Thursday, December 31, 2015

Low payout ratio

Dear Mr. Tan

Can you explain how to read the claim ratio and the profit ratio of critical illness insurance shown on this page?

For the top company PRU, the claim ratio is 18.3% and the profit ratio is 27.1%, giving a total of 45.4%. What happened to the remaining 55.6%?

The remaining 55.6% goes towards commission, expenses and increase in reserves.

The claim ratio is very low. For every $100 in premium, the policyholder gets back only $18 in claims. This payout ratio is worse that 4D or Toto!.

Wednesday, December 30, 2015

Soursop Tea Leaf and prostate cancer

Prostate cancer, (Mr Lim, 75)

Mr Lim went for his regular urinal test and the doctor did a Postrate Speicfic Antigen (PSA) on him. The result on 6 Oct shows 9.370. Normal range below 4. Doctor suspected he may have Postrate Cancer and scheduled a biopsy test of the postrate in Dec 2015. In the meantime, Mr Lim continued his same medication which he has been taking for past 1 to 2 years.

Having read about the soursop leaf tea, Mr. Lim started to drink the team every morning 30 minutes before breakfast.

On 29 Dec when he did his PSA test again the reading was 5.930. As this caused no alarm, the doctor scheduled him for next checkup 6 months time. The doctor was not able to give reason for reduction in the reading, but the patient knew what helped him.

Tuesday, December 29, 2015

ElderShield supplement

Dear Mr. Tan
I receive a call from an agent recommending that I should top up my Eldershield as $400 is not enough. Should I buy the top up policy?
Get the agent to send you a benefit illustration. You can send it to me. I will carry out an analysis.
The claim ratio for this class of business is very low, as shown here:
This means that very few people are making claim for disability. The insurance company are making a very big profit margin. One large company make a profit of more than 90% on the premium that they received!

How to get a more detailed analysis

A consumer (or perhaps an insurance agent pretending to be a consumer) commented on my article about Aviva MyCare policy. He said that I should carry out a more detailed analysis to back up my recommendation to "take your own risk".
My recommendation is based on the statistics that shows the insurance company had a profit ratio over 90%. This is horrible. The other companies have a profit ratio more than 30%, which is also too high. The insurance companies are making a high profit margin on Eldershield and the supplements.
If the consumer wants a more detailed analysis, he has to contact me at my consulting portal and provide data that is relevant to his own case.

Monday, December 28, 2015

Service for property owners, agents and tenants

Office desk space available for rental
Free listing available for agents or owners

How to replace the Goods and Services Tax

I dislike the Goods and Services Tax (GST). It increases the cost of living and hits the low income people hardest. It adds to the cost of doing business, by imposing a burden on traders to collect the tax on every transaction and to account the collection to the government.

The government needs revenue to meet its operating expenses and to provide welfare and public service to the people. The GST represents an important source of revenue for the government. If it is discontinued, we will need a suitable replacement.

The government can increase the income tax rate to replace the loss of revenue from stopping GST. This was the situation prior to the introduction of GST. However, this could bring the income tax rates to a level that is higher than other countries.

Another way is for the government to introduce payroll tax to replace GST. A payroll tax of 3.5% is sufficient to replace GST of 7% on the assumption that most people spend 50% of their income on expenses  that now attract GST.

For self employed people such as hawkers, taxi drivers and small contractors, the government can introduce a licence fee of $50 to $250 a month, depending on trade. This would be equivalent to the payroll tax collected from an average employee.

The alternative of payroll tax/ licence fee can be set at a level that is adequate to replace the revenue from GST. It has an advantage over GST. It is a cost of doing business, similar to the salary and CPF contributions.

While it will increase the consumer price by the increase in cost to the business, it avoids the multiplying effect imposed by GST, i.e when GST is increased by x%, the consumer prices usually increase by more than x%.

This will free the traders from the added cost of administering the GST.

I believe that countries will be better off by replacing the broad based GST with the payroll tax/ licence fee. They can still introduce a selective sales tax on certain types of expenses, such as hotel bills, restaurant bills, lawyer billings, stamp duties.

Sunday, December 27, 2015

Short sighted thinking in the government

Dear Mr. Tan

You said that the PPP model is more costly for the country. Why does the government opt for this model?

We have a government that is "very smart".They want to get the Sports Hub for free. Why not get the private sector to fund the cost and take all the risk?

Unfortunately, the decision makers probably did not realize that this kind of model is quite costly, troublesome and difficult to manage. It adds to the total cost to the country.

I suspect that this kind of "short sighted thinking" happens in many other aspects of our government administration.

For example, the government agencies want to reduce their operating cost, e.g. to cut down on staff and to get the public and businesses to "do it yourself" by using the online websites. But they do not take into account the cost to the public of using these complicated online process. For example, the government agency save 5 minutes of their staff's time, but as a result, the public has to spend 1 hour.

