Seeking sound financial advice

By Lorna Tan

If you’ve only got a minute:

• it is important to discern what is good and value-added advice offered in social media channels from sub-standard financial advice and misrepresentation.
• Rather than relying completely on external sources, having some knowledge yourself will give you a better idea on whether you are getting sound advice and recommendations.

As the world becomes increasingly digitally driven, more and more people, especially young adults, are turning to social media channels for quick access to financial knowledge, advice, and perform transactions.

But are such channels more risk than reward? A recent survey finds that the proportion of Singaporeans aged in their 20s who are on track to meeting their investment goals has plummeted to under a third (32%) in 2023, from 75% in 2019.

Where can young adults go to seek helpful and constructive guidance on their financial goals?

1. Social Media

There is a plethora of financial information on social media channels such as Instagram, TikTok, Telegram and so on. However, it is important to discern what is good and value-added from sub-standard financial advice and misrepresentation. The person offering the advice may not be qualified, or may have their own agenda such as pushing selective products to earn kickbacks.

If you do follow the right folks, you will be in a better place. Portals run by the likes of Singapore’s national financial education programme MoneySense, and DBS Financial Planning portal, will provide the necessary financial knowledge on various topics to empower yourself. 

Do note that the tips and hacks in these portals may not be customised to your needs. It is important to evaluate such suggestions before acting on them.

2. Chat GPT

Responses on artificial intelligence-powered platform ChatGPT are based on past data, so they are only as good as the information that is available to the chatbot. If the data is limited, incomplete, biased, or inaccurate, the quality of responses will be affected accordingly.

How the questions are being phrased is another factor.

Ultimately, ChatGPT is not designed to provide financial advice as it is typically generic, limited in the application of local schemes and not comprehensive — but it can support learning.

3. Digital tools

Technology is an enabler that can be used to make informed decisions and be updated on market trends and information.

A suitable digital financial advisory tool is a great starting point for anyone looking to get a handle on their financial situation. For instance, the Plan tabs on the POSB and DBS digibank apps is auto-populated with your financial information, such as cashflows and investments. The Plan tabs on these apps also empower you with personalised insights and tips, which enhances your decision-making. 

Even if you prefer to engage the services of a human adviser, digital tools such as these are helpful in to kickstarting the fact-finding process on your financial health.

To gain greater clarity, sync with SGFinDex (Singapore Financial Data Exchange) using your SingPass via the financial planning application or website from participating financial institutions, like the DBS’s Plan tab.  Doing so  will enable you to consolidate all your financial information from Central Provident Fund (CPF), Housing and Development Board, Inland Revenue Authority of Singapore, CDP, as well as other banks and insurers to give you a comprehensive view of your financial health.

By better understanding your overall financial health, you can make more holistic decisions about your money.

4. Financial advisory representatives

While there are advantages to getting online financial advice, such as potentially feeling less pressure to purchase products, some may still prefer human interaction and the reassurance that they are able to reach out to a customer service representative when necessary.

Unless you have a good grasp of financial education, are an active saver and are disciplined in managing money, you will likely need professional advice on understanding your financial objectives, how to quantify them more accurately, mitigating against your saving and investing biases, and sticking to your financial plan.

This is where financial advisers come in. 

When selecting a financial advisory representative, consider their credentials and track record, the range of solutions they provide, their trustworthiness, how they are remunerated (salaried, commissions or fee-based), and the level of service you require.

5. Basic Financial Planning Guide

Planning for financial wellness can be overwhelming, especially for the uninitiated. As such, the Singapore Government and industry associations, including banks, have come together to develop an easy-to-use Basic Financial Planning Guide.

Launched in October 2023, the guide’s aim is to enable everyone to enhance their financial health by making financial planning more accessible to the masses and encouraging them to take simple steps towards doing so.

The comprehensive guide provides a consolidated view on the diverse needs of financial planning at various life stages — from fresh entrants to the workforce, to working adults with kids, to pre-retirees and retirees). It offers recommended levels of emergency cash, protection levels, investment, retirement, and estate planning considerations.

The holistic guide covers national schemes (including CPF, MediShield Life and CareShield Life), low-cost products, and actionable rules-of-thumb for consumers to self-assess, identify, and close their money gaps. Come early 2024, it will be further developed into six short guides addressing the needs of individuals in different life stages. 

While the guide is broadly applicable to most, it is not exhaustive and may not cater to every individual’s specific needs, circumstances, and preferences. 

It remains important to analyse your own needs and consult a professional for a customised financial plan.

6. Family and friends

It is well and good if your circle of family and friends is made up of experienced financial experts. If not, it will be prudent to rely on them more for the open discussion and sharing of ideas, instead of soliciting hard-and-fast advice.

Such discussions, just like those found on online forums, can help to ascertain your beliefs and raise questions that did not occur to you.

7. Get educated

Research has shown that financial education can substantially impact the financial wellness by correcting misunderstandings and inculcating good money habits.

Be on the continuous lookout for content, workshops and seminars that can give a boost to your financial know-how. For instance, Singapore’s national financial education programme MoneySense aims to help Singaporeans manage their money well and make sound financial decisions on their own. The CPF Board also has information on its many schemes and how to optimise them.

Rather than relying completely on external sources, having some knowledge yourself will give you a better idea on whether you are getting sound advice and recommendations.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.