What Is It Really Like to be a "Financial Adviser"
Many people, including insurance agents, do not see any distinction between these titles and designations. In the end, they all just sell insurance right?
What Is a Financial Adviser Representative?
In simple terms, the Financial Advisers Act 2001 governs the provision of financial advisory services in the marketing, sales and advisory of investment and insurance products in Singapore. So Banks, Insurance Companies, Investment Firms are termed “Financial Adviser” (FA) and the people appointed by them are termed “Financial Adviser Representative” (FAR).
Then what is the difference between an “insurance agent”, “financial consultant” and “relationship manager” ?
FAs can use any title or designation for their FAR to represent their role. For example, My title with finexis is “Branch Manager”, and this is because I lead a team of “Financial Consultants”.
In the realm of personal insurance and investment, it is more important to know:
- What solutions the FAR can offer,
- How the FAR deliver these value or services,
- How the FAR is compensated.
For (1) and (2), I will just refer you to this page that shows the difference.
Examples of “Insurance Agent/Adviser” (IA) are agents who only represent and sell only a single insurer product (eg. Prudential, Great Eastern, etc). They are commission-based, and get a cut from each sale they make.
“Relationship Managers” or “Personal Bankers” are employees of the Bank (eg. UOB, OCBC, DBS, Citibank, etc.). They have a base salary and are expected to hit monthly KPIs for insurance and investments.
Some FAs are “Insurer Backed”. This includes Manulife FA, AIA FA, Singlife FA, Great Eastern FA, etc. Their primary offerings are usually with the insurer that owns them, and may carry Unit Trust solutions. These Financial Consultants are commission-based.
Independently-owned FAs (iFAs) are not majority-owned by any insurer. finexis Advisory is an example. iFAs’ solutions depend on the partners they have. Here is a list of partners finexis works with. We are commission-based too.
What is it Really Like to be a Financial Consultant?
Now that we clarified the difference, what is it like being a Financial Consultant (FC)?
It is TOUGH.
More Work
Firstly, an extensive partner list and product offering means more time needed for research and training. While finexis’ Product Team and in-house comparison tools are especially useful, we still need to understand the products well to know if the features can be useful benefits to our clients.
It may seem like insurance agents and insurer backed FCs have an easier time as they only need to be familiar with their company’s (limited) solutions. But they face challenges when consumers want comparisons across different providers, and they do not have access to the right information and details to be a competent adviser to such consumers.
No Fixed Income
Secondly, and the most glaring one for most people exploring being a Financial Consultant, is the lack of “salary” and “stability”. Being fully commission-based can be unnerving when there are bills to pay and people who depend on us. Many of us do our own financial planning to make sure we have sufficient savings and support for 6 months to a year before making the transition.
Many candidates are enticed by “allowance packages” where a fixed allowance is provided for 1 or 2 years when certain sales KPIs are met. This gives them a false sense of “stability”. False because a consumer is wise enough to know if your product is competitive or not. The FAR may end up pushing products rather than recommending them based on the client’s needs. Never product push!
Rejections and More Rejections
Thirdly, rejections. Regardless of how successful, experienced, or knowledgeable you are as a FC, you will always face rejections. Simply because the average consumer thinks that every FAR is only trying to sell them something. And no one wants to be sold anything! However, rejections are part and parcel of any business and entrepreneur endeavour. As a FAR, rejections will become your best friend for life.
It is also because of this fear of rejection that many new FARs do not dare to prospect their immediate network but prefer to do cold prospecting. They do not want to be seen as “needy for a sale” with their friends and feel less paiseh when selling to a stranger on the street. If you feel this way, I hope you acknowledge that this is a limitation you place on yourself and you need to remove this self-limitation. Message me for tips.
Why I am Still in FA Business
So, if it is that TOUGH being a Financial Consultant. Why am I in this business?
The Business Model is Attractive
The right business model can make the journey easier as you continuously work on your business. And many people are unaware that FAs have different business models! Many were “sold” a business opportunity but few actually try to understand the business and revenue model before joining. Broadly, the business and revenue models in this industry can be categorised into 3 types, with some variation among the FAs. Talk to us to understand which one works best for you.
Better Work-Life Control
Provided you are in the right business and revenue model, this business is equitable - you earn based on what you build. I have control over the clients I want to work with, how I deliver my value to them, and the time/effort I put into this business. I can leverage my business processes, team, and partners to reduce my workload without sacrificing my income. I have true work-life control.
Clients Appreciate What We Do
This might sound like a cliche, but I really help people with their finances. A small minority, aka DIYers, can navigate the complex world of finance and financial products well. The large majority lack the time, knowledge, access and interest to manage their own finances and need proper advice. Many of my clients rely on my advice, trust I have their interest at heart, and appreciate the work I do. This is something I don’t take for granted, and makes my work satisfying.
This is a Sales AND Advisory Business
Does this mean FARs earn big bucks? Of course not.
There are successful FCs earning more than CEOs running a well-oiled, one-person setup. But they probably represent the top 10%. One recent salary data published had “Financial Advisor” and “Wealth Planner” earning ~$13k per month, and that seems fair on average.
Ultimately, this is just a sales job right?
Fundamental a sale is the exchange of goods and services for money, isn’t it? When you engage a lawyer, did the lawyer make a “sale”? When you consult a doctor, does the doctor sell you anything? When you sign up for a course to upskill, was a “sale” made?
“Nothing happens until a sale is made”
~ Tom Watson, founder of IBM
Sales is everywhere. What differentiates each sale is HOW the sale is made, and there are many ways to make a sale. For my business, I don’t prefer product-focused sales, and prefer an advisory-based, client-centric one. What about you?
