By Geraldine Lam

About The Writer

Geraldine has been providing financial advice to individuals, families and Corporations since November 2005. She started with insurance sales in AIA Singapore and later moved on to become an independent financial advisor in January 2007, dealing with a wide range of insurance and investment products from various financial institutions. She is currently undergoing the Certified Financial Planner® course, the most highly sought after designation by financial planners worldwide.

    They say, “If you fail to plan, you plan to fail”. This is a universal philosophy of life, and can be applied to most, if not all, areas of our lives. When you’re a student, you plan your assignments and your study schedules; you set goals for exam performances. In your working life, your company sets goals. Some of you may also be part of a business strategy team.

    Why then, do we not apply the same concepts or regard our family’s finances as important enough – a high priority item – to start planning effectively today? Why is it that many people procrastinate and avoid their insurance or financial advisors, for fear of “over-committing” to financial plans or a regular premium savings policy? Some of these people bought a few insurance policies five or ten years ago and regard that as financial planning, period.

    Have they ever taken a moment to open up their files or portfolios and asked themselves, “How much am I going to receive at age 55, 65… am I confident that this is the sum? Is the amount guaranteed? How long will this amount last me if I live till 85?”

    These are questions that your financial advisor – a competent one at that – will likely go through with you in the event that you have asked yourself these questions before. (Sure, all Singaporeans are afraid of the “Financial Con-sultant” that is just out to earn a sale or make a quick buck from you. However, there are increasing numbers of committed advisors who strive hard to be as professional as they can be – upgrading themselves with professional qualifications too. Thus, your duty as a consumer is to look for a competent professional that is trustworthy and serious about working with you towards your financial goals.)

    There are some smart alecks out there, most of them in their 20s, who punt in the stock market and sneer at the prospect of engaging a financial advisor to help them with their investment plans. This is where they have gone wrong. Financial advisors do not claim to be stock market analysts – although being in the business, they most likely know a thing or two (some know a great deal) about market movements, for the very same reason that they are investors too!

    Back to the topic: a financial advisor helps you to get a foundational PLAN – a disciplined approach – in place, and sets up a program for you to achieve a realistic compounded annual return to hit a clearly defined objective at retirement age, or any other specific age. The financial planner is not interested in fighting with you over which stock is a better bet, or challenging his or herself to achieve a higher return than you in one week. Sure, take your own risk and test your beliefs and strategies with stocks and options; but how many can claim to know how to use the myriad of financial planning tools and products out there in the market and choose the few that, when combined together, will meet specific needs and targets?

    How many know the intricacies of investment-linked policies, anticipated endowment plans, regular savings plans and all the loopholes involved? How many know how to calculate their actual returns at the end of a 20-year period, AFTER inflation and taxes? Do you even know you have to pay taxes? Finally, how many have the discipline to act on your own and stick to your plan after two years have passed? Most people, if not “forced” or reminded to stick with the plan, will most likely get distracted and divert the funds to some other short-sighted whim – like a new luxury item you do not need.

    My point is simple – do not be complacent, and ignorance is not bliss. If you can’t even answer the first question (“How much am I going to receive at age 55, 65, 70?”) posed in this article, not to mention the later more complicated issues, then ring your financial planner and get some professional help. See a financial doctor, before (it’s too late) your financial stream amputates. Are you going to wait for the day, ten years after retirement, when your CPF money (recall, “CPF is enough!”) runs out, to wake up and realize your mistakes? (Note that people have had to sell their houses and belongings when they run out of money to live on.)