Difference between Financial Sales & Financial Planning

Financial planning is not a glamorous job in Singapore. Regardless of one’s education and experience in the industry, it is inevitable that some consumers I come across do view practitioners in a negative light. I believe this is strongly attributed to its intense focus on financial sales rather than financial planning. As a result, many young people have joined the industry hoping to be a professional often become disillusioned that remuneration and recognition is pegged to how good one is in marketing products rather than helping their clients.

The turnover is so high in the industry that an estimated 90% will not stay over 3 years. Usually, only 2 kinds of financial advisers can survive in this competitive environment for the long haul.

1. Financial Salespeople who have mastered the art of conning unsuspecting consumers. 

2. Advisers who find real meaning in their line and are convinced they are helping people solve problems while earning a living in the process.


For obvious reasons, one should shun financial salespeople. However finding an adviser who has your interests at heart is not as easy as it seems as no one will claim to be poorer than their competition.

From my experience, the best way to differentiate the 2 types of advisers is via the approach undertaken.

1) Most Financial Sales people have the following characteristics

- Going straight into presentation of products
- Explaining benefits and encouraging a prospect to buy without identification of client’s real needs.
- Focus is on closing a deal, not solving the clients problems
- Closing is usually attempted on the first meeting
- Unwilling (often also unable) to advise the client based on the whole context of his finances.
- Conducts Ad-Hoc planning in the pretense of giving advice.
- Examples: Insurance Road shows, buying products from banks, supporting friends who are part time agents.

2) True blue advisors, on the other hand, work in the following manner

- At least 1-2 hours spent on gathering client data.
- Analysing a clients financial status with a clients financial needs in mind.
- Focus is on solving client’s problems, not closing a deal.
(Savvy clients will implement the tools recommended if it does solve their problems)
- Closing is usually attempted on the second, third or fourth meeting
- Willing and able to advise client based on the whole context of his finances.
- Conducts comprehensive financial planning because it is the right thing to do.
- Examples: Fee based financial planning or simple financial planning conducted in a conducive environment like office or residence.

(See Wilfred Ling's article: Why Fee based & comprehensive financial planning)


Difference between financial sales & financial planning using the 6 step needs based model:

(Click to enlarge image)

For higher quality financial decisions to be developed, it always take 2 hands to clap, the public has to appreciate the value done by an adviser as it can take days to develop recommendations, and some of which involves little or no product sales. Many consumers in Singapore often think they hold the upper hand in a client – planner relationship and expect professional advice to be free. These consumers often mistaken generic advice or ad hoc advice for specific advice relating to their personal circumstances. Unfortunately, they will eventually bear the burden of free financial advice through unsuitable products marketed to them. (See my article: the downside of free financial advice)


Financial advisory can be a very honorable profession if it is being conducted in the right spirit. There are enough bad apples in the industry, let’s do the right thing for our clients.

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The downside of free financial advice

Financial literacy is still low in Singapore, despite our country being one of the leading financial services hubs in the world.  Other than recent government initiatives such as Moneysense, a large responsibility falls on the financial intermediaries such as banks, insurance companies and fund houses when it comes to financial education. Despite the overload of free financial information being bombarded constantly at us, I will explain why free financial advice can hurt both the customer and the adviser.

How it hurts the client?

 We all know there are no lack of financial salespeople in Singapore who claim to be “planners, consultants, advisers, wealth managers...etc”, and they would gladly provide “free” financial advice in the hope of securing a deal. Talk to an insurance salesperson and you will find out most of them will gladly give you an hour of their time for a free consultation, at a time and place of your choice.

If you ain’t looking for them, don’t worry, they are out there looking for you!  It breaks my heart whenever I see unsuspecting people being conned by financial advisers pretending to be financial advisers. Examples of these predators can be seen everywhere doing road shows from mrt stations to shopping malls. Due to my nice guy image, I have been approached by them several times before I joined the industry. What starts out as helping a sweet girl with a survey usually conclude with a product presentation. I am still waiting for them to publish their survey results despite conducting the same survey for decades.

However, what troubles me even more is why unsuspecting passersby can trust someone with 4 O’level credits who approach them at an MRT station to provide the solution to their retirement plan after 15 minutes of product presentation??!!

There is an information gap that exists between the adviser and the client. It is common practice for advisers only to present the benefits of the product and leave its limitations out. Most clients either do not know how to interprete the signed documents or do not bother finding out. The end result is they lose out massively in the long run. 

 How it hurts the adviser?

So how does giving free financial advice hurt the adviser then?  Anyone in our business knows that we are not being compensated for doing proper financial planning. Even when our clients want us to, there is no incentive to draw up a full financial plan, which can take days, when we are not paid a single cent for these efforts.  I had a unforgettable negative experience when I just started out many years back where after countless hours of consultation, fact finding, review and multiple email exchanges and travelling to and fro,  I realised I had just been conned by a poorly qualified prospect who just want me to clear up her financial mess in a pretence of giving me business. The high time and monetary loss I incurred made me realise there are also rogue customers who will gladly take advisers for a ride.

Thus many practitioners do things the smart way and do the absolute minimum in order to close the sale. Since remuneration is based purely on closing a sale, the industry shifts its focus from improving financial competency to improving selling skills.  In recent years, many financial salespeople have resort to highly advanced selling skills like Neuro linguistic programming (NLP), which aims to influence a customer subconsciously into buying.

Who eventually carry the burden of "FREE" financial advice?

My preference is that fees should be charged for ongoing advice if one is truly providing a valued service.  No one works for free and pretending that we work for free is hypocritical.  One does not have to hypnotise the client if the analysis is accurate and the recommendations are sound. My experience tells me that savvy and sincere clients can recognise a good deal when they see one.

Therefore I believe that charging fees is first and foremost protecting a client’s interests, as well as respecting my time and effort. An adviser who does not respect his time and effort will not be respected by the clients, regardless of the level of expertise.  It is unfortunate that many people in Singapore generalise financial advisers as salespeople who are out to make a quick buck. This negative perception has resulted in many academically inclined young people from shunning the industry to avoid being labelled as a "insurance person".  It in turn limits the growth of professionalism in the long run.


Financial planning is such an integral part of one's finances yet the many industry practices have made many people lose faith altogether. For example, the commission based remuneration we have in Singapore today only encourages a generation of salespeople that pray on the ignorant public. One truely has to ask, is the landscape in Singapore promoting professionalism among financial advisers? or salesmanship? 
(See: Difference between financial sales & financial planning )

Many of my fellow practitioners often compare an adviser to that of a financial doctor. The reasoning is that as long as one does consultative sales, professionalism can still prevail at the end of the day. This is still a far fetch dream in Singapore, to put it simply, would you trust a medical doctor's prescription if he earns his living SOLELY by selling medicine to you? 

Mr. Wilfred ling, a renowned fee based financial planner in Singapore, have written extensively about why fee based financial planning is the fairest way of remuneration and I strongly encourage readers to check it out.

 (See link: Why pay fee for advice when others provide free advice?)

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