Financial advice: Who you could be dealing with

What is financial advice?

Financial advice is given when someone looks into your needs and financial situation and recommends you to purchase an investment or life insurance product.

When to seek advice

You may want to seek financial advice when you have a financial need or goal but do not know how to address it. Only authorised firms and individuals are allowed to give you financial advice on investments and life insurance products.

As part of assessing your financial situation and needs, the Financial Advisory (FA) representative will help you identify specific goals and develop a plan to achieve them over time. The plan may include buying life insurance or investment products.

Buying a product with and without advice

If you choose to receive financial advice, your FA representative must ensure that the product recommended is suitable for your needs, taking into account your financial objectives, investment horizon, risk profile and other relevant circumstances.

If you choose to buy without advice, you will need to ensure for yourself that the product you select is suitable for your needs.

For example, before you buy, you would have to:

• Calculate the amount of insurance coverage you need

• Decide on the length of coverage needed, e.g. until your children are independent

• Work out your budget to see if you can afford the premiums throughout the life of the contract

Who can give financial advice

Only authorised firms and individuals are allowed to give you financial advice.

FA representatives are appointed by licensed financial advisers, banks, insurance companies or brokerages to provide advice on life insurance and investment products on their behalf.

They may call themselves financial advisers, financial planners, financial consultants, insurance agents or relationship managers. Regardless, individuals authorised to provide financial advice will be issued a unique representative number by the Monetary Authority of Singapore.

Always ask for the FA representative's unique representative number and check if he or she is permitted to give financial advice.

Always check the following:

• Financial Institutions Directory to see if the FA firm is authorised by MAS to provide financial advisory services

• Financial Institution Representatives Register to see if the individual you are talking to is an FA representative

Customers who are speaking or meeting with their FA representatives for the first time are encouraged to verify that the individual they are interacting with is the representative listed in the Register of Representatives. For instance, they could request to meet in person at the official premise of the financial institution, and ask for official identification.

Types of financial advisers

There are different types of financial institutions that can offer financial advice on investments and life insurance products. They could be licensed financial advisory firms, banks, insurance companies, insurance brokers or brokerages.

Each has different business models and structures. Some have commercial arrangements or ownership links with product providers, some do not. It is important to understand the differences and decide which firm best suits your needs.

Check with your FA representative

Ask your FA representative whether the financial adviser he or she represents is confined to selling products of a restricted range of product providers.

Examples would be:

• Certain tie-ups where banks partner specific product providers to distribute their products

• Instances where the FA representative is a tied agent of an insurer and only offers the products of that insurer

Independent Financial Advisers

You may meet financial advisers that promote or advertise their services as being independent. What this generally means is that the firm has no financial or commercial links with product providers.

The firm must:

• Not receive any commercial benefits from a product provider which may create product bias

• Be free from any restriction relating to any investment product which is recommended

• Be free from any conflict of interest created by any connection or association with any product provider