The cumulative effect of this short sighted thinking in the government over the past decades has increased the cost of doing business in Singapore, apart from high property rental. We are now inefficient and costly.

Period of premium payment

Some insurance buyers are not able to distinguish between the duration of the insurance policy and the period of premium payment. Usually, they are the same, but some plans are designed to be different.

A insurance buyer may be misled into thinking that he or she is investing in a life insurance policy for 5 years when the premiums are locked up for a much longer period.

Read this article to understand the difference.

What's wrong with the Public Private Partnership model?

Mr. Tan
The PPP (public private partnership) model sounds like a good idea. The government (i.e. taxpayers) do not bear any risk. All the risk are borne by the private sector. Eventually, the government gets the asset, i.e. the Sports Hub, for free. Is there any negative aspect of it, from the taxpayer's point of view?

The private sector does not enter into the PPP as a charity or public service. They do it for profit. They expect to earn a higher profit that will cover their risk.

The PPP model is also more costly. Decision making is complicated, as the different partners have to agree to any major change.

The model is also inflexible. The terms of the PPP have to be set out in detail in advance. It is difficult to modify the terms to meet changing market conditions. The re-negotiation will be time consuming and costly.

The PPP model is more costly. It can work in a virtual monopoly, e.g. utilities and toll roads.

When there is no monopoly, the higher operating cost is likely to price the PPP out of the market. That is why many of the international sports events find the rental rates of the Sports Hub to be too expensive and have opted for other venues.

Saturday, December 26, 2015

Sports Hub Partnership

Someone knowledgeable about the subject explained to me the difference between a PPP (public private partnership)  and a normal procurement process.

Public private partnership
An example of the PPP is the Sprts Hub. It involves several parties, namely
a) The public sector
b) The financiers, who are mainly the banks
c) The builder
d) The facility manager
e) The operator, who is responsible to bring in the international events

All of these parties have an interest in the PPP and are expected to work in the best interest of the PPP (at least in theory).

The public sector, which will eventually own the property at the end of 25 years will make an annual payment based on the KPIs that have to be achieved by the PPP.

The disadvantage of the PPP is the difficulty in getting decisions made. As many parties are involved, it is difficult to manage the different priority of interest of these parties.

This is why the PPP involving the Sports Hub has to face many problems and challenges.

Normal Procurement
Under the normal procurement method, a company will be set up to be the equity owners of the project. They will negotiate for financing with the banks on commercial terms. They will get a builder to build the project for an agreed price. It could be a design and build project. They can appoint the operator to manage the facility and bring in the events.

From this explanation, it is quite clear the normal procurement is a straight forward arrangement. It was rather naive for the government to go into the PPP which brings along so many unnecessary problems that have to be handled.

Aviva MyCare policy

The Aviva MyCare policy is a life insurance policy that provides for long term care. The policyholder, age 43, pays a premium of $564 a year for the whole of life. 
When the policyholder becomes severely disabled, which is defined as the inability to carry out at least 3 activities of daily living, the policy pays a monthly benefit of $1,300 for up to 12 years. 
Is this policy worth buying? Here is my analysis.
Note - the MyCare policy is a supplement to the Eldershield policy, which can be bought with CPF Medisave savings. The coverage is similar to Eldershield, but the premuim and amount of benefit is different.

A bad PPP model for the Sports Hub

Wee Meng said:
The entire sports hub was built via a PPP model, which is ridiculous. PPP only works when the country is in debt and needs the private sector to help in the financing. In our case, it is unfathomable that our govt has to "borrow" from private funding and hence subject to paying incredulous interests over the span of the 25 yrs contract, with tax payers' money no less. With our huge reserves, our govt can clearly finance it without having to incur huge interest payments.
I agree that it is "stupid" to adopt the PPP model for the Sports Hub. What to do ,when our ministers and top civil servants have no business or practical experience?

Sports Hub $1.3 billion

I asked an architect, who was involved in the project, why the Sports Hub cost $1.3 billion?
He said that the Sports Hub is more than the stadium. There are 7 structures - national stadium, indoor stadium, arena, aquatic center, mall, office and a huge car park.
The actual cost of the national stadium is probably half of the total, i.e. $650 million (but this is just a guess). It is expensive because of the retractable roof that allows the national stadium to be used for all weather.

Improve your property yield in a weak market

The property market is weak. But you can take some action to improve the return on your property investment.

If you own a property that you are renting out, you will probably face the risk of a vacant property when the current tenancy runs out.

You can avoid this risk by listing your property several months ahead of the expiry date. This gives you a better chance of finding another tenant who like your flat or house due to its location, budget and available month.

You can advertise your property at our website, and it is FREE. You can rent out a flat, house, office, shop or factory. You can also rent out a room in your HDB flat.

If you own a condo unit that was developed many years ago, you can get a better value when it is placed on a collective sale. You can register your interest in this website and get the other owners in the condo to register also.

