Is anyone particularly surprised with the content of this article?
No. It’s written by Tree of Prosperity after all. His financial genius is only paralleled by his ability to troll with zero fear for the consequences.
As happy as I am to be (somewhat) praised and singled out, the response to this article had really created quite an unnecessary buzz, that really doesn’t help my profession. As a result, it requires address.
So here I am.
Initially I assumed that only pissing off feminists would make him viral, but apparently not. He has plenty of room for other people, such as my colleagues in this profession.
You know…‘Money Maverick was created to address Financial Misconceptions.’
Sometimes, these misconceptions will arise from your favorite bloggers. And so I do what I do.
Initially it was Dr Wealth (well technically not, but). A little of Budget Babe. Some occasional shade thrown at Financial Horse. Very often, Seedly. More recently, both MoneyOwl and Providend (also not really. Hmm).
And now – the inevitable. ToP.
It’s time for me to take Chris down.
…No I’m just kidding it’s like a good 10 years too early for me to even try something like that.
But if there is anyone in the Financial Blog world that I would love to take down more than Kyith from Investment Moats, it’s really Christopher Ng from Tree of Prosperity.
A direct confrontation of Financial Expertise would have Money Maverick completely obliterated by this veteran, regardless of my 80-hour work week attempt to catch up.
So…Let’s not do that, and do this instead with some roundabout stuff that might not even address the points directly.
1) Do you Trust Financial Advisors?
As a consumer of Financial products, I often think back to my first one where I was easily baited by an attractive banker from UOB. Yes, Money Maverick – like many of the guys – also owns a PruFlexi Cash since he was 18. That was almost 10 years ago, and the RM is long gone.
Still, the question is loaded as hell.
The relationship between an advisor and his/her client tends to become an extremely personal one.
By phrasing it in such a manner, as has been pointed out by some of the commenters (maybe FAs) – it reduces the FA to a general, non-human being.
Like do you trust hospitals. Or banks. Or lawyers?
We come back to the cute little survey – even if you have SOMEONE who trusts his or her Financial Advisor dearly – they wouldn’t generally trust other Financial Advisors. Ergo, the probability of answering no increases exponentially.
DollarsandSense posted some troubling statistics, but when I saw them, I thought that they were quite ok. Could be a little better, but it would be abnormal if they were a lot better.
If this is great comfort to the FAs, that’s a bit sad. But you get the idea.
What really happens is that my clients trust me disproportionately while the general public distrusts me disproportionately.
And why shouldn’t the latter behave in such a manner? Do you often hold great general trust for the people you do not know?
If you do not trust Financial Advisors, embrace it.
You only need to trust yours.
And you do that by making the decision carefully.
How do you do that? If you’re a fan of The Office like myself, you’ve noticed that despite being a paper company – which is a complete commodity that requires no skill whatsoever by the way – they use the value of their service rather than compete on price.
An advisor will always be more expensive than not having one.
The easiest way to tell is if the person adds value to you. Not just the product. The person.
2) Regret versus Competence
Chris states in one particular paragraph: “I realized that many Singaporeans may have made some insurance moves they grow to regret.”
He then confidently goes into the article teaching you how to rebut a salesperson like myself.
As a consultant, I try to be as empathetic as I can be, despite my social awkwardness.
But here are some examples where your regret means nothing to me.
a) You didn’t buy your insurance despite having the opportunity and budget to do so, following which a poor scenario happened
b) You insisted on only Group Term Insurance from your company and that blew up in your face spectacularly
c) You bought a whole life plan, read online that you should have bought a term and invested the rest despite having no knowledge or experience, and came to regret it
d) You bought a Term plan and flubbed your investment spectacularly
Of course, the number 1 ‘culprit’ is this one below.
e) You bought a whole life plan or endowment plan, gained investment experience a few years later and have come to regret the long-term purchase
I could go on, but honestly – I’ve met all the following. I’ve helped all the following.
Which is why my examples are so specific. I’m just one advisor.
They’re not uncommon.
And I’ll take it back – I do care. It does mean something to me. But a consultant is supposed to be a problem solver and it becomes very difficult or impossible to solve these problems.
Listen closely to me and listen good – especially for scenario (e).
…Your regret is no more different than someone who studied Psychology, leapt into Finance headfirst and wished that they had studied Finance instead so that their career path could have been a lot smoother.
So he doesn’t have to work 80 hours a day to be an exceptional consultant when he could be using those flexible hours to visit his girlfriend or sort his personal life out or have a social life.
You can’t predict the future. It’s dumb.
And at least lucky for you, you have ‘someone’ to blame for something that might not even have been considered a mistake had you chosen a different path from the one you’re on now.
Congratulations on becoming competent. What now?
You could hire someone like myself to invest and mitigate the ‘damage’ done.
You could sell your plan to Saxo Capital in a couple of years.
Or instead of regretting, you can be thankful.
Thankful that in the contact sport of investing and finance, you’ve made non-expensive first steps ahead of your peers.
Chris is now a millionaire. We will never know whether he suffered needlessly. But he is who he is because of what happened to him.
Myself – I can’t speak for how badly the policy was missold or how much it hurt Chris and his family. That would be undermining what happened to him.
But I can only say this much – every year, I get better at what I do. Much better.
I look at my recent client’s portfolios, designed with so much precision and heart compared to when I was a clumsy first year.
Yet my first-year clients have a far greater impact on accelerating my career than my recent clients. It’s sad. It’s bitter. It’s regretful. It’s unfair.
