The most common mistakes the public make when buying a financial solution!

For a list of ‘reported’ problems you may wish to stroll down this site at Thefinance.sg. I am trying to identify on the common mistakes the public make because once identified this will not lead to more problems or frustration in the future. In the first place, if they did not buy the financial product, the problems will not occur. Stamp the problem at the beginning before it happens!

There are endless problems and complains on this (any) site, when the public buy a financial solution, be it insurance, ILPs or Unit Trusts. First of all, you do not buy financial products, the important things is to buy his advice.

The point is, you should be looking for his financial advice (relating to a problem like financial risk, investment risk, etc). You should try to identify the risk and the related financial impact on the possibility. the event will occur. You would try to estimate how much, what, when the financial damage will be.

Having a complete picture of the risk, your financial planner (at annual reviews or ad hoc reviews) should be able to make reasonable recommendations based on your needs. If you are not able to estimate the financial impact or damage, your financial advisor should be able to assist by asking you a set of questions - the fact find.

Some points to note, you do NOT

·         buy from strangers or acquaintances (in any instance)

·         buy at sales booth at shopping centers or ‘hub’. These are informative sites (to inform the public of a new product or a solution to a financial problem) but it should be restricted just to informing the public and NOT corner the public to an immediate sale. Otherwise, it is plain selling. This would just promote more problems.

·         buy at your first meeting with a new adviser (the objective is to know the client-planner)

·         buy when someone else has it – he buy, I buy

·         buy when informed of good features – good ‘potential’ returns, Greed ‘blinds’ you

·         buy from a bank (unless your financial advisor is with you. This is always printed on the brochure but every time the public ignores this).

·         buy when pressurized (kindly just walk away, they are not thugs.)

·         buy, just that you want to support someone (This is subjective hence you need to be responsible for your actions)

First of all, you should NOT buy from strangers or acquaintances. Personally, I may consider if a financial consultant is referred to me, but again, I would most probably start off with a better understanding of his Vision, Mission and related financial career.

The Vision and Mission statement will probably tell me more of his passion in his/her career, career objective and eliminates those ‘fly by night’ agents.

In addition, I would ask for something more like his resume which could identify his personal history, career, education, after all he will be asking the same questions in your first appointment with him/her.

In my opinion, the common mistake the public make, time and time and time again is that they will buy a prescription before any diagnosis from any registered practitioner at any corner of the street! blinded by promotions or gifts. Please avoid these (not an exhaust list) as you may be contributing to the next biggest investment after your property investment.