Although the collective sale market is quiet, there will be an upturn in the property market when there is a change in government policy or an improvement in the global economy. If your condo is ready for a collective sale, you can move quickly and catch the market upturn.

An important message for young people for 2016

With a new year around the corner, I wish to share this message to the young people of Singapore who started work recently or will be entering into the workforce next year.
You have studied hard and done well in the exams. You have found or will soon find a job that pays quite well. You will have some spare money - if you do not spend all of your salary lavishly.
Someone, probably an insurance agent, adviser or consultant, will soon approach you. He or she is usually a person that you know, maybe a classmate or a friend.
The insurance agent will tell you about the importance of saving, investing for the future, and protecting your family against unforeseen calamities The agent will be quite convincing - as they have been well trained in this sales pitch.
The message that the agent give to you is correct, but the insurance policy that the agent recommends to you is usually bad for the buyer.
Many young people, maybe 20,000 each year, will buy the wrong policy and will be locked up in a poor yielding policy for the next 30 years.
I have seen many examples of the typical policies bought by young people that give them (say) $300,000 after 30 years when they should be getting $500,000. YES ... the difference is $200,000 and this is what they will lose out. (This is for a monthly saving of $500).
This information is shown in the benefit illustration under the column called "effect of deduction". But most buyers are not aware about it. When they learn about it later, it is too late. They have locked up their savings in a bad policy and can only get out by suffering a large loss.
You can avoid this disaster. You only need to spend 3 hours and $30 to attend my talk on financial planning.
I will show you what to look out for when you buy a life insurance policy. More importantly, I will show you how you should invest your savings in an index fund that gives you the best return over the long term, and the flexibility you will need in an uncertain world of today.
My talk is held on Saturday 9 January in HDB Hub in Toa Payoh. I conduct this talk once in 3 months, so you should not miss this talk. You can find out more details and register for this talk at this webpage

Friday, December 25, 2015

Claim and profit ratio of insurance policies

Dear Mr. Tan
Thank you for sharing the statistics about the claim ratio and the profit ratio of various insurance policies.

I looked at the critical illness policy, which I have bought from (name removed). Can you tell me why Prudential has a claim ratio of 18.3% and a profit ratio of 27.1% while AIA had a higher claim ratio of 25.0% and a higher profit ratio of 38.9%?

Does it mean that Prudential has higher commission and expenses than AIA?And why is AIA listed twice in your website?

I show the link to your webpage

The figures are taken from the MAS website.

Before arriving at the profit, the insurance company provides the premium, claim, commission, expenses, reserves and investment income.

If you register an account and sign in, you can see the full view which shows the commission and expenses as well.

AIA is listed twice because they operated as a branch of AIA Hong Kong previously and now as a separate Singapore company in the later years.

Forbes magazine article about Donald Trump

Real estate mogul turned presidential hopeful Donald Trump has stunned the political establishment with his sustained popularity in the polls since he announced his candidacy in June. 

Trump has garnered huge amounts of media attention from around the world. He has stirred controversy, starting with his negative remarks in June about Mexican immigrants and his call to build a wall between Mexico and the U.S. and force Mexico to pay for it. He followed with a plan in August to deport more than 11 million illegal immigrants. 

Trump alienated some women voters with a critical remark about Republican presidential candidate Carly Fiorina's looks. He insulted Sen. John McCain's military record. 

Despite such gaffs, he still polls well. Trump and Forbes have disagreed about his net worth for 32 years. In September Forbes put his net worth at $4.5 billion; Trump claims he's worth $10 billion or more, $3 billion of which is the value of his "brand." 

Trump admitted to Forbes in September that the magazine had listed his net worth "too high" in the early years on The Forbes 400 list -- and that in turn it helped him secure financing.

My experience in a collective sales of a condo

I was actively involved in the collective sale of Thomson View Condo for several years. On the first occasion in 2009, I was the chair of the Sales Committee. We were not able to find a property developer who was willing to submit a bid for the property based on the asking price. I knew the problems that had to be faced by the committee in handling this task.

Two years later (in 2011), another Sales Committee was formed. I opted out as I could not spare the time. The new Sales Committee worked very hard. They were able to get a property developer to submit a bid above the asking price at the very last minute, before the deadline expired.

Unfortunately, a few of the objecting owners brought the case to court. The court decided that the collective sales could not be enforced due to some technical issue. It was a big disappointment to the consenting owners.

A year later, some of the owners approached me to form another Sales Committee. I declined, as it was too much work, and quite unappreciated.

However, I said that if there were enough owners who were willing to register in a website, I may be able to help get another Sales Committee to be formed. We need the consenting owners to give their particulars in the website, and to help to get other owners to support the collective sale.

This website is now ready.

The website can be used by the owners of ANY CONDO in Singapore to register and to get other owners to support the collective sale of their condo.

Although the property market is soft now, it is better to get ready for the next property upturn. When it comes, the condos who are ready will be able to catch the boat.

