Tuesday 12 June 2012

What is missing in your financial plan?

A financial plan is an on-going process of fact finding, analyzing your current budget and financial goals to accomplish the final financial goal or a set of circumstances, e.g. elimination of debt, retirement preparedness, etc.
If you have a sound financial plan, you could probably ignore the rest but please send me a bouquet if you find something that is 'of thought' in my post. Thanks in advance. In addition, if you have been following my posts, you would find my articles 'unique and rare' in the sense that other professionals do not post in their blog mainly because they 'charged' exorbitantly for professional charges. You get free, NO obligation in my blog.
Most often than not, most Singaporean do not have a financial plan which includes a budget & balance sheet, risk management or insurance plan, investment plan, will and income tax plan, etc.

·         Most often than not, most Singaporean do not have a financial plan which includes a budget & balance sheet, risk management or insurance plan, investment plan, will and income tax plan, etc.

·         I am not surprised to find out If, most of you, who have an impressive portfolio of insurance policies but have not make any plans for any nomination or will planning!

·         If you do have a will, were you advised the advantages of making your insurance nomination through the will or ‘nomination of beneficiaries’ framework such that you can decide intelligently given ‘that’ knowledge? If not, you need to find out where the difference is?

·         If you do not have a will, are you familiar with the ISA? Do you have a wish on how you like your assets to be distributed or leave it to the Act?

Whichever, what were your pending instructions for your investments through the insurance companies and various investment platforms after our demise? Would you leave it to the Executor or the Estate? How long would it take to identify and nominate an Administrator to manage your investment when you do not have a will (given the volatility of the market since March 2012)?

·         If you don’t understand what I am saying to any or all of the above
·         If you do not have a ‘valid’ CPF nomination, will or nomination of beneficiaries
·         If you do not have an insurance plan, investment plan, tax plan
·         If you do not have a financial plan

Why then do you

1.    Buy insurance for risk management
2.    Invest your hard earned savings for a comfortable retirement???
In the midst of your heavy schedule climbing up the corporate ladder, in search of a higher standard of living and comfort but you may not have realized that you may have paid the least attention to having a proper financial plan for yourself, your loved ones, siblings or dependants???. Most of us would deem this as least important but will realize it is too late when the unexpected event occurs. Pardon me for saying but the reality is some of you do not understand or know where your family priorities are!

What’s next? Having a plan is similar to having a health screening report. Without taking the prescription or executing the recommendation is equally pointless.

Last but not least, having an on-going financial plan is equally important as there are various and different aspects/stages in the life cycle that we have to go through as we become ‘wiser’!

Or would you blame it on your incompetent insurance agent, legal advisor or financial planner who forgot to tell/advise you in your reviews? Or are you probably waiting for snow to fall in Singapore?

Whatever is your journey, I hope you will come to realize the importance of planning and executing your financial plan soon. While for some, seeking a fresh or second opinion will help you realize what is missing! If you have any further queries, I am sure you’ll know who to contact. Happy planning!


Thursday 7 June 2012

Why financial markets are not going your trend?

Financial markets are not predictable.

Financial markets are not logical most of the times.
Most would wonder why Asian equity markets plunge while US Dow rallied for a third day or US markets ended mixed.

While

·         China’s ‘good news’ rate cut spooks market from MarketWatch


·         Spanish Banks Need $50 Billion: IMF Report from CNBC.....

The rate cut was NOT a surprise. My post on China Making Contingency Plans for a Greek Exit would have pre-empted you that China was on to something! Though missed by many while interpreted with a different mindset would have resulted otherwise.
Bernanke is Bernanke. How well do you read Mr. Bernanke? As in my earlier post, he is a patient strategist. His moves and actions are well supported. My opinion is that his decision to utilise the appropriate tool or tools would be when he has sufficient data to react. Meanwhile the FOMC is not convinced to react given the current financial market. It means there is room to fall.
IMF. Is $50 Billion sufficient?


Markets movements are based on ‘speculations’ and hopes. If speculated wrongly which I believe the current speculation is WRONG, the reality takes control.
In addition, was that a coordinated Central Banks action? Is there volatility? Or is there more uncertainty? What’s going to happen on June 17th or 18th?

