Cost of financial advice matters less to consumers

Consumers in Singapore are willing to pay no matter what it costs for an advisor who exhibits good knowledge in financial services.

Friends Provident International today released a report highlighting the results of their latest Investor Attitudes survey for Q2 2012 (survey period from 23rd April to 7th May). The survey's results highlight the importance of having knowledgeable financial advisors in the Singapore insurance and financial services industry. When respondents were asked what the most important factors were when choosing a financial adviser, offering the right products and services and sound financial knowledge were the most highly-ranked factors.

Chris Gill, Principal Officer and General Manager, Southeast Asia at Friends Provident International said:

"We're pleased to see that investors are concentrating on acquiring solid financial advice and identifying products that match their financial needs. Interestingly, investors appear relatively less concerned about the cost of such advice, ranking it as the least important factor when deciding to engage a financial advisor. We will continue to work closely with financial advisors and our bank partners to offer products and services that are aligned with our customers' needs."

Earlier this year, the Monetary Authority of Singapore announced the implementation of the Financial Advisory Industry Review (FAIR), where one of the key areas under scrutiny includes the lowering of distribution costs of financial products.

In light of FAIR, the latest Investor Attitudes survey asked investors in Singapore whether they preferred a commission-based remuneration model or a fee-based model. The results showed respondents were almost equally split between these two options.

However, when asked about remuneration disclosure, more than half (53%) of respondents said that their advisors have never disclosed the amount they earn through commission or fees.

Within the same report, the findings also showed that investor confidence in Singapore has recovered since the last survey conducted in Q1 2012, moving up 5 points to 17. Conducted by ICM Research, this report surveyed 1,000 people in Singapore from 23rd April to 7th May 2012. During this period, the confidence levels of investors in Singapore rose above those of investors in Hong Kong and the UAE.

Commenting on this rise in confidence, which reflected investors' attitudes towards the global markets during the survey period, Mr. Gill said:

"In May 2012, Singapore announced strong GDP growth and there was decreased anxiety over the crisis in the eurozone. These factors helped to strengthen investors' confidence levels."

Confidence in the future state of the markets also increased, with 42% of respondents forecasting that the state of the investment market will be better in six months time, up from only 30% last wave. This increase in investors' confidence in Singapore is reflected in the type of asset classes and investment instruments preferred.

Mr. Gill continued:

"While cash and gold remain the preferred choice for investors, increased consumer confidence has led to increased interest in equities, property and money market funds. It is encouraging to see that investors are more open to considering different asset classes and instruments such as extended traded funds (ETFs) that meet their risk appetite and financial goals."