The Retirement Dilemma
So you have finally retired, this is something you have been waiting for literally your whole life. But, you are quickly realising that your available funds, which are supposed to last you till the end of your days, are dwindling with each day. This is a common dilemma that many Singaporeans face after they retire. A survey carried out by Manulife showed that 1 in 5 retirees find themselves dissatisfied with the amount that they have saved for retirement.
This does not mean that you have to go back to working your previous job. There is a way that will allow you to earn additional income to maintain the expenses of your lifestyle and achieve your vacation goals without having to return to your previous occupation, becoming an independent financial advisor after retirement has grown into quite a productive option for many retirees.
Besides having a new stream of income, many find that being involved in an active work life again as a successful independent financial advisor after retirement has given them a fresh and positive view of life. The nature of this option means that there are no limits to the amount of income you can make and you are also able to plan out your own schedule in accordance with your vacation plans.
This makes a career as an independent financial advisor an ideal one for retirees as they are able to earn a high income by selling insurance without having to invest a large sum of money to start.
A New Way of Selling Insurance: As An Independent Financial Advisor
An independent financial advisor is someone who is licensed and regulated by the Monetary Authority of Singapore (MAS) under the Financial Advisers Act (FAA) to sell insurance independently. The following shows the requirements to gain the necessary licensing to become an independent financial advisor.
Firstly, you must be at least 21 years of age. You will then need to have at least:
- GCE ‘A’ Level certificate with three H2 passes and two H1 passes;
- Or an International Baccalaureate (IB) diploma;
- Or a polytechnic diploma; or equivalent academic qualifications.
Lastly, you must have taken and passed modules 5 to 9A from the CMFAS Exam, namely:
- Rules and Regulations for Financial Advisory Services (M5),
- Securities Products and Analysis (M6)
- Collective Investment Schemes (M8)
- Life Insurance and Investment-Linked Policies (M9)
- Life Insurance and Investment-Linked Policies II (M9A)
These examinations are self-study, but there are private schools available that offer courses to help you prepare for them.
After you have completed the requisite papers, you can log a notification with MAS and begin work as an independent financial advisor.
What You Need To Know About Retirement In Singapore
Singapore has a growing aging population, which means that it is experiencing a growth in both the size and the proportion of older people in the population. In addition, more and more Singaporeans are voluntarily staying in the workforce longer. For these reasons, it is now more important than ever for the older workforce to gain a better understanding of their rights. It is also the responsibility of employers to educate themselves on the obligations they have to the employment rights of people reaching retirement age.
What is the retirement age in Singapore?
In Singapore, the age of retirement by law is 63 years if you are:
- A Singapore citizen or permanent resident; and
- Have joined the organization or were recruited before the age of 55
Your employer is not allowed to ask you to retire if you have not yet reached the age of 63.
Can I continue to work after reaching retirement age?
You have the right to continue working after reaching retirement age as long as you are willing and able to do so.
Furthermore, before you turn 63, your employer must offer you re-employment in your current organization if you meet the eligibility criteria for re-employment.
What is re-employment?
Re-employment is the process of re-contracting employees who have reached retirement age, allowing them to continue working if they are willing and able to. This is done by offering the employee a re-employment contract.
As of 1 July 2022, the re-employment age is 68 years old. This means that employers are required by law, to offer eligible employees who turn 63, re-employment until the age of 68.
Who is eligible for re-employment?
You are eligible for re-employment if you meet the following criteria:
- Are a Singapore citizen or Singapore permanent resident;
- Have worked with your current employer for a minimum of 2 years before turning 63;
- Your employer has rightfully assessed your work performance as satisfactory;
- You are medically fit (i.e. mentally and physically able to continue working); and
- You are born on or after 1 July 1952.
Can I still work after the maximum re-employment age of 68 years?
There is no legal provision in Singapore that does not allow you to work after the maximum re-employment age of 68 years. As long as you are medically fit and willing to work, and your current organization can accommodate such an arrangement.
Offer an Employment Assistance Payment (EAP)
If your current organization is unable to accommodate such an arrangement, the EAP is a one-off payment offered by your current employer as a last resort, after considering all available options.
This sum of money is a form of financial support while you search for other employment opportunities. The Ministry of Manpower (MOM) recommends that the payment provided should be equivalent to 3.5 months’ salary, with a minimum amount of S$6,250 and a maximum of S$14,750.
You will not be entitled to an EAP if you:
- Mutually agree with your employer that you will not receive it,
- Decline an offer of re-employment from your current employer, or
- Are not eligible for re-employment.
However, if your employer has helped you obtain another job with a new employer, you are still eligible for the EAP even in the event you decide to turn down the offer.
This sum of money could help you stay on your feet while you make your way to becoming an independent financial advisor.
Prudential Singapore abolished its mandatory retirement age of 62, giving its 1,100 employees the choice of when to retire. The new policy allows employees to continue to fulfill their personal and financial goals.