Why are my posts different from others? My question to the audience is do you see, hear, smell the ‘happenings’ in the financial markets? Do you utilise your senses? Hence, you would be able to TASTE the success in the journey of investing!
Learn and educate yourself at a higher level – above average. Outsource - if you do not have time or if it is not your cup of tea. Doors are always open to queries. Have a great weekend!

Monday 4 June 2012

China Making Contingency Plans for a Greek Exit

The above post was just released from CNBC. It discusses a call for contingency plans from the China authorities for a possible Greek exit.

As you probably know, news providers are eager to broadcast the latest news. There are times when they do not verify the source of information. Do you recall the Spain-IMF rescue which was later denied?

Whichever, we too, have a contingency plan.
If the above is true, how would this relate to ‘global investors call for coordinated Central Bank intervention’? The pieces of the jigsaw puzzle does not add up!

·         Would China participate with Central Banks for a coordinated Central Bank intervention?
·         If no, why not?
·         If China were too, wouldn’t the stock market rally? If yes, why would there still be a call for a contingency plan?
·         It’s possible; there may not be a coordinated Central Bank intervention before June 17th.
·         If it were to happen, then the call for a contingency plan cautions any market rally as it may be short lived. Hence, be very careful for (many) multiple bull traps following rallies.
The discussion goes on...
The above is just part of my daily process, monitoring financial markets and putting pieces together. I am not sure if it would help you but we need to contribute and put our brains together such that Singapore investors are not suckered into bull rallies and lose their hard earned savings.

As usual, the above are my personal opinions and do not demonstrate any form of advice or recommendation. And if you find the above interesting, please remember to add me, like me or forward the article to your friends. Otherwise, I would assume that these posts do not add any value to the audience and hence I would put my effort in better areas of interest.


I would monitor the above 'news' closely and if were true than it would affect the current strategy in place. That is how important it is to monitor global news constantly, interpret what it means and to verify if the news sounds logical or otherwise.

Have a great week ahead!

Think deep and hard before you invest

Think deep and hard before you invest / advise / share.
The markets had been tough since 2010. Most (if not all) investors are losing their capital. Even if you are a ‘pro’, your experience would have assisted you to cushion the fall in value.

I am suggesting that you leave your investment to the ‘experienced’ professionals. Let me try to explain. Are you able to replace the professional experience of a certified doctor or lawyer? Of course not! Got it?

However, most of you try to educate yourself by reading books and attending investment seminars. You think it is just as simple as that. The question is that after you ‘think’ you have enough experience, do you think you could replace the doctor or the lawyer?

Investing is like going to war. It is hell out that. Try going to war without two years of national service. Most of you do not know you’re going to war. If you want to make money, you need to put in effort, time and dedication. It is not for part timers. I hope you realize the above at THIS point.

By the time you realize that if it’s not your profession to be a personal trader most of you are bound to pay ‘school fees’ forever.

Where did you go wrong? Your reason for seeking and managing your own investment could be as a result that your financial institution, ‘insurance agent’, ’financial planner’, ’wealth planner’, etc recommended this product or that AND they  lost your money. They lost your investment. And you have a long list of bloggers who would suggest that you manage your own investments. After the above, try investing by yourself?

The fact is that are you stupid, crazy, mad or an idiot?

If you still don’t get it, read the above paragraph again. Are they investment advisers? NO!

If you still do not know how to differentiate, they are retail outlets, distributors, salesman, etc. And even if they are investment advisers, their recommendation would be based on your risk profile. ‘PERIOD’. Is it just that simple?

If you think they could help you to potentially enhance your investments, the next question is

·         Do they monitor financial markets?
·         Do they understand what’s happening?
·         Do they know what’s logical or otherwise? Even so, do they have a strategy?
·         Are they discipline to execute the strategy?
·         Do they inform you what is happening? The best part is do you bother to read your emails and acknowledge his opinions?
Otherwise, all the above are successful ingredients for you to FAIL. I can’t blame most of you, as most of you do not have a ‘degree’ in investments. However, you need to be smart enough to ask the ‘right’ set of questions AND to identify and if you have chosen the ‘right’ product – the professional advice.

