Why you need an Independent Financial Advisor

Often when I’m asked to introduce myself and what i do, I briefly mention that I’m an Independent Financial Advisor, and I help people build and maintain a robust financial portfolio that encompasses for a variety scenarios using a wide range of tools spanning across platforms. I do get a typical reply asking how long I’ve been selling insurance. While it may sound odd, there’s an overlap of what an insurance agent and an independent financial advisor does, however there are key differences, in this article I’d like to address those key differences and advantages. 

The distinct advantages of engaging an independent financial advisor in Singapore compared to an insurance agent include:

  • Independent financial advisors can provide a wide range of financial advice, including investment advice, retirement planning, estate planning, and tax planning.
  • Insurance agents are typically limited to providing advice on insurance products.
  • Some not all Independent financial advisors are typically paid a fee for their advice and services, allowing them to provide unbiased advice.
  • Insurance agents are paid on a commission basis, which may influence the advice they provide.
  • Independent financial advisors are required to adhere to certain standards of professionalism and conduct set by the MAS.
  • Independent financial advisors must complete ongoing training to maintain their license and stay up-to-date with the latest developments in the financial industry.
  • Engaging an independent financial advisor offers clients a trusted and valuable resource for their financial planning needs.

1. One of the key advantages of working with an independent financial advisor is the scope of their services. Independent financial advisors are licensed by the Monetary Authority of Singapore (MAS) to provide a wide range of financial advice, including investment advice, retirement planning, estate planning, and tax planning. They can provide comprehensive financial advice to help clients make informed decisions about their finances and achieve their long-term goals.

Insurance agents, on the other hand, are typically licensed by the MAS to sell insurance products, and their advice is limited to the products they sell. This means that they may not be able to provide the same level of comprehensive financial advice as an independent financial advisor.

Another advantage of working with an independent financial advisor is the way they are compensated. Some Independent financial advisors are paid a fee for their advice and services, which means that they are not incentivized to sell specific products. This allows them to provide unbiased advice that is in the best interests of the client, rather than advice that is influenced by commission-based incentives.

Insurance agents, on the other hand, are typically paid on a commission basis for the insurance policies they sell. This means that they may be more likely to recommend products that provide them with a higher commission, rather than products that are in the best interests of the client.

2. Independent financial advisors are required to adhere to certain standards of professionalism and conduct set by the MAS. They must complete ongoing training to maintain their license and keep up-to-date with the latest developments in the financial industry. This means that clients can have confidence in the expertise and professionalism of independent financial advisors. 

3. An Independent Financial or any other Financial Services Advisor may have the CFP/ AFP/ AWP Accreditation

Obtaining a Certified Financial Planner (CFP), Associate Financial Planner (AFP) or Associate Wealth Planner (AWP) designation is an important milestone for independent financial advisors in Singapore. The CFP/ AFP/ AWP is a globally recognized professional qualification that demonstrates a high level of knowledge and expertise in the field of financial planning.

To become a CFP/ AFP/ AWP, individuals must meet certain education and experience requirements, as well as pass a comprehensive exam. The CFP/ AFP/ AWP program is administered by the Financial Planning Association of Singapore (FPAS), which is the professional body for financial planning in Singapore.

One of the key benefits of obtaining a CFP/ AFP/ AWP is that it shows clients that the advisor has the knowledge and skills to provide comprehensive financial advice. The CFP program covers a wide range of topics, including financial planning, insurance, investments, tax planning, and retirement planning. This means that CFP/ AFP/ AWP holders are equipped to provide advice on a wide range of financial matters, giving clients confidence in their ability to help them achieve their financial goals.

Obtaining a CFP is not an easy process, and it requires dedication and commitment. The CFP/ AFP/ AWP designation demonstrates a high level of knowledge and expertise as critical thinking skills and taking an all rounded approach to financial planning is key to successful financial planning.  

Overall, engaging an independent financial advisor in Singapore offers a number of distinct advantages over working with an insurance agent. Independent financial advisors can provide comprehensive financial advice and are not influenced by commission-based incentives, making them a trusted and valuable resource for clients.

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