Long term property investment

Dear Mr. Tan
May I also enquire your opinion about Iskandar properties in Malaysia? I have bought a 2-bedroom room unit 2 years ago and I am regretting now. There is so much news on the oversupply problem. I bought mainly with the intention to rent out. But this could be a problem as they may be no tenants and the rental is low. I am contemplating give it up now.
For the Iskandar property, you can give me a call at 66599611 (office) for a chat. I personally feel that it is a good long term investment. However, I am not sure if you have problem in servicing the mortgage payments.
How about listing your Islandar property in this website,

Private bus operator face new challenges

I asked a private bus operator if the drop in petrol price helped his business. He said that he saves $1,000 in fuel cost each month. But he has problem in getting workers.

He is a sub-contractor and relies on the main contractor to pass the transport jobs to him. The main contractor is squeezing him by reducing the share of the income that is passed to him.

He said that many of the people like him went bankrupt. They could not make ends meet. He is also thinking of calling it a day.

This is another example of the bad economic policies that is pursued by this government.

Badly affected by global and internal factors

Singapore's economy is affected by the global demand. When the global demand contracts, we will feel its bad effects. This is beyond the control of our government and businessmen, so we cannot blame anybody.

However, the drop in demand affects our business sector more acutely because of our high cost. So, it is exceptionally painful. This is a bad result of our economic policies that push the rental and the cost of doing business at a high level.…/singapore-s-…/2374516.html…

10 year old blog on marriage

Hi Mr Tan,

I came across your blog post, dated June 2005. I was only a 17-year-old year 2 polytechnic student back then.

I particularly like your comment regarding marriage:

"- marry early
- have children early
- live simply and on one income
- do not need to buy an expensive house
- enjoy the things in life that are free: clean air, nice parks, beach
- save 15% of your earning to meet the rainy day - if you should be retrenched

I think that this is possible. Just compare with people who are able to survive on a lower salary."

I still think what you've said back then applies 10 years later, today. Sometimes, the best things in life come free. =)

Thursday, December 24, 2015

A difficult balance act

A SMRT manager told me that his CEO had a difficult job. He gets instructions from the regulator, i.e. the Land Transport Authority and the minister to increase the train service to 3 am on the eve of public holidays.

If he agree to the request, he will have to sacrifice the maintenance of the system and the train may break down the following day, leading to heavy fines on SMRT.

If he does not agree with the request, he gets into the bad books of the regulator and the minister.

Guess what he did. And what will you do, if you were the CEO of SMRT?

Get ready for the property upturn

The property market and collective (en bloc) sales is now quiet. It is a good time for owners to prepare for the next property upturn.
Register here:

MAS Insurance Statistics

Here are the profit margins for the various insurance products, based on data taken from the MAS website.

If the profit margin is more than 10%, the consumers are paying a premium that is too high. The market is not competitive in bringing down the premium.

Enchanced MediShield


Critical illness


You can see the results for the other classes of business. You can also see the results for a selected company

If you wish to see a fuller breakdown of the results, you have to register as a user and sign in as a user. It is free.

Collective sale of condominium

This website allows the owner of a condominium unit to register his or her support or objection for the collective sale (also know as enbloc sale) of the condominium. The owner will receive a weekly email showing the level of support for the collective sale and messages posted to the owners.

Sales Committee
When the support for the collective sale has reached the required level of 25%, the website administrator will arrange for a meeting to be held to elect a sales committee. The committee can take over the administration of the effort for that specific condominium.

The sales committee can communicate with the owners by sending messages to the owners. The owners can view the messages when they receive the weekly emails.

Click here to register as an owner

Wednesday, December 23, 2015

Will Donald Trump be the next US President? Quite likely!

A few months ago, when Donald Trump indicated his interest to be a Republican candidate, most observers considered that he would not last long in the race.

By now, he is clearly the leading Republican candidate. He has a good chance of beating Hilary Clinton or any other Democrat candidate.

I have watched videos of his interviews and rally speeches. He is really a formidable force. He is very energetic and has clear and strong views. There is a strong likelihood that we will see a President Trump in 2016.

What makes Donald Trump so special, so different from all the other candidates?

Soursop website

Mr. Tan

How long does it take you to develop the Soursop website and how much does it cost for a person to have this type of website? I find it to be quite useful as it allows the customer to place an order and to receive details by email.


It took 3 people a total of 6 hours (i.e. about 2 hours per person) to develop this website. The time is reduced considerably as the website uses the "standard codes" that have been developed for similar website.

I develop it for my friend David, so he does not have to pay me for the website. I hope that he will get some orders for the soursop leaves.

David has been taking care of his sister who has been undergoing cancer for several months. A friend recommended the drinking of the soursop leaf tea. David found the results to be most encouraging, so he wishes to get other people to try it.

I hope that other people who try this tea can also share their experience, e.g. medical reports to show if it produced any improvement to their health.

Click here to view the website.

