In “thesundaytimes” dated 08/04/2012, Mr. Andy Mukherjee wrote about getting good advice from financial adviser(fa). In his article, he suggested a tip which I think was very good. He suggested to recommend someone who is of a different age group as yourself to the financial adviser that is attending to you. The purpose is to sniff out if this fa is purely pushing the same product to everyone he see or will the fa recommends the products that suits an individual.
MAS has strict regulation as who and when the term ‘independent’ can be use. The method of remuneration plays a part but not necessarily must be fee-based. Likewise, fee-based advice may not be independent if there is some relationship between the financial adviser and the financial institution.
In the MAS guidelines on use of the term “Independent” by Financial Advisers, it states that
8.3 The Authority considers that a financial adviser can use the word
“independent” if –
(a) it does not receive any of the following:
(i) any commission (apart from commission that is
rebated in full to the financial adviser’s clients);
(ii) any form of remuneration calculated at a rate or on a basis that varies having regard to all or any of the following:
(A) The number of transactions so arranged or effected; or
(B) The value of each transaction or of all transactions (For life policies, based on amount of premiums paid or payable or the amount of sum insured. For unit trusts, based on subscriptions paid or payable.); and
(iii) any gift or other benefit from product providers which may reasonably be expected to influence the financial
(b) it operates free from any direct or indirect restriction relating to the investment products it provides financial advisory services on; and
(c) it operates without any conflict of interest that may –
(i) arise from its association or relationship with product providers; and
(ii) reasonably be expected to influence it in carrying on the business of providing financial advisory services.
It also states that
9 A financial adviser may be compensated by product providers in various ways. These include commissions, trailer fees or soft dollar arrangements.
11 The mere fact that a financial adviser receives commissions or other benefits from a product provider does not preclude it from calling itself “independent”.