Time flies…

Wow!!!! I didn’t realise I’m a CFP for 12 years !



My son’s savings programme.

 My Elder son, Xavier, have been saving regularly for the past few years. He used to have 99.9% of his savings from the ‘passive income’ that he recieved from the red packets during Chinese New Year, his birthday and what we gave him. When his younger arrived, I decided that he should know about ‘active income’ and the need to work for money. I got him to do some chores such as throwing away his younger brother’s diaper and he is paid $0.50 each. A diaper with solid waste can earn him $1. The lesson to him is he will need to do all these job in future if he don’t study hard now. He was also taught that he could earn the same $1 the by working harder. He only experienced with cash inflow all this while. After spending 6 months in P1 and saw the ‘real world’ of  nothing is free. I decided to teach him about cash outflow as well.

On a side note, I strongly encourage parents to get this piggy bank(on the left) that look like an ‘ATM’ for your kids. It has the function to decide what is your saving target and to decide how many days you wish to achieve the target.

It will also count the amount of coins you had ‘deposited’ & when you withdraw the cash frm this machine, a password & ‘ATM card’ is needed. The amt will also be less off from the balance and it shows you what’s the shortfall from your targeted savings.

All you need is SGD500 to open & maintain the Junior Banker a/c with RHB Bank.

There are 3 savings accounts that Xavier will need to keep.

The 1st  which is also the most important account is the ‘ATM piggy bank’. It allows him to set a clear target and see his shortfall from his target. The card is kept away from him so he cannot withdraw any money from it. This account is purely for savings!

The 2nd account will be the Yellow Angry Bird. The money in this account is to be use for charity donations, school donations etc and more importantly the parent’s allowance 🙂 I personally think that we need to instil other values in our child in addition to teach them the value of money. This account teaches him not to be a selfish miser who just saves for own rainy days but also to think of those more unfortunate than him. I believe it also cultivates fillal piety and to provide for his parents becomes a habit! (p.s. I need to plan for my retirement too ;p)

The last account is the piggy bank from OCBC. Any extra money from the above two accounts will be save here. This account is meant for spending. I had told him that I will take money from this account if he buys toys or other unncessary items. However, I had  not told him that I will still ‘refund’ into his 1st account.

Sounds complicated??? I taught him an easy way to remember. The savings account need not be bother since he cannot take any money out from it. The 2nd account which is from the angry bird is for daddy & mummy. I told him, ” Just remember that if you don’t give me money, I will become a angry daddy.” The 3rd account for spending is easy to remember as you can see a ‘S’ -shape on the piggy bank and it stands for ‘spending’.

I modified some of these ideas from ‘MoneyTree (Singapore)’ which specialise in Financal Literacy program for children.

What I learnt from the GE.

GE is over but the post-GE talks are as firery as the pre-GE ones. Some happier & more togue-in-cheek ones like Mr. Yam does bring out a little chuckle or laughter in a boring situation. Well, its ironic that I need a boring character in a boring situation speaking with a boring tone to bring me laughter when I am bored. However, some not so happy facts that happen are about Ms. Tin, BG George Yeo & maybe the latest Ms. Soh who was acccused of wrongly sack (either you believe its for selling the wrong party merchandise or for printing the wrong document). Before I continue, I make my stand clear that I am not speaking for or against any party. Untill 2016, I am not interested in any party other than my son’s birthday party in July.

One of the few things that I had learnt in this GE is “Change“! The word “Change” had been made popular by Mr. Obama in his Presidential Election and is back again in BG Yeo’s speech. He had mentioned that “either you change or get changed”. I don’t know how many foreigners are they in this little dot now and I was told another 900,000 are expect to enter. We can stop all them from entering but how many foreigners are there outside of Singapore. That is the real competition if we want globalisation. IMHO, either we change ourselves and challenge that guy who ‘steals’ our job or we get changed. The world is getting smaller with the social media and as an financial advisers, I not only need to be updated with the latest info but also upgrade myself with the required skills. I had read that Insurance & Insurance Agents were mentioned in this GE several times and I encourage my fellow practictioners to learn from this GE. We need to change too.