The other issue is that most of us are not custom to making payment for professional advice. Hence, you get ‘peanuts’! And up to this point, I can safely say that most of you are still not able to identify the real ‘Mc Coy’. I hope the relevant authorities are able to note my comments and assist Singaporeans in the above matter.

The above is not an exhaust list of why people lose their investment or they got burnt. There are many other reasons. Please share your thought if you have any.

Audience, please be reactive. If you agree to the above points, click ‘like me’ ‘add Google’ and share the article with your friends. Between two audience and if one forwards the article, my statistics would increase by 50%. Bear in mind. Thank you.

Read next--> China Making Contingency Plans for a Greek Exit



 

Thursday 31 May 2012

2012 Q1 was a bull trap

The Year 2011 was indeed a difficult year for the financial markets. We had the earthquake, tsunami, US credit rating and Europe issues, etc.

To cushion the fall in 2011 Q3, major economies intervened. The effects started to materialise in late 2011 Q4 as it takes time. Most of 2012 Q1 rally was spanned by the massive pumping of liquidity from major economies not forgetting from Japan and TWO (2) LTROs from Europe!

Amidst the rally in 2012 Q1, most of you who followed my posts would have realised the rally could not last as explained in buy HIGH sell LOW! Following which, Economic data starts to weaken

·         Weak PMI spanning from China to Europe
·         IP grows at a slower pace
·         Trend in exports and imports start to weaken in major economies
·         Negative GDP is noticed in most economies
·         Technical recession is found in most countries in Europe, etc

The ‘Risk ON’ tap was shut. Risk OFF was then laid on the table. As you probably know, this was triggered after the US data released in May 2012 coupled with several elections in Europe. Henceforth, most data released from Japan, China and Europe not forgetting the US starts to deteriorate. This coincided with 'Sell in May and Go away'.

Where did all the money go? Valuations in equities, gold, commodities, crude oil, etc. fell. Most of this was channelled to safe haven instruments like the Japanese Yen, US dollar, Treasuries and equivalents. With the rise in the US dollar, commodity currencies, crude oil, etc fell. This is a ripple effect. Unless Risk OFF is taken off the tap, the US dollar will continue to be of choice. Have you noticed the strength of the US dollar index?

Hence, we will have to wait until the laws of economics is triggered – Demand and Supply. Until then, be very (very) prudent on where, when, how much you might want to risk. Gold will be of choice BUT not at this time.

With no catalyst in sight or for that matter, QE3, LTRO, China stimulus can you find a reason to take risk? Bargain hunting is for the novice. If you do, please share with the audience.

While most of your investment tools may differ from mine, I strongly advise that you do not ignore my speculations. The current environment may not be visible to you but is very visible to me. The situation is totally different from what you understand. Be very careful if shampoo salesman tells you to buy because it is cheap. If you do without understand what you're going into, it is like burning your assets.

With total uncertainty in Europe, major trading partners will suffer the same fate (in trade). Even China will not be spared (in the near term) as China needs time to react to the situation. Hence, the global economy will slow down at a rapid pace.

From now Singapore time until Friday, 930pm I would expect the markets to be in a tight trading range despite the fact that PMI data from China, UK and Europe came out weaker than expected. The major focus for the week would be US data on ISM Index, nonfarm payrolls and Unemployment. The EZ joblessness data which just hit headlines rose to the highest level ever. I wouldn't be surprise if the US nonfarm payroll data completes the puzzle of weak unemployment. Otherwise, i'll be very surprised but am very sure any rally will be short lived.

Unless major economies work in tandem, coordinated (not individual) economies launch growth directions, any rally in the near future will be short lived. Greece is the focus and the giunea pig, put your focus in SPAIN - "Spexit". Falling currencies leading to higher inflation coupled with growth concerns is a crucial problem to most economies!