Soursop Leaf Tea

A few people have asked me on where to get the soursop leaves. They have friends or family members undergoing cancer treatment and they like to try the tea.

Here is the website. I developed it for a friend. You can order the leaves. You have to pay a small price, but it should be worth it.
You can also read the testimonials of a few people who have tried the tea.

A better approach to handle terrorism

There were long queues at the causeway and the second link during the holiday season. More people were travelling by car to Malaysia. The Singapore authorities also introduced "heightened security checks" as a counter terrorism measure, following the Paris terrorist attack. Each motorist has to spend about 3 hours in the traffic jam.

I consider the method of "heightened security checks" to be primitive. Apart from causing the massive jams and inconvenience to many tens of thousand motorists, it is probably ineffective in stopping arms or undesired terrorists from entering Singapore. The terrorists would be able to find better ways to get around these "heightened security measures".

A better approach is for the police to use modern technology to combat these terrorists. They can use intelligence to identify the potential terrorists and to observe them closely. They can move to nab them when the evidence confirm their action.

An example of this kind of action is the recent arrest of the plotters by the Australian authorities. Link to article.

Here is another example from France. Link to article.

Our authorities can use modern communication and surveillance tools and connection to the people through the social media to do their work. We should train investigators and detectives as professionals in ground work, rather than deal with problems behind a desk.

It is time for our police to upgrade their competence.

Tuesday, December 22, 2015

Should you buy the upgraded Eldershield?

Hi Mr. Tan
Currently I'm just going into understanding the ElderShield. On the surface, it looks good what the government has introduced - the Eldershield (ES) Scheme. It sounds timely, relevant and sufficient.

However, there has been so many calls from telemarketing/insurers to advice us to upgrade the ES coverage. So, I'm really confused now. I need to understand the ES properly and know the loopholes of this before engaging another party.

Last year, I had met with an AVIVA officer (at random) last year and he gave a good impression that he was sincere, and he also explained and had me understand that it makes more sense to use the premium (which I cannot take out) to upgrade on the ES coverage.

I know once I sign up I may regret it without knowing the loopholes further. However, I'm unable to breakdown the levels of loopholes in all this schemes due to lack of experience and foresight. So, if you are able to share more on this, I would greatly appreciate it.

The telemarketers and agents want to earn an attractive commission by selling the upgraded Eldershield to you.
The insurance companies make a big profit margin on this product.

So, the consumers are paying a high premium and getting back only a small percentage back as claims. It is better for consumers to keep their money in the CPF to earn 4% interest. When they make a claim at an advanced age, they can draw out the money from the CPF.

Keep the money for yourself. Don't give it to the insurance company as profit.

How to combat terrorists

The Immigration and Checkpoint Authority introduced stronger security measures during the holiday season to prevent arms and undesirable people from entering Singapore. Unfortunately, this has led to long queues at the entry points. Read this article.

Is this a good approach? Is there a better way to handle security measures in the modern day?

Here are some of my thoughts.

a) If the terrorists wishes to bring arms into Singapore, they are likely to find other ways to ship them into Singapore, rather than bring them in vehicles across the border during the holiday season.

b) If they wish to use this method, they can choose to bring the arms in before the holiday season, where the checks are less stringent.

c) A better way to prevent terrorist attacks is to have more policemen at places where there are large crowds and ask them to be alert to look for suspicious people. We can also use surveillance cameras more effectively.

Jamming the Causeway and Second Link does not seem to be a good way to implement stronger security measures?

Just my thoughts.

Monday, December 21, 2015

Apartment with excellent view

This apartment is available for rental from 1 March 2016. It has excellent view of Singapore from its 17th floor.

Mr LKY's Oxley Road home

Two thirds of the respondents prefer Mr LKY's house in Oxley Road to be demolished, as stated in his will. Read their reasons and comments.

Challenge for our "super" transport minister

This is a challenge for the new transport minister. I consider him to be a "super" minister because he was able to solve many difficult problems in other ministries by taking the right step.
I wrote this letter, which was published in the Straits Times in 2012. The Land Transport Authority did not bother to consider it - at least they don't bother to contact me.

Friday, December 18, 2015

Thursday, December 17, 2015

Set aside savings for specific needs

Mr. Tan
What are your views about planning for the expenses set out in this article?…/5-retirement-expenses-singapor…/
Is it necessary to include these items in the financial planning? How much should be set aside for each item?
I do not recommend setting aside a specific amount of savings for each item.
I advise people to make adequate savings to cover all contingencies, including retirement and unemployment.
My approach is explained in this talk.

Singaporeans are not hungry enough

John is the IT manager of a large Temasek linked company.

John - It is difficult to find Singaporeans to do IT work. They are not hungry enough. The foreigners from China and India are prepare to work hard, but not the Singaporeans. At 5 pm, they go home.

TKL - When I was in Sydney, most people go home at 5 pm. They do not need to stay back in the office after 5 pm. They do have a family and other activities to attend to.

