The difference between being an Insurance Agent, an Independent Financial Advisor, and Personal Banker?

The financial advisory industry in Singapore is a huge part of the economy and can be quite complex to some. The industry is full of technical jargon and people who claim they can give financial advice to anyone. There are three groups of professionals whose job is to advise people on personal financial matters, Insurance Agents, Financial Advisers, and Personal Bankers.

But what do these groups of people actually do? Let’s take a look.

Insurance Agents

Insurance agents are representatives that are appointed by life insurance companies to sell or advise you on their insurance policies or investment needs that their companies offer. They are also referred to as tied agents, as they have the responsibility to act in the best interest of their company. Tied insurance agents usually work in one of these 5 companies, including The Great Eastern Life Assurance Company Limited,  AIA Singapore Private Limited, Prudential Assurance Co. Singapore, NTUC Income Insurance Co-operative Limited, and Manulife Singapore.

Financial Advisors

Financial Advisors are representatives that are appointed by Independent Financial Adviser (IFA) that are allowed to sell or advise you on products that are from the IFA firms they are representing. Some of these advisors work on a fee-only basis whilst others are remunerated similar to a regular insurance agent.

IFA firms are called independent because they advise or sell products from at least four life insurance companies. The recommendations that they give are independent in nature and are not biased towards any specific insurance company that they are representing.  Some of these independent financial advisories include Global Financial Consultants, Synergy, Great Eastern Financial Advisers, Manulife Financial Advisers, PolicyPal, and Providend.

Personal Bankers

Personal bankers are representatives that are appointed by a bank to sell or advise you on products offered by the bank and life insurance products from companies in partnership with a bank.

At first glance, these three jobs may appear to be the same. Now, let’s take a look at some important key differences that you should be aware of.

Number 1: Insurance agents will always sell or advise life insurance products offered by the company that they are representing

Insurance agents will only be allowed to sell or advise on products from their represented company. Because of this, they may be required to speak about their products in a biased way compared to other companies’ products. This means that there would be a conflict of interest when other companies’ products come into the picture.

Number 2: Financial advisers are required to be independent when recommending products

Financial advisers are required to be unbiased when recommending products from the different life insurance companies they represent. Although, the situation may not always be fully unbiased due to differing levels of knowledge or even remuneration that they have for various products.

Number 3: Personal bankers are paid a salary

Insurance agents and financial advisers are paid mainly through commissions, while personal bankers are employees of the banks that they represent and receive a basic salary and commission for their work.

For the salary that they are paid, personal bankers are required to meet sales targets. This is can be done in two ways, servicing customers who walk into the bank or calling and soliciting for sales on their own.

Essentially, personal bankers are employees of the banks that they work for and are expected to meet the KPIs set for them.

Although these are 3 different groups of professionals, they are all also salespeople. They are all required by the Monetary Authority Of Singapore (MAS) to sell based on the financial needs which customers have.

In conclusion, understanding the differences between an insurance agent, financial adviser, and personal banker will allow you to appreciate better the roles they play and their strengths and weaknesses between them.

The most important aspect that any of these professionals should have is high-quality knowledge that will result in appropriate advice that is trustworthy. This is the only way that an appointed representative can balance the needs of their company and the customers.

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