If you find my post of substance, please forward it to your friends to avoid any unnecessary damage to their investment plan or retirement funding! Thanking you in advance.
The following is a comical narrative of how Greece wins the world cup-->
Read next. and
China Making Contingency Plans for a Greek Exit


2014 FIFA World Cup

Since the last World Cup in 2010, it is widely rumored that Greece would emerge as champions in the 2014 FIFA World Cup. There’s somehow a twist to the World Cup. Instead of playing with a soccer ball, the players are kicking the can!

Greece is widely rumored to reach the finals. In the Year 2010, they scored a goal allowing them to qualify the qualifying rounds. A goal is their first bailout package.

In 2011, Greece scored another goal making it a 2-0 and received the next bailout package. Hmmm, it looks like Greece is getting better with the game.

In the Year 2012, after having 2 years of experience, Greece seems to be improving game after game, year after year, amidst them following/not following the rules(austerity) of the game. They were widely rumored to make it the Q finals. The latest result in favor of Greece is 3-0. They continued receiving their 2nd anniversary bailout package.

Would Greece reach the semi-finals in 2013 or the finals in 2014? The situation is crucial. In fact the situation is very crucial by the volatility in financial markets.

Would the election in mid June create an impact/earthquake that is currently not measurable on the Richter scale? No one is able to calculate the impact currently.

For three years, Greece had been allowed, bailout after bailout, of course with terms and condition. Is it getting better?

We have the experience with PIGS, scores of meeting with France & Germany, from the EU summit, Euro zone, ECB, ESFS, ESM. On top of that we have Financial Ministers meeting, global leaders – G3, G7, G8, G20, etc.

Greece was ‘allowed’ to win game after game, year after year. Greece was allowed, I repeat Greece was allowed to win.

The question is, how long will Greece be allowed to kick the can? Oops! I mean, how long would leaders be allowed to kick the can, Until 2014 FIFA World Cup?

I have been using the word ‘allowed’. Can they be stopped? In other words, why were they not stopped from reaching the finals? Aren’t there sufficient leaders to stop this small little country with little or no knowledge of soccer? Isn’t there a team of experience soccer players to stop this giant-killer?

Wouldn’t global team from Fort Knox, Panda nor the Samurais or 'sum of the above' come up with a game strategy to stop Greece from winning the next game.

If Greece were to reach the finals in 2014, it was allowed to win. Losing a game does not mean Greece won. The opponents lost. Three own goals scored 3 different years. That’s a hat-trick!

Wake up, wake up! Where’s your coach? Build your morale and stop Greece from triggering the next financial meltdown! Or are Global leaders are executing a plan for a financial meltdown???

From the look of the volatility in financial markets, the reading is that global investors do not have the confidence at all! Dear audience: Is there anything to comment? FIFA 2014?

In my humble opinion, this is a situation where the storm is brewing before the sunrise.

If I am proven wrong, you know where the world when wrong. Have you heard about the joke? where in one of those emerging economies, they amputated the head of the President, replace it with a coconut and the President could still rule the country!


Wednesday 30 May 2012

Declines in Asian Bank, Property Stocks Yield Rich Dividends

The above headline is extracted from CNBC.

Pause. (While you are reading the headline thru the hyperlink generated). Hyperlink - fixed; There were amendments to the original title and hence the link!
What comes into your mind? Think out of the BOX?

There are several (many, in fact) that crosses my mind. I like to post, just two points that cross my mind.
First of all, many would agree that the current market situation is volatile, very volatile to be correct. Hence, one of the options in diversification as suggested by the author is ‘income’, dividend or interest.

However, investors should know their risk profile, time horizon and investment objectives. More importantly in relation to the above are your investment objectives.

Investment objectives could be
·         Capital appreciation, moderate, aggressive, etc
·         Stream of income
·         Or both.

Hence, the above is more suitable for investors whose investment objectives are a stream of income.

In the article, did you notice the range of dividends being declared?

Question? Which investment of yours generates an average dividend as declared in the article. Would your

·         savings account,
·         CPF account,
·         SRS account, etc

Generate a similar amount of dividend? The point suggested here is stream of income and NOT capital appreciation or otherwise. So no arguement can be generated.

