What is an Independent Financial Adviser (IFA)?
According to the Monetary Authority of Singapore, a Financial Adviser is “Financial advisers are licensed and regulated under the Financial Advisers Act. They may provide the whole range of financial advisory services as specified in the Second Schedule of the Financial Advisers Act with the appropriate Financial Advisers license. Currently, these services include advising others on investment products, issuance of research reports covering investment products, marketing of any collective investment schemes, as well as arranging life policies for others.”
Some of these Advisers tack on the word “Independent” in front of their title to give them added ‘marketing power’. But do not be fooled, they are not much better than run of the mill FAs. Plus they may only be “Independent” only in their own minds. By their own definition, they claim to be independent of the financial institutions in recommending insurance, savings, or credit products. They are, according to them, not tied to one particular firm, and are free to recommend the best products for the client. The reality is that the difference is razor thin, as you the consumer is free to choose from several insurance agencies on your own. Plus you do not know in the background whether he gets a bigger commission from the insurance company he does recommend to you. To me, if I was an Independent FA, I would have an open declaration which states that whatever I recommend to a client is not the agency or financial institution which paid me the highest commission.
I had the misfortune of trying one IFA who was a former colleague of mine. He felt he could not make it in his profession, so he switched careers to become an IFA after taking most of the required exams. In hindsight, I should have heeded some troubling signs that he exhibited while he was working. He took more personal calls and did more of his ‘outside of work’ business than the job he was paid to do. Perhaps he was already preparing to switch careers?
The first thing I asked of him was to find a good health insurance. I had been royally screwed by my first insurance agent as my health cover from company A only covered me to the age of 75 and had life riders which made the premium three times higher than other comparable medical insurance. Sigh. This part he did very well and now I have lifetime coverage for one third the premium of insurance company A. Plus I got coverage for my mother which paid off when she needed hip surgery.
But things went downhill from that point. I had fallen again for the usual trick of such financial people; they give you good advice at first to gain your trust, then whack you with bad and dubious advice after that.
(continued in Part 2)