is very obvious that we need our clients and every level of management needs us to pay their salaries. 

Financial advisors are clients too. Clients to the company who deserve to be served and supported at a level which helps to serve and support our end-clients. 

If a FA firm / insurance agency does not serve and support their advisors well, the advisors will also face unnecessary obstacles at work to serve and support their clients well.

Putting things in perspective:

Will we get success i.e. favorable outcomes from serving people whom we need or serving people who need us?

Interview Part 3 - Guide to Interview the Interviewer

You now know the harsh realties of the financial advisor's career and you are fully prepared.

The amount of hard knocks and work one has to go through at the beginning is worthwhile if this career is meant for the long run.

Lets take it to the next level by finding a suitable place that is nestable for a potential lifelong career.

Whether you are an advisor-to-be or an advisor switching firms, the series of interviews at FA firms and insurance agencies can put you in a whirl of excitement, happiness, confusion and leave you with many questions about the future.

The people are so nice, so friendly and so kind. The firm seems to take advisors' professional development very seriously. They meet you up so often that they are getting familiar. They want you. You are not quite sure who to join.

By the time you get to this confusion stage, your emotions run high.

At a time when emotions are high, intelligence is low.

Not exactly a good time to be making decisions.

The next thing you know it, you sign with the friendliest agency/firm to avoid further procrastination. They will fill you with guilt about procrastination anyway. 
Its part of the career sales tactic.

Before you even get to the interview stage, you have to realize something very important.

You are not going for the interviews to get a job.

You are going for the interviews to interview the interviewer.

During the interview, the interviewer will tell you every single impressive thing that the agency/firm has done and will do for the advisor. Expect to hear a lot of repeats.

DO NOT count on mere words for your future, it is a HUGE gamble.

It is very easy for the salesman to glorify every single thing and promise things to you which don't have to be delivered today.

Once you have signed with the firm and gathered a pool of clients, it is going to be a pain to break away.

Imagine the opportunity cost :

You have to hunt for a new firm to join, go through tedious administrative procedures to leave the current firm, explain to every single one of your client reasons for joining the new one, apply for FAR license again at the new firm and wait for approval, go back to every single client to sign transfer forms to let you be their servicing advisor again…

Even if you want to stay in the same firm but change to another manager, FA workplace politics make it too complicated to do that. In some FA firms, it may actually be easier to leave the firm entirely than change to another manager within the same firm. 
It is dumb, but that is reality. 


During the interview stage you need to consider both the firm and the manager. 
It is okay to go for interviews again at the same firm with different managers. 
Every manager is different. 
Your environment and learning path can be shaped differently under different managers in the same firm.

With so much at stake, the person who has to take interviews most seriously, is YOU.

Words from a group of salesmen (recruiting managers, directors, testimonials taken from some advisors) can build the FA workplace to be quite a beautiful facade.

Fortunately, you don't have to wait till you've gone on board to find out about whats really going on in there.

You can ask specific fact-finding questions at the interview.

We've compiled a list of interview questions for you to ask about your future financial advisory work environment.

These are the questions we would have asked.

            

Company-wide Features:

1. Are you offered the benefits of Client Ownership and Vesting?

Having Client Ownership supposedly means you are given the right to port your clients over to another firm in the industry when you leave.

Having Vesting means commissions follow you even when you transfer to another FA firm. 

These are the most important benefits to ask about during the interview.

Life insurance agencies generally don't give advisors Client Ownership and Vesting, so you can strike those out in your interview notes when you go for the interview at a insurance firm.

Not all Financial Adviser firms offer both benefits, so do ask. 

If the FA firm offers Client Ownership, check if it will be stated in the contract and how it gets activated when an advisor leaves to join another:

Will the firm assign the servicing back to the advisor when he has transited to the new firm?

Or will the advisor have to go back to every client to sign a transfer of servicing form?

If it is the latter, this Client Ownership thing is just a hoax. 
Cross it out and move on to the next question.

2. Compensation Model: How does this agency or firm pay you?

Predominantly there are 2 types of Compensation Model in the financial advisory sector in Singapore.

One is Basic Commission and the other is the Gross Revenue. 

They are not the simplest things to understand but you have to understand them before you go for the interview, to ask clear questions.

Life Insurance agencies in Singapore presently work on the Basic Commission model. 

Some FA Firms in Singapore work on the Gross Revenue model.

Each financial product essentially has 2 parts to its commission:

Basic Commission and Overriding Commission.

Under the Basic Commission Model, regardless of the amount of total commissions you bring in, you get the Basic Commission as your share. Your manager and the firm takes the Overriding Commission.