A friend had posted on her FB wall that she got into an accident on the way to their rally and the parties’ candidate visited her . My question is will such touching scene be seen again if that party was elected? This is similar to agents who sweet talk clients to getting certain products. I had seen some appointments before the sales were done in expensive eateries but once the deal is close, there is a 180 degress change in attitude and the client may be lucky to get a just cup of plain water. Some agents also promised to be contactable  24/7 which in my personal opinion, that is possible only if you are 7-11. However, these agents go missing once you are a client because they need to give 24/7 to the prospect. The clients are entitled only 7/24 i.e. 7 hours out of the 24 hours.  May I suggest that for those belongs to this group of agents, review your pre-approach and the sales process. Do not promise the clients heaven and earth before the sales and only to give hellish services after the close. Remember this – if the client is the last person in your mind, you are also the last person in the client’s mind.

I also learnt that voters/consumers wants their voices to be listen. The consumers of today are mature and well-informed enough to make decisions. They do not need any agents to tell them “My policy or company is the best” but rather, they want to voice their opinion and someone to say “This policy is the best for you” after a proper process known as know-your-client is done. I had spend a few years in a tied agency prior to my move to an independent financial advisory firm. I must admit that it is a very difficult task to provide a holistic solution that is customised to an individual  if the agent is a tied agent as they can only represent the company and one single company. As an independent financial advisor, I am able to offer alternate choices and solutions that fits the individual than asking the individual to fit into the solution.  To understand the needs of your client well, you need to understand what your client really needs. There is no use providing freebies like ipad, iphones or mp3 players to win the deal. You may win the deal but not for long especially when the clients realised their needs are undermined. Similarly if you are in a 4 or 5 room flat, how many times can it be upgraded? The 1st time doing it is surprise, the 2nd time upgrading is expected and the 3rd time will be normal.

One common concern among the different political parties’ agenda is improving medical care and lowering the cost. This idea, in my humble opinion, is similar to wanting your room to be cool down by aircon and yet expect your electrical bills to be low! My dear reader… don’t forget that the doctors are voters too and I believe they also vote for a higher salary for themselves. If you want quality medical care or living standards, you pay for them in quantities. My point is the best a government can do is to improve the medical care system and if we want to enjoy that system, we need to make changes to our own system too. Do not expect the medical cost to be lowered by subsidisy but take charge and get yourself the right solution.

Conference on estate planning for Muslims

There has been two significant developments affecting the financial and estate planning for Muslims since the Muslim Financing Planning Association (MFPA) had its inaugural successful conference in July 2009

  1. the passing of the Insurance (Amendment) Act 2009 and the amendments to Section 111 of the Administration of Muslim Law Act (AMLA) which gave rise to concerns in the insurance industry on the ability of Muslim life insurance policyholders to make revocable nominations
  2. the judgment of the Singapore Court of Appeal in March 2009 in Shafeeg’s case on the applicability of rights of survivorship to real
    property held by Muslims as joint-tenants.

These developments will be discussed in depth at the MFPA 2010 Conference.

MFPA as a concerned group will examine the dynamics between the Syariah and secular principles on these and related matters.

For more information about MFPA, please visit www.mfpa.org.sg.
For more information about this Conference, please visit www.intellitrain.biz/MFPA.

Click below for conference brochures and registration form.

  1. Brochure
  2. Registration Form

(Source: MFPA)

How much are you worth?

 The father of a victim who was knocked by a car & got paralysis had asked for $2.5 million in compensation but only to be awarded $650k by the court. What is your first thought when you read such news? The responses I got range from the negative ‘money grabber’ to empathic ‘tragic’ to the positive ‘at least got some money to tie over’. What is clear is that each individual has the same view of this accident that is “it’s a tragic” but its not so clear when asked to put a monetary value to someone’s life. It is common that whenever some financial advisors suggest a $500k or $1mil of coverage for an individual, the prospect thinks that advisor is crazy or that advisor is trying to get a fat cheque off him.

