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Why Go Independent?
The financial advisory industry in Singapore is dominated by banks and insurance companies. Since the enactment of the FAA however, the local IFA industry have been growing in momentum, gaining market share and recognition.
Many who decided to turn independent were drawn to the clear advantages that the IFA model offers:
- The ability to provide truly holistic financial planning
- The freedom to place clients' interests first
- A business model that keeps them ahead of the competition
- True business ownership
Holistic financial planning
Before the FAA, constructing a holistic financial plan involved the consumers shopping around for different financial products from different financial intermediaries all on their own.
The lack of a "one-stop shop" for one's financial planning needs made portfolio tracking difficult, the comparison of products for best value arduous, and the process of getting a thorough financial health analysis cumbersome.
The IFA represents this "one-stop shop" that the consumer demands.
As an IFA representative, you will be single point of contact for your clients to gain access to all their financial planning needs.
The IFA model gives you access to a whole range of financial instruments and services, from insurance and investments to estate and tax planning, making the task of constructing a truly holistic financial plan for your clients possible.
Clients' interests first
The absence of any financial or commercial links between an IFA and any product providers means that, as an IFA representative, you have the freedom to place your clients' interests above all else.
Being an IFA representative gives you the freedom to select the best of breed in each product class to create the best value for your clients. For example, with the knowledge that different insurance companies each have different areas as their strengths, you have the freedom to recommend the best product from the respective insurance company that would meet your clients' needs.
Staying ahead of the competition
Following the enactment of the FAA, many of the top tied agents have foregone their "pots of gold" built over the years in their insurance companies to join the IFA industry.
These include founders of the biggest IFA companies in Singapore who had the conviction that consumers deserved the better service and the unbiased financial advice that only an IFA model can offer.
The strong growth that the IFAs have seen since, both in terms of number of advisers and Asset-Under-Advice (AUA) is testament to the viability of having "Independence" as a calling-card.
As consumers become more sophisticated, experience in more developed IFA markets such as that the UK reveals that:
- Consumers generally understand the distinction between tied and independent advisers
- Consumers think independent advice is better than tied advice
- Consumers prefer to use an independent adviser
Going independent now ensures that you remain ahead of the competition.
True Business Ownership
In the IFA setup, financial advisers are able to build and own a business that provides a perpetual recurrent income in the form of the annual advisory fee from managing clients' investment portfolio. This is in comparison to that of the insurance companies and banks, where the clientele built by the financial advisers are wholly owned by their principal company and there is no perpetual recurrent income from existing clientele.
By truly owning the recurrent revenue generating business that you have as an IFA rep, you have the potential to sell off your business in the future when you retire, as witnessed in the prevailing trends of the more developed financial advisory industry in other countries.
Next Steps
If you think that going independent is the right choice for you, click here to find out how you can go truly independent.
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