Financial Advisor Offerings

“Ma’am, this plan gives guaranteed 8% returns” That’s what my bank told me when I started investing. It sounded great… until I read the fine print. It was a 20-year life insurance policy with high charges, low liquidity, and no real return after inflation. And now I understand why they push these products so hard 👇 🏦 Banks today are no longer just banks. They’re becoming full-time sales machines. A research by 1 Finance Magazine and my friend Kanan Bahl on India’s top 15 banks revealed: 🔹 Up to 25% of a bank’s total income comes from commissions, exchange, and broking fees 🔹 Of this, up to 23% comes from selling life insurance and mutual funds 🔹 In FY24 alone, banks made ₹21,733 crores just from selling these financial products 🔹 HDFC Bank made the most: ₹6,467 crores, followed by SBI: ₹3,893 crores Let that sink in. 🤯 But here's the alarming part: 🟠 A survey of 1,655 relationship managers revealed: 57% were told to missell products to meet sales targets 🟠 Banks earn up to 65% commission on the first-year premium of some life insurance plans 🟠 Many customers are sold products that don’t suit their goals — just to hit a monthly quota So what can you do? ✅ Always ask: – What are the charges & lock-ins? – What are the real post-tax returns? – Is this right for my needs — or just right for their targets? ✅ Don't confuse trust in your bank with trust in what they’re selling Your RM may smile and say "best plan," but your best defence is asking the right questions. Banks have changed. It’s time we changed too. *** Follow me (Meenal Goel) for more such content 💡

Your financial advisor is probably a salesperson in disguise - and that’s a problem. I recently hosted a University of California, Berkeley alumni meetup in Singapore. A common sentiment I heard during my conversations that evening was the low trust people felt toward their private bankers and financial advisors. 🚩𝗧𝗵𝗲𝘆 𝗮𝗿𝗲 𝗽𝗮𝗶𝗱 𝘁𝗼 𝘀𝗲𝗹𝗹, 𝗻𝗼𝘁 𝗮𝗱𝘃𝗶𝘀𝗲 𝘆𝗼𝘂 Charlie Munger, Warren Buffet’s right-hand man is often (mis)quoted as saying: “Show me the incentives, and I’ll show you the outcomes” Traditional fund managers make a 2% management fee on the size of the fund, and 20% on the performance of the fund. Most of their earnings come from the fund's performance. But ~99% of all financial advisors' earnings come from sales commissions - not the quality of the advice they give you. Financial advisors are paid double-digit commissions (going as high as 50%), with the highest % paid out in the earliest years over the lifetime of an investment-linked policy (ILP), endowment, or insurance product. Put simply, they are incentivized to sell you - as much - and as early as possible. If someone is paid like a salesperson, they will behave like a salesperson. Regardless of how well-meaning, or genuine, or nice a person might be - incentives shape behavior. In “The Big Short” mortgage brokers were asked why they were pushing high-risk, floating-rate loans to vulnerable populations in 2008. The reply was simple: the commissions were 5x higher. 🚩𝗧𝗵𝗲𝘆 𝗸𝗻𝗼𝘄 𝗹𝗲𝘀𝘀 𝘁𝗵𝗮𝗻 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸 Titles don’t matter: wealth manager, financial advisor, or private banker - in many cases, the bar for qualifying as a financial advisor is much lower than you think. In Singapore, financial advisors have to pass certain exams by the Monetary Authority of Singapore (MAS) to be licensed to give financial advice. But many recruiters know that even high-school graduates have been coached to pass those exams within weeks - or less. Ironically, many of the Berkely alumni in that room had far more insight and understanding of capital markets, and financial products, despite not being certified financial advisors. 𝗪𝗵𝗮𝘁 𝗰𝗮𝗻 𝘆𝗼𝘂 𝗱𝗼 𝗮𝗯𝗼𝘂𝘁 𝗶𝘁? 👉 Work with fee-based, not commission-based financial advisors In Singapore, there are a small number of financial advisors like Providend who are paid based on fixed fees, and a management fee as a % of your portfolio. This can help you to avoid the conflict of interest that most commission-based wealth managers come packaged with. 👉 Join a curated community Curated communities are a tremendous way to learn from others, and share practical insights in a safe space - free of vested interests. 👉 Educate yourself No one has your best interests at heart better than you. Do you have any horror stories to share about financial advisors? What are some of your best resources for learning about investing and personal finance? Share them in the comments below!

