An independent financial adviser in Singapore has lamented the amount of advisers the tiny country has in comparison to bigger places such as Australia.
Adviser 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.
He points out Singapore has more advisers than Australia – a country that has more than four times its population – with around 18,000 advisers to a population of 22 million.
The United States has 310,000 advisers to 311 million people, United Kingdom has 20,000 advisers per the 62 million population, and New Zealand has 1963 advisers with a population of 4.4 million.
Wee said if the number of practitioners in Singapore is 20,000, there are only 259 people to each adviser.
“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 advisers, 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 advisers, competition over the solicitation of clients is intense. Is it any wonder that overpriced policies are recommended to maximise 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 adviser having a small number of potential customers is largely the result of an oversupply of advisers. This is a systematic problem that hinders an advisers’ 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 adviser. Currently, the odds of getting a sound adviser do not look good.”
Wee’s post first appeared here.