John - I am referring to Singaporeans who have just joined us. They need to work hard for one year or two to get the knowledge and experience. If they are not willing to do so, they will never get the competence.

TKL - If you are referring to male graduates, they are likely to be quite old by the time they join you, maybe 26 to 28 years old. If they have to spend another 1 or 2 years to get the working knowledge, they will soon be hitting 30. The problem in Singapore is our full time national service, which takes away 2 1/2 years of their life (including waiting time to be called up) and university which takes another 3 or 4 years.

John - Oh. I did not see it from that angle.

Use of personal e-mail should be allowed

There is a rule in the US government that all officials should use their official email, rather than personal email.
This rule seems to apply also to many commercial companies. I presume that the purpose is to allow the organization to check on what the employee is doing. But why is it necessary?
Many government agencies and commercial companies in Singapore also follows this practice.
I find this rule to be inappropriate. I use my personal email address for personal and business purpose. Instead of talking to someone over the telephone, I send an email. Why should I have to use the official email address?
If it comes to a business deal when a record is required, we will probably use a signed document anyway, and send by PDF.

MAS Balanced Score Card

Here is the opening section of the MAS regulation on the Balanced Score Card. Frankly, I do not understand what it meant. I expect MAS to use simple and clear English in their guidelines, rather than confuse the public with this kind of language.

1 These Guidelines are issued pursuant to section 64 of the Financial Advisers Act (Cap. 110) [“FAA”]. They apply to all licensed financial advisers and exempt financial advisers, other than a financial adviser in respect of the activities, recommendations or transactions set out under regulation 34A of the Financial Advisers Regulations [“FAR”].

2 The Notice on Requirements for the Balanced Scorecard Framework and Independent Sales Audit Unit [FAA-Nxx] (“the Notice”) sets out the requirements for the Independent Sales Audit Unit and the design and operation of the balanced scorecard framework which financial advisers shall put in place in their remuneration structures for their representatives and supervisors. These Guidelines are intended to provide general guidance on some of the requirements in the Notice, such as the posttransaction checks and classification of infractions by the Independent Sales Audit Unit. In addition, these Guidelines set out the measures to be applied to existing and newly recruited representatives and supervisors who have been assigned a balanced scorecard grade E, as well as obtaining and sharing of information on the representatives’ and supervisors’ balanced scorecard grades during reference checks. The Guidelines also set out the Authority’s expectation for financial advisers to conduct pre-transaction checks to minimise the impact of the balanced scorecard framework on representatives and supervisors. The Authority may rely on a financial adviser’s failure to comply with these Guidelines to establish or negate any liability in question in relation to any proceeding under the Notice.

3 These Guidelines should be read in conjunction with the provisions of the FAA, the FAR, as well written directions, notices, codes and other guidelines that the Authority may issue from time to time.  

Wednesday, December 16, 2015

MAS Balanced Score Card

John Thor Wu asked:

Mr. Tan, what's your view on the latest Balanced Score Card implemented to so called improve the insurance sector?
My view is that MAS is wasting so much monies to achieve so little things...when they can actually use that monies to make sure consumers don't, in the first place, buy EXPENSIVE insurance related products.
But maybe they scared that many insurance agents will leave and unemployment level shoot up. The very true is with the implementation of the BSC, insurance agents will CONTINUE to sell THOSE super expensive products because they will have their way to protect themselves and at the same time consumers continue to waste their monies....
Insurance is not all useless but consumers need to either find the right agents, or educate themselves, plus MAS to filter out those products that do NOT meet the criteria in term of costs (e.g CPF-IS scheme).

I am not familiar with the Balanced Score Card. I am not able to comment on its goals and its effectiveness in achieving the goals. I usually prefer to identify the root of the problem and find the right way to address it, rather than to adopt an approach that sounds good on paper, but is not clear to most people. 

My approach towards providing insurance protection and long term savings for consumers is:
a) Get insurance companies to offer products that are suitable for consumers and ensure that the premiums are charged fairly.
b) Make it possible for the agents to make a living by selling these products, e.g. to reduce the time taken to sell the products, so they can earn enough on the modest commissions that the customers can afford
c) High net worth individuals who need special financial advice should be encouraged to approach experienced and qualified advisers and to pay a fee.

I will give my comments on the MAS balanced score card approach when I learn more about it.

Tuesday, December 15, 2015

Private condo available for rental

This private condo in Upper Thomson Road is available from 1 March 2016 at a reasonable rental. It is close to some popular schools.

The house in Oxley Road

Should Mr. LKY house in Oxley Road be kept as a national monument or be demolished? Give your views here. After 10 votes are received, we can view the results.