Are Insurance and Pension Products Any Good for Saving for Retirement? (Part 4) In our prior post, Sebastian and I addressed the tax advantages of private pension insurance over stand-alone fund portfolios. We ended by saying that tax benefits are only one part of the equation. There are two more equally important factors, product costs and performance. How do they impact the product? Let’s dive in 🕵️ We start with product costs, the most common argument against insurance. The vast majority of pension insurance products are brokered on a commission-basis, with the typical commission-based product reducing the gross return by well over 1% per year. For a 300€ per month savings plan over a 35-year period with a return of 7% p.a., a private pension insurance costs around 30,000 – 40,000€ over its lifetime. In addition, you lose compound interest on those costs. The costs are so high that almost all commission-based products will perform worse than a stand-alone fund portfolio - even after accounting for tax benefits. But what if the product costs can be reduced? Besides a handful of commission-based products with exceptionally low costs, there is a growing market for commission-free products (“Nettopolicen”). Their product costs are about 50% lower compared to an average commission-based product. We have made a comparison between the same fund portfolio being held individually and within an insurance in the graphic below (incl. the list of assumptions). It is a tight race - which gives us an interesting discussion. The insurance is slightly ahead at the date of retirement due to capital gains being tax free during the savings phase. As we mentioned in Part 3, payouts from the insurance are generally taxed less compared to the fund portfolio. However, in our example, significant parts of the capital gains of the fund portfolio have already been taxed during prior fund switches. Thus, the effective tax burden on payout will somewhat match the one of the insurance. We may call it a tie. Yet, we can draw a number of insightful conclusions: 1️⃣ Minimizing product costs of the insurance is key. 2️⃣ It takes about three decades for the tax advantages to set off the insurance costs. If you have less time, an ETF / fund is preferable. 3️⃣ The more often you expect fund switches, the higher the advantage of the insurance (one every 10 years over a 30-year period can be seen as the break even). 4️⃣ The result of the comparison depends on the taxation of capital gains in a fund portfolio. It may look different if such gains are taxed higher in the future. On the other hand, tax rules for insurance are preserved (grandfather clause). Thus, the insurance can be used as a long-term hedge against rising taxes on capital gains. Because tax advantages and costs do not lead to a clear choice, we will have a look at more factors in our next post. We’ve said it before: Make sure to follow Sebastian Urban and I not to miss out. 😉 #insurance #assetallocation

Many Indians are puzzled by life insurance! This confusion is primarily due to the prevalent practice of selling life insurance as a savings product rather than a protection tool. This approach often leads to misaligned expectations and misunderstandings about the primary purpose of life insurance. In India, life insurance policies are frequently marketed with an emphasis on their investment components, tax benefits, overshadowing their fundamental role of providing financial protection against unforeseen events. This trend is driven by commission structures that incentivize agents to promote products with higher savings elements, potentially compromising the adequacy of coverage. The Insurance Regulatory and Development Authority of India (IRDAI) mandates that agents conduct a thorough needs analysis before recommending policies. This process ensures that the suggested plans align with the genuine needs of clients, focusing primarily on protection. However, the current sales practices often prioritize products that offer higher commissions, leading to a mismatch between the policyholder's needs and the product sold. To address this issue, it's essential to realign the sales process with the core objective of life insurance: protection! Agents should prioritize conducting comprehensive needs assessments to determine the appropriate coverage for clients. By doing so, they can recommend policies that offer adequate protection, ensuring that the primary purpose of life insurance is fulfilled. Additionally, restructuring incentive models to reward agents for proper needs analysis and the sale of protection-focused products can lead to more ethical sales practices. This shift would ensure that clients receive policies tailored to their actual needs, enhancing trust in the insurance industry and promoting a better understanding of life insurance's true purpose. Nithin Kamath #Insurancenews #Lifeinsurance #Policyholders #IRDAI https://lnkd.in/g9D5E23K

