An independent financial advisor in Singapore has lamented the amount of advisors the tiny country has in comparison to bigger places such as Canada and the U.S.
Advisor Seth Wee, contributing to a financial news
site, says Singapore has a population of about five million, while the number of practitioners in the financial advisory industry is estimated to be between 20,000 and 30,000.
In Canada, there are more than 90,000 financial advisors to 34.88 million people; while there are 310,000 advisors to 311 million people in the U.S and 20,000 advisors to a population of 62 million in the UK.
Wee said if the number of practitioners in Singapore is 20,000, there are only 259 people to each advisor.
“This is a far cry from the United States and the United Kingdom, which stand at 1,000 and 3,100 respectively.”
He laid out the ramifications of an excessive number of advisors, saying while it should mean the financial needs of Singaporeans are adequately addressed, this is in fact not the case.
“Reports show that Singaporeans are not financially well served by the financial advisory industry – less than two in 10 Singaporeans are ready to retire, and most Singaporeans are underinsured.
“Since there are so many advisors, competition over the solicitation of clients is intense. Is it any wonder that overpriced policies are recommended to maximize revenue from each client? Leaving them underinsured and ill-prepared for retirement also preserves them as viable prospects for future business.
“The situation of an advisor having a small number of potential customers is largely the result of an oversupply of advisors. This is a systematic problem that hinders an advisors’ ability to recommend low cost solutions.”
He also said people in Singapore have become “averse” to financial planning due to the poor quality of advice received, coupled with the “constant harassment” from self-styled planners.
“Product peddlers have reduced the term ‘financial planning’ to a euphemism for ‘financial product sales’,” he said.
“Consequently, there is little demand for fee-based, proper financial planning because people think that they have already planned their future solely by purchasing financial products.”
But the industry will not change its spots willingly, said Wee.
“Companies will continue to recruit as their sales will grow with the number of salespeople they manage to attract.
Until market forces and/or regulators drag the industry screaming and kicking into better shape (if ever), individuals should carefully exercise their own discretion in picking an advisor. Currently, the odds of getting a sound adviser do not look good.”
Wee’s post first appeared here.