An intelligent dog

My friend in Romax Farm in Malacca kept more than 10 dogs in the farm. One dog is called Fox. She gave birth to a puppy but it was killed by one of the dogs.
One day, while pregnant again, she disappeared from the farm on a stormy night. My friend presumed that she had run away.
Fox returned back a few days later looking for food, but must have given birth at another place.
One night, my friend followed Fox back after her dinner. They found that she had a litter of four puppies in another farm. She must have felt that her puppies would be safe there.
Fox returned to Romax farm every day for her meal. Sometimes, she took back some spare meat to feed her puppies.
I saw Fox. She was intelligent and friendly.

Sunday, December 13, 2015

Wild animals also have families

A farmer told me of an incident in his farm that is quite sad.
He plants fruits and vegetables and keeps out the wild animals with a fence. One day, a wild boar tore open the fence and destroyed his plants. This occurred for a few days.
He finally laid a trap for the boar and caught it. it was a female boar. He sold her to a nearby restaurant which sells wild boar meet.
A few days later, his farm was visited by three piglets looking for their mother. He was so sad to see this piglets.
He would normally not hunt the wild animals, but it this case, the boar was destroying his plants.

Elderly people should stay on Medishield Life

Hi Mr Tan, do you think it is necessary to buy an integrated shield plan to get better healthcare (private hospitals) as opposed to just relying on Medishield Life?

This is not necessary, especially for older people.

I wish to share the experience of an elderly lady. She was encouraged by the agent to convert from a basic plan to a A plan that covers treatment in a private hospital.

She was diagnosed for colon cancer after a year. As she had an A plan, she was advised to go to a private hospital. She incurred a bill of $300,000.

The insurance company rejected her claim, as she did not disclose that she had diabetes at the time of upgrading. She said that the agent did not ask her about this condition. She was not educated in English and relied entirely on the agent to handle the upgrading.

The insurance company finally offered to pay $80,000 for her treatment. This was probably the amount that would have been paid under Medishield Life.

If she had remained on Medishield Life, she would have been fully covered (except for the co-insurance). By upgrading to the A plan, she had incurred a large bill that was not covered.

When a person is elderly, they are likely to have a chronic condition, such as diabetes or high blood pressure or high cholesterol. They may not be aware about it or may not be aware that it has to be declared. It is risky to upgrade a Shield plan at an advanced age.

Wednesday, December 09, 2015

Easy to vote with google or facebook sign in

You only need to register once for the Wisdom of the Crowd website. If you wish to vote at any time, and you cannot remember your password, just click on the Facebook or Google sign in, and you will are ready to vote. It is convenient and easy.

Register here

Sign in here:

Voting results - Wisdom of the Crowd

The Wisdom of the Crowd website has a new look. More people are now voting on the issues, as shown here.

You can vote on the issues and get a free copy of the e-book "Financial Planning for Young People" (usual price $6) after you submit 5 votes.

Register here to vote immediately.

Tuesday, December 08, 2015

Like a gold rush


Read this article below about why people are joining the life insurance industry like GOLD RUSH.…/ever-wondered-insurance-agen…

After reading the article I hope that the public will understand why graduates, doctors ,dentist, engineers and accountants, conmen and women join the industry. Is it because these people want to help you poor clueless people out there to make you rich, to have more money when you retire; to be adequately insured?

The answer is NO< NO NO. to make themselves rich and this is the industry where they can cheat you and con you LEGALLY without being noticed and caught. Why? their accomplice, the insurance companies need the money from you too to invest for their senior managers to have humongous salary. What about the regulator? (Rude remarks deleted)  they cannot see even when a crime is committed infront of them.

Vote now and get your free copy of "Financial Planning For Young People"

Several people have participated in the voting of 5 or more issues in this website and have already received their free copy of the popular e-book "Financial Planning For Young People". You can also take part now, and get your copy.  It should take you just 15 minutes to give your votes on 5 issues.

More productive to arrange an open house

My friend in Sydney told me that he is selling his house. He appointed a property agent. The agent put up a listing in their company website. The listing was quite impressive.

The agent arranged for 2 open house events. At each event, about 5 prospective buyers are visiting.

This seemed to be quite productive. The owner only needs to be interrupted twice for many buyers to view the house.

When I looked for a tenant to view my vacant property, the agent had to make individual visits to show one prospective tenant at a time.

Monday, December 07, 2015

Financial Planning for Young People - free copy

Financial Planning for Young People is my most popular e-book. It sells from $6 from my website (

You can win a FREE copy of this e-book by submitting your vote on 5 or more issues in the Wisdom of the Crowd website.

Register here:

After registration, you can click on "Vote Now" to see a list of issues that you can vote on. You will be given the "For" and "Against" reasons on each issue. Select your vote and click the "Submit" button.

Implications of "nationalizing" the public transport system

The government is going to "nationalize" or "de-privatize" the public transport system. They have not made a specific announcement, but they have already awarded two operating contracts to foreign operators to operate two batch of new bus services.

There is now "insider information" that they will be buying the fixed assets, i.e. buses and trains, from the two operators and will tender out the operation of the bus and train services that they are "taking back" from SMRT and SBS.

