Alvin Soong’s Blog

This was a life testimonial of one who turns from insurance and investment sceptic to one who believes in financial planning. His name is Francis and I am a spend-a-holic. In today’s economy it is even more important to be thrifty and review your Financial Needs Analysis through financial planning.

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The Testimonial:

His penchant used to be for shiny new things, good food and travel to faraway places is proof. Although he has always earned enough not to be in debt, the sum in my savings account was pathetic. Only 0.25 per cent interest per year for my money in a savings account. I knew I had to start saving and investing for that ‘rainy day’, but taking that first step was hard.

Contrary to the belief of investment gurus or financial planning experts, I found managing my own finances extremely challenging. He did not have any insurance policies, life or otherwise, aside from my car insurance and whatever I got through Medisave. Yet, he stood by the sidelines, apprehensive about saving, investing or even just talking to a financial planner.

He also kept hearing about how investment products and insurance policies were sold to customers based on the seller’s sales quotas rather than the customer’s needs. ‘What if I lost my money based on their wrong advice? Why should anyone make a commission from my hard-earned cash? What if I die tomorrow and never enjoyed life enough?’ These thoughts ran through his head. While there was some degree of truth to all that, he felt hewas also just plain lazy and indifferent to the concept of thrift.

He thought to himself “Life wasn’t bad to begin with. I bought what I needed, splurged on what I wanted and indulged in whatever I desired. I was never worried about money and that was my problem. “

Until a couple of years ago, he was still living from dollar to dollar - no wait, make that cent to cent - and it was starting to get embarrassing. However, all that changed a year ago when he decided to trade my job at a bank for a career in journalism. Friends from the ‘other side’ told him how little journalists made and how hr would have serious trouble maintaining my lifestyle.

Finally the day he signed on the dotted line to be a journalist was also the day he called a financial-adviser friend who sat him down and went through what she called a ‘know-your-customer’ questionnaire and a financial needs analysis or FNA.

The process entailed a series of questions that everyone should ask himself every now and then, like: How much do you spend on fixed expenses like your mortgage, utilities, car loan and even your gym or spa membership? How much money do you think you need to retire at say, 55 years old? How much of your income can you afford to risk for investments? And so on.

After they were finished, he was taken aback by the diagnosis that he would not have enough to retire on until he was at least 72. Even then, his pocket money would range between $300 and $400 a month.

In the end he signed up for a few life and medical policies, plus other long-term investments. I realised that it wasn’t as painful as I thought it would be to part with a few grand on insurance. More importantly, the FNA threw up a few surprises for me other than the obvious fact that I was under-insured. It showed him as one with a ‘low appetite for risk’ and a ‘long-term outlook’. Instead of letting the recent fiasco surrounding the alleged mis-selling of dodgy structured investment products be your excuse, now is a good time to look into FNA Financial Needs Analysis. If anything, the increased scrutiny on financial institutions these days will make them even more focused on running the analysis for you.

Testimonial taken from Sunday Straits Times 30 th Nov and summarised.

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