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Even though a recent survey showed Singaporeans
had favourable financial habits, it is worrying
that they did not seek professional advice,
says financial planning expert David Choo.
Singapore’s first financial literacy
report conducted in March 2005 by Media
Research Consultants Pte Ltd, which was
appointed by the Monetary Authority of Singapore
(MAS), covered slightly more than 2,000
Singaporeans between 18 and 60 years of
age. The results showed that most Singaporeans
recognised the importance of financial planning,
but did not plan their finances in a structured
manner. In addition, Singaporeans were not
well versed in common financial products
like life insurance policies or unit trusts.
The survey report showed Singaporeans scored
67 out of 100 in financial literacy defined
as “the ability of individuals to make
informed judgement and take effective decisions
in managing their finances”. 40 per
cent of respondents relied on the advice
of their friends and relatives compared
to 20 per cent that dependent on the advice
of financial advisers. While common logic
would dictate that financial advisers be
the preferred choice because of their knowledge,
and expertise, observers speculate Singaporeans
are suspicious that financial advisers are
motivated more by self-interest.
While a proportion of Singaporeans (25 per
cent) revealed that they did their own financial
planning, the survey found out that Singaporeans’
product knowledge were relatively weak.
Moreover, 67 per cent of Singaporeans interviewed
indicated that they did not have any investments,
and 21 per cent did not know enough about
investments.
Generally, it appears that Singaporeans
perceive financial advisers negatively.
This is perhaps due to financial product
advisers encourage clients to buy directly
from them and not allow financial advisers
to scrutinise the products. 72 per cent
of the respondents felt that the DIY approach
was best, but failed to realise the complexities
in financial planning.
The financial literacy survey shows that
more has to be done by both the MAS and
financial institutions and associations.
While the client will do better if he is
more well-informed and can decide more wisely
on financial matters, DIY is only for the
exceptional and is all right for hobbies,
but can be time consuming and counter-productive
in the area of financial planning and financial
advice.
David Choo, ChFC, CFP, is the Managing Director
of PromiseLand Independent Pte Ltd, a licensed
Financial Adviser.
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Personal Finance Matters 