(I find most investors do not have a clear investment objective, hence the investment advisor has a more difficult task to respond to.)

Now that you may (may not) have understood the above, you may wish to decide (or otherwise) to diversify your investment portfolio accordingly.


However, there's still a worry! Are you familar with the current rate of inflation in Singapore? Whatever, the value of your assets are being eroded! Are you taking going to take risk or simply watch your purchasing power loses it's value?

Point (2). Dividends are attractive. Have you ever notice how much your insurance cash value is generated on an annual basis for your whole life policies? I am trying to relate dividends and whole life policies declaration of bonuses, if any. Are there any whole life policies that generate more than 3% (just plucking a figure) on an annual yield basis?

Is the above ‘food for thought’? An avenue to your insurance portfolio diversification? Is your insurance advisor recommending similar alternatives? Does he have the license to advice on most investment solutions? Did he put 1 plus 1 together?

I am just sharing a penny’s worth of thoughts or advice while monitoring the market and pending my thoughts for the audience. Or perhaps, some audience still do not know what my point is?



Tuesday 29 May 2012

Sun Tzu Art of War

Most of us have heard of SUN Tzu. There was a ‘rumour’ Sun Tzu wrote a script on the Art of War. After his era, kings, prince, emperors, etc were searching for the script. Eventually the script was found.

One of Sun Tzu’s knowledge was related to understanding the weather. You may have heard how he used the weather to his advantage to win his battles (544 BC - 496 BC) during the Warring States Period.. In one battle he 'forecasted' the eclipse of the Sun to surprise the enemy.

Courtesy from Anonymous: Another well known strategist, Zhuge Liang (181–234; lived during the Three Kingdoms Era, of the China history; a latter period than Sun Tzu), who studied the stars, astronomy and weather patterns "borrowed" the East Wind to defeat Cao Cao at the battle at Red Cliff.

How does this relate to market trends?


The above is related to understanding the weather or climate. In this case, the financial equivalent is relating to the macros, economic data, geo-politics, music and noises happening in the financial market. And to filter/massage the actual events.

While most of you invest in counter stocks, foreign exchange, etfs, etc you are either ignorant or ignore the above or choose to ignore the above. But I hope the above would generate interest for you to equip yourself with the financial climate. Hence, you would have a better understanding why equities will behave more illogical than before!

Others in brief. The above is Understanding the weather.

·         Do you understand yourself? Risk profile, tolerant, patience, discipline,etc

·        Do you understand your terrain? Just stocks? Units trusts? Forex? Etfs? (For diversification)

·         Who’s your friend or enemy?

Without a ‘set’ of the above, how do you read the financial market? Who are your enemy? What sort of ‘terrain’ do you understand and use to your advantage? Etc...

If you admire Sun Tzu, his knowledge, the history he created and to relate how his Art of War manual can be used to your advantage in your personal investment, please equip yourself with knowledge, plan a strategy and execute your strategy with discipline.

In other words, please stop trading and investing blindly. I’ve witnessed

·         too many investors being slaughtered, time and again, without understand where is ignorance IS!

·        banks, investment advisors who does not have any idea what is/are financial markets, hence

·         without understanding the climate, how does he have a plan/strategy

·         how does he plan to go for a battle

·         What tools, strategy would he use, etc...?

·         How does he provide professional advice???

Remember and note: When you invest, you are strongly advised NOT to buy the stock, the Forex, the UT fund, the commodity, etc (all these are 'dead') but the 'advice' of your professional investment advisor because his best product is his advise!. Choose your investment advisor intelligently.

In conclusion, if you still do not understand what I am trying to relate, take my advice. Do not invest.


If you agree with the above AND you wish to help your friends, please forward the post to your friends such that they may understand investment better. The finance.sg is just one collection of financial bloggers. Your assistance and loyalty will enhance the blog and me and YOUR firends. This equates to a win-win-win situation!