Do Financial Intermediaries deserve such high commissions — especially from Life Insurance companies? A recent report shows that top banks earn between 13% to 25% of their total income from commissions — largely from selling insurance and mutual funds. Axis Bank leads with 25.2%, while HDFC Bank made ₹6,467 crore from insurance and MF distribution in FY24. This often raises the question: Are such high commissions justified? Let’s dig deeper. Yes, life insurance distributors can earn up to 35%+ commission in the first year, and 2-5% in renewal years. But here's the nuance: Over a 10-year premium payment term, the amortized payout is ~10%, and much lower if the PPT is longer. Renewal commissions are on premium paid, not on AUM (Assets Under Management) like MFDs or RIAs, who typically earn ~1% on the entire AUM annually — a model that can generate higher cumulative payouts post year 5–7. So, while upfront insurance commissions seem steep, they taper off significantly — unlike the compounding trail income of an AUM-linked model. Moreover, life insurers rely heavily on fully variable intermediaries, which means: Minimal fixed cost on offices, staff, infra Scalable, cost-effective outreach Wider financial inclusion, especially in semi-urban/rural India Also, high-commission doesn’t always equal poor value. We accept it in real estate, pharma, or luxury sales, because the intermediary plays a crucial role in education, hand-holding, and servicing. For investors with conservative to moderate risk profiles, life insurance investment products — though imperfect — still offer long-term debt solutions with embedded protection and tax efficiency. The real issue isn’t commission — it’s transparency and suitability. What do you think: Should intermediaries be paid less, or should we focus on better disclosures and investor awareness?

📘 Bima Sugam – A New Era for Insurance Advisors: 1. 🌐 What is Bima Sugam? I) It is a digital marketplace for all types of insurance (Life, Health, Motor, General). ii) Backed by IRDAI, run by a non-profit industry federation. iii) Works as a Digital Public Infrastructure (DPI) — like UPI for payments. iv) Target rollout of full transactions: by Dec 2025. 2. 👩💼 Role of Advisors in the Bima Sugam Era: I) Advisors are not being replaced — they are evolving into digital relationship managers. ii) Before: Heavy reliance on manual paperwork, physical follow-up. iii) Now: Digital onboarding, instant comparisons, quicker claims. iv) Advisor’s value: Guiding clients through choices, explaining terms, providing trust & handholding 3. 🔑 Key Features Advisors Must Know: I) Policy Comparison – Clients can see premiums & features of all insurers → Advisors must explain differences clearly. ii) Digital Repository – All client policies stored in one place → Advisors help clients consolidate. iii) Claims & Renewals – Faster process → Advisors must ensure clients submit proper documentation. iv) Transparency – Harder to mis-sell → Advisors should focus on needs-based selling. v) Intermediary Integration – Advisors will get a login dashboard to manage client portfolios digitally. 4. ✅ How Advisors Should Prepare? I) Go Digital: Learn to use the portal for policy issuance, renewal, claims. ii) KYC Ready: Ensure clients’ Aadhaar, PAN, mobile, email are updated. iii) Client Education: Teach clients to use the portal while positioning yourself as their guide. iv) Build Trust: Emphasize advisory role (explaining coverage, riders, long-term planning). v) Stay Updated: Follow IRDAI & company circulars on Bima Sugam features. 5. 📊 Benefits for Advisors: I) Wider Reach: Can serve clients anywhere in India through the platform. ii) Efficiency: Less time on paperwork → more time for client relationship. iii) Credibility: Digital audit trail increases client trust. iv) Retention: Easier servicing means higher persistency & renewals. 6. ⚠️ Challenges & How to Overcome it? i) Clients may try to buy directly → Position yourself as an advisor, not just a seller. ii) Digital literacy gap → Offer personal assistance in onboarding. iii) Lower commissions? → Compensate with higher volume & cross-selling. iv) Competition → Differentiate with personalized service, financial planning insights. 7. 🏆 Action Plan for Advisors: i) Create digital toolkit (laptop, WhatsApp Business, PDF scanner apps). ii) Build a client insurance folder (soft copy of policies, KYC details). iii) Train yourself on policy comparison and benefit explanation. iv) Use social media to educate clients on Bima Sugam and invite them to onboard through you. v) Focus on life-stage financial planning (Protection, health, retirement, wealth). #Newera #Digitalmarketplace #Digitaltoolkit #Widerreach #Transparency #Intermediaryintehration

