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:
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.
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.
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.
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.
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.
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.
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.
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.
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 independent 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.
With over 5 years of experience in client service industries, I come to understand and appreciate the importance of high-quality customer service and customer experience. The key is to always prioritize the best interests of customers, ensuring their needs and expectations are met with professionalism.
The passion for client service extends into my current role where I strive to deliver personalized financial planning services. With more than 150 business partners in our company, I can help you achieve your financial goals by analyzing various financial products and offering tailored financial advice.
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