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Why No Young Graduate Will Pay $2,000 to $2,500 for a Comprehensive Plan Still

There are some things I posted on social media that… I do not recall where I got it from.

However, it is always interesting to see that there are some things that I reshared that garnered strong reaction from my friends today.

About 8 or 9 years ago, I shared this newspaper clipping on Christopher Tan explaining the fees he charged for planning back then.

You can review the original sharing here:

I got called into the room to explain where did this come from.

I cannot remember lah. How is it possible to remember a random Facebook post made 8 years ago?

My best guess is that this was from The Edge Magazine or the Business Times. It is likely to be from the Edge.

The interesting thing is that Chris (who is now my boss) remembers that these phrasing puts the comments closer to 2003 than in 2012. This cannot possibly be the case since back then, there was no Facebook, and it is nearly impossible the 2012 Kyith would go dig out something that goes as far back as 2003.

Will No One Pay $2,000 to $2,500 Upfront for Financial Advice Still?

Back then, I made a comment on social media that no one will be willing to pay that amount for advice.

That statement was referring more to how much Providend charged back then for fresh graduates and students.

Budget Babe asked whether did my views changed since then.

In a way yes and no.

Being on the inside, I know that if there are no willing payers for our service, our business would not do well since our main revenue are fees, no commissions, no trailer fees. So there are people that pays.

However, I still stand firm on that view that a plan that cost $2k to $2.5k is quite tough for a fresh graduate.

As a fresh graduate, you came out into the working world needing to pay off your student loans. If you do not have a student loan, you would like to maximise the amount of money kept with you or use your money in areas that give you greater satisfaction.

Paying a fee upfront is tough. It is even tougher when financial representatives are providing free advise. If I am a fresh graduate weighing the pros and cons in my head, there is little downside to choosing the free advise.

As a note, the advise is not free. Often, it will be just as expensive. It is just that the cost to you are not visible on the outside.

Fresh Graduates Do Not Have Adequate Life Experiences to Understand the Value Proposition of Paying a Fee

A group of our prospects come to find us because our message resonated with them.

They listen to what we have to say, and think back to their experiences with their current wealth, insurance or financial advise, and realize that they are not adequately serve to get them to where they want to be.

Sometimes, you have to buy 100 insurance policies to have a small voice inside your head telling you that something is not very right with this picture.

Talking to peers, reading blogs like Investment Moats and his fellow financial blogs would make you question whether you have taken the right way to create your financial and protection plan.

I feel that only conscientious individuals would be more open to the idea of doing things the right way.

What is Considered Comprehensive is Subjective to People

Another common problem is that our definition of what is considered comprehensive, and what is comprehensive in your head is totally different.

I have a friend. Originally, he wanted to engage Providend but am on the fence about the cost versus the value. So he didn’t proceed further.

I helped him craft something out and just ask for ang bao money.

After the whole thing, he remarked that this wasn’t what he was expecting. He was not expecting this level of rigour to go into planning.

Your idea of what is comprehensive and our idea can be rather close but most likely is rather wide.

A comprehensive plan should be a plan that help you realistically see how to get from where you are to where you want to be. You might have 2 to 3 different alternate places that you wish to end up in and you could take a few different ways, but the plan should let you know what it takes to get there, where are the areas of failure and the chances of things working out.

This is not for your friend or another person. It only works for your family and yourself.

If you do have a clear answer to the above, then perhaps you do not have a comprehensive plan.

Ben Felix has a good video on what is good financial advice and why he still has a job.

It is a refreshing way to look at financial advise.

Is The Industry Ready for Fee-Only?

In the article, my boss say “If nobody is out there to provide a service, how can anyone be ready? At the end of the day, it is not whether consumers are ready. The real question is, “Are advisory companies ready to give good advice that consumers will pay for?”

8 years have gone by and not a lot of things change. Turns out we are still the only shop out there doing this.

There are fee-based shops out there. There is also a fee-only robo-advisory shop.

I have also hear of firms or individuals wanting to transit to a fee-based or fee-only concept but the struggles are real and eventually, they had to still stick with the existing model.

With social media, a lot of the messages financial companies tried hard to keep a lid on can no longer be kept.

But overall, too much information also confuses people and result in people not taking action.

Are the consumers better serve in this 8 years?

In a way, prospects came to us to validate their own planning or the plan that current adviser did for them.

If there are conviction in their own competency and trust, they would seldom come in and validate their own plan.

We have seen prospects that are very well-inform having very decent financial plan. However, we have not heard much that the one that drafted this plan was their excellent adviser (if they have one, most likely they do not need to re-validate their financial situation!)

Ultimately, through our prospects, we have a good sensing whether people are giving good paid advise out there.

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Sunday 25th of April 2021

UK had moved to a fee-based model from commission model a few years ago.

Its experience proved what many people already instinctively know --- fee-based model ends up catering to people who have a certain level of income and/or asset base.

Fresh grads or those with lower income/low assets either can't afford the upfront costs or can't overcome the mental hurdle vis-à-vis their low expectations for the future.

Advisers also want to earn at least the median wage or higher. And comprehensive financial planning is a bespoke service that's very time consuming, custom-made, and requires drawing on knowledge, experience & information sources/databases.

For those who haven't or don't have that level of income or assets, the best fee-based approach may have to involve public-private partnerships to provide a more standardised & automated approach, with standardised plans & advice.

Else, it's basically just sticking to commission based & relying on the masses' knowledge to hopefully make the right decisions. People like us are motivated & self-driven to seek out this knowledge on our own. Govt will have to institutionalise some sort of national financial literacy programs if they want the rest of the masses to acquire some of this knowledge.


Sunday 25th of April 2021

Hi Sinkie, they are trying but you wonder if it is helpful. For sure, if you graduate today, it is better than when I graduate in 2003 in terms of options. But paying that amount upfront for a young person is probably too much. There needs to be a better model. Perhaps hiding that you have already paid the fee is a good idea.


Sunday 25th of April 2021

Besides the upfront fees, Providend also charges an annual % based on AUM. Can't imagine the firm could survive ONLY on revenue collected from one-time fees.


Sunday 25th of April 2021

HI Pete, thanks for the comment. Yes you are right. Some would not consider that aum fee to be a fee though. We do.

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