Instead of thinking of your Financial Advisor as the nameless, faceless institution – just ask them, by name.
Do you think you could have done this better?
And do you think the person who planned this did their best?
I look after my first year clients exceptionally well because I owe them a debt of gratitude. In this line, you have to beg for people to see you when you are a nobody.
And I returned that kindness with a crummy, clumsy portfolio.
I cannot regret it. I did my best at the time and it was everything I could give.
Now I can give more. And I do.
That’s all you can do.
If you regret a Financial Decision, become more competent or seek someone more competent. And then most importantly – instead of painting yourself as a victim, take action and solve the problem.
Learning to rebut the professional problem solvers for this solves nothing.
And the stupidest thing you can do is blame someone for something that may not even have been a mistake at the time.
3) Have your FA compare themselves to other professions, continually
I’m personally not a fan of the Financial Consultant = Doctor analogy. Like Chris said – you’d probably have to concede that the entry point for being a consultant is far lower than that of a doctor. This is not arguable.
I don’t really care that much about the entry point, to be honest. There are plenty of less educated people than me who are more competent in their field of expertise – trading, digital marketing, entrepreneurship, etc.
What I do respect and wish not to compare myself to against Doctors – is really the time and money for those certifications and expertise. There’s really no comparison at all, even if Financial Consultants do have a ton of mandatory hours on top of our own assigned hours.
But where’s the fun in not having your FA compare themselves to professions that you can identify with and respect?
There is a range of FA’s and it’s very interesting to categorize them. I’ll put them in 4 categories, just for examples – but I think you guys could come up with more.
1) Newbies: Those with a lot to prove (<2 years)
Strengths: High energy, a lot of time for you, will likely do your claims.
Weaknesses: Generally lower in professionalism, knowledge and efficiency.
Profession to be compared to: Interns. Or Servants. Yeap, I said it. Expect a lot of energy, enthusiasm and too many inspirational posts on their social media.
Ignore the buzz and look for quality. If there isn’t, feedback it to them. The person who takes it will stay your advisor for a long time.
The person who doesn’t will leave in less than two years.
2) Fairly Experienced: (2 years – 5 years)
Strengths: Fairly skilled, High energy, will likely do your claims
Weaknesses: Not as experienced to be handling the highest of complex cases, not as much time or energy as newbies. You’re sandwiched.
Profession to be compared to: A sergeant/specialist in the army. Good at a few things, good at looking after a few things – needs time and growth to be able to do more. Maybe a bit too much, if you’re particularly affluent or used to serious VIP treatment/skill levels. There are still definitive caps on what they can do, especially for high net worth or complex cases.
3) Very Experienced: (6 years+)
Strengths: Very skilled (ideally). Deals with highly complex cases and can handle high pressure and large amounts of money. Likely doing this forever at this point, since he/she is already a statistical anomaly.
Weaknesses: Expectations are very high – likely approaching busier life stages and has many clients, so time is limited.
Profession to be compared to: Your immediate supervisor. You really need only two criteria – they should know everything, and they should be likeable. The former is more important than the latter. More often than not, you will get the former and not the latter. There’s a decent chance you will get both. In rare and unfortunate cases, you will get neither and be really upset.
4) Very Qualified:
Strengths: Same as (3), but typically adding a bunch of chartered papers like CFA, CHFC, CFP, etc etc.
Weaknesses: Same as (3). Potentially more expensive.
Profession to be compared to: Doctor. You wanted one, you got one. It comes with solid advice, but a personal relationship is going to be exceptional. If each appointment lasts over an hour, something is probably wrong.
You can see very clearly some of the pros and cons of different FAs and the comparisons to make them more relatable.
So choose away, friendo. Choose away.
4) Guarantees are Expensive – and non-guarantees are even more so
Chris says that FAs are more likely to sell you expensive, guaranteed saving-ish plans. Occasionally, he’ll also complain about expensive ILPs (which I fully intend to crush his passive retirement amount with before 37).
...But actually, it’s probably true.
Here’s the thing from someone who is on the ground though – talking to people privately and confidentially.
I’ll say this with confidence – for every person that’s complaining about a plan, there’s a whole lot more that are suffering in silence.
I know this because I wasn’t as good at investing in 2018 as I am now – but I was hit up with appointment after appointment to talk about corrective actions for robo advisors, for the STI ETF. Money Maverick hadn’t even been in existence at the time – but people wanted professional advice, not online advice which had led to that in the first place.
So sometimes you settle for a savings plan.
I wouldn’t. But sometimes its okay if you do.
I actually detailed that in this post very thoroughly: you’ll probably never beat an full investment return, but its certainly something: and there have been points in history where your savings plan will have beaten a full, 100% equity portfolio across 20 years.
Conclusion
I'm not entirely sure if this was fruitful for consumers, FAs and Chris alike, but it was a fun thing for my Saturday.
...Both Saturdays.
Ultimately, there's a lot of dimensions to a Financial Advisor than most people think, even including Chris. I hope it's left some considerations for you to think about when selecting, as well as how seriously you should consider online advice.
You do have responsibilities to choose carefully, but it turns out its not hopeless.
Of course, if an adviser gets namedropped by a prominent financial blogger who wants commissioned based advisories abolished - such as Tree of Prosperity, he's probably not too bad eh.
Truthfully, you might be able to get even better advice from Chris than me.
He has time to spoil the market and give you unbiased advice.
Actually, even if he’s personally biased he’s not influenced by money.
Money Maverick
Investments above are available using CPF (Ordinary Account), SRS (Supplementary Retirement Scheme) and Cash.
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