Wednesday, November 23, 2022

Advises from Advisors?

At all time, I am a strong advocator of doing financial planning by own self. Reason being no one knows me better than myself. Of course, by doing so, I have to spend lots of time and resources to equip myself with the ability of doing self-financial planning. Learning is one thing, keep updating myself is another important step to enhance this ability.

I know, many of you may claim that you don’t have time to learn. Why do all these hassles while you could opt for experts to manage your money? Yes, they claim themselves licensed financial planner.  But how do you know what they are thinking of.  If they are truly an expert in their field and care about you, why they bother to earn your commission by selling you their expert advice. Do think about it.

In this article, I would like to share my personal experience on dealing with these experts. 

Two year ago, in the year of 2020, the local savings interest rate kept dropping a year after my retirement. Even though it did not affect me much in long term but getting an average interest return of less that 2% p.a. from more than 4% p.a. in short term did bother me. In another words, my passive return was slashed by more than 50% a year. I therefore seek for an expert to help me to diversify savings so that it could at least maintaining at 4% p.a. That expert advised me to invest in unit trust while she could reduce the initial charge from 5% to 1% and help me to monitor it. She selected a few funds for me and I went in. Sad to say that those funds she selected for me did not perform well. After making a 12% loss within a year, she asked me to top up since the market is low but I rejected. It turned out my decision was correct; those funds gave me a total paper loss of 22% in subsequent 6 months. When it recovered slightly to a loss of 15%, I cut the loss and went out. The market did not perform well since then. Lucky me. She apologized to me but I didn’t even bother to look at her. I don’t trust her anymore. This is a very typical example that I didn’t do the selection by myself and left it to the experts. I have to accept this consequence.

Another story is about deceased income tax declaration for my mother. My mom passed on August, 2021. I was very sad but I know very well that the income received on her assets must be handled carefully before they are transferred to respective beneficiaries. While waiting for Administrator Order hearing which I had applied it in August, 2021, I asked an expert about the declaration of a deceased income tax. She advised me to do it after I got my Administrator Order. During the tax season in 2022, I asked again as I worry there will be a penalty if I did not declare timely. She said again to wait for my Administrator Order. After I requested her to double confirm with her financial planning company about the process, they replied that they only handover it to their tax agent for their client and have no idea how they handle it. For my case which I will do it by my own, they only ask me to check with my tax agent which I don’t have one. I was shocked about the reply from a financial planning company. I finally received my Administrator Order a year after. When I checked with Inland Revenue Board, the replied that I’ll have to pay the penalty over the applicable tax payable after my mom passed. Luckily there was no tax payable for my mom’s income after she passed and, therefore, the penalty is zero. So, can I trust these experts?

There is no doubt that there are good advisors around, if you and me are lucky to meet one. So, instead of listening to their advises blindly, do your homework.