Is It a Sales Pitch or Is It a financial advice ?

We are continuing our series on "Is your advisor an asset or liability?"

Today we are going to touch a little bit more on identifying your advisor and his/her abilities.

The number one issue in our country today is retirement planning.
Your agent ask you, have you thought of saving for your retirement?
Sundays times also share on a projection amount which you need in order to retire comfortably.

The most common solutions that i know of is a 25years saving plan. Agents are literally, not figuratively selling them anyway and everywhere. Throw in a cash withdrawal options and it's every young graduate dream plan.

Then, there are another more atas group of agents, who believe in investment linked. They argued, the returns from an endowment is not good enough to hedge against inflations. So we need an investment linked policy to hedge against inflations and on top of that, giving my clients good returns for his/her money.

I sincerely believed both group of agents think that they are doing their clients a favor.
Though their intention is good, but the lack of knowledge will caused them some problems in the near future. But i will not touch on that in this post.

Whenever your agents recommend you an investment linked product, as you know there are higher risk involved in such products and its totally non guaranteed, so initially, most of us would be paralyzed by this fact. And our agents will pacify us by saying

"Don't worry, as long as you invest for the long term, do dollar cost averaging and diversify your portfolio, everything will be fine."

They are right. But your agent haven't finish what he/she wants to say.

Everything will be fine provided the market always go up, they are saying that as long as the market always go up, it is safe.

So when your agent is talking, please don't cut him off.

But I beg to differ.

Anyway, Is that a Sales pitch or Is that a financial advice ?

IF you are still not convinced, they will tell you, why not we put your money in bond funds. instead of equities funds.
It's lower risk, but also give you a lower returns.
Equity higher risk, but also higher returns !

Then people assumed that their agents know their stuffs.
The agent assumed the fund managers know what they are doing.

In the end, you make an ASS out of U and ME.

When your agent asked you to buy equities, you should asked, "what is equities?"(if you do not already know)
Ask them to take this financial term and put it into layman's term for you to understand.
Ask them "What is bonds? you say lower risk, why is it lower risk compared to equities?"
Ask them "how does bonds and equities work?"

I think you get my point, my point is that you make sure you understand the investment well before you buy.

You think your agent understand it well, i can tell you, more than 50% of the agents selling you bonds and equities totally have no idea what are they actually.

So it is important for yourself, the consumers to understand what you are buying.
It's not about the guidelines and rules set by MAS to govern the financial industry.
I think guidelines and rules has it's place but the emphasis should be on your own financial education.