Under the Gross Revenue Model, Gross Revenue simply means the total amount of commissions you've brought in for you and the company.

Gross Revenue = Basic Commission + Overriding Commission

In the Gross Revenue Table, your banding shows the percentage of the total commissions i.e. Gross Revenue you've brought in that you get to keep during the banding year.

For e.g. if you've brought in $80,000 of total Gross Revenue for the year:

60% X $80,000 = $48,000 -> Your Share of Commission.

40% X $80,000 = $32,000 ->  Manager's + Company's Share of Commission

Usually when newcomers enter the company, they are placed at the 60% banding level.

At 60%, the amount of commissions an advisor receives is around the same as under the Basic Commissions Model.

To draw veteran advisors from other agencies and firms, some FA firms have given these advisors a 1st year 80% banding incentive for joining the firm. Of course, this special offer is not available to newbie advisors. 

If the FA firm operates on a Gross Revenue compensation model, remember to get from the interviewer the Gross Revenue Table figures and copy them down in your notes.


Some FA firms give you a higher percentage of commission (i.e. higher banding percentage) for the same amount of Gross Revenue you bring in. 


That means more money for the same amount of work that you do! So this is definitely an area to keep a lookout for.

There are pros and cons for both the Basic Commission and Gross Revenue compensation.


The good thing about the Gross Revenue compensation is the more you produce, the higher the percentage you get to keep. 


The downside is you must produce that amount and more every year, for the rest of your life. If not, your banding will drop. 


For Basic Commission compensation, you will always get your fixed share, banding never drops nor increases.

The 3rd kind of compensation is fee based, which isn't as common in Singapore yet. 
These independent financial advisors charge clients fees for advice and return to clients commissions of financial products clients acquire through them.

Manager and training related questions

1. Is your manager hired by the company or is he/she an entrepreneurial manager?

The above might sound like a odd question but it has its relevance.

Before going there, at the beginning of the interview first check with your interviewer, if he/she is going to be your manager when you join. 
If he isn't, skip the 'manager questions' till you meet the actual recruiting manager.

Typically, Life Insurance agencies don't have managers on payroll to manage teams so you can safely strike that out in the interview toolkit if your interview is at the insurance agency.

At FA firms, they have both hired managers and entrepreneurial managers. 


Hired managers take a monthly pay check from the FA firm and entrepreneurial managers take a cut of the total commissions you bring in.

Hired managers have titles like Business Development Manager (BDM) and entrepreneurial managers have titles like Branch Manager (BM) or Branch Director (BD).

I have heard far too many advisors complain about managers who are on payroll.

One of the complaints is that these managers do not spend time to address advisors' concerns if the concerns are not within firm's key performance indicators (KPI).

Aside from spending time with advisors, hired managers have to do many things for the firm like recruitment, event planning, project management, administrative work, trainings etc.

Attention is already divided from day one.

                      Manager Hired By FA Firm

                Manager Not Hired By FA Firm

2. 
i) How many no. of years experience does your manager have in his financial    advisory practice?
ii) Is he still practising financial advisory?
iii) When did he last close a client?

(i) Years of Experience

It is important to find out about the manager's financial advisory sales background. If the manager has very little or poor relevant experience, like maybe 1 or 2 years doing financial advisory work or not successful at being a financial advisor, there isn't much to learn from him/her. 


After you're done learning from him, he will eventually just be an admin person to you, signing your forms and asking you about your production every week. 


If you are looking for a manger who can be your mentor, such a manager is not suitable for you.

Anything less than 3 years of financial advisory work experience is considered little ( for a manager ) in our opinion.

Another common complaint of hired managers is that they have little or poor financial advisory work experience. 
It does make sense, its hard to fathom experienced and high earning advisors and managers wanting to take a salary. That would mean a pay cut.

There are also managers who have been in the industry for many years. 
BUT they could have been in the industry since the 1980s and only practiced for a few years before being a manager. So, always ask specifically the number of years they have done financial advisory.

(ii - iii) Financial Advisory Practice & Last Closed Client

Some managers have many years of experience in insurance sales, but the last time they did sales was 10 years ago. 


Besides staying relevant with financial advisory knowledge, one needs to stay relevant with clients as well. It is a people business after all.

The best manager to have is one who still meets new clients. Even if it shaves off some time for you the advisor, his relevance in the financial advisory field will be immensely valuable to you.

In the whole financial advisory industry, whether you are in a upcoming FA firm or an established insurance agency, it is very common to have managers teaching a lot of things that is based on theory or from books. You will also notice that they spend most of their training on motivational content. 