On a separate post, Greece needs more than an AMD, in a situation where an individual is on a life support system, he is supported medically by life support machines. In this case, Greece had been financially unsound for three years on a life support system draining the finances of his siblings (Europe), currently has no government and a decision, whether to continue on the life support system in mid June through elections is NOT the solution to Greece problems.

Fortunately, Greece had a chance to 'wake up' from his 'coma' and decides on election day! There's more to this or the AMD...

I hope the above will assist you to relate the situation is Greece from an AMD point of view and the future of Europe and trading partners of Europe! 

Read next post:






Greece needs more than an AMD

AMD is a medical term for Advance Medical Directive. As the name implies it is an advance of a medical directive in the event the individual is depended on a life support system.

I hope most of you had been informed by your financial planner that there exists an AMD in Singapore.  Currently, there is no cost to planning an AMD. The cost of not knowing/planning/executing an AMD is the financial burden or cost that your loved ones, dependants will have to fork out while keeping the life support system for you. Talk to your financial planner or your family doctor to get a fresh opinion.

The first stage, if Greece needs to execute the AMD is mid-June when the Greeks have to go to the polls. (pardon my punchline, is there a Greek government?) The result may/may not determine if Greece will stay with the Euro. Otherwise the can will be kick further down the road. As the play kicking the can successfully for the last three years, they will find that the wall is just a few metes ahead. No more room to kick.

While the focus had been Greece and Spain or Europe for the matter, the Grexit had overshadowed much event globally. Please be reminded that

·         Weak global growth is still a primary concern as witnessed by the camp of Energy speculators driving crude oil prices down

·         The relative strength/rise in the US dollar as a safe haven against most currencies signifies flow to safe haven and withdrawing/unwinding of carry trades in currencies.

·         Europe probably going into a technical recession affecting major trading partners – US, China, Japan and not forgetting global partners. Fall in exports; manufacturing, industrial production says it all.

While the strength in the US dollar on a back to back weekly rise, most currencies including Asian currencies are weakening dramatically resulting in lower GDP growth and rising inflation.

Unless global FM and leaders come to a quick and decisive plan, I wouldn’t be able to see how this ‘salted fish’ situation would ever be able to swim again. Hence, I would not be able to see how the current relief or ‘breather’ in equities market is going to last beyond this week where ‘packed’ financial data are to be released over the next couple of days...
Only the brave with a strong heart coupled with lots of lady luck could eke out a gain in this situation. That is what investment is all about - NO RISK NO GAIN. But i won't fall into this situation.

Read next--> Two bold predictions for Singapore
SUN TZU Art of War
Boom Gloom and Doom


Monday 28 May 2012

Two bold predictions for Singapore

If you have been following my posts – risk management, the following will impact most of us

1.    There will be a major change in the insurance industry as Singaporeans are getting more insurance savvy and demand for better and suitable products

2.    In housing loans, while most of you have been debating and timing between fix, floating or hybrid interest rates, did most of you measure the future affordability when rates increase to 3-4%. As a result, where would most of you have the additional cash to finance the mortgage loans???

Since the financial crisis/Lehman back to 2008, Singaporeans have been enjoying competitive housing interest rates for almost 4 years. As always, most Singaporeans fail to see financial impacts while enjoying with their high standard of living and comfort.

BUT When (2) occurs (it will definitely occur as a result of global growth), situations will occur and WILL impact most Singaporeans, financial industry, stock market and the economy!

The above post is a reminder to Singaporeans/PRs/mortgage loan owners who may not be savvy enough to identify, recognize and visualize the financial impact UNTIL it is TOO late.

What should you do next? Are your financial planners, HNW bankers thinking OUT OF THE BOX? (I doubt so as they're out to make more money from you.) Make sure you engage the right financial planner to access the financial impact. In addition, if you find my posts interesting, do not keep it in your drawer/inbox/trash but please forward to your freinds and share the thoughts....

My warning comes ... such that you are advised to make and take precautions and not become as a victim to the above events.

The following is just my personal opinions which differs from most investors, economists, etc who are much highly experience than my humble self.

