Questions To Ask My Financial Adviser

Representatives of Financial Advisers (FAs) are trained in dispensing sound financial advice that aim to maximize their clients’ returns. In the process of providing you with suitable financial solutions to meet your goals, they also help you make better informed choices about your financial future.
 
Here are five questions you should ask an FA before you settle for one:

  1. Are you regulated by the Monetary Authority of Singapore (MAS)?

    2. Engage only FAs that are regulated by the MAS, which are required to comply with the business conduct rules under the Financial Advisers Act.
     
    To view the list of MAS-regulated FAs and the types of services they are authorized to provide, please visit the MAS website at www.mas.gov.sg

  2. What experience and qualifications do you have?

    3. Conduct a background check on the track record of the firm. An FA should be selected based on its merits rather than the range of products the company offers.
     
    Also, find out the qualifications of the FA representative. Look for a representative who has proven experience in financial planning matters such as insurance, tax planning, investments, estate planning or retirement planning. Find out how long the planner has been in practice and the number and types of companies with which he or she has been associated with.

  3. What is your approach to financial planning?

    4. Ask the FA about the type of clients and financial situations they typically like to work with. Make sure the FA representative’s viewpoint on investing is not too cautious or overly aggressive for you.

  4. How will I pay for your services?
     
    As part of your financial planning agreement, the FA representatives should clearly tell you in writing how they will be paid for the services to be provided. They can be paid in several ways:
    1. A salary paid by the company for which they work for. The FA receives payment from you or others, either in fees or commissions, in order to pay its representatives’ salary;
    2. Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income;
    3. Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the premium you pay for a product or of the amount that you invest.

  5. Can I have it in writing?

    6. Before dealing with an FA representative, ask him/her to provide you with a) the name of the FA he represents; and b) the type of financial advisory service he is authorized to provide.
     
    When in doubt, call the FA to confirm the information provided by the representative.
     
    Store all documents as they might come in handy if you need to lodge a complaint or take legal action in future.

Questions to explore with your Financial Adviser (FA) representative before purchasing an insurance policy
 
While a FA representative can recommend particular products that are appropriate for your needs, you are the one who has to make the final decision. As a prospective customer, it is still your responsibility to weigh the pros and cons of each policy to decide which one/s would best suit your needs. If you have any questions pertaining to the policies, always consult your FA representative. Do not take up a policy when you are unsure of its functions		 BE CAREFUL!

  • Do not buy any insurance product unless you have fully understood what you are buying into
  • Read all documents and fine print carefully before signing anything.
  • Do not release your identity card without a valid reason.
  • Be careful of verbal promises and guarantees of high returns. Insist on written confirmation from your FA representative.

Here are some questions you should explore with your FA representative when choosing a plan:

1. What kind of insurance do I need? First, you should understand your needs and objectives. After completing the fact-find process, you will be in a better position to see the type of insurance you need, be it for protection, savings, investment or retirement.
 
If you are thinking of investment, you should map out your risk appetite as higher returns come with higher risks. For savings plans, take special note of the guaranteed and non-guaranteed portions of your plan. The non-guaranteed portion can be revised in future, depending on the performance of the company's life funds.
 
Even after your have purchased an insurance policy, you should review your needs and objectives regularly as they may change over time.
2. What will my insurance policy cover? The cover varies with different insurance policies. Before making a purchase, your FA representative should present you with a list of recommendations, including the types of policies and their benefits. You should study these thoroughly to be clear of what your policy covers. When in doubt, seek clarification from him.
3. How much insurance coverage do I need? The amount of insurance coverage you need will depend on many factors such as:

  • The number of dependants you have;
  • Existing debts or mortgages;
  • The level of coverage you want for your family should you meet an untimely death or are no longer able to earn an income due to critical illness or disability;
  • How much you need for your children's education fund;
  • Your investment needs.

Seek the help of an FA representative to ascertain your current financial circumstance and your insurance needs. Not everyone will have the financial ability to purchase immediately all the insurance plans that they need. With fact finding, your representative will be better placed to help you prioritise your needs and select policies that meet your present budget.
4. How much will I be paying for insurance cover? The amount of premiums paid depends on the insurance coverage you need. Review the benefits the insurance policy provides and then determine if you should opt for a rider. With some riders, you may stop paying premiums for your policy when you become disabled and still enjoy the protection benefits of the policy.
 
However, if your policy does not have this optional rider and you are finding it difficult to continue meeting the premium payments, you should discuss with your FA representative what other options may be available for you to consider.
5. What happens if I fail to make the required premium payments? You typically have a 30- or 31-day grace period during which you can pay the premium with no interest charged. If you do not pay your premium within this grace period, and as long as your policy has sufficient cash value, the insurance company will automatically pay your overdue premium by taking a loan against the policy’s cash value. This keeps your policy in force but you will have to pay interest on this loan.
6. How do I make a claim? You should fill out a claim form and contact the FA representative from whom you bought your policy. You need to submit all relevant documents such as original receipts to your insurer to support your claim.
 
If your insurer can settle your claim, you will be issued a cheque generally within 7 days from the time they receive all relevant documents. However, if your insurer is unable to deal with all or any part of your claim, they will provide a written explanation.
7. Should I replace an existing insurance policy? Buying an insurance policy is a long term commitment and any decision to cancel a policy should only be taken after careful consideration.
 
If you are unable to continue paying premiums on your current policy, you should consult your FA representative to consider other options that are available. It may be possible to reduce the sum assured which in turn will reduce the premiums.
 
If you finally decide that there are valid reasons to cancel your current policy and purchase a new one, we would recommend that you do not cancel your original policy until you receive confirmation that your new policy is in force. This will ensure that you are not left without coverage during the interim period.
8. What happens if I terminate my policy? Early cancellation of a policy may incur additional fees and charges. What is more important is that you may be losing valuable benefits. Your health status could have changed since you first took out the policy and you may not be able to get a similar level of protection in a new policy as you will be required to declare all pre-existing conditions and possibly undertake a medical examination.

For more information on what to look out for when dealing with a financial adviser, refer to the “Dealing with a Financial Adviser: What to look out for?”