Should you share your protection sourcing results with clients? This is an interesting question and one that I cover off in my coaching sessions. Failing to be open and transparent with clients can erode trust and give the impression that you don't represent the clients' best interests. Sending your preferred recommendation on email without first providing comparative context or adding value can drive people to shop online, go elsewhere or seek comparison to measure whether what you are proposing represents good value or not. Besides, by not sharing your results, you may actually be missing out on incredible opportunities to demonstrate value, upsell better quality cover and earn significantly more. All of which produces better outcomes for all parties. Let me explain. If you 'sell' protection primarily on price alone, then sharing your sourcing results will create problems for you as it becomes a race to the bottom and your only option will ever be to default to the 'cheapest' viable option for clients. But by sharing your results, in the right way, you can actually add value and trigger conversations around comparative options and quality differentiators. In my coaching sessions, I encourage advisers not to just share sourcing results but to actively engage with the customer as you move through them so that they feel like they are part of the decision-making process. There is huge value in sharing your screen and walking the client through the various sourcing results and why you intend to recommend what you are. In the case of #incomeprotection for example, sharing your results and scrolling through them with the client can help to really explain and justify why you are recommending the particular plan you intend to. As you move down the list, past the short-term plans, the age-costed plans and even the reviewable options, you can tell the client that these plans are not for a client like them, so you're going past those until you get to the ones that apply to their specific circumstances (I.e. they need an income for life). This is a chance for you to educate why these limited plans don't work for the customer and why you're passing them. Better still, rather than scaring the client off, the results can help to anchor the client to the value of the recommendation you are making. As you reach the full term plans and the one you intend to recommend, you now have the opportunity to demonstrate its relative value compared to other similar plans. This is particularly important if you don't plan on recommending the 'cheapest' viable option and want to remain Consumer Duty compliant. Unless you intend to recommend the most expensive plan on the list, you can use that plan to show how the plan you are recommending represents exceptional value compared to that one. But you can't do that without sharing your results and by being fully transparent. Transparency builds trust.

70% 𝐨𝐟 𝐖𝐢𝐝𝐨𝐰𝐬 𝐋𝐞𝐚𝐯𝐞 𝐓𝐡𝐞𝐢𝐫 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐀𝐝𝐯𝐢𝐬𝐞𝐫 𝐰𝐢𝐭𝐡𝐢𝐧 12 𝐦𝐨𝐧𝐭𝐡𝐬 😯 . 𝐇𝐞𝐫𝐞’𝐬 𝐖𝐡𝐚𝐭 𝐖𝐞 𝐀𝐫𝐞 𝐆𝐞𝐭𝐭𝐢𝐧𝐠 𝐖𝐫𝐨𝐧𝐠 ….. One stat from Futureproof that really hit me: nearly 70% of widows leave their financial adviser within 12 months of their husband’s passing. That’s staggering. For many advisers, this creates a trifecta of challenges: 𝐬𝐥𝐨𝐰 𝐨𝐫𝐠𝐚𝐧𝐢𝐜 𝐠𝐫𝐨𝐰𝐭𝐡, 𝐫𝐢𝐬𝐢𝐧𝐠 𝐜𝐨𝐬𝐭𝐬, 𝐚𝐧𝐝 𝐥𝐨𝐬𝐢𝐧𝐠 𝐜𝐥𝐢𝐞𝐧𝐭𝐬 . They’re not just treading water—they’re slipping backwards. After chatting with advisers here in Australia, anecdotally at least it seems this issue could be just as prevalent here too. But 𝐰𝐡𝐲? From what I’ve heard and seen: 1️⃣ Many women don’t feel understood by their adviser. 2️⃣ Advisers often focus on traditionally “masculine” metrics— net worth, returns, etc. Even as a female adviser, I’ve been guilty of this because it’s what we’ve been taught. But for many women, money represents something deeper: security, confidence, ease. 3️⃣ Adult children are stepping in to help their mums choose advisers. They’re looking for a business with a modern approach—user-friendly websites, easy online booking, and virtual meetings. It’s clear we need to adapt. Women are living longer, will be the majority recipients of wealth transfer, and by 2030, they’ll be the majority breadwinners in the US (and perhaps here in Australia too!). Women want advisers who understand them—not just their finances. 💡 𝐂𝐮𝐫𝐢𝐨𝐮𝐬 𝐡𝐚𝐯𝐞 𝐲𝐨𝐮 𝐧𝐨𝐭𝐢𝐜𝐞𝐝 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞𝐬 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐲𝐨𝐮𝐫 𝐦𝐚𝐥𝐞 𝐚𝐧𝐝 𝐟𝐞𝐦𝐚𝐥𝐞 𝐜𝐥𝐢𝐞𝐧𝐭𝐬? 𝐇𝐨𝐰 𝐚𝐫𝐞 𝐲𝐨𝐮 𝐚𝐝𝐚𝐩𝐭𝐢𝐧𝐠? 𝐈’𝐝 𝐥𝐨𝐯𝐞 𝐭𝐨 𝐡𝐞𝐚𝐫 𝐲𝐨𝐮𝐫 𝐭𝐡𝐨𝐮𝐠𝐡𝐭𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐜𝐨𝐦𝐦𝐞𝐧𝐭𝐬!