To be practical, adding motivational content in trainings is a good way to kill training time and it is very easy to prepare. 


Step 1: Go to Kinokuniya grab some books 
Step 2: Go online and surf YouTube videos
Step 3: With content from the books and videos, generate a 2 hour training complete with a group discussion thrown in at the end. 


Even a secondary school student is capable of facilitating such a training.

Will you choose to learn driving from someone who last drove 10 years ago? 
Will you learn from someone who teach you how to drive from the driving theory handbook? 
Do you expect motivational quotes to miraculously transform you into a F1 driver?


If you will not entrust your driving lessons to someone like that, will you entrust your life career to a manager who mentors you the same way?

3. Ask the manager to show you a sales presentation.

Before going to the interview, check out the firm's website and read through their scope of financial planning for the clients.

Pick an area that interests you, for e.g Corporate financial planning : Buy-Sell agreement for the Business Owners.

Politely ask the manager if he/she can show you a role-play of the presentation, with him being the advisor and you as the client.

If after you've seen his presentation, you are enticed to find out much more, you know you will be able to influence many others to feel the same way too.


If the presentation leaves you confused and clueless, it is not a good presentation. 


A good presentation is one that makes complex things simple, not one that makes you feel stupid because its too complex. 


If the presentation is too cheesy or too boring, you can't imagine yourself replicating it, this is not the manager to join either.

It is important to see a live example presentation because it is a sneak preview to how this manager will impart financial advisory work skills to you in future. 


Whatever the manager shows you is likely to be whatever you are taught to show clients. 


If you are not impressed, don't join.

If the manager rejects you because it is not his area of specialty, ask if he can show you another presentation which he specializes in. 


If you are rejected for a reason like 'Its is too advanced for you', there can be 2 possible real reasons. 


1. He is not confident enough to show you the presentation.


2. He might be one of those managers who will always tell you to concentrate on your 'bread and butter' and cap your learning curve because he has already let his learning curve plateau and is unwilling to advance. Even if he sounds like he is very knowledgeable, do not be taken in, people in this industry are very good at projecting a facade. Many times their knowledge comes from repeating other people's client experiences and cleverly passing other's experiences as their own.


Hired managers are often guilty of letting their learning curves plateau. The fact that they gave up on sales to take a salary already speaks volumes.


When you advance quickly and possibly advance ahead of them, it makes them look bad the day they have to say to you these 3 words: "I don't know". In the financial advisory industry many people will never do you the favour of saving your time and tell you "I don't know." Compared to your time, their face is more important.


Whenever you ask an advisor, manager or director a work related question, if they have the answer, they will never hesitate to impress upon you their wealth of knowledge.


However if they are doubtful of their answer, they will never answer you straightaway or just say a plain "I don't know". 


They will always ask you Why you are asking that and ask all kinds of questions to skirt around the topic. After 15 mins you realise you still don't have the answer and have wasted your time and energy.


Also, when will you ever be good enough for something 'advanced'?

There are advisors who have been with their firms for 10 years and they still hear the same thing: "Its too advanced for you, just focus on your bread and butter."

You don't want to commit 10 years of your life to find out you have been fooled. 
Insist that he shows you that presentation, if not just strike this manager out of your list.

4. Ask the manager about the trainings you are interested in and if you can sit in.

Far too many FA firms claim they have world class trainings and are keen on advisor's professional development. 


Yes, they are, that is before you join them.

If the manager tells you about world class trainings that the firm provides and advanced financial advisory work the firm takes interest in educating the advisors on, do one very important thing.

Ask to sit in one of the trainings.

If you can't, do the next most important thing.

Mingle with the firm's advisors and ask if there are such trainings and what exactly do they do in there. If it all sounds really vague and iffy, definitely discount those trainings as part of your reasons to join.

There is no perfect manager or agency/firm but knowing what questions to ask will help you filter the ideal manager and firm to join so that you can have a head start compared to others who join based on blind faith.

However, a head start does not guarantee the financial advisor long term success.

What does it mean to be a successful financial advisor?

Interview Part 2 - Myths and Truths about the Financial Advisor's Career

There are many myths surrounding the career as a financial advisor.

Management people repeat these myths over and over again during recruitment campaigns and company events as if they are true. 

As these myths get so much air time, they have generally been perceived to be true. 

Even advisors have been conditioned to believe its true.

During your interview, the manager will regurgitate to you these common myths as part of his/her sales pitch to you about being a financial advisor.

Myth No. 1 : This is a business. You become a business owner.

This is one of the most overused misconception. A financial advisor is not a business owner. People like to use the word business very loosely.

You are really a self-employed professional.