 In the financial planning process, the advisor should be able to your needs. The needs varies from an individual to another individual and it may signal a lack of knowledge when the advisor suggest 5-10yrs of annual income. In the case of the reported accident, we may look from the point of Income Protection.

Lets take a simple scenario of someone aged 25 and starts to draw his first salary of $2,500/mth. How much is he ‘worth’? Assuming he stops working at the age of 55, he would have spend 30yrs in employment. Consider this…

 $2,500 per mth x 12 mths = $30,000 per year

 $30,000 per year x 30 years = $900,000 per life

 Next, consider this…

 The amount of $900,000 does not take into account that

1)      you have bonus

2)      you have pay increment

3)      there is inflation

 and the amount easily cross $1million if you put in those factors. A detail plan should be done in a proper planning.

 While there is no way to put a value to someone’s life, we can put an economic value to him. One of my client told me his advisor only ask him to buy insurance and say there is not so much need for his wife who stays at home and look after the kid. I told him that he will be surprised to know the economic value of his wife.

First, the wife prepares the breakfast and does the household chores. If the wife is gone, he can either get a domestic helper to do all this at $600/mth or be a house husband at no cost. (Some guys may consider getting a replacement wife)

 Next, the wife fetches the kids to & fro school & a part time chauffer to pick them up will cost at least $800/mth.

 To have a tutor to teach the kids if the wife is gone is going to cost another $500/mth.

 The list goes on & on but these 3 cost will add up to almost $2,000/mth! His child was only 6yrs old and we can assuming he can work in MacDonalds if he is 16. Even with that assumption, he jolly well prepared $240,000 sitting in the bank to fund for these expenses if the wife dies before him. Another option is he can use less than $1,000/yr to get an affordable term to cover this liabilities.

The question is never how much one should be insured but who do you want to insure you? The choice is by an insurance company or your own insurance company thru self-insuring.

What’s your game plan?

Aberdeen introduces yet another investor education piece entitled: What is your game plan?, it’s about how asset allocation can be utilised to enhance a investment portfolio.The concept of asset allocation isn’t new, what this serves is a reminder that asset allocation plays an important role in any investment strategy. Here, our aim is to promote and raise the awareness surrounding the use of asset allocation as well as capture investors’ attention with regards to the various asset classes available.

So have a look at What is your game plan, take part in the challenge & may you win the ipad!

IFA services

Q:How are independent FAs different from other FAs?

A:  Independent FAs are able to advise consumers on a wide range of investment products from various product providers.  Only FAs who can clearly show that they do not have financial or commercial links with product providers that may influence their recommendations to consumers can use the term “independent”.  Representatives of tied FAs, on the other hand, can only recommend products of selected product providers that the FAs are tied to. (source: Moneysense)

The above may be too difficult to be absorb by some consumer and I will summarise it with the diagram below.


Most consumer are familar with insurance agents representing insurance companies. These agents are also known as tied agents because they are tied to just one company, they represent the company. If that particular company does not have a suitable solution for the client, the agent either chose to walk away with no deal done or do his best to convince the product is good for the client.


On the other hand, IFAs represent the  clients and source for the most appropriate solution from the range of different service providers that they work with.  

 The service and advice provided by my team of advisors and myself include Insurance planning, Investment planning, Education Planning, Retirement Planning, Mortgage loans and estate planning such as Wills & custody thru a six step holistic approach towards financial planning as shown below.

We provide the solution to achieve your financial goals with

  • Life insurance products thru more than 5 insurance companies
  • General Insurance, Business insurance and Employee Benefits with more than 10 insurance companies
  • Investments thru more than 300 unit trust
  • Alternate investment thru hedge funds and land bankings

Investment Planning

I had remember that a common question that was thrown at me in my earlier years of my practice was how long will I be in the business and what happens if I quit. I am proud to say that I am still in the business serving the same group of people who may had asked me that more than a decade ago. One of the strangest thought I had seen in financial advisors is that financial advisors assume they will never quit the business, they will never retire or they will live longer than any of their clients. We advocate legacy planning but not many advisors actually practice it. I will share briefly how our company investment services minimise the concern the client have such as when the advisor quits the business.

