After Meeting 1,000 Clients, I Found These 9 Common Issues! Take a Look!
When discussing financial planning, I often hear clients say, “I’ve got it all sorted.” However, upon closer examination, I find several common issues. Here are the most frequent ones I’ve encountered:
1. Overemphasis on Insurance
Many people’s financial plans revolve mainly around insurance. This happens because many “financial advisors” are actually insurance salespeople who focus heavily on insurance needs. While insurance is important, if the entire plan is about insurance, something is missing. This is the most common issue I see. If you are looking for insurance types available in Singapore, you can refer to this article.
2. Skipping the Basics of Financial Planning
Proper financial planning starts with managing your income, assets, and financial ratios. Many skip this step! We need to ensure income covers current expenses and prepares for future needs like insurance and investments. Key financial ratios include debt ratio, savings ratio, debt-to-asset ratio, and investment-to-asset ratio. Checking these ratios can help identify issues, but this step is rarely taken.
3. Fear of Uncertainty Leading to Delays
Some people hesitate to invest due to fear of uncertainty. Both securities platforms and Investment-linked insurance plans (ILPs) are good starting points for investments. Bad past experiences or negative stories lead many to avoid investing, which is irrational. Modern investment products, especially ILPs, are user-friendly with features like premium holidays, partial withdrawals, and scheduled withdrawals. It’s important to stay open-minded and choose products that suit your needs.
4. Limited Investment Strategies
Some investors only engage in long positions, ignoring market-neutral products. Retail investors used to only have basic long funds, losing money when the market crashed. Now, some hedge funds are available to retail investors in Singapore, but many are unaware.
5. Misusing the CPF Special Account for Investments
The CPF Special Account (SA) offers a risk-free return of 4%. However, many people invest this money poorly, earning less or losing it. Fortunately, investing CPF funds is now fee-free, so “financial advisors” have less incentive to push these products.
6. Inappropriate Risk Levels in Retirement Investments
Some people take excessive risks in retirement investments, especially older individuals speculating in the stock market for quick gains, sometimes resulting in significant losses. Conversely, younger people, who can afford more risk, often keep too much money in cash due to fear.
7. Lack of Estate Planning
Estate planning is part of financial planning, but 99% of financial advisors don’t offer this service. Some consult lawyers to draft a will, but lawyers might not consider the full financial picture. Finding a reliable estate planner in Singapore can be challenging.
8. Low Coverage Due to Preference for Whole Life Policies
Some people prefer whole life policies with cash value, resulting in low coverage amounts. Whole life insurance is valuable but expensive. If one only buys whole life insurance, the coverage may be insufficient. Insurance is for protection, not investment, much like a phone plan is for communication. You may read this article for more info about insurance plans in Singapore.
9. Procrastination in Writing a Will
Most people know writing a will is important, but many still haven’t done it, thinking it’s not urgent. A will ensures the right people inherit your assets, prevents your estate from being frozen, reduces probate costs and time, and ensures elderly parents continue to receive support.
These are just some common mistakes I frequently encounter. I mainly provide investment and estate planning advice because my clients, usually aged 45 to 60+, have already purchased the necessary insurance and are more focused on establishing a comfortable retirement. Let’s have a chat over coffee if you are looking for personalised financial advice.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek unbiased financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Published By:
Lidwina Teo 维娜
With 5+ years in client service, I’m passionate about delivering personalized financial planning that puts your best interests first. Backed by 150+ business partners, I tailor solutions to help you reach your financial goals.
Contact me now to request for a quotation or schedule a coffee session for further discussion. See you soon!
拥有5年以上客户服务经验，我致力于提供以客户利益为先的个性化理财规划。依托150多位业务伙伴，我为您量身定制方案，助您实现财务目标。
欢迎咨询，随时为您准备方案！
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