Read more on:

Greece needs more than an AMD
Boom Gloom and Doom
SUN TZU Art of War





Boom Gloom and Doom

When all seems Boom Gloom and Doom in the month of May, the reverse happens.

My posts had been helping you, ‘the audience’ to avoid bear markets as far back as May 2011 and market rally as far back Nov 2011. In my previous posts on market trends


The following abstract...

“However, having provided all the bad news.... here comes my technical reading.

Technically, RSI and various indicators signal ‘oversold’ levels. The big boys, fund houses may have program buying at key technical support levels. Hence, there’s a strong possibility the market would take a short breather from these oversold positions.

Following which markets may rally depend on the rebound or if short covering is triggered. We’ll cross this bridge at the appropriate time”.

1. Coincidentally, US and Europe markets reversed course following my post. The US and Europe markets returned a positive week after string of weekly losses! How coincident!

2. The last Para may/may not happen and it depends on situations and events.


3. The above remark can be found in many news provider which included and warned 'signs' still show a sell trade, which i omitted from my post as a result of 'my set' of technical indicators which differs from theirs!



The Greek election is in mid June. Between now and then, this week is pack with heavy data

·         Initial jobless claims, ADP reports, nonfarm payroll, unemployment data

·         US GDP

·         China PMI

Would we continue to receive weak data from US and China? Guess work is not in my dictionary.

Read next -->
Greece needs more than an AMD
Two bold predictions for Singapore

  


Wednesday 23 May 2012

Are your existing insurance plan suitable?


Thank you, audience for a well received posting on



I had lots of emails and queries regarding suitability. We have talks/seminar on investment suitability, Client Knowledge Assessment, Product Suitability, etc but what is insurance suitability?

First of all, I am impressed/surprised that most Audience picked up this insurance jargon ‘suitability’. Congrats!

Hence, the common question is what did I mean by the above title?

In Singapore's context, the following is just ONE example...Take for e.g. Mr. Chan who wants to start off an insurance plan for his daughter Age, 19.

His preference is to cover the child for Sum Assured of S$ 300,000 for

1.    premature death

2.    total & permanent disability (TPD)

3.    terminal illness (TI)

4.    critical illness (CI) or major illness coupled with early stage dread disease benefit

5.    AND cash values of S$ 100,000 at age 64/65 thereabouts.

The operative on (5) is ‘AND’ and this is where the word suitability is in question.

If (1) – (5) were my client’s preference; the above plan from MOST insurers will NOT meet the client’s preference.

Let’s go through the above case one by one.

Should premature death occur or TPD or TI or CI was to be diagnosed, S$ 300,000 would be paid out as the event accelerates the basic plan benefits.

The question of concern is

·         What would happen to the Cash value at age 64? Upon claim of any of the above,

·         would the life assured be guaranteed of another insurance plan,

·         would the life assured buy an endowment plan (for retirement funding)

·         Would the life assured receive the Cash value at Age 54/65 then???

If the Cash value is not important, then why did you choose a whole life plan? Wouldn’t a term plan lower the cost of the premium? But, please don’t come and say that term plan has no cash value. Know your needs; is it protection you’re looking for?

What is the probability for claims one to four?

·         Death – once

·         TPD once

·         TI once

·         Major illness – more than once

·         Early stage detection – in addition to more than once, early is earlier!

You be the judge! Is the plan well designed to fulfil the needs of Mr. Tan.? Is the plan suitable for his daughter?

How could the above be avoided?

You can’t, now!  By ‘insurance’ statistics, most of you subscribed to the above plan. The possible source of the problem is you ‘employed’ an insurance agent or a financial planner who does not have a single idea of what financial planning is ALL about. Some might understand but may not have recommended products that are suitable but of convenience!

Fortunately, this gives me an opportunity to highlight any solutions that are not suitable for their clients! So, did your insurance agent earn his rightful commission or should professional fees be paid for highlighting this plan that is not suitable for the client?




If you’re in this situation how this could be rectified. The choice is go back to your insurance agent or financial advisor. If you wish to have a fresh opinion, you may contact financial practitioners who know what risk management is all about, preferably 15 years or more! It can be made right!