RUN AWAY 🏃➡🏃➡ When an insurance advisor says, “Pay your term insurance premium for just 5 years, and enjoy coverage till 60.” Run. Fast. Opposite direction. 🏃➡ Because they’re not helping you save. They’re helping themselves earn — as much as possible, as fast as possible. Let’s break it down. Assume you’re 35. You want ₹1.5 crore life cover till 60. You open the insurance portal and see various premium options: → Monthly: ₹1,429 → Yearly: ₹16,728 → 5-Year: ₹66,052 → 10-Year: ₹34,922 The site screams: “SAVE up to 41% with 5-year pay!” And that’s true… → Monthly plan (25 years): ₹4,28,700 → Yearly plan (25 years): ₹4,18,200 → 5-Year plan: ₹3,30,260 → 10-Year plan: ₹3,49,220 You’re saving almost ₹1L if you go with the 5-year pay option. Wrong. That’s the surface-level math. If you choose yearly payment and invest the difference between that and the 5-year plan into mutual funds at 10% CAGR… You stop investing after 5 years. Let it sit for another 20 years thereafter. Guess what happens at the end of 25 years? → That money becomes ₹22.39 LAKHS. So yeah — you “saved” ₹1L…but you LOST ₹21 LAKHS. …. The truth: ❌ Limited pay plans don’t build wealth. ❌ They don’t save you money. ❌ They just save your advisor’s sales target. What to do? ✅ Pay the premium for as long as the cover lasts. ✅ Invest the difference. ✅ Let compounding do the heavy lifting. That’s how wealth is built. Not by shortcuts. Not by sales gimmicks. But by understanding the damn math. PS: If you’re sugar-coated advice that is costing you your financial goals - DM me. I’ll walk you through a plan that protects your family without draining your future. One conversation could give you much-needed clarity. LinkedIn Guide to Creating LinkedIn News India

Ever wonder how some firms offer both “fiduciary advice” and commission-based products? You’re not alone, and if you’ve gotten calls from companies like First Command, this setup probably rings a bell Let’s break it down 🧩 Some financial professionals are dual-registered, licensed to give fiduciary investment advice and licensed to sell financial products like insurance or annuities That means they can switch roles in the same conversation, depending on what they’re recommending 💼 In one moment, they’re acting as a fiduciary, required to put your interests first when giving advice 📄 In the next, they may shift into a sales role where they’re only held to the “suitability” standard and can earn commissions It’s perfectly legal In a sales role, they’re not giving advice, so the fiduciary standard doesn’t apply But that role switch? It’s not always obvious to the client (or should I say customer?) Even if the advisor is a great person and genuinely wants to help others, there’s a massive conflict of interest involved when they can sell products to clients who deeply trust them “Fee-based” advice models are common across the industry, not just at places like First Command, and they require more scrutiny from the client’s side If someone’s helping you plan your financial future, it’s fair to ask: 💬 How are you compensated? 💬 Are you acting as a fiduciary 100% of the time? 💬 Do you or your firm sell investment or insurance products? Transparency matters. So does aligning incentives #Veteran #MBA #WealthPlanning