Even when you become a very highly paid self-employed professional, it doesn't transform you into a business owner.

The advisor's business doesn't run without the advisor.

The advisor has to meet clients and close cases personally. 

He/She has to do all important paperwork personally and a lot of these paperwork involves writing long essays of reasons for recommendations for each financial product that is sold. (More of the financial advisor's job scope is discussed here)

The advisor cannot be removed from the picture and still expect to generate new business.

No work from the advisor = No pay for the advisor.

The advisor has merely given himself a job.

Like the Char Kway Teow man, to run his business he needs to open his stall. If he is not at the stall frying kway teow and selling them, the business doesn't run. Even if he has sold enough kway teow to buy him a Sentosa Cove residence, the stall cannot run without him. He has set up the business to employ himself.

However the Char Kway Teow man still has his advantage over the financial advisor.

He can take a backseat by hiring workers to fry and sell kway teow. Without him in the picture, the kway teow show still goes on and fresh new business comes in daily. 

The same can't be said for the financial advisor, even if he changes course and becomes a manager.

Myth No. 2: You are your own boss.

Myth No. 1 and Myth No. 2 sound similar, but have different points to expand on.

You are your own boss BUT you have to attend regular meetings you didn't call for. 

On top of that you go for mandatory 30 to 36 hours of trainings every year. 

If you are unlucky, you get signed on to a firm that insists advisors step into office by 9am, just like an employee. 

Almost every week there is a team meeting. During the team meetings you answer to your manager about your production figures. Sometimes you even answer to your team mates about your production figures. 

It is extremely illogical that you pay your manager and the directors a part of their salaries yet they make you answer to them about your work. 

Doesn't sound like much 'own boss' benefits.

Myth No 3: Unlike over at the banks, there is no sales quota.

At least the banks are upfront about their quota. You will know about the FA firm / agency's expected performance when you become licensed as its advisor.

Some firms work on creating an environment of peer pressure. Under the environment, you will be compared to your peers and you mind will be framed to compare yourself to your peers. This type of quota has a never ending ceiling.

Myth No 4: You'll be better off than your peers who are working 9 to 5. They are trapped in the rat race.

'You'll be better off than your peers who are working 9 to 5'

It really depends on what one defines as 'better off'.

The better off points I can think of is that the advisor has the potential to make much more money than his/her peers who take a salary and doesn't have to worry about taking leave or taking a MC.

'They are trapped in the rat race'

The advisor is also a rat trapped in the perpetual sales treadmill.

 No matter how well he/she has done in the past, the Management's pursuit of sales accolades for the advisor like MDRT, COT & TOT puts him/her back on the treadmill year after year. Other than these 3 things and some other internal sales awards, the firm doesn't really publicly chart any other career progression for the advisor.

No matter how hard the advisor works, he/she doesn't get out of the rat race. Just becomes a richer rat thats all.

Whether the same advisor is 21, 40 or 50 years old, one thing never changes. 

The company asks the advisor to run the MDRT / COT / TOT treadmill every year. 

Very simply, year after year that is all to work towards to. 

For the typical advisor, career progression is summed up in these 3 sales accolades.

As long as the advisor is still breathing, it never changes, even at age 70.

Financial advisors always compare down to the 9 to 5 workers.

How about the investor and business owner?

Myth No 5: You get to enjoy freedom of time.

You ought to know by reading this far that this cannot be true.

Officially you get to have freedom of time.

Whether or not you'll let yourself enjoy is another matter.

For the advisor, More Work = More Pay.

You could be resting. But if you were working you would get more money. So you compel yourself to work. And if you rest, you would feel at least a little guilty about resting. So that really doesn't count for enjoyment.

Even if you are able to let yourself enjoy the freedom of time, if you haven't met your sales production goal, your manager will remind you. Everytime. Without fail. You will be conditioned to feel guilty.

Even if you have met your sales production goal, MDRT for example, your manager will sell you the idea of striving for the next production level, COT. You get the idea.

With so much sugar-coating removed, what are the real benefits of being a financial advisor? Why are we still here?

It is financially rewarding. The satisfaction of having won over your clients is indescribable. You forget what its like to get a MC. You get to meet all kinds of people and learn from them. Along the way you establish friendships. If your firm agency doesn't force you to step in office by 9am, you get to enjoy driving or public transport during off-peak hours.You get to go to the gym during off-peak hours. You get to have lunch and avoid the lunch crowd. You know how to use a financial calculator. Your social intelligence and emotional intelligence improves. You get to network. You learn how to ask good questions. You learn to present effectively.

If it sounds good enough, lets move on to the 3rd part of the interview.