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 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.

Financial Advisor vs Insurance Agent

So you've just received a call for an interview for the position of a Financial Consultant / Financial Planner / Management Trainee with a Financial Services / Financial Advisory Firm. Congratulations!

Why so many name variations ? Actually they all mean exactly the same thing.

Recruiting managers from life insurance firms and financial advisers tend to be very creative with names.

They don't want you to miss out on this fascinating career of a Insurance Agent or a Financial Adviser Representative (FAR) just because of your pre-conceived notions.
After all, how can you be interested in something you have not tried?

How did they get your number even though you didn't send in any resume? 
Well, either they have bought leads from a leads seller to cold call you, or you have passed by their booth in NUS /NTU/ SMU career fair and left your number. 
Graduating students are hot favorites of cold-calls by recruiting managers from life insurance agencies and financial advisory firms. 
If Singapore tertiary students need sponsorship for any kind of events and don't mind hounding recruitment calls, approach insurance agencies and financial advisory firms for sponsorship.

Life Insurance Firm vs Financial Adviser

How to tell if you've been called to interview by an insurance firm or an advisory firm?

Financial services / Life insurance firms are like Prudential, Great Eastern, NTUC Income, Aviva etc

Financial Advisers are like IPP, PIAS, Finexis, Providend etc.

Here is a source where you can find a good list of them.

If somebody calls you up from an insurance firm, the person will introduce himself as someone from Michael Tan & Associates or Michael Tan Organization. When you ask the person over the phone what they do, he/she is not be upfront with you and tell you life insurance. Instead, it will be financial services.

And if somebody calls you up for an interview from a financial adviser, the introduction will also involve something like e.g. Michael Tan & Associates or Michael Tan Organization. When you ask  a bit more about what they do, he/she is also not likely to be upfront and tell you life insurance either. 
If you probe a little further, he/she will be quick to add that besides life insurance they also do investments and financial planning for corporations,
work with hundreds of life insurance firms, 
general insurance firms, 
fund managers and offshore investment firms. 
This is what typically most people know as a financial advisory firm.

Insurance Agent vs Financial Advisor

The birth of the Financial Advisers Act (FAA) in Singapore also gave rise to the existence of Financial Advisers Representatives (FAR).

Insurance agents work very hard to be seen on the same level as FARs. 
FARs work very hard at differentiating themselves from insurance agents.

It isn't easy.

Insurance Agent is an easy name to understand, remember and repeat. But it hasn't gained the best reputation over the years.

FAR is such a mouthful. Nobody ever remembers the name, much less repeat it. 
So even though its the only name insurance agents are not able to use, the FAR usually doesn't use the FAR title.

However, the closest title 'Financial Consultant' is used on practically every insurance agent's name card.

What exactly is the real difference between being an Insurance agent and a FAR?

Frankly speaking, not much difference.

That difference is only on the client's end.

The FAR's clients get to benefit from the FA firm's much much much wider range of financial products.

Aside from that, everything else is the same for the FAR and insurance agent.

Both are mostly remunerated by commissions ONLY.

The very few insurance agents who are paid a monthly salary either have a really low basic pay with some compromised commission structure, or are signed on to a program conjured by recruiting managers with too many terms and conditions about the monthly compensation.

There are also the minority independent FARs who don't receive commissions and charge clients fees instead.

Both have to find their own clients.

There are many ways to go about doing that . Approaching friends and family, asking for referrals, going for roadshows, cold callings, cold canvassing on the streets, doing surveys, and for some, getting professional introducers.

Other similarities and differences are minor in comparison.

At the end of the day, their job scope and environment is largely the same. Not one them is more superior than the other.

The question is, can you deal with 
1) constantly having to find clients and 
2) being remunerated  based on commissions only?

If you can't, save yourself the time, save clients the trouble. Pursue something else instead.

If you can, great, simply read on for the interview.


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