There are currently 6 people who are above the age of 62 at Prudential, who are eligible for re-employment in the next five years.
With the new policy, Prudential’s employees above age 62 can continue their jobs with all the same compensation and benefits. When they decide to leave, they will still receive the full retirement payout.
How To Start Selling Insurance
If you have decided to pursue a newfound career as an independent financial advisor, here are a few steps to help you get started.
1. Create a list of potential clients
Once you have become a certified licensed independent financial advisor, you are going to need clients. To build a client database, you will need to make a list of your contacts. These would include all your current contacts such as your family, friends, colleagues, and acquaintances. This list is the list of your potential clients that will help you get started. You may then proceed to contact each one and let them know your intentions.
2. Cold calling
After you have gone through your own contacts, you will then need to expand your reach. Cold-calling is when you call unknown individuals asking if they are in need of insurance. You can create a list of contact numbers from social media or through networking with existing clients. This is an additional way to increase your client reach.
3. Follow up with calls
Persistence is key. You need to make a few follow-up calls to your contacts to ensure an appointment with them. Be patient and make your follow-up calls until an insurance plan is sold.
4. Confirm your appointments
Ensure to fix appointments with the people you have called. It is always better to meet prospective clients in person so that you are able to understand their individual requirements to ensure you find suitable insurance policies for them.
How To Be A Good Financial Advisor
Being an independent financial advisor is not just about selling insurance, you are providing advice on what is the best option for your clients. Besides using the financial knowledge you will gain from obtaining your license, you will also need to use your own judgment skills to handle each individual client.
1. Understand the unique needs of each potential client
Do not pitch in an insurance product straight away, you must first do an analysis. Get to know your potential client’s financial situation in-depth and understand their needs before shortlisting suitable products for them.
2. Match suitable products to your client’s unique needs
After understanding the needs of the client, match a product that would appropriately fulfill their needs. Additionally, health insurance is essential. Find out if your client has these plans in place and if they do not, educate them on their importance. If they do, analyze if the cover is sufficient for their specific needs. More often than not, people are in possession of plans that are not sufficient for their needs. So, recommend a suitable product only after fully understanding their needs.
3. Ensure that your potential clients fully understand the features of the product
Insurance products are often quite technical, so they can be difficult to understand for the average person. This is often the reason why many people avoid insurance as they have the preconceived notion that it is too complex to understand. A good financial advisor should explain the products in a way that will make it easy to understand for their clients so that they are able to make an informed decision. You should not be making a sale if your client is unsure of the product in question.
4. Be okay with rejection
Selling insurance means you will be met with a good deal of rejection, however, it’s important to understand that it’s not personal. After all, most people only find insurance important after an incident that requires coverage. Some prospects way fall through even if you have put in a lot of effort and that is okay. To be a successful financial advisor, you will have to handle rejections. All you can do is do your job well and trust that your client will make the beneficial choice for themselves.
Benefits Of Being An Independent Financial Advisor
Once you have achieved the required licensing, the benefits that come with being an independent financial advisor are highly rewarding.
1. Make A Difference In People’s Lives
You will be able to sell insurance in your free time and earn a commission while educating your family and friends on the importance of being properly insured, this will give you a sense of virtue knowing that you are helping others stay safe and well-prepared.
2. Be Independent
Being able to continue to earn your own income after retirement will also help your self-confidence and self-respect, which are aspects that often take a beating for one that has retired as they feel that they may have “lost” their usefulness and have become a burden to their loved ones. You will be able to live guilt and worry-free.
3. Flexible Schedule
An independent financial advisor has no fixed hours of work, you are your own boss. For retirees, this is ideal as you can carry out your work at the convenience of your own time.
4. Earn unlimited income
Selling insurance means that your income is determined by how many policies you sell, so, your income is endless if you are able to continue selling. Therefore, you are able to make as much income as you like.
5. You can work from anywhere
With technology nowadays, you can sell insurance from home, online, or over the telephone. Retirees can save time by not having to go to the office and using that time to do things they want to do.
6. Do Work That You Actually Enjoy
The job you had before retirement may have been one you didn’t truly enjoy. Selling insurance can give you another chance at having a more fulfilling career. Even if you may not have earned more money than in your previous job, you can enjoy a more fulfilling and driven job without all the pressure.
7. Give Back To The Community
Even if you can comfortably retire with your available funds, you might find that you do not enjoy life without purpose or just things to do in your daily life. Being a financial advisor means you are contributing your time and energy to giving back to the community, this can be quite a rewarding feeling which can give you joy and satisfaction that would not be achievable after retirement.
While there are many ways to keep economically active, being in good health is important to be able to live the life that you want. Keeping your body and mind active is even more important in your later years. Continuing to work, especially in an industry that requires you to interact with different people and also allows you to help others in need, will help keep you sharp and well-oiled. And who knows? You might even find a new calling in life!
Retiring from work does not mean you have to retire from life. With a new source of income, you may be able to have new dreams and goals that might not have been possible before your retirement.