An insurance policy is a legal contract binding between the policy holder and the insurance company. What this means is that the policy holder can purchase a policy, keep it in the safe deposit and never ever to see it again till a claim arises. However, that is not true for an investment plan. 

 If there are two gardeners and both planted a seed on the same day. The first gardener took pains to water the seed daily, put fertilizer and remove any weeds growing around it while the second garden leave the watering to mother nature that is to water only when it rains. I believe both seeds will still grow to a strong tree in 10 or 20 years but which tree would you think will bear more and sweeter fruits?  Investment planning is like planting a tree. Both investors can invest an initial of $20,000 and the first investor does a regular review with his financial advisor while the second investor don’t. Which investor is likely to see a better returns for their investment?

What I believe is not only a review of investment but there must be a system in place for investment. That is the reason why I am with First Principal Financial because we practice responsible investing thru assets allocation, diversification and re-balancing at a company level done by an investment committee. The client will recieve consistent reporting, monitoring and review of their investment that is done at coporate level.   Which means that in the event that the financial advisor is not around to service the investor because he had left the business by choice or by chance, the next servicing advisor will have the same investment philosophy and method of review for the client even if he happens to be inexperience.

Pleasant Surprise

I was suppose to meet my client for her investment review. I got a pleasant surprise when my client gave me these new year goodies. She said it was to thank me for the services & advices  that I had provided throughout these years.

The financial planning industry face lots of rejection. It is never easy to make a decision to be part of this industry. It is even harder to make the decision to stay on and make this the last career in our lives.

It is such gesture that keep us going and know that what you are doing is being appreciated.

Happy New Year

We very often forget our financial goals as we review our resolution for 2009 & set new goals for 2010. This is important as we often heard about friends or relatives saying that ” if only I have the money, I will do this or that.”

Although most analyst see 2010 as a good year, there will still be financial bad news, companies going bust & some other bad news . The current bullish situation reminds me of the months before the crash in 2007 in a what I can as a ‘Buy what also make’ market. One of the few lessons I learn in my years as a IFA is when people are greedy, be worry & when people is worry, be hungry.  Another lesson I learn is when you hear about the aunties in the market talking about how good is a stock and not how fresh is the fish, then its time to get worried. You are not safe if you sit back and don’t do anything because you get crush by the escaping crowds.

Many people tells you how much they can make by investing in certain instrument. I suggest they think about the loss appetite before putting your first dollar. Risk appetite means how much risk an investor can afford. Some can take up to -5% or even -20% but some retirees cannot even afford a -1% risk. So, what is loss appetitie?

However, how much can you lose? Assuming both Mr Rich & Mr Average decides to invest $10,000 today and both of them has an risk appetite of -10%.  Mr. Rich has another $100,000 in the bank after this invesment and Mr. Average left only $10,000. Both lost -10% of the invested amount of $10,000 which is $1,000. Although the face value is both -$1,000 but the lost affects both investors very differently. Again, I emphasis that the safest way is not by doing nothing.

All these resolve simply first doing a cashflow statement of your own income and expenditure. To do a Balance sheet by having your assets minus your liabilities allows you to have a back up plan to take care of the liabilities if any unforeseen circumstances arise. A good gauge will be setting at least 6-12mths of your monthly expenditure aside in the low interest savings account or some money market funds. The rest can put to better yielding instrument thru asset allocation & diversification. A smart way is to have a long term approach to your investment time horizon. 

One of the important and often missed out steps is to review! Alice in Wonderland was lost & she ask the caterpillar which path she should take. The capterpillar replied by asking where she wanna go & Alice said she don’t know. The caterpillar then told Alice that it does not matter which path she takes if she does not know where she is going because it will never be wrong. While knowing your destination is important, knowing where we are starting from and where we are now is equally important. I would strongly suggest  to review and assess your current portfolios before taking the next step. If you need help, get a professional advice.