Dr Khoo Kah Siang, Senior Managing Director, Strategic Business Development & Regional Bancassurance of Great Eastern Life Assurance Company, reveals how financial advisors can enhance their skills and overcome the trust barrier.
A 2015 survey conducted by the Financial Planning Association of Singapore (FPAS) found that 72 per cent of Singaporeans did not know whom to trust for financial planning. Only 11 per cent felt very knowledgeable about financial matters and just 13 per cent were strongly confident about being able to achieve their financial life goals.
Financial advisors are well positioned to fill this knowledge gap and help Singaporeans meet their financial goals. Dr Khoo offers insights into how the trust relationship between clients and financial advisors can be enhanced.
Q: What are the main reasons causing this lack of trust?
A: There have been instances of mis-selling in the past among financial advisors, and mistakes were made by less reputable operators that tarnished the perceived trustworthiness of financial advisors in Singapore.
At the same time, there is a certain vulnerability required on the part of the customer that is inherent in the process of financial advisory. That is, financial planning involves a discovery process where customers must review their beliefs and habits in relation to their money management, and how these might have worked for or against their financial goals. Such a process is usually not initiated, and may not always be welcome, by customers.
As such, customers may fail to see the value of financial products and perceive product recommendations as a hard sell. This also results in a bit of distrust towards financial advisors.
Q: How can this lack of trust be repaired?
A: The Financial Advisory Industry Review (FAIR) has comprehensively evaluated the financial advisory industry and taken great strides to raise the competence of financial advisors, lower the costs of insurance products, and promote a culture of fair dealing within the industry. This is certainly a strong step towards restoring trust in the industry.
Financial advisors must also do their part. A good financial advisor is someone who can help their customers address their financial needs in an appropriate and timely manner. He or she needs to possess strong product knowledge, awareness of developments in the financial market and industry, and effective communication skills. He or she must also be trustworthy and have the highest level of integrity when handling customers’ dealings and their personal information.
However, it’s not enough for financial advisors to act with integrity alone. They must also build their professional competence. This should be a career-long journey – not something that can be achieved overnight – but financial advisors can start by taking proactive steps to develop the skillsets they need.
Some of the core skills include the ability to uncover the needs of clients, analyse clients’ financial needs now and in the future, and propose suitable solutions appropriate to the financial capability of their clients.
Q: How can financial advisors develop these skillsets?
A: To develop these skills, financial advisors can refer to the IBF Standards for Financial Planning, which sets out a skills roadmap for financial advisors and benchmark to ensure high standards of professionalism are maintained. Both the Certified Financial Planner (CFP) and Chartered Financial Consultant/Singapore (ChFC/S) programmes have been accredited under the IBF Standards.
Financial advisors are required to fulfil 30 hours of continuous professional development every year, and should look to continually enhance their skills through relevant courses, such as those recognised under IBF’s Financial Training Scheme.
They should also attend seminars and conferences locally and overseas on financial planning. This will help them keep abreast of latest developments in the financial market landscape and provide relevant advice to their customers.
In the early years of practice as financial advisors, it is also critical to have good mentors. These should include, but not be limited to, direct or indirect supervisors. Coaching is critical to build the right skill sets and to get the right advice where necessary.
Another resource is IBF’s MySkills Portfolio, a free online platform that allows finance practitioners to track their professional development progress and receive training recommendations based on career goals. It also functions as a repository of skills and training records, empowering individuals with a resource to plan and manage their skills development journey.