How will this impact the commuters?

Nationalize model
Under the nationalized model, the Land Transport Authority will decide on the planning of the services and the fare structure. They will tender out the operations of the bus and train services to the operators on a term contract of presumably five years.

The operator who wins the contracts will be assured of a guaranteed fee to run the service. They have to pay the wages, fuel, maintenance and other operating expenses. Presumably, the operating contract will allow for adjustment in the operating fees to take care of changes in wages and fuel prices. Most importantly, the operator will not have to worry about the revenue and the fare structure.

Under this model, the government will plan the services based on the demand. They will fix the fares based on what their judgement of what the commuters will find to be "affordable". They may fix the fares lower than the actual cost to encourage more people to take public transport.

But, they will not want to underprice the fares, as it might make the other forms of transport to be not feasible. They will also have to address the issue on the nature of taxis - are they private or public transport?

How is it different from the privatized model
Under the current privatized model, the LTA face difficulties in dealing with the transport operators.

The LTA may want the operators to run more services, but the operators have to look at their bottom line and will be reluctant to run additional buses or trains where the marginal cost is not met, i.e. these additional capacity will be unprofitable. The focus on profits will complicate the planning of the services.

The "conflict of interest" will be removed under the nationalized model.

Challenges for the LTA
 The LTA will face the firing line in the future when the public demand for more bus and train services. They will approach their MP, who will bring their request to the LTA or raise them in Parliament.

LTA will need to build the ability to plan the services based on actual demand, and to deal with requests that are not economically justified. They have to learn how to balance between the budgetary cost and the demand for quality service.

Can LTA raise to this challenge? They have to build the ability to handle the new challenge. They need a new way to interact with the people who are affected. They have to listen to their concerns and build the trust that these concerns have been fairly addressed when the final decisions are taken.

Bad customer service - DBS

I went to deposit a cheque at the DBS quick check deposit machine in Midview City. The screen said, "temporary out of order". There was a sign - customer service 1800 111 1111.

I called that number. I had to go through 10 irrelevant messages before giving up. Why can't DBS just allow me to speak to someone to report that the machine is out of order, or to tell me when it will be ready? One hour later, I went to the machine again. It was still out of order.

I know that machines fail from time to time. But what annoys me is the inconsiderate call center system. They should, for such cases, allow the customer to talk directly to a person - rather than make them waste so much time listening to irrelevant messages.

We need a white paper to discuss the de-privatization of public transport

The government should issue a white paper to discuss how they proposed to "de-privatize the public transport system". This white paper should be discussed in Parliament and in the media. The people have a right to give their say on this important move.

The public transport operators will have to be compensated a few billion dollars for the trains, buses and the rail network. How will this sum be determined? Will the price be fair to the tax payers?

How will the future operations be handled. From my reading of news reports, it seemed that the bus and train services will be tendered out to private operators based on a performance contract. This strategy seem to follow the model of London Transport.

Surely, such an important issue must be discussed in the public domain? Will it improve the public transport service? Will fares be increased? Will public transport be subsidized?

Sunday, December 06, 2015

Saturday, December 05, 2015

Get a benefit illustration, instead of a brochure

Hi Mr Tan, I am a graduate and is saving for the future. What do you think of prudential pruwealth policy?

Send the benefit illustration to me.

Mary sent a brochure of the policy.

TKL This is a brochure. It does not show the essential information that help you to make a proper decision. You should ask the agent to give you a "benefit illustration" so that you can look at the "effect of deduction" and "distribution cost" and the surrender values. You should register to attend this talk so that you know what is a better way to invest for the future. Get your friends to attend as well.

Do not miss this talk on financial planning, 9 Jan 2016, 2 pm HDB Hub

Do not miss this talk on financial planning. The next talk will be held in 6 months' time.

By attending this talk, you learn how to manage your personal finances, to put aside savings from your regular income, and invest the savings in the right way to earn the best long term return. You also avoid being sold a bad financial product that eats into your savings!

Register now. Do not miss this talk.

Thursday, December 03, 2015

Financial Planning Talk, 9 January 2016

HDB Hub, Toa Payoh
Saturday 9 Jan 2016
Time 2 - 5 pm
Venue: Bedok Room (HDB Hub Basement 1)
Duration - 3 hoursFee - $10 (FISCA member) $30 (public)
Outline of the Talk
1. Tips on Financial Planning
2.How to invest your savings
3. Life insurance and structured products
4. Buying insurance-managing risk

Profile of the speaker

Mr. Tan Kin Lian started work in 1966 and qualified as an actuary in 1975. He joined NTUC Income in 1977 as the general manager (later re-designated as chief executive officer) and retired after 30 years.  NTUC Income was a leading life and general insurance co-operative in Singapore.
He is now the President of the Financial Services Consumer Association (FISCA), a non-profit organization formed to educate the public on financial planning.

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