Financial Planning, is managing your finances to meet your lifestyle goals.
Do you know that if you are one of the many Singaporeans who depend solely on your CPF for retirement, you can look forward to a retirement income of only $750 or less?
As a result of heightened interest and awareness, there is now a profusion financial instruments and services in the market to help consumers attain their lifestyle objectives.
With increased choice, however, the possibility of leaving your hard earned money in the wrong places becomes greater.
A good financial plan provides direction and meaning to your financial decisions.
To use a simple analogy, financial planning is akin to planning a long and distant road trip. There are numerous decisions that need to be made and factors to consider before you embark on the journey. Even when your journey has started, you might realize that, sometimes, even the best-made plans need to be changed mid-journey due to changing circumstances.
Financial planning is similar except the stakes are much higher, the journey is much longer and the consequences of poor planning is much direr.
Do I Need Advice?
It really depends on your unique situation.
With the wealth of information available on the Internet, it has now become more feasible for individuals to independently manage their own finances.
However, making quality financial decisions requires both an ample commitment to learn and research, coupled with a great dose of self-discipline. And even though the Internet provides a rich source of information, the sheer amount of information available can be overwhelming for a layperson. It takes a certain level of financial knowledge to make sense of the industry jargon, terminologies, concepts and methodologies.
Ultimately, the question is not whether you need advice per se.
Rather, the question is whether you have the necessary expertise and time to do your own financial planning.
If the answer is No to either, it is wise and important to get sound advice from professionals.
These professionals will:
- objectively assess your financial circumstances
- advise you on how to achieve your lifestyle goals, and
- manage your finances and allow your money to grow for the future whilst ensuring you and your families are financially protected
Where Do I Get Advice?
Whether you are planning for early retirement, saving up for you children's university fees or aiming to ensure that you and your family are adequately protected, rest assured that there are trained professionals who have spent their careers serving many others with the same concerns.
The Monetary Authority of Singapore (MAS) regulates persons who provide financial advice to consumers under the Financial Advisers Act (FAA). The term Financial Adviser (FA) refers to a corporation, and the individual who provide advice if referred to as Financial Adviser Representative (FAR).
They can be generally grouped under 3 categories, based on the types of advice they can provide:
- Tied Advice
This refers to a representative of a life-insurance company. Insurance agent can only represent and recommend products from one life-insurance company. - Multi-tied Advice
As the term implies, multi-tied advice relates to the existence of an arrangement between the FA and more than one product provider. Banks typically have the agreements to distribute the products of a single insurance company and a limited number of fund managers. - Independent Advice
The term "independent" refers to the advisers' independence from commercial links with product providers which may influence their recommendations to consumers. The guidelines of the use of term "Independent Financial Adviser" (IFA) allow consumers the confidence in knowing that the Financial Adviser operates objectively and impartially, and is free from product bias. Among the requirements is the need for an IFA to provide and